English Indian Clays Limited

DRAFT LETTER OF OFFER (For Private Circulation to Equity Shareholders of the Company only)

ENGLISH INDIAN CLAYS LIMITED (Incorporated on November 18, 1963 under the Companies Act, 1956) Registered Office: TC-79/4, Veli, Thiruvananthapuram- 695021 (Kerala). Tel: 0471-2741133/ 2741433/2741633 Fax : 0471- 2742233 Email ID: [email protected] Corporate Office: 801-803, Tower ‘B’, Global Business Park, Gurgaon-122001 (Haryana) Tel: 0124 – 2803379/80/81 Fax : 0124 - 2803372 Email ID: [email protected] Website: www.eiclclays.com Contact Person / Compliance Officer: Mr. P S Saini, Company Secretary Tel: 0124-2803379/80/81/82 Fax: 0124 – 2803372 Email ID: [email protected]

ISSUE OF 7,44,830 EQUITY SHARES OF RS 10/- EACH FOR CASH AT A PREMIUM OF RS 990/- ON A RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF 1 (ONE) EQUITY SHARE FOR EVERY 6 (SIX) EQUITY SHARES HELD ON RECORD DATE i.e. [.], AGGREGATING TO RS. 74,48,30,000 (RUPEES SEVENTY FOUR CRORE FORTY EIGHT LACS THIRTY THOUSAND ONLY)

GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision investors must rely on their own examination of the issuer and the offer including the risks involved. The securities have not been recommended or approved by Securities and Exchange Board of India nor does Securities and Exchange Board of India guarantee the accuracy or adequacy of this document.

Specific attention of the Investors is invited to the statement of Risk Factors pertaining to Company, Project and this

Issue on Page No. 08 of the LOF.

ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Offer Document 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 Offer Document is true and correct in all material repects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

PNR Securities Limited RCMC Share Registry Pvt Limited

R-5, Green Park Market, Relan House, B-106, Sector -2,

New Delhi-110 016 Noida, Uttar Pradesh - 201301

Tel: 011 – 42009000 Tel.: 0120 – 4015880/4015886

Fax: 011 – 41755800 Fax: 0120 – 4015886

SEBI Registration No: INM000000727 SEBI Registration No: INR000000429

Email: [email protected] E-mail: [email protected]

Web site: www.pnrgroupindia.com Website: www.rcmcdelhi.com

Contact Person: Ms. Aruna Sharma Contact Person: Mr. Rakesh Adhana

ISSUE OPENS ON LAST DATE FOR RECEIVING REQUESTS FOR SPLIT FORMS ISSUE CLOSES ON [.] [.] [.]

LISTING The Company’s existing Equity Shares are listed on the Bombay Stock Exchange Limited, Mumbai (BSE). The Equity Shares to be issued through this Issue would also be listed on the Stock Exchange mentioned above. The in-principle approval for listing of equity shares arising from this issue has been obtained from BSE vide their Letter No. [.] dated [.] .

1 English Indian Clays Limited

TABLE OF CONTENTS

SECTION I: GENERAL...... 3 DEFINITIONS AND ABBREVIATIONS ...... 3

CONVENTIONAL / G ENERAL TERMS ...... 3 OFFER RELATED TERMS ...... 4 COMPANY / I NDUSTRY RELATED TERMS ...... 5 ABBREVIATIONS ...... 5

SECTION II : RISK FACTORS ...... 7 FORWARD LOOKING STATEMENTS AND MARKET DATA ...... 7 RISK FACTORS ...... 8 NOTES TO THE RISK FACTORS ...... 14 SECTION III: INTRODUCTION...... 16 INDUSTRY SUMMARY...... 16 THE ISSUE...... 18 SUMMARY FINANCIAL INFORMATION ...... 19 GENERAL INFORMATION ...... 21 CAPITAL STRUCTURE ...... 26 OBJECTS OF THE ISSUE...... 36 BASIS FOR ISSUE PRICE ...... 45 STATEMENT OF TAX BENEFITS ...... 47 SECTION IV: ABOUT THE ISSUER COMPANY ...... 57

INDUSTRY & B USINESS OVERVIEW ...... 57 COMPANY OVERVIEW ...... 62 HISTORY AND CORPORATE STRUCTURE ...... 77 MAIN OBJECTS ...... 81 OUR MANAGEMENT ...... 82 ORGANISATION STRUCTURE OF THE COMPANY ...... 90 KEY MANAGEMENT PERSONNEL ...... 91 PROMOTERS AND THEIR BACKGROUND ...... 93 DIVIDEND POLICY ...... 106 COMPANY OVERVIEW ...... 57 SECTION V : FINANCIAL STATEMENTS ...... 107 AUDITORS REPORT...... 107 MANAGEMENT ’S DISCUSSION AND ANALYSIS ...... 146 SECTION VI : LEGAL AND OTHER INFORMATION ...... 154

OUTSTANDING LITIGATION , D EFAULTS AND MATERIAL DEVELOPMENTS ...... 154 CASES AGAINST THE COMPANY ...... 154 GOVERNMENT APPROVALS / L ICENSING ARRANGEMENTS ...... 163 SECTION VII: OTHER REGULATORY AND STATUTORY DISCLOSURES...... 170 SECTION VIII : OFFERING INFORMATION ...... 178 SECTION IX : DESCRIPTION OF EQUITY SHARES AND TERMS OF THE ARTICLES OF ASSOCIATION ...... 200 SECTION X: OTHER INFORMATION...... 229

MATERIAL CONTRACTS ...... 229 DOCUMENTS FOR INSPECTION ...... 229 DECLARATION ...... 230

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SECTION I: GENERAL

DEFINITIONS AND ABBREVIATIONS

GLOSSARY OF TERMS/ ABBREVIATIONS CERTAIN CONVENTIONS, USE OF MARKET DATA

In this Letter of Offer (LOF), unless the context otherwise requires, all references to one gender also refers to another gender and the word “Lakh” or “Lac” means “One Hundred Thousand” and the word “Ten Lac” means “one million” and the word “Crore” means “Ten Million” In this LOF, any discrepancies in any table between total and the sum of the amounts listed are due to rounding-off.

Throughout this LOF, all figures have been expressed in Lacs unless otherwise specifically stated. All references to “India” contained in this LOF are to the Republic of India.

For additional definitions used in this LOF, see the Section “Definitions and Abbreviations” on Page No. 2 of this LOF. In the section titled “Description of Equity Share and Terms of the Articles of Association” on page No. 200 of this LOF, defined terms have the meaning given to such terms in the Articles of Association of the Company. Industry data used throughout this LOF has been obtained from industry publications and other authenticated published data. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe industry data used in this LOF is reliable, it has not been independently verified. Similarly, internal Company reports, while believed by us to be reliable, have not been verified by any independent source.

CURRENCY OF PRESENTATION

In this LOF, all references to “Rupees” and “Rs.” are to the legal currency of India.

Conventional / General Terms

Term Description Act The Companies Act, 1956 as amended from time to time AGM Annual General Meeting of members of the Company Articles Articles of Association of the Company Board Board of Directors of English Indian Clays Limited BSE Bombay Stock Exchange Limited, Mumbai. CDSL Central Depository Services (India) Limited A depository registered with SEBI under the SEBI (Depositories and Depository Participants) Regulations, 1996, as amended from time to time Designated Stock Exchange Bombay Stock Exchange Limited (BSE). DP A Depository Participant as defined under the Depositories Act. EGM Extra-ordinary General Meeting of the members of the Company FIs Financial Institution Foreign Institutional Investors registered with SEBI under applicable FII(s) laws FY Financial year ending 31st March of every year. GOI Government of India Guidelines issued by the Securities and Exchange Board of India under Section 11 of the Securities and Exchange Board of India Act, 1992 and called the Securities and Exchange Board of India (Disclosure and Guidelines/SEBI Guidelines Investor Protection) Guidelines, 2000 as amended till date.

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IT Act The Income Tax Act, 1961 and amendments thereto

Memorandum Memorandum of Association of the Company MRTP Act Monopolies and Restrictive Trade Practices Act

NR Non-resident NRI(s) Non-resident Indians

NSDL National Securities Depository Limited

OCB(s) Overseas Corporate Body (ies)

RBI Reserve Bank of India

SEBI Securities and Exchange Board of India Securities and Exchange Board of India (Substantial Acquisition of SEBI (SAST) Regulations, 1997 Shares & Takeovers) Regulations 1997

Offer Related Terms

Unless the context otherwise requires, issue of equity shares pursuant to Allotment this Issue. The successful applicant to whom the equity shares are being / or have Allottee been issued or transferred. Any prospective investor who makes an application pursuant to terms of Applicant this Offer Document. The forms in terms of which the Investors shall apply for the Equity Application Forms Shares of the Company. The Statutory Auditors of the Company, M/s PRICE WATERHOUSE, Auditors CHARTERED ACCOUNTANTS

Bankers to the Issue AXIS Bank Limited Composite Application Form CAF This Letter of Offer circulated to the Equity Shareholders of the LOF/ Offer Document Company. Equity Shares of face value of Rs. 10/- each of the Company unless Equity Shares otherwise specified in the context thereof. Equity Shareholders / Shareholders Equity shareholders whose names appear as: / Members 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 Equity Shares of face value of Rs. 10/- each of the Company unless otherwise specified in the context thereof.

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.______and to whom this issue is being made.

Face Value Face Value of Equity Shares of the Company being Rs. 10/- each.

Issue Closing date The date on which the Issue closes for subscription i.e. ______

Issue Opening date The date on which the Issue opens for subscription i.e. ______The period between the Issue opening date and the Issue closing date inclusive of both the days and during which prospective applicants can Issue Period submit their application Forms.

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Issue of 7,44,830 Equity shares of Rs 10 each for cash at a premium of Rs.990/- per equity share on a Rights basis to the existing equity shareholders of the Company in the ratio of basis to the existing equity shareholders of the Company in the ratio of 1 equity shares for every 6 equity share held on record date i.e. ______aggregating to Rs. Issue / Rights Issue 74,48,30,000/- Unless the context otherwise indicates or implies refers to English Indian EICL / Company / Issuer / We / Our Clays Limited, a public limited Company incorporated under the / Us / The Company provisions of the Companies Act, 1956

Lead Manager Lead Manager to the Issue, in this case being PNR Securities Limited. Persons whose names have been inserted as Promoters as referred on Promoters Page No. 93.

Record Date ______

Registrar to the Issue RCMC Shares Registry Pvt. Ltd The number of Equity Shares that an Equity Shareholder is entitled to under this LOF in proportion to his / her / its existing shareholding in the Rights Entitlement Company as on Record Date.

ROC Registrar of Companies at Cochin, Kerala

Company / Industry Related Terms

Terms Descriptions Board / Board of Directors The Board of Directors of English Indian Clays Limited or a Committee thereof CENVAT Central Value Added Tax EPS Earning Per Share Director(s) Director(s) of the Company unless otherwise specified EPS Earning Per Share FDI Foreign Direct Investment NAV Net Asset Value PAC(s) Person(s) Acting in Concert PBIT Profit Before Interest and tax Registered Office of the Company situated at TC-79/4, Veli, Registered Office of the Company Thiruvananthapuram (Kerala). SSI Small Scale Industry

Abbreviations

Terms Descriptions BOD Board of Directors of English Indian Clays Limited BSE Bombay Stock Exchange Limited CAF Composite Application Form CDSL Central Depository Services (India) Limited Committee of the Board of Directors of English Indian Clays Limited COD authorized to take decisions on matters related to / incidental to this Offer CRISIL The Credit Rating Information Services of India Limited FIPB Foreign Investment Promotion Board FEMA Foreign Exchange Management Act, 1999

5 English Indian Clays Limited

FI’s Financial Institutions GOI Government of India HUF Hindu Undivided Family NA Not Applicable NAV Net Asset Value NSDL National Securities Depository Limited RBI Reserve Bank of India

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SECTION II : RISK FACTORS Forward Looking Statements and Market Data

This LOF contains “forward-looking statements”. These forward looking statements can generally be identified by words or phrases such as “aim”, “anticipate”, “believe”, “except”, “ensure”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe the objectives, plans or goals also are forward-looking statements.

All forward looking statements are subject to risks, uncertainties and assumptions about the Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Important factors that could cause actual results to differ materially from the expectations include, among others:

• General economic and business conditions in India; • Company’s ability to meet the capital expenditure requirements and / or increase in capital expenditure; • The ability to successfully implement the strategy, growth & expansion plans and technological changes; • Changes in the value of the Rupee and other currency changes; • Changes in the foreign exchange control regulations, interest rates and tax laws in India. • The ability to retain and attract qualified personnel; • Fluctuations in the operating costs and impact on financial results; • Manufacturers’ defects or mechanical problems with Company’s plant & machineries or incidents caused by human error; • Changes in laws and regulations that apply to the customers of the Company and of user Industry and Company’s ability to respond to it; • Increasing competition in and the conditions of the customers of the Company and the user Industry in general; • Occurrence of natural disasters or calamities; • Changes in political conditions in India; • Any adverse outcome in the legal proceedings in which the Company is involved.

For a further discussion of factors that could cause Company’s actual results to differ, please refer to the sections titled “Risk Factors” (page 8), “Company Overview” (page 62) and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 146 of this LOF.

By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither the Company, the Directors, the Lead Manager nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, the Company and the Lead Manager will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchange.

The investors should consider the following risk factors together with all other information included in this LOF carefully, in evaluating the Company and its business before making any investment decision. Any projections, forecasts and estimates contained herein are forward looking statements that involve risks and uncertainties. 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”. If any of the following risks actually occur, the Company’s business, results of operations and financial condition could suffer, the trading price of the Company’s Equity Shares could decline, and the investor may lose all or part of his investment.

Use of Market Data Market data used throughout this LOF was obtained from internal Company reports. The information contained in this LOF has been obtained from sources believed to be reliable, but their accuracy and completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Although, the Company believes that the market data used in this LOF is reliable, it has not been independently verified. Similarly, internal Company reports and data, while believed to be reliable, have not been verified by any independent source.

Note: Unless specified or qualified in the relevant risk factors below, the Company is not in a position to quantify the financial or other implication of any risks mentioned herein under:

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RISK FACTORS

Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of the issuer and the offer including the risks involved. The securities have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this document. The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this LOF 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 the offer document 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 material 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.

Unless the context otherwise requires, references to the "Company" are to English Indian Clays Ltd on an unconsolidated basis. References to "fiscal year" are to the year ended March 31.

Materiality:

The Risk Factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality:

1. Some events may not be material individually but may be found material collectively.

2. Some events may have material impact qualitatively instead of quantitatively.

3. Some events may not be material at present but may be having material impacts in future.

RISK FACTORS SPECIFIC TO THE PROJECT AND INTERNAL TO THE COMPANY:

1. We have not commissioned an independent appraisal for cost of the Project and Deployment of proceeds to be raised through this Issue

Cost of the project and utilisation of proceeds of the Issue has been determined based on the management’s internal estimates. No bank or financial institution has appraised the use of proceeds to be raised by us through this Issue. No independent body will be monitoring the use of proceeds. The Company is professionally managed with persons having sufficient experience in the business and has estimated the funds requirement based upon plans to be implemented by the Company but the chances of variation in the implementation of the project may occur.

The amount raised through the Rights Issue shall be disclosed to the Audit Committee and the uses / applications of funds shall also be disclosed on a quarterly basis as a part of the quarterly declaration of financial results. For utilization of the issue proceeds, please refer to the “Objects of the Issue” beginning on page 36 of the Draft Letter of Offer.

2. Delay in supply of critical equipments required for the project may delay the implementation of the Project

There are many critical types of machinery such as Corn milling Machinery, Turbine, Boiler and others with long delivery periods of around 12 months. Any delay in supply of these equipments by the vendors may result into project delays and cost overruns.

Our Company has appointed M.N. Dastur & Company as Engineering Consultants who will jointly be responsible for vendor evaluation, selection, and commissioning of the project. In addition, stringent follow-ups with the suppliers by dedicated & professional project team will ensure that the project is completed in time with no cost overruns.

3. The proposed manufacturing facilities are subject to operating risks

8 English Indian Clays Limited

Such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, labor disputes, natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities The occurrences of any of these risks could significantly affect our operating results. Although we take precautions to minimize the risk of any significant operational issues at our manufacturing facilities, our business, financial condition and result of operations may be adverse effected by any disruption of operation of our facilities, due to any of the factors mentioned above.

4. Increase in the cost of expansion may impact the financials of our Company

In case there is any delay in implementation of the proposed expansion due to internal / external circumstances the cost of expansion may increase which may have an adverse impact on the business & financial condition and results of operations.

5. We are yet to receive certain Government approvals for our proposed expansion

We are yet to obtain some of the approvals / permissions as required for our proposed project. Among others, in relation to the implementation of the project, the company would require permissions and/or registrations under the following legislations or from the following authorities, which, although applied for are yet to be received like Registrations under the Factories Act, 1948, State Environmental Authority Clearance, State Pollution Control Board Consent Registrations under the Karnataka Added Tax Act. etc.

6. The implementation of the activities proposed under Objects of the Issue would be completed on raising the funds from the issue. Undue delay in raising the funds would delay the implementation of the proposed activities

7. Threat of Pests Impacting the Plantation Activity and hence availability of the main raw material

Crop loss in corn due to pests, diseases and weeds varies between 15 and 20 percent. During the last several decades, control of pests, diseases and weeds in cornfields is predominantly influenced by the use of synthetic chemicals. Though broad-spectrum pesticides offer powerful incentives in the form of good control, increased yield and high economic returns, they have serious drawbacks such as development of resistance to pesticides, resurgence of pests, and outbreak of secondary pests.

8. Corn plantation is Labour intensive

The harvesting season for corn in India lasts for months and the harvesting process is a time bound process, which requires a large work force. The Plantation Labour Act governs the employment of labour in the plantation industry. Wage Negotiation and Labour Policies of the Government play a vital role in determining the final cost of production. Starch Industry, being labour-intensive, requires good industrial relations for profitable operations. Any labour unrest may lead to loss of production and may negatively impact the Company’s profitability.

9. Demand Supply Position

The projected profitability of the unit depends on the demand supply position and starch prices in the domestic market. Any down turn in starch industry and the corresponding drop in starch prices may affect profit margins and other financials of the Company.

10. Inter-Unit Supply

30% of proposed new unit’s installed capacity will be supplied to the Puducherry starch unit of the Company, which predominantly caters to Textile industry. Any down turn in Textile Industry may adversely affect the performance of the proposed Shimoga unit.

11. Company’s capabilities and equipment may become obsolete

9 English Indian Clays Limited

Technological changes have transformed the global starch and clay industry. Such changes could potentially require capabilities and equipment, which we currently may not possess. We may be required to make significant investments to build such capabilities in our Company, which could bring further financial burden on the Company.

12. Presently we are dependent on limited number of clients

Company’s top 5 clients account for 29% of our turnover as on March 31, 2008. In future, our operations may get adversely affected if we are not able to source repeat business from these clients.

However the management perception to this risk is that a study to assess the overall starch market was undertaken by Feedback Consultants P. Ltd., which established a favorable demand supply position over the next 4 years. The Company has also moved up the value chain by manufacturing value added modified starches which insulates the Company from the fluctuation of commodity business. In addition, the Company’s project site at Shimoga is just 250 km away from the Mangalore port, which will facilitate exports to Middle East & African countries.

13. Company relies on contract Labour for the performance of many of our operations

The Company relies on contractors who engage on-site labourers for performance of many of our operations. In the event that these contractors default on their statutory obligations, the Company may be required to fulfill such obligations, which may impact our operations adversely.

14. Mishaps or accidents at our facilities could lead to property damage, injury, production loss and accident claims

Any mishap or accident at our production could result eventually in damages, which may result into loss to the Company. The Company could suffer loss of income; receive adverse publicity and experience diversion of management attention and resources in defending such damages. Any such significant event could have an adverse effect on our business, financial condition and results of operations.

15. Company is subject to competition

The Company has many competitors in the starch industry in India and overseas who may have better financial resources and execution capabilities than the Company and consequently greater capability to win contracts. Competition in the starch industry is often intense with respect to bidding for new contracts. Further, in most cases bidding takes place based on specifications provided by the client providing little scope for product differentiation. Most jobs are awarded based on ‘lowest’ bid thus making the business subject to intense competition.

16. Certain type of risks may not be covered under our existing insurance policies since these may be uninsurable or not economically insurable

We maintain insurance policies for our material assets. However, certain losses may arise due to assets being not economically insurable. Should an uninsured loss occur, we might need to incur significant investment to make good the loss. Further, our insurance premium for future policies could also increase. Such eventualities could have an adverse effect on our business, financial condition and result of operations.

17. Compliance with and changes in, safety, health and environmental laws and regulations may adversely affect our business, financial condition and results of operations

Depending upon the nature of the projects undertaken by our Company, environmental laws and regulations such as Environment Protection Act, 1986; Water (Prevention and Control of Pollution) Act, 1974; Air (Prevention and Control of Pollution) Act, 1981; Hazardous Waste (Management and Handling) Rules, 1989; and Hazardous Chemicals Rules, 1989 etc. may apply. If new safety, health and environmental regulations are introduced then there could be an effect on our operations, which cannot be predicted. Our failure to meet requirements could expose us to administrative, civil and criminal proceedings by governmental authorities, as well as civil proceedings by environmental groups and other individuals, which could result in substantial fines and penalties against us as well as orders that could limit or halt our operations.

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18. Our Company is involved in certain legal and regulatory proceedings that, if determined against our Company, could have a material / adverse impact on our Company

Our Company is party to various legal proceedings. These proceedings are pending at different levels of adjudication before various courts / other judicial forums, and if determined against us, could have an adverse impact on the business, financial condition and results of operations. No assurance can be given as to whether these matters will be ordered in our favour or against us. Nor can any assurance be given that no further liability will arise out of these claims. For further details of these litigations/ disputes/ cases, see the section titled “Outstanding Litigation and Material Developments” beginning on page 154 of this Letter of Offer.

19. There are certain legal proceedings against our Group Company

There are also certain cases under various statutes against our Group Company. Details of these litigations/disputes/cases initiated against our Promoter are contained under the section titled “Outstanding Litigation and Material Developments” beginning on page 154 of this Letter of Offer.

20. We have certain contingent liabilities

We have certain contingent liabilities, which if the Company is required to pay may adversely affect the financials of the Company:

AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs

a) Outstanding Bank Guarantees 178.43 237.40 208.95 167.19 193.50

b) Outstanding Letter of Credits 39.72 169.78 37.86 27.58 -

c) Bills and Cheques discounted 316.09 557.16 134.54 391.51 810.99

d) Indemnity Bond countersigned 247.72 249.85 249.85 249.85 249.85

Excise and Sales Tax matters e) (including penalty) 680.41 186.37 1,206.49 2,235.24 703.17

f) Entry Tax on Kerosene Oil 100.41 100.41 100.41 151.34 151.34

g) Income Tax Matters 146.92 379.94 481.18 493.15 682.55

h) Others 44.31 25.00 25.00 25.00 25.00

i) Claims against the Company not acknowledged as debts

i) Lease rent on lands acquired on 107.60 51.21 49.63 49.63 50.11 lease against which the case is pending before the Hon'ble High Court of Kerala ii) Rent (Net) 6.04 6.04 8.37 8.37 - j) Capital Commitments (Net of Advances) 378.25 65.66 148.36 1,852.03 2,225.84

For further information please see section titled “Financial Statement” on page 107 of this letter of offer. However, the amount of contingent liabilities is not material considering the size of our current operations.

21. Our customers generally do not enter into long term contracts

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Our customers generally do not enter into any long term contracts with us. Our ability to maintain close and satisfactory relationships with our customers and to consistently manufacture products that meet their requirements is therefore important to our business. There is no assurance that these customers will continue to purchase our products from us or that they will not scale down their orders. In the event that they are able to obtain similar products from our competitors at more favourable terms or for any other reason, our financial condition will be adversely affected.

22. We have not branded our products or patented any of our products or processes

The Company does not have any registered patent or branded products nor has any intellectual property rights over its products except three trademarks in the name of the Company as detailed at page no. 75 Therefore, the Company would be at risk if any dispute arises in future in this regard.

The characteristic of the industry in which we operate is that the clients depend on quality of the products and not on brands or trade marks. There are no patented processes used in this industry

23. EICL has not registered the logo as a trade mark

The company’s logo has not been registered. Therefore, potential misuse of the logo by others is not under our control and subjects us to commercial disadvantages.

24. Our failure to obtain and renew regulatory approvals required for our business may detrimentally affect our business operations

Certain registrations and permits are required by us for carrying on our business operations and if we are unable to obtain/ renew these registrations and permits the same may adversely impact our business operations. For the details of the approvals required for our business, which are currently pending, please refer to page 169 of this Letter of offer.

25. Our Promoter currently holds more than 75% of the issued and paid-up Equity Share capital of our Company

Clause 40A of Listing Agreement stipulates a minimum public shareholding of 25% in relation to a listed company. Presently our Promoters hold 79.91% of the total Equity Share capital of our Company and the public shareholding of our Company is less than 25%, In the event our Promoters do not reduce their shareholding in the Company to or less than 75% of the total Paid-up Equity Share capital of the Company so as to comply with the aforesaid clause, we may be subject to delisting of our Equity Shares from the Stock Exchange.

26. One of our Promoter Company is engaged in the same line of business as our Company

DBH International Pvt Ltd and EICL both are engaged in the business of clay mining. The mining activities are carried out by both the Companies for extraction of raw clay, which is used as a raw material for the processed China Clay manufactured by EICL. In such instances there could be a conflict of interest between our Company and DBH International Pvt Ltd.

27. Dependence on Key Management Team

The Company’s operations rely heavily on key employees. In case of shortage of key employees or high attrition of employees, its operations could be adversely affected. Successful performance of the business operations depends on its trained key managerial personnel and any sudden disruption in the services of these personnel may have an adverse impact temporarily affecting the smooth operation of the business.

However the management confirms that no Key Management Personnel have left the Company in the last one-year

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RISK FACTORS EXTERNAL TO AND BEYOND THE CONTROL OF THE COMPANY:

1. Political Instability or changes in Central or in the states in which we operate could adversely affect economic conditions

The political situation of the country significantly influences the overall aspects of the economy. The business of the Company, the market price and the liquidity of the shares of the Company may be affected by the interest rate fluctuations, changes in the Government policy, taxation, social and civil unrest.

2. Terrorist attacks and other acts of violence or war involving India, could adversely affect the financial markets, result in loss of customer confidence and adversely affect the business of the Company

Any communal disturbances, terrorist attacks and riots, deterioration in the relationship between India and other countries, or any social or civil unrest in the neighboring countries may influence the Indian Economy and could have a material adverse effect financials of the Company and on the market for equity shares of the Company.

3. Political, economic and social developments in India

Since 1991, the Government of India has pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector. The present Government consists of a coalition of political parties. Any changes in the economic policies by the Government could change specific laws and policies affecting foreign investment, currency exchange rates and other matters, which could adversely affect the investment in the equity shares of the Company.

4. Risk of Economic Slowdown will adversely affect our business

The Company proposes to sell its products mainly to corporate customers in India. Any down turn in the rate of economic growth in India and importing countries, whether due to political instability or regional conflicts, economic slowdown elsewhere in the world, or otherwise, may have a material adverse effect on demand for the products that the Company manufactures and markets.

5. Increasing employee compensation in India may erode some of our competitive advantage and may reduce our profit margins:

Employee compensation in India has historically been significantly lower than employee compensation in the developed countries for comparably skilled professionals. However, compensation increases in India may erode some of this competitive advantage and may negatively affect our profit margins. Employee compensation in India is increasing at a fast rate, which could result in increased costs relating to labours, managers and other mid-level professionals. We may need to continue to increase the levels of our employee compensation to remain competitive and manage attrition. Compensation increases may have a material adverse effect on our results of operation and financial condition.

6. Taxation policy of the government

Risks arising from changes in taxation policies, statutory taxes and other levies that affect the cost of production and our revenue generation capabilities. Any increase in any of these taxes or levies in the future, may have a material adverse impact on our business, results of operations and financial conditions.

RISKS RELATING TO THE EQUITY SHARES

1. Investors may not receive the Equity Shares and other instruments that they subscribe for in this Issue until 42 days after the date on which this Issue closes, which will subject them to market risk.

The Equity Shares investors purchase in this Issue will not be credited to their demat account with depository participants until approximately 42 days from the Issue Closing Date. Investors can start trading on such Equity Shares only after receipt of listing and trading approvals in respect of these shares. Since the Equity Shares are already listed on stock exchanges, investors will be subject to market risk from the date they pay for the Equity Shares to the date they are listed. Further, there can be no assurance that the Equity Shares

13 English Indian Clays Limited allocated to investors will be credited to their demat account, or that trading in the Equity Shares will commence within the time periods specified above.

2. Investors may be subject to Indian taxes arising out of capital gains.

Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian Company are generally taxable in India. Any gain realised on the sale of listed equity shares on a stock exchange held for more than twelve (12) months will not be subject to capital gains tax in India if Securities Transaction Tax ("STT") has been paid on the transaction. STT will be levied on and collected by a domestic stock exchange on which the equity shares are sold. Any gain realised on the sale of equity shares held for more than twelve (12) months to an Indian resident, which are sold other than on a recognised stock exchange and on which no STT has been paid, will be subject to long term capital gains tax in India. Further, any gain realised on the sale of listed equity shares held for a period of twelve (12) months or less will be subject to short term capital gains tax in India.

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

In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted until after those Equity Shares have been issued and allotted. Approval will require all other relevant documents authorizing the issuing of Equity Shares to be submitted. There could be a failure or a delay in listing the Equity Shares on the BSE.

4. Rights Exercise Price is not indicative of the future market price of equity shares of the Company

Rights Exercise Price shall be at a price of Rs. 1000 per share. The investors may also note that the price of Rs. 1000 per share should not be taken to be indicative of the market price of the equity shares, whether presently or after the equity shares that are issued upon the exercise of Rights are listed. No assurance can be given regarding the active / sustained trading in the equity shares or the price at which the Equity Shares offered under the present issue will be traded after listing.

Investors are advised to refer to the paragraph entitled “Basis for Issue Price” beginning on page No. 45 of this LOF.

Notes to Risk Factors:

1. This Issue is of 7,44,830 Equity Shares for cash at a premium of Rs. 990 per Equity Share on rights basis to the existing Equity Shareholders of the Company in the ratio of 1 fully paid up Equity Share for every 6 fully paid up Equity Shares held on the Record Date of [•] in terms of this LOF.

2. Net worth of the Company as on March 31, 2008 is Rs. 9057 lacs. The Issue is of an amount aggregating Rs. 7448.30 lacs.

3. The book value per Equity Share of the Company as on March 31, 2008 was Rs. 135.53 per Equity Share.

4. The Company has entered into certain related party transactions as disclosed in the section titled "Related Party Transactions" on page 127.

5. Before making an investment decision in respect of this Issue, investors are advised to refer to the section entitled "Basis for Issue Price" on page 45.

6. Trading in the Equity Shares, through the stock exchanges, for all investors shall be in dematerialised form only.

7. For transactions in Equity Shares by Directors of the Company in the last six months, please refer to the section entitled "Capital Structure" on page 26.

8. Other than as stated in this LOF, the Directors/Key Management personnel have no interest other than reimbursement of expenses incurred or normal remuneration or benefits.

14 English Indian Clays Limited

9. The Company and the Lead Managers are obliged to keep this LOF updated and inform the public of any material change/development.

10. The Lead Managers and the Company shall make any clarification or any information relating to the Issue available to the investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever.

The Lead Managers and the Company shall update this LOF and keep the shareholders/public informed of any material changes till the listing and trading commencement and the Company shall continue to make all material disclosures as per the terms of the listing agreement.

15 English Indian Clays Limited

SECTION III: INTRODUCTION

This is only a summary and does not contain all the information that investor should consider before investing in the equity shares. Investor should read the entire LOF, including the information contained in the chapters titled “Risk Factors” and “Financial Statements” and related notes beginning on pages 8 and 107 of this LOF before deciding to invest in the equity shares of the company.

INDUSTRY SUMMARY

EICL has two key business segments viz Clay Business and Starch Business with strong R&D set-up at all its three manufacturing locations.

Overview of the Clay and Starch Industry and Indian scenario

About the Clay Industry China Clay has several important applications in various industries such as Paint, Paper, Ceramics, Fiber Glass and Rubber etc. Good quality clay reserves are concentrated in few countries viz USA (Georgia), Brazil (Amazon) and India. Indian reserves are spread across Kerala, Rajasthan, Orissa, West Bengal & Gujarat. Kerala is known for high quality clay reserves. Total size of clay reserves in India is estimated at about 1042 million MT. Indian market size for processed clays is estimated at 240,000 TPA.

About the Starch Industry Starch is broadly classified into two categories i.e. traditional starch and specialty starch. The traditional starches and its derivates are native starch, liquid glucose, corn oil etc. which have its applications in food, pharma, textile, and paper industry etc. The specialty starches cater to textile, oil well drilling, aqua industry etc. The industry size for traditional starches and specialty starches in India is about 9,50,000 MTA.

Presence of English Indian Clays Limited The Company has its clay manufacturing plants at three different locations in Thiruvananthapuram (Kerala) where the clay mines owned by the Company are located. Mining license and the necessary approval for mining have been obtained from the Government of Kerala and the Government of India respectively. The installed capacity of the plants was 36,000 MT per annum initially and it has since been increased to 2,13,600 MT per annum as of date, estimating to appx. 70% market share in India.

The Company had taken over the Starch Business of erstwhile Bharat Starch Industries Limited (BSIL) in 2001, engaged in the business of manufacturing starch and its derivatives, glucose and modified starches etc. The starch business has two manufacturing divisions at Yamunanagar in Haryana and Puducherry. The Starch division at Yamunanagar can trace its origins back to 1937 when Late Lala Karam Chand Thapar promoted a Company by the name of Indian Starch & Chemicals Limited. The name of this Company was later changed to Bharat Starch Industries limited. The starch division at Puducherry was set up in 1994-95 to manufacture modified starches for industrial uses. The divisions have the distinction of being the only starch manufacturing company in India to have acquired ISO-9002 certification and DSIR recognised R & D centre. Current starch producing capacity of the Company is 1,01,040 MT per annum. EICL is a market leader in modified textile starch (56% domestic market share) and a significant player in traditional starch (6% domestic market share) with stable growth rates and reasonable profitability.

Restructuring of EICL

EICL recently demerged/hived off its Investments Division to Bharat Starch Products Ltd. (“BSPL”), proposed under a Restructuring Scheme approved by the Hon’ble High Courts of Kerala and Delhi vide their order dated 19-12-2007 and 14-01-2008 respectively. The scheme was envisaged to achieve the following business and commercial objectives for EICL and BSPL:

Demerger of the Investments Division would enable EICL to focus on and enhance its core manufacturing business operations by streamlining operations and cutting costs.

16 English Indian Clays Limited

The Scheme will enable both EICL and BSPL to rationalize and streamline their management, businesses and finances and to eliminate duplication of work to their respective advantage. The Scheme is beneficial to the companies, their shareholders, creditors, employees and all stakeholders and will enable both companies to achieve and fulfill their objectives more efficiently and economically. The Scheme will contribute in furthering and fulfilling the objects of both companies and in the growth and development of their business.

Products and its applications

The Company manufactures varieties of superior grade China Clay for diversified applications such as pigments, extender, filler and as raw material in different industries. Superior Coating Grade Kaolin is produced under the trade marks ‘Supercoat’, ‘Higloss’, ‘Hibrite’ and ‘BCK’ in the form of lumps, powder, and pre-dispersed Spray Dried Powder; Filler and Coating Grade Clay under trade mark ‘KCG’ as lumps, powder, and pre-dispersed Spray Dried Powder. Calcined Clay, used as a substitute for Titanium Dioxide in Paints, Paper, Detergents, and other grades, is also manufactured by EICL to cater to niche markets.

As pigment and extender, China Clay it is used extensively in the paper and paints industry. As filler, it is used in the manufacture of plastics, detergents, rubber goods and paper; as raw material, it is used by glass and ceramic industries for making fiberglass and porcelain respectively. As additive, it is used by the soap industry and it is also used by the paper industry for specialty coating purposes as well in order to impart strength and shine and water repellent characteristics to the paper.

Starch is used in the paper industry to increase the strength of paper-sheet & to improve the drainage, make paper less porous, for giving gloss, whiteness & smoothness to the paper. It is used to provide brightness & sharpness to the print and it is used as a bonding agent.

In the textile industry, Starch is used to impart an abrasion resistance capacity to yarn and yarn to loom. It is an excellent fibre binder, both for natural and for synthetic fibre, gives high colour yield with sharp and bright prints, imparts weights to the fabrics, compatible to thermoses resins and acts as a good finishing agent for cotton and blended yarns.

In food industry it acts as thickener or body developer, improves the texture of the food products. Corn Syrup and allied products are used in production of hard-boiled candies, soft candies, chewing gums, bubble-gums, toffees, lozenges, and in breweries as a good fermentation medium and flavour and texture provider.

In pharmaceutical industry it acts as a carrier of the medicines. In tablets it is the main filler and acts as a Tablet disintegrate. The main use of the by products is as cattle feed.

17 English Indian Clays Limited

The Issue

Equity Shares proposed by the Company 7,44,830 Equity Shares Face Value Each Equity Share shall have the face value of Rs. 10/- each. Issue Price Each Equity Share is being offered at a price of Rs. 1000/- each.

Entitlement Ratio The Equity Shares are being offered on Rights basis to the existing Equity Shareholders of the Company in the ratio of 1 (One) Equity Share for every 6 (Six) Equity Shares held as on the record date i.e. [.] . Equity Shares outstanding prior to the Issue 44,68,979 Equity Shares Equity Shares outstanding after the Issue 52,13,809 Equity Shares Market Lot The market lot for the Equity Share is 1.

Terms of Payment 100% of the issue price i.e. Rs. 1000/- shall be payable on Application. Fractional Rights entitlement to be rounded off to the nearest higher integer if equal to or more than half and to be ignored if less than half.

Fractional Entitlements Equity Shareholders holding less than 3 (Three) Equity shares will not be entitled for any Equity Shares under the Rights Issue and shall be dispatched a CAF with zero entitlement. However, such shareholders are eligible to apply for additional 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 including dividends with the existing Equity Shares of the Company Ranking of the Equity Shares from the date of allotment.

For more information, see “Section VIII – Offering Information” Terms of the Issue beginning on page 178 of this Letter of Offer.

18 English Indian Clays Limited

SUMMARY STATEMENT OF ASSETS AND LIABILITIES AS RESTATED

AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs 1 Fixed Assets Gross Block 14,299.70 16,538.63 17,822.92 19,549.48 21,338.86 Less: Accumulated Depreciation 2,305.65 2,941.62 3,613.67 4,385.14 5,232.79 Net Block 11,994.05 13,597.01 14,209.25 15,164.34 16,106.07 Capital work in progress (including Capital advances) 978.36 170.14 238.97 561.68 2,594.24 12,972.41 13,767.15 14,448.22 15,726.02 18,700.31 2 Investments – Demerged w.e.f. April 1, 2007 (Refer Note 4 (c) of Annexure III B) 4,446.14 4,437.40 1,785.58 4,554.80 -

Current Assets, Loans and 3 Advances Inventories 1,967.29 2,209.21 2,415.28 3,502.91 3,485.11 Sundry Debtors 1,592.00 1,691.61 1,987.59 2,710.87 3,080.91 Cash and Bank Balances 399.59 510.92 1,423.14 579.19 692.76 Loans and Advances 758.71 811.25 2,560.52 1,152.32 1,336.33 Other Current Assets 10.30 306.07 47.42 9.22 10.25 4,727.89 5,529.06 8,433.95 7,954.51 8,605.36

4 Liabilities and Provisions Secured Loans 9,860.10 9,595.50 9,022.19 8,332.81 10,500.10 Unsecured Loans 1,270.18 1,226.31 1,125.17 1,005.60 1,106.97 Current Liabilities 2,010.89 2,207.91 2,204.52 3,137.04 3,329.47 Provisions 459.92 843.67 1,186.40 1,628.73 1,919.93 Deferred Tax Liability 843.91 1,228.70 1,322.58 1,336.67 1,387.43 Deferred Government Grants 11.44 9.77 8.10 6.44 4.77 14,456.44 15,111.86 14,868.96 15,447.29 18,248.67

5 Net Worth (1 + 2 + 3 - 4) 7,690.00 8,621.75 9,798.79 12,788.04 9,057.00

6 Represented By Share Capital 1,446.90 1,446.90 1,446.90 3,446.90 3,446.90 Reserves & Surplus 6,259.00 7,185.45 8,357.19 9,341.14 5,610.10 Less: Miscellaneous Expenditure to be written off 15.90 10.60 5.30 - -

Net Worth 7,690.00 8,621.75 9,798.79 12,788.04 9,057.00

19 English Indian Clays Limited

SUMMARY STATEMENT OF PROFITS AND LOSSES AS RESTATED

FOR THE YEAR ENDED MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Income

Gross Sales - of products manufactured by the Company 14,841.14 17,003.21 20,722.38 25,230.11 27,785.83 - of products traded in by the Company 16.65 22.61 20.54 29.13 - 14,857.79 17,025.82 20,742.92 25,259.24 27,785.83 Less: Excise duty on manufactured goods 805.92 909.56 1,141.86 1,257.40 1,143.31 Net Sales 14,051.87 16,116.26 19,601.06 24,001.84 26,642.52 Other Income - Recurring 51.96 91.62 83.34 63.10 99.37 - Non - Recurring 256.93 975.79 861.24 268.29 35.61 Increase/(Decrease) in Inventories 89.53 (66.01) 63.03 49.34 343.12 14,450.29 17,117.66 20,608.67 24,382.57 27,120.62

Expenditure Material Cost 4,540.67 5,066.43 6,867.66 8,400.82 9,152.02 (including Clay mining & processing expenses) Other Manufacturing Expenses 4,186.63 5,021.64 5,725.50 7,131.84 8,456.85 Staff Costs 1,442.35 1,515.19 1,630.01 2,013.91 2,263.64 Administration Expenses 697.25 910.15 1,082.31 1,062.38 1,094.99 Research & Development Expenses 52.12 64.00 79.25 83.78 102.88 Selling and Distribution Expenses 722.82 801.05 1,007.73 1,085.21 969.80 Interest 1,024.82 1,189.90 991.99 967.67 1,170.66 Depreciation 555.74 667.61 750.66 783.73 895.90

Net Profit after Extraordinary items 789.75 1,422.40 1,795.34 1,849.64 1,909.42 Profit / (Loss) brought forward from previous year 440.44 441.41 367.86 539.60 762.23 Amount Available for Appropriation 1,230.19 1,863.81 2,163.20 2,389.24 2,671.65 Appropriations: Dividend - Preference Shares 121.91 100.00 100.00 225.97 320.00 - Equity Shares 134.07 335.17 446.90 312.83 312.83 Tax on Dividend 32.80 60.78 76.70 88.21 107.55 Transfer to General Reserve 500.00 1,000.00 1,000.00 1,000.00 193.91 Balance carried to Balance Sheet 441.41 367.86 539.60 762.23 1,737.36

20 English Indian Clays Limited

GENERAL INFORMATION

EICL was incorporated on 18 th November 1963, in technical and financial collaboration with English China Clays Limited, UK (now known as ECC Group plc, UK). This collaboration with ECC ceased in the year 1992. EICL has since been actively engaged in the manufacture and processing of China Clay of different grades for use as a coating agent and filling agent. The Company has its clay manufacturing units at Veli, Thonnakkal and Kollam located in Thiruvananthapuram, Kerala. The Company acquired the starch business of erstwhile Bharat Starch Industries Limited (BSIL) in the year 2002, pursuant to the Scheme of Reorganization by way of Arrangement, Amalgamation and Reconstruction between English Indian Clays Limited (EICL or the Company), BILT Bio Chemicals Ltd. (BBCL) and Bharat Starch Industries Limited (BSIL) and Scheme of Reconstruction of Bharat Projects Limited (BPL) as approved by the Hon’ble High Court of Gujarat, Kerala and Delhi.

Registered Office: TC-79/4, Veli, Thiruvananthapuram (Kerala) – 695021 Tel: 0471 2741133 / 2741433 / 2741633, Fax : 0471- 2742273, Email ID: [email protected]

Company Registration No.: 09-002039

Company Identification No.: L26939KL1963PLC002039

Registrar of Companies, Kerala : Ministry of Corporate Affairs, Company Law Bhawan, BMC Road, Thrikkakara, Kochi, Kerala 682 021

The Equity Shares offered are proposed to be listed at Bombay Stock Exchange Limited (Designated Stock Exchange). The Company has received in principle approval from BSE for the listing of the Equity Shares being offered through this Rights Issue vide their letter No. [.] dated [.] .

Dear Shareholder(s)

Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on January 25, 2008, it has been decided to make the following offer to the Equity Shareholder of the Company, with a right to renounce.

ISSUE OF 7,44,830 EQUITY SHARES OF RS 10 EACH FOR CASH AT PREMIUM OF RS. 990 PER SHARE ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF 1 (ONE) EQUITY SHARE FOR EVERY 6 (SIX) EQUITY SHARES HELD ON RECORD DATE i.e. [.] AGGREGATING TO RS. 74,48,30,000/- (RS. SEVENTY FOUR CRORE FORTY EIGHT LACS THIRTY THOUSAND ONLY)

Important

1. This offer is applicable only to those Equity Shareholders whose names appear as beneficial owners in respect of the Equity Shares held in the electronic form and on the Register of Members of the Company in respect of the Equity Shares held in physical form as on the Record Date fixed in consultation with the Designated Stock Exchange i.e. BSE.

2. Investors’ attention is drawn to “Risk Factors” appearing on page no. 8 of this LOF.

21 English Indian Clays Limited

3. Please ensure that investors have received the Composite Application Form (‘ CAF ’) along with this LOF. In case the original CAF is not received, lost or misplaced by the shareholder, the Registrar will issue a duplicate CAF on the request of the shareholder who should furnish the registered folio number/DP ID/client ID number and his/her full name and address to the Registrar. Please note that those applicants who are making the application in the duplicate CAF should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. In case the original and the duplicate CAFs are lodged for subscription, allotment will be made on the basis of the duplicate CAF and the original CAF will be ignored.

4. Please read this LOF and the instructions contained therein and in CAF carefully, before filling in the CAF. The instructions contained in the CAF are an integral part of this LOF and must be carefully followed. Application is liable to be rejected for any non-compliance with the terms of this LOF or the CAF.

5. All enquiries in connection with this LOF or CAF should be addressed to the Registrars to the Issue, RCMC Share Registry Pvt Limited quoting the registered folio number / Depository Participant (DP) Number and Client ID Number and the CAF numbers, as mentioned in the CAF.

6. The Issue will be kept open for a minimum period of thirty days. If extended, it will be kept open for a maximum period of sixty days.

7. Lead Manager and the Company shall update this LOF and keep the public informed of any material changes till the listing and trading commences for Equity Shares offered through this Issue.

ISSUE SCHEDULE

The subscription will open upon the commencement of the banking hours and will close upon the close of banking hours on the dates mentioned below:

Last Date For Request For Split Issue Opens On Application Forms Issue Closses On [.] [.] [.]

Board of Directors

The Board of Directors of English Indian Clays Limited

Name Age Qualification Address Designation

8, Cedar Avenue, DLF Chatterpur, New Mr. Karan Thapar 51 ACA Delhi – 110 030 Chairman B-24 (Rear), Greater Kailash – I, New Mr. Dellinder Kohli 62 BA Delhi – 110 048 Managing Director 192, Sector-21B, Faridabad – 121 001, Director Mr. Som Nath Dua 67 FCA & FCS Haryana Mr. Suresh Kumar B-255, Greater Kailash – I, New Delhi – Toshniwal 62 B.Com 110 048 Director Mr. Shankara Pillai “Sansar”, Jawahar Nagar Road, Padmakumar 74 MA Thiruvananthapuram – 695 041, Kerala Director House No.C-018, GAIL Employees Coop. Group Housing Society, Plot Mr. Jainender Kumar Chartered No.GH-9, Sector-56, Gurgaon – 122 Director Jain 62 Accountant 003, Haryana (ICICI Nominee) 4A, Cleave House, 90, Wod House Mr. Vijay Rai 61 B.Tech Road, Colaba, Mumbai – 400 005 Director

22 English Indian Clays Limited

Brief details of each member of the Board:

1. Mr. Karan Thapar, Chairman

Mr. Karan Thapar, Chairman of the Company aged 51 years, is a Chartered Accountant and belongs to the Promoter family. He joined the Board of the Company in the year 1990. He has working experience in different companies for over 26 years.

2. Mr. Dellinder Kohli, Managing Director

Mr. D. Kohli, aged 62 years, is a retired Wing Commander of Indian Air Force and associated with the Company since 1992. Mr. D. Kohli has been looking after the affairs of the Company for the last 16 years in different positions of the Company.

3. Mr. Som Nath Dua

Mr. S.N. Dua aged 67 years is a Fellow Member of Institute of Chartered Accountants of India and Institute of Company Secretaries of India. He has working experience in different companies for over 43 years. During this period, he held various position in different companies in the area of Financial Re-Structure/Resources Management, Cost Control management, HRD Initiatives, Business Environment Management, Foreign Collaboration and Joint Ventures etc.

4. Mr. Suresh Kumar Toshniwal

Mr. S.K. Toshniwal aged 62 years, is a Commerce Graduate having working experience of over 29 years in different areas such as production, quality control, marketing and administration in different companies. He is member of different trade organizations and holds directorship in various companies.

5. Mr. Shankara Pillai Padmakumar

After a distinguishing academic career leading to Masters Degree from Delhi School of Economics, Mr. Padmakumar entered the Indian Administrative Service in the year 1957. Assigned to the Kerala Cadre, after the standard field tenures in sub divisions and districts, he has headed as CMD, public sector undertakings like the Travancore Titanium Products and the Industrial Development Corporation, served as Secretary to Government in Revenue, Finance, Industry etc. departments and as First Member, Board of Revenue, before retiring in 1992 as Chief Secretary. During this period, he had also served as Chairman and/or Director on the Boards of a number of State and Central undertakings and public companies, as Government nominee. He continues to serve as an independent Director on the Boards and Governance committees of over half a dozen well known Public companies. Mr. S. Padmakumar is associated with the Company from 1993 as a Director on the Board of the Company.

6. Mr. Jainender Kumar Jain

Mr. J.K. Jain, aged 62 a Chartered Accountant retired from Gas Authority of India Ltd. (GAIL) as Director (Finance). He was nominated on the Board by ICICI Bank Ltd.

7. Mr. Vijay Rai

Mr. Vijay Rai is B.Tech in Mechanical Engineering from I.I.T., Kharagpur. He has rich experience of over 38 years in different Industries including Industrial Chemicals, Pharmaceuticals and Engineering. He was the Vice President of Bombay Chamber of Commerce & Industry and member of several industry association. He has been associated with the Company from the year 2000.

23 English Indian Clays Limited

ISSUE MANAGEMENT TEAM

BANKERS TO THE COMPANY LEGAL ADVISOR

Axis Bank Limited Rajeev Goel & Associates Statesman House, 138-A, Pocket – F, 148, Barakhamba Road, Mayur Vihar – II, New Delhi -110001 New Delhi – 110091 Tel: 011-22725301 Oriental Bank of Commerce Fax: 011-22725301 Industrial Finance Branch, Email ID : [email protected] H-36, Connaught Circus, New Delhi – 110001 COMPLIANCE OFFICER

State Bank of India Mr. P S Saini, Company Secretary Overseas Branch, English Indian Clays Ltd. Jawahar Vyapar Bhawan, Global Business Park, 801-803, 1, Tolstoy Marg, Tower-B, 8 th Floor, New Delhi – 110001 Mehrauli-Gurgaon Road Gurgaon-122 001 (Haryana) State Bank of Indore Tel: 0124-2803379-82 Commercial Branch, Fax: 0124-2803372 Mittal Court, B Wing, Email ID: [email protected] Ground Floor, Nariman Point, Mumbai - 400021

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

PNR Securities Limited R-5, Green Park Market,

Relan House, M/s RCMC Share Registry Pvt. Ltd. New Delhi-110 016 B-106, Sector – 2, Noida, Tel: 011-42009000 Uttar Pradesh - 201301 Fax: 011-41755800 Tel : 0120-4015880 Email: [email protected] Fax: 0120-4015886 Contact Person: Ms Aruna Sharma E-mail: [email protected] SEBI Registration No: INM000000727 Contact Person: Mr. Rakesh Adhana Sebi Registration No: INR000000429

BANKERS OF THE ISSUE AUDITORS OF THE COMPANY

Price Waterhouse, Chartered Accountants Building 8, 7 th & 8 th Floor Tower B, DLF Cyber City, Axis Bank Gurgaon – 122002. Axis Bank Limited Tel: 0124-4620000, 3060000 Statesman House, Fax: 0124-4620620 148, Barakhamba Road, Email: [email protected] New Delhi -110001 Contact Person: Avijit Mukerjee (Partner, Tel: 011-43506500 Price Waterhouse) Fax: 011-43506565 Email: [email protected] Contact Person: Anurag Gupta

Note: The Registrar to the Issue is not an Associate of the Issuer Company. The investors are advised to contact the Registrar / Compliance Officer to the Issue/ Company in case of any Pre-Issue / Post- Issue related queries such as non-receipt of LOF/ Letter of Allotment / share certificates / refund orders, etc. Mr.P.S Saini, Company Secretary of the Company has been appointed as the Compliance Officer for the captioned Rights Issue and will be in charge of handling all investors’ grievances and redressal of complaints, if any, pertaining to the

24 English Indian Clays Limited securities of English Indian Clays Limited being offered through the Rights Issue and thereby listed at Bombay Stock Exchange Limited.

Inter se Allocation of Responsibilities As there is only one Lead Manager to the issue, inter se allocation is not applicable.

Credit Rating This being an Issue of Equity Shares on Rights basis, no credit rating is required.

Trustees Since the present issue is of Equity Shares, appointment of Trustees is not required.

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 the rates prescribed under sub – Sections (2) and (2A) of Section 73 of the Companies Act, 1956.

Monitoring Agency No outside independent monitoring agency has been appointed in this issue. However Board of Directors will devote their best attention to utilize the proceeds to implement the project as per implementation schedule.

Appraising Entity Any Bank / Financial Institution has not appraised the proposed Project of the Company. Requirements of the project have been estimated and ascertained by the management of the Company.

Underwriting and Standby Arrangement Present Rights Issue is not underwritten. While the Promoters, the Directors and Persons acting in concert have confirmed their intention to subscribe to their rights entitlement, some of them may renounce with a view to comply with the provisions of Clause 40A of the Listing Agreement, relating to minimum levels of public shareholding in a listed Company.

25 English Indian Clays Limited

CAPITAL STRUCTURE

The capital structure of the Company and related information is set forth below. For the purpose of this chapter bracketed numbers indicate negative figures. Rs. in Lacs Aggregate Aggregate Nominal Value Value at Issue Price Authorized Share Capital 80,00,000 Equity Shares of Rs. 10/- each 800.00 30,00,000 Preference Shares of Rs. 100/- each 3000.00 Total 3800.00 Issued, Subscribed and Paid Up Share Capital 44,68,979 Equity Shares of Rs. 10/- each fully paid 446.89 up 10,00,000 10% Cumulative Redeemable Preference 1000.00 shares of Rs. 100/- each fully paid up 20,00,000 11% Cumulative Redeemable Preference 2000.00 Shares of Rs 100/- each fully paid up Total 3446.89 Present issue being offered to the Equity Shareholders through this LOF 7,44,830 Equity Shares of Rs. 10/- each at a price 74.48 7448.30 of Rs. 1000/- per share Paid Up capital after the Issue 52,13,809 Equity Shares of Rs. 10/- each fully paid 521.38 up 10,00,000 10% Redeemable Preference shares of 1000.00 Rs. 100/- each fully paid up 20,00,000 11% Redeemable Preference Shares of 2000.00 Rs 100/- each fully paid up Total 3521.38 Share Premium Account Existing Share premium account 0 Share premium account after the issue 7373.82

Note: a. Post Issue shareholding is based on the assumption that all shareholders (including promoters) will subscribe in full to their entire Rights entitlement.

b. As, the Promoters currently hold 79.91% of the pre-issue equity share capital of the Company. The Company presently does not comply with the provisions of Clause 40A of the Listing Agreement, relating to minimum levels of public shareholding in a listed Company.

The Company, by a letter dated April 2, 2008 to the BSE, where the shares of the Company are listed, has requested for grant of time upto December, 2008 to comply with the requirements of Clause 40A of the Listing Agreement requiring the Company to bring down the promoters holding below 75%. While the promoters have confirmed their intention to subscribe to their rights entitlement, some of them may renounce with a view to comply with the above mentioned continuing listing requirements.

In the event that the Company does not receive the minimum subscription of 90% of the Rights Issue, the Company undertakes to refund the entire subscription to the applicants within 42 days from the date of the closure of the Rights Issue as per the guidelines.

26 English Indian Clays Limited

NOTES TO CAPITAL STRUCTURE

1. Details of Changes in Authorized Share Capital

Authorized Capital after Date From To enhancement (Rs.) On Incorporation - 30,00,000 30,00,000 30-09-1981* 30,00,000 30,00,000 30,00,000 20-08-1991 30,00,000 3,00,00,000 3,00,00,000 5-11-1993 3,00,00,000 5,00,00,000 5,00,00,000 26-08-2002 5,00,00,000 18,00,00,000 18,00,00,000 31-08-2006 18,00,00,000 38,00,00,000 38,00,00,000

*the face value of the equity share of Rs 100/- each was sub-divided into face value of Rs 10/- each w.e.f September 30, 1981

2. Further issue of 7,44,830 Equity Shares has been authorized by a resolution adopted pursuant to Section 81 of the Companies Act 1956, at the meeting of the Board of Directors held on January 25, 2008.

3. Capital History of the Company

Build up of Paid-up Equity Share Capital of the Company since incorporation is follows:

Cumulative Cumulati Paid -up No. of Face Issue Date of ve No. of Conside Equity Equity Value Price Nature of allotment Allotment Equity ration Share Shares (Rs.) (Rs.) Shares Capital (in Rs.) On 7 7 100 100 Cash 700 Signatories to the Incorporation Memorandum of Association for cash 20-05-1965 14,993 15,000 100 100 Cash 15,00,000 Further issue of shares on Preferential Allotment basis 07-08-1965 15,000 30,000 100 100 Other 30,00,000 Further issue of shares than on Preferential Allotment cash basis to M/s ECC International Ltd. for import of technical know how and plant & machinery One equity share of Rs 100/- each was sub-divided into ten equity shares of Rs 10/- each w.e.f September, 30, 1981 20-11-1992 11,97,58 14,97,580 10 35 Cash 1,49,75,800 Right Issue to the 0 existing shareholders as per the Letter of Offer dated September 12, 1992 (4 equity shares for every one equity share in the Company) 20-11-1992 10,450 15,08,030 10 35 Cash 1,50,80,300 Shares Allotted to permanent employees as per the Letter of Offer

27 English Indian Clays Limited

dated September 12, 1992 20-11-1992 2420 15,10,450 10 35 Cash 1,51,04,500 Further Issue of shares on preferential basis 30-11-1993 15,10,45 30,20,900 10 Nil NA 3,02,09,000 Issue of Bonus Shares 0 in the ratio of 1:1 by capitalization of General Reserves 01-02-1994 8,00,000 38,20,900 10 100 Cash 3,82,09,000 Issue of shares on conversion of partly convertible debentures 12-08-2002 6,48,079 44,68,979 10 Nil NA 4,46,89,790 Issued to the shareholders of erstwhile Bharat Starch Industries Ltd pursuant to the Scheme of Re- organization by way of Arrangement, Amalgamation and Re- construction between Bharat Starch Industries Ltd, BILT Bio-Chemicals Ltd, Bharat Projects Ltd and English Indian Clays Ltd.

28 English Indian Clays Limited

Build up of Paid-up Preference Share Capital of the Company since incorporation is as follows: Cumulative Issue/ Paid -up Face Date of No. of Redempti Consid Pref Share Allotment/ Redemption Value Allotment Shares on Price eration Capital (Rs.) (Rs.) (Rs.)

30-09-2002 Allotment of 12% Optionally 10,00,000 100 100 Cash 10,00,00,000 Convertible Redeemable Preference Shares allotted to Marble Arch Investments PCC Ltd, Mauritius 25-03-2004 Allotment of 10% 10,00,000 100 100 Cash 20,00,00,000 Cumulative Preference Shares allotted to Marble Arch Investments PCC Ltd, Mauritius redeemable at par at the option of the Company not earlier than 3 years but not later than 5 years from the date of allotment 31-03-2004 Redemption of 12% (10,00,000) 100 100 Cash 10,00,00,000 Optionally Convertible Redeemable Preference Shares allotted to Marble Arch Investments PCC, Mauritius 04-09-2006 Allotment of 11% 20,00,000 100 100 Cash 30,00,00,000 Cumulative Preference shares allotted to DBH International Pvt Limited redeemable at par at the option of the Company not earlier than 18 months but not later than 5 years from the date of allotment

4. Shareholding pattern before and after the offer

SNo. Particulars Pre Issue Post Issue** % of % of No. of issued No. of issued Shares Capital Shares Capital A Promoters 1 Indian (a) Individual / HUF Mr. B.M. Thapar 3000 0.07 3500 0.07 Mrs. Sulochana Thapar 1000 0.02 1167 0.02 Mr. Karan Thapar 6000 0.13 7000 0.13 Mr. Karan Thapar and jtly others 400 0.01 467 0.01 Sub Total A 1 (a) 10,400 0.23 12,134 0.23

(b) Central Government / State Government(s) - - - - (c) Bodies Corporate DBH International Pvt. Ltd. 2168778 48.53 2530241 48.53 Karun Carpets Pvt. Ltd. 1235500 27.65 1441416 27.65

29 English Indian Clays Limited

Bharat Projects Pvt. Ltd. 156399 3.5 182466 3.5 Sub Total A 1 (b) 3560677 79.68 4154123 79.68 (d) Financial Institutions/Banks - - - - (e) Any Other - - - -

Sub Total A 1 3571077 79.91 4166257 79.91

2 Foreign (a) Individual / HUF - - - - (b) Central Government/State Government(s) - - - - (c) Bodies Corporate - - - - (d) Financial Institutions/Banks - - - - (e) Any Other - - - -

Sub Total A 2 - - - -

Total shareholding of Promoters A = A 1 + A 2 3572077 79.91 4167423 79.91

B Public Shareholding 1 Institutions (a) Mutual Funds/UTI 2000 0.04 2333 0.04 (b) Financial Institutions/Banks - - - - (c) Central Government/State Government(s) - - - - (d) Venture Capital Funds - - - - (e) Insurance Companies - - - - (f) Foreign Institutional Investors 298998 6.69 348831 6.69 (g) Foreign Venture Capital Investors - - - - (h) Any Other - - - -

Sub Total B 1 300998 6.74 351164 6.74

2 Non Institutions (a) Bodies Corporate 91704 2.05 106988 2.05 (b) Individuals (i) Individual shareholders holding nominal share capital up to Rs. 1 lakh. 460471 10.3 537216 10.3 (ii) Individual shareholders holding nominal share capital in excess of Rs. 1 lakh 12000 0.27 14000 0.27 (c) Any Other (i) Clearing Members 25187 0.56 29385 0.56 (ii) Non Residents 6518 0.15 7604 0.15 (iii) Trust 1024 0.02 1195 0.02

Sub Total B 2 596904 13.36 696388 13.36

Total Public Shareholding B = B 1 + B 2 897902 20.09 1047522 20.09

Shares held by Custodians and against which Depository Receipts C have been issued - - - -

Grand Total A + B + C 4468979 100.00 5213809 100.00

30 English Indian Clays Limited

** Note: Post Issue shareholding is based on the assumption that the respective categories will subscribe to the extent of 100% of their Rights entitlement. However, as the Promoters currently hold 79.91% of the pre-issue equity share capital, the Company presently does not comply with the provisions of Clause 40A of the Listing Agreement, relating to minimum level of public shareholding in a listed Company.

5. Top ten largest shareholders as on 16-05-2008 being the date of filing of the LOF with SEBI, are as follows:

Sr. No. Name of the Shareholder Number of % of Issued Shares Capital 1 DBH International Pvt. Ltd. 2168778 48.53% 2 Karun Carpets Pvt. Ltd. 1235500 27.65% 3 Lotus Global Investments Ltd. 298998 6.69% 4 Bharat Projects Pvt. Ltd. 156399 3.50% 5 Angel Broking Ltd. 14969 0.33% 6 I.M. Thapar 12000 0.27% 7 Arjun Thapar 9000 0.20% 8 Raghunath Vishwanath Deshpande 8000 0.18% 9 Karan Thapar 6000 0.13% 10 V.M. Thapar 6000 0.13%

6. Top ten largest shareholders as on 06-05-2008, being 10 days prior to the date of filing of the LOF with SEBI, are as follows:

7. Top ten largest shareholders 2 years prior to the date of filing of the LOF with SEBI is as follows i.e. 16-05-2006.

Sr. No. Name of the Shareholder Number of % of Issued Shares Capital 1 DBH International Pvt. Ltd. 1743969 39.02 2 Karun Carpets Pvt. Ltd. 1380091 30.88

31 English Indian Clays Limited

3 Nilkash Investments & Holdings Ltd. 400000 8.95 4 PNR Securities Ltd. 220813 4.94 5 Lotus Global Investments Ltd. 172050 3.85 6 Bharat Projects Pvt. Ltd. 156399 3.50 7 Dome Investments Ltd. 126948 2.84 8 Abhishek Finance Co. Ltd. 45000 1.01 9 Deoria Sugar Mills Ltd. 32000 0.71 10 Karamchand Thapat & Bros. Ltd. 24809 0.56

8. The Issuer Company has not made any public offering within the immediately preceding two years.

9. Shareholding pattern of the promoter group and of the directors of the promoters as on 31 March 2008.

Particulars No. of % of Present Equity Equity Shares

Promoters Mr. B.M. Thapar 3000 0.07 Mrs. Sulochana Thapar 1000 0.02 Mr. Karan Thapar 6000 0.13 Mr. Karan Thapar & jtly others 400 0.01 DBH International Pvt. Ltd. 2168778 48.53 Karun Carpets Pvt. Ltd. 1235500 27.65 Bharat Projects Pvt. Ltd. 156399 3.5 Total (A) 3571077 79.91

Promoter Group - - Total (B) - -

Total Promoter Group Shareholding (A + B) 3571077 79.91

Director of the Promoter Company Mr S.N. Dua 200 -

Total (C) 200 -

Total Shareholding of the Promoter Group and directors 3571277 79.91 of the Promoter (A + B + C)

10. Promoter Group, directors/promoter entites of the Company have entered into purchase or sale transactions of the Company’s shares during the period of six months preceding the date on which the LOF is filed with the Board, as under: Average Aggregate Numer of Price per gross value Sno. Name Transaction Date Shares equity share (In Rs.)* 1 Mrs. Sulochana Thapar Market Sale 17.01.2008 1000 3412 3412000 Market Sale 16.01.2008 250 3249.65 812412 2 Mr. Vijay Rai Market Sale 17.01.2008 500 3412.1 1706050 Market Sale 18.01.2008 250 3582.7 895675

32 English Indian Clays Limited

Market Sale 10.12.2007 3000 1,667.54 5002620 Market Sale 11.12.2007 3785 1,721.48 6515802 Market Sale 12.12.2007 2000 1,718.33 3436660 Market Sale 17.12.2007 10306 1,759.10 18129285 3 Karun Carpets Pvt. Ltd. Market Sale 27.12.2007 8269 1,764.43 14590072 Market Sale 28.12.2007 3168 1,780.22 5639737 Market Sale 31.12.2007 23563 1,847.33 43528637 Market Sale 01.01.2008 43000 1,942.05 83508150 Market Sale 02.01.2008 72000 1,925.32 138623040 *Excluding brokerage

11. There is no Employees Stock Option Scheme or Employees Stock Purchase Scheme of Issuer Company. 12. The total number of members / shareholders of the Company as on 31 st March 2008 is 16,974. 13. The Equity shares to be issued through this Issue would be made fully paid up at the time of the Issue and there are no Calls in this Issue. 14. The Aggregate Shareholding of the Promoter Group is 3,571,077 Equity Shares forming 79.91% of the total Issued and Paid-up Share Capital as on 31 st March 2008. 15. The promoters vide their letters of intent dated May 14, 2008 have confirmed that they intend to subscribe to the promoters entitlement. However, as the Promoters currently hold 79.91% of the pre-issue equity share capital of the Company, the Company presently does not comply with the provisions of Clause 40A of the Listing Agreement, relating to minimum level of public shareholding in a listed Company. The Company, by a letter dated April 2, 2008 to the BSE, where the shares of the Company are listed, has requested for grant of time upto December, 2008 to comply with the requirements of Clause 40A of the Listing Agreement requiring the Company to bring down the promoters holding below 75%. While the promoters have confirmed their intention to subscribe to their rights entitlement, some of them may renounce with a view to comply with the above mentioned continuing listing requirements. 16. The present Issue being a Rights Issue, as per extant SEBI guidelines, the requirement of promoter’s contribution and Lock-in are not applicable. 17. The Company has not availed of “bridge loans” to be repaid from the proceeds of the Issue, for incurring expenditure on the Objects of the Issue or for any other purpose. 18. The terms of Issue to Resident / Non-Resident Equity Shareholders have been presented under the “Basic Terms of the Issue” Section of this LOF on page No.44 . 19. The promoters, directors and Lead Managers to the Issue have not entered into any buy-back, standby or similar arrangements for any of the securities with any person being issued through this LOF. 20. The Equity Shares of the Company are fully paid up and there are no partly paid up Equity Shares as on the date of filing of this LOF. 21. There are no outstanding Warrants, Options or Convertible loan/instruments or any Debentures convertible into Equity Shares on a later date. 22. No further issue of capital by way of issue of bonus shares, preferential allotment, Rights issue or public issue or in any other manner which will affect the equity capital of the Company, shall be made during the period commencing from the filing of the LOF with the SEBI and the date on which the Equity Shares issued under this LOF are listed or application moneys are refunded on account of the failure of the Issue. 23. The Company does not intend to alter its capital structure for a period of six months from the date of opening of the Issue, by way of issue of shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities whether in India or abroad. However, an alteration in the capital structure may take place by way of split/consolidation of the denomination of the shares during the period of six months from the date of opening of the Issue, after seeking and obtaining all the approvals, which may be required for such alteration. 24. The promoters, directors and Lead Managers to the Issue will not pay any amount, whether directly or indirectly and in cash or kind, in the nature of discount, commission, allowance or otherwise to any person for the subscription of this Rights Issue. 25. The Company does not have any Revaluation Reserves. 26. The Company has not issued any Equity Share for consideration other than cash or out of Revaluation Reserve in the past except as provided herein.

33 English Indian Clays Limited

27. All information shall be made available by the Lead Manager and the Issuer to the public and investors at large and no selective or additional information would be available for a section of investors in any manner whatsoever including road shows, presentations, research or sales reports etc. 28. As such, other than meeting the requirements indicated in Objects of the Issue (refer “Particulars of the Issue”), there is no other intention/purpose for this Issue, including any intention to delist the Company.

29. Scheme of Restructuring of EICL

The Investment Division of the Company was De-merged into Bharat Starch Products Limited (BSPL) on going concern basis pursuant to an Scheme of Arrangement and De- merger between English Indian Clays Ltd and Bharat Starch Products Ltd as approved by the Hon’ble High Court of Kerala and Delhi vide their order of dated December 19, 2007 and January 14, 2008 respectively.

The Scheme became operative w.e.f. the Appointed Date i.e., April 1, 2007 upon filing of the certified copy of the Order dated December 19, 2007 of the Hon’ble High Court of Kerala and Order dated January 14, 2008 of the Hon’ble High Court of Delhi, with the Registrar of Companies on January 31, 2008 and filing of revised Order on February 12, 2008.

As per the Scheme the De-merger would envisage achieving the following business and commercial objectives and will result in the following benefits:

i) De-merger of the Investment Division would enable EICL to focus on and enhance its core manufacturing business operations by streamlining operations and cutting costs. ii) The Scheme will enable both EICL and BSPL to rationalize and streamline their management, businesses and finances and to eliminate duplication of work to their respective advantage. iii) The Scheme is beneficial to both the companies, their shareholders, creditors, employees and all stakeholders and will enable both companies to achieve and fulfill their objectives more efficiently and economically. The Scheme will contribute in furthering and fulfilling the objects of the both companies and in the growth and development of their business.

The salient features of the Scheme are set out below:

All the properties of EICL pertaining to the Investment Division including leasehold rights, tenancy rights, entitlements, licenses, contracts, arrangements present and future liabilities and debts vested in BSPL on a going concern basis at the values indicated in the Scheme.

Pursuant to the Scheme of De-merger with BSPL as approved by the Hon’ble High Courts of Kerala and Delhi, existing shareholder of EICL was entitled for 4 equity shares of Rs.10/- each of BSPL for every 19 Equity Shares of Rs.10/- each held in EICL, par value credited as fully paid up. The shares issued and allotted in BSPL shall be unlisted i.e. shall not be listed in any Stock Exchange and consequently shall not have the facility of trading as in the case of shares of EICL. However, pursuant to the scheme two options were given to eligible EICL shareholders:

1. Option given by BSPL: An option is given in the Scheme whereunder an eligible member i.e. any person being a shareholder of EICL as on the record date i.e., 20-02-2008 has an option to receive 100 (one hundred), 8% Cumulative Redeemable Preference Shares (“CRPS”) of Rs.10/- each of BSPL, redeemable at par on expiry of ten years from date of allotment, in lieu of one BSPL equity share of Rs.10/- each as per the entitlement hereinbefore mentioned. Such an option to receive equity shares or 8% CRPS shall be exercised by the eligible members within a period of 35 days from the date of the notice. However, in case any eligible member does not convey or inform the Company of his/her

34 English Indian Clays Limited

option within the aforesaid period, then he/she shall be deemed to have opted for equity shares. 2. Option given by DBH International Pvt. Ltd. and Karun Carpets Pvt. Ltd.: In order to give the eligible equity shareholders of EICL, an opportunity to exit and provide liquidity to the equity shareholders, DBH International Pvt. Ltd. and Karun Carpets Pvt. Ltd. have provided through the Scheme an exit price of Rs.1000/- per equity share of BSPL as per the entitlement hereinbefore mentioned, based on the valuation done by an Independent Valuer. This option can be exercised by the eligible members for a period of 1 year from the record date i.e. upto 19.02.2009 on the same price i.e., Rs 1000/- per equity share.

30. None of the persons forming part of the Promoter Group including Bodies Corporate have been restrained from accessing the Capital Market for any reasons by SEBI or any other Authorities. 31. None of the Equity Shares held by the Promoters are under lock-in. 32. The Equity Shares held by the Promoters are not pledged to any party as on date of filing of this LOF. 33. At any given time there shall be only one denomination for the shares of the Company and the disclosures and accounting norms specified by SEBI from time to time shall be complied with.

35 English Indian Clays Limited

OBJECTS OF THE ISSUE

The Company intends to use the proceeds of the present Rights Issue of 7,44,830 Equity Shares of Rs.10/- each at Rs. 1000/- per Equity Share aggregating Rs. 74,48,30,000 for meeting the following objectives:

• To part finance the cost of setting up of Starch manufacturing plant in District Shimoga (Karnataka) with an installed capacity of Maize (Corn) grinding of 500 TPD. • To part finance the long term working capital requirements of the Company including that of the proposed project. • To meet the issue expenses.

The details of the proceeds of the Issue are summarised below:

Rs. in Lacs Particulars Amount Gross Proceeds of the issue 7448 Estimated issue related expenses 95 Net Proceeds of the issue 7353

Use of Net Proceeds of the Issue

Subject to receipt of all regulatory approvals, the Company intends to immediately deploy the funds for the proposed project and for meeting working capital requirements as mentioned above.

In case of a shortfall in the Net Proceeds, the Company may explore a range of options including utilizing its internal accruals or seeking additional debt from existing and future lenders. Company believes that such alternate arrangements would be available to fund any such shortfall without any difficulty.

The Objects clause of the Memorandum of Association of the Company enables it to undertake its existing activities and the activities for which the funds are being raised through this issue.

Funds Requirements

To meet the objects of the issue the total funds requirement as estimated by the Company and its means of finance are as under: Rs. in Lacs Cost of the Project Sno. Particulars Phase I Phase II Total A Land 600 - 600 B Buildings & Site Developments 1,050 275 1,325 C Plant & Machinery 8,049 2,221 10,270 D Pre-operative Expenditure - Interest on loans 360 200 560 - Detailed Engineering 250 75 325 - Other Expenses 200 125 325 E Deposits & Cenvat 375 150 525 F Margin money for Working Capital 900 600 1,500 G Contingencies 366 109 475 H Expenses of the Rights Issue 95 - 95 Total 12,245 3,755 16,000

The assessment of funds requirement and deployment are based on internal management estimates and have not been appraised by any bank or financial institution or any independent organization. The capital expenditure plans are subject to a number of variables, including possible cost overruns;

36 English Indian Clays Limited development delays or defects; receipt of critical governmental approvals, if any, and changes in management’s views of the desirability of current plans, among others.

The Company proposes to meet the above fund requirements through the following: Rs. in Lacs Means of Finance Phase I Phase II Total Equity 7,448 - 7,448 Debt (ECB/Term Loan) 4,500 3,000 7,500 Internal accruals 297 755 1,052 Total 12,245 3,755 16,000

The Company has applied to its bankers to part finance the proposed starch project and in principle letter of approval, has been received from ICICI Bank for USD 19mn (Rs 7500 lacs approx). Notes:

1. No part of the issue proceeds will be paid as consideration to promoter, directors, key managerial personnel, associate or group companies. 2. The Company is dependent on full-subscription to the Rights Issue in order to meet its working capital and financial requirements for the proposed project. 3. The Company hereby confirms that firm arrangements have been made through verifiable means towards 75% of the stated means of finance, excluding the amount to be raised through proposed Rights Issue.

Rationale for the Project

As a part of its expansion programme, EICL has proposed to set up a new Corn Wet Milling Plant at Shimoga District, Karnataka State. The proposed Corn Wet Milling Plant will be implemented in two phases. Phase-I will have a capacity to process 300 tonnes of Maize grinding per day, which will be expanded to 500 tonnes per day during Phase-II. The Corn Wet Milling Plant will have facilities to produce Starch derivatives such as Modified Starch, Liquid Glucose, Malto Dextrine Powder, Dextrine and Pharma Starch. In order to meet the process steam requirement and power requirement of the Corn Wet Milling Plant it is also proposed to install a 6 MW Co-Generation Plant.

The rationale for setting up Starch Manufacturing plant at Shimoga is as under:

1. To exploit business opportunity with better Return on Investment. 2. To encash upon the favourable demand-supply position. 3. To increase market and geographical coverage to all India level, and leverage the technical strength and market goodwill of existing starch division of the Company. 4. To exploit the raw material availability in the region. 5. To enable backward integration with Company’s unit at Puducherry. 6. To create opportunity for exports.

Detailed Break-up of Funds Requirements

A. Land

The Company has taken possession of 66.4 acres of land allotted to them by Karnataka Industrial Area Development Board in Plot No. Block-3 of Machenahalli & Nidige Village, Shimoga Taluk, Shimoga District (Karnataka) vide its letter No. KIADB/AE/SMG/15/08-09 dated 29-04-2008. Lease is valid for 11 years and after that may be converted into sale subject to terms of allotment letter. An amount of Rs 534.20 lacs has been paid towards purchase of land and the Company is in the process of getting it registered, hence cost of registeration remains pending.

B. Buildings & Site Developments Rs in lacs Particulars Phase I Phase II Total

37 English Indian Clays Limited

Factory Buildings 816.4 107.7 924.1 RCC Tanks 56.5 - 56.5 Storage & Maize Receiving 125.0 95.0 220.0 Admin Block 25.0 25.0 50.0 Other 27.1 47.3 74.5 Total 1050.0 275.0 1325.0

The Company is in the process of finalization of Civil Contractors for the construction of plant’s foundation, buildings, storage facilities etc. The cost mentioned above is as estimated by the management of the Company.

C. Plant & Machinery

The list of equipments for different section of the plant is given below. All orders are in negotiation stage and are yet to be placed with suppliers:

Phase I

Unit Total Price Amt Sno. Descriptions Supplier Qty (Rs.Lac) (Rs.Lac)

1 Corn Wet Milling Plant Maize Corn handling I System Multivendor 1 lot 155.00 155.00 Maize Steeping & Germ Alfa-Laval/ Geeli/ Ii Separation Chinese(ZZJH) 1 lot 310.00 310.00

Iii SO2 Water Plant Chinese(ZZJH) 1set 50.00 50.00 Fibre Washing and Universal/Geeli/ iv Separation Chinese(ZZJH) 1 lot 178.60 178.60 Alfa- Starch separation and Laval/Universal/C v refining hinese(ZZJH) 1 lot 699.00 699.00 Starch,Dewatering and Mojj/ vi Drying Chinese(ZZJH) 1 lot 274.00 274.00 Pneumatic Conveying & vii Bagging for Starch Multivendor 1 lot 52.00 52.00 Gluten Dewatering and Hydropress/ Mojj/ viii Drying CEEtech/AVM 1 lot 120.00 120.00 6 ix Steeping Vats RCC( Own Civil) nos. 168.00 168.00

x Intercconnecting Piping Multivendor 1 lot 175.00 175.00

Wet Modification & Dry 2 Modification Equipments Oxydised Starch, Cationic, Thintrite and Amphoteric including Dextrine, Coating Universal/AVM/C Binder & Amphoteric Starch ee Tech/ i section Chinese( ZZJH) 1 lot 810.00 810.00

Liquid Glucose Section, 3 Capacity - 50 TPD Universal 1 lot 475.00 475.00

38 English Indian Clays Limited

Malto Dextrine Powder Section, Universal/ 4 Capacity - 15 TPD AVM/Mojj 1 lot - -

7 Pharma Starch Section AVM/Universal 1 lot - -

8 Co-Gen Plant

I Boiler & Auxilaries To be finalised 1 lot 800.00 800.00

Ii Turbine & Auxilleries To be finalised 1 lot 520.00 520.00

Iii Water System To be finalised 1 lot 147.00 147.00 Fuel & Ash Handling Iv System To be finalised 1 lot 170.00 170.00

V Utilities and Piping To be finalised 1 lot 40.00 40.00

Vi Electrical Power Distribution To be finalised 1 lot 316.00 316.00

Vii Power Evacuation System To be finalised 1 lot 125.00 125.00

Viii Other BOP To be finalised 1 lot 50.00 50.00

Ix DCS Automation To be finalised 1 lot 75.00 75.00

X Fire Fighting system To be finalised 1 lot 15.00 15.00 Emergency DG set 1250 Xi KVA To be finalised 1 75.00 75.00 Tax, Duty, Spares And Xii Erection of Co-Gen To be finalised 312.00 312.00 Unitec 9 ETP Consultant 1 lot 546.00 546.00

10 Lab Multivendor 1set 50.00 50.00

11 Work Shop Multivendor 1set 30.00 30.00

12 Electricals To be finalised 1 lot 405.00 405.00

13 Plant automation Multivendor 1 lot 100.00 100.00

14 Utility And Piping Multivendor 1 lot 75.00 75.00

15 Mics (Office Furniture & EDP) Multivendor 1 lot 35.00 35.00

16 Spares To be finalised 1 lot 79.00 79.00

16 Taxes, Duties & Freight To be finalised 219.46 219.46

17 Errection To be finalised 398.00 398.00

TOTAL 8,049.06

Phase II

Unit Total Price Amt Sno. Descriptions Supplier Qty (Rs.Lac) (Rs.Lac)

39 English Indian Clays Limited

1 Corn Wet Milling Plant Maize Steeping & Germ Alfa-Laval/ Geeli/ i. Separation Chinese (ZZJH) 1 lot 119.00 119.00 Starch, Dewatering and Mojj/ Chinese ii. Drying (ZZJH) 1 lot 52.00 52.00 Gluten Dewatering and Hydropress/ Mojj/ iii. Drying CEEtech/AVM 1 lot 25.00 25.00 2 iv. Steeping Vats RCC (Own Civil) Nos. 28.00 56.00

v. Intercconnecting Piping Multivendor 1 lot 25.00 25.00 Wet Modification & Dry 2 Modification Equipments Oxydised Starch, Cationic, Thintrite and Amphoteric including Dextrine, Coating Universal/AVM/C Binder & Amphoteric Starch ee Tech/ Chinese i section (ZZJH) 1 lot 110.00 110.00 Malto Dextrine Powder Section, Universal/ 3 Capacity - 15 TPD AVM/Mojj 1 lot 409.00 409.00

4 Pharma Starch Section AVM/Universal 1 lot 100.00 100.00

5 Co-Gen Plant

i Boiler & Auxilaries To be finalised 1 lot 600.00 600.00 Fuel & Ash Handling ii. System To be finalised 1 lot 10.00 10.00

iii. Utilities and Piping To be finalised 1 lot 10.00 10.00

iv. Electrical Power Distribution To be finalised 1 lot 24.00 24.00 Tax, Duty, Spares And v. Erection of Co-Gen To be finalised 83.00 83.00 Unitec 6 ETP Consultant 1 lot 218.00 218.00

7 Lab Multivendor 1set 25.00 25.00

8 Work Shop Multivendor 1set 10.00 10.00

9 Electricals To be finalised 1 lot 80.00 80.00

10 Plant automation Multivendor 1 lot 20.00 20.00

11 Utility And Piping Multivendor 1 lot 25.00 25.00

12 Mics (Office Furniture & EDP) Multivendor 1 lot 25.00 25.00

13 Spares To be finalised 1 lot 22.00 22.00

14 Taxes, Duties & Freight To be finalised 60.54 60.54

15 Errection To be finalised 112.00 112.00

TOTAL 2,220.54

40 English Indian Clays Limited

D. Pre-operative Expenditure The preoperative expenditure includes the interest on borrowings proposed to be taken from the bankers of the Company for the period under construction. The cost of detailed engineering represents the amount to be paid to technical consultant M N Dastur & Company. The other expenses include the amount of salary & wages to the employees, travelling and other administrative expenses to be incurred during the construction period.

E. Deposits & Cenvat The deposits and CENVAT includes the amount of security deposits to be paid to various Government Authorities and the amount of CENVAT to be paid on the excisable capital items.

F. Margin money for Working Capital The working capital requirements of the project are estimated to be approx. Rs 3600 lacs on commissioning of Phase-I and an additional requirement of Rs 2400 lacs on commissioning of Phase-II. The margin money is considered at 25% of the total working capital requirement.

G. Expenses of the Issue

The issue expenses are estimated at Rs. 95 Lacs, which are as follows:

Sr. No. Rights Issue Expenses Amount (Rs. In Lacs) 1 Lead Manager’s Fees [.]

2 Registrar’s Fees [.]

3 Legal Advisor’s Fees [.]

4 Postage & Stationary [.]

5 Printing of LOF & CAF [.]

6 Advertising [.]

7 Traveling & Conveyance [.]

8 Collection & Refund Bankers Fees [.]

9 SEBI Fees [.]

10 Contingencies [.] TOTAL 95

H. Contingencies The Contingencies are considered at 3% of the project cost.

Schedule of Implementation

The detailed schedule of implementation for the proposed Shimoga project is given below: Sno. Activity Commencement Completion I PHASE-I

A Preliminary work 1 Contour Survey Nov 07 Dec 07 2 Land allotment Oct 07 Jan 08 3 Layout Finalisation Nov 07 Feb 08 Statutory clearances (Consent for establishment from KSPCB, Clearance from MOEF for Co- 4 generation plant clearance from AAI) Jan 08 June 08 5 Soil Investigation Jan 08 May 08 6 Civil Contractor finalisation Feb 08 June 08 7 Site leveling and Civil & structural works June 08 Mar 09

B Equipment supply and Erection of starch Plant 1 Corn wet Milling Plant May 08 July 09

41 English Indian Clays Limited

2 Liquid Glucose Plant June 08 Aug 09 3 Modified Starch Plant June 08 Aug 09 4 Amphoteric and Coating Binder section June 08 Aug 09 5 Balance of Starch Plant June 08 July 09 6 Trail Run & Commissioning of Starch Plant June 09 July 09

Equipment supply and Erection of Co-Gen C Plant 1 Boiler & Accessories Sept 08 Dec 09 2 Turbo-Generator Sept 08 Dec 09 3 BOP Sept 08 Dec 09 4 Trail Run & Commissioning of Co-Gen Plant Nov 09 Dec 09

II PHASE- II 1 Layout Finalisation June 08 Sept 08 2 Civil Contractor finalisation June 08 Sept 08 3 Corn wet Milling Plant – Balancing Equipments July 09 Nov 09 4 Malto Dextrine Powder Plant Aug 09 Nov 09 5 Dextrine Plant Aug 09 Nov 09 6 IP Starch Plant Aug 09 Nov 09 7 Trail Run & Commissioning of Co-Gen Plant Dec 09 Jan 10

Funds Deployed Actual expenditure incurred up to April 30, 2008 by the Company on Shimoga project is given below:

SNo. Particulars Amount (Rs in lcas) 1 Land 534.80 2 Technical Consultants’ Fees 18.87 3 Project Consultants’ Fees 74.44 4 Payment to and provision for employees 1.92 5 Travelling & others misc. expenditure 28.90 658.93

Deployment of funds has been certified by M/s. Grewal & Singh, Chartered Accountants, vide their certificate dated May 12, 2008.

Sources of financing of funds already deployed The above expenditure has been incurred by the Company out of internal accruals and advance from promoters.

Details of Balance Funds to be deployed The year-wise break up of the expenditure proposed to be incurred on the said project is given below: Rs in lacs Sno. Particulars 2008-09 2009-10 1 Capital Expenditure 9334.00 3877.00 2 Deposits & CENVAT 375.00 160.00 3 Margin Money for Working Capital 900.00 600.00 4 Issue Expenses 95.00 0.00 Total 10704.00 4637.00

Interim use of funds The management, in accordance with the policies formulated by it from time to time, will have flexibility in deploying the Net Issue Proceeds. Pending utilization of the Net Issue Proceeds for the purposes described above, the Company intends to temporarily invest the funds in high quality interest or dividend bearing liquid instruments including money market mutual funds and deposits

42 English Indian Clays Limited with banks for the necessary duration. Such investments will be made in accordance with the Company’s investment policies.

Monitoring of utilisation of funds The Board of Directors of the Company will monitor the utilization of the proceeds of the Issue. The Company has not appointed any monitoring agency. The Company will disclose the utilization of proceeds of the Issue under a separate head in its balance sheet specifying the purpose for which such proceeds have been utilized. The Company, in its balance sheet, will provide details, if any, in relation to all such proceeds of the Issue that have not been utilized thereby also indicating investments, if any, of such unutilized proceeds of the Issue. However, at any point of time the proceeds of the Issue will not be used for any other purposes, except as those stated in the Memorandum of Association of the Company.

No part of the Rights Issue proceeds will be paid by the Company as consideration to Directors, Company’s key managerial personnel or companies promoted by the Promoters except in the normal course of business.

Appraisal The fund requirement and deployment thereof is based on internal management estimates, and has not been appraised by any bank or financial institution.

43 English Indian Clays Limited

BASIC TERMS OF THE ISSUE

Basis of the Offer

Face Value Each Equity Share shall have the face value of Rs. 10/- each. Issue Price Each Equity Share is being offered at a price of Rs. 1000/- each.

Fractional Those Equity shareholders having holding less than 3 (Three) Equity Entitlements shares will not be entitled for any Equity Shares under the Rights Issue and shall be dispatched a CAF with zero entitlement. However, such shareholders are eligible to apply for additional 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 Ranking of the Equity including dividends with the existing Equity Shares of the Company Shares from the date of allotment.

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

44 English Indian Clays Limited

BASIS FOR ISSUE PRICE

The Issue Price has been determined in consultation with Lead Manager to the Issue considering following qualitative & quantitative factors. Investors should also refer to the section “Risk Factors” and “Auditors’ Report” beginning on page no. 8 and 107 respectively to get a more informed view before making the investment decision.

Qualitative Factors

• The Company is an ISO 9001:2000 Company. • The Company has been servicing esteemed clientele like ITC Ltd, BILT, Nahar Group, JK Paper, AP Paper, Tamil Nadu Newsprint and Papers Limited, Asian Paints, Goodlas Nerolac, Berger Paints, ICI, Paragon Footwear, Relaxo Footwear, Kajaria Ceramics Ltd, Nitco Tiles, HR Johnson, Ranbaxy, Pan Asia, Wockhardt, Perfetti, Wrigley India Private Limited, Dabur, Parle Products, Surya Food & Agro Ltd, Nestle, Raymonds, Welspun, GHCL etc. • The Company’s turnover has been growing at CAGR of 16.6% over the last 3 years. • The Company’s manufacturing locations are strategically located in proximity to the source of materials and main customers for finished products. • The Company holds clay bearing, land sufficient to feed its units for the approximately next 25 years. • The Company has strong R&D set-up at all the three manufacturing locations. • The Company is having experienced management team and efficient work force.

Quantitative Factors

1) Basic Earnings per Share (EPS)

Earnings Per Share, i.e., EPS pre-issue for the last three years (as adjusted for changes in capital).

Basic EPS Sr. No. Financial Year (Rs) Weight Used A 2005 – 2006 37.62 1 B 2006 – 2007 35.55 2 C 2007 – 2008 34.35 3 Weighted Average 35.29 * Source: Audited Annual Accounts

2) Price Earning Ratio (P/E Ratio) in relation to the issue price of Rs. 1000/- per share based on the EPS of financial year 2007 – 2008 is 29.11.

3) Price Earning Ratio (P/E Ratio) in relation to the issue price of Rs. 1000/- per share.

Sr. No. Particulars P/E Ratio A Based on year ended 31st March 2008 29.11 B Based on Weighted Average EPS of 29.88 28.34 There are no listed comparables in the Indian Clay and Starch C Industry P/E Industry

4) Return on Net Worth in the last three years.

Sr. No. Financial Year Return on Net Worth (%) Weight Used A 2005 – 2006 18.32 1 B 2006 – 2007 14.46 2 C 2007 – 2008 21.08 3 Weighted Average 18.41

45 English Indian Clays Limited

Minimum Return on Total Net Worth needed after the Issue to maintain Pre-Issue EPS of Rs. 34.35 is 11.02%.

Note: i. The return on average net worth has been computed on the basis of the restated profits of the respective years/period drawn after considering the impact of material adjustments of prior period items pertaining to earlier years. ii. Net Worth is defined as: Equity Share Capital + Free Reserves and Surplus – Miscellaneous Expenses.

5) Net Asset Value (NAV) per share (Pre-Issue)

Sr. No. Financial Year Net Worth (Rs. in Lacs) No. of Shares NAV (Rs.) A 2005 – 2006 8,798.79 4468979 196.89 B 2006 – 2007 9,788.04 4468979 219.02 C 2007 – 2008 6,057.00 4468979 135.53 * Source: Audited Annual Accounts

6) Net Asset Value (NAV) per share based on the last Balance Sheet & comparisons thereof with the post issue NAV:

Sr. No. Net Asset Value Value (Rs.) A As at 31/03/2008 196.89 B After Issue 311.6 C Issue price 1000 * Source: Audited Annual Accounts

7) Comparison of accounting ratios of the Company with the accounting ratios of peer group.

There are no listed comparables in the relevant Industry.

The Lead Manager believes that the issue price of Rs. 1000/- per share for the Rights Issue is justified in view of the above Qualitative and Quantitative parameters. The investors may also want to peruse the risk factors and financials of the Company including important profitability and return ratios, as set out in the Auditors’ Report in the offer Document to have more informed view about the investment proposition.

The Face Value of the Equity Shares is Re. 10/- per share and the Issue Price is 100.00 times of the face value i.e. Rs. 1000/- per share.

46 English Indian Clays Limited

STATEMENT OF TAX BENEFITS

The below Statement of Tax Benefits sets out the provisions of law in summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of Equity Shares. The statements made are based on the tax 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 the purchase, ownership and disposal of Equity Shares.

English Indian Clays Ltd. N-75, Connaught Circus, New Delhi - 110001

Dear Sirs,

Statement of Possible Direct Tax Benefits available to the Company and its shareholders

We hereby report that the enclosed annexure states the possible tax benefits available to English Indian Clays Limited ("Company") and its shareholders under the current tax laws in India. We would like to inform you that the benefits stated therein are subject to fulfillment of the conditions prescribed under the relevant tax laws.

The benefits discussed are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue.

We do not express any opinion or provide any assurance whether: a) The Company or its shareholders will continue to obtain these benefits in future; or b) The conditions prescribed for availing the benefits have been or would be met with.

The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company.

We have no objection if the attached annexure i.e. Tax Benefits Available to the Company is incorporated in the information memorandum to be submitted to the concerned stock exchange.

Our views expressed herein are based on the facts and assumptions indicated by you. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes. The views are exclusively for the use of English Indian Clays Limited. Grewal & Singh, for any claims, liabilities or expenses relating to this assignment except to the extent of fees relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or intentional misconduct. Grewal & Singh will not be liable to any other person in respect of this statement.

Thanking you,

Yours faithfully,

MOHD. AYUB ANSARI Partner Grewal & Singh, Chartered Accountants Membership No. 500810

Place: Delhi

47 English Indian Clays Limited

Date: May 14, 2008 Encl.: Annexure

48 English Indian Clays Limited

ANNEXURE

Statement of Possible Direct Tax Benefits Available to English India Clays Limited and to its Shareholders

Statement of special tax benefits:

There are no special tax benefits available to the Company or its Shareholders.

Statement of general tax benefits:

These are the general tax benefits available to the all companies and shareholders, subject to compliance with relevant provision of the Income Tax Act, 1961.

A. Under the Income Tax Act, 1961 ("the Act")

I. Benefits available to the Company

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by the domestic companies) received on the shares of the Company is exempt from tax.

2. As per section 10(35) of the Act, the following income will be exempt in the hands of the Company:

a. Income received in respect of the units of a Mutual Fund specified under clause (23D) of section 10; or b. Income received in respect of units from the Administrator of the specified undertaking; or c. Income received in respect of units from the specified Company: However, this exemption does not apply to any income arising from transfer of units of the Administrator of the specified undertaking or of the specified Company or of a mutual fund, as the case may be.

For this purpose (i) "Administrator" means the Administrator as referred to in section 2(a) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 and (ii) "Specified Company" means a Company as referred to in section 2(h) of the said Act.

3. As per section 2(29A) read with section 2(42A), shares held in a Company are treated as long term capital asset if the same are held by the assessee for more than twelve months period immediately preceding the date of its transfer. Accordingly, the benefits enumerated below in respect of long term capital assets would be available if the shares are held for more than twelve months.

4. As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term capital asset being an equity share of the Company, or a unit of an equity oriented fund where such transaction is chargeable to securities transaction tax, will be exempt in the hands of the Company.

For this purpose, "Equity Oriented Fund" means a fund -

(i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than sixty five percent of the total proceeds of such funds; and

(ii) which has been set up under a scheme of a Mutual Fund specified under section 10(23D) of the Act.

As per section 115JB, while calculating "book profits" the Company will not be able to reduce the long term capital gains to which the provisions of section 10(38) of the Act apply and will

49 English Indian Clays Limited

be required to pay Minimum Alternate Tax @ 10% (plus applicable surcharge and education cess) of the book profits.

5. As per section 54EC of the Act and subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered under section 10(38) of the Income Tax Act) arising on the transfer of a long-term capital asset will be exempt from capital gains tax to the extent such capital gains are invested in a "long term specified asset" within a period of 6 months after the date of such transfer. It may be noted that investment made on or after April 1, 2007 in the long term specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs.

However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money.

A "long term specified asset" means any bond, redeemable after three years and issued on or after the 1st day of April 2007:

(i) by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988; or

(ii) by the Rural Electrification Corporation Limited, a Company formed and registered under the Companies Act, 1956.

6. As per Section 74 Short-term capital loss suffered during the year is allowed to be set-off against short-term as well as long-term capital gains of the said year. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years' short- term as well as long-term capital gains. Long-term capital loss suffered during the year is allowed to be set-off against long-term capital gains. Balance loss, if any, can be carried forward for eight years for claiming set-off against subsequent years' long-term capital gains.

7. As per Section 80JJAA, and subject to the conditions laid down therein, of the Act an Indian Company engaged in the manufacture or production of an article, a further deduction is allowable equal to thirty per cent of additional wages paid to the new regular workmen employed by it in the previous year for three assessment years including the assessment year relevant year relevant to the previous year in which such employment is provided.

For this purpose, "additional wages" means the wages paid to the new regular workman in excess of one hundred workmen employed during the previous year. However, in the case of an existing undertaking, the additional wages shall be 'nil' if the increase in the number of regular workmen employed during the year is less than ten per cent of existing number of workmen employed in such undertaking as on the last day of the preceding year.

8. As per section 111A of the Act, short term capital gains arising to the Company from the sale of equity share or a unit of an equity oriented fund transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge and education cess).

9. As per section 112 of the Act, taxable long-term capital gains, if any, on sale of listed securities or units or zero coupon bonds will be charged to tax at the concessional rate of 20% (plus applicable surcharge and education cess) after considering indexation benefits in accordance with and subject to the provisions of section 48 of the Act or at 10% (plus applicable surcharge and education cess) without indexation benefits, at the option of the Company. Under section 48 of the Act, the long term capital gains arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition/ improvement.

10. The Company is entitled to claim additional deprecation @ 20% of the cost of new machinery installed equal to (10% if the assets are used for less than 182 days benefit to spread in two

50 English Indian Clays Limited

years) in accordance with provisions of section 32(1)(iia) for the purchase of new plant and machinery acquired and installed after 31st March, 2005.

11. In accordance with and subject to the provisions of Section 35, the Company would be entitled to deduction in respect of expenditure (not being capital expenditure) laid out or expended on scientific research related to the business.

12. Under section 115JAA(1A) of the Act, credit is allowed in respect of any Minimum Alternate Tax ('MAT') paid under section 115JB of the Act for any assessment year commencing on or after April 1, 2006. Tax credit eligible to be carried forward will be the difference between MAT paid and the tax computed as per the normal provisions of the Act for that assessment year. Such MAT credit is allowed to be carried forward for set off purposes for up to 7 years succeeding the year in which the MAT credit is allowed.

II. Benefits available to Resident Shareholders

2. As per section 2(29A) read with section 2(42A), shares held in a Company are treated as long term capital asset if the same are held by the assessee for more than twelve months period immediately preceding the date of its transfer. Accordingly, the benefits enumerated below in respect of long term capital assets would be available if the shares are held for more than twelve months.

3. As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term capital asset being an equity share of the Company, where such transaction is chargeable to securities transaction tax, will be exempt in the hands of the shareholder.

4. As per section 54EC of the Act and subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from capital gains tax to the extent such capital gains are invested in a "long term specified asset" within a period of 6 months after the date of such transfer. It may be noted that investment made on or after April 1, 2007 in the long term specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs.

A "long term specified asset" means any bond, redeemable after three years and issued on or after the 1st day of April 2007:

(i) by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988; or

(ii) by the Rural Electrification Corporation Limited, a Company formed and registered under the Companies Act, 1956.

5. As per section 54F of the Act, long term capital gains (in cases not covered under section 10(38)) arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family (HUF) will be exempt from capital gains tax if the net consideration is utilised, within a period of one year before, or two years after the date of transfer, in the purchase of a residential house, or for construction of a residential house within three years.

Such benefit will not be available:

(a) if the individual or Hindu Undivided Family

51 English Indian Clays Limited

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

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

- constructs another residential house within a period of three years after the date of transfer of the shares; and

(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property". If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the capital gain, the same proportion as the cost of the new residential house bears to the net consideration, will be exempt.

If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be income chargeable under the head "Capital Gains" of the year in which the residential house is transferred.

6. As per Section 74 Short-term capital loss suffered during the year is allowed to be set-off against short-term as well as long-term capital gains of the said year. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years' short- term as well as long-term capital gains. Long-term capital loss suffered during the year is allowed to be set-off against long-term capital gains. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years' long-term capital gains.

7. As per section 88E of the Act, the Securities Transaction Tax paid by the shareholder in respect of taxable securities transactions entered into in the course of the business will be eligible for deduction from the amount of income tax on the income chargeable under the head "Profits and Gains of Business or Profession" arising from taxable securities transaction, subject to certain limit specified in the section.

8. As per section 111A of the Act, short term capital gains arising from the sale of equity shares of the Company transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge and education cess).

9. As per section 112 of the Act, taxable long-term capital gains, if any, on sale of listed securities will be charged to tax at the rate of 20% (plus applicable surcharge and education cess) after considering indexation benefits or at 10% (plus applicable surcharge and education cess) without indexation benefits, whichever is less. Under section 48 of the Act, the long term capital gains arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition/ improvement.

III. Benefits available to Non-Resident Indians/Non-Resident Shareholders (Other than FIIs)

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115- O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by the domestic companies) received on the shares of the Company is exempt from tax.

52 English Indian Clays Limited

a) As per first proviso to section 48 of the Act, in case of a non resident shareholder, the capital gain/loss arising from transfer of shares of the Company, acquired in convertible foreign exchange, is to be computed by converting the cost of acquisition, sales consideration and expenditure incurred wholly and exclusively incurred in connection with such transfer, into the same foreign currency which was initially utilized in the purchase of shares. Cost Indexation benefit will not be available in such a case. As per section 112 of the Act, taxable long-term capital gains, if any, on sale of shares of the Company will be charged to tax at the rate of 20% (plus applicable surcharge and education cess).

5. As per section 54EC of the Act and subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from capital gains tax to the extent such capital gains are invested in a "long term specified asset" within a period of 6 months after the date of such transfer. It may be noted that investment made on or after April 1, 2007 in the long term specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs.

A "long term specified asset" means any bond, redeemable after three years and issued on or after the 1st day of April 2007:

(i) by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988; or

(ii) by the Rural Electrification Corporation Limited, a Company formed and registered under the Companies Act, 1956.

6. As per section 54F of the Act, long term capital gains (in cases not covered under section 10(38)) arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family (HUF) will be exempt from capital gains tax if the net consideration is utilised, within a period of one year before, or two years after the date of transfer, in the purchase of a residential house, or for construction of a residential house within three years.

Such benefit will not be available:

(a) if the individual or Hindu Undivided Family

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

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

- constructs another residential house within a period of three years after the date of transfer of the shares; and

(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".

If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the capital gain, the same proportion as the cost of the new residential house bears to the net consideration, will be exempt.

53 English Indian Clays Limited

7. As per Section 74 Short-term capital loss suffered during the year is allowed to be set-off against short-term as well as long-term capital gains of the said year. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years' short- term as well as long-term capital gains. Long-term capital loss suffered during the year is allowed to be set-off against long-term capital gains. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years' long-term capital gains.

8. As per section 88E of the Act, the securities transaction tax paid by the shareholder in respect of taxable securities transactions entered into in the course of the business will be eligible for deduction from the amount of income tax on the income chargeable under the head "Profits and Gains of Business or Profession" arising from taxable securities transaction, subject to certain limit specified in the section.

9. As per section 111A of the Act, short term capital gains arising from the sale of equity shares of the Company transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge and education cess).

10. As per section 112 of the Act, taxable long-term capital gains, if any, on sale of listed securities will be charged to tax at the rate of 20% (plus applicable surcharge and education cess) after considering indexation benefits or at 10% (plus applicable surcharge and education cess) without indexation benefits, whichever is less. Under section 48 of the Act, the long term capital gains arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition/ improvement.

11. As per section 115F of the Act and subject to the conditions specified therein, in the case of a shareholder being a Non-Resident Indian, gains arising on transfer of a long term capital asset being shares of the Company will not be chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period of six months in any specified asset or savings certificates referred to in section 10(4B) of the Act. If part of such net consideration is invested within the prescribed period of six months in any specified asset or savings certificates referred to in section 10(4B) of the Act then such gains would not be chargeable to tax on a proportionate basis. Further, if the specified asset or savings certificate in which the investment has been made is transferred within a period of three years from the date of investment, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified asset or savings certificates are transferred.

12. As per section 115G of the Act, Non-Resident Indians are not obliged to file a return of income under section 139(1) of the Act, if their only source of income is income from specified investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act.

13. As per section 115H of the Act, where Non-Resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under section 139 of the Act to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.

14. As per section 115I of the Act, a Non-Resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing a declaration along with his return of income for that assessment year under section 139 of the Act, that the

54 English Indian Clays Limited

provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Act.

For the purpose of aforesaid clauses "Non-Resident Indian" means an Individual, being a citizen of India or a person of Indian origin who is not a "resident". A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India.

Provisions of the Act vis-à-vis provisions of the Tax Treaty

In respect of non-residents, the tax rates and consequent taxation mentioned above will be further subject to any benefits available under the Tax Treaty, if any, between India and the country in which the non-resident is resident. As per the provisions of section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the non-resident.

IV. Benefits available to Foreign Institutional Investors ('FIIs')

As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by the Company) received on the shares of the Company is exempt from tax.

As per section 2(29A) read with section 2(42A), shares held in a Company are treated as long term capital asset if the same are held by the assessee for more than twelve months period immediately preceding the date of its transfer. Accordingly, the benefits enumerated below in respect of long term capital assets would be available if the shares are held for more than twelve months.

As per section 10(38) of the Act, long term capital gains arising from the transfer of long term capital asset being an equity share of the Company, where such transaction is chargeable to securities transaction tax, will be exempt to tax in the hands of the FIIs.

As per section 54EC of the Act and subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from capital gains tax to the extent such capital gains are invested in a "long term specified asset" within a period of 6 months after the date of such transfer. It may be noted that investment made on or after April 1, 2007 in the long term specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs.

A "long term specified asset" for making investment under this section on or after 1st April 2007 means any bond, redeemable after three years and issued on or after the 1st April 2007 by:

(i) National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988; or

(ii) Rural Electrification Corporation Limited, a Company formed and registered under the Companies Act, 1956.

As per Section 74 Short-term capital loss suffered during the year is allowed to be set-off against short-term as well as long-term capital gains of the said year. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years' short- term as well as long-term capital gains. Long-term capital loss suffered during the year is

55 English Indian Clays Limited

allowed to be set-off against long-term capital gains. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years' long-term capital gains.

The tax rates and consequent taxation mentioned above will be further subject to any benefits available under the Tax Treaty, if any, between India and the country in which the FII is resident. As per the provisions of section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the FII.

As per section 111A of the Act, short term capital gains arising from the sale of equity shares of the Company transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge and education cess).

As per section 115AD of the Act, FIIs will be taxed on the capital gains that are not exempt under the provision of section 10(38) of the Act, at the following rates:

Nature of income Rate of tax (%)

Long term capital gains 10 Short term capital gains (other than referred to in section 111A) 30

The above tax rates have to be increased by the applicable surcharge and education cess.

In case of long term capital gains, (in cases not covered under section 10(38) of the Act), the tax is levied on the capital gains computed without considering the cost indexation and without considering foreign exchange fluctuation.

As per section 196D, no tax is to be deducted from any income, by way of capital gains arising from the transfer of shares payable to Foreign Institutional Investor.

IV. Benefits available to Mutual Funds

As per section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made there under, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India will be exempt from income tax, subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf.

B. Benefits available under the Wealth Tax Act, 1957

Asset as defined under section 2(ea) of the Wealth tax Act, 1957 does not include shares in companies and hence, shares of the Company are not liable to wealth tax in the hands of shareholders.

C. Benefits available under the Gift Tax Act.

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

The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of shares.

Notes:

(i) The provisions of law as discussed above are for the current year.

(ii) 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 investments in the shares of the Company.

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SECTION IV: ABOUT THE ISSUER COMPANY

(I) Industry & Business Overview

The information presented in this section has been extracted from publicly available documents, which have not been prepared or independently verified by the Company, the Lead Manager or any of their respective affiliates or advisors or the sources referred to herein. In this Section, we have relied on and referred to information regarding the industry and competitors from market research reports, other publicly available sources and information provided by the Company. Although we believe that this information is reliable, we have not independently verified the accuracy and completeness of the information.

EICL has two key business segments viz Clay Business and Starch Business.

Overview of the Clay Industry

Kaolinite is a clay mineral belonging to the group of aluminosilicates. It is commonly referred to as “China Clay” because it was first discovered in Kao-Lin, in China. Kaolin is a white, soft, plastic clay mainly composed of fine –grained plate - like particles. It is an industrial mineral used primarily as an inert filler and customers combine it with other raw materials in a wide variety of applications. China Clay finds several important applications in diverse industries such as paint, paper, ceramics, fiberglass and rubber etc. Global Kaolin production capacity is estimated at 27-30 million TPA, 60- 65% of this capacity is used as an extender or filler, mainly in paper and paint The good quality clay reserves are the key raw material, which is concentrated in few countries viz USA, Brazil, England and India particularly in Kerala, Rajasthan, Orissa, West Bengal & Gujarat. The total size of clay reserves in India is estimated at about 1042mn tonnes. As per the management estimation, the Indian market size for processed clay is estimated at 240,000 TPA. Out of this, EICL’s market share is about 70%.

Raw Material

Good Clay reserves are concentrated in only a few countries viz. USA (Georgia), Brazil (Amazon), England (Cornwall) and India (Kerala).

WORLD CLAY RESERVES

Brazil 28%

USA 53%

India 7%

Ukraine Others 6% 6%

Source: Company Estimates

Indian reserves are spread across Kerala, Rajasthan, Orissa, West Bengal & Gujarat (est. 1042 mn tonnes). Kerala is known for high quality reserves (Brightness, Recovery, Particle Size) even though they form only 13% of total Indian clay reserves.

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Applications of Clay

China Clay has multiple and diversified uses. China Clay’s whiteness and plasticity make it extremely suitable for its extensive use as a filler, extender, ceramic raw material and pigment. It is an important raw material for refractories, catalyst, and cement and fiberglass industries. It is a unique industrial mineral, which offers excellent covering when used as a pigment or extender in coated films and filling applications. In addition, it is soft and non- abrasive and has a low conductivity of heat and electricity. China Clay is used in following industries: • Paper: in this industry China Clay is used both as filler in bulk of paper and to coat its surface. China Clay whiteness, opacity, large surface area and low abrasivity make it an ideal raw material for paper production. Its use allows reduction in amount of expensive wood pulp required enhances the optical properties of paper and improves its printing characteristics. It improves paper brightness and gives the gloss and printed-paper quality required for many different kinds of paper. • Paint: China Clay can improve the optical, mechanical, rheological properties of paint. Calcined Clay is widely used in satin and matt paints where they can deliver increased opacity, whiteness and scrub resistance. It is also useful as a partial replacement for the expensive TiO2 pigment. • Ceramics: China Clay converts to mullite and glass when fired to temperature exceeding 1000 °C. It is used in formulations described as whitewares, which consists of tableware, sanitaryware, and wall and floor tiles. It provides strength and plasticity in shaping of these products and reduces the amount of pyroplastic deformation in process of firing. • Tableware: In tableware in addition to strength and plastic quality China Clay is essential for achieving high-fired whiteness. • Sanitaryware: China Clay contributes the rheological properties that enable the casting slip to flow and drain after the cast formation. Cast pieces are relatively heavy and China Clay must be strong to withstand the weight and retain the shape before the piece enters the kiln. • Wall and Floor Tiles: combined with feldspar, China Clay and quartz, plastic clays are utilized for their bonding properties. • Refractories: China Clay is used to build structures subject to high temperatures, ranging from simple to sophisticated products. E.g. from fireplace brick linings to re–entry heat shields for space shuttle. They are used to line boilers and furnaces of all types- reactors, ladles, stills, kilns and so forth. • Chemical Applications: Plastic clays are used as fine fillers and extenders in polymers, adhesives, plastics, fertilizers and insecticides. • Sealants: Plastic clays are widely used for lining landfill waste disposal sites and for sealing over them once completed. • Fillers: China Clay main properties, especially its whiteness or near whiteness, make it very suitable as a filler or pigment. Also it remains inert over a wide PH range, is non-abrasive, has a low heat and electrical conductivity and offers brightness and opacity. • Rubber: China Clay adds strength, abrasion resistance and rigidity to rubber. Calcined Clay finds extensive use in high value thermoplastic elastomers for a variety of applications and in rubber insulation on high voltage power lines. • Plastics: clay is used in plastics to provide smooth surfaces, dimensional stability and resistance to chemical attack, to conceal fiber reinforcement patterns, to reduce shrinkage and cracking during polymer compounding and shape forming. It is also used to improve mechanical, electrical and thermal properties of PVC cables. It is used in speciality films where it imparts anti- blocking or infra-red absorption characteristic. Calcined Clay is one of the major additives used in manufacture of automotive parts based on engineering thermoplastics. • Fiberglass: China Clay is used for fiberglass manufacturing. It allows the strengthening of fibers integrated into the material. It improves the integration of fibers in products requiring strengthened plastics: cars, boats, marine products, aviation and aerospace products, circuit board manufacturing, fiberglass insulation, fiberglass air filters, fiberglass tanks and pipes, corrosion resistant fiberglass products, fiberglass building and construction products etc. • Cosmetics and Pharmaceuticals: China Clay is used in both human and veterinary medicinal products, for example, to treat digestion problems and as a constituent of poultices. It is used as an excipient in personal care products including, thalasso therapy

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(bath and skin treatments), and in cosmetics. It is also used in a number of dietary products, plasters, foot- powders and in specialized treatment of some lung disorders.

Growth in End-user Industries

Per capita consumption of paper in India is estimated at 7Kg as compared to 42Kg in China and 312Kg in USA. It is expected that Indian per capita consumption of paper will double by 2015.

Per capita consumption of paint in India is 800-900 grams compared to 15-25 kg in the developed countries. Growth in this sector is estimated at 15-20% per annum owing to the boom in Indian housing sector, strong industrial growth, heavy infrastructure spending, rise in income and increase in manufacturing activities.

Overview of the Starch Industry

Starch is an abundant carbohydrate distributed worldwide in plants. It has been a major ingredient in man’s diet over the centuries. It’s a white, granular, organic chemical produced naturally by all green plants. Starch is a very versatile product, both in its raw material and its uses. Starch is primarily extracted from corn, wheat, potato and tapioca and has more than thousand known applications.

Composition of Starch

100%

80%

60%

40%

20%

0% Corn Potato Wheat Tapioca

Starch Moisture Protein Fat Fibre

Source: Company Estimates

Starch is broadly classified into two categories such as Traditional Starch and Speciality or Modified Starch. The traditional starches are Native Starch, Liquid Glucose, Corn Oil etc. Through modification native starch is converted by physical and chemical means to suit various industrial applications.

Corn-based starch and its derivatives account for a multi-billion dollar industry in the US while in India it is estimated only at Rs.15 billion. India’s per capita consumption is a fraction of the global average on account of limited applications.

With fuel prices increasing, cornstarch is fast emerging as an essential; environment-friendly additive that helps reduce fuel bills. Ethanol alone accounted for 53% of the entire US starch industry output and this practice is expected to be replicated in other developed and developing economies.

Raw Material

Maize and the Tapioca Starch are the main raw material required by the Company to produce starch. India’s produces around 10-14 million tons of maize annually. This contributes to about 2% of the total world production. Farmers grow Maize both in Rabi and Kharif season. In India the maize potential districts in 23 states are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Gujarat, Himachal Pradesh, Jammu & Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Manipur,

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Meghalaya, Mizoram, Nagaland, Orissa, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttar Pradesh and West Bengal. Karnataka is the leading producer of maize in India as it falls under the corn belt of India and produces around 15% of India’s total produce. India consumes almost all the maize that it produces. About 50% of the total Indian produce is consumed as poultry feed and about 8-10% is consumed by the starch industry.

Applications of Starch

Food Use: It is estimated that 70% of the starch produced is converted into syrups for food use. It is used in the food industry as a thickener, filler and binder; to manufacture sweeteners and syrups used in the soft drinks and brewing industry; in baked goods, confectionary and many other food products; and to produce sugar alcohols, which are widely used in the food and chemical industry. As a carbohydrate source it forms the basic feedstock for much fermentation processes of chemicals. The main use of the by products are as cattle feed.

Non-Food Use: But, food is not the only use of starch. Industrial uses are also very important. Starch is used in the Paper Industry to increase the strength of paper-sheet & to improve the drainage, to increase paper strength, make paper less porous, for giving gloss, whiteness & smoothness to the paper. It is used to provide brightness & sharpness to the print and it is used as a bonding agent.

Starch is also used in the Textile Industry to impart an abrasion resistance capacity to Yarn. It is an excellent fibre binder, both for natural and for synthetic fibre, gives high colour yield with sharp and bright prints, imparts weights and hands to the fabrics, is compatible to thermoses resins and acts as a good finishing agent for cotton and blended yarns.

In Pharmaceutical industry it acts as a carrier of the medicines. In tablets it is the main filler and acts as a Tablet disintegrate.

Non-Food Applications of Starches

Adhesives Metals Industry

• hot-melt glues • foundry core binder • stamps, bookbinding, envelopes • sintered metal additive • labels (regular and waterproof) • sand casting binder • wood adhesives, laminations • automotive, engineering Textiles Industry • pressure sensitive adhesives • corrugation • warp sizing • paper sacks • fabric finishing • printing Explosives Industry Cosmetic and Pharmaceutical Industry • wide range binding agent • match-head binder • dusting powder • make-up Paper Industry • soap filler/extender • face creams • internal sizing • pill coating, dusting agent • filler retention • tablet binder/dispersing agent • surface sizing • paper coating (regular and colour) Mining Industry • carbonless paper stilt material • disposable diapers, feminine products • ore flotation • ore sedimentation Construction Industry

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• oil well drilling muds • concrete block binder • asbestos, clay/limestone binder Miscellaneous • fire-resistant wallboard • plywood/chipboard adhesive • biodegradable plastic film • gypsum board binder • dry cell batteries • paint filler • printed circuit boards • leather finishing

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(II) Business / Company Overview

EICL was incorporated on 18 th November 1963 and operates in two business divisions namely Clay and Starch. EICL is an ISO 9001:2000 Company supported by strong a R&D setup.

EICL manufactures and processes China Clay of different grades for use as a coating agent and filling agent. The Company has its clay manufacturing units at Veli, Thonnakkal and Kollam located in Thiruvananthapuram, Kerala. The installed capacity of the plants was 36,000 MT per annum initially and it has since been increased to 2,13,600 MT per annum as of date, with appx. 70% domestic market share.

The Starch Division of the Company has two manufacturing units located at Yamunanagar and Puducherry. The Divisions have the distinction of being the only Starch Company in India to have acquired ISO-9002 certification and DSIR recognised R&D centre. Current starch producing capacity of the Company is 1,01,040 MT per annum. EICL is a market leader in modified textile starch (56% domestic market share) and a significant player in traditional starch (6% domestic market share) with stable growth rates.

EICL also had an Investment Division, which has been de-merged to Bharat Starch Products Limited (BSPL), pursuant to the Scheme of arrangement by way of de-merger as approved by Hon’ble High Courts of Kerala and Delhi with effect from April 1, 2007.

EICL is promoted by the prestigious BM Thapar Group and Mr. Karan Thapar is the Chairman of the Company. The group is one of the big industrial houses of India having successfully managed large companies in diversified industries. The other companies under the control of Mr. Karan Thapar are Greaves Cotton Limited and Premium Energy & Transmission Limited.

The main strengths of the Company are:

Leadership Dominant market leader in Processed China Clay (70% share), a segment characterized by good profitability and a good growth potential. Market leader in modified textile starch (56% share) and a significant player in traditional starch (6% share) with stable growth rates and reasonable profitability

Healthy Demand Healthy domestic demand in clay with end-user industries expected to grow at 12-15 % over next 5 years.

Demand supply gap in traditional starch creates an opportunity to capture this gap.

Credible Promoters Reputed industrial group with a long track record of having managed diverse businesses, each being leaders in their sector

Market Standing Strong Customer support provided by a team of application engineers backed by in house R&D in both the Clay & Starch businesses.

Long standing relationships with market leaders in various industry segments.

Business Growth Turnover growth at a CAGR of 16.6% in last 3 years

Future Growth Clay - In addition to domestic market also tap export markets. Plans

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Starch - Broaden geographical presence in South India for native/modified starch.

Margin Improvements Improved profitability to be driven by: • Increased focus on value added products in processed China Clay & Calcined Clay. • Reduction in manpower and power costs • Improvement in process efficiencies & higher yields in for new starch plant at Shimoga.

Strong R&D Teams Strong R&D set-up at all the manufacturing locations

Services to end Serves diverse industries across various end-user segments like users Paper, Textiles, Pharma, Confectionary, Ceramics, Rubber, Fibre Glass etc.

Restructuring of EICL

Demerger of the Investments Division of EICL to Bharat Starch Products Ltd. (“BSPL”) was proposed under a Restructuring Scheme approved by the Hon’ble High Courts of Kerala and Delhi on 19-12- 2007 and 14-01-2008 respectively. The scheme is envisaged to achieve the following business and commercial objectives and will result in the following benefits for EICL and BSPL: Demerger of the Investments Division would enable EICL to focus on and enhance its core manufacturing business operations by streamlining operations and cutting costs. The Scheme will enable both EICL and BSPL to rationalize and streamline their management, businesses and finances and to eliminate duplication of work to their respective advantage. The Scheme is beneficial to both the companies, their shareholders, creditors, employees and all stakeholders and will enable both companies to achieve and fulfill their objectives more efficiently and economically. The Scheme will contribute in furthering and fulfilling the objects of the both companies and in the growth and development of their business.

Production Facilities

EICL operates its business from five state of the art facilities strategically located in various parts of the Country, listed as follows:

(I) Clay Division

a. Unit Veli, KP III/428, Veli, Thiruvananthapuram - 695021 Kerala Tel : 91-471-2741133 Fax : 91-471-2741033 b. Unit Thonnakkal Speciality Products Division (SPD) Melthonnakkal P.O., Thonnakkal Thiruvananthapuram - 695317 Kerala Tel : 91-471-2619242 c. Unit Kollam Velichikkala P.O Kollam - 691573 Kerala

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Tel : 91-474-2563909

(II) Starch Division

a. Unit Yamunanagar Radaur Road, Yamunanagar - 135001, Haryana Tel : 91-1732-251316 Fax: 91-1732-250178 b. Unit Puducherry Kalitheerthalkuppam Madagadipet Post Pallineliyanur - 605107, Puducherry Tel: 91-413-2640665 Fax: 91-413-2640059

Details of installed capacity and actual production at its current production facilities are as follows:

Particulars 2008 2007 2006 TRV* YMN* POND* TRV* YMN* POND* TRV* YMN* POND* Gross Installed Capacity (Metric Ton) 213,600 78,270 22,770 204,000 78,270 20,130 188,000 76,890 17,700 Net Installed Capacity (Metric Ton) 176,100 45,097 22,770 142,795 41,231 14,178 132,890 38,772 12,706 Actual Production (Metric Ton) 159,935 43,126 15,549 163,660 59,416 14,178 147,659 56,257 12,706 % Capacity Utilisation 91% 96% 68% 86% 95% 70% 85% 92% 72% *TRV – Thiruvananthapuram YMN – Yamunanagar POND - Puducherry

Business Segments

EICL has two business segments namely clay and starch.

As regards the clay business, the Company has its processing plants near Thiruvananthapuram where the clay mines are located. Mining license and the necessary approval for mining have been obtained from the Government of Kerala and the Government of India respectively. The installed capacity of the plant was 36,000 MT per annum initially and it has since been increased to 200,000 MT per annum. Turnover from Clay business of the Company is growing at a CAGR of 19.3% over the last three years and concentrating on the sale of value added products through Research & Development and Products Application team.

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14,000 27.5% 12,000 27.0% 26.5% 10,000 26.0% 8,000 25.5% 6,000 25.0% 24.5% 4,000 24.0% 2,000 23.5% 0 23.0% 2004 2005 2006 2007 2008

Net Sales (Rs. Lakhs) EBITDA %

The Company has taken over the Starch Business of erstwhile Bharat Starch Industries Limited (BSIL), a Company registered under the Companies Act 1956, engaged in the business of manufacturing starch and its derivatives, glucose and modified starches. The Starch Business has two divisions namely Yamunanagar Division and Puducherry Division. The Starch division at Yamunanagar can trace its origins back to 1937 when the Late Lala Karam Chand Thapar promoted a Company by the name of Indian Starch & Chemicals Limited. The name of this Company was later changed to Bharat Starch Industries limited. The Starch Division at Puducherry was set up in 1994- 95 to manufacture modified Starches. The plant produces various grades of starches for industrial applications.

Turnover from Starch business of the Company is growing at a CAGR of 12.8% over last three years and concentrating on the sale of value added products i.e. Modified starches through Research & Development and extensive application support provided to the user industries.

16,000 8.0% 14,000 7.0% 12,000 6.0% 10,000 5.0% 8,000 4.0% 6,000 3.0% 4,000 2.0% 2,000 1.0% 0 0.0% 2004 2005 2006 2007 2008

Net Sales (Rs. Lakhs) EBITDA %

Products and its application

EICL manufactures varieties of superior grade China Clay for diversified applications such as pigments, extender, filler and as raw material in different industries. Superior Coating Grade Kaolin under the trade marks ‘Supercoat’, ‘HIGLOSS’, ‘HIBRITE’ and ‘BCK’ in the form of lumps, powder, and pre-dispersed Spray Dried Powder. Filler and Coating Grade Clay under trade mark ‘KCG’ as lumps, powder, and pre-dispersed Spray Dried Powder. Calcined Clay, used as a substitute for Titanium Dioxide in Paints, Paper, Detergents, and Other grades, is also manufactured by EICL to cater to niche markets.

65 English Indian Clays Limited

EICL’s Starch Division has expanded its capacity and diversified its product mix to emerge as the market leader for certain products. At its Yamunanagar unit, the Company manufactures different products viz. - Maize Starch, IP/BP/PFP, Thintrite, Papyrox, Synthosize, Amylospray, Amylosize, Amylocot, fiberloc, bondex, corn syrup, maltodextrine, high maltose corn syrup, fructose corn syrup, refined corn oil, gluten, maize oil cake, mixed fiber, corn steep liquor. At the Puducherry unit the Company manufactures – Texoplast, Carbojet, Jetsize, PGS, Drilling Starch and Aqua Starch. EICL supplies traditional and modified starches to various industries including textile, paper, pharma and F&B. EICL enjoys a 56% market share in textile starch and a dominant share in the Northern traditional starch market.

Raw Material

Clay Business The Company obtains raw clay from the clay mines near Thiruvananthpuram. This special white clay is available only in the state of Kerala. The mining operations are undertaken as per the mining plan approved by the Indian Bureau of Mines.

The Company owns clay-bearing land near Thiruvananthapuram taking care of the raw material requirements of the Company for the next 25 years. Mining Lease is being obtained from the State Government of Kerala as required. Since adequate clay reserves are available in the nearby areas, additional clay-bearing mines can be made available as and when required depending on the raw material requirements. The gestation period for conversion of newly purchased land into an operational mining lease with an approved mining programme is around two years.

The other raw material inputs are chemicals such as Sodium Dithionate, Sodium Silicate, Tri-Sodium Phosphate, Sulphuric Acid, Sodium Carbonate and Tetra Sodium Pysphorphate, which is the major component of the manufacturing cost. All these chemicals are freely and easily available in the open market.

Power fuel is also one of the major components of the manufacturing cost for which the Company has made necessary arrangements to meet the power requirements.

Starch Business Maize and the Tapioca Starch are the main raw material required by the Company. Maize is available in Punjab, Himachal Pradesh, Uttar Pradesh, Bihar, Maharastra, Rajasthan, Andhra Pradesh, Karnataka. The Tapioca Starch is available in abundance, which the Company procures from Salem at Tamilnadu.

Both the raw materials being agricultural products the crop depends upon the monsoon and the other seasonal factors. Farmers grow Maize both in Rabi and Kharif season. Tapioca is also cultivated these days in both the seasons. Usually, the Company procure the raw material from mandies in the above states keeping a close monitoring on the availability of the materials, quality of the material, and the demand which dictates the price of the material at mandies.

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Production Process

CLAY MANUFACTURING

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STARCH MANUFACTURING

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Customers

EICL supplies Calcined Clay to diverse industries across different sectors ensuring low industry concentration risk. Its key customers of this segment are listed below:

a) Paper Industry : ITC, BILT, NR Group, Khanna Paper, Tamilnadu News Prints Ltd, Andhra Pradesh Paper Mills Limited. b) Paint : Asian Paints, Goodlas Nerolac, Berger, ICI. c) Fibre Glass Industry : Owens Corning, Vertotex, Goa Glass Fibre. d) Rubber : Paragon Footwear, Relaxo. e) Ceramic & Others : Kajaria, Nitco, H & R Johnson (India) Limited.

The Company has a strong focus on manufacturing value added modified starches , and more than 75% of its business in this segment comes from Institutional / Corporate clients as detailed below:

a) Paper and Boards Industry : ITC, Bhadrachalam Papers Limited, J.K. Paper Ltd, Khanna Paper Ltd, BILT, West Coast Papers Ltd, Tamilnadu Newsprints Ltd, Andhra Pradesh Paper Mills Limited and Star Papers Ltd. b) Textiles Industry: Raymonds, Vardhaman, Century Textiles, JCT. c) Pharmaceuticals Industry : Cipla, Torrent, Ranbaxy, Smilax, Wings Pharmaceuticals, Wardex. d) Food & Beverages Industry : Perfetti Vanmelle, Wrigley, Dabur, Parle, Britannia, Surya Food & Agro Ltd.

Marketing Arrangements

EICL has a well-established marketing set-up led by professionals. It has three offices headed by Senior Managers at Delhi, Thiruvananthapuram, & Mumbai and 2 support offices at Kolkata & Ahmedabad to service the domestic market. Company’s to undertake direct supplies to customers and build longstanding partnership through customized solutions, and application support.

Research & Development Set-up

All the manufacturing locations of EICL are well equipped with R&D facilities center recognized by the Department of Science and Technology, Govt. of India, which works upon product innovation, new product development / introduction and providing application support to customers.

It has equipments and application facilities to conduct all tests required as per industry standards ranging from raw material analysis to end-product application. EICL’s R&D has a team of 25 professionals led by PhDs in their respective fields. The Application Team provides the solutions at customer end working with their R&D facilities.

1. Specific areas in which R&D is carried out by the Company in year ended March 31, 2008

Clay Division • Commercialization of Supergloss and Delaminated clay • Introduction of new liquid bleaching technique • To identify process route for Alternative Fiberlin • To develop new product ‘Zeofine’ for catalyst application

Starch Division • Development of different cold water soluble adhesive formulations for various applications in packaging • Review of various process involved in plant and suggesting alternative routes • Commercialization of high valued products in the application area of adhesives, textile printing, wet-end applications of paper.

2. Benefits derived as a result of the above in year ended R&D in year ended March 31, 2008

Clay Division

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• Increased the value added product market and achieved higher contribution. • Pollution free operation and man pover saving • Better utilization of grey matrix

Starch Division • A new cost effective alternative process for wet-end starch (cationic) for paper processing applications. • Introduction of 3 rd variant in cold processable packaging adhesive • Introduction of printing application

3. Future plan of action

Clay Division • Commercialization of Zeofine and Himashine • Identifying process route for the production of pigment composite and FCC catalyst. • Application support to customers for developing cost effective formulations

Starch Division • Development of new formulation for AKD/ASA (pre-gel) emulsion additive • Commercialization of cold water processable formulation for paper cone application of packaging • Process review for enhancing starch recovery

4. Expenditure on R&D in year ended March 31, 2008

(In Rs.) Year ending

31st March 31st March 2008 2007 Capital 34,39,548 7,15,527 Recurring 1,02,87,756 83,77,654 Total 1,37,27,304 90,93,181 Total R&D Expenditure as a percentage of total turnover 0.49% 0.36%

Competition

Clay EICL has operated in this segment since 1963 and has a built a market leadership position (with an estimated 70% market share over past fifteen years). Other players include Twenty Microns (8% market share) and Kerala Ceramics (7% market share), while 10% of the domestic demand is met by imports.

Starch EICL enjoys a 56% market share in textile starch and a dominant share in the Northern traditional starch market. Other players in the native and modified starch segment include Riddhi Siddhi Gluco Biols, Gayatri Starchkem, Sukhjit Starch, Vijayangram Biotech, Alpinot, Anil Starch and Indochem.

Business Strategy

The Company’s business strategy is a. To achieve optimum capacity utilization at all the manufacturing divisions. b. To focus on new products to sustain profitability through its strong R&D supported by effective application team. c. To give thrust to domestic top end requirement of user industries. d. To have presence in International Market through Exports of the products.

70 English Indian Clays Limited e. To build up a sound technical corpus and an effective management team to manage the required growth in the business. f. To enhance/maintain the market share in both the business segments. g. To explore the possibilities for backward & forward integration of the existing businesses.

Expansion Plans

As a part of its expansion programme, EICL has proposed to set up a new Corn Wet Milling Plant at Shimoga District, Karnataka State. The proposed Corn Wet Milling Plant will be implemented in two phases. Phase-I will have a capacity to process 300 tonnes of Maize per day, which will be expanded to 500 tonnes per day during Phase-II. The Corn Wet Milling Plant will have facilities to produce Starch derivatives such as Modified Starch, Liquid Glucose, Malto Dextrine Powder, Dextrine and Pharma Starch. In order to meet the process steam requirement and power requirement of the Corn Wet Milling Plant it is also proposed to install a 6 MW Co-Generation Plant.

The rationale for setting up Starch Manufacturing plant at Shimoga is as under:

To exploit business opportunity with better Return on Investment. To encash upon the favourable demand supply position. To increase market and geographical coverage to all India level, and leverage the technical strength and market goodwill of existing starch division of the Company. To exploit the raw material availability in the region. To enable backward integration with Company’s unit at Puducherry. To create opportunity for export.

Capacity and Capacity Utilisation for Proposed Plant (yearwise)

Particulars 2009-10 2010-11 2011-12 2012-13 Installed Maize Grinding Capacity (Metric Ton Per Day) 300 500 500 500 Equivalent Production Capacity (Metric Ton) 67,200 1,12,000 1,12,000 1,12,000 Production (Metric Ton) 41,000* 90,000 1,01,000 1,12,000 Proposed Capacity Utilisation 80% 80% 90% 100% *in FY10 plant will run for nine months.

Location of the Project

The proposed 500 TPD Corn Wet Milling Plant and 6 MW Co-Generation Plant will be situated adjacent to the Special Economic Zone (SEZ) being developed by Karnataka Industrial Area Development Board (KIADB) in Nidige Village, Shimoga-Bhadravati.

EICL has taken possession of 66.4 acres of land allotted to them by Karnataka Industrial Area Development Board in Plot No. Block-3 of Machenahalli & Nidige Village, Shimoga Taluk, Shimoga District (Karnataka) vide its letter No. KIADB/AE/SMG/15/08-09 dated 29-04-2008. Lease is valid for 11 years and after that may be converted into sale subject to terms of allotment letter.

The site selection for the Corn Wet Milling Plant and the Co-Generation Plant is pre-dominantly determined by the following essential factors :-

• Proximity to sources of supply of major raw material viz., maize • Proximity to water source and assured availability of water • Proximity to power source • Availability of adequate land for the Plant and green belt development • Acceptability of site from environmental aspects • Favourable soil conditions • Availability of water and power during construction • Availability of labour force in the proximity • Road link closer to the Plant

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Shimoga, Karnataka is found to be satisfying all the above factors to a reasonable extent. Karnataka is the leading producer of maize in India as it falls under the corn belt of India and produces around 15% of India’s total produce. EICL has conducted a detailed study of maize production in Karnataka, especially in Shimoga District and have prepared maize survey report, the gist of which is reproduced below :-

Maize Area - Area under maize in Karnataka is increasing at the rate of 10% over the last five years. From 5.80 lakh hectares in the year 2001-02, area under maize for the year 2005-06 is reported to be 9.34 lakh hectares as per data from Agriculture Department. The area under maize cultivation in Karnataka is shown in Fig. 3-1.

Production - Production of maize has increased at the rate of 20% over the last five years. From total production of 14.52 lakh MT during the year 2001-02, production of maize is reported to have increased to 28.32 lakh MTs during the year 2005-06.

Yield/ Productivity - Yield of maize in Karnataka is increasing @ 7% over the last four years as per data available with Agriculture from 2.634 MT per hectare in 2001-02, yield of 3.110 MT per hectare is reported for the year 2004-05.

Quality of Maize - As per data available with the State Government, up to year 2003-04 more than 97% of area under maize is covered with Hybrid variety of seed, yield of which is over 2.5 MT per hectare.

Season - Maize in Karnataka is grown in three seasons, viz., Rabi, Kharif and summer. Sowing for Kharif starts during the months April-May and harvesting is done during the month of October. Similarly for Rabi, sowing is done during October and harvesting is done during April. For very small summer, sowing is done during January and harvesting is done some time in July.

As per data available with the Department of Agriculture, for the year 2003-04, out of total area under maize of 6.18 lakh hectares, 88% area under maize was covered during Kharif and 10.7% was during Rabi and remaining 1.3% during summer. Hence, Kharif remains the main crop for Karnataka supported by Rabi/ Summer. It is understood that there is no major change in the pattern of sowing of maize for the years beyond 2003-04 and Kharif remains the major crop.

It is important to note here that as 88% of total maize production is in Kharif season only whereby material is available from idle of October onwards upto January (i.e. in 100 days) as size of Rabi crop is too small to depend upon. Therefore inventories are to be made for more than eight months from season of about 4 months availability. Alternatively, two/ three months requirement can be made available from Rabi in Bihar, which will have additional expense of around Rs. 1,850/- per MT towards transportation.

It was revealed that as per data available with the Government out of total area of 6.18 lakh hectares under maize for the year 2003-04, 65% area falls under un-irrigated land and only 35% area falls under irrigated land. Thus good rainfall remains a key factor to the overall production as well as yields.

Marketable Surplus - As per discussions with traders/ merchants/ commission agents and Government officials, domestic consumption of Corn in Karnataka is around 25 to 30% of the total production and around 70-75% of total production is exported from Karnataka to the other states in India and to some foreign countries as well.

Availability in Shimoga - As per data available with Department of Agriculture for the year 2005-06, maize in Shimoga District is grown in area of about 34% of total 180,000 hectares of land available for agricultural purposes i.e. in about 61,000 hectares in Kharif season only. Over the last five years, Maize area in Shimoga has increased from just 9% in 2001-02 to 34% in 2005-06. As per data available with the Department, entire area in Shimoga District is covered with Hybrid sowing and this district is one of the top districts having yield of more than 3 MT per hectare. However, good rains remain key factor in total production and overall productivity. Within 170 kms from Shimoga, Maize production in three districts, viz.,

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Chitradurga (110 kms), Davengere (100 kms) and Haveri (170 kms) is around 3.08 lakh MTs that is 25% of total production of Karnataka as per production data for the year 2003-04 available with the Government.

Schedule for implementation of project and progress made so far

The proposed Corn Wet Milling Plant will be implemented in two phases. Phase-I will have a capacity to process 300 tonnes of Maize per day, which will be expanded to 500 tonnes per day during Phase-II.

The details of schedule for implementation of project and progress made so far are given in the Section “Object of the Issue” on page [36] of the LOF.

Plant & Machinery

The details of Plant & Machinery and other equipment proposed to be purchased to set up a new Corn Wet Milling Plant at Shimoga District, Karnataka State are given in the Section “Object of the Issue” on page [36] of the LOF.

There is no Second hand machinery bought /or proposed to be bought for the proposed project expansion.

Production Process

Production process for producing starch from maize is as described on page no.68 of the LOF.

Collaboration

There is no collaboration agreement entered by the Company.

Infrastructure

Road Connection - The Plant site is located on the Shimoga-Bhadravati National Highway, on the North-Eastern Side from where the main approach road to the Plant will be taken. Rail Connection - Shimoga town is the nearest railway station, about 12 kms from the Plant site. No rail connection is envisaged for the Plant. Port facilities - Mangalore Port is about 250 kms away and Redi Port is 300 kms away from the proposed Plant site. The facilities of these ports can be conveniently utilized for receiving imported coal. Man Power - The education of the District as per Census 2001 is 74.86%. Out of this, male literacy is of 82.32% and female literacy is of 67.24%. About 45-60% of employees can be from nearby villages. Their families have dependence on the existing large scale and small scale Industries located in the nearby area. Adequate skilled manpower will be available from the nearby area for the proposed Plant.

Utilities

1. Power - Power requirement is 6.0 MW which is being met by setting up a 6.0 MW Cogen Plant with 1 Steam Turbo generator of 6.0 MW, and 2 Boilers of 25 TPH each. 2. Back – up Power of 2.0 MW is also being obtained from Kerala State Electricity Board (KSEB). During the discussions with KIADB officials, it is understood that there is a proposal for establishing a 33/ 11 kV Sub-station in SEZ area, which will be approximately 2-3 kms from the proposed site. Electric power at 33 kV or 11 kV can be brought to the Plant from this Sub-station. Start-up power can also be drawn from the Grid. However, necessary permissions need to be obtained for the same. 3. Water - Total Water requirement is of 3135 kl/day (m3/day) which will be met by availing 1790 kl/day supply from Karnataka Industrial Area Development Board, and the balance quantity of 1345 kl/day will be by recycling. Additional facilities will be provided for further treatment to make it suitable for industrial use. 4. Steam - Total Steam requirement is of 28 MTPH, which will be met from the 2 Boilers of 25 TPH each.

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5. Compressed Air - Compressed Air requirement is 200 – 250 Nm3/hr @ 6.0 bar pressure, which will be met by 2 nos. compressors with driers.

6. Co-Generation Plant - The actual power consumption for the project considering diversity factor and annual energy requirement is furnished below :

300 TPD 500 TPD Power Consumption, kWh 3,400 4,750 Annual energy requirement at million 330 days/ year, 26.93 37.62 units

Considering the electrical power requirement of 38 million unit per year, the power Plant capacity is calculated as given below :

Annual energy requirement : 38 million units Plant load factor : 85% Auxiliary power consumption : 10% Gross power generation requirement : 5,700 kW

Based on the availability of standard unit sizes from leading turbine manufacturers, 6,000 kW turbo-generator has been considered. The turbo-generator having the controlled extraction will be selected for meeting the steam required for process.

Considering the process steam and power requirement in two phases, two boilers of 25 tph each are proposed. One boiler will be provided in Phase-I and the second boiler will be added in Phase-II.

With one boiler of 25 TPH capacity the Power Plant will produce 4,000 kW power and 14 TPH of process steam in Phase-I. After meeting the Power Plant auxiliary consumption, net power available for the process will be around 3,600 kW, which can comfortably meet the requirement.

Fuels proposed for the Power Plant

Various kinds of fuels can be considered for boiler depending upon the availability in the Plant region: 1. Biomass 2. Indian Coal 3. Imported Coal 4. Wood Chips

Immovable properties of the Company other than project sites

Registered Office of the Company is a freehold property, owned by the company, located at TC- 79/4, Veli, Thiruvanthapuram - 695 021, Kerala.

Corporate Office of the Company is a leasehold property located at Global Business Park, 801- 803, Tower-B, 8 th Floor, Mehrauli-Gurgaon Road, Gurgaon-122 001 (Haryana).

Branch Offices – EICL has three leasehold branch offices listed as follows:

Ahmedabad Branch Office Himavan Samaj Kalyan Kendra Building Pritam Rai Marg, Ellisbridge, Ahemdabad

Mumbai Branch Office 234, Udyog Bhavan, Sonawala Road, Goregaon (East), Mumbai – 400 063

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Delhi Branch Office N-75, Connaught Circus, New Delhi - 110001

Works – EICL has five state of the art production units listed as follows: Clay Unit, Veli, KP III/428, Veli, Thiruvananthapuram - 695021 Kerala

Clay Unit, Thonnakkal Speciality Products Division (SPD) Melthonnakkal P.O., Thonnakkal Thiruvananthapuram - 695317 Kerala

Clay Unit, Kollam Velichikkala P.O Kollam - 691573 Kerala

Starch Unit, Yamunanagar Radaur Road, Yamunanagar - 135001, Haryana

Starch Unit, Puducherry Kalitheerthalkuppam Madagadipet Post Pallineliyanur - 605107, Puducherry

Purchase of Property

Intellectual Property

Following are the Trademarks held by the Company:

1. “Texoplast” Trade Mark has been registered under Trade and Merchandise Marks Act, 1958 in Class 3, in respect of “TEXTILE SIZING AGENTS BEING GOODS” under Registeration No. 548746. The trademark has been renewed on June 13, 2003 for a period of seven years. 2. “CARBOJET” Trade Mark has been registered under Trade Marks Act, 1999 in Class 1, in respect of “TEXTILE SIZING AGENT BEING CHEMICAL PREPARATION INCLUDED IN CLASS 1” under Registeration No.1261077. The trademark has been renewed on January 10, 2006 for a period of seven years. 3. “TEXOPLAST” Trade Mark has been registered under Trade and Merchandise Marks Act, 1958 in Class 3, in respect of “TEXTILE SIZING AGENTS” under Registeration No.538732. The trademark has been renewed on May 13, 2003 for a period of seven years.

Awards & Recognitions

Following are the awards and recognitions attained by the Company:

75 English Indian Clays Limited

1. An Award of First Prize was given to English Indian Clays Ltd., Thonakkal for Standard of Supervision, based on findings of the inspection team constituted for the purpose in connection with the Safety Week Celebrations conducted by Tamil Nadu & Kerala Mines Safety Association, Kerala Zone from 18-02-2008 to 23-02-2008. 2. An Award of First Prize was given to English Indian Clays Ltd., Kolum for Injury Rate Performance, based on findings of the inspection team constituted for the purpose in connection with the Safety Week Celebrations conducted by Tamil Nadu & Kerala Mines Safety Association, Kerala Zone from 18-02-2008 to 23-02-2008.

Insurance

The Company has taken up a range of insurance policies including:

a. Standard Fire and Special Peril Policy including earthquake (fire & shock) and terrorism for Company plants, buildings and offices, raw materials, work-in-progress and finished goods; b. Burglary and House Breaking Policy (Business Premises) for cash in safe. c. Group Personnel Accident Policy. d. Money in Transit, by the insured authorised employee(s), occassioned by robbery, theft or any other fortuitous cause.

These insurance policies are reviewed annually to ensure that the coverage is adequate. The sum total of the insurance cover is approx Rs. 16765 lacs. All the policies are in existence and the premiums have been paid thereon.

Key Industry Regulations

The Starch & Clay Industry are not regulated industries and as such there are no specific key industry regulations govenning the operations of these industries.

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History and Corporate Structure

Incorporation, history and major events of the Company

EICL was incorporated under the provisions of the Companies Act, 1956 with the Registrar of Companies, Kerala vide Certificate of Incorporation No. 2039 of 1963 dated November 18, 1963. We obtained the Certificate of Commencement of Business on October 13, 1983 w.e.f October 3, 1964.

EICL was incorporated in technical and financial collaboration with English China Clays Limited, UK (now known as ECC Group plc, UK). This collaboration with ECC ceased in the year 1992. EICL has since been actively engaged in the manufacture and processing of China Clay of different grades for use as a coating agent and filling agent. The Company has its clay manufacturing units at Veli, Thonnakkal and Kollam located in Thiruvananthapuram, Kerala. Subsequently, the Company acquired the starch business of erstwhile Bharat Starch Industries Limited (BSIL) in the year 2002, pursuant to the Scheme of Reorganization by way of Arrangement, Amalgamation and Reconstruction between English Indian Clays Limited (EICL or the Company), BILT Bio Chemicals Ltd. (BBCL) and Bharat Starch Industries Limited (BSIL) and Scheme of Reconstruction of Bharat Projects Limited (BPL) as approved by the Hon’ble High Court of Gujarat, Kerala and Delhi.

Presently, EICL is a part of BM Thapar Group. Mr. Karan Thapar is the Chairman of the Company.

The shares of the Company were earlier listed on Madras Stock Exchange, Cochin Stock Exchange, Delhi Stock Exchange and Bombay Stock Exchange Ltd. and the shares have been since de-listed from first three Stock Exchanges w.e.f. July 30, 2004; February 16, 2004 and March 31, 2004 respectively. The Equity shares of the Company are presently listed on the Bombay Stock Exchange Ltd only w.e.f. 07-09-1994.

Registered Office Registered Office of the Company is located at TC-79/4, Veli, Thiruvananthapuram - 695 021, Kerala.

The situation of the registered office of the Company changed from KP-III/428, Veli, Thiruvananthapuram - 695 021, Kerala to TC-79/4, Veli, Thiruvananthapuram - 695 021, Kerala w.e.f. July 29, 2005. However, there was no actual shifting of the registered office and the address of the registered office was changed only due to merger of Kadakampallay Panchayat with Thiruvananthapuram Corporation.

Key Events & Milestones

Year Events Description 1963 Incorporation of Company EICL was incorporated on 18.11.1963 1990 Dilution of ECC’s Stake Thapars bought the ECC’s stake in the EICL and Mr Karan Thapar Joined Board of EICL 1992 Rights Issue Right Issue to the existing shareholders as per the Letter of Offer dated September 12, 1992 (4 equity shares for every one equity share in the company) 1993 Appointment of CMD Mr Karan Thapar was appointed as Chairman cum Managing Director of the Company (CMD) 1994 Bonus Issue Issue of 1510450 Equity shares as fully paid- up Bonus Shares in the ration of 1:1 by capitalization of general Reserves 1994 Listing on BSE The shares of EICL were listed on the Bombay Stock Exchange w.e.f September 7, 1994 1994 Foray into specialty starch EICL commissioned a specialty Starch Plant at Puducherry for textile industry 1996 De -merger of Starch EICL de -merged its starch Business to Bharat

77 English Indian Clays Limited

Business by EICL Starch Industries Limited w.e.f. 01.04.1995 pursuant to the Scheme of Arrangement between English Indian Clays Limited and Bharat Starch Industries Limited 2002 Merger of Bharat Starch with EICL acquired the starch business of EICL erstwhile Bharat Starch Industries Limited w.e.f. April 1, 2001 pursuant to the Scheme of Reorganization by way of Arrangement, Amalgamation and Reconstruction between English Indian Clays Limited, BILT Bio Chemicals Ltd. and Bharat Starch Industries Limited and Scheme of Reconstruction of Bharat Projects Limited 2003 Capacity Expansion Capacity expansion in calcine clay at new locations by commissioning of a R&D project for the manufacturing of 25000 MTA of Calcined Clay during the year 2003-04 2005 Capacity Expansion Capacity expansion in Hydrus clay at new locations 2007 Appointment of MD Mr Karan Thapar resigned from the post of MD and became Non-executive Chairman. Mr D. Kohli was appointed as Managing Director 2007 Acquisition in Clay EICL acquired the clay manufacturing division of Wolkem Clays Pvt Limited at Kollam (Kerala) and commenced production w.e.f. September 11, 2007 2008 Commissioning of Co-gen A 2 MW Co-gen plant is being commissioned plant at Yamunanagar to reduce the cost of steam & power significantly 2008 Demerger of Investment De-merged its investment divisions to Bharat Division Starch Products Ltd pursuant to an Scheme of Arrangement and De-merger between English Indian Clays Ltd and Bharat Starch Products Ltd

Restructuring History

1. 1996 – De-merger of Puducherry Starch Unit to erstwhile Bharat Starch Industries Limited

Pursuant to the Scheme of arrangement U/S 391 of Companies Act, 1956 between English Indian Clays Limited (EICL) and Bharat Starch Industries Limited (BSIL) approved by Hon’ble High Courts of Kerala and Gujarat on 17.07.1996 and 03.09.1996 respectively, the Puducherry Starch Unit located at Punducherry was hived off to BSIL w.e.f the transfer date April 1, 1995 on a going concern basis.

2. 2002 - Amalgamation of the starch business of erstwhile Bharat Starch Industries Limited with EICL

The Scheme of Reorganization by way of Arrangement, Amalgamation and Reconstruction between EICL, BILT Bio Chemicals Ltd. (BBCL) and Bharat Starch Industries Limited (BSIL) and Scheme of Reconstruction of Bharat Projects Limited (BPL) was approved by the Hon’ble High Court of Gujarat vide their order dated February 8, 2002, by Hon’ble High Court of Kerala vide their order dated April 10, 2002 and thereafter by the Hon’ble High Court of Delhi vide their order dated May 9, 2002. The Scheme became operative from the Appointed Date, April 1, 2001.

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The erstwhile BSIL was engaged in the business of manufacturing and sale of starch and allied products and citric acid and the Company was engaged in the business of mining and manufacturing of clay products. The salient features of the scheme are set out below: a) All the properties of BSIL pertaining to the Citric Acid business including leasehold rights, tenancy rights, entitlements, licenses, contracts, arrangements present and future liabilities and debts vested in BBCL on a going concern basis at the values indicated in the scheme. b) All the assets, rights, title and interests of the residuary undertaking including starch business vested in the Company with effect from the Appointed date i.e. April 1, 2001.

c) The Balance Sheet of BPL (a subsidiary Company of EICL), was reconstructed based on valuation of the investment business as determined by independent valuer and the Share Capital of BPL was reduced to the extent of the loss on such valuation.

3. 2008 – EICL de-merged its investment division to Bharat Starch Products Ltd

The Investment Division of the Company was de-merged into Bharat Starch Products Limited (BSPL) on an ongoing concern basis pursuant to an Scheme of Arrangement and De-merger between English Indian Clays Ltd and Bharat Starch Products Ltd as approved by the Hon’ble High Court of Kerala and Hon’ble High Court of Delhi vide their orders dated December 19, 2007 and January 14, 2008 respectively.

The Scheme became operative w.e.f the Appointed Date i.e., April 1, 2007 upon filing of the certified copy of the Order dated December 19, 2007 of the Hon’ble High Court of Kerala and Order dated January 14, 2008 of the Hon’ble High Court of Delhi, with the Registrar of Companies on January 31, 2008 and filing of revised Order on February 12, 2008.

As per the Scheme the de-merger would envisage achieving the following business and commercial objectives and will result in the following benefits:

The salient features of the Scheme are set out below:

1. Option given by BSPL: An option is given in the Scheme whereunder an eligible member i.e. any person being a shareholder of EICL as on the record date i.e., 20-02-2008 had an option to receive 100 (one hundred), 8% Cumulative Redeemable Preference Shares (“CRPS”) of Rs.10/- each of BSPL, redeemable

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at par on expiry of ten years from date of allotment, in lieu of one BSPL equity share of Rs.10/- each as per the entitlement hereinbefore mentioned. Such an option to receive equity shares or 8% CRPS shall be exercised by the eligible members within a period of 35 days from the date of the notice. However, in case any eligible member does not convey or inform the Company of his/her option within the aforesaid period, then he/she shall be deemed to have opted for equity shares.

2. Option given by DBH International Pvt. Ltd. and Karun Carpets Pvt. Ltd.: In order to give the eligible equity shareholders of EICL, an opportunity to exit and provide liquidity to the equity shareholders, DBH International Pvt. Ltd. and Karun Carpets Pvt. Ltd. have provided through the Scheme an exit price of Rs.1000/- per equity share of BSPL as per the entitlement hereinbefore mentioned, based on the valuation done by an Independent Valuer. This option can be exercised by the eligible members for a period of 1 year from the record date i.e. upto 19.02.2009 on the same price i.e., Rs 1000/- per equity share.

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Main Objects

The Company has been incorporated before the commencement of the Companies (Amendment) Act, 1965 and accordingly there is no classification of the Object Clause of the Memorandum of Association in to (a) main objects, (b) objects incidental or ancillary to the attainment of main objects and (c) other object clause. All the business activities of our Company have been covered under the Object Clause of the Memorandum of Association. The relevant Object Clauses are as follows:

(2) To carry on in India or elsewhere the business of producers, manufacturers, merchants and exports of or dealers in China Clay, china stone, ball clay, tiles, pipes, fencing posts, building stone, bricks, paving blocks, sand gravel, clay, builders’ materials, mica, lime pottery, terracotta, tin, tin-ore, tin products, copper, copper- ore, copper products, and other metallic minerals, minerals, chemicals, timber, paper, artificial stone, glass, casks, sacks, cases and other package.

(3) To buy, sell, hire or deal in, search for, obtain, win, get, quarry refine and prepare for market China Clay, china stone of all kinds, ball clay, felspar, potters’, paper makers and cotton spinners’ materials and chemicals and other cognate substances, tin, copper, zinc, mica and other materials, silica and quartz and to take or acquire leases of land containing any such substances, or of land required for the purposes of dealing with them.

(4) To carry on in India or elsewhere the business or businesses of builders, contractors, miners, metallurgists, quarry owners, hauliers, shippers, ship owners, freight contractors, general carriers by land and sea, railway and forwarding agents, wharfingers, warehousemen and commission agents.

(22) To establish, provide maintain and conduct China Clay research and other laboratories, training colleges, schools and other institutions for the training, education and instruction of students and others who may desire to avail themselves of the same and to provide for the delivery and holding; of lectures, demonstrations exhibitions, classes, meetings and conferences in connection therewith.

(37) To manufacture, produce, process, develop, purchase, import, export sell; acquire, prepare, for market and generally deal in (either as principal or as agent) Starch, Modified Starch; Biopolymers, allied products, by-products and derivatives thereof, and any or all the products or by-products thereof and any mixtures or compounds thereof and all or any articles consisting or partly consisting thereof and any mixture or compounds thereof, including, hydrogenated and fermented products.

(38) To manufacture, produce, refine, rectify, manipulate, import, export, buy, sell and deal in all or any products, any by- products, mixtures, compounds, modifications and derivatives of corn, sugar, feeds, starch, rice, sorghum, sago, wheat and other cereals and / or any farinaceous products, tapioca and vegetables, and any articles consisting thereof.

Changes in Memorandum Association (MOA)

Date of Details of Change in the MOA Shareholders Approval 30-09-1981 Change in the Capital Clause of the MOA on sub-division of the face value of equity shares from Rs. 100/- to Rs. 10/- per share 20-08-1991 Change in the Capital Clause of the MOA on increase in authorized share capital from Rs. 30 lacs to Rs. 300 lacs 20-08-1992 Object Clause of the MOA was altered by inserting new clause no. 37 to 41 immediately after clause no. 36 26-07-1993 Object clause of the MOA was altered has been changed by inserting new clause no. 41(a) to 41(d) immediately after clause no. 41 05-11-1993 Change in the Capital Clause of the MOA on increase in authorized share capital from Rs. 300 lacs to Rs. 500 lacs 14-11-1997 Object clause of the MOA was altered replacing new clause no.17 in place of the old clause no. 17

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26-08-2002 Change in the Capital Clause of the MOA on increase in authorized share capital from Rs. 500 lacs to Rs. 1800 lacs 31-08-2006 Change in the Capital Clause of the MOA on increase in authorized share capital from Rs. 1800 lacs to Rs. 3800 lacs

Subsidiaries of the issuer Company There is no subsidiary Company of EICL.

Holding Company of the Issuer Company The Company does not have a Holding Company.

Shareholders agreements At present there are no shareholders agreements between the Company and any other person.

Other Agreements There are no other material contracts, not being contracts in the ordinary course of business entered into or to be entered into by the Company, or a contract entered into more than two years before the date of filling this LOF.

Strategic Partners The Company as on date has no strategic partners.

Financial Partners The Company also has no financial partners. Except the agreements in the normal course of business, the Company has not entered into any other financial agreements of any kind.

Management

EICL is a professionally managed Company, which is listed on BSE and is run by Board of Directors supported by a team of professionals.

The Board of Directors and key management personnel of the Company are as mentioned below. The composition of the Board of Directors is in compliance with requirements of corporate governance:

Board of Directors

Name, Age, Residential Address, Occupation, Term, Qualifica Other Directorships/ Membership in Designation Date of Appointment, DIN tion Committee of other Companies

Mr. Karan Thapar , Chairman ACA Other Directorship: 51 years, 1. Greaves Cotton Ltd. 8, Cedar Avenue, DLF 2. Standard Refinery & Distillery Ltd. Chattarpur, New Delhi 110030. 3. Bharat Starch Products Ltd. Industralist 4. KCT Chemicals & Electricals Ltd. 5. DBH International Pvt. Ltd. Liable to retire by rotation 6. Premium Energy Transmission 21-09-1990 Limited 7. Karun Carpets Pvt. Ltd. DIN : 00004264 8. Bharat Projects Pvt. Ltd. 9. DBH Global Holdings Ltd.

Committee Membership:

Audit Committee Greaves Cotton Ltd. -Member

Shareholders/Investors Grievance Committee

82 English Indian Clays Limited

Greaves Cotton Ltd. - Member

Mr. Dellinder Kohli , Managing BA Other Directorship: 62 years, Director 1. Standard Refinery & Distillery Ltd. B-24 (Rear), Greater Kailash – I 2. Bharat Starch Products Ltd. New Delhi – 110048, Service Committee Membership: NIL Not liable to retire by rotation; (Appointed as Managing Director w.e.f April, 2007 for three years), 01-04-2007

DIN : 00003528

Mr. Som Nath Dua , Director FCA & Other Directorship: 67 years, FCS 1. Bharat Starch Products Ltd. 192, Sector-21B 2. Haryana Telecom Ltd. Faridabad – 121 001 3. Standard Refinery & Distillery Ltd. Haryana, 4. Mahaan Proteins Ltd. Business, 5. DBH International Pvt. Ltd. 6. Bharat Projects Pvt. Ltd. Liable to retire by rotation, 20-11-1992 Committee Membership:

DIN : 00003510 Audit Committee Haryana Telecom Ltd. - Chairman Mahan Proteins Ltd. - Chairman

Share Transfer Committee Haryana Telecom Ltd.- Member

Mr. Suresh Kumar Toshniwal , Director BCom Other Directorship: 62 years, 1. Standard Refinery & Distillery Ltd. B-255, Greater Kailash – I 2. Toshniwal Drugs & Pharmaceuticals New Delhi – 110 048, Ltd. Business 3. Toshniwal Son (P) Ltd.

Liable to retire by rotation, Committee Membership: 31-05-1978 NIL

DIN : 00004250

Mr. Shankara Pillai Director MA Other Directorship: Padmakumar , 1. City Theatres (P) Ltd. 74 years, 2. BPL Ltd. “Sansar”, Jawahar Nagar Road, 3. Binani Industries Ltd. Thiruvananthapuram – 695 041, 4. Binani Cement Ltd. Kerala, 5. Goa Fibre Glass Ltd. Business 6. Binani Lead Ltd. 7. Binani Zinc Ltd. Liable to retire by rotation, 15-12-1993 Committee Membership: Audit Committee DIN : 00009237 BPL Ltd. – Member Binani Industries Ltd.– Chairman Binani Cement Ltd. – Chairman Goa Fibre Glass Ltd. – Member Binani Lead Ltd.– Member

Investors Relations Committee

83 English Indian Clays Limited

BPL Ltd. – Member Binani Industries Ltd. - Member Binani Cement Ltd. - Chairman Goa Fibre Glass Ltd. – Member

Mr. Jainender Kumar Jain , Director - Chartere Other Directorship: 62 years, Nominee of d 1. Simbhaoli Sugar Ltd. House No.C-018, GAIL ICICI Bank Accounta 2. Jamna Auto Industries Ltd. Employees Coop. Group nt 3. Mahanagar Gas Ltd. Housing Society, Plot No.GH-9, Sector-56, Gurgaon – 122 003, Committee Membership: Haryana, Service Audit Committee Simbhaoli Sugar Ltd. – Member Not liable to retire by rotation, Jamna Auto Industries Ltd. - Member 26-05-2006 Mahanagar Gas Ltd – Member

DIN : 00066452 Remuneration & Compensation Committee Simbhaoli Sugar Ltd. – Member Jamna Auto Industries Ltd – Member

Mr. Vijay Rai , Director B. Tech Other Directorship: 61 years, 1. Punjab Chemicals and Crop Care 4A, Cleave House, 90, Wod Ltd. House Road, Colaba, 2. Akola Chemicals (India) Ltd. Mumbai – 400 005, 3. Greaves Cotton Ltd. Business 4. Greaves Leasing Finance Ltd. 5. Prince Plastics International Pvt. Ltd Liable to retire by rotation, 6. Navneet Publications (India) Ltd. 07-08-2000 7. Viswas Business Solutions Ltd. 8. Polygel Technologies (I) Pvt Ltd. DIN : 00075837 Committee Membership:

Audit Committee Greaves Cotton Ltd. – Member Punjab Chemicals Corp Care Ltd. - Member

Shareholder’s Grievance Committee Greaves Cotton Ltd. – Member

All the Directors have confirmed that there is no pending litigation / dispute or criminal / civil prosecution against them.

Brief Profile of the Board of Directors

1. Mr. Karan Thapar, Chairman

2. Mr. Dellinder Kohli, Managing Director

84 English Indian Clays Limited

3. Mr. Som Nath Dua

4. Mr. Suresh Kumar Toshniwal

5. Mr. Shankara Pillai Padmakumar

6. Mr. Jainender Kumar Jain

Mr. J.K. Jain, aged 62 a Chartered Accountant retired from Gas Authority of India Ltd. (GAIL) as Director (Finance). He was nominated on the Board by ICICI Bank Ltd.

7. Mr. Vijay Rai

Borrowing Powers

Pursuant to a resolution of the shareholders of our Company dated July 30, 2007, the Board has been authorised to borrow sums of money for the purpose of our Company upon such terms and conditions from time to time as the Board may think fit, provided that the money or monies to be borrowed together with the monies already borrowed by our Company (apart from the temporary loans obtained from our bankers in the ordinary course of business) shall not exceed, at any time, a sum of Rs. 2,00,00,00,000 (Rupees two hundred crores only) over and above the aggregate of the paid up capital of our Company and its free reserves.

For further details on the borrowing powers of the Directors as authorized by the Articles of Association, refer to section titled “Main provisions of the Articles of Association” beginning on page 200 of this Letter of Offer.

Compensation of Managing Director/ Whole Time Director

85 English Indian Clays Limited

The Company’s board consists of only one Managing Director / Whole time Director i.e Mr. Dellinder Kohli. The Directors in their meeting held on 24-01-2007 appointed Mr. D. Kohli as the Managing Director of the Company for a period of 3 years w.e.f. April 1, 2007 to March 31, 2010 on a total remuneration upto Rs.60,00,000/- per year with a power to the Board to increase the amount of remuneration from time to time during the tenure of Mr. D. Kohli as Managing Director, subject to overall ceiling of 5% of net profits of the Company as calculated under sections 349 and 350 read with section 198 of the Companies Act, 1956. The detailed components of the remuneration shall be worked out by the Company in consultation with Mr. D.Kohli. In case of absence or inadequacy of profits in any financial year during the tenure of the Managing Director Mr. D. Kohli, the remuneration drawn by Mr. D. Kohli, Managing Director shall be considered the minimum remuneration subject to the limits specified in Schedule XIII of the Companies Act, 1956. Total remuneration paid to Mr. D. Kohli during 2007-08 is as follows: (Amount in Rs.) Executive Director Salary Perquisites Retirement Commission Total Benefits Mr. Dellinder Kohli 28,73,000/- 213,000/- 486,000/- - 3,572,000/-

Compensation of Non-Executive Directors

The members of the Company in their Extra-Ordinary General meeting held on August 24, 2004 had approved for the payment of Commission @ 1% per annum, in aggregate, to the Non-Executive Directors of the Company U/s 309 of the Companies Act, 1956 on the Net Profit of the Company as calculated U/s 349 and 350 of the Companies Act, 1956. Keeping in view of the overall involvement of Mr. Karan Thapar, Chairman of the Company in the affairs of the Company’s business, the Directors resolved to give 1% commission to Mr. Karan Thapar. Accordingly, a commission Rs 32,46,265 was paid to Mr Karan Thapar in the year 2007-08.

Sitting fee is paid to the Non-executive directors of the Company for attending Board Meetings and Meetings of the Committee of the Board. Sitting fees paid to the Company’s Non-Executive Directors for attending Board and Committee meetings during 2007-08 is as follows: (Amount Rs) Name Sitting Fees (Rs.) Mr. Karan Thapar 50,000/- Mr. S.N. Dua 105,000/- Mr. S.K. Toshniwal 77,000/- Mr. S. Padmakumar 50,000/- Mr. Vijay Rai 120,000/- Mr. J.K. Jain 100,000/- Qualification Shares required to be held by our Directors

As per Article 93 of the Articles of Association of our Company, a Director need not hold any shares in the Capital of our Company to qualify him to act as a Director of our Company.

Interest of our Directors: The Directors of our Company have no interest in our Company, except to the extent of the following:

a. fees, if any, payable to them for attending meetings of the Board or Committee thereof; b. remuneration (received by them in their respective capacities) and reimbursement of expenses if any; c. any Equity Shares of our Company held by them; in contracts, agreements or arrangements entered into or to be entered into by our Company, with any company in which they hold directorships, or any partnership firm in which they are partners, as declared in their respective declarations.

All the Directors may also be deemed to be interested to the extent of Equity Shares, if any, that may be subscribed for and allotted to them, out of the present issue in terms of this Letter of Offer. All the Directors may also be deemed to be interested to the extent of any dividend, if any, payable to them and other distribution in respect of the said Equity Shares.

86 English Indian Clays Limited

Corporate Governance

The Corporate Governance assumes great importance in the business of the Company. The Company adopted adequate policies of Corporate Governance to ensure transparency, professionalism and accountability in its dealing with stakeholders, customers, lenders and employees.

The composition of Board of Directors, Audit Committee and Investor Grievance Committee are in compliance with the requirement of Clause 49 of the listing agreement.

Composition of Board of Directors

The Board of Directors comprises of a Non-Executive Chairman, an Executive Director and five Non- Executive Directors including one Nominee Director. All Non-Executive Directors are persons of eminence and bring in a wide range of expertise and experience to the Board.

Name of the Director Position Category Mr. Karan Thapar Chairman Non Executive - Promoter Mr. Dellinder Kohli Managing Director Executive Mr. Som Nath Dua Director Non- Executive- Independent Mr. Suresh Kumar Toshniwal Director Non- Executive- Independent Mr. Shankara Pillai Padmakumar Director Non- Executive- Independent Mr. Jainender Kumar Jain Director - Nominee of ICICI Bank Ltd. Non- Executive- Independent Mr. Vijay Rai Director Non- Executive- Independent

The following committees of the Board of Directors for compliance with the corporate governance requirements have been constituted:

• Audit Committee; • Shareholder's /Investor Grievances/ Share Transfer Committee

1. Audit Committee

The powers of the Audit Committee are as mentioned in Clause 49(II) (c) and (d) of the Listing Agreement and Section 292A of the Companies Act, 1956. The terms of reference of this Committee are wide enough covering the matters specified for Audit Committees under the Listing Agreement. The Committee acts as a link between the management, the Statutory and the Internal Auditors on one side and the Board of Directors of the Company on the other side and oversees the financial reporting process.

The Audit Committee comprises of three Independent Directors viz. Mr. Vijay Rai, Mr. S.K. Toshniwal and Mr. S.N. Dua. Mr. Vijay Rai is appointed by the Committee as the Chairman of the Committee. Mr. P.S. Saini, Company Secretary is the Secretary to the Committee. The Vice President (Corporate Finance, Accounts & Administration) is the permanent invitee at the Committee Meetings.

The terms of reference of the Audit Committee inter alia, include the following :

••• Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. ••• Recommending the appointment and removal of external auditor, fixation of audit fee and also approval for payment for any other services. ••• Reviewing with management the half yearly/annual financial statements before submission to the Board, focussing primarily on; o Any changes in accounting policies and practices. o Major accounting entries based on exercise of judgement by management. o Qualification in draft audit report. o Significant adjustments arising out of audit. o The going concern assumption.

87 English Indian Clays Limited

o Compliance with accoutning standards. o Compliance with Stock Exchange and legal requirements concerning financial statements. o Any related party transactions i.e. transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of Company at large. ••• Reviewing with the management, external and internal auditors, the adequacy of internal control systmes. ••• Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. ••• Discussion with internal auditors on any significant findings and follow up there on. ••• Reviewing the finding of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. ••• Discussion with external auditors before the audit commences, regarding the nature and scope of audit as well as have post-audit discussion to ascertain any area of concern. ••• Review of the Company's financial and risk management policies. ••• To look into the reasons for substantial defaults in the payment to depositors, debentureholders, shareholders (in case of non payment of declared dividends) and creditors.

2. Shareholder's /Investor Grievances/ Share Transfer Committee

The Committee is formed to approve the transfer/transmission of shares/issue of duplicate share certificates and to look into the redressing of shareholders’ and investors’ complaints with respect to transfer of shares, non-reciept of balance sheet, not-receipt of declared dividend etc.

The Shareholder’s/Investor Grievance Committee comprises of Mr. S.K. Toshniwal as Chairman of the Committee and Mr. Karan Thapar, Mr. D. Kohli and Mr. S.N. Dua as other members of the Committee. Mr. P.S. Saini, Company Secretary is the Compliance Officer of the Company.

There is no complaint pending as on date.

Other Committees:

Besides the above mentioned Committees, the Company has the following other working committees of the Board:

a. Sub-committee of Directors (for Present Right Issue) b. Sub-committee of Directors (for approval of quarterly/ half yearly un-audited results) c. Risk Management Committee

The Company has constitutes a Sub-committee of Directors consisting of Mr Karan Thapar, Mr. S.K. Toshniwal, Mr. D. Kohli and Mr. S.N. Dua in the Board meeting held on January 25, 2008 for the purposes of the present Right Issue. The sub-committee has been delegated with the following powers:

a. Fixing of the record date for the purpose of determining eligibility of the Existing Shareholders for the entitlement of Right Shares; b. Eligibility of the Existing Shareholders for the entitlement of Equity/Preference Shares of Bharat Starch Products Ltd. in terms of the Scheme of Demerger; and c. To do all other acts, matters and things including but not limited to any follow up acts, deeds and matters as may be required or expedient in or about the premises.

Director’s Shareholding

As per Clause 93 of the Articles of Association of the Company, no qualification share is prescribed for being a director. The following is the details of the shareholding of the Directors who hold shares either in their personal capacity or as joint holders, as on the date of filing of this LOF:

88 English Indian Clays Limited

Number of Director Equity Shares (Pre-Issue) Mr. Karan Thapar (incl. jt. holding) 6400 Mr. Dellinder Kohli Nil Mr. Shankara Pillai Padmakumar Nil Mr. Vijay Rai 700 Mr. Som Nath Dua 200 Mr. Suresh Kumar Toshniwal 1500 Mr. Jainender Kumar Jain Nil

Changes in Directors during last Three Years

Name Date of Date of Appointment Cessation Nature of Change Dr. A.K. Bhattacharya - 25-05-2006 Nominee Director replaced by ICICI Bank Ltd. with Mr Jainender Kumar Jain Mr. Jainender Kumar Jain 26-05-2006 - Appoint ed in place of Mr A K Bhattacharya as an ICICI Bank Ltd. nominee director Mr. Mohan Lal Khemka - 12-02-2007 Resigned Mr B M Thapar - 31-07-2007 Retired by rotation in the Annual General Meeting Mr. Dellinder Kohli 01-04-2007 - Appointed as Managing Di rector of the Company w.e.f April 1, 2007 for three years

89 English Indian Clays Limited

Organisation Structure of the Company

90 English Indian Clays Limited

Key Management Personnel

The Company is managed by its Board of Directors, assisted by qualified professionals, with vast experience in the field of production/finance/ distribution/marketing and corporate laws. The following key personnel assist the Management:

Date of Total Previous Name, Designation Age Joining Qualification Experience Employment Gross Salary*

DBH Mr. Dellinder Kohli , B.A., Ex-Wing International Pvt Managing Director 62 01.04.1993 Com (IAF) 18 years Ltd, N Delhi 42.19

Khemka Mr S K Jain , VP (Corp- Chartered Aviation Limited, F&A) 50 04.11.1992 Accountant 25 years N Delhi 25.49 Kothari Mr B Thakkar , VP- BD BE (Chem), Beverages, & Corp HR 48 01.04.2004 MBA. 20 years Baroda 24.06

Mr G S Nair , VP Tata Consulting (Works) 51 01.08.1987 B Tech 24 years Engg., Banglore 23.19

Mr Abhay Singh, GM B Tech (Mech), (Corporate Strategy) 37 10.12.2007 MBA 13 years Duncan Goenka 36.39 Supertex (India) Corporation Ltd, Mr J S Patil , GM (Ops) 53 12.05.1986 BE (Textiles) 30 years Mumbai 24.36 Mr Sanjeev Thomas , GM (Operations - Clay India Almunium Business) 49 09.07.1993 B Tech, MBA 19 years Company Ltd 17.59

Mr P S Saini, Appolo Tubes Company Secretary 48 02.06.1986 FCS, LLB 25 years Limited, N Delhi 19.03 *paid for year ending March 31, 2008 (Rs. In Lacs)

All the key managerial personnel are permanent employees of the Company.

Shareholding of Key Managerial Personnel The shareholding of the key managerial personnel of the Company as on the date of filing the Draft LOF is as follows: Number of Equity Shares Held (Pre- Name Issue) Mr. Dellinder Kohli Nil Mr S K Jain Nil Mr B Thakkar Nil Mr G S Nair 200 Mr J S Patil Nil Mr Sanjeev Thomas Nil Mr Abhay Singh Nil Mr P S Saini Nil

Bonus or Profit Sharing Plan for the Key Managerial Personnel The Company does not have any bonus or profit-sharing plan for its Key Managerial Employees.

91 English Indian Clays Limited

Changes in Key Managerial Personnel There is no change otherwise than by way of retirement in the normal course in the key senior managerial personnel particularly in charge of production, planning, finance and marketing within three year prior to the date of filing the LOF with the Board shall be disclosed.

Employees The total number of employees of the Company as on 31 st March 2008 is 736.

Employees Stock Option Scheme / Employees Stock Purchase Scheme Till date, the Company has not introduced any Employees Stock Option Scheme / Employees Stock Purchase Scheme, as required by the Guidelines or Regulations of SEBI relating to Employee Stock Option Scheme and Employee Stock Purchase Scheme.

Payment or Benefit to Officers of the Company No amount or benefit has been paid or given within the two preceding years or intended to be given to any of the directors or key managerial personnel.

Interest of Promoters, Directors and Key Managerial Personnel Except as stated in “Related Party Transactions” on page [127] of this LOF, and to the extent of shareholding in the Company, the promoter and promoter group does not have any other interest in the Company’s business.

All Directors of the Company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a Committee thereof as well as to the extent of other remuneration, reimbursement of expenses payable to them under the Articles of Association. All the Directors may also be deemed to be interested to the extent of Equity Shares, if any, held by them or that may be subscribed for and allotted to them, out of the present Issue in terms of this LOF and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. None of the Directors are interested in any advances or facilities that have been provided by us to their relatives or persons in which such relatives are interested.

The key managerial personnel of the Company do not have any interest in the Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business and to the extent of the Equity Shares held by them in the Company, if any.

92 English Indian Clays Limited

Promoters and their Background

EICL’s current promoters are:

Individual Non-Individual Mr. B.M. Thapar DBH International Pvt. Ltd. Mrs. Sulochana Thapar Karun Carpets Pvt. Ltd. Mr. Karan Thapar Bharat Projects Pvt. Ltd.

Individual Promoters

1. Mr. BM Thapar

Photograph of the promoter

Residential Address E-16, Pushpanjali Farms, Bijwasan, New Delhi -110 061 Date of Birth October 8, 1922 Educational Qualification Senior Cambrige Experience in Clay Business 52 years Experience in Starch Business 52 years Occupation Industrialist Passport Details E7711661 Permanent Account Number ABNPT6304L Voter ID Number CPJ1144807 Driving License Number - Name of Bank and Address Hsbc Bank, Jmd Bldg., Gurgaon Account Number 054-136338-006

Mr. B.M. Thapar, aged 85, a Senior Cambridge, is a reputed industrialist having over 50 years of vast experience in different industries. He has been associated with the Company since 1992 and under his esteemed guidance and leadership the Company has grown remarkably over a period of time.

2. Mrs. Sulochana Thapar

Photograph of the promoter

Residential Address E-16, Pushpanjali Farms, Bijwasan, New Delhi -110 061

93 English Indian Clays Limited

Date of Birth December 27, 1934 Educational Qualification Undergraduate Experience in Clay Business - Experience in Starch Business - Occupation Industrialist Passport Details G7978320 Permanent Account Number ACSPT3895N Voter ID Number - Driving License Number - Name of Bank and Address Hsbc Bank, Jmd Bldg., Gurgaon Account Number 051-203214-006

Mrs Sulochana Thapar aged 73 years is one of the promoters of the Company. She is an industrialist.

3. Mr. Karan Thapar

Photograph of the promoter

Residential Address 8, Cedar Avenue, DLF Chattarpur, New Delhi Date of Birth March 20,1957 Educational Qualification Chartered Accountant Experience in Clay Business 26 years Experience in Starch Business 26 years Occupation Industrialist Passport Details Z1347648 Permanent Account Number ABNPT6297Q Driving License Number P03032001253607 Name of Bank and Address Axis Bank Ltd., Statesman House, Connaught Place, New Delhi - 110001 Account Number 007010100193825

Mr. Karan Thapar aged 51 years, is a Chartered Accountant and belongs to the Promoter family of English Indian Clays Ltd. Mr. Karan Thapar has over 26 years of experience in various industries.

Non-Individual Promoters

1. DBH International Pvt. Ltd. (DBH)

DBH was incorporated on January 11, 1950 for taking over the business of M/s Dadabhoy Hormusjee & Sons as a going concern to carry out the business of Customs & Clearing agents originally. Presently the Company has been engaged in the business of clay mining other allied activities.

The Company has following subsidiaries:

94 English Indian Clays Limited

a. Bharat Starch Products Limited (100% subsidiary) b. Premium Energy Transmission Limited

The details of the aforesaid companies have been given in the section Details of Promoters Companies.

Management

DBH International Pvt Ltd is promoted by B M Thapar Group. The Management of the Company is vested in the Board of Directors, which comprises of eminent professionals. The Chairman of the Company Mr. Karan Thapar has over 26 years of experience in various industries. The day-to-day affairs of the Company are managed by Mr. B.M. Thapar subject to the superintendence and control of the Board of Directors of the Company. The Board of Directors of the Company consists of the following:

Mr. Karan Thapar Chairman Mr. B. M. Thapar Managing Director Mr. S N Dua Director Mr. Mohinder M Khanna Director Mr. D.N. Sawhney Director

The Company is not listed on any of the stock exchange and there has been no change in the management of the Company in the last three years.

Shareholding Pattern

DBH is subsidiary company of DBH Global Holdings Ltd. The Shareholding of DBH as on March 31, 2008.

Sl. Name of the Shareholder No of Shares %age No. 1 Mr Karan Thapar 3401 1.02 2 Mr Karam Thapar 800 0.24 3 DBH Global Holdings Ltd. 330000 98.74 Total 334201 100.00

Financial Performance

Audited financial results of DBH International Pvt Ltd for the last three financial years are set forth below: (Amount in Rs. lacs) Period July 01, 06 to April 01, 05 to April 01, 04 to Particulars Jun 30, 07 June 30, 06 March 31, 05 Share Capital Equity Share Capital 33.42 33.42 33.42 Reserves 4772.03 4000.86 851.69 Total Income 1809.7 4192.04 520.55 Profit After Tax 1363.88 3911.32 285.56 Earning Per Share (Rs.) 408 1170 85 Net Asset Value Per Share (Rs.) 1438 1207 265 Face Value Per Share (Rs.) 10 10 10

Other Details

The details of DBH’s permanent account number, registration number, CIN and the address of the Registrar of Companies where it is registered are as follows:

95 English Indian Clays Limited

Company Registration No. : 55-057209 Company Identification No. : U74899DL1950PTC057209 Permanent Account Number : AAACD0085D Current Account Number : 007010200020110 (AXIS Bank) R.O.C. Address : Registrar of Companies NCT of Delhi & Haryana IFCI Tower (4th Floor) 61, Nehru Place, New Delhi – 110019 Registered Office Address : N-75, Connaught Circus, New Delhi - 110001

DBH has never become a sick company within the Sick Industrial Companies (Special Provision) Act, 1995.

Related Party Transactions between DBH and EICL

Please refer to page no. 127 for related party transactions.

Common Pursuits

There is no common pursuit between DBH & EICL except that both the Companies is engages in the business of clay mining. The mining activities are carried out by both the Companies for extraction of raw clay, which is used as a raw material for the processed China Clay manufactured by EICL.

Payment or Benefits to DBH within the last two years

Except as stated in the section titled “Financial Statements” on page 107 of this Letter of Offer, there has been no payment of benefits to the Promoters during the last two years preceding the date of filing of this Letter of Offer.

2. Karun Carpets Pvt. Limited (KCPL)

KCPL was incorporated as a limited Company on December 5, 1985. The word “private’ was deleted from the name of the Company under section 43A(1A) of the Companies Act, 1956 w.e.f March 31, 1993 and it become a deemed public company. However the word ‘private’ was again added to the name of the Company w.e.f March 20, 2001 under section 43A (2A) of the Companies Act, 1956 and there after the Company is a private limited Company. The registered office of the Company is situated at N-75, Connaught Circus, New Delhi - 110001. The Company was incorporated to run the business of Carpets, other floor coverings, handicrafts and readymade garments. Over the period of time, the business of the Company got changed and at present it is carrying out the business of commission agency.

Management

Karun Carpets Pvt Ltd is promoted by B M Thapar Group. The Management of the Company is vested in the Board of Directors, which comprises of eminent professionals. The Chairman of the Company Mr. Karan Thapar has over 26 years of experience in various industries. He is looking after day-to-day activities of the Company subject to the superintendence and control of the Board of Directors of the Company. The Board of Directors of the Company consists of the following:

Mr. Karan Thapar Chairman Mr. B M Thapar Director Mr. P S Saini Director

The Company is not listed on any of the stock exchange and there has been no change in the management of the Company in the last three years.

Shareholding Pattern

The Shareholding of KCPL as on March 31, 2008.

96 English Indian Clays Limited

SNo Name of the No of equity %age Shareholder Shares 1 Mr Karan Thapar 44400 88.01 2 Mr Karam Thapar 2800 5.55 3 Ms Monika Thapar 500 0.99 4 Ms Devika Thapar 2300 4.56 5 M/s Standard Refinery & 447 0.89 Distillery Ltd Total 50447 100.00

Financial Performance for the last three years

Audited financial results of KCPL for the last three financial years are set forth below:

(Amount in Rs. lacs) Period April 01, 06 to April 01, 05 to April 01, 04 to Particulars March 31, 07 March 31, 06 March 31, 05 Share Capital Equity Share Capital 5.04 5.04 5.04 Preference Share Capital - - - Reserves 743.46 406.2 48.62 Total Income 394.43 308.29 58.17 Profit After Tax 337.44 275.23 33.74 Earning Per Share (Rs.) 669 546 67 Net Asset Value Per Share (Rs.) 1484 815 107 Face Value Per Share (Rs.) 10 10 10

Other Details

The details of KCPL’s permanent account number, registration number, CIN and the address of the Registrar of Companies where it is registered are as follows:

Company Registration No. : 55-022696 Company Identification No. : U74899DL1985PTC022696 Permanent Account Number : AAACK2331D Current Account Number : 007010200015905 (AXIS Bank) R.O.C. Address : Registrar of Companies (Delhi & Haryana) IFCI Tower (4th Floor) 61, Nehru Place, New Delhi – 110019 Registered Office Address : N-75, Connaught Circus, New Delhi - 110001

KCPL has never become a sick company within the Sick Industrial Companies (Special Provision) Act, 1995.

Related Party Transactions between KCPL and EICL

Please refer to page no. 127 for related party transactions.

Common Pursuits

There are no common pursuits between KCPL and the Company.

Payment or Benefits to KCPL within the last two years

97 English Indian Clays Limited

3. Bharat Projects Pvt Limited (BPPL)

BPPL was incorporated as a private limited Company on March 7, 1995. The word “private’ was deleted from the name of the Company under section 43A (1A) of the Companies Act, 1956 w.e.f March 09, 1998 and it become a deemed public company. However the word ‘private’ was again added to the name of the Company w.e.f September 24, 2003 under section 43A (2A) of the Companies Act, 1956 and there after the Company is a private limited Company. The registered office of the Company is situated at N-75, Connaught Circus, New Delhi - 110001. The Company was incorporated to run the business of project management and consultancy services. Presently there is no business of the Company relating to project management and consultancy services. During the last year, BPPL earned dividend income on its holding in group companies.

Management

Bharat Projects Pvt Ltd is promoted by B M Thapar Group. The Management of the Company is vested in the Board of Directors which comprises of eminent professionals. The Chairman of the Company Mr. Karan Thapar has over 26 years of experience in varied industries. He is looking after day-to-day activities of the Company subject to the superintendence and control of the Board of Directors of the Company. The Board of Directors of the Company consists of the following:

Mr. Karan Thapar Chairman Mr B M Thapar Director Mr. S N Dua Director Mr. S K Jain Director

Shareholding Pattern

The Shareholding of BPPL as on March 31, 2008.

SNo Name of the Shareholder No of Equity %age Shares 1 DBH International Pvt Limited 69000 44.96 2 Karun Carpets Pvt Limited 69000 44.96 3 Mr Karan Thapar 15454 10.08 4 Mr S N Dua 1 0 5 Mr D Kohli 1 0 Total 153456 100.00

The Company is not listed on any of the stock exchange and there has been no change in the management of the Company in the last three years.

Financial Performance

Audited financial results of BPPL for the last three financial years are set forth below:

(Amount in Rs. lacs) Period April 01, 06 to April 01, 05 to April 01, 04 to Particulars March 31, 07 March 31, 06 March 31, 05 Share Capital Equity Share Capital 15.35 15.35 15.35 Preference Share Capital 13.00 13.00 13.00 Reserves 985.83 885.31 162.18 Total Income 111.65 723.74 21.01 Profit After Tax 100.52 723.13 20.62

98 English Indian Clays Limited

Earning Per Share (Rs.) 66 471 13 Net Asset Value Per Share (Rs.) 652 587 116 Face Value Per Equity Share (Rs.) 10 10 10

Other Details

The details of BPPL’s permanent account number, registration number, CIN and the address of the Registrar of Companies where it is registered are as follows:

Company Registration No. : 55-066073 Company Identification No. : U74899DL1995PTC066073 Permanent Account Numbe : AACCB0122F Current Account Number : 007010200015914 (AXIS Bank) R.O.C. Address : Registrar of Companies (Delhi & Haryana) IFCI Tower (4th Floor) 61, Nehru Place, New Delhi – 110019 Registered Office Address : N-75, Connaught Circus, New Delhi - 110001

BPPL has never become a sick company within the Sick Industrial Companies (Special Provision) Act, 1995.

Related Party Transactions between BPPL and EICL

Please refer to page no. 127 for related party transactions.

Common Pursuits

There are no common pursuits between BPPL and the Company.

Payment or Benefits to BPPL within the last two years

99 English Indian Clays Limited

Interest of Promoters of EICL

a. Promoters have no interest in EICL except to the extent that they have promoted the Company, payment of remuneration and reimbursement of expenses to them and to the extent of any equity shares (of EICL) held by them or their relatives and associates or held by the companies, firms and trusts in which they are interested as director, member, partner, and/or trustee, and to the extent of benefits such as dividends etc arising out of such shareholding.

b. Promoters are not interested in any property acquired by the Company within the last two years or any property proposed to be acquired by the Company.

Companies with which the promoter has disassociated in the last three years:

The Promoter has not disassociated itself with any company in the last three years except as follows:

Name of the Name of the Company from Date of Promoter which promoter was dis- disassociation associated during last three and reason years Mr B M Thapar English Indian Clays Ltd July 31, 2007 Resigned from directorship, he continues as one of the promoter of the Company Greaves Cotton Ltd October 18, 2007 Resigned from directorship Mr Karan Thapar Crompton Greaves Ltd May 28, 2007 Resigned from directorship CG Capital & Investments Ltd May 28, 2007 Resigned from directorship

Other Confirmations

a. We confirm that the details of the permanent account numbers, bank account numbers and passport numbers or CIN or registration number of our Promoters has been submitted to the BSE.

b. Further, our Promoters and Promoter Group entities have confirmed that they have not been detained as wilful defaulters by the RBI or any other governmental authority and there are no violations of securities laws committed by them in the past or are currently pending against them.

c. Additionally, neither our Promoters nor our Promoter Group entities have been restrained from accessing the capital markets for any reasons by the SEBI or any other authorities.

100 English Indian Clays Limited

Promoter Group

EICL is a part of B M Thapar Group of Companies. In addition to our Promoters named above, the following natural persons and companies are part of the Promoter group.

The natural persons who are part of our Promoter group (due to their relationship with our Promoters), other than the Promoters named above are as follows:

Mr. Karam Thapar (son of Mr. Karan Thapar) Ms. Devika Thapar (daughter of Mr. Karan Thapar)

Promoter Group Companies

The companies other than the Promoters named above, which are part of our Promoter group are as follows:

Sl. Company Listed / Unlisted no. 1 Greaves Cotton Ltd. Listed 2 Premium Energy Transmission Ltd. Unlisted 3 Pembril Industrial & Engineering Company Pvt. Ltd. Unlisted 4 Greaves Leasing Finance Ltd. Unlisted 5 Dee Greaves Ltd. Unlisted 6 KCT Chemicals & Electricals Ltd Unlisted 7 Standard Refinery & Distillery Ltd. Unlisted 8 Bharat Starch Products Ltd. Unlisted 9 DBH Global Holdings Ltd. Unlisted 10 Greaves Farymann Diesel Gmbh Unlisted 11 Greaves Cotton Netherlands B.V. Unlisted

Except the equity shares of Greaves Cotton Ltd., which are listed on the BSE and NSE, none of the promoter group entities have listed their equity shares on any stock exchange.

Following is the information of Greaves Cotton Limited and top four other unlisted companies in terms of turnover.

1. Greaves Cotton Ltd. (GCL)

GCL was incorporated on March 29, 1922 under the Companies Act VII, 1913. The registered office of PETL is located at Thapar House, 124, Janpath, New Delhi 110 001. Industrial Manor, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025. GCL is presently engaged in the business of manufacturing and marketing a wide range of industrial products, inter-alia, Diesel/ Petrol Engines, Gensets, Agro Equipments and Construction Equipments.

Board of Directors

Mr. Karan Thapar Chairman Mr Praveen Sachdev Managing Director Mr. Vijay Rai Director Dr. Surinder Kapur Director Mr. Suresh N. Talwar Director Mr. Vikram Tandon Director Mr. Sukh Dev Nayyar Director

Shareholding Pattern as on 31 st March 2008

Total shareholding as a % of total no. Category of shareholder Total no. of shares of shares

101 English Indian Clays Limited

(A) Shareholding of Promoter and Promoter Group (1) Indian Individuals / Hindu Undivided Family 3149 0.01 Bodies Corporate 24742579 50.66 Sub Total 24745728 50.67 (2) Foreign Total shareholding of Promoter and Promoter Group (A) 24745728 50.67 (B) Public Shareholding (1) Institutions Mutual Funds / UTI 6483671 13.27 Financial Institutions / Banks 7811 0.02 Central Government / State Government(s) 6342 0.01 Insurance Companies 9613287 19.68 Foreign Institutional Investors 394956 0.81 Sub Total 16506067 33.8 (2) Non-Institutions Bodies Corporate 1928978 3.95 Individuals Individual shareholders holding nominal share capital up to Rs. 1 lakh 4934629 10.1 Individual shareholders holding nominal share capital in excess of Rs. 1 lakh 725957 1.49 Sub Total 7589564 15.54 Total Public shareholding (B) 24095631 49.33 Total (A)+(B) 48841359 100

Financial Performance for the last three years (Consolidated) (In Rs. Lacs) Period July 01, 06 to July 01, 05 to July 01, 04 to Particulars Jun 30, 07 June 30, 06 June 30, 05 Share Capital Equity Share Capital 4883 4884 4564 Reserves 25047 16781 9773 Total Income 110113 84466 66188 Profit After Tax 12162 8704 6256 Earning Per Share (Rs.) 24.91 17.46 11.09 Net Asset Value Per Share (Rs.) 69 54 33 Face Value Per Share (Rs.) 10 10 10

Details of listing and Highest & Lowest market price during the preceding six months

Equity shares of GCL are listed on BSE and NSE. Monthly High & Low price of the Equity shares of GCL at BSE and NSE are as follows:

BSE NSE Month High Low High Low October 2007 415 315.8 417.5 311 November 2007 353.8 315 401 310.5 December 2007 410 330 410 332 January 2008 466 280.55 470 278.05 February 2008 344.95 231.55 349 238.15 March 2008 287.95 173.2 280 176.1

102 English Indian Clays Limited

April 2008 264.7 201.75 266.5 201.2 Source: BSE and NSE websites

The closing share price of GCL on BSE was Rs. 236.00 as of May 16, 2008. The closing share price of GCL on NSE was Rs. 235.25 as of May 16, 2008. The market capitalization of GCL on BSE was Rs. 1,15,238.8 Lacs as of May 16, 2008 at closing. The market capitalization of GCL on NSE was Rs. 1,14,872.57 Lacs as of May 16, 2008 at closing.

Promise v/s Performance

The Company has made no public or rights issue in the last ten years.

Mechanism for redressal of investor grievance

The Shareholders/ Investors Grievance Committee comprises of Mr. P Sachdev, Mr. Karan Thapar and Mr. Vijay Rai. Mr. KK Saraf – Vice President & Company Secretary has been designated as compliance officer of the Company.

The Committee reviews the redressal of shareholders complaints relating to transfer, transmission, non-receipt of annual reports and other shares related complaints. The Compliance Officer also reports to the board in each board meeting the number and category of the shareholders complaints received and status of their resolution.

There are no outstanding complaints as on March 31, 2008.

2. Premium Energy Transmission Limited (PETL)

PETL was incorporated on 26.04.1983. The registered office of PETL is located at Thapar House, 124, Janpath, New Delhi 110 001. It is in the business of manufacturing of industrial gear box, fluid coupling and other mechanical power transmission equipments.

Board of Directors

Mr. B.M. Thapar Chairman Mr. S.K. Jain Director Mr. Karan Thapar Director Mr. TK Chattopadhyay Director Mr. TK Mukherjee Director Mr. SN Phatarphekar Director

Shareholding Pattern as on 31 st March 2008

Sl Name of the Shareholder No of equity %age no Shares 1 DBH International Pvt Ltd 15,776,294 61.2% 2 Marble Arch Investments PCC Ltd. 10,000,000 38.8% 3 Mr. Karan Thapar 5 - 4 Mr. Karam Thapar 5 - 5 Mr. Dellinder Kohli 4 - 6 Mr. SK Jain 4 - 7 Mr. PS Saini 2 - Total 25,776,314 100.00

Financial Performance for the last three years

(Amount in Rs. lacs) Period April 01, 06 to April 01, 05 to April 01, 04 to Particulars March 31, 07 March 31, 06 March 31, 05 Share Capital

103 English Indian Clays Limited

Equity Share Capital 2577.63 2577.63 2577.63 Preference Share Capital 3408.03 - - Reserves 2940.03 1252.28 179.41 Total Income 22603.04 17039.15 11930.75 Profit After Tax 2703.82 2013.39 1048.95 Earning Per Share (Rs.) 10.23 7.81 4.07 Net Asset Value Per Share (Rs.) 21.4 14.86 10.69 Face Value Per Share (Rs.) 10 10 10

3. Pembril Industrial & Engineering Company Pvt. Ltd. (PIECL)

PIECL was incorporated on March 5, 1973. The registered office of PETL is located at Industrial Manor, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025. The Company was incorporated to carries on the business of machinist, makers of machinery, manufacturers of metallic & non-metallic bellows and hydro-pneumatic systems, mechanical engineers etc. Presently there is no business of the Company relating to these objects. During the last year, PIECL earned income on its holding in group companies.

Board of Directors

Mr. S.K. Jain Director Mr. TK Chattopadhyay Director Mr. Anup Guha Director

Shareholding Pattern as on 31 st March 2008

Sl Name of the Shareholder No of % age no Equity Shares 1 DBH International Pvt Ltd. 2500 50% 2 Bharat Projects Pvt. Ltd. 525 39.5% 3 Karun Carpets Pvt. Ltd. 1975 10.5% Total 5000 100.00

Financial Performance for the last three years (Amount in Rs. lacs) Period April 01, 06 to April 01, 05 to April 01, 04 to Particulars March 31, 07 March 31, 06 March 31, 05 Share Capital Equity Share Capital 5.00 5.00 5.00 Preference Share Capital 2080 - - Reserves 893.15 870.8 871.52 Total Income 44.04 24.54 13.87 Profit After Tax 22.34 -0.71 2.67 Earning Per Share (Rs.) 447 -14.36 53.49 Net Asset Value Per Share (Rs.) 17441.9 17441.9 17456.3 Face Value Per Share (Rs.) 100 100 100

4. Greaves Leasing Finance Ltd. (GLFL)

GLFL was incorporated on December 31, 1958. The registered office of GLFL is located at Industrial Manor, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025. The Company is a non banking finance company (NBFC) registered with the RBI vide Certificate of Registration No. 13.0422 dated March 24, 1998. GLFL is engaged in the business of leasing, hire purchase finance and bills discounting. GLFL has one subsidiary Company i.e., Dee Greaves Limited.

104 English Indian Clays Limited

Board of Directors

Mr. Tapan Kumar Chattopadhyay Director Mr. Vijay Rai Director Mr. Anup Guha Director

Shareholding Pattern as on 31 st March 2008

GLFL is a wholly owned subsidiary of Greaves Cotton Ltd and all 1785545 equity shares of Rs 10 each is held by Greaves Cotton Ltd and their nominees (who are holding shares in the beneficial interest of Greaves Cotton Ltd.)

Financial Performance for the last three years

(Amount in Rs. lacs) Period April 01, 06 to April 01, 05 to April 01, 04 to Particulars March 31, 07 March 31, 06 March 31, 05 Share Capital Equity Share Capital 178.55 178.55 178.55 Preference Share Capital 2858.27 2858.27 2858.27 Reserves 622.04 789.94 470.22 Total Income 258.36 553.46 215.52 Profit After Tax 114.59 414.92 82.52 Earning Per Share (Rs.) -1.8 15.23 4.62 Net Asset Value Per Share (Rs.) 11.65 27.86 9.47 Face Value Per Share (Rs.) 10 10 10

5. Dee Greaves Ltd. (DGL)

DGL was incorporated on August 19, 1960. The registered office of DGL is located at Industrial Manor, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025. The Company is engaged in the business of dealing in steam traps & regulating instruments and other trading activities.

Board of Directors

Mr. Sandip Kumar Basu Director Mr. Krishna Kumar Saraf Director Mr. Anup Guha Director

Shareholding Pattern as on 31 st March 2008

DGL is a wholly owned subsidiary of Greaves Leasing Finance Ltd and all 133851 equity shares of Rs 10 each is held by Greaves Leasing Finance Ltd and their nominees (who are holding shares in the beneficial interest of Greaves Leasing Finance Ltd.)

Financial Performance for the last three years (Amount in Rs. lacs) Period April 01, 06 to April 01, 05 to April 01, 04 to Particulars March 31, 07 March 31, 06 March 31, 05 Share Capital Equity Share Capital 13.38 13.38 13.38 Reserves -81.91 -148.07 -134.17 Total Income 269.01 117.21 112.12 Profit After Tax 38.29 -13.90 -134.17 Earning Per Share (Rs.) 28.61 -10.39 -10.98 Net Asset Value Per Share (Rs.) - - -

105 English Indian Clays Limited

Face Value Per Share (Rs.) 10 10 10

Currency of Presentation

In this LOF, all references to “Rupees” and “Rs.” Are to the legal currency of India. All references to “U.S.$” or “U.S. Dollar(s)” are to United States Dollars, the official currency of the United States of America. Unless stated otherwise, throughout this LOF, all figures have been expressed in Lacs.

Dividend Policy

EICL is a dividend paying Company, following are the dividends paid by the Company to its equity share holders in the last five years:

Year Rate of Dividend Paid 2007-08 70% 2006-07 70% 2005-06 100% 2004-05 75% 2003-04 20%

However, the Company does not have a formal dividend policy. The declaration and payment of dividends are recommended by the Board of Directors and approved by the shareholders at their discretion and depends on a number of factors, including but not limited to the earnings, capital requirements, overall financial conditions and other factors prevailing at the time.

The amounts paid as dividends in the past are not necessarily indicative of the dividend policy or dividend amounts, if any, in the future.

Related Party Transactions between Group Companies and EICL

Please refer to page no. 127 for related party transactions.

Common Pursuits

There are no common pursuits between Group Companies and EICL and inter-se among Group Companies except between DBH International Pvt Ltd and EICL as mentioned hereinabove.

Confirmation on Sick Company Status

None of the Group Companies have become a sick company within the Sick Industrial Companies (Special Provision) Act, 1995.

106 English Indian Clays Limited

SECTION V : Financial Statements

AUDITORS REPORT

To The Board of Directors, English Indian Clays Limited

Dear Sirs,

1) We have examined the attached financial information of English Indian Clays Limited, as approved by a Committee of Directors appointed by the Board of Directors of the Company, in the meeting held on May 16, 2008, prepared in terms of the requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 as amended to date (SEBI Guidelines) and in terms of our engagement agreed upon with you in accordance with our engagement letter dated April 20, 2008 in connection with the proposed rights issue of Equity Shares of the Company.

2) These information have been extracted by the Management from the financial statements for the years ended 31 st March 2004, 31 st March 2005, 31 st March 2006, 31 st March 2007, and 31 st March 2008.

3) In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI Guidelines and terms of our engagement agreed with you, we further report that:

(a) The Restated Summary Statement of Assets and Liabilities of the Company as at 31 st March 2004, 31 st March 2005, 31 st March 2006, 31 st March 2007, and 31 st March 2008 examined by us, as set out in Annexure 1 to this report, subject to 3(c) below , are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies and Notes to the Accounts (Annexure III).

(b) The Restated Summary Statement of Profit or Loss of the Company for the year ended 31 st March 2004, 31 st March 2005, 31 st March 2006, 31 st March 2007, and 31 st March 2008 examined by us, as set out in Annexure II to this report, subject to 3(c) below , are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies and Note to the Accounts (Annexure III).

(c) The Company has not restated the financial information for the periods prior to April 1, 2006 to take into account the liability as per Accounting Standard 15 (Revised) – ‘Employee Benefits’ as required by clause (b) of paragraph 6.10.2.7 of the SEBI Guidelines, as the impanct thereof for respective years is not readily ascertainable at this stage (Also refer Note 12 and 13 of Annexure IIIB).

(d) Attention is drawn to Note 4 (b) on Annexure III B in respect of Financial Year ended March 31, 2006, which relates to acquisition and transfer of certain group Company shares pursuant to family settlement agreements at negotiated prices. As per legal advise obtained by the Company, the said transaction is not prejudicial to the interest of the Company as it forms part of family settlement as stated in above note. The said transaction has since been ratified in the Annual General Meeting of the Company held on August 31, 2006.

(e) Based on above, we are of the opinion that that the restated financial information have been made after incorporating:

(i) Subject to 3(c) above , adjustments for the changes in accounting policies retrospectively in respective financial years to reflect the same accounting treatment as per changed accounting policy for all the reporting periods.

(ii) adjustments for the material amounts relating to previous years in the respective financial years to which they relate.

107 English Indian Clays Limited

(iii) and there are no extra-ordinary items that need to be disclosed separately in the accounts and qualification requiring adjustments.

(f) We have also examined the following other financial information set out in Annexures prepared by the management and approved by the Committee of Directors relating to the Company for the years ended 31 st March 2004, 31 st March 2005, 31 st March 2006, 31 st March 2007, and 31 st March 2008.

(i) Statement of Cash Flows included in Annexure – IV. (ii) Statement of Dividend paid/proposed included in Annexure – V. (iii) Statement of Accounting Ratios included in Annexure – VI. (iv) Statement of Capitalization as at 31 st March 2008 included in Annexure – VII. (v) Statement of Secured Loans, Unsecured Loans and the Statement on principal terms of loans and assets charges as security included in Annexure – VIII. (vi) Statement of Other Income included Annexure – IX. (vii) Statement of Tax Shelter included in Annexure – X. (viii) Statement of Investments included in Annexure – XI. (ix) Statement of Sundry Debtors included in Annexure – XII. (x) Statement of Loans & Advances and Other Current Assets included in Annexure – XIII.

In our opinion subject to 3 (c) above , the financial information contained in Annexures – I to XIII of this report read along with the Significant Accounting Policies and Notes to the Accounts (Refer Annexure – III) have been prepared after making adjustments and regrouping as considered appropriate and in accordance with Part II B of Schedule II of the Act and the DIP Guidelines.

4) Our report is intended solely for use of the management and for inclusion in the offer document in connection with the proposed rights issue of equity shares of the Company. Our report should not be used for any other purpose except with our consent in writing.

Anupam Dhawan Partner M.No. F-084451 For and on behalf of Price Waterhouse. Gurgaon, May 16, 2008 Chartered Accountants

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ENGLISH INDIAN CLAYS LIMITED Annexure I SUMMARY STATEMENT OF ASSETS AND LIABILITIES AS RESTATED

5 Net Worth (1 + 2 + 3 - 4) 7,690.00 8,621.75 9,798.79 12,788.04 9,057.00

Net Worth 7,690.00 8,621.75 9,798.79 12,788.04 9,057.00

109 English Indian Clays Limited

ENGLISH INDIAN CLAYS LIMITED Annexure II SUMMARY STATEMENT OF PROFITS AND LOSSES AS RESTATED

FOR THE YEAR ENDED MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Income

Net Profit Before Tax and extraordinary items 1,227.89 1,881.69 2,473.56 2,853.23 3,013.88 Tax Expense Current Tax 74.14 74.50 548.34 847.50 1,029.70 Deferred Tax 364.00 384.79 93.88 135.19 50.76 Fringe Benefit Tax - - 36.00 20.90 24.00 Net Profit Before Extraordinary items 789.75 1,422.40 1,795.34 1,849.64 1,909.42 Extraordinary Items (Net of Tax) - - - - - Net Profit after Extraordinary items 789.75 1,422.40 1,795.34 1,849.64 1,909.42 Profit / (Loss) brought forward from previous year 440.44 441.41 367.86 539.60 762.23 Amount Available for Appropriation 1,230.19 1,863.81 2,163.20 2,389.24 2,671.65 Appropriations: Dividend

110 English Indian Clays Limited

- Preference Shares 121.91 100.00 100.00 225.97 320.00 - Equity Shares 134.07 335.17 446.90 312.83 312.83 Tax on Dividend 32.80 60.78 76.70 88.21 107.55 Transfer to General Reserve 500.00 1,000.00 1,000.00 1,000.00 193.91 Balance carried to Balance Sheet 441.41 367.86 539.60 762.23 1,737.36

Annexure III A. STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES

1. Accounting Convention

These financial statements are prepared under the historical cost convention on accrual basis except so far as they relate to revaluation of land, buildings, certain plant and machinery and are prepared to comply in all material aspects with all accounting principles in India, the applicable accounting standards notified u/s 211 (3C) of the Indian Companies Act, 1956 (the ‘Act’) and the relevant provisions of the Act.

2. Fixed Assets

Fixed Assets (other than those which have been revalued), including capital spares, leasehold improvements, technical know how costs, research and development assets and are stated at cost. Cost includes direct expenses related to acquisition and installation and interest incurred during construction period.

The revalued fixed assets are restated at their estimated current replacement values as on the date of revaluation as determined by the approved valuers.

Intangible assets are recognized if it is probable that the future economic benefits attributable to the asset will flow to the enterprise and cost of the asset can be measured reliably in accordance with Accounting Standard – 26, on ‘Intangibles’ issued by the Institute of Chartered Accountants of India.

3. Depreciation/Amortisation

a) Tangible Fixed Assets

Depreciation on Fixed Assets is provided as per straight line method at higher of the following

a) Depreciation on original cost as specified in Schedule XIV to the Companies Act, 1956 or

b) Depreciation on revalued value based on the residual life of the asset.*

* Since the list of the assets is too large, it is not practicable to give the individual depreciation rates for each of the assets.

In respect of additions and deletions, depreciation charge is restricted to the period of use. All assets costing Rs. 5,000 or less are fully depreciated in the year of addition.

Leasehold Land and Leasehold improvements are depreciated on a straight line method basis over the period of lease.

b) Intangible Assets

Intangible assets including Technical Know-how/Brand and Computer Software/ Licence Fee are amortized on straight line basis over their useful lives of 10 years and 5 years respectively from the date of acquisition / implementation. The amortization period and method are reviewed at each year end.

111 English Indian Clays Limited

4. Investments

Long term Investments are valued at their acquisition cost. Decline, other than temporary, in the value of long term investments is accounted for.

5. Inventories

Inventories, including stores and spare parts, raw materials (including clay matrix-mined and purchased), work in process and finished goods, are valued at lower of cost and net realizable value. Cost is ascertained on weighted average basis.

Total mining expenses except depreciation on Fixed Assets at mines are considered as raw material cost for Clay Matrix – mined. In respect of finished goods and work in progress, appropriate overheads are considered.

6. Employees Benefits

(a) Short Term Employee Benefits

Short term employee benefits are recognized in the period during which the services have been rendered.

(b) Long Term Employee Benefits

i. Defined Contribution Plan

Provident Fund and employees state insurance schemes

All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and the employer make monthly contributions to the plan at a predetermined rate (presently 12.0%) of the employees’ basic salary. These contributions are made to the fund administered and managed by the Government of India and an approved Trust for this purpose. In addition, some employees of the Company are covered under the employees’ state insurance schemes, which are also defined contribution schemes recognized and administered by the Government of India.

The Company’s contributions to both these schemes are expensed in the Profit and Loss Account. The Company has no further obligations under these plans beyond its monthly contributions.

Superannuation Plan - Some employees of the Company are entitled to superannuation, a defined contribution plan which is administered through Life Insurance Corporation of India (“LIC”). Superannuation benefits are recorded as an expense as incurred.

ii. Defined Benefit Plan

Leave Encashment – The Company has provided for the liability at year end on account of unavailed earned leave and compensated absences as per the actuarial valuation as per the Projected Unit Credit Method.

Gratuity – The Company provides for gratuity obligations through a defined benefit retirement plan (the ‘Gratuity Plan’) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employees salary and years of employment with the Company. The Company provides for the Gratuity Plan based on actuarial valuations in accordance with accounting Standard 15 (revised). Actuarial gains and losses are recognized as and when incurred.

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7. Foreign Currency Transactions

Transactions in foreign currency are accounted for at the exchange rate prevailing on the date of the transaction. Exchange difference arising out of their settlement is dealt with in the profit and loss account. All monetary assets and liabilities denominated in foreign currency are restated at the year end rate and the exchange difference arising on such translation is recognized in the profit and loss account.

Liabilities covered by forward exchange contracts are translated at contracted rates of exchange and the difference between the contracted rate and the exchange rate at the date of the transaction is recognised as income or expense over the life of the contract. Further exchange difference on such contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate on the date of inception of contract/the last reporting date, is recognised as income/expense for the period.

8. Research & Development Expenses Revenue expenditure on research & development is charged off as and when incurred.

9. Government Grant

Government grants relating to depreciable fixed assets are treated as deferred income and recognized in the Profit and Loss Account over the remaining useful life of the related assets.

10. Revenue Recognition a) Revenue from Sale/Services is recognised on despatch which coincides with the transfer of all significant risks and rewards of ownership and is inclusive of excise duty, where applicable. b) Income from investments - dividend / interest is recognised on the basis of declaration/ accrual thereof. 11. Borrowing Costs

Borrowing costs are charged to revenue except in cases where costs relate to qualifying assets in which case such costs are capitalised as a part of cost of respective assets till the date they are put to their intended use.

12. Taxation

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. Provision for the current tax is made based on liability computed in accordance with the relevant tax rates and tax laws. Provision for deferred tax is made for all temporary timing differences arising between the taxable income and accounting income at currently enacted tax rates. Deferred tax assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

13. Segment Accounting

The accounting policies applicable to the reportable segment are the same as those used in the preparation of the financial statements as set out above.

Segment Revenue and expenses include amounts, which are directly identifiable to the segment or allocable on a reasonable basis.

Segment assets include all operating assets used by the segment and consist primarily of debtors, inventories and fixed assets. Segment liabilities include all operating liabilities and consist primarily of creditors and statutory liabilities.

113 English Indian Clays Limited

14. Earnings per share (EPS)

The earnings considered in ascertaining the Company’s Basic EPS comprises net profit after tax. The number of shares used in computing Basic EPS is the weighted Average number of shares outstanding during the year.

The earnings considered in ascertaining the Company’s Dilutive EPS comprises net profit after tax as adjusted for expenses or income that would result from the conversion of the dilutive potential equity shares. The number of shares used in computing Diluted EPS is the weighted average number of shares outstanding during the period as adjusted for the effects of all dilutive potential equity shares.

15. Leases

Lease payments under an operating lease are recognized as an expense in the Profit and Loss Account on a straight line basis over the lease term.

16. Provisions & Contingencies

A provision is recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that probably will not require an outflow of resources.

114 English Indian Clays Limited

B. NOTES TO THE ACCOUNTS

1. Contingent liabilities: AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs

a) Outstanding Bank Guarantees 178.43 237.40 208.95 167.19 193.50

b) Outstanding Letter of Credits 39.72 169.78 37.86 27.58 -

c) Bills and Cheques discounted 316.09 557.16 134.54 391.51 810.99

d) Indemnity Bond countersigned 247.72 249.85 249.85 249.85 249.85

Excise and Sales Tax matters e) (including penalty) 680.41 186.37 1,206.49 2,235.24 703.17

f) Entry Tax on Kerosene Oil 100.41 100.41 100.41 151.34 151.34

g) Income Tax Matters 146.92 379.94 481.18 493.15 682.55

h) Others 44.31 25.00 25.00 25.00 25.00

i) Claims against the Company not acknowledged as debts

2. Contingent liabilities with respect to Income tax matters referred in paragraph 1 (g) above excludes:

a) Claim of loss of Rs. 1,280.80 lacs, in respect of which an appeal was pending with the Commissioner of Income Tax (Appeals). The case has been decided in favour of the Company during the year 2007-08, thus allowing carry forward of losses of erstwhile Bharat Starch Industries Limited (BSIL) for the assessment year 1998-99 (since merged with the Company w.e.f. 01.04.2001).

b) Claim of loss of Rs.1,398.43 lacs of BSIL for the assessment year 2001-02, in respect of which the Hon’ble High Court of Kolkata has admitted the petition of the Company and is pending for adjudication. Based on opinion obtained by the Company from its tax advisor, the Company should get the decision in its favour i.e. the aforesaid amount should be allowed as revenue expenditure in view of judicial pronouncements.

115 English Indian Clays Limited

3. Contingent liabilities with respect to Excise and Sales Tax matters for the year 2007-08 referred in Paragraph 1 (e) above excludes demands aggregating Rs. 1527.66 lacs relating to inputs used in manufacturing of excisable and as well as exempted goods and Cenvat Credit of Service Tax, pending with Central Excise and Service Tax Appellate Tribunal (CESTAT) were set aside and remitted to the relevant authorities for a fresh decision and revision in demand. Consequently amount deposited under protest amounting to Rs. 34.68 lacs have been considered good and recoverable and no provision for the same has been considered necessary till the time demands are received by the Company amounts of contingent liabilities, if any, is presently not ascertainable.

4. Changes in the Structure of Company:

a) Pursuant to the Scheme of reorganization by way of arrangement, amalgamation and reconstruction (the Scheme) between Bharat Starch Industries Limited (BSIL), English Indian Clays Limited (EICL or the company), BILT Bio-Chemicals Limited (BBCL) and a scheme of reconstruction of Bharat Projects Limited (BPL) as approved by the Hon’ble High Courts of Ahmedabad, Cochin and Delhi on February 8, 2002, April 10, 2002 and May 9, 2002 respectively, the Company has issued 1 (one) Equity share of Rs. 10 (Ten) each fully paid up for every 100 (One Hundred) Equity Shares of Rs. 10 each fully paid up to the shareholders of the erstwhile BSIL and all fractional shares arising thereof have been allotted to the trustees and 1,20,000 Equity Shares of Rs.10 each fully paid up at a premium of Rs. 40 per share to a creditor in full and final settlement of its liability taken over by the Company during the financial year ended March 31, 2003.

b) Pursuant to the Family Settlement Agreement dated April 24, 2001 (FSA 1) and exemptions provided by Securities & Exchange Board of India (SEBI) through various orders dated October 9, 2001, January 22, 2002 and December 22, 2004 and in terms of further agreement dated December 21, 2005 (FSA 2) the transfer and acquisition of shares had been taking place from time to time. In the year 2005-06, under this process 85 lacs shares of Crompton Greaves Limited (CGL) have been transferred by the Company to Solaris Holdings Limited, a Company under B M Thapar group and similarly the Company has acquired 20 lacs shares of Greaves Cotton Limited (GCL) from Solaris Holdings Limited, both at negotiated prices. These transactions have been incorporated in the accounts for the year ended March 31, 2006 and were subject to approval of the Shareholders in the Annual General Meeting held on August 31, 2006, which has since been ratified.

The Company was legally advised that this transfer of Shares is not prejudicial to the Company and there are no tax implications of the same since these transfers have been made pursuant to the completion of the aforesaid family settlements and SEBI exemptions.

c) To enable the Company to focus on and enhance its core manufacturing business operations, the Board of Directors approved a scheme of de-merger of investment division between the Company (EICL) and Bharat Starch Products Limited (BSPL) which was approved by the Hon’ble High Courts of Kerala and Delhi vide their orders dated December 19, 2007 and January 14, 2008 respectively.

The Scheme became operative from April 1, 2007, (the Appointed date) upon filing of the certified copy of the Order dated December 19, 2007 of the Hon’ble High Court of Kerala and Order dated January 14, 2008 of the Hon’ble High Court of Delhi, with the Registrar of Companies on January 31, 2008 and filing of revised Order on February 12, 2008. The salient features of the scheme are set out below: i) All the properties of EICL pertaining to the Investment Division including leasehold rights, tenancy rights, entitlements, licenses, contracts, arrangements present and future liabilities and debts be vested in BSPL on a going concern basis at the values indicated in the scheme.

116 English Indian Clays Limited

ii) The salient features of the Scheme are narrated hereunder:

a) De-merger of the Investments Division would enable EICL to focus on and enhance its core manufacturing business operations by streamlining operations and cutting costs.

b) The Scheme will enable both EICL and BSPL to rationalize and streamline their management, businesses and finances and to eliminate duplication of work to their respective advantage.

c) The Scheme is beneficial to both the companies, their shareholders, creditors, employees and all stakeholders and will enable both companies to achieve and fulfill their objectives more efficiently and economically. The Scheme will contribute in furthering and fulfilling the objects of the both companies and in the growth and development of their business.

iii) Pursuant to the Scheme of De-merger with BSPL as approved by the Hon’ble High Courts of Kerala and Delhi, existing shareholder of EICL is entitled for 4 equity shares of Rs. 10 each of BSPL for every 19 Equity Shares of Rs. 10 each held in EICL, par value credited as fully paid up. The shares issued and allotted in BSPL shall be unlisted i.e. shall not be listed in any Stock Exchange and consequently shall not have the facility of trading as in the case of shares of EICL. However, pursuant to the scheme two options were given to eligible EICL shareholders:

1. Option given by BSPL - An option is given in the Scheme where under an eligible member i.e. any person being a shareholder of EICL as on the record date of February 20, 2008 fixed by the Committee of Directors, has an option to receive 100, 8% Cumulative Redeemable Preference Shares (“CRPS”) of Rs. 10 each of BSPL, redeemable at par on expiry of ten years from date of allotment, in lieu of one BSPL equity share of Rs. 10 each as per the entitlement hereinbefore mentioned. Such an option to receive equity shares or 8% CRPS shall be exercised by the eligible members within a period of 35 days from the date of the notice. However, in case any eligible member does not convey or inform the Company of his/her option within the aforesaid period, then he/she shall be deemed to have opted for equity shares.

2. Option given by DBH International Pvt. Ltd. and Karun Carpets Pvt. Ltd . - In order to give the eligible equity shareholders of EICL, an opportunity to exit and provide liquidity to the equity shareholders, DBH International Pvt. Ltd. and Karun Carpets Pvt. Ltd. have provided through the Scheme an exit price of Rs.1000/- per equity share of BSPL as per the entitlement hereinbefore mentioned, based on the valuation done by an Independent Valuer. This option can be exercised by the eligible members for a period of 1 year from the record date i.e. upto February 19, 2009.

iv) Pursuant to the Scheme of Arrangement and De-merger as approved by the Hon’ble High Courts, impact on assets and liabilities of the investments business of the Company in the year 2007-08 are given as under: (Rs.in lacs) Decrease in: Fixed Assets(Net) 351.32 Investments 4,554.80 Cash and Bank Balances 0.31 Current Liabilities and Provisions (0.01) 4,906.42 Settled as follows: Decrease in Securities Premium 919.57 Decrease in Capital Reserve 7.54

117 English Indian Clays Limited

Decrease in General Reserve 3,979.31 4,906.42

Further income from such investments and expenditure relating to the investment division aggregating Rs. 147.76 lacs and Rs. 20.24 lacs respectively, recognized / incurred during the year and held on behalf of the transferee Company (BSPL), have been transferred.

5. During the year 2007-08, the Company acquired the fixed assets and net current assets of a clay manufacturing unit in Kollam, Kerala at a consideration of Rs. 669.61 lacs.

The land and buildings were accounted at the cost of acquisition including cost of registration incurred by the Company and the plant & machinery of the said unit were valued by an independent valuer and has been accounted accordingly. The difference between the acquisition cost and value of assets amounting to Rs. 6.34 lacs has been accounted as Capital Reserve.

The break-up of the assets and liabilities acquired and amount transferred to capital reserve is given hereunder: (Rs. in lacs) Fixed Assets Land (excluding registration charges 102.27 Rs. 13.03 lacs) Buildings (excluding registration 20.73 charges Rs. 2.60 lacs) Furniture & Fixtures 5.81 Motor Vehicles 7.49 Plant & Machinery 405.78 542.08

Current Assets, Loans & Advances Inventories Raw Material 54.95 Stores and Spares 21.10 Stock in Process 0.54 Finished Goods 22.58 99.17 Sundry Debtors 28.15 Loans & Advances 27.15 154.47

Less : Current Liabilities & Provisions Current liabilities (5.38) Provisions (15.22) (20.60)

Net Assets acquired 675.95 Net Consideration Paid 669.61 Capital Reserve 6.34

The Company commenced commercial production of the said plant with effect from 11.09.2007.

6. The Company is in the process of setting up a Starch Plant for manufacturing of Starches and allied products with an installed capacity of corn crushing of 500 TPD. Direct expenditure incurred for the project till the date of commercial production, are carried forward and included in Capital work in progress and will be allocated to fixed assets in the year of commencement of commercial production. Break up of expenses carried forward are as under:

Particulars Amount (Rs. in lacs) Technical Consultant Fees 17.00 Project Consultant Fees 74.44 Travelling and Others 24.70

118 English Indian Clays Limited

Balance at the end of the year 116.14

7. Explanations to the re-statements carried out in the previous years.

AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Adjustments for Liabilities no longer required written back - - - - 69.23 Sales Discounts - - (24.77) (14.16) - Office & Other Expenses - - - (15.30) - Repair & Maintenance – Plant & Machinery - - - (15.00) - - - (24.77) (44.46) 69.23 Current Tax Impact - 8.34 14.97 (23.30) Total - - (16.43) (29.49) 45.93

The Company has restated the profits for the year ended March 31, 2006 and March 31, 2007 by Rs. 24.77 lacs and Rs. 44.46 lacs respectively by reducing the expenses and increasing the profit for the year and tax thereon arising from the write backs of excess provisions aggregating Rs. 69.23 lacs recognized in the profit & loss account in the year ended March 31, 2008 as the same pertained to these years. Only material amounts in excess of Rs. 10 lacs have been considered for restatement.

8. Segment Information A. Primary Segment Reporting (by Business Segments)

i. Composition of Business Segments The Company’s business segments are organised as under:

Clay Products: Segment manufactures and supplies the clay products to various industries like paper, paint, rubber and fibreglass etc.

Starch Products : Segment comprising starches/specialty starches, syrups and modified starches, manufactures and supplies the starch products to various industries like paper, textile, food and pharma etc.

Investments : Segment which held shares in various companies has been de-merged to Bharat Starch Products Limited as referred to in Note 4(c) above.

119 English Indian Clays Limited

A. PRIMARY SEGMENT

YEAR ENDED MARCH 31, 2004

Particulars CLAY STARCH INVESTMENTS TOTAL Rs. in lacs Segment Revenue Gross Sales to External Customers 6,822.46 8,035.33 - 14,857.79 Dividend Income - - 255.36 255.36 Other Income 17.35 36.18 - 53.53 15,166.68

Segment Result (Operating Profit/ (Loss) 1,854.74 263.08 239.62 2,357.44 Less: Unallocated Expenses (Net) 104.73 Interest expenses/ income (Net) 1,024.82 Income Taxes (Net) 438.14 Net Profit as per Profit & Loss Account 789.75

- Total Carrying amount of segment assets 11,373.72 5,957.10 4,450.69 21,781.51 Un-allocated 380.83 22,162.34

- Segment liabilities 1,066.00 867.73 - 1,933.73 Un-allocated 12,511.27 14,445.00

- Capital Expenditure during the year 2,396.02 169.93 - 2,565.95 Un-allocated 20.61 2,586.56

- Depreciation/Amortization 275.51 262.47 - 537.98 Un-allocated 17.76 555.74

B. Secondary Segment

YEAR ENDED MARCH 31, 2004 Outside Particulars India India Total Rs. in lacs

Revenue 14,893.60 273.08 15,166.68 Total Assets 22,090.91 71.43 22,162.34 Capital Expenditure during the year 2,586.56 - 2,586.56

120 English Indian Clays Limited

A. PRIMARY SEGMENT

YEAR ENDED MARCH 31, 2005

Particulars CLAY STARCH INVESTMENTS TOTAL Rs. in lacs Segment Revenue Gross Sales to External Customers 8,068.03 8,957.79 - 17,025.82 Dividend Income - - 935.37 935.37 Profit on Sale of Investments - - 0.05 0.05 Other Income 39.59 92.40 - 131.99

18,093.23

Segment Result (Operating Profit/ (Loss) 1,971.18 320.07 935.42 3,226.67 Less: Unallocated Expenses (Net) 155.08 Interest expenses/ income (Net) 1,189.90 Income Taxes (Net) 459.29

Net Profit as per Profit & Loss Account 1,422.40

- Total Carrying amount of segment assets 12,417.69 6,218.53 4,739.90 23,376.12 Un-allocated 368.09 23,744.21

- Segment liabilities 979.37 1,340.35 - 2,319.72 Un-allocated 12,782.37 15,102.09

- Capital Expenditure during the year 1,167.85 376.50 - 1,544.35 Un-allocated 39.22 1,583.57

- Depreciation/Amortization 366.63 281.66 - 648.29 Un-allocated 19.32 667.61

B. Secondary Segment

YEAR ENDED MARCH 31, 2005 Outside Particulars India India Total Rs. in lacs Revenue 17,420.12 673.11 18,093.23 Total Assets 23,559.57 184.64 23,744.21 Capital Expenditure during the year 1,583.57 - 1,583.57

121 English Indian Clays Limited

A. PRIMARY SEGMENT

Particulars YEAR ENDED MARCH 31, 2006

CLAY STARCH INVESTMENTS TOTAL Rs. in lacs Segment Revenue Gross Sales to External Customers 9,278.64 11,464.28 - 20,742.92 Dividend Income - - 382.51 382.51 Profit on Sale of Investments - - 427.67 427.67 Other Income 26.28 71.24 - 97.52

21,650.62

Segment Result (Operating Profit/ (Loss) 2,420.91 398.77 810.18 3,629.86 Less: Unallocated Expenses (Net of unallocated income of Rs. 36.88 lacs) 164.31 Interest expenses/ income (Net) 991.99 Income Taxes (Net) 678.22

Net Profit as per Profit & Loss Account 1,795.34

- Total Carrying amount of segment assets 13,344.44 6,324.69 1,785.59 21,454.72 Un-allocated 3,218.33 24,673.05

- Segment liabilities 1,015.15 1,226.13 - 2,241.28 Un-allocated 12,619.58 14,860.86

- Capital Expenditure during the year 1,038.96 375.73 - 1,414.69 Un-allocated 76.71 1,491.40

- Depreciation/Amortization 424.53 304.72 - 729.25 Un-allocated 21.41 750.66

B. Secondary Segment

YEAR ENDED MARCH 31, 2006 Outside Particulars India India Total Rs. in lacs Revenue 20,809.72 840.90 21,650.62 Total Assets 24,668.63 4.42 24,673.05 Capital Expenditure during the year 1,491.40 - 1,491.40

122 English Indian Clays Limited

A. PRIMARY SEGMENT

Particulars YEAR ENDED MARCH 31, 2007 CLAY STARCH INVESTMENTS TOTAL Rs. in lacs Segment Revenue Gross Sales to External Customers 11,651.67 13,607.57 - 25,259.24 Dividend Income - - 265.97 265.97 Other Income 19.83 42.24 - 62.07

25,587.28

Segment Result (Operating Profit/ (Loss) 2,901.35 860.89 265.96 4,028.20 Less: Unallocated Expenses (Net of unallocated income of Rs. 3.35 lacs) 207.30 Interest expenses/ income (Net) 967.67 Income Taxes (Net) 1,003.59

Net Profit as per Profit & Loss Account 1,849.64

- Total Carrying amount of segment assets 15,235.15 7,811.36 4,554.80 27,601.31 Un-allocated 634.02 28,235.33 - Segment liabilities 1,732.76 1,869.62 - 3,602.38 Un-allocated 11,838.47 15,440.85

- Capital Expenditure during the year 1,633.34 287.43 - 1,920.77 Un-allocated 150.76 2,071.53

- Depreciation/Amortization 433.43 324.12 - 757.55 Un-allocated 26.18 783.73

B. Secondary Segment

YEAR ENDED MARCH 31, 2007 Outside Particulars India India Total Rs. in lacs Revenue 24,453.10 1,134.18 25,587.28 Total Assets 28,076.99 158.34 28,235.33 Capital Expenditure during the year 2,071.53 - 2,071.53

123 English Indian Clays Limited

A. PRIMARY SEGMENT

Particulars YEAR ENDED MARCH 31, 2008 CLAY STARCH INVESTMENTS TOTAL Rs. in lacs Segment Revenue Gross Sales to External Customers 13,199.49 14,586.34 - 27,785.83 Other Income 53.77 81.21 - 134.98

27,920.81

Segment Result (Operating Profit/ (Loss) 3,346.29 1,013.46 - 4,359.75 Less: Unallocated Expenses (Net) 175.21 Interest expenses/ income (Net) 1,170.66 Income Taxes (Net) 1,104.46

Net Profit as per Profit & Loss Account 1,909.42

- Total Carrying amount of segment assets 17,006.17 9,170.06 - 26,176.23 Un-allocated 1,129.44 27,305.67

- Segment liabilities 1,975.02 1,860.08 - 3,835.10 Un-allocated 14,408.80 18,243.90

- Capital Expenditure during the year 2,302.57 1,676.98 - 3,979.55 Un-allocated 266.28 4,245.83

- Depreciation/Amortization 501.42 337.51 - 838.93 Un-allocated 56.97 895.90

Secondary Segment

YEAR ENDED MARCH 31, 2008 Outside Particulars India India Total Rs. in lacs Revenue 26,904.38 1,016.43 27,920.81 Total Assets 27,062.79 242.88 27,305.67 Capital Expenditure during the year 4,245.83 - 4,245.83

124 English Indian Clays Limited

9. Deferred Tax AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Deferred Tax Liabilities

Tax Impact of difference between carrying amount of fixed Assets in the financial Statements and under Income Tax Act 1,232.24 1,441.57 1,540.70 1,676.83 1,778.15

1,232.24 1,441.57 1,540.70 1,676.83 1,778.15

Deferred Tax Assets

Tax Impact on brought forward losses of Amalgamating Company (erstwhile BSIL) 234.16 42.39 - - -

Adjustment on account of Valuation of Employee Benefits - - - 121.10 121.10

Tax impact of expenses charged in the financial statement but allowable as deductions in future years under Income Tax 154.17 170.48 218.12 219.06 269.62

388.33 212.87 218.12 340.16 390.72

Net Deferred Tax (Asset)/Liability 843.91 1,228.70 1,322.58 1,336.67 1,387.43

AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Charge to Profit and Loss Account as per Audited Accounts 409.50 370.98 82.06 160.15 35.25 Charge to Profit and Loss Account as restated 364.00 384.79 93.88 135.20 50.76

Re-statement 45.50 (13.81) (11.82) 24.95 (15.51)

The deferred tax assets and liabilities have been re-stated on account of the following:

a) changes in tax rates; and

b) difference in tax liability arising on computation of tax at the time of filing of tax returns

10. Earnings per share (EPS)

Particulars Year ended March 31, 2004 2005 2006 2007 2008 Rs. in lacs a) Weighted average number of Equity shares of Rs. 10 each. Number of Equity Shares at the beginning of the year 4,468,979 4,468,979 4,468,979 4,468,979 4,468,979

125 English Indian Clays Limited

b) Net profit after tax 789.75 1,422.40 1,795.34 1,849.64 1,909.42

Less : Dividend on 12% Cumulative Redeemable preference shares 135.38 - - - -

Less : Dividend on 10% Cumulative Redeemable preference shares 2.14 113.55 114.03 115.51 117.00

Less : Dividend on 11% Cumulative Redeemable preference shares - - - 145.51 257.39

Net profit after tax available to equity shareholders 652.23 1,308.85 1,681.31 1,588.62 1,535.03

c) Potential Number of Equity Shares at the end of the year

Total Number of Equity Shares as per (a) above 4,468,979 4,468,979 4,468,979 4,468,979 4,468,979

Number of Equity shares deemed converted at the beginning of the year 15,555,554 20,803,648 15,329,070 8,884,628 4,666,667

Weighted average number of Equity Shares outstanding during the year 20,024,533 25,272,627 19,798,049 13,353,607 9,135,646

d) Net profit after tax available for potential equity shareholders

Net profit after tax available to equity shareholders 652.23 1,308.85 1,681.31 1,588.62 1,535.03

Income on dilutive potential Equity shares 116.16 142.78 117.80 64.01 30.58

Profit attributable to potential Equity Shareholders 768.39 1,451.63 1,799.11 1,652.63 1,565.61

e) Basic EPS (Rs.) 14.59 29.29 37.62 35.55 34.35

f) Diluted EPS (Rs.) 3.84 5.74 9.09 12.38 17.14

g) Nominal Value of Equity Share (Rs.) 10.00 10.00 10.00 10.00 10.00

126 English Indian Clays Limited

11. Related Party Transactions In accordance with the required Accounting Standard (AS-18) on related party disclosures where control exist and where transactions have taken place and description of the relationship as identified and certified by management are as follows:

A. Associates i) Enterprises in which the Company has significant influence: a) K.C.T (Africa) Ltd. (upto 31.01.2005)

ii) Enterprises which have significant influence over the Company: a) DBH International Pvt. Ltd. b) Karun Carpets Private Limited

B. Enterprises, over which substantial shareholders of the Company and their relatives, have significant influence a) Crompton Greaves Ltd. (Upto March 31, 2007) b) Greaves Cotton Ltd. c) Premium Energy & Transmission Ltd. (since F.Y 2005-06) d) Solaris Holdings Limited (since F.Y. 2005-06) e) Pembrill Industrial & Engineering Co. Ltd. (since F.Y. 2005-06) f) Greaves Leasing Finance Ltd. (since F.Y. 2005-06) g) Standard Refinery & Distillery Ltd. (erstwhile Deoria Sugar Mills Ltd., Shree Sitaram Sugar Co. Ltd., New Savan Sugar & Gur Refining Co. Ltd. Since merged) h) Aravali Sports & Cultural Foundation i) Bharat Starch Products Ltd.(since 2005-06) j) Karam Chand Thapar & Bros. Ltd. k) Thapar Institute of Engineering & Technology l) Solaris Bio-Chemicals Limited (since F.Y 2003-04)

C. Key Management Personnel & their relatives Mr. Karan Thapar Mr. B.M. Thapar (since 2004-05) Ms. Devika Thapar (Daughter of Mr. Karan Thapar) (since 2004-05) Mr. Karam Thapar (Son of Mr. Karan Thapar) (since 2005-06) Mr. D Kohli Mr Sudhir Mathur (Upto Sep 8, 2006) Mr M.M. George Mr. S K Jain Mr. P.S. Saini (since 2004-05) Mrs. Amita Kohli (since 2004-05) Mr. Vikramaditya Kohli (son of Mr. D. Kohli) (since 2004-05) Mrs. Jasbir Kohli (mother of Mr. D. Kohli) (since 2004-05) Mr Anita Jain (Wife of Mr.S.K.Jain) Ms. Sangeeta Mathur (wife of Mr. Sudhir Mathur) (Upto Sep 8, 2006) Ms. Annakutty George (wife of Mr. MM George) (since 2004-05)

1) Details of transactions with Associates in which the Company has significant influence

YEAR ENDED MARCH 31 2004 2005 2006 2007 2008 Rs. in lacs Receiving of Services KCT (Africa) Ltd. 50.32 12.32 - - -

127 English Indian Clays Limited

2) Details of Transactions with Associates which has significant influence in the Company

YEAR ENDED MARCH 31 2004 2005 2006 2007 2008 Rs. in lacs Purchase of Goods DBH International Pvt. Ltd. 45.02 92.56 101.01 124.51 115.95

Allotment of Preference Shares DBH International Pvt. Ltd. - - - 2,000.00 -

Sale of Investmetnts Karun Carpets Pvt. Ltd. 400.00 - - - -

Receiving of Services

Karun Carpets Pvt. Ltd. - 32.14 65.33 72.07 69.16 DBH International Pvt. Ltd. 59.76 21.34 - - -

Rendering of Services DBH International Pvt. Ltd. 15.63 - - - -

Loan/Advances Paid DBH International Pvt. Ltd 121.75 440.45 0.51 500.00 - Karun Carpets Pvt. Ltd. - 63.00 - 50.00 250.00

Loan/advances received DBH International Pvt. Ltd. 121.63 440.57 - 500.00 - Karun Carpets Pvt. Ltd. - 63.00 - 50.00 250.00

Rent Paid DBH International Pvt. Ltd. - - 9.02 12.96 14.29

Security Deposit Refund DBH International Pvt. Ltd. - 20.00 20.00 20.00 20.00

Dividend Paid on Preference Shares DBH International Pvt. Ltd. - - - 125.97 220.00

Interest Paid on Loans DBH International Pvt. Ltd. - - - 5.15 - Karun Carpets Pvt. Ltd. - - - 0.16 0.89

Other Income DBH International Pvt. Ltd. - 2.66 - - - Others 0.04 0.13 - - -

Other Expenses Others 0.24 - - - -

128 English Indian Clays Limited

3) Details of transactions with Enterprises over which substantial Shareholders have significant influence

YEAR ENDED MARCH 31 2004 2005 2006 2007 2008 Rs. in lacs Purchase of Goods Premium Energy Transmission Ltd. - - - 1.28 3.49 Others 0.69 0.14 0.36 - -

Purchase of Fixed Assets Greaves Cotton Ltd. 1.82 0.97 - - - Crompton Greaves Ltd. 5.54 - - - -

Sale of Fixed Assets Bharat Starch Products Limited - - - - 2.90

Purchase of Investments Greaves Cotton Ltd. 2,800.00 - - 2,769.22 - Solaris Holdings - - 1,420.00 - - KCT Bros. Ltd. 756.00 - - - -

Sale of Investments Solaris Holdings Ltd. - - 4,861.50 - -

Loans/ Advances Paid Standard Refined & Distillery Limited - 200.00 300.00 - - (erstwhile Deoria Sugar Mills Ltd.)

Loans/ Advances Received Standard Refined & Distillery Limited - 200.00 300.00 - - (erstwhile Deoria Sugar Mills Ltd.)

Dividend Received Crompton Greaves Ltd. 255.00 935.00 382.50 - - Greaves Cotton Ltd. - - 0.01 265.97 147.76

Assets Transferred Bharat Starch Products Limited - - - - 351.32

Dividend Transferred Bharat Starch Products Limited - - - - 147.76

Expenses Transferred

129 English Indian Clays Limited

Bharat Starch Products Limited - - - - 20.24

Other Income Standard Refined & Distillery Limited - 8.88 1.16 - - (erstwhile Deoria Sugar Mills Ltd.) KCT & Bros. Ltd. 0.03 - 0.03 - -

Other Expenses Aravali Sports & Cultural Foundation 13.00 15.00 11.17 16.18 15.00 Thapar Institute of Engg. & Tech. 2.50 2.50 2.50 2.50 2.50 Others 0.04 - - - -

4) Details of Transactions with Key Management Personnel & their relatives

YEAR ENDED MARCH 31 2004 2005 2006 2007 2008 Rs. in lacs Refund of Public Deposit Ms. Amita Kohli - - - 3.00 - Mr. Karan Thapar - - - - 20.00 Mr. D. Kohli - - - - 25.75 Ms. Devika Thapar - - - - 2.50

Sale of Investments Others 2.61 - - - -

Commission Mr. Karan Thapar - - 22.40 28.88 32.46

Remuneration Mr. Karan Thapar 68.92 58.02 - - - Mr. D.Kohli 26.92 18.04 22.46 24.95 34.72 Mr. Sudhir Mathur 11.17 12.20 16.49 11.43 - Mr. S.K.Jain - - 14.42 16.40 20.67 Mr. P.S. Saini - - 11.93 11.81 15.39 Mr. M.M. George - 11.54 12.11 13.23 25.22 Others 5.42 15.06 - - -

Other Expenses Mr. Karan Thapar - 4.51 2.13 2.34 - Mr, D. Kohli - 3.89 2.84 4.04 - Mrs. Sangeeta Mathur - 3.14 3.12 - - Others 3.95 3.34 2.13 4.78 2.88

5) Outstanding balances and balances written off/written back:

YEAR ENDED MARCH 31

130 English Indian Clays Limited

2004 2005 2006 2007 2008 Rs in lacs Associates in which the company has 19.20 Cr Nil Nil Nil Nil significant influence* 34.45 Dr Nil Nil Nil Nil Associates which have significant 187.00 Cr 130.97Dr 110.00 91.95 66.04 Dr influence in the Company Dr Dr 21.73 Dr 32.89 Cr 40.22 57.91 16.21Cr Cr Cr Enterprises over which substantial 5.85 Cr 2.15 Dr 6.81 Dr 7.38 Dr 116.54 shareholders of the Company and Cr their relatives, have significant influence** 3.65 Dr 299.35Cr 1.59 Cr 0.04 Cr 9.89 Dr Key management personnel & their Nil 20.61 Cr 22.40 Cr 28.87 32.46 Cr relatives of key management** Cr * Debit balance are net of balances Nil 12.82 Nil Nil Nil written off during the year ** Debit balance are net of balances Nil Nil Nil Nil Nil written off during the year

12. As required by SEBI (Disclosure & Investor Protection) Guidelines 2000 the financial information needs to be re-stated uniformly for all the reporting periods in case of change in the accounting policy / application of new Accounting Standards. Other than restatement required on Accountion Standard (AS-15) “Employee Benefits” the Company has complied with the aforesaid requirement.

The Company has adopted AS-15 with effect from April 1, 2006, and has has adjusted the additional liability (net of deferred tax) of Rs. 238.68 lacs upto March 31, 2006 against the reserves in accordance with the transitional provision allowed by the AS-15. The Company has not restated the charge, liability and corresponding impact on reserves for the years ended March 31, 2004, March 31, 2005 and March 31, 2006 as the same is not readily ascertainable at this stage.

13. Employee Benefits

During the year 2006-07 and 2007-08, the Company has recognized the following amounts in the Profit and Loss Account.

Defined Contribution Plans Year ended March Year ended March 31, 2008 31, 2007 Rs. in lacs Employer’s Contribution to Provident Fund 102.92 90.83 Employer’s Contribution to Superannuation 53.02 39.21 Fund Employer’s Contribution to ESI 15.87 14.72

a) The assumptions used to determine the benefit obligations are as follows :

Year Ended Year Ended March 31, 2008 March 31, 2007 Gratuity Leave Gratuity Leave Encashment Encashment Discount Rate 8.00% 8.00% 8.20% 8.20% Expected Rate of increase in 9.00% 9.00% 9.00% 9.00% Compensation levels Expected Average remaining 17 17 18 18

131 English Indian Clays Limited

working Lives of employees (years)

In calculating the leave earned /compensated absences liability, 36% of the leave has been assumed to be availed of during the service before separation.

b) Reconciliation of opening and closing balances of benefit obligations:

Year Ended March 31, 2008 Year Ended March 31, Change in Projected Benefit 2007 Obligation (PBO) Gratuity Leave Gratuity Leave Encashment Encashment Rs. in lacs Projected benefit obligation at 581.42 37.27 531.42 30.35 the beginning of the year

Acquired during the year on 13.22 2.00 - - acquisition of Kollam unit

Current service cost 47.11 2.89 38.97 2.30

Interest cost 47.68 3.06 42.51 2.43

Benefit paid (34.65) (34.22) (43.23) (39.53)

Actuarial (gain) / loss 32.03 38.14 11.75 41.72

Projected benefit obligation 686.81 49.14 581.42 37.27 at the end of the year

The projected benefit obligation for compensated absences (earned/ sick leaves) at the beginning of the year and at the end of the year is Rs. 199.72 lacs and Rs. 223.51 lacs respectively.

c) The discount rate is based on the average yield on government bonds of 20 years.

d) Expenses recognized in the Profit and Loss Account

Year Ended March 31, Year Ended March 31, 2008 2007 Gratuity Leave Gratuity Leave Encashment Encashment Rs. in lacs Current service cost 47.11 2.89 38.97 2.30

Interest cost 47.68 3.06 42.51 2.43

Actuarial (gain) / loss 45.25 40.15 11.75 41.72

Total 140.04 46.10 93.23 46.45

In addition to above, an amount of Rs.23.79 lacs (2006-07; Rs. 7.70 lacs) has been charged towards compensated absences of staff (Earned/ sick leaves).

14. Auditors’ qualifications as reported in the Companies (Auditor’s Report) Order which do not require any corrective adjustment in the financial information are set out below:

132 English Indian Clays Limited

i. In the year 2003-04 the auditors have reported in the Clause (xvii) that the Company has used funds raised for short term purposes for long term investment amounting to Rs. 1,162.60 lacs primarily for the purpose of acquisition of long term investments – equity.

ii. In the year 2004-05 the auditors have reported in Clause (i) (a) that the Company is in the process of updating the fixed assets register with respect to Yamunanagar Unit.

iii. In the year 2004-05 the auditors have reported in Clause (ii) (b) that the physical verification procedures for inventories needs to be strengthened with respect to Yamunanagar Unit.

iv. In the year 2004-05 the auditors have reported in Clause (iv) that the internal control systems for the purchase of inventory, fixed assets and sale of goods needs to be strengthened with respect to Yamunanagar Unit.

v. The auditors in the year 2003-04, 2004-05 and 2005-06 have reported in the Clause (ix) (a) that the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

vi. In all the years i.e. from 2003-04 to 2007-08, the auditors have reported in Clause (ii) (a) that the stock lying with the consignee agents has not been physically verified by the management during the year.

15. Other Observations:

In the year 2005-06 the auditors had drawn attention to note 4 (b) above regarding transfer and acquisition of certain group company shares pursuant to family settlement agreements at negotiated price and based on the legal opinion obtained from the Companies legal counsel these transactions have not been considered prejudicial to the interest of the Company as it forms part of the family settlement as stated in note 4 (b) above. These transactions were incorporated in the accounts of the year 2005-06 and were subject to approval of the shareholders in the annual general meeting. No adjustment for the same has been considered while preparing these summary financial statements as these transactions were ratified by the shareholders in the aforesaid annual general meeting held on August 31, 2006.

133 English Indian Clays Limited

ENGLISH INDIAN CLAYS LIMITED Annexure IV SUMMARY STATEMENT OF CASH FLOWS AS RESTATED FOR THE YEAR ENDED MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Cash flow from operating A activities: Net profit before tax 1,227.89 1,881.69 2,473.56 2,853.23 3,013.88 Adjustments for:

Depreciation 555.74 667.61 750.66 783.73 895.90 Interest Expense 1,067.82 1,213.53 1,071.75 998.90 1,190.63 Interest Income (43.00) (23.63) (79.76) (31.23) (19.97) (Profit)/Loss on Sale of Investment (Net) 2.53 (0.05) (427.67) - -

Dividend Income (255.36) (935.37) (382.51) (265.97) - Unrealised Exchange Fluctuation (10.09) (0.53) (20.52) 19.60 (5.58) (Profit)/Loss on Sale of Fixed Assets (Net) 0.41 21.35 37.79 0.95 3.56 Debts / Advances Written off 5.27 76.17 62.44 11.67 4.45 Provision for Bad & Doubtful Debts/Advances 10.13 15.58 111.26 23.16 42.06 Miscellaneous Expenditure written off 5.30 5.30 5.30 5.30 - Liability no longer required written back (1.57) (40.37) (51.06) (2.32) (35.61) Provision for Gratuity & Leave Encashment 30.49 34.04 32.52 64.61 141.06 Dimunition in Value of Investments 13.20 - - - - Government grant (1.67) (1.67) (1.66) (1.67) (1.67) Operating profit before working capital changes 2,607.09 2,913.65 3,582.10 4,459.96 5,228.71 Adjustments for changes in working capital : (INCREASE)/DECREASE in Sundry Debtors (140.83) (175.77) (342.26) (764.57) (400.42) (INCREASE)/DECREASE in Other Receivables (134.27) (43.16) 51.08 (98.46) 39.63 (INCREASE)/DECREASE in Inventories (66.92) (241.93) (206.08) (1,087.62) 17.80 INCREASE/(DECREASE) in Trade and Other Payables 207.49 606.32 (53.90) 934.05 304.24

Cash generated from operations 2,472.56 3,059.11 3,030.94 3,443.36 5,189.96 - Taxes (Paid) / Received (Net of TDS) 26.07 (82.81) (367.43) (1,028.78) (1,192.76)

Net cash from operating activities 2,498.63 2,976.30 2,663.51 2,414.58 3,997.20 B Cash flow from Investing activities: Additions to fixed assets and capital work in progress (2,168.95) (1,781.34) (1,437.62) (2,202.00) (4,272.26) Payment against Pre operative expenses (153.70) - - - -

Proceeds from Sale of fixed assets 7.86 19.65 21.88 9.05 20.76

Proceeds from Sale of Investments 411.82 8.79 4,864.95 - -

Purchase of investments (3,557.57) - (1,785.46) (2,769.23) -

134 English Indian Clays Limited

Loans to Companies (Net) - - (1,900.00) 1,900.00 -

Deposits with bank (Net) (14.63) 13.61 (829.64) 861.35 (36.57) Interest Received 44.76 20.73 9.81 64.15 18.94 Dividend Received 255.36 637.87 684.57 265.97 - Net cash used in investing activities (5,175.05) (1,080.69) (371.51) (1,870.71) (4,269.13)

FOR THE YEAR ENDED MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Cash flow from financing C activities: Proceeds from share capital 1,000.00 - - 2,000.00 - Redemption of Preference Shares (1,000.00) - - - - Receipts 3,480.10 2,500.00 2,000.00 2,000.00 4,000.00

Payments (821.10) (2,894.81) (2,775.26) (2,626.98) (2,327.06) Proceeds from short term borrowings (Net) 1,000.00 - - - - Proceeds from fixed deposits (Net) 35.88 (43.34) (100.96) (119.34) 100.95 Proceeds from Cash Credits (Net) 210.27 168.04 215.13 (64.22) 492.73 Interest Paid (includes exchange fluctuation ) (1,051.60) (1,296.56) (1,069.80) (1,034.26) (1,231.79) Income from foreign currency contracts - - 17.41 - -

Dividend Paid (314.63) (185.54) (434.91) (596.13) (586.04)

Dividend Tax Paid (45.99) (18.46) (61.03) (85.54) (99.56) Net cash used in financing activities 2,492.93 (1,770.67) (2,209.42) (526.47) 349.23 Net Increase/(Decrease) in Cash & Cash Equivalents (183.49) 124.94 82.58 17.40 77.30 Cash and cash equivalents at the beginning of the year 371.29 187.80 312.74 395.32 412.72 Less: transferred pursuant to Scheme of Arrangement - - - - (0.31) Net Cash and cash equivalents at the beginning of the year 371.29 187.80 312.74 395.32 412.41 Cash and cash equivalents at the end of the year 187.80 312.74 395.32 412.72 489.71 Cash and cash equivalents comprise

Cash, Cheques & Drafts (in hand) 59.13 127.78 56.40 9.40 6.63 Balance with Scheduled Banks in Current Accounts (includes amounts held in Dividend Account ) 128.67 184.96 338.92 403.32 483.08 187.80 312.74 395.32 412.72 489.71

Notes:

1 The above Cash flow statement has been prepared pursuant to clause 32 of the listing agreement with stock exchange and under the indirect method setout in AS-3 issued by the Institute of Chartered Accountants of India.

2 Figures in brackets indicate cash outgo.

3 Cash and cash equivalents at the end of the year include amounts held in dividend accounts with scheduled banks.

135 English Indian Clays Limited

4 The Significant Accounting Policies (Annexure III A) and Notes to the Accounts (Annexure III B) forms an integral part of the Cash Flow Statement.

ENGLISH INDIAN CLAYS LIMITED Annexure V STATEMENT OF DIVIDEND PAID/ PAYABLE

FOR THE YEAR ENDED MARCH 31, Particulars 2004 2005 2006 2007 2008 EQUITY SHARES Number of Shares (in lacs) 44.69 44.69 44.69 44.69 44.69 Face Value Per Share (Rs.) 10.00 10.00 10.00 10.00 10.00 Paid up Value Per Share (Rs.) 10.00 10.00 10.00 10.00 10.00 Rate of Dividend % 30% 75% 100% 70% 70% Total Dividend Paid/ Proposed (Rs. Lacs) 134.07 335.17 446.90 312.83 312.83 Corporate Dividend Tax (Rs. Lacs) 17.19 47.23 62.67 53.16 53.16 PREFERENCE SHARES 12% Preference Shares Number of Shares (in lacs) 10.00 - - - - Face Value Per Share (Rs.) 100.00 - - - - Paid up Value Per Share (Rs.) 100.00 - - - - Rate of Dividend % 12% - - - - Total Dividend Paid/ Proposed (Rs. Lacs) 120.00 - - - - Corporate Dividend Tax (Rs. Lacs) 15.38 - - - - 11% Preference Shares Number of Shares (in lacs) - - - 20.00 20.00 Face Value Per Share (Rs.) - - - 100.00 100.00 Paid up Value Per Share (Rs.) - - - 100.00 100.00 Rate of Dividend % - - - 11% 11% Total Dividend Paid/ Proposed (Rs. Lacs) - - - 125.97 220.00 Corporate Dividend Tax (Rs. Lacs) - - - 19.54 37.39 10% Preference Shares Number of Shares (in lacs) 10.00 10.00 10.00 10.00 10.00 Face Value Per Share (Rs.) 100.00 100.00 100.00 100.00 100.00 Paid up Value Per Share (Rs.) 100.00 100.00 100.00 100.00 100.00 Rate of Dividend % 10% 10% 10% 10% 10% Total Dividend Paid/ Proposed (Rs. Lacs) 1.91 100.00 100.00 100.00 100.00 Corporate Dividend Tax (Rs. Lacs) 0.23 13.55 14.03 15.51 17.00

TOTAL Total Dividend Paid/ Proposed (Rs. Lacs) 255.98 435.17 546.90 538.80 632.83

Corporate Dividend Tax (Rs. Lacs) 32.80 60.78 76.70 88.21 107.55

ENGLISH INDIAN CLAYS LIMITED Annexure VI ACCOUNTING RATIOS FOR THE YEAR ENDED MARCH 31, Particulars 2004 2005 2006 2007 2008 1 Earnings Per Share

136 English Indian Clays Limited

-Basic Earnings Per Share (Rs.) 14.59 29.29 37.62 35.55 34.35 -Diluted Earnings Per Share (Rs.) 3.84 5.74 9.09 12.38 17.14

Return on Net Worth (%) 2 (B/A) 10.27 16.50 18.32 14.46 21.08

Net Asset Value Per Share 3 (Rs.) (E/F) 149.70 170.55 196.89 219.02 135.53

Workings:

Particulars FOR THE YEAR ENDED MARCH 31, 2004 2005 2006 2007 2008 Rs. in lacs A. Net Worth 7,690.00 8,621.75 9,798.79 12,788.04 9,057.00 Profit After Tax & Extraodinary B. Items 789.75 1,422.41 1,795.34 1,849.64 1,909.42

Net Worth relating to Equity Share holders

C. Net Worth 7,690.00 8,621.75 9,798.79 12,788.04 9,057.00 Less: Preference Share D. Capital 1,000.00 1,000.00 1,000.00 3,000.00 3,000.00

E. Total (E=C-D) 6,690.00 7,621.75 8,798.79 9,788.04 6,057.00

Weighted Average Number of F. Equity Shares 4,468,979 4,468,979 4,468,979 4,468,979 4,468,979

-* Refer Note 10 on Annexure III B for workings of Earnings per Share.

ENGLISH INDIAN CLAYS LIMITED Annexure VII CAPITALISATION STATEMENT

Pre Issue as Adjusted for at March 31, Right Issue Particulars 2008

Rs. in lacs Borrowings Short Term 5,689.09 5,689.09 Long Term 5,917.98 5,917.98

Total Debts 11,607.07 11,607.07

Shareholders Funds Equity Share Capital 446.90 521.38 Preference Share Capital 3,000.00 3,000.00 Free Reserves* 5,603.76 12,977.58 Less: Miscellaneous expenditure written off - - (to the extent not written off)

137 English Indian Clays Limited

Total Shareholders Funds 9,050.66 16,498.96

Long term Debt/ Equity Ratio 0.65 0.36

* Free Reserves include General Reserve and balance in Profit and Loss Account

ENGLISH INDIAN CLAYS LIMITED Annexure - VIII STATEMENT OF SECURED LOANS AS RESTATED

AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Loans from Banks - Cash Credit Account with Scheduled banks 762.98 806.02 896.15 831.93 1,274.67 - Working Capital Demand Loans (WCDL) 1,000.00 1,125.00 1,250.00 1,250.00 1,300.00 - Interest Accrued and due on WCDL 46.18 8.88 4.03 5.84 7.45

- Rupee Term Loans 5,833.33 6,238.89 5,936.11 5,791.77 7,917.98 - Foreign Currency Term Loans 2,144.07 1,393.87 935.90 453.27 -

Loans from Others Deferred Sales Tax Liability 73.54 22.84 - - -

9,860.10 9,595.50 9,022.19 8,332.81 10,500.10

Notes: Amounts repayable within one year 2895.20 2823.59 2613.23 2326.96 2165.36

STATEMENT OF UNSECURED LOANS AS RESTATED

AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs

Fixed deposits 1,268.14 1,224.81 1,123.85 1,004.51 1,105.46 Interest accrued and due 2.04 1.50 1.32 1.09 1.51

1,270.18 1,226.31 1,125.17 1,005.60 1,106.97

Notes; Amounts repayable within one year 823.28 542.90 652.83 780.59 752.31 Amounts due to Directors 72.50 93.15 60.15 51.15 3.22

138 English Indian Clays Limited

ENGLISH INDIAN CLAYS LIMITED Annexure VIII (contd.) PRINCIPAL TERMS OF LOANS AND ASSETS CHARGED AS SECURITY

Nature of Name of Balanc Rate of Repayment Security Remarks Loan Bank e as on Interest Schedule March 31, 2008 Rs. In lacs Rupee Term Axis Bank Bank PLR 12 equal quarterly Loan Limited 749.98 minus installments of Rs. Term Loans from Banks 3.5% i.e. 83.34 lacs / Financial Institutions 11.25% commencing from the are secured by an 24th month from the equitable mortgage of date of 1st all immovable disbursement starting properties of the from 31.07.2007 to Company, both present 30.04.2010. and future and are also Rupee Term Axis Bank Bank PLR 16 equal quarterly secured by way of Loan Limited 1,500.0 minus installments of Rs. hypothecation of the 0 3.75% i.e. 125 lacs commencing Company's movable 11.00% from the 12th month properties including from the date of 1st movable Plant and disbursement starting Machinery, Machinery from 12.06.2007 to Spares, Tools and 12.03.2011. Accessories and other Rupee Term Axis Bank Bank PLR 16 equal quarterly movables both present Loan Limited 2,000.0 minus installments of Rs. and future (save and 0 3.5% i.e. 125 lacs commencing except book debts) 11.25% from the 5th quarter subject to prior charges from the date of 1st created in favour of the disbursement starting Company's bankers on from 30.06.2008 to stocks of raw materials, 31.03.2012. consumable stores, Rupee Term State Bank PLR 5 equal yearly finished goods etc. for Loan Bank of 600.00 minus installments of Rs. working capital facilities. Indore 2.25% + 300 lacs starting from Term 1 year after Premium disbursement i.e. 0.5% i.e. 01.08.2005 to 11.50% 01.08.2009. Rupee Term State Bank PLR 11 equal quarterly Loan Bank of 668.00 minus installments of Rs. Indore 2.50% i.e. 83 lacs each and last 10.75% 12th installment of Rs. 87 lacs commencing from two years after disbursement starting from 31.05.2007 to 28.02.2010.

139 English Indian Clays Limited

Rupee Term `State Bank PLR Bullet repayment at Put/ Call Loan Bank of 2,000.0 minus the end of 24 months option is Indore 0 2.25% i.e. for principal i.e. due available on 11.00% on 27.08.2009. or after September 27, 2008 Rupee Term Life 10.00% 10 equal half yearly It is Loan Insurance 400.00 installments of Rs. convertible Corporatio 100 lacs starting from into Equity

n of India 01.05.2005 to Shares in 01.11.2009. case of default 7,917.9 8 Working Axis Bank Bank PLR Cash Credit and Capital Limited 500.00 minus Working Capital Demand Loan 3.5% i.e. Demand Loans along 11.25% with guarantees and Working Oriental Bank PLR letters of credit facilities Capital Bank of 800.00 minus given by the Banks are Demand Loan Commerc 2.25% i.e. secured by e 11.00% Hypothecation of Cash Credit Axis Bank Bank PLR Finished Goods, Semi- Account Limited 315.25 minus Finished Goods, 3.25% i.e. Consumable Stores and 11.50% spares, Raw Material Cash Credit Oriental Bank PLR and Book Debts at Account Bank of 959.42 minus Yamunanagar, Commerc 2.25% i.e. Pondicherry & e 11.00% Thiruvananthapuram factories and second pari passu charge on block of assets of the Company. Interest Accrued and 7.45 due

2,582.1 2

Fixed Deposit From Various Repayable from 1 Unsecured Public 1,105.4 Rates year to 3 years 6 Interest Accrued and 1.51 due

11,607. 07

140 English Indian Clays Limited

ENGLISH INDIAN CLAYS LIMITED Annexure – IX

STATEMENT OF OTHER INCOME AS RESTATED

FOR THE YEAR ENDED MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs NON-RECURRING Dividend on Investments other than trade 255.36 935.37 382.51 265.97 - Profit on Sale of Investments - 0.05 427.67 - - Liabilities no longer required written back 1.57 40.37 51.06 2.32 35.61

256.93 975.79 861.24 268.29 35.61 RECURRING INCOME Exchange Fluctuation (Net) - - 24.63 - - Government Grants 1.66 1.66 1.66 1.66 1.66 Miscellaneous Income 50.30 89.96 57.05 61.44 97.71 51.96 91.62 83.34 63.10 99.37 308.89 1,067.41 944.58 331.39 134.98

ENGLISH INDIAN CLAYS LIMITED Annexure X TAX SHELTER STATEMENT FOR THE YEAR ENDED MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Net Profit Before Tax and 1,227.8 exceptional items (A) 9 1,881.69 2,473.56 2,853.23 3,013.88

35.875 Tax Rate (B) % 33.660% 33.660% 33.660% 33.990%

TAX AT APPLICABLE (C)=(A* RATES (A) B) 440.50 633.38 832.60 960.40 1,024.41

Adjustments PERMANENT DIFFERENCES Depreciation on revalued portion of fixed assets (150.14) (147.47) (141.48) (152.01) (137.57) Dividend Income 255.36 935.37 382.51 265.97 - Amount Inadmissible u/s 14A - - (3.13) (7.57) - Charity and Donations (23.00) (41.42) (11.25) (8.75) (9.61) Wealth Tax (4.04) (4.00) (4.00) (4.00) (4.00) Government Grants 1.67 1.67 1.67 1.67 1.67 Profit on sale of Investments (15.74) 0.05 427.67 - - Payment to Employee Welfare Association (0.36) (0.36) (0.18) (0.30) - Issue expenses written off (5.30) (5.30) (5.30) (5.30) -

141 English Indian Clays Limited

Fees paid for increase in Authorised Capital - - - (10.00) - TOTAL PERMANENT DIFFERENCES (D) 58.45 738.54 646.51 79.71 (149.51)

TIMING DIFFERENCES Difference between Tax Depreciation 792.95 633.59 313.40 394.32 296.40 and Book depreciation Capital Expenditure on Research and Development 44.14 9.67 18.87 7.16 34.40 Loss/(Profit) on sale of fixed assets (0.42) (21.35) (37.79) (0.95) (3.57) Expenditure on VRS u/s 35DDA - - - (46.36) 11.59 Provision for doubtful debts (Net) 3.15 (0.62) (108.15) 64.80 (33.48) Brought Forward Losses 382.91 569.73 125.94 - -

43 B Liabilities (Net) (34.97) (10.65) (3.89) (26.37) (41.53)

Gratuity Provision (Net) (24.31) (26.04) (22.02) (50.00) (92.17) Amalgamation Expenses 6.00 6.00 6.00 - - Disallowed under Clause 17 of 3CD (Net) - (17.17) (13.45) 17.01 7.53 Other Adjustments (0.02) - - - (0.68)

TOTAL TIMING 1,169.4 DIFFERENCES (E) 3 1,143.16 278.91 359.61 178.49

(F)=(D+ 1,227.8 TOTAL DIFFERENCES E) 8 1,881.70 925.42 439.32 28.98

(G)=(F* TAX SAVING B) 440.50 633.38 311.50 147.88 9.85

INTEREST UNDER SECTION 234 (H) - - 27.24 34.98 15.14

(I)=(C- TOTAL CURRENT TAX G+H) - - 548.34 847.50 1,029.70

TAXABLE INCOME U/S 115JB 963.83 944.67 2,089.38 2,585.60 3,012.21

MAT RATE 7.688% 7.841% 8.415% 11.220% 11.330%

TAX PAYABLE UNDER MAT (J) 74.14 74.50 175.82 290.10 341.28

TAX EXPENSE (MAXIMUM OF (I) OR (J) 74.14 74.50 548.34 847.50 1,029.70

TAX AS PER PROFIT & LOSS ACCOUNT 74.14 74.50 548.34 847.50 1,029.70

142 English Indian Clays Limited

ENGLISH INDIAN CLAYS LIMITED Annexure XI SUMMARY OF INVESTMENTS AS AT AS AT MARCH AS AT MARCH AS AT MARCH AS AT MARCH MARCH 31, 31, 2004 31, 2005 31, 2006 31, 2007 2008

Bo Face ok Value Val ue Book Book Book No. Book No. Rs. Value Value Value of Value of in No. of Rs. in No. of Rs. in No. of Rs. in Share Rs. in Share lac Shares lacs Shares lacs Shares lacs s lacs s s Long Term Investments

- Quoted Crompton Greaves 8,500,0 4,077. 8,500,0 4,077.3 Limited * 10 00 31 00 1 ------Greaves Cotton 2,125,1 1,785.4 2,955, 4,554.7 Limited # 10 150 0.02 150 0.02 73 8 173 0 - - Blue Horizon Investment Ltd.* 10 5,000 0.50 5,000 0.50 ------

- Unquoted Karam Chand Thapar (Africa) Ltd. # US$1 100,000 20.94 ------Thapar Consultants & Services Ltd. 10 1,000 0.10 1,000 0.10 1,000 0.10 1,000 0.10 - -

Ronak Dying Ltd. 10 50 0.00 50 0.00 50 0.00 50 0.00 - - Karam Chand Thapar 356.0 & Bros. Ltd.** 100 356,000 0 356,000 356.00 ------Karam Chand Thapar & Bros. (Coal Sales)Ltd.* 100 1,200 1.50 1,200 1.50 ------Indian City Properties Ltd.* 10 2,250 1.97 2,250 1.97 ------Tentulia Khas Collieries Ltd.* 10 10,000 1.00 ------Less: Provision for Diminution in Value of (13.2 Investments 0) - - - - 4,446. 4,437.4 1,785.5 4,554.8 TOTAL 14 0 8 0 - # represents companies under the same management.

1. Aggregate Book Value of quoted 4,077. 4,077.8 1,785.4 4,554.7 Investments 83 3 8 0 -

2. Aggregate Book Value of unquoted 368.3 Investments 1 359.57 0.10 0.10 -

3. Aggregate Market Value of quoted 13,09 36,834. 6,955.6 9,397.4 Investments 4.82 94 9 5 -

* Pursuant to Group settlement as approved by SEBI, shares indicated by * were in the process of being transferred to others with related rights for dividend in the interregnum. The same were transferred in 2006 pursuant to FSA as explained in Note 4(b) on Annexure III B.

143 English Indian Clays Limited

** Represents Optionally Convertible Zero Coupon Non Marketable Transferable Debentures.

ENGLISH INDIAN CLAYS LIMITED Annexure – XII

STATEMENT OF SUNDRY DEBTORS AS RESTATED

AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Debts outstanding for over six months considered good, unless otherwise stated - secured 1.18 47.79 0.82 1.96 2.53 - unsecured 170.43 113.04 72.30 69.02 94.75

Considered Doubtful 21.81 12.30 48.47 55.65 79.96

Less: Provisions for Bad & Doubtful Debts (21.81) (12.30) (48.47) (55.65) (79.96)

Other debts considered good - secured 3.66 4.85 3.01 18.91 10.31

- unsecured 1,416.73 1,525.93 1,911.46 2,620.98 2973.32

3,080.9 1,592.00 1,691.61 1,987.59 2,710.87 1

ENGLISH INDIAN CLAYS LIMITED Annexure - XIII STATEMENT OF LOANS & ADVANCES AS RESTATED AS AT MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs. in lacs Unsecured - considered good unless otherwise stated Loan to companies 15.00 15.00 1,900.00 - -

Advances recoverable in cash or in kind 595.76 611.71 471.06 624.28 484.38 or for value to be received Considered doubtful 152.49 162.62 192.27 152.49 147.68 Less: provision for doubtful advances (152.49) (162.62) (192.27) (152.49) (147.68) Deposit with the Excise authorities on Current account 147.95 159.59 189.46 276.04 365.74 Advance tax paid including tax deducted at source (net) - 24.95 - 252.00 486.21

758.71 811.25 2,560.52 1,152.32 1,336.33

STATEMENT OF OTHER CURRENT ASSETS AS RESTATED

Particulars AS AT MARCH 31, 2004 2005 2006 2007 2008

144 English Indian Clays Limited

Rs. in lacs Interest recoverable - on deposits and loans 5.74 4.01 47.42 9.22 10.25 Dividend Receivable 4.56 302.06 - - -

10.30 306.07 47.42 9.22 10.25

145 English Indian Clays Limited

Management’s Discussion and Analysis

Management’s Discussion and Analysis of Financial Condition and Results of Operations as Reflected in the Financial Statements

The investors should read the following discussions of the financial conditions and results of operations together with the audited financial statements of the Company, each for the financial years ending March 31, 2008, 2007, 2006, 2005 and 2004 including notes thereto and the reports thereon, which appear in the section titles ‘Restated Financial Statements’ beginning on page no. 108 of this LOF.

Overview of business of Issuer Company

EICL was incorporated on 18 th November 1963 and is currently in business of manu in technical and financial collaboration with English China Clays Limited, UK (now known as ECC Group plc, UK). This collaboration with ECC ceased in the year 1992. EICL has since been actively engaged in the manufacture and processing of China Clay of different grades for use as a coating agent and filling agent. The Company has its clay-manufacturing units at Veli, Thonnakkal and Kollam located in Thiruvananthapuram, Kerala.

The Company acquired the starch business of erstwhile Bharat Starch Industries Limited (BSIL), pursuant to the Scheme of arrangement by way of amalgamation of BSIL after de-merger of Citric Acid Division as approved by the Hon’ble High Courts, with effect from April 1, 2001. The Starch Division of the Company has two manufacturing units located at Yamunanagar and Puducherry. EICL also had an Investment Division, which has been de-merged to Bharat Starch Products Limited (BSPL), pursuant to the Scheme of arrangement by way of de-merger as approved by Hon’ble High Courts of Kerala and Delhi with effect from April 1, 2007.

EICL is currently operating in two main business segments i.e. Clay Business and Starch Business, and also has investment business segment, which consists of investments of Rs 450 mn in group companies. The Company has already filed a Scheme of arrangement for de-merger of Investment division of EICL into BSPL w.e.f. April 07. The scheme has been approved by Hon’ble High Courts of Kerala and Delhi.

A brief on both the operating businesses of the Company is given below:

Clay Business

The Company has three processing plants near Trivandrum, Kerala (India), where the clay mines are located. Mining license and the necessary approval for mining have been obtained from the Government of Kerala and the Government of India respectively. The installed capacity of the plant was 36,000 MT per annum initially and it has since been increased to 213,600 MTA.

The main features of Clay Business are: • EICL has operated in this segment since 1963 and has a built a market leadership position (with an estimated 70% share over past fifteen years). • 19.3% CAGR turnover growth during FY 06-08 • Major exporter from India in this segment • Started focusing on exports only since FY 03 and achieved significant growth to reach Rs 100 mn export revenue in FY 08 • Serves diverse industries across different sectors ensuring low industry concentration risk. • Other players include Twenty Microns(8%), Kerala Ceramics (7%), Imports - 10% • The Domestic market for processed clay is estimated at 240,000 MT

Results of Operations of Clay Business

(Rs.in crores)

FY08 FY07 FY06 FY05 FY04

146 English Indian Clays Limited

Turnover 131.99 116.52 92.79 80.68 68.22 EBIDTA 38.49 33.35 28.45 23.38 21.3 EBIT 33.46 29.01 24.21 19.71 18.55

Starch Business The Company has two starch processing plants in Yamunanagar and Puducherry. The Starch division at Yamunanagar was set up in 1937 while the Puducherry Unit was set up in 1994-95.

The main features of Starch Business are as under: • EICL’s starch operations date back to 1937 with the establishment of Bharat Starch which was merged with EICL in 2001. • The Company today has a Corn Grinding capacity of 175 TPD and modified starches manufacturing capacity is 28,770 TPA. • Turnover from Starch Business has grown at a CAGR of 12.8% during FY 06-08. • 75% sales are to Corporates, rest through retail supported by the Company’s marketing team. • EICL enjoys a 56% market share in textile starch and a dominant share in the Northern traditional starch market. • Its strong R&D capabilities have enabled development of value added products e.g. Carbojet (Textiles) – benefits for end user and better margins for EICL. • Company has also achieved margin improvement in traditional starches based on process efficiencies e.g. - reduction in furnace oil requirement) and reduction in manpower with VRS scheme in FY 07. • Margins to improve further, with power costs set to decline due to installation of Power co- generation plant in Yamunanagar in FY 09. • It has not only diversified risk by catering to diverse sectors but has also established relationships with pedigree clientele across these segments.

Results of Operations of Starch Business (Rs.in crores)

FY08 FY07 FY06 FY05 FY04 Turnover 145.86 136.07 114.64 89.58 80.36 EBIDTA 13.51 11.85 7.03 6.02 5.26 EBIT 10.13 8.61 3.99 3.20 2.63

Significant Developments subsequent to last Financial Year

There have been no significant developments since the date of the last financial statements as disclosed in the Letter of Offer and which materially and adversely affect or is likely to affect the profitability of the Company, or the value of its assets or its ability to pay its liabilities within the next twelve months.

Restructuring

To enable the Company to focus on and enhance its core manufacturing business operations, the Directors approved a scheme of de-merger of investment division and the same was approved by the Hon’ble High Courts of Kerala and Delhi vide their orders dated December 19, 2007 and January 14, 2008 respectively.

Factors that may affect the results of operations

Several factors may affect the result of operations that may make it difficult to predict the future financial results. Such factors are:

• The risk in the Clay Business is primarily the volatility in the fuel prices, since the business is energy intensive. Any abnormal increase in prices of petroleum products could adversely impact the business.

147 English Indian Clays Limited

• The Starch Businesses could be impacted when the two new 1000 TPD Cornwet Milling facilities come up in North India later this year. The Unit though has its own strategies to counter any threats.

Discussion on Results of Operations The following discussion on the financial operations and performance should be read in conjunction with the audited financial results of the Company for the years ended March 31 st 2004, 2005, 2006, 2007 and 2008.

FOR THE YEAR ENDED MARCH 31, Particulars 2004 2005 2006 2007 2008 Rs in lacs Income Gross Sales of products manufactured by the Company 14,841.14 17,003.21 20,722.38 25,230.11 27,785.83 of products traded in by the Company 16.65 22.61 20.54 29.13 -

14,857.79 17,025.82 20,742.92 25,259.24 27,785.83 Less: Excise duty on manufactured goods 805.92 909.56 1,141.86 1,257.40 1,143.31

Net Sales 14,051.87 97.8% 16,116.26 93.8% 19,601.06 95.4% 24,001.84 98.6% 26,642.52 99.5% Other Income - Recurring 51.96 0.4% 91.62 0.5% 83.34 0.4% 63.10 0.3% 99.37 0.4%

- Non - Recurring 256.93 1.8% 975.79 5.7% 861.24 4.2% 268.29 1.1% 35.61 0.1%

14,360.76 100% 17,183.67 100% 20,545.64 100% 24,333.23 100% 26,777.50 100% Expenditure Increase/(Decrease) in Inventories (89.53) -0.6% 66.01 0.4% (63.03) -0.3% (49.34) -0.2% (343.12) -1.3%

Material Cost 4,540.67 31.6% 5,066.43 29.5% 6,867.66 33.4% 8,400.82 34.5% 9,152.02 34.2% (including Clay Mining & Processing Expenses) Other Manufacturing Expenses 4,186.63 29.2% 5,021.64 29.2% 5,725.50 27.9% 7,131.84 29.3% 8,456.85 31.6%

Staff Costs 1,442.35 10.0% 1,515.19 8.8% 1,630.01 7.9% 2,013.91 8.3% 2,263.64 8.5% Administration Expenses 697.25 4.9% 910.15 5.3% 1,082.31 5.3% 1,062.38 4.4% 1,094.99 4.1% Research & Development Expenses 52.12 0.4% 64.00 0.4% 79.25 0.4% 83.78 0.3% 102.88 0.4% Selling and Distribution Expenses 722.82 5.0% 801.05 4.7% 1,007.73 4.9% 1,085.21 4.5% 969.80 3.6%

Interest 1,024.82 7.1% 1,189.90 6.9% 991.99 4.8% 967.67 4.0% 1,170.66 4.4%

12,577.13 87.6% 14,634.37 85.2% 17,321.42 84.3% 20,696.27 85.1% 22,867.72 85.4% Net Profit Before Depreciation and Tax 1,783.63 12.4% 2,549.30 14.8% 3,224.22 15.7% 3,636.96 14.9% 3,909.78 14.6%

Depreciation 555.74 3.9% 667.61 3.9% 750.66 3.7% 783.73 3.2% 895.90 3.3%

Net Profit Before Tax 1,227.89 8.6% 1,881.69 11.0% 2,473.56 12.0% 2,853.23 11.7% 3,013.88 11.3% Tax Expense

Current Tax 74.14 0.5% 74.50 0.4% 548.34 2.7% 847.50 3.5% 1,029.70 3.8%

Deferred Tax 364.00 2.5% 384.79 2.2% 93.88 0.5% 135.20 0.6% 50.76 0.2% Fringe Banefit Tax - - 36.00 0.2% 20.89 0.1% 24.00 0.1%

148 English Indian Clays Limited

Net Profit 789.75 5.5% 1,422.40 8.3% 1,795.34 8.7% 1,849.64 7.6% 1,909.42 7.1%

149 English Indian Clays Limited

For the year ending March 31, 2006

Net Sales The Company’s performance in both its Clay and Starch businesses during the year under review was steady with sales exceeding Rs.200 crores. In actual terms, the Company registered a Sales growth of 22% with a turnover of Rs.207.43 crores. The business focus during the year was directed towards promotion and further consolidation of value added / new products. The Company’s exports registered a growth of 67% showing good product acceptance in international markets.

Other Income Other income includes Rs 8.10 Crores income from investments of the Company as against Rs 9.35 Crores in the previous year.

Material Cost Material cost represents the cost of Raw material consumed as well as the mining and processing expenses incurred by the Company on its mining operations. The cost of raw material is increased to 33.6% from 29.5% in the previous year mainly due to abnormal spurt in the cost of agro based materials i.e. Corn & Tapioca.

Staff Costs The cost of manpower has come down from 8.8% to 7.9% due to payment of retirement benefits to employees.

Other Manufacturing Expenses The other manufacturing expenses are almost maintained at same level.

Administrative Expenses The administrative expenses are at the same level as were in the previous year.

Research & Development Expenses The Company has been regularly incurring expenses on its R&D activities, which are about 0.4% of total income.

Selling and Distribution Expenses The selling & distribution expenses are marginally higher at 4.9% of total income against 4.7% in the previous year due to expenses relating to exports made by the Company.

Profit Before Interest, Depreciation and Tax (PBIDT) The PBIDT of the Company was at 20.5% against 21.7% in the previous year due to variation in other income as explained above.

Interest Expense The interest expenses were at 4.8% of total income against 6.9% in the previous year due to reduction in the cost of borrowings of the Company.

Depreciation The depreciation charge was at 3.7% against 3.9% in the previous year. The change in depreciation is due to the capital expenditure incurred by the Company during the previous year but the sale is increased in the current year.

Profit After Tax (PAT) The profit after tax was at 8.7% as against 8.3% in the previous year. The reason of variations is non-operational income as explained above.

For the year ending March 31, 2007

Net Sales The business environment for both the Clay and Starch businesses were good, and the Company continued to improve its performance on almost every parameter like productivity, product mix, quality, exports etc. The Company registered a growth of 22% in Turnover and 26% in EBIDTA from

150 English Indian Clays Limited operating businesses. The Turnover for F.Y. 2006-07 was Rs.253 crores and EBIDTA from operations Rs.42 crores.

Other Income Other income includes Rs 2.66 Crores income from investments of the Company as against Rs 8.10 Crores in the previous year.

Material Cost Material cost is increased to 34.5% from 33.6% in the previous year mainly due to continued increase in the cost of agri-produce i.e. Corn & Tapioca.

Staff Costs The cost of manpower has increased from 7.9% to 8.3% due to cost of VRS given to the employees of starch division of the Company.

Other Manufacturing Expenses The other manufacturing expenses are increased from 27.9% to 29.3% mainly due to increase in the rates/prices of power/fuel.

Administrative Expenses The administrative expenses are increased by 8% in value terms, which are lower than the growth in the sales volume.

Research & Development Expenses The Company has been regularly incurring expenses on its R&D activities, which are about 0.4% of total income.

Selling and Distribution Expenses The selling & distribution expenses are reduced from 4.5% from 4.9% in the previous year due to focus on sale to corporate customers.

Profit Before Interest, Depreciation and Tax (PBIDT) The PBIDT of the Company was at 18.9% against 20.5% in the previous year due to variation in other income as explained above.

Interest Expense The interest expenses were reduced further at 4.0% of total income against 4.8% in the previous year by better management of working capital.

Depreciation The depreciation charge was at 3.2% against 3.7% in the previous year. The change in depreciation is due to the capital expenditure incurred by the Company during the previous years. But it is increased by 5% in absolute terms.

Profit After Tax (PAT) The profit after tax was at 7.6% as against 8.7% in the previous year. The reason of variations is non-operational income as explained above.

For the year ending March 31, 2008

Net Sales During the year under review the Company’s turnover increased by 10% to Rs.277.86 crores and EBIDTA from operations by 20% to Rs. 51.50 crores. The Company was well positioned to take advantage of the economic growth in the country and the favourable market conditions.

Other Income Other income includes Rs Nil income from investments of the Company as against Rs 2.66 Crores in the previous year.

Material Cost

151 English Indian Clays Limited

Material cost was marginally lower at 34.2% as against 34.5% in the previous year mainly due to strategic buying of agri-produces i.e. Corn and Tapioca Starch.

Staff Costs The cost of manpower has increased to 8.5% from 8.3% due to increase in the cost of manpower in the market.

Other Manufacturing Expenses The other manufacturing expenses are increased from 29.3% to 31.6% mainly due to increase in the prices of industrial fuels.

Administrative Expenses The administrative expenses are maintained at almost at same level in value terms despite increase in the sales volume.

Research & Development Expenses The Company has been regularly incurring expenses on its R&D activities, which are about 0.4% of total income.

Selling and Distribution Expenses The selling & distribution expenses are reduced from 3.6% from 4.5% in the previous year due to continued focus on sale to corporate customers.

Profit Before Interest, Depreciation and Tax (PBIDT) The PBIDT of the Company was at 19% against 18.9% in the previous year despite nil income on investments pursuant to de-merger of investment division.

Interest Expense The interest expenses were reduced further at 4.4% of total income against 4.0% in the previous year due to increase in the cost of borrowings.

Depreciation The depreciation charge was at 3.3% against 3.2% in the previous year. But it is increased by 14% in absolute terms due to acquisition of Kollam unit and capital expenditure incurred by the Company.

Profit After Tax (PAT) The profit after tax was at 7.1% as against 7.6% in the previous year. The reason of variations is non-operational income as explained above.

Off Balance Sheet Arrangements

None

Information required as per Clause 6.10.5.5 (a) of the SEBI (DIP) Guidelines i. Unusual or infrequent events or transactions. There has been one infrequent transaction in the F.Y. 2008 as compared to the previous three years on account of de-merger of investment division. This has resulted in reduction in non-recurring income on account of Dividend. ii. Significant economic changes that materially affected or are likely to affect income from continuing operations. In case of Clay business, fuel cost has affected the cost of production of Clay products. In view of the ongoing position of oil industry, this is likely to affect the income in future also. However, the Company continuously takes steps to either reduce the consumption or take price increase of its finished products. iii. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations. In case of Clay business, the Company is in a monopoly position and trends are well settled and therefore we do not expect any material adverse impact on sales, revenue or income

152 English Indian Clays Limited

from the operations. However, raw material prices of Starch business have been rising and in case %age growth in sales realization does not happen in the ratio, there may be some adverse impact. iv. Future changes in relationship between cost and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known. As mentioned above increase in agro based raw material for Starch business and fuel cost in the Clay business may cause some adverse change. However, Company has strategy to counter these effects. v. The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices. Material increases in sales or revenue are due to increase sales volume only in both the Clay and Starch business in past years. vi. Total turnover of each major industry segment in which the issuer Company operated.

Paper & Board 23.2% Paint 21.5% Food 18.9% Textiles 10.7% Oil well Drilling 5.1% Fibre Glass 4.2% Rubber 3.4% vii. Status of any publicly announced new products or business segment. Nil viii. The extent to which business is seasonal. Procurement of raw material for Starch business is seasonal. It has to be procured in eight months comprising two seasons of four months each for the full years requirements. However, Seasonality of the sales is not much and is maximum about 5% of Clay business segment because of higher sales in festival season. ix. Any significant dependence on a single or few suppliers or customers. The Company does not have dependency on single or few suppliers for both Clay and Starch businesses because Company has its own raw material clay mines and maize/tapioca for Starch business are procured from different suppliers. Also the sales is spred over various sectors comprising various customers. x. Competitive conditions. In the Clay business there is no significant competition for the Company. The Company has 70% market share in India and there is no threat to business even in future because the Company has been in this position for a very long period and has established itself as a quality and consistent supplier. In Starch business, competition is there for the Company because the market share is below 10% in India. The strategy of the Company is to produce quality products and concentrate on corporate customers.

153 English Indian Clays Limited

SECTION VI : LEGAL AND OTHER INFORMATION

Outstanding Litigation, Defaults and Material Developments

Except as described below, there are no significant outstanding litigations, suits or criminal or prosecutions, proceedings or tax liabilities against the Company, the Directors of the Company, the Promoters of the Company and group Companies that would have a material adverse effect on the business of the Company and there are no defaults, non-payment or overdue of statutory dues, institutional/bank dues and dues other than unclaimed against the Company or Directors or Promoters or Group Companies as on date of this LOF.

The Company, its Directors, Promoters and Promoter Group are not on the list of wilful defaulters of the RBI, have not been debarred from dealing in securities and / or accessing the capital markets by SEBI and no disciplinary action has been taken against them by SEBI or any stock exchanges.

The Company is involved in various legal proceedings, which are incidental to the ordinary course of business. The said legal proceedings are by and also against the Company.

Cases against the Company

Sales Tax Department, Haryana v. English Indian Clays Ltd: The Company had filed a petition in the Hon’ble High Court of Punjab & Haryana against the sales tax Department, Haryana the for charging by them an amount of Rs. 32,16,191 under Haryana Local Area Development Tax Act, 2000. The High Court held, vide its order dated 14.03.2007 that the said levy tax is against the provisions of Article 301 of the Constitution of India and has passed the judgment that the impugned levy is not compensatory in character and the same amounts to restriction on free flow of trade and commerce. A Special Leave Petition has been filed by the Sales Tax Department against the Order of the High Court of Punjab & Haryana, which is pending for hearing.

Bharat Starch Majdoor Union, Yamuna Nagar v. Bharat Starch Industries a division of EICL: Birbal Sharma, President of Bharat Starch Labour Union, had submitted a notice to the Company that the management is showing favoritism to some staffs and discrimination among the workers of the unit. The matter is pending with the Labour cum Conciliation Officer, Haryana. The next date of hearing is fixed on 19.05.2008

Madan Gopal v. Bharat Starch Industries, Yamunanagar : The Plaintiff has filed a case against the Company in the Court of Rent Controller, Jagadari alleging non issuing of rent receipt for the Stall No. 10 situated at Radaur Road, Yamunanagar. The matter is pending in the Court of Rent Controller, Jagadari.

Ami Chand v. Presiding Officer, Labour Court and others: A writ has been filed by Mr. Ami Chand in the Hon’ble Punjab & Haryana High Court, Chandigarh against the judgment dated 13.6.2006 of Labour Court, Ambala for termination of services of Mr. Ami Chand by the Company. The Petition has been dismissed by the High Court.

Pawan Chopra v. Bharat Starch Industries, Yamunanagar: Complaint under section 12 of the Consumer Protection Act has been filed by Mr Pawan Chopra asking for supply the documents, i.e. NOC from the previous registering authority of vehicle, which was required for the transfer of the vehicle Tata Sierra Car No DL 2CH- 0244 sold by the Company to Mr Pawan Chopra in auction. The Plaintiff has demanded Rs 50,000 as compensation. The matter is pending with the District Consumer Disputes Redressal Forum, Yamunanagar at Jagadhri. The date of hearing is fixed on 18.06.2008.

Sanjay Sharma v. GM, Bharat Starch Industries, Yamunanagar: A case has been filed by Mr. Sanjay Sharma in the Labour Court, Ambala against his retrenchment by the Company. The matter is pending for hearing.

Gian Chand Gulati v. Bharat Starch Industries, Yamunanagar: The Plaintiff has taken a decree dated 04.04.2006 from Court, Civil Judge (Junior Division) at Jagadhri for certain payments to be

154 English Indian Clays Limited made by EICL to him. The Plaintiff has asked for direction for the respondent to fulfill the terms of the decree and in default thereof attachment of the property of the Company. The matter is pending with Court of Shri C.L. Mohal, Civil Judge (Junior Division) at Jagadhri.

Mr. Muralidharan Nair v. State of Kerela & Others: The Company is sixth respondent in the matter. Mr. Muraleedharan Nair, one of the members of the action council, Thonnakkal led by Mr. Mohanachandran had filed a petition before the Lok Ayukata against 20 Clay Mines in Azoor and Managalapuram Panchayat including English Indian Clays Ltd alleging that the mining operations are responsible for the water scarcity in surrounding areas. The matter is pending with the Hon’ble Lok Ayukta, Thiruvananthapuram. The matter is pending for hearing.

Ahammad Kabeer v. English Indian Clays Ltd. & Others: Ahammad Kabeer has filed a writ petition before the High Court of Kerala seeking an interim relief to restrain the Company from its operation at Kollam unit on the ground that EICL do not possess valid license in its name from the Panchayat. The High Court of Kerala vide its order dated 08.01.2008 passed an interim order restraining EICL from carrying on its activities at Kollam. Thereafter, the Company moved an application for modification of the interim order allowing the Company to continue the operations. The matter came up for hearing on 17/01/2008. After hearing the case the Hon’ble High Court has quashed the interim order issued against the Company. The Plaintiff has filed a review petition.

Mr. J. Gireesan v. English Indian Clays Ltd.: The Company is having mining activities at Melthonakkal and the China Clay mined out having about 35% Clay constituent and the remaining is tailings, of which the main constituent is sand. This tailings was earlier disposed of as waste by the respondent. However, when the company was facing pressure from the Statutory agencies like Pollution Control Board to achieve Zero generation in the plant, possibility of separating & using the sand available in the tailing was explored. There is an allegation by the petitioner that the sand generated by the respondent company is not suitable for construction. The respondent company is selling sand as processed tailing, which can be sold as per the central laws. The matter is pending for hearing in the Hon’ble High Court of Kerala.

Cases filed by the Company

Bharat Starch Industries v. Municipal Council, Yamunanagar : The Municipal Council has sent Notice to the Company that the Company has to deposit an amount of Rs. 2,33,400/- on account of license fee for generator and further threatened for initiating coercive action under the Land Revenue Act for getting recovery thereof. The Company has replied that the factory premises are governed by the provisions of the Factories Act and the company has taken necessary license from the competent authority by payment of requisite fee of Rs. 13,000 and consent has also been taken from the Haryana Pollution Control Board under the various provisions of Water (Prevention and Control of Pollution) Act 1974 and Air (Prevention and Control of Pollution) Act 1981. The Plaintiff has filled the suit for permanent injunction. The matter is pending with the Court of Civil Judge, Senior Division, Jagadhri, Distt.Yamunanagar.

Bharat Starch Industries, Yamunanagar (Plaintiff) v. 1.Narender Kumar Lamba, 2.Soni Ram, 3.Krishan Kumar, 4.Prem Chand, 5.Narender Rana, 6.Rajinder Parshad, and 7.Kesri Nandan: The Company has sought for decree of permanent injunction from the Court of Civil Judge (Senior Division), Jagadhri, restraining the defendants from demonstrating, raising slogans and resorting to abuse and provocative language against the plaintiff company, its officers and management and holding gate meetings near the premises of the Company. The Court has fixed the next date of hearing on 29.09.2008.

Bharat Starch Industries, Yamunanagar v. Madan Gopal: Bharat Starch Industries the plaintiff company has filed a suit in the Court of Civil Judge, Senior Division, Jagadhri praying for Mandatory Injunction directing Mr. Madan Gopal the Defendant to remove his occupation along with goods and articles kept in the Stall No. 10 situated opposite to Sacha Soda Market, Radaur Road, Yamunanagar, which is owned by the Company. In the year 1974 an agreement was executed containing terms & conditions to use the said stall. As per the terms of the agreement, the plaintiff company has requested the defendants to remove his occupation from the said stall. The matter is pending for hearing.

155 English Indian Clays Limited

English Indian Clays Ltd v. Revenue Dept. Govt. of Kerala: The Company has filed a case in the Hon’ble High Court of Kerala at Ernakulam. The Court has accepted argument that the factory was located in the Kadakampally village till 30-11-1999 and as such the revised rate of lease is not applicable till the date. The Court also accepted the company’s argument that the market value is fixed arbitrarily. Hon’ble High Court has given direction to Secretary; Revenue Department to re-fix the lease rent and the direction in this regard is awaited.

There are no Litigation/Disputes involving Securities Related Offences, including penalties imposed by SEBI or any other securities market regulator in India or abroad against us.

There are no Litigation involving Statutory and other offences, including penalties imposed by any regulatory authority in India or abroad against us

There are no Litigations involving Civil and Economic Offences against us except as stated above.

There are no Litigations in relation to labour laws, and employee related cases against us except as stated above.

Litigation involving revenue authorities (customs / excise / sales tax / income tax / service tax) against us are as under:

1. The Assessing Office has raised a demand of Rs. 3,29,291/- for the year 1986-87 in respect of interest levied for non submission of Form ‘C’ under Kerala Sales Tax Act and Central Sales Tax Act. The matter is pending with Deputy Commissioner Appeals, Thiruvananthapuram, Kerala. 2. A demand of Rs. 2,41,863/- was raised by the Assessing officer for the year 1987-88 in respect of non submission of Form ‘C’ and tax levied on freight under Kerala Sales Tax Act & Central Sales Tax Acts. The matter is pending with The Assistant Commissioner (Appeals), Thiruvananthapuram, Kerala. 3. A similar cases is pending with Assistant Commissioner (Appeals) Thiruvananthapuram for 1988-89 – amount involved is Rs. 2,36,873/-. 4. Demand of Rs. 17,008/- was raised for 1990-91 under the above mentioned Acts for non submission of Form 18. The order is pending for modification with Assistant Commissioner (Appeals), Thiruvananthapuram. 5. Appeal against a demand of Rs. 6,00,702/- raised by the Assessing Officer under the above Acts for the year 1991-92 was filed by the company and is pending in the High Court of Kerala, Erakulam, Kerala 6. Another appeal under the same Acts is pending in the High Court of Kerala for modification of order of Assistant Commissioner, Kerala General Sales Tax, for non-submission of Form ‘C’ involving an amount of Rs. 1,13,912/- for the year 1992-93. 7. An appeal under the above Acts involving an amount of Rs. 22,872/- for the year 1993-94 is pending in the High Court of Kerala. 8. An appeal under the above mentioned Acts is pending with the Appellate Tribunal, Kerala General Sales Tax, Thiruvananthapuram, for the period 1995-96 involving an amount of Rs. 91,962/- for non submission of Form 18. 9. Assessing Officer had raised a demand of Rs. 18,90,950/- in respect of non submission of Form ‘C’ and Form 18 for the year 1998-99 under the Kerala Sales Tax Act and Central Sales Tax Act. The appeal against the order is pending with Deputy Commissioner (CST & KGST) at Kollam, Kerala. 10. An appeal has been filed by the company with Deputy Commissioner (Appeals) for rectification of the order pertaining to Royalty Sales return for the year 2000-01 amounting to Rs. 61,050/- under the Kerala General Sales Tax Act. 11. Company has filed a writ petition in the Supreme Court, against the imposition of an entry tax on import of Superior Kerosene Oil in the State of Kerala under which a demand for Rs. 1,51,33,588/- was raised for the year 2002. The matter is pending for hearing. 12. Company has filed a petition before the Hon’ble High Court of Kolkata against disallowance of interest expenses claimed by the company for the year 2001-02 rejected by the Income Tax Appellate Tribunal, Kolkata. The amount involved is Rs. 4,84,20,562/- and pertains to

156 English Indian Clays Limited

Bharat Starch Industries Ltd., which was merged with English Indian Clays Ltd. w.e.f. 01-04- 2001. 13. The company has filed an appeal with Commissioner of Income Tax (Appeals) Cochin, against the Assessing Officer for disallowing the adjustment of brought forward losses claimed by the Company for year 2003-04 & 2005-06 and amounting to Rs. Rs. 6,82,55,122/-. 14. A demand of Rs. 6,34,94,596/- including penalty was raised by the Excise Department, Haryana under the Central Excise Act, 1944 covering the period 01-04-1997 to 18-12-2001. As per the contention of the company this was due to misclassification of Maize Starch as excisable product by the Excise Authorities and has, therefore filed an appeal with Central Excise and Service Tax Appellate Tribunal (CESTAT), Delhi. Matter is pending for hearing. 15. A show cause notice was issued by Excise Department, Haryana, for Modvat claimed by the company on Lubricants & Transformer oil for production of excisable and non-excisable products. An amount of Rs. 5,49,05,706/- consisting of demand and penalty covering the period from 2000 to 2004 was required to be deposited by the company. The appeal of the company with CESTAT at Delhi is pending. 16. An appeal of the above nature (para 15) involving an amount of Rs. 4,53,96,100/- for the period 01-12-2004 to 31-08-2005 is pending with CESTAT, Delhi.

There are no Litigations / cases in the nature of winding up petitions/ liquidation/ bankruptcy / closure filed by / against the company

157 English Indian Clays Limited

Group Companies

Sr. Company Listed / Unlisted No. 1. Greaves Cotton Limited Listed 2. Premium Energy Transmission Ltd. Unlisted 3. Pembril Industrial & Engineering Company Pvt. Ltd. Unlisted 4. Greaves Leasing Finance Ltd. Unlisted 5. Dee Greaves Ltd. Unlisted 6. KCT Chemicals & Electricals Ltd Unlisted 7. Standard Refinery & Distillery Ltd. Unlisted 8. Bharat Starch Products Ltd. Unlisted 9. DBH Global Holdings Ltd. Unlisted 10. Greaves Farymann Diesel Gmbh Unlisted 11. Greaves Cotton Netherlands B.V. Unlisted

While the details of litigation cases pertaining to Greaves Cotton Ltd. are given below, there are no significant litigations against any other Company whose outcome could have materially adverse effect on the financial position of EICL.

Greaves Cotton Limited

Cases filed against the Compay

Amount Sr. Case Title/Date of Particulars of case involved Present No. Insitution / Forum Rs. Lakhs Status UPSTRC filed suit for breach of We have filed 1 96 of 1977 :: Civil Court, contract by GCL. Court 23.95 appeal at High Court, decreed the matter in favour of Allahabad and Kanpur / HC Allahabad UPSRTC. execution of decree is UPSRTC, Kanpur stayed.

Cons. Case No. 194 of Diesel Engines for Gensets were Arguments 2 2004 supplied by GCL's 12.68 were filed. Original Equipment Assembler Judgment is Dist. Forum, Varanasi (OEA); both sets started awaited GN Bros, Sarees malfunctioning.

Cons. Case No. 590 of DG Set supplied by GCL's OEA; Next date is 08- 3 2007 both parties submitted 16.00 07-2008 their arguments; President is on Dist. Forum, Jagadhliri leave Neelagiri Wood Crafts

Cons. Case No. 824 of DG Set supplied by GCL OEA; Customer to 4 2007 customernegligence is 19.53 submit its version ; Dist. Forum, Chandigarh noticed Next date J&K Aluminium Co. is 20-05-08

Suit filed by few auto dealers at The matter is in 5 Suit No. 160 of 1993 Agra during 1993; the suit 60.00 the Court was dismissed in default during Civil Court, Agra 1998. Although the plaintiff Auto Delaers filedapplication for reinstatement,

158 English Indian Clays Limited

the same is yet to come on Board as there is no sitting of the Court for the last six years.

CESPO made risk purchase due The Court 6 Suit No. 124 of 1989 to delay in supply of 35.83 stayed the Jessops Hanomag equipment. Ci8vil Copurt Lucknow Matter was referred to Proceedings arbitration. GCL filed appeal in CESPO (Goct. Of UP) Civil Court requesting for making Jessops as necessary party to the arbitration. Court stayed arbitration proceedings in1989

Materials purchased by Cranacx Pending for 7 Appeal No. 207 2004 from GCL were sold by 25.80 hearing; them to J S Dwellers, but Chandigarh HC cheques issued by JS Dweller got bounced. With the result Cranacx cheques issued by Cranacx to Greaves also got bounced. While GCL filed case u/s 138 on Cranacx, Cranacx filed a suit against JS dweller and made GCL a party to this suit.

GCL vacated As GCL did not vacate the the premises 8 Suit No. 264 of 2004 premises after expiry of Lease 138.00 but Deed, which expired on 30-11- the disputed Dist Court, Tees Hazari 2002, suit for vacant property was clandestinely possession of the premises and sold to third Mrs. Santosh Passi for money decree towards party without Manse Profit @ 4.60 Lacs p.m informing GCL. w.e.f 01-12-2002 with Next date of hearing interest @ 24% p.a. 30-07-08

Lease Deed was not got Next date of 9 Suit No. 2826 of 1993 extended after 30-06-1993. Land 675.00 hearing is 25-11-08. Lord served notice on GCL to However, the High Court, Delhi vacate the premises and parties are trying to also filed suit for manse profit @ settle the Express News Papers Ltd. 6.58 Lacs p.m. GCL filed matter suit for specific performance. Both suit are listed for hearing. amicably.

Kirloskar Electric Ltd., who are a 10 No. 54/95/2993 of 1995 party for the complaint, 21.61 Pending at SC CWP of 2000 & SLP 18404 filed SLP at Supreme Court. After of 2003 SC issues directions, the MRTP Commission matter will be taken up by MRTP

159 English Indian Clays Limited

Utkal Solvents

Allegation of UTP by Surya Next date of 11 No. 30/10389/UTP/92 Scooters and the matter 600.00 hearing is 20-08-2008 MRTP Commission is pending at MRTP when cross- examination by Surya Scooters plaintiff will be done.

CESTAT 12 OiO No. 5 of 1999 Valuation of GAU 4360 Engine 62.48 Mumbai has revertedthe Commissioer of CE, matter to Commissioner Aurangabad forreview.

Matter is Cons. Case No. 288 of Alleged malfunctioning of DG Set pending for 13 2000 supploied by GCL's 19.50 hearing Staqte Commission, Mumbai OEA, National Flask Ind Ltd.

Cranes supplied by GCL were We have 14 No. 289 of 1995 submerged in the floods, 93.68 submitted our suit filed for damages but SSNNL. paper-book; all Civil Court, Ahmedabad We have filed suit for proceeding at balance payment. Matter referred the Tribunal Saredar Sarovar Nigam to Arbitration Tribunal were stayed by HC against a CWP filed by another party.

Mr. Jain ex-employee filed a HC stayed the 15 CWP 7238 of 2002 labour case for reinstatement 21.00 matter. and payment of wages ect. We HC, Bhopal have filed appeal at HC. Mr. P. C. Jain

State Consumer Alleged not functioning of DG Set; We have filed 16 Commission claimed for loss of profit 67.80 our WS and the matter is yet to Guwahati etc. come for Advent Industries, Guwahati hearing

Cases filed by the Compay

Amount Sr. Case Title/Date of Particulars of case involved Present No. Insitution / Forum Rs. Lakhs Status

160 English Indian Clays Limited

For recoveryt of outstanding Pending for 1 Spl Sum. Suit 17 of 2000 dues form 52.48 final hearing at Civil Court, Pune earstwhile Auto Delaer Pune Court Sai Motors

Land acqusition matter; decreed Final hearing at 2 Spl Suit No. 17 of 1997 in our 77.84 HC is favour for enhanced espected to at Civil Court compensation. Govt take appealed at HC Hyderabad and place very Sangareddy/HC Hyderabad deposited soon. Rs. 14.00 lakhs whilch amount APIIC, Govt. of AP was received by us.

For recoveryt of outstanding Pending for 3 Spl Sum. Suit 229 of 2000 dues form 73.17 final hearing at Civil Court, Pune earstwhile Auto Delaer Pune Court Padmaja Exim Pvt Ltd

Petition admitted; coupled with Awaiting BIFR 4 Co. Petition 388 of 2002 another 9.06 status High Court, Bombay petition; Co. is under BIFR Libra Polymers Ltd.,

Service of Suit for recovery of monye summons id 5 City Civil Court against supply of engines 11.20 sone. Hyderabd Sunku Motors

Co. Petition No. 399 of Pending for 6 2003 for recovery of dues. 72.87 final hearing. High Court, Bombay Skip Plastic Ltd.

Petition Co. Petition No. 842 of allowed; in the 7 1999 For recovery of dues 26.00 process of appointing Official High Court, Bombay Liquidator. Circle KS Polyset I Ltd.

Contingent Liabilities Sr. Details Amount No. In Rs. Lacs

1 Sales Tax Liability that may arise in respect of matters in appeal 502.41 2 Income Tax demands which are in Appeals 354.23 3 Towards claims made against Company, not acknowledged as debt.

161 English Indian Clays Limited a. Demands made by Central Excise Authorities which 111.44 are in appeals.

LITIGATION BY AND AGAINST THE DIRECTORS

The Directors of the Company have no outstanding litigation towards tax liabilities, criminal/civil prosecution for any offences (irrespective of whether they are specified under paragraph (i) of Part 1 of Schedule XII of the companies Act), disputes, defaults, non-payment of statutory dues, in their individual capacity or in connection with the Company and other Companies with which the Directors are associated :

* Pertaining to Criminal Laws : Nil * Pertaining to Civil Laws : Nil * Pertaining to Securities : Nil * Pertaining to Statutory Laws : Nil * Pertaining to Labour Laws : Nil * Arbitration matters : Nil

LITIGATION BY AND AGAINST THE PROMOTERS

The Promoters of the Company have no outstanding litigation towards tax liabilities, criminal/civil prosecution for any offences (irrespective of whether they are specified under paragraph (i) of Part 1 of Schedule XII of the companies Act), disputes, defaults, non-payment of statutory dues, in their individual capacity or in connection with the Company and other Companies with which the Promoters are associated :

OUTSTANDING DUES OF SSI UNITS

There is no overdue amount outstanding to the suppliers covered under SSI

LITIGATION BY AND AGAINST THE DIRECTORS OR PROMOTER COMPANY

Nil

MATERIAL DEVELOPMENT

The Directors of the Company in their opinion hereby state that there is no material development after the date of the last financial statements disclosed in the LOF which is likely to materially and adversely affect 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 twelve months.

162 English Indian Clays Limited

Government Approvals / Licensing Arrangements

Except for pending approvals mentioned under this heading, the Company has received the necessary material consents, licenses, permissions and approvals from the Government/RBI and various Government agencies required for the present business. Further, except for pending approvals as detailed herein, the Company can undertake all the present activities, in view of the present approvals and no further material approvals from any statutory body are required by the Company to undertake the present activities. Except as mentioned in this section, we have not applied for any licenses/ approvals in relation to the Objects of the Issue.

Approvals for the Issue

The following approvals have been obtained or will be obtained in connection with the Issue:

1. The Board of Directors has, pursuant to resolution passed at its meeting held on January 25, 2008 authorized the Issue of the Company under Section 81(1) of the Companies Act. 2. In-principle approval from the Bombay Stock Exchange Limited dated [.] , 2008.

Approvals for Business

The Company has received the following major Government and other statutory approvals pertaining to its business.

I. General Approvals to the Company:

Company Registration: The Company is registered under Companies Act, 1956 (No.1 of 1956) with Registrar of Companies, Kerela as a public limited Company vide Certificate of incorporation No.2039 of 1963 dated 18 th November 1963.

Certificate for Carry on Business: Certificate of Commencement of Business was granted by the Registrar of Companies, Kerela vide their certificate dated 13 th October 1983 w.e.f. 3 rd day of October 1964.

Permanent Account Number (PAN): The Company has taken PAN from Commissioner of Income Tax, Trivandrum under Income Tax Act, 1961 and the PAN No. is AAACE5011C.

Tax Deduction Account Number (TAN): The Company has taken TAN as required by the Income Tax Act, 1961. Tax Deduction Account Number is DELE02824D.

Importer Exporter Code Number (IEC): The Company has taken Importer Exporter Code Number (IEC) from Ministry of Commerce as IEC Number 1088000436 dated 29 th April 1988.

Approvals under Section 297 of the Companies Act, 1956: Central Government Approval under Section 297 of the Companies Act 1956 has been taken by the Company for entering into contract with M/s Karun Carpets Private Limited for availing services of the Contractee for procurement of maize around 6,00,000 bags (Quintal) per annum for a period from 09.10.2006 to 30.09.2008 on commission basis for not exceeding a service charge of Rs. 10/- per bag. Vide Approval Order No.F.No.2/M-8622/2002 dated 20 th March 2007.

163 English Indian Clays Limited

II. Unit-wise Government Approvals/ Permissions

A. Puducherry Unit

Sl. Subject Matter Description Reference./License Issue/ Renewal Expiry date/ No. No. Date period of validity

1 Factory Certificate of registration under PMC - 050/ PY- 1724 01-01-2008 31-12-2008 License the Factories Act, 1948 – 1994

2 Commune License under Pondicherry 33 - 37/MCP/94-95/W- 01-04-2008 31-03-2009 License Village and Commune 2 Panchayats Act, 1973 and Rules

3 Air Pollution Consent under Air (Prevention 16/PPCC/ Con/Air/ 01-02-2007 31-01-2008 and Control of pollution) Act, MCP/933 Applied for 1981 renewal

4 Contract Registration under Contract No.05/2003/CL/Regn 01-04-2007 31-03-2008 Labour Labour (Regulation & Abolition) Applied for Act, 1970 renewal

5 License to License under Petroleum Act, P/H.Q/PY/15/28 20-07-2008 31-12-2008 Import and 1934 (P15348)20.07.2006 - Store 31.12.2008 Petroleum

6 Service Tax Registration under section 69 of Regn. No. 23-02-2005 Permanent the Finance Act, 1994 GTA/157/2005 STP Code. AAACE 5011CST002 7 Central Excise Registration under Rule 9 of the AAACE 5011CXM002 01-08-2003 Permanent Central Excise Rules, 2002

8 Central Sales Registration under the Central 8032/PRC/ 16.06.93 01-04-2007 Permanent Tax Sales tax Act, 1956

9 VAT Registration under Puduchery 34520007743 01-07-2007 Permanent Value Added Tax Ordinance Act, 2007

10 ESI Employees State Insurance 51-21704-19 28-11-2001 Permanent Act,1948

164 English Indian Clays Limited

11 EPF Employees Provident Fund s & KR/2879 01-09-1994 Permanent Miscellaneous Provisions Act,1952

12 TAN Income Tax Act 1961 CHEE02475E NA Permanent

B. Yamunanagar Unit

Sl. Subject Matter Description Reference./License Issue/ Renewal Expiry date/ No. No. Date period of validity

1 Factory Certificate of registration under AMB/B-11/7467 01-01-2008 31-12-2008 License the Factories Act, 1948

2 Air & Water Consent under Water (Prevention HSPCB/Consent/E- 01-04-2005 31-03-2008 Pollution and Control Pollution) Act, 1974 & 1/2005/1604 Applied for Air (Prevention and Control of renewal Pollution) Act,1981

3 Contract Registration under Contract RG- 30-04-2008 31-12-2008 Labour Labour (Regulation & Abolition) 917/1949/424/YNR/I- Act, 1970 15/NI-2 & HR/604/YNR/6/05 4 Central Excise Registration under Rule 9 of the AAACE5011CXM001 05-01-2004 Permanent Central Excise Rules, 2002

5 Service Tax Registration under Finance Act AAACE 5011CST001 20-01-2005 Permanent 1994

6 Central Sales Central Sales Tax (Registration JAG/CST/1657 N.A. Permanent Tax and Turnover) Rules, 1957

7 TAN Registration under Income Tax RTKE007428 07-07-2004 Permanent Act, 1961

8 EPF Employees Provident Fund s & 2430890001 N.A. Permanent Miscellaneous Provisions Act, 1952

9 ESI Employees’ State Insurance Act, 13-1086-09 22-04-2008 Permanent 1948

10 VAT TIN No. Haryana Value Added Tax 06461601657 N.A. Permanent Registration

C. Thiruvananthapuram Units

165 English Indian Clays Limited

Sl. Subject Matter Description Reference./License Issue/ Renewal Expiry date/ No. No. Date period of validity 1 Factory Certificate of registration under License the Factories Act, 1948

Veli Unit TVM/13/45/88 16-11-2007 31-12-2008 Melthonnakkal Unit TVM/13/311/03 16-11-2007 31-12-2008 Kollam Unit KUR/111/278/97 29-02-2008 31-12-2008

2 Water Pollution Consent under Water (Prevention and Control Pollution) Act, 1974

Veli Unit W/01/046/1996 01-01-2005 31-12-2007 Applied for renewal Melthonnakkal Unit W/01/113/2003 01-01-2005 31-12-2007 Applied for renewal Kollam Unit W/02/046/1996 01-01-2005 31-12-2007 Applied for renewal 3 Air Pollution Consent under Air(Prevention and Control of Pollution) Act, 1981

Veli Unit PCB/A/R5 /16/2006 01-01-2006 31-12-2008

Melthonnakkal Unit PCB/A/R1/ 3150/06 01-01-2006 31-12-2008 Kollam Unit PCB/A/R3/ 192/06 01-01-2006 31-12-2008

4 Hazardous Hazardous Wastes (Management Waste and Handling) Rules, 1989 Management & Handling Veli Unit PCB/HWMA/R1/98/2 16-11-2001 15-11-2006 001 Applied for renewal Melthonnakkal Unit PCB/HO/TVM/HW/F/ 02-11-2006 01-11-2011 02/06 Kollam Unit PCB/RO/KLM/HW/F/ 25-05-2006 26-05-2010 1/06

5 Contract Registration under Contract CLR/03/1999 29-03-1999 NA Labour Labour (Regulation & Abolition) Act, 1970

6 Contract Registration under Contract CL/R-3/93-ALC/TVM 06-04-1993 NA Labour Labour (Regulation & Abolition) Act, 1970

7 TAN Income Tax Act 1961 TVDE00085B NA Permanent

166 English Indian Clays Limited

8 Service Tax Registration under Finance Act AAACE 5011CST003 09-06-2005 Permanent 1994

9 Central Sales Central Sales Tax (Registration 32010125905C 01.04.2007 Permanent Tax and turnover) Rules, 1957

10 VAT Kerela Value Added Tax Rules, 32010125905 01-04-2007 Permanent 2005

11 EPF Employees Provident Fund s & 16599 NA Permanent Miscellaneous Provisions Act, 1952

12 ESI Employees’ State Insurance Act, 54-1452-45 NA Permanent 1948

13 Mining License Mining Lease under the Mines & GO NO. 217/86/ID 02-04-1987 01-04-2007 Minerals (R&D) Act, 1957 for a total area of 2.6588 Hactares in Melthonnakal village, Trivandrum

14 Mining License Mining Lease under the Mines & GO NO.99/94/ID 30-09-1994 12-09-2014 Minerals (R&D) Act, 1957 for a total area of 1.97 Hactares in Melthonakkal Village, Thiruvananthapuram

15 Mining License Mining Lease under the Mines & GO NO 98/94/ID 12-10-1995 11-10-2015 Minerals (R&D) Act, 1957 for a total area of 2.2025 Hactares in Melthonakkal Village, Thiruvananthapuram

16 Mining License Mining Lease under the Mines & GO NO 112/2003/ID 22-03-2005 21-03-2020 Minerals (R&D) Act, 1957 for a total area of 1.6593 Hactares in Melthonakkal Village, Thiruvananthapuram

17 Mining License Mining Lease under the Mines & GO NO. 113/2003/ID 22-09-2004 21-09-2024 Minerals (R&D) Act, 1957 for a total area of 3.57 Hactares in Melthonakkal Village, Thiruvananthapuram

18 Mining License Mining Lease under the Mines & GO NO 128/2003/ID 03-11-2004 02-11-2016 Minerals (R&D) Act, 1957 for a total area of 2.3210 Hactares in Melthonakkal Village, Thiruvananthapuram

19 Mining License Mining Lease under the Mines & GO NO 118/2003/ID 13-10-2003 12-10-2023 Minerals (R&D) Act, 1957 for a total area of 2.9253 Hactares in Melthonakkal Village, Thiruvananthapuram

167 English Indian Clays Limited

20 Mining License Mining Lease under the Mines & GO NO 106/06/ID 10-11-2006 09-11-2026 Minerals (R&D) Act, 1957 for a total area of 2.722 Hactares in Melthonakkal Village, Thiruvananthapuram

D. Shimoga Unit (proposed project)

Details of approvals/ sanctions received

Sl. Subject Matter Description Reference./License Issue/ Renewal Expiry date/ No. No. Date period of validity 1 Allotment of land Allotment of 66.4 acres land in KIADB/AS/DVG/ 28-01-2008 Lease is valid for Shimoga Nidige Village, Shimoga Taluk, 17786/ 2099/ 2007- for 11 years Project Shimoga Distric for setting up 08 and after that industry for Maize Grinding and 6 may be MW Co-generation on lease cum converted into sale basis sale subject to terms of allotment letter

2 Clearance for Approval to establish a unit for Order 25.03.2008 Valid for two setting up plant “Maize Grinding of 1,72,500 Mtpa No.CI31SP/2008 years from the from Capacity” and 6 MW Co- date of issue Commissioner of generation power plant on 70 Industrial Acres of land in Industrial Area Development, Shimoga District. Govt. of Karnataka

3 NOC from Airport No Objection from Airport AAI/2001/2/1485/200 08-02-2008 07-02-2012 Authority of India Authority for construction of the 7-ARI(NOC) for Chimney proposed Chimney at SY.No.144 stack height of Nidge Village, Shimoga Taluk, Shimoga, Karnataka

168 English Indian Clays Limited

Other approvals/ sanctions to be obtained by the Company

Sl. Subject Matter Description Date of Application made No. by Company

1 Onsite and offsite Plan Approval under the Factories Act, 1948 Application made vide letter emergency plan from Director, Factories and Boilers, dated 13-02-2008 approval Government of Karnataka

2 Plan approval from Approval from the Department of Factories & Application made vide letter Department of Boilers for setting up of 500 TPD corn wet dated 13-02-2008 Factories & Boilers milling plant at KIADB Industrial Estate, Shimoga

3 Consent for Consent under Water (Prevention and Control Application made vide letter establishment from Pollution) Act, 1974 & Air (Prevention and dated 13-02-2008 State Pollution Control Control of Pollution) Act, 1981 Board

4 Environmental Environmental Clearance from the Application made vide letter Clearance Certificate Department of Ecology and Environment, dated 13-02-2008 Government of Karnataka

5 Fire Safety Norms Plan approval from department of fire Application to be submitted protection by the Company

169 English Indian Clays Limited

SECTION VII: OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue

Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on 25 th January 2008 it has been decided to make the rights offer to the Equity Shareholders of the Company with a right to renounce.

Prohibition by SEBI

Neither the Company, nor its Promoters, directors, any of the Company’s Associates or Group Companies, and Companies with which the directors of Issuer are associated, as directors or promoters, have not been prohibited from accessing the capital market under any order or directions passed by SEBI. Further, none of the directors or the person(s) in control of the Promoter Companies have been prohibited from accessing the capital market under any order or direction passed by SEBI. Further neither the Promoter, the Company or group companies has been declared as wilful defaulters by RBI / Government authorities.

Eligibility for the Issue

The Company is an existing Company listed only on the Bombay Stock Exchange Limited (Designated Stock Exchange). The Company is eligible to offer this Rights Issue in terms of Clause 2.4.1 (iv) of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 and amendments thereto (“SEBI Guidelines”).

SEBI DISCLAIMER CLAUSE:

AS REQUIRED, A COPY OF THIS DRAFT LOF HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF OFFER DOCUMENT TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE OFFER DOCUMENT. LEAD MERCHANT BANKER, PNR SECURITIES LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURES AND INVESTOR PROTECTION) GUIDELINES IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE OFFER DOCUMENT, THE LEAD MERCHANT BANKER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MERCHANT BANKER PNR SECURITIES LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED MAY 16, 2008 IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS 1992, WHICH READS AS FOLLOWS:

I. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALS IN CONNECTION WITH THE FINALISATION OF THE OFFER DOCUMENT PERTAINING TO THE SAID ISSUE;

II. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE

170 English Indian Clays Limited

DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY;

WE CONFIRM THAT: A. THE OFFER DOCUMENT FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND 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 OFFER DOCUMENT ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE.

III. BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THIS LOF ARE REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID.

THE FILING OF THE LOF DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MERCHANT BANKER ANY IRREGULARITIES OR LAPSES IN THE LOF.

Disclaimer Statement from the Issuer and the Lead Manager / Caution

The Company and the Lead Managers accept no responsibility for statements made otherwise than in this LOF or in any advertisement or other material issued by the Company or by any other persons at the instance of the Company and anyone placing reliance on any other source of information would be doing so at his own risk.

The Lead Manager and the issuer shall make all information available to the Public and Investors at large and no selective or additional information would be available for a section of investors in any manner whatsoever including at road shows, presentations, in research or sales report etc, after filing of the LOF with SEBI. The Lead Managers and the Company shall update the LOF and keep the public informed of any material changes till the listing and trading commences.

Selling Restrictions

The distribution of the LOF and the Issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons in whose possession this LOF may come are required to inform themselves about and observe such restrictions.

No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that this LOF has been filed with SEBI for observations and SEBI has given its observations. Accordingly, the Equity Shares represented thereby may not be offered or sold, directly or indirectly, and this LOF may not be distributed in any jurisdiction. Receipt of the LOF will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, those circumstances, the LOF must be treated as sent for information only and should not be copied or redistributed. No person receiving a copy of the LOF in any territory other than in India may treat the same as constituting an invitation or offer to him, nor should he in any event use the CAF unless, the relevant territory, such an invitation or offer could lawfully be made to him and the CAF could lawfully be used or dealt with without contravention of any registration or other legal or regulatory requirements. Accordingly, persons receiving a copy of the LOF should not, in connection with the issue of Equity Shares or the rights entitlements distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If the LOF is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the rights entitlements referred to in the LOF, unless the Company determines that such actions would not violate applicable legal or regulatory requirements. Neither the delivery of this LOF nor any sale hereunder, shall under any circumstances

171 English Indian Clays Limited create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date.

Disclaimer with respect to Jurisdiction

This offer is being made in India to persons resident in India including Indian nationals resident in India who are majors, Hindu Undivided Families (HUFs), Companies, Corporate Bodies and Societies registered under the applicable laws in India and authorized to invest in shares, Indian Mutual Funds registered with SEBI, Indian Financial Institutions, Commercial Banks, Regional Rural Banks, Co-operative Banks (subject to RBI permission), Trusts registered under the Societies Registration Act, 1860, as amended from time to time, or any other Trust law and who are authorized under their constitution to hold and invest in shares and to nonresidents including NRIs and FIIs. This offer Document does not, however, constitute to hold and sell or an invitation to subscribe to Equity Shares issued hereby in any other jurisdiction to any person to whom it is unlawful to make an issue or invitation in such jurisdiction. Any person who is in possession of this Offer Document is required to inform himself or herself about; and to observe, any such restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of appropriate court(s) at Delhi, India only.

No action has been or will be taken to permit a rights offering in any jurisdiction where action would be required for that purpose, except that this LOF has been filled with SEBI for its observation and SEBI has given its observations and that the final offer document has been filled with the stock exchange as per the provisions of the Companies Act. Accordingly, the equity shares represented thereby may not be offered or sold, directly or indirectly, and this LOF may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction.

Disclaimer Clauses of Bombay Stock Exchange Limited (Designated Stock Exchange)

The Bombay Stock Exchange Limited (‘the Exchange”) has pursuant to its letter no. [•] , given its permission to the Company to use the Exchange’s name in this LOF as one of the stock exchanges on which the Company’s securities issued in terms of this Issue are proposed to be listed. The Exchange has scrutinized the LOF for their limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner:

(a) warrant, certify or endorse the correctness or completeness of any of the contents of this LOF; or (b) warrant that the Company’s securities will be listed or will continue to be listed on the Exchange; or (c) take any responsibility for the financial or other soundness of the Company, its Promoters, its management or any scheme or project of the Company. and it should not for any reason be deemed or construed that this LOF 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 or acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.

Disclaimer Clause of Reserve Bank of India

Not Applicable.

Filing of LOF

The LOF has been filed with SEBI, SEBI Bhavan, Plot No. C4/A “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051 for its observations. The copy of LOF has been filed with BSE, Phiroze Jeejebhoy Towers, Dalal Street, Mumbai - 400 023 having attached thereto the material contracts and documents as per requirements. A copy of the documents referred to elsewhere in the LOF has been kept open for public inspection at the Registered Office of the Company.

Dematerialised dealing

172 English Indian Clays Limited

The Company has entered into agreements with National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited, and the Equity Shares bear the ISIN No. INE267F01016.

Listing

The existing Equity Shares of the Company are listed on Bombay Stock Exchange Limited (Designated Stock Exchange). The Company has made applications to the BSE for permission to deal in and for an official quotation in respect of the Equity Shares being offered in terms of this LOF.

The Company has received “in-principle” approval from the Designated Stock Exchange pursuant to its letter no. [•] . The Company will make applications to the stock exchanges for permission to deal in and for an official quotation in respect of the Equity Shares arising from this Issue. If the permission to deal in and for an official quotation of the Equity Shares is not granted by the stock exchanges mentioned above, the Company shall forthwith repay, without interest, all monies received from the applicants in pursuance of this LOF. If such money is not repaid within eight days after the Company becomes liable to repay it (i.e. 42 days after closure of the Issue), 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 subsections (2) and (2A) of Section 73 of the Act.

Impersonation

Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Companies Act, 1956 which is reproduced below:

“Any person who a. makes in a fictitious name, an application to a Company for acquiring or subscribing for, any shares therein, or b. otherwise induces a Company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years.”

Consent

Consents in writing of the Directors, the Compliance Officer, the Auditors, Bankers to the Issue, Bankers to the Company, Legal Advisor, Lead Managers to the Issue, and Registrar to the Issue to act in their respective capacities, have been obtained and filed along with a copy of the LOF with the Bombay Stock Exchange Limited, Mumbai as required under section 60 and 60B of the Companies Act, 1956 and such consents have not been withdrawn up to the time of delivery of this LOF for registration with the Bombay Stock Exchange Limited, Mumbai.

M/s Price Waterhouse, Chartered Accountants, statutory auditors of the Company have given their written consent to the inclusion of their report in the form and context in which it appears in this Offer Document and such consent and report has not been withdrawn up to the time of delivery of this Offer Document for filing with the Stock Exchange.

M/s Grewal & Singh, Chartered Accountants , have given their written consent for inclusion of income tax benefits in the form and content as appearing in this LOF, accruing to the Company and its members.

To the best of the Company’s knowledge there are no other consents required for making this Issue. However, should the need arise, necessary consents shall be obtained by the Company.

Expert Opinion

No expert opinion has been obtained by the Company.

Expenses of the Issue

173 English Indian Clays Limited

The expenses of the Issue payable by the Company including including brokerage, fees and reimbursement payable to the Lead Manager, Auditors, Legal Advisors, Registrar to the Issue, bank charges, fee payable to SEBI, printing and distribution expenses, publicity, listing fees, stamp duty and other expenses are estimated at Rs. 95 lakhs (around 1.27% of the total Issue size) and will be met out of the proceeds of the Issue.

% of net % of total Amount proceeds of the expenses of the SNo. Particulars (Rs. In Lacs) Issue Issue 1 Lead Manager’s Fees [•] [•] [•] 2 Registrar’s Fees [•] [•] [•] 3 Legal Advisor’s Fees [•] [•] [•] 4 Postage & Stationary [•] [•] [•] 5 Printing of LOO & CAF [•] [•] [•] 6 Advertising [•] [•] [•] 7 Traveling & Conveyance [•] [•] [•] 8 Collection & Refund Bankers Fees [•] [•] [•] 9 SEBI Fees [•] [•] [•] 10 Contingencies [•] [•] [•] Total 95 1.27 100

Fees Payable to the Lead Manager to the Issue

The fees payable to the Lead Manager to the Issue and reimbursable expenses are set out in the Memorandum of Understanding entered into by the Company with the Lead Manager, copies of which are available for inspection at the Registered Office of the Company.

Fees Payable to Registrar to the Issue

The total fees payable to the Registrar to the Issue will be as per the Memorandum of Understanding signed with the Registrar, copy of which is available for inspection at the Registered Office of the Company.

The Registrar will also be reimbursed with all relevant out-of-pocket expenses such as cost of stationery, postage, stamp duty, communication expenses, etc.

Fees Payable to the Legal Advisor to the Issue

Fees Payable to the Legal Advisor to the Issue are set out in the engagement letter issued by the Company.

Underwriting commission, brokerage and selling commission

The present Rights Issue is not underwritten hence the payment of underwriting commission does not arise and also no brokerage will be paid in this Issue.

Previous Issues by the Company

The Company has not made any Public or Rights Issue in the last five years.

Issues for consideration other than cash

The Company has not issued Equity Shares for consideration other than cash or out of revaluation reserves within the five years preceding the date of this LOF. For issues prior to that, investors are requested to refer to the built-up of the “Capital Structure” on page 26 of LOF.

Commission and brokerage on previous issues

174 English Indian Clays Limited

No sum has been paid or is payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of the Equity Shares.

Companies Under the same Management within the meaning of Section 370(1B) of the Act

The Company has not made any Capital Issue in the last three years. There is no other listed Company under the same management within the meaning of Section 370 (1B), which has made any capital issue in the last three years.

Promise vis-à-vis performance

The Company has not made any issue of shares in the last ten years

Option to Subscribe

Other than the present issue, the Company has not given any option to subscribe for any shares of the Company. Investors shall have an option either to receive the security certificates or to hold the securities with a depository.

Outstanding Debentures, Bonds and Preference Shares

The Company has not issued any debentures, bonds or preference shares other than those mentioned in the sections on “Capital Structure” on page [26] of the LOF

Stock Market Data

The Company’s Equity Shares are presently listed on the BSE. The high and low closing prices recorded on the BSE for the preceding three years and the number of Equity Shares traded on the days the high and low prices were recorded is stated below:

Volume on Volume Average Year date of on date of price for ending High high (no. Low low (no. the year March 31 (Rs.) Date of High of shares) (Rs.) Date of Low of shares) (Rs.) 2006 594.85 03-02-2006 7620 320.00 01-04-2005 10 464.26 2007 574.95 20-04-2006 107 307.50 15-06-2006 3 448.69 2008 3582.70 18-01-2008 127444 187.95 13-02-2008 3280 1003.37 (Source: www.bseindia.com) The average price has been computed based on the daily closing price of Equity Shares.

The high and low prices and volume of Equity Shares traded on the respective dates during the last six months on BSE are as follows: Volume on Volume on date of high date of low High (no. of Low (no. of Month, Year (Rs.) Date of High shares) (Rs.) Date of Low shares) April, 2008 1114.40 11-04-2008 60168 856.05 11-04-2008 33137 March, 2008 2020.00 17-03-2008 317248 404.55 03-03-2008 593 February, 2008 2215.00 06-02-2008 81772 187.95 13-02-2008 3280 January, 2008 3582.70 18-01-2008 127444 1890.00 02-01-2008 117763 December, 2007 1858.70 31-12-2008 57718 1290.00 03-12-2007 780 November, 2007 1497.45 06-11-2007 26878 1129.20 12-11-2007 12673 (Source: www.bseindia.com) The average price has been computed based on the daily closing price of Equity Shares.

The weekend prices of the Equity Shares of Rs. 10.00 each of the Company for the last six weeks on BSE were as under:

175 English Indian Clays Limited

Weekend High Week Ended Price (Rs.) Date of High Low (Rs.) Date of Low 16-05-2008 1287.15 1378.00 13-05-2008 1224.00 14-05-2008 09-05-2008 1292.80 1292.80 09-05-2008 860.00 08-05-2008 02-05-2008 927.60 989.00 28-04-2008 916.20 02-05-2008 25-04-2008 938.35 1030.00 21-04-2008 931.00 25-04-2008 18-04-2008 996.15 1056.00 16-04-2008 1044.00 17-04-2008 11-04-2008 1045.30 1114.40 11-04-2008 856.05 07-04-2008 (Source: www.bseindia.com)

The opening market price was Rs. 2410 on BSE on January 28, 2008, the trading day immediately following the day on which Board meeting was held to finalize the offer price for the Issue.

There have not been any transactions in Equity Shares by the Promoter, the promoter group and directors of the Company during the last six months from the date of this LOF other than those mentioned in the section “Capital Structure” on page [26] of the LOF.

Mechanism evolved for Redressal of Investor Grievances

The Company has appointed the M/s. RCMC Share Registry Pvt Limited, to handle the investor’s grievances in coordination with the compliance officer of the Company. All grievances relating to the present issue may be addressed to the Registrar with a copy to compliance officer of the Company, giving full details such as name, address of the applicant, number of equity shares applied for, amount paid on application and bank and branch. The Company would monitor the work of registrar to ensure that the investors’ grievances are settled expeditiously and satisfactorily.

The registrar to issue, namely M/s RCMC Share Registry Pvt. Ltd., B-106, Sector – 2, Noida, Uttar Pradesh - 201301, will handle investors’ grievances pertaining to issue. The Company would also be co-coordinating with the Registrar to the issue in attending to the grievances of the investors. The Company assures through the Board of Directors in respect of the complaints to be received, if any, shall adhere to the following schedules.

The average time taken for processing share transfer requests including despatch of share certificates is 15- 20 days, while it takes a minimum of 15 days for processing dematerialization requests. The average time taken by the Registrars for attending routine grievances is 15 days from the date of receipt.

As per confirmation from the Registrar, no complaints were received from any shareholder during the period.

Mechanism evolved for Redressal of Investor Grievances for listed companies within the meaning of Section 370(IB) of the Companies Act 1956

Only one listed Company falls within listed companies within the meaning of Section 370(IB) of the Companies Act 1956 i.e. Greaves Limited. Following is the mechanism evolved for redressal of Investor Grievances for Greaves Cotton Limited:

The Shareholders/Investors Grievance Committee comprises of Mr. P Sachdev, Mr. Karan Thapar, and Mr. Vijay Rai. Mr. KK Saraf – Vice President & Company Secretary has been designated as compliance officer of the Company.

There are no outstanding complaints as on March 31, 2008.

Changes in Auditors during the last three years

176 English Indian Clays Limited

The Company has not changed its auditors in the last three years

Capitalization of Reserves or Profits (during last five years)

There has not been any capitalization of Reserves or Profits during the last five years.

Revaluation of Assets

None of the assets of the Company have been revalued during the last five years.

177 English Indian Clays Limited

SECTION VIII : OFFERING INFORMATION

Terms of Issue

The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of this LOO, the CAF, the MOA and AOA of the Company, the approvals from the Government of India, FIPB and RBI, if applicable, the provisions of the Act, FEMA, guidelines issued by SEBI, laws, guidelines, notifications and regulations for issue of capital and for listing of equity shares issued by SEBI, Government of India, RBI and/or other statutory authorities and bodies from time to time, listing agreements entered into by the Company with Stock Exchanges, terms and conditions as stipulated in the allotment advise or letters of allotment, rules as may be applicable and introduced from time to time.

Authority for the Issue

The present Rights Issue is pursuant to the resolution passed by the Board of Directors of the Company u/s 81 (1) of the Companies Act at its meeting held on January 25, 2008.

Basis for the Issue

The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders of the Company whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in dematerialized form and on the Register of Members of the Company in respect of the Equity Shares held in physical form at the close of business hours on the Record Date, i.e., [●], fixed in consultation with the Designated Stock Exchange (BSE).

The Equity Shares are being offered for subscription in the ratio of one Equity Share for every six Equity Shares held by the Equity Shareholders on the Record Date.

Ranking of Equity Shares

The Equity Shares allotted pursuant to this Issue shall be subject to the Memorandum and Articles of Association of the Company and the Companies Act, 1956 and shall rank pari passu with the existing Equity Shares in all respects including dividend. For more details see “Main Provisions of the Company’s Articles of Association” on page 200 of this LOF.

Mode of Payment of Dividend

The dividend will be paid to all the eligible shareholders in terms of the provisions of the Companies Act, 1956 with regards to the payment of dividend. The unclaimed dividend if any will be transferred to Investor Protection Fund as prescribed under the Companies Act, 1956.

Face Value

Each Equity Share is of Face Value of Rs. 10/-

Issue Price

Each Equity Share is being offered at a Price of Rs.1000 (including a premium of Rs.990).

Terms of Payment

Full amount i.e. Rs.1000 per Equity Share (Rs. 10/- face value + Rs.990 share premium) is payable on application. Where an applicant has applied for additional Equity Shares and is allotted lesser number of Equity Shares than applied for, the excess application money paid will be refunded.

Rights Entitlement Ratio

178 English Indian Clays Limited

As your name appears as beneficial owner in respect of the Equity Shares held in the electronic form or appears in the register of members as an Equity Shareholder of the Company as on the Record Date. You are entitled to the number of Equity Shares in Block I of Part A of the enclosed Composite Application Form, in the ratio of 1 Equity Share for cash at Rs.1000 for every 6 Equity Shares held as on the Record Date.

Fractional Entitlements

Fractional Entitlements are to be rounded off to the nearest higher integer if equal to or more than half and to be ignored if less than half.

Those Equity shareholders having holding between 3 to 5 shares will be entitled to one Equity Share on a rights basis.

Those Equity shareholders having holding less than 3 Equity shares and therefore entitled to zero Equity Shares under the Rights Issue shall be despatched a CAF with zero entitlement. Such Equity Shareholders are entitled to apply for additional Equity Shares. However, they cannot renounce the same to third parties. CAF with zero entitlement will be non negotiable/non renunciable.

Joint-Holders

Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint-holders with benefits of survivorship subject to provisions contained in the Articles of Association of the Company.

Rights of the Equity Share Holders

The Shareholders are entitled to receive dividend, as and when declared and bonus and rights shares, as and when issued. Further, the rights of the above and other holders of shares are subject to the provisions of the Companies Act, 1956 the Memorandum and the Articles of Association of the Company, the terms of this LOF and other laws as applicable from time to time.

Listing and trading of Equity Shares proposed to be Issued

The Company’s existing Equity Shares are currently traded on the BSE under the ISIN No. INE267F01016. The fully paid-up Equity Shares proposed to be issued on a rights basis shall be listed and admitted for trading on the BSE under the existing ISIN for fully paid Equity Shares of the Company. The fully paid up Equity Shares allotted pursuant to this Issue will be listed as soon as practicable but in no case later than 7 days from the date of allotment.

Electronic Clearing Service for Payment of dividend

The Company offers Electronic Clearing Service facility to its shareholders. The RBI has introduced the concept of Electronic Clearing Service through the clearing house to obviate the need for issuing and handling paper instruments and thereby facilitates improved customer service. This facility will be available in cities where RBI provides such a facility. The Company will then be able to credit the dividend amount to the investor’s account with the concerned bank

Printing of Bank Particulars on refund orders

As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the applicant’s bank account are mandatorily required to be given for printing on refund orders. Bank account particulars will be printed on the refund orders / refund warrants, which can then be deposited only in the account specified. The Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud.

Notices

All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and one

179 English Indian Clays Limited regional language daily newspaper with wide circulation and/or, will be sent by ordinary post/ to the registered holders of the Equity Share from time to time.

Market lot

The Equity Shares of the Company are tradable only in dematerialized form. The market lot for Equity Shares in dematerialized mode is one. In case of holding in physical form, the Company would issue to the allottees one certificate for the Equity Shares allotted to one folio (“Consolidated Certificate”). In respect of the Consolidated Certificate, the Company will, upon receipt of a request from the Equity Shareholder, split such Consolidated Certificate into smaller denomination within 15 days time from the request of the Equity Shareholder. The Company shall not charge any fee for splitting the Consolidated Certificate.

Nomination facility

In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose.

The sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders (being individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint holders, as the case may be, shall become entitled to the Equity Shares. Person(s), being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same rights to which he would be entitled if he/she were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale/disposal of the Equity Share by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. When two or more persons hold the Equity Share(s), the nominee shall become entitled to receive the shares only on the demise of all the holders.

Fresh nominations can be made only in the prescribed form available on request at the registered office of the Company or such other person at such addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant portion of the CAF.

Only one nomination would be applicable for one folio. Hence, in case the shareholder(s) has (have) already registered the nomination with the Company, no further nomination need to be made for Equity Shares to be allotted in this Issue under the same folio. However, new nominations, if any, by the Equity Shareholder(s) shall operate in super session of the previous nomination, if any.

In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective Depository Participant of the applicant would prevail. If the applicant requires changing the nomination, they are requested to inform their respective Depository Participant.

Minimum Subscription

If the Company does not receive the minimum subscription of 90% on the date of the closure of the issue, or if the subscription level falls below 90% after the closure of issue on account of cheques having being returned unpaid or withdrawal of applications, the Company shall forthwith refund the entire subscription amount received. If there is any delay in the refund of subscription amount by more than 8 days after the Company becomes liable to refund the subscription amount (i.e. forty two days after the closure of the Issue), the Company will pay interest for the delayed period, at rates prescribed under sub sections (2) and (2A) Section 73 of the Companies Act, 1956.

The Rights Issue will become undersubscribed after considering the number of Equity Shares applied as per entitlement plus additional Equity Shares. The undersubscribed portion, if any, shall be applied for only after the close of the Issue. As the Promoters currently hold 79.91% of the pre- issue equity share capital of the Company, the Company presently does not comply with the

180 English Indian Clays Limited provisions of Clause 40A of the Listing Agreement, relating to minimum levels of public shareholding in a listed Company.

The Company by a letter dated April 2, 2008 to the BSE, where the shares of the Company are listed, has requested for grant of time upto December, 2008 to comply with the requirements of Clause 40A of the Listing Agreement requiring the Company to bring down the promoters holding below 75%. While the promoters have confirmed their intention to subscribe to their rights entitlement, some of them may renounce with a view to comply with the above mentioned continuing listing requirements.

Disposal of odd Lots

Since the Equity Shares of the Company are tradable in compulsory demat form, the minimum trading lot is one Equity Share. The Company has not made any arrangements for disposal of odd lot Equity Shares arising out of this Issue. The Company will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity Shareholder.

Restrictions on transfer and transmission of shares and on their consolidation/ splitting

There are no restrictions on transfer and transmission and on their consolidation/splitting of shares issued pursuant to this Issue.

Issue of Duplicate Equity Share Certificates

If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity Shares are fully utilized, the Company against the surrender of such Certificate(s) may replace the same, provided that the same will be replaced as aforesaid only if the Certificate numbers and the Distinctive numbers are legible.

If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the satisfaction of the Company and upon furnishing such indemnity/ surety and/or such other documents as the Company may deem adequate, duplicate Equity Share Certificate(s) shall be issued.

Offer to Non-Resident Equity Shareholders/ Applicants

Applications received from NRIs and other NR shareholders for allotment of Equity Shares shall be, inter alia, subject to the conditions imposed from time to time by the RBI under the FEMA in the matter of recipet and refund of application moneys, allotment of Equity Shares, issue of Letter of Allotment / share certificates, payment of interest, dividends, etc. General permission has been granted to any person resident outside India to apply shares offered on rights basis by an Indian Company in terms of FEMA and regulation 6 of notification No. FEMA 20/2000-RB dated May 3, 2000.

Vide notification dated June 18, 2003, bearing number FEMA 94/2003, RBI has granted general permission to Indian companies to issue rights/bonus shares to existing non-resident shareholders. The existing nonresident shareholders may apply for issue of additional shares and the Company may allot the same subject to the condition that the overall issue of shares to non-residents in the total paid up capital does not exceed the sectoral cap. In other words, non-residents may subscribe for additional shares over and above shares offered on rights basis by the Company and renounce the shares offered in full or part thereof in favour of a person named by them. Residents may subscribe for additional shares over and above the shares offered on rights basis by the Company and also renounce the shares offered either in full or part thereof in favour of a person named by them.

The Equity Shares issued under the Rights Issue and purchased by non-residents shall be subject to the same conditions including restrictions in regard to the repatriability as are applicable to the previously held Equity Shares against which Equity Shares under the Rights Issue are issued. However, as per the provisions of AP DIR circular No. 14 dated September 16, 2003 (issued by the RBI), such shareholders who have been allotted the Equity Shares as OCBs would not be permitted to participate in the Rights Issue. Accordingly, shareholders/ applicants who are OCBs and wishing

181 English Indian Clays Limited to participate in the Rights Issue would be required to submit approvals in relation thereto from the FIPB and the RBI.

The Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the allotment of Equity Shares, payment of dividend etc. to the Equity Shareholders who are non - resident.

Procedure for Application

The CAF for Equity Shares would be printed in black ink for all Equity Shareholders. In case the original CAF is not received by the applicant or is misplaced by the applicant, the applicant may request the Registrars to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address.

Acceptance of the Rights Issue

You may accept the Issue and apply for the Equity Shares offered, either in full or in part by filling Block III of Part A of the enclosed CAF and submit the same along with the application money payable to the bankers to the Issue or any of the branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board thereof in this regard. Applicants at centers not covered by the branches of collecting banks can send their CAF together with the demand draft, net of demand draft and postal charges, payable at Delhi to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected.

The CAF should be complete in all respects, as explained in the INSTRUCTIONS indicated in the CAF. The CAF should not be detached under any circumstances; otherwise the application(s) will be rejected forthwith.

Option to Subscription in the Issue

The Composite Application Form clearly indicates the number of Equity Shares that the Equity Shareholder is entitled to. As mentioned elsewhere, the investor shall have the option either to receive the security certificates in physical form or to hold the securities with a depository in electronic form. If the Equity Shareholder applies for an investment in Equity Shares, then he can:

• Apply for his entitlement in part • Apply for his entitlement in part and renounce the other part • Apply for his entitlement in full • Apply for his entitlement in full and apply for additional Equity Shares • Renounce his entire entitlement

Renouncees for Equity Shares can apply for the Equity Shares renounced to them and also apply for additional Equity Shares.

Additional Equity Shares

You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to, provided that you applied for all the Equity Shares offered without renouncing them, in whole or in part, in favour of any other person(s).

If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for additional shares in Part A of the CAF. Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, in consultation, if necessary with the Designated Stock Exchange and in the manner prescribed under the section titled ‘Basis of Allotment’ on page 190 of this LOF. The renouncees applying for all the Equity Shares renounced in their favor may also apply for additional Equity Shares.

In case of application for additional Equity Shares by Non-Resident Equity Shareholders, the allotment of additional securities will be subject to the permission of the Reserve Bank of India.

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Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.

In case of change of status of holders i.e. from Resident to Non-Resident, a new demat account shall be opened for the purpose.

You may exercise any one of the following options with regard to the Equity Shares offered to you, using the enclosed CAF:

Option Option Available Action Required A. Accept whole of your entitlement without Fill in and sign Part A of the CAF (All joint holders renouncing the balance. must sign). B. Accept your entitlement in full and apply Fill in sign part A including Block III relating to the For additional Equity Shares. acceptance of entitlement and Block IV relating to additional Equity shares (All joint holders must sign). C. Accept only a part of your entitlement of Fill and sign Part A of the CAF (All joint holders the Equity Shares offered to you (without must sign). renouncing the balance). D. Renounce your entitlement in full to one Fill in and sign Part B (all joint holders must sign) person (Joint renouncees not exceeding indicating the number of Equity Shares renounced three are considered as one renouncee) and hand over the entire CAF to the renouncee. with out applying for any Equity Shares The renouncees must fill in and sign Part C of the offered to you. CAF (All joint renouncees must sign). E. Accept a part of your entitlement and Fill in and sign Part D (all joint holders must sign) renounce the balance or part of it to one requesting for Split Application Forms. Send the renouncee or renounce all the Equity CAF to Registrar to the issue so as to reach them Shares offered to you to more than one on or before the last date for receiving requests for renouncee. Split Forms. Splitting will be permitted only once. On receipt of the Split Form take action as indicated below. i. For the Equity Shares you wish to accept, if Any, fill in and sign Part A of one split CAF. ii. For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand over the Split CAFs to the renouncees. iii. Each of the renouncees should fill and sign Part C for the Equity Shares accepted by them. iv. Send the entire CAF to the Rigistrar to the Issue F. Accept a part of the Equity Shares offered Follow the procedure stated in (E) above for to you and Renounce the balance to more obtaining the required number of Split Application than one renouncee(s) (Joint renounces Forms and on the receipt of Split Application Forms are deemed as one person). follow the procedure as stated in (E) (ii), (iii) and (iv) above. G. Introduce a joint holder or change the This will be treated as renunciation. Fill in and sign sequence of joint holders. Part B and renouncees must fill in and sign Part C.

Applications for Equity Share 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 Banker to the Issue at its collecting branches 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 Banker to the Issue as mentioned in the CAF for Non-Resident Equity Shareholders. No part of the CAF should be detached under any circumstances otherwise the application is liable to be rejected.

Applicants must provide information in the CAF as to their savings / current / NRE / NRO / FCNR bank account and the name of the bank with whom such account is held to enable the Registrar to print the said details in the refund orders after the name of the payees.

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Shareholders cannot utilize both Part A and Part B simultaneously i.e. accepting the offer as well as renouncing the offer. If all the parts are filled in, in that case, the allotments will be made under Part B and C i.e. to the renouncee only and the entry in Part A shall be ignored.

Please check the number of shares registered in your name. In case of any discrepancy in the number of shares held by you as appearing in the CAF, the Company shall be entitled to amend the same on the basis of the entry in the Register of Members and the information provided by the Depositories.

Renunciation

This Issue includes 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 person(s) subject to the approval of the Board. Such renouncees can only be Indian Nationals (including minor through their natural/legal guardian) / limited companies incorporated under and governed by the Companies Act, 1956, statutory corporations / institutions, trusts (registered under the Indian Trust Act, 1882), societies (registered under the Societies Registration Act, 1860 or any other applicable laws) provided that such trust / society is authorized under its constitution/bye laws to hold Equity Shares in a Company and cannot be a partnership firm, foreign nationals or nominees of any of them (unless approved by RBI or other relevant authorities) or more than three persons including joint-holders HUF, any person situated or having jurisdiction where the offering in terms of this LOF 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) or from Non-resident Indian Shareholder(s) to other Non-Resident Indian(s) is subject to the renouncer(s)/renouncee(s) obtaining the approval of the FIPB and/ or necessary permission of the RBI under the Foreign Exchange Management 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.

By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognised as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, the existing Equity Shareholders of the Company who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of renouncees shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated nonresident entities. Thus, OCBs desiring to participate in this Issue must obtain prior approval from the RBI. On providing such approval to the Company at its registered office, the OCB shall receive the LOF and the CAF.

The Board reserves the right to reject the request for allotment to renouncees in its sole and absolute discretion without assigning any reasons thereof.

Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. Submission of the enclosed CAF to the Bankers to the Issue or to any of their designated branches or at the 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. The renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Part A must not be used by the renouncee(s) as this will render the application invalid. Renouncee(s) will also have no right to renounce any Equity Shares in favour of any other person. Renouncer will not be entitled to apply for additional Equity Shares.

Your attention is drawn to the fact that the Company will not consider application for allotment of any Equity Shares renounced in favour of:

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i. more than three persons as joint holders (including the first holder), in case of renouncees ii. a partnership firm iii. an Hindu Undivided Family iv. a Trust or Society (unless such trust or society is registered under the Societies Registration Act, 1860 and it is authorized under its Memorandum and Articles of Association and/or its Rules and Bye Laws to hold shares/ Equity Shares in a Company) v. a minor (unless application is made through a guardian)

Procedure for Renunciation

(a) To renounce the whole offer in favour of one renouncee

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 in the same order as per the specimen signatures recorded with the Company. 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/or to renounce the whole to more than one renouncee

If you wish to either accept this offer in part and renounce the balance or renounce the entire offer in favour of two or more renouncees, the CAF must be first split into requisite number of forms by applying to the Registrar to the Issue.

Please indicate your requirement of Split Forms in the space provided for this purpose in Part D of the CAF and return the entire CAF to the Registrar to the Issue, so as to reach them latest by the close of business hours on the last date of receiving requests for split forms. On receipt of the required number of split forms from the Registrar, the procedure as mentioned in para (a) above shall have to be followed.

In case the signature of the shareholder(s) who has renounced the Rights Shares, does not agree with the specimen registered with the Company, the application will be rejected.

The person in whose favour the equity shares are renounced should fill in and sign Part C and submit the entire application form to the Bankers or to the collection centers to the Issue on or before the closing date of the Issue along with the application money. However, this Rights of renunciation is subject to the express condition that the Board of Directors of the Company shall be entitled in its absolute discretion to reject the request for allotment from the renouncee(s) without assigning any reason thereof.

(d) Change and/or introduction of additional holders

If you wish to apply for equity shares jointly with any other person or persons, not more than three, who is/are not already joint holders with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above for renunciation shall have to be followed viz. Part B & C of the CAF will have to be filled in.

Renunciation by a resident Shareholder to a non-resident or vice-versa is subject to the Renouncee(s) / Renouncer(s) obtaining the necessary approval of the Reserve Bank of India and the said permission should be attached to the CAF, failing which the application will be rejected. In case of Non-Residents renouncing their rights without consideration, a declaration to that effect should be attached to the CAF, failing which the application is liable for rejection.

Please note that: • Part A of the CAF must not be used by any person(s) other than those in whose favour this Issue has been made. If used, this will render the application invalid.

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• Request by the applicant for the Split Application Form should reach the Company on or before [ •] • Only the Equity Shareholder to whom this LOF has been addressed to and not the renouncee(s) shall be entitled to renounce and to apply for Split Application Forms. Forms once split cannot be split again. • Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.

How to Apply

For Resident Indian Shareholders

Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead Manager or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications as per instructions given in this section of the LOF.

Non-resident Equity Shareholders

Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, be subject to the conditions as may be imposed from time to time by the Reserve Bank of India, in the matter of Refund of application moneys, allotment of Equity Shares, issue of Letters of Allotment/certificates/ payment of dividends etc.

Mutual Funds

A separate application can be made in respect of each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications. The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made.

The CAF consists of four parts:

Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares Part B: Form for renunciation Part C: Form for application for renouncees Part D: Form for request for split application forms

For Applicants Residing at places other than Designated Bank Collecting Branches

Shareholders residing at places other than the cities where the bank collection centers have been opened or the Collection Centres as mentioned in the CAF and applicants who wish to send their applications by post are requested to send their applications by registered post directly to the Registrars to the Issue, M/s RCMC Share Registry Pvt. Ltd., B-106, Sector – 2, Noida, Uttar Pradesh - 201301, together with their Demand draft of amount net of bank and postal charges, for the full application amount, drawn in favour of “ EICL- Rights Issue ” and crossed “A/c Payee only” payable at Delhi directly to the Registrar to the Issue by registered post so as to reach them on or before Issue Closing Date. The date of mailing by the applicant and / or the date of Demand Draft / Banker’s Cheque will not be the criteria for acceptance.

The Company and the Bankers to the Issue will not be liable for any postal delays/ loss in transit and applications received through mail after the Issue Closing Date 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. In the interest of the members, it is advised that such applications be sent by Registered Post.

No receipt will be issued for the application money. However, the Bankers to the Issue and / or their branches / Collection Centres receiving the applications will acknowledge the receipt of the application by stamping and returning to the applicant the acknowledgement slip at the bottom of each CAF.

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The CAF along with with cash/ cheque/demand draft for the application money must NOT be sent to the Company or the Lead Manager to the Issue or the Registrar to the Issue except as mentioned above. The applicants are requested to strictly adhere to these instructions.

Availability of duplicate CAF

In case the original CAF is misplaced or is not received by the applicant, the Registrar to the Issue will issue a duplicate CAF on request of the applicant who should furnish the registered folio number, DP ID Number, Client ID Number and his/her full name and address to the Registrar to the Issue. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. Thus, 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 under Power of Attorney

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 of authority to the signatory to make the relevant investment under this Offer and to sign the application and a copy of the Memorandum and Articles of Association and/or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue closing date, then the application is liable to be rejected.

In case the Power of Attorney is already registered with the Company, then the same need not be furnished again. However, the serial number of the Registration under which the Power of Attorney has been registered with the Company must be mentioned below the signature of the Applicant. In no case should these papers be attached to the application submitted to the Bankers to the Issue or at its collection centres.

Application on Plain Paper

An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Issue on plain paper, along with an Account Payee Cheque/Demand Draft payable at Delhi net of bank and postal charges to be drawn in favour of ‘EICL -Rights Issue’ in case of resident shareholders and non-resident shareholders applying on non repatriable basis and in favour of ‘EICL - Rights Issue – NR’ in case of non-resident shareholders applying on repatriable basis and marked ‘A/c Payee Only’ and send the same by registered post directly to the Registrar to the Issue so as to reach them on or before the closure of the Issue. The envelope should be super scribed “English Indian Clays Limited - Rights Issue’ in case of resident shareholders and non-resident shareholders applying on non repatriable basis and ‘English Indian Clays Limited - Rights Issue – NR’ in case of non-resident shareholders applying on repatriable basis. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:

1. Name of Issuer, being English Indian Clays Limited 2. Name and address of the Equity Shareholder including joint holders 3. Registered Folio Number/DP ID and Client ID 4. Number of shares held as on the Record Date 5. Certificate numbers and distinctive numbers, if held in physical form. 6. Number of Rights Equity Shares entitled 7. Number of Rights Equity Shares applied for 8. Number of additional Equity Shares applied for, if any 9. Total number of Equity Shares applied for 10. Total amount paid on application at the rate of Rs.1000/- per Equity Share 11. Particulars of cheque/demand draft enclosed 12. Savings/Current Account Number and name and address of the bank where the Equity Shareholder will be depositing the refund order. In case of Equity Shares allotted in Demat

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mode, the bank account details shall be obtained from the information available with the depositories. 13. PAN of the applicant and for each applicant in case of joint names, irrespective of the total value of the Equity. 14. Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company. 15. In case of Non Resident Shareholders, NRE/FCNR/NRO A/c No. Name and Address of the Bank and Branch. 16. If payment is made by a draft purchased from NRE/ FCNR/NRO account, as the case may be, an Account debit certificate from the bank issuing the draft, confirming that the draft has been issued by debiting NRE/FCNR/ NRO Account.

Attention of the shareholders is drawn to the fact that those shareholders making the application otherwise than on a CAF i.e. on plain paper shall not be entitled to renounce their rights and should not utilize 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 any one or both the applications. The Company shall refund such application amount to the applicant without any interest thereon.

Last date of Application

The last date for submission of the duly filled in CAF is . The Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 60 (sixty) days from the Issue Opening Date.

If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/ Committee of Directors, the offer contained in this LOF shall be deemed to have been declined and the Board/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under the section entitled “Basis of Allotment”.

INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE TRADED ON THE STOCK EXCHANGE ONLY IN DEMATERIALISED FORM.

Mode of Payment

The completed CAF (duly signed by all joint holders, if any), together with the cheque/demand draft for the amount payable on application at the rate of Rs.1000/- per Equity Share should be forwarded to any of the Bankers to the Issue or their designated branches or the Collection Centres as mentioned in the CAF, on or before . Application(s) will NOT be accepted by the Lead Manager to the Issue or by the Company directly at any of their offices.

1. Resident Shareholders

Applicants who are applying through CAF and residing at places where the bank collection centers have been opened by the Company for collecting applications, are requested to submit their applications at the corresponding collection centre together with a local Cheque/Demand Draft of amount net of bank charges, for the full application amount favouring ‘ EICL- Rights Issue ’ and marked ‘A/c Payee only’.

Applicants who are applying through CAF and residing at places other than places where the bank collection centers have been opened for collecting applications, are requested to send their applications together with a Cheque/Demand Draft of amount net of bank and postal charges, for the full application amount favouring ‘ EICL - Rights Issue’ and marked ‘A/c Payee only’ payable at Delhi directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

Applicants who are applying on plain paper, are requested to send their applications on plain paper together with a local Cheque/Demand Draft of amount net of bank and postal charges, for the full application amount favouring ‘ EICL- Rights Issue’ and marked ‘A/c Payee only’ payable

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at Delhi directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

You are requested to mention the Folio number, Client ID / DP ID (as may be applicable) and the CAF number on the reverse of the Cheque /Demand Draft.

Particulars of applicant's Savings Bank/Current Account must be given in the space provided for in the CAF, so as to enable the Registrars to print the same on the refund order, if any. Applications without such details are liable to be rejected.

The applicant or in the case of application in joint names, each of the applicants should mention his/her Permanent Account No. allotted under the Income Tax Act, 1961. Without this information, the Application Form will be considered incomplete and will be liable to be rejected.

A separate cheque or bank draft must acCompany each application form. All application forms duly completed together with cash/ cheque/ demand draft for the amount payable on application at Rs.1000/- per Equity Share must be submitted before the close of the Subscription List to the Bankers to the Issue named herein or to any of their designated branches or the Collection Centres mentioned on the reverse of the CAF and not to the Company, the Lead Manager to the Issue or the Registrars to the Issue.

2. Non-Resident Shareholders including NRIs/OCBs/FIIs

Applications received from Non-Resident Indian(s)/Persons of Indian Origin resident abroad / OCBs / nonresidents / FIIs / foreign shareholders, for allotment of Equity Shares shall be, inter- alia, subject to the conditions as may be imposed from time to time by the Reserve Bank of India in the matter of refund of application moneys, allotment of Equity Shares, issue of letters of Allotment/ Equity Share Certificates, payment ofinterest, dividends etc.

The source for making investment by Non-Resident Indian(s)/Persons of Indian Origin resident abroad/OCBs/non-residents/FIIs/foreign shareholders will depend on whether the Equity Shares held by them and the Equity Shares to be allotted to them are on repatriation or non-repatriation basis.

On Repatriation basis

Payment is to be made by such NRIs/OCBs/FIIs/Foreign Investors in any of the following modes:

a. Indian Rupee Draft purchased from abroad drawn on any bank in India and made payable at Delhi or b. Cheques drawn on Non-Resident External Account (NRE Account) with any Bank at Delhi or c. Indian Rupee Draft purchased out of NRE/FCNR accounts maintained anywhere in India and payable at Delhi d. Payments by FIIs must be paid through the Special Non Resident Rupee deposit Account e. Applicants seeking allotment of the Equity Shares on repatriation basis should note that the payments for such allotment have to be made through external source only and that the payments through NRO accounts shall not be permitted f. In case of applications by overseas companies and other corporate bodies owned predominantly by Non-Resident Individuals of Indian nationality/origin, a certificate in the prescribed form OAC/OAC-1 from an overseas auditor/chartered accountant/certified public accountant should be submitted along with the application g. In case of NRIs who remit their application money through Indian rupee drafts from abroad, refunds, payment of interest and other disbursements, if any, will be made in the relevant foreign currencies at the rate of exchange prevailing at such time subject to the permission of the RBI. The Company will not be liable for any loss on account of exchange fluctuations for converting their rupee amount in any foreign currency. In case of those NRIs who remit their application money from funds in NRE/FCNR accounts, refund, payment of interest and other disbursements, if any, shall be credited to such account, details of which account should be furnished in the appropriate column of the CAF.

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h. All cheques/drafts submitted by non-residents applying on repatriable basis have to be made through external source only and should be drawn in favour of “EICL – Rights Issue – NR” payable at Delhi and crossed ‘A/c Payee only’ for the amount payable.

On Non-repatriation basis Payments are to be made by such NRIs either as mentioned above or by Cheques drawn on NRO/NRE/FCNR/NRSR/NRNR A/c maintained in Delhi or Rupee Demand Draft purchased out of NRO/NRE/FCNR/NRSR/NRNR A/c maintained anywhere in India, but payable in Delhi. Application being made for the Equity Shares is on non-repatriation basis, a separate cheque / demand draft must acCompany each CAF. All instruments must be crossed “ Account Payee only ” and drawn in favour of “ EICL - Rights Issue ”. You are requested to mention the folio number and the CAF number on the reverse of the cheque/demand draft. The application should be accompanied by a non-repatriation undertaking as per the forms prescribed by RBI. In case shares are allotted on non-repatriation basis, the dividend/sale proceeds of the shares cannot be remitted outside India. If the payment is made by a draft purchased from an FCNR/NRE/NRO account, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting FCNR/NRE/NRO accounts or foreign Inward Remittance Certificate (FIRC) from the authorized dealers along with the CAF otherwise the application may be considered incomplete and liable for rejection. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of application in transit, if any. In no circumstances should the CAF be delivered to the Lead Manager to the Issue or to the Company. Note: In case where repatriation benefit is available, dividend and sales proceeds derived from the investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to Income-tax Act, 1961.

In case, the Equity Shares are allotted on non-repatriation basis and refund, dividend, interest and other disbursement, if any, will be payable in Indian Rupees only and cannot be remitted outside India.

The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of Banking Hours on the aforesaid Issue Closing Date. A separate Cheque or Bank draft must acCompany each CAF.

In case application received from Non Residents, allotment, Refunds and other distributions, if any will be made in accordance of the guidelines/rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.

Payment by means of Stockinvest

In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 05, 2003, the Stockinvest Scheme has been withdrawn with immediate effect. Hence, payment through Stockinvest would not be accepted in this Issue.

Basis of Allotment

Subject to the provisions contained in this LOF, the Articles of Association of the Company and the approval of the Designated Stock Exchange, the Board will proceed to allot the Equity Shares in the following order of priority: a. Full allotment to those Equity Shareholders who have applied for their rights entitlement either in full or in part and also to the renouncees who have applied for Equity Shares renounced in their

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favour either in full or in part (subject to other provisions contained under the paragraph titled “Renunciation”). b. Wherein fractional entitlement is ignored, allotment of one additional Equity Share each to the shareholders whose fractional entitlement have been ignored and have applied for additional Equity Shares. c. Allotment to the Equity Shareholders who having applied for their full rights entitlement of Equity Shares offered to them have also applied for additional Equity Shares provided there is a surplus available after full allotment under (a) and (b) above and shall be at the absolute discretion of the Board or the Share Transfer Committee of the Company authorized in this behalf by the Board and the decision of the Board or the Share Transfer Committee shall be final and binding. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis with reference to the number of Equity Shares held by them on the Record Date in consultation with the BSE, as part of the Issue and not preferential allotment. d. To the renouncee(s) who having applied for all the Equity Shares renounced in their favour and have also applied for additional Equity Shares, provided there is surplus available after making full allotment under (a), (b) and (c) above. The allotment of such additional Equity Shares will be made on a proportionate basis at the sole discretion of the Board/ Share Transfer Committee but in consultation with the Designated Stock Exchange, as a part of the Rights Issue and not preferential allotment. e. Allotment to any other person as the Board may in its absolute discretion deem fit provided there is surplus available after making full allotment under (a), (b), (c) and (d) above.

After taking into account allotment to be made under (a) and (b) above, if there is any unsubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b)(ii) of the Takeover Code which would be available for allocation under (c), (d) and (e) above. If allotted to the Promoter shall be in terms of provison to regulation 3(1)(b)(ii) of the Takeover Code and will be exempt from the applicability of regulation 11 and 12 of Takeover Code. This disclosure is made in terms of the requirement of Regulation 3(1)(b)(ii) of the Takeover Code. Further this acquisition will not result in change of control of management of the Company. After such allotments as above and to the Promoters, including the application for rights/renunciation and additional Equity Shares, any additional Equity Shares shall be disposed off by the board or committee of the Board of Directors 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 oversubscription, allotment will be made within the overall size of the Issue. In the event of oversubscription against the Rights Issue, allotment will be considered on an equitable basis with reference to the number of Equity Shares held on the Record Date, within the overall size of the Rights Issue at the sole discretion of the Board but in consultation with the Designated Stock Exchange. No oversubscription shall be retained by the Company. Even in the event of under subscription, the allotment will be made in consultation with the Designated Stock Exchange. To the Equity Shareholders who have applied for their full rights entitlement of Equity Shares, have applied for additional Equity Shares, provided there is a surplus after making the allotment under (a), (b), (c), (d) & (e) above. The allotment of such additional Equity Shares shall be made as far as possible on equitable basis with reference to the number of Equity Shares held on Record date , within the overall size of Rights Issue at the sole and absolute discretion of the Board of Directors or Committee thereof in consultation with the Designated Stock Exchange. The basis of allotment shall be finalised by the Board in consultation with the Designated Stock Exchange, within a period of 42 days from the date of closure of the Issue. In case of delay in allotment the Company shall, as stipulated under Section 73(2A) of the Act, be required to pay interest on the same at a rate of 15 per cent per annum. Underwriting

The present Issue is not underwritten. While the Promoters, the Directors and Persons acting in concert have confirmed their intention to subscribe to their rights entitlement, some of them may renounce with a view to comply with the provisions of Clause 40A of the Listing Agreement, relating to minimum levels of public shareholding in a listed Company.

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Allotment letters / Refund Orders The Company will issue and dispatch letters of allotment/ share certificates/ demat credit 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 Issue Closing Date. 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. Applicants residing at 68 centers where clearing houses are managed by the Reserve Bank of India (RBI) will get refunds through ECS only (Electronic Clearing Service) except where applicants are otherwise disclosed as applicable/eligible to get refunds through direct credit and RTGS. The bank account details will be directly taken from the depositories database/mandates. In case of those applicants who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, an advice regarding their credit of the Equity Shares shall be given separately. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit of refund within a period of 42 days from the Issue Closing Date. In case of those Applicants who have opted to receive their Rights Entitlement in physical form and the Company issues letter of allotment, the corresponding share certificates will be kept ready within three months from the date of allotment thereof or such extended time as may be approved by the companies Law Board under Section 113 of the Companies Act or other applicable provisions, if any. Allottees are requested to preserve such letters of allotment, which would be exchanged later for the share certificates. Letters of allotment/share certificates/demat credit/ refund orders above the value of Rs.1,500/- will be dispatched by registered post/ speed post to the sole/ first applicant’s registered address. However, refund orders for value not exceeding Rs.1,500/- shall be sent to the applicants by way of under certificate of posting. Such cheques or pay orders will be payable at par at all the centers where the applications were originally accepted and will be marked ‘A/c payee’ and would be drawn in the name of the sole/ first applicant. Adequate funds would be made available to the Registrar to the Issue for the dispatch of such letters of allotment/ share certificates/ demat credit and refund orders. As regards allotment/ refund to non-residents, the following further conditions shall apply: In case of non-residents, who remit their application monies from funds held in NRE/ FCNR accounts, refunds and/ or payment of interest/ dividend and other disbursement, if any, shall be credited to such accounts, details of which should be furnished in the CAF. Subject to the approval of the RBI, in case of non-residents, who remit their application monies through Indian Rupee draft purchased from abroad, refund and/ or payment of dividend/ interest and any other disbursement, shall be credited to such accounts (details of which should be furnished in the CAF) and will be made net of bank charges/ commission in US Dollars, at the rate of exchange prevailing at such time. The Company will not be responsible for any loss on account of exchange fluctuations for converting the Indian Rupee amount into US Dollars. The share certificate(s) will be sent by registered post at the Indian address of the non-resident applicant.

Payment of Refund Applicants should note that on the basis of name of the applicants, Depository Participant’s name, Depository Participant- Identification number and Beneficiary Account Number provided by them in the CAF, the Registrar to the Issue will obtain from the Depositories, the applicant’s bank account details including ten digits MICR code. Hence, applicants are advised to immediately update their bank account details as appearing on the records of the depository participant. Please note that failure to do so could result in delays in credit of refunds to applicants at the applicant’s sole risk and neither the Lead Manager nor the Company shall have any responsibility and undertake any liability for the same. In case of applicants applying for physical shares, refunds will be made on the basis of the bank account details provided by them in the CAF.

The payment of refund, if any, would be done through various modes in the following order of preference:

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1. ECS: Payment of refund shall be undertaken through ECS for applicants having an account at any of the 68 centres as specified by SEBI pursuant to its circular SEBI/CFD/DILDIP/29/2008/01/02 dated February 1, 2008. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. The payment of refunds through ECS is mandatory for applicants having a bank account at any of the above-mentioned 68 centres, except where the applicant, being eligible, opts to receive a refund through direct credit or RTGS. 2. NEFT: Payment of refund shall be undertaken through NEFT wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method. 3. Direct Credit: Applicants having bank accounts with the bankers to the Issue shall be eligible to receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by the Company. 4. RTGS: Applicants having a bank account at any of the abovementioned 68 centers and whose refund amount exceeds Rs. 1 lac, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the Refund Bank(s) for the same would be borne by such applicant opting for RTGS as a mode of refund. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant. Only or all the other applicants excepts for whom payment of refund is possible through 1), 2), 3) and 4), the refund orders would be despatched “Under Certificate of Posting” for refund orders less than Rs.1,500/- and through Speed Post/Registered Post for refund orders exceeding Rs.1,500/-. Such refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/first applicant and payable at par.

For shareholders opting for allotment in physical mode, bank account details as mentioned in the CAF shall be considered for electronic credit or printing of refund orders, as the case may be. Refund orders will be made by cheques, pay orders or demand drafts drawn on the Refund Bank(s) and payable at par at places where the applications were received and will be marked account payee and will be drawn in the name of Sole/First Applicant. The bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centers will be payable by the Applicants.

Letters of allotment or refund orders Equity Share certificate(s)/Letter(s) of Allotment or Letter(s) of Regret together with refund orders exceeding Rs 1,500/-, if any, will be dispatched by registered post/speed post at the sole/first named applicant’s address within 42 days from the date of the closing of the Issue. Mode of payment of refund would be made as mentioned in the clause dealing with the "Payment of Refund". Company shall ensure despatch of refund orders, if any, by under the Certificate of Posting or registered post or speed post or through modes as mentioned in the section on "Issue Related Information" in the clause dealing with "Payment of Refund", as applicable, only at the sole or First Applicant’s sole risk within 42 days of closure of the Rights Issue, and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the Issuer. In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialised form by electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately.

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Refunds will be made by cheques or pay orders drawn on the Collection Bank(s) and 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 nonresidents shall be done as mentioned on page 189 of this LOF.

Letters of Allotment / Share Certificates / Demat Credit Letter(s) of allotment/ share certificates/ demat credit or letters of regret along with refund order will be dispatched to the registered address of the first named applicant or respective beneficiary accounts will be credited within 6 (six) weeks, from the date of closure of the subscription list. In case the Company issues letters of allotment, the relative share certificates will be dispatched within three months from the date of allotment. Allottees are requested to preserve such letters of allotment (if any) to be exchanged later for share certificates. Export of letters of allotment (if any)/ share certificates/ demat credit to non-resident allottees will be subject to the approval of RBI.

Refund payment to Non-Resident Where applications are accompanied by Indian Rupee drafts purchased abroad and payable at 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 rate risk on such refunds shall be borne by the concerned applicant and the Company shall not bear any part of the risk. 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 were drawn and details of which were provided in the CAF.

Option to receive Equity Shares in Dematerialized Form

Applicants to the Equity Shares of the Company issued through this Issue shall be allotted the securities in dematerialized (electronic) form at the option of the applicant. The Company and the Registrar have tripartite agreements with CDSL and NSDL respectively, which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. The ISIN No. of the Company’s equity shares for NSDL and CDSL is INE267F01016.

In this Issue, the allottees who have opted for Equity Shares in dematerialized form will receive their Equity Shares in the form of an electronic credit to their beneficiary account with a depository participant. The CAF shall contain space for indicating number of shares applied for in demat and physical form or both. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Applications, which do not accurately contain this information, will be given the securities in physical form. No separate applications for securities in physical and/or dematerialized form should be made. If such applications are made, the application for physical securities will be treated as multiple applications and is liable to be rejected. The Equity Shares of the Company will be listed on the BSE. Procedure for availing the facility for allotment of Equity Shares in this Issue in the electronic form is as under: • Open a beneficiary account with any depository participant (care should be taken that the beneficiary account should carry the name of the holder in the same manner as is exhibited in the records of the Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as with the Company). In case of Investors having various folios in the Company with different joint holders, the Investors will have to open separate accounts for such holdings. Those Equity Shareholders who have already opened such Beneficiary Account (s) need not adhere to this step. • For Equity Shareholders already holding Equity Shares of the Company in dematerialized form as on the Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Equity

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Shares by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of Equity Shares arising out of this Issue may be made in dematerialized form even if the original Equity Shares of the Company are not dematerialized. Nonetheless, it should be ensured that the Depository Account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of the Company. • Responsibility for correctness of information (including applicant’s age and other details) filled in the CAF vis-à-vis such information with the applicant’s depository participant, would rest with the applicant. Applicants should ensure that the names of the applicants and the order in which they appear in CAF should be the same as registered with the applicant’s depository participant. • If incomplete / incorrect beneficiary account details are given in the CAF or where the investor does not opt to receive the Rights Equity shares in dematerialized form, the applicant will get Equity Shares in physical form. • The Rights Equity Shares pursuant to this Issue allotted to investors opting for dematerialized form, would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s depository participant will provide to him the confirmation of the credit of such Equity Shares to the applicant’s depository account. • Renouncees will also have to provide the necessary details about their beneficiary account for allotment of securities in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected.

Utilisation of Issue Proceeds The Board of Directors undertake that a. All monies received out of issue of shares to public shall be transferred to separate Bank account other than the Bank account referred to in sub - section (3) of section 73; b. Details of all monies utilised out of the issue referred to in sub-item a) shall be disclosed under an appropriate separate head in the balance-sheet of the Company indicating the purpose for which such monies had been utilised. c. Details of all unutilised monies out of the issue of shares, if any, referred to in sub-item (a) shall be disclosed under an appropriate separate head in the balance-sheet of the Company indicating the form in which such unutilised monies have been invested. d. 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 Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90 per cent of the Issue has been received by the Company. e. The proceeds of proposed Rights Issue will be kept in a separate Bank Account and will be deployed / utilized only in accordance with the “Objects of the Offering” as specified in this offer document. For further instructions, please read CAF carefully.

General instructions for applicants a. Please read the instructions printed on the enclosed CAF carefully. b. Application should be made on the printed CAF, provided by the Company except as mentioned under the head Application on Plain Paper and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of this LOF are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the applicants, details of occupation, address, father’s / husband’s name must be filled in block letters. c. Payments should be made in cash/cheque/demand draft drawn on any bank which is situated at and is a member of sub-member of the banker’s clearing house located at the centre where application is accepted. Outstation cheques/ demand drafts will not be accepted and

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application(s) accompanied by such cheques/ demand drafts will be rejected. The Registrar will not accept cash along with CAF. d. The CAF together with cheque/demand draft should be sent to the Bankers to the Issue/Collecting Bank or to the Registrar to the Issue and not to the Company or Lead Manager to the Issue. Applicants residing at places other than cities where the branches of the Bankers to the Issue have been authorized by the Company for collecting applications will have to make payment by Demand Draft payable at Delhi of amount net of bank and postal charges, and send their application forms to the Registrar to the Issue by REGISTERED/SPEED POST. If any portion of the CAF is/are detached or separated, such application is liable to be rejected. e. Applications for any value made by the applicant or in the case of application in joint names, each of the applicants, should mention his/ her PAN number allotted under the Income-Tax Act, 1961 along with the application for the purpose of verification of the number. CAFs without the mention of the PAN number will be considered incomplete and are liable to be rejected. f. Bank Account Details: It is mandatory for applicants to provide information as to their savings/current account number and the name of the Company with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Application not containing such details is liable to be rejected. Shareholders may please note that for shares held in DEMAT mode, the bank account details shall be obtained from the depositories. Shareholders may ensure that the bank account details are updated with the depositories. g. Payment by cash: The payment against the application should not be effected in cash. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon. h. Signatures should be either in English or Hindi or in any other language specified in the Eight Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company or depositories. i. In case of an application under power of attorney or by a body corporate or by a society, a certified true copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Issue and to sign the application and a copy of the Memorandum and Articles of Association and / or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above-referred documents are already registered with the Company, the same need not be furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue. j. In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with the Company. Further, in case of joint applicants who are renouncees, the number of applicants should not exceed three. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant. k. Application(s) received from Non-Resident/NRIs, or persons of Indian origin residing abroad for allotment of Equity Shares shall, inter alia , be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of application money, allotment of Equity Shares, subsequent issue and allotment of Equity Shares, interest, export of share certificates, etc. In case a Non-Resident or NRI Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF. l. All communication in connection with application for the Equity Shares, including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first / sole applicant Equity Shareholder, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to Registrar to the Company; M/s RCMC Share Registry Pvt. Ltd., B-106, Sector – 2, Noida, Uttar Pradesh - 201301, in the case of Equity Shares held in physical form and to the respective depository participant, in case of Equity Shares held in dematerialized form. m. Split forms cannot be re-split. n. Only the person or persons to whom Equity Shares have been offered and not renouncee(s) shall be entitled to obtain split forms.

196 English Indian Clays Limited o. Applicants must write their CAF number at the back of the cheque/demand draft. p. Only one mode of payment per application should be used. The payment must be either in cash or by cheque/demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted. q. A separate cheque/draft must acCompany each CAF. Outstation cheques/demand drafts or post- dated cheques and postal/money orders will not be accepted and applications accompanied by such cheques/demand drafts/money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in cash. (For payment against application in cash please refer point (g) above) r. No receipt will be issued for application money received. The Bankers to the Issue/Collecting Bank/Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF. s. An applicant which is a mutual fund can make a separate application in respect of each scheme of the fund and such applications shall not be treated as multiple applications. The application made by the asset management Company or custodian of a mutual fund shall clearly indicate the name of the concerned scheme for which the application is made.

Grounds for Technical Rejections Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following: 1. Amount paid does not tally with the amount payable for; 2. Bank account details (for refund) are not given; 3. Age of First Applicant not given; 4. PAN not provided; 5. In case of application under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted; 6. If the signature of the existing shareholder does not match with the one given on the CAF and for renounces if the signature does not match with the records available with their depositories; 7. If the Applicant desires to have shares in electronic form, but the application form (CAF) does not have the Applicant’s depository account details; 8. CAF are not submitted by the applicants within the time prescribed as per the instructions in the CAF and the LOF; 9. Applications not duly signed by the sole/joint applicants; 10. OCBs who cannot apply in terms of RBI restrictions; 11. Applications accompanied by Stockinvest; 12. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the applicants (including the order of names of joint holders), the depository participant’s identity (DP ID) and the beneficiary’s identity; 13. Applications by ineligible Non -residents (including on account of restriction or prohibition under applicable local laws) and where last available address in India has not been provided. 14. Multiple Applications. 15. Duplicate Applications.

Disposal of applications and application money No acknowledgement will be issued for the application moneys received by the Company. However, the Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgement slip at the bottom of each CAF.

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The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the applicant within 42 days from the closure of the Issue. For further instruction, please read the Composite Application Form (CAF) carefully.

Interest in Case of Delay in Despatch of Allotment Letters/ Refund Orders The Company agrees that as far as possible the allotment of the Equity Shares shall be made within 42 days of the closure of Issue. The Company further agrees that it shall pay interest at the rate of 15% per annum if the allotment has not been made and/or the refund orders have not been despatched to the investors or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner within 42 days from the date of closure of the Issue.

Undertakings by the Company a. The complaints received in respect of the Issue shall be attended to by the Issuer 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 will be taken within 7 working days of finalization of basis of allotment; c. The funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue. d. Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 42 days of closure of the Issue, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund. e. The certificates of the securities/refund orders to the non-resident Indians shall be dispatched within specified time. f. Except as disclosed, no further issue of securities affecting equity capital of the Company shall be made till the securities offered through this offer document are listed or till the application moneys are refunded on account of non-listing, under subscription, etc. g. The Company accepts full responsibility for the accuracy of information given in this LOF and confirms that to best of its knowledge and belief, there are no other facts the omission of which makes any statement made in this LOF misleading and further confirms that it has made all reasonable enquiries to ascertain such facts. h. All information shall be made available by the Lead Manager and the Issuer to the investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc. The Issuer and Lead Manager shall update this LOF and keep the investors informed of any material changes till the listing and trading commences of the securities offered through this LOF. Important • Please read this LOF carefully before taking any action. The instructions contained in the acCompanying Composite Application Form (CAF) are an integral part of the conditions of this LOF and must be carefully followed; otherwise the application is liable to be rejected. • All enquiries in connection with this LOF or acCompanying CAF and requests for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and super scribed ‘English Indian Clay Limited - Rights Issue’ on the envelope) to the Registrar to the Issue at the following address:

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RCMC Share Registry Pvt. Ltd. B-106, Sector – 2, Noida, Uttar Pradesh - 201301.

• It is to be specifically noted that this Issue of Equity Shares is subject to the section entitled ‘Risk Factors’ beginning on page 8 of this LOF. • 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. • The Issue will not be kept open for more than 30 days unless extended, in which case it will be kept open or a maximum of 60 days.

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SECTION IX : DESCRIPTION OF EQUITY SHARES AND TERMS OF THE ARTICLES OF ASSOCIATION

Pursuant to Schedule II of the Companies Act and the SEBI Guidelines, the important provisions of the Articles of Association of the Company are detailed below.

Capitalized terms used in this section have the meaning that has been given to such terms in the Articles of Association.

1. Unless the context otherwise requires words or expressions contained in these Articles shall bear the same meaning as in the Act or any statutory modification thereof in force at the date at which the Articles becomes binding on the Company.

The marginal notes hereto are inserted for convenience and shall not affect the construction hereof and in these presents unless there be something in the subject or context inconsistent therewith:-

"The Act" means the companies Act, 1956, and includes where the context so admits any re- enactment or statutory modification thereof for the time being in force

"These Articles" means these Articles of Association as originally frame oras from time to time altered by Special Resolution.

"The Company" means English Indian Clays Limited.

"The Directors" means Directors for the time being of the Company.

"The Board of Directors" or "The Board" means the Board of Directors for the time being of the Company

"The Managing Director" means the Managing Director for the time being of the Company.

"The Office" means the Registered Office for the time being of the Company.

"Register" means the Register of Members of the Company required to be kept by Section 150 of the Act.

"The Registrar" means the Registrar of Companies, Kerala.

"Dividend" includes bonus.

"Month" means a calender month.

"Year" means the period from Ist of April of each year to the 31st March of the succeeding year.

"Seal" means the Common Seal of the Company.

"Proxy' includes Attorney duly constituted under a Power-of Attorney.

"In Writing" and "Written" include printing, lithography and other modes of representing or reproducing words in a visible form.

Words importing the singular number only include the plural number and vice versa. Words importing person include corporations.

2. Save as reproduced herein the regulations contained in Table 'A' in the First Schedule to the Act shall not apply to the Company.

3. The company shall forthwith enter into an agreement with English China Clays Limited of St. Austell, Cornwall, England, in the terms of the draft, a copy whereof has for the purpose of

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identification, been subscribed by Mr. B.P. Ray, Solicitor of Calcutta and the Board shall carry the said agreement into effect with full power nevertheless (subject to the provisions of Section 61 of the Act) from time to time to agree to any modification of the terms of such agreement either before or after the execution thereof.

The basis on which the Company is established is that the Company shall enter into the said agreement on the terms therein set forth, subject to such modification (if any) as aforesaid and that Mr. Alan Nugent Goring Dalton and Mr. Mavelikalathu Narayana lyer Ramakrishnan are to be the first Directors of the Company, and accordingly it shall be no objection to the said agreement that the said Mr. Alan Nugent Goring Dalton and the said Mr. Mavelikalathu Narayana lyer Ramakrishnan as promoters and Directors stand in a fiduciary position towards the Company and that the Directors do not in the circumstances constitute an independent Board and every members of the Company, present and future, is to deemed to join the Company on this basis.

4. The Company shall have power subject to and in accordance with all applicable provisions of the Act to purchase any of its own fully paid shares whether or not they are redeemable and may make a payment out of Capital or such other reserves as may be permissible in respect of such purchase.

5. The Share Capital of the Company is Rs.38,00,00,000/- (Rupees Thirty Eight Crores) divided into 80,00,000 Equity Shares of Rs. 10/- each 30,00,000 Convertible or Non-Convertible or Cumulative or Non-cumulative Preference shares of Rs. 100/- each Redeemable and entitled to such rate of Annual Dividend with or without the right to participate in future profits of the Company, as the Directors may determine before each issue of such shares.

[Increased from Rs.30,00,000/- to Rs. 3,00,00,000/- vide special resolution dated 20-08-1991] [Increased from Rs.3,00,00,000,/- to Rs. 5,00,00,000/- vide special resolution dated 05-11-1993] [Increased from Rs.5,00,00,000/- to Rs. 18,00,00,000/- vide special resolution dated 26 th , August 2002] [Increased from Rs.18,00,00,000/- to Rs. 38,00,00,000/- vide special resolution dated 31 st , August, 2006]

6. (1) Subject to the provisions of these Articles, the shares shall be under the control of the Board who may allot or otherwise dispose of the same to such persons, on such terms and conditions, at such times, either at par or at a premium, and for such considerations as the Board think fit. Provided that, where at any time (after the expiry of two years from the formation of the Company or at any time after the expiry of one year from the allotment of shares in the Company made for the first time after its formation, whichever is earlier) it is proposed to increase the subscribed capital of the Company by the allotment of further shares, then subject to the provisions of Section 81 (IA) of the Act, the Board shall issue such shares in the manner set out in Section 81(1) of the Act. Option or right to call of shares shall not be given to any person without the sanction of the Company in the General Meeting.

(2) As regards all allotments made from time to time the Company shall duly comply with Section 75 of the Act.

7. If the Company shall offer any of its shares to the public for subscription.

(1) No allotment thereof shall be made unless the amount stated in the prospectus as the minimum subscription has been subscribed, and the sum payable on application thereof has been paid to and received by the Company, but this provision shall no longer apply after the first allotment of shares offered to the public for subscription.

(2) The amount payable on application on each share shall not be less than 5 per cent, of the nominal amount of the share; and

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(3) The company shall comply with the provisions of sub-section of Section 69 of the Act.

And if the company shall propose to commence business after filing a statement in lieu of prospectus, the Board shall not make any allotment of shares payable in cash unless seven at of the shares proposed to be issued shall have been subscribed for a payable in cash by seven members and Sections 70 and 149 of the Act shall have been complied with.

8. The Company may exercise the powers of paying commissions conferred by Section 76 of the Act, provided that the rate per cent, or the amount of the commission paid or agreed to be paid shall be disclosed in the manner required by the said Section and the commission shall not exceed 5 per cent of the price at which any shares, in respect whereof the same is paid, are issued or 2 per cent of the price at which any debentures are issued (as the case may be). Such commission may be satisfied by the payment of such or the allotment fully or partly paid shares or partly in one way and partly in the other. The Company may also on any issue of shares or debentures pay such brokerage as may be lawful.

9. With the previous authority of the Company in general meeting and the sanction of the Court and upon otherwise complying with Section 79 of the Act, the Board may issue at a discount shares of a class already issued.

10. If, by the conditions of allotment of any share, the whole or part of the amount or issue price thereof shall be payable by instalments, every such instalment shall, when due, be paid to the Company to the person who, for the time being, shall be the registered holder of the share or by his executor or administrator.

11. The joint holders of a share shall be severally as well as jointly liable for the payment of all instalments and calls due in respect of such share.

12. Save as herein otherwise provided, the Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not except as ordered by a Court of competent jurisdiction, or as by statute required, by bound to recognise any equitable or other claim to or interest in such share on the part of any other, person.

13. Shares may be registered in the name of any person, company or other body corporate. Not more than four persons shall be registered as joint-holders of any share.

CERTIFICATES

14. Subject to the provisions of the Companies (Issue of Share Certificates) Rules, 1960 or any statutory modification or re-enactment thereof, share scrips shall be issued as follows:-

(1) The certificates of title to shares and duplicates thereof when necessary shall be issued under the seal of the Company which shall be affixed in the presence of (i) two Directors or a Director and a person acting on behalf of another Director under a duly registered power-of-attorney or two persons acting as attorneys for two Directors as aforesaid: and (ii) the secretary or some other person appointed by the Board for the purpose, all of whom shall sign such share certificate; provided that, if the completion of the Board permits of it, at least one of the aforesaid two Directors shall be a person other than a Managing or whole time Director.

(2) Every members shall be, entitled free of charge to share certificate in market lots for all the shares of each class registered in his name and where share certificates are issued for more or less than market lots, sub-division and / or conslidation shall be done free of charge. Unless the conditions of issue of any shares otherwise provide, the Company shall, within three months after the date of either allotment and on surrender to the Company of its letter making the allotment or of its fractional coupons of requisite value (save in the case of issue against letters of acceptance or of renunciation or in cases of issue of bouns shares) or within one month of receipt of the application for registration of the transfer of any of its, shares, as the case may be, complete and have ready for

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delivery the certificates of such shares. Every certificate of shares shall specify the name of the person in whose favour the certificate is issued, the shares to which it relates and the amount paid up therein. Particulars of every certificate issued shall be entered in the Register maintained in the form set out in the Act. or, in a form as near thereto as circumstances admit, against the name of the person to whom it has been issued, indicating the date of issue. In respect of any share held jointly by several persons, the Company shall not be bound to issue more than one certificate and delivery of a certificate to one of several jointholders shall be sufficient delivery to all such holders.

(3) If any certificate of any share or shares be surrendered to the Company for sub-division or consolidation or if any certificate by defaced, torn or old, decrepit, worn-out or where the cages in the reverse for recording transfers have been duly utilised, then, upon surrender thereof to the Company, the Board may order the same to be cancelled and may issue a new certificate in lieu thereof and if any certificate be lost or destroyed, then, upon proof thereof to the satisfaction of the Board, and on such indemnity as the Board thinks fit being given, a new certificate in lieu thereof shall be given to the party entitled to the shares to which such lost or destroyed certificate shall relate. Where a certificate has been issued in place of certifcate which has been defaced, etc. lost or destroyed, it shall state on the face of it and against the stub or counter foil that it is issued in lieu of a share certificate or is a duplicate issued for the one so defaced, etc., lost or destroyed, as the case may be, and, in the case of a certificate issued in place of one which has been lost or destroyed, the word "duplicate" shall be stamped or punched in bold letters across the face thereof. No fee shall be charged for sub-division or consolidation of share certificates, or for issue of new certificate in replacement of those which are old, decrepit, or worn out or where the cages on the reverse for recording transfers have been fully utilised. However in the case of certificate lost or destroyed there shall be paid to the Company such out of pocket expenses incurred by the Company in investigating evidence as the Board may determine.

(4) Where a new share certificate has been issued in pursuance of the last preceding paragraph, particulars of every such certificate shall also be entered in a Register of Renewed and Duplicate Certificates indicating against the name of the person to whom the certificate is issued, the number and date of issue of the certificate in lieu of which the new certificate is issued and the necessary changes indicated in the Register by suitable cross-references in the "Remarks" Column. All entries made in the Register or in the Register of Renewed and Duplicate Certificates shall be authenticated by the Secretary or such other person as may be appointed by file Board for the purposes of sealing and signing the share certificate under paragraph (1) hereof.

CALLS

15. The Board may, from time to time, subject to the terms on which any shares may have been issued, and subject to the provisions of Section 91 of the Act, make such calls as the Board thinks fit upon the members in respect of all moneys unpaid on the shares held by them respectively, and not by the conditions of allotment thereof made payable at fixed times, and each member shall pay the amount of every call so made on him to the persons and at the times and places appointed by the Board. A call may be made payable by instalments and shall be deemed to have been made when, the resolution of the Board authorising such calls was passed.

16. No call shall exceed one-fourth of the nominal amount of a share, or be made payable within one month after the last proceeding call was payable, Not less than fourteen days' notice of any call shall be given specifying the time and place of payment and to whom such call shall be paid.

17. (1) If the sum payable in respect of any call or instalment be not paid on or before the day appointed for payment thereof, the holder for the time being in respect of the share for which the call shall have been made or the instalment shall be due shall pay interest for the same at the rate of 12 percent per annum from the day appointed for the payment thereof to the time of the actual payment or at such lower rate (if any) as the Board may determine.

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(2) The Board shall be at liberty to waive pament of any such interest either wholly or in part.

18. If by the terms of issue of any share or otherwise any amount is made payable at any fixed time or by instalments at fixed times, whether on account of the amount of the share or by way of premium every such amount or instalment shall be payable as if it were a call duly made by the Board and of which due notice had been given and all the provisions herein contained in respect of calls shall relate to such amount or instalment accordingly.

19. On the trial or hearing of any action or suit brought by the Company against any shareholder or his representatives to recover any debt or money claimed to be the Company in respect of his share, it shall be sufficient to prove that the name of the defendant is or was, when the claim arose on the Register as a holder, or one of the holders of the numbers of shares in respect of which such claim is made, and that the amount claimed is not entered as paid in the books of the Company and it shall not be necessary to prove the appointment of the Board who made any call, nor that a quorum was present at the Board meeting at which any call was made nor that the meeting at which any call was made was duly convened or constituted, nor any other matter whatsoever, but the proof of the matters aforesaid shall be conclusive evidence of the debt.

20. The Board may, if it thinks fit, receive from any member willing to advance the same, all or any part of the money due upon the share held by him beyond the sums actually called for, and upon the money so paid or satisfied in advance, or so much thereof as from time to time exceeds the amount of the calls then made upon the share in respect of which such advance has been made, the Company may pay interest at such rate not exceeding, unless the Company in general meeting shall otherwise direct, 6 percent per annum as the member paying such sum in advance and the Board agrees upon. Money so paid in excess of the amount of calls shall not rank for dividends or offer a right to participate in profits. The Board may at any time repay the amount so advanced upon giving to such member not less than three months notice in writing.

21. A call may be revoked or postponed at the discretion of the Board.

FORFEITURE AND LIEN

22. If any member fails to pay any call or instalment of a call on or before the day appointed for the payment of the same the Board may, at any time thereafter during such time as the call or instrument remains unpaid, serve a notice on such member requiring him to pay the same, together with any interest that may have accrued and all expenses that may have been incurred by the Company by reason of such non-payment.

23. The notice shall name a day (not being less than fourteen days from the date of the notice) and a place or places on and at which such call or instalment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of nonpayment at or before the time, and at the place appointed, the shares in respect of which such call was made or instalment is payable will be liable to be forfeited.

24. If the requisitions of any such noitce as aforesaid be not complied with any shares in respect of which such notice has been given may, at any time thereafter, before payment of all or instalments, interest and expenses, due in respect thereof, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture.

25. When any share have been so forfeited, notice of the resolution shall be given to the member in whose name it stood immediately prior to the forfeiture and any entry of the forfeiture, with the date thereof, shall forthwith be made in the Register, but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or to make such entry as aforesaid.

26. Any share so forfeited shall be deemed to be the property of the Company, and the Board may sell, re-allot or otherwise dispose of the same in such manner as it thinks fit.

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27. The Board may, at any time before any share so forfeited shall have been sold, re-allotted or otherwise disposed of, annul the forfeiture thereof upon such conditions as it thinks fit.

28. A person whose share has been forfeited shall cease to be a member in respect of the forfeited share, but shall, not with standing, remain liable to pay, and shall forthwith pay to the Company, all calls, or instalments, interest and expenses, owing upon or in respect of such share, at the time of the forfeiture, together with interest thereon, from the time to forfeiture untill payment thereof, or any part thereof, without any deduction or allowance for the value of the shares at the time of forfeiture, but shall not be under any obligation to do so.

29. A duly verified declaration in writing that the declarant is a Director of the Company, and that certain shares in the Company have been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares and such declaration and the receipt of the Company for the consideration. if any, given for the shares on the sale or disposition thereof shall constitute a good title to such shares; and the person to whom any such share is sold shall be registered as the holder of such share and shall not be bound to see to the aplication of the purchase money, nor shall his title to such share be affected by any irregularity or invalidity in the proceedings in reference to such forfeiture, sale or disposition.

30. The provision of Articles 22 to 29 hereof shall in the case of non payment of any sum which, by the terms of issue of a share, become payable at a fixed time, whether on account of the nominal value of a share or by way of premium, as if the same has been payable by virtue of a call duly made and notified.

31. The Company shall have a first and paramount lien upon every share not being fully paid up registered in the name of each member (whether solely or jointly with others), and upon the proceeds of sale thereof for moneys called or payable at a fixed time in respect of such share whether the time for the payment thereof shall have actually arrived or not and no equitable interest in any share shall be created except upon the footing and condition that Article 12 hereof to have full effect. Such lien shall extend to all dividends from time to time declared in respect of such share. Unless otherwise agreed, the registration of a transfer of a share shall operate as a waiver of the Company's lien, if any, on such share,

32. For the purpose of enforcing such lien the Board may sell the share subject thereto in such manner as it thinks fit, but no sale shall be made until such time for payment as aforesaid shall have arrived and until notice in writing of the intention to sell shall have been served on such member, his executor or administrator or his committee, curator bonis or other legal representative as the case may be and default shall have been made by him or them in the payment of the money called or payable at a fixed time in respect of such share for seven days after the date of such notice.

33. The net proceeds of the sale shall be received by the Company and applied in or towards the payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue, if any shall (subject to a like lien for sums not presently payable as existed upon the share before the sale) be paid to the person entitled to the share at the date of the sale.

34. Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers hereinbefore given, the Board may appoint some person to execute an instrument of transfer of the share sold and cause the purchaser's name to be entered in the Register in respect of the share sold, and the purchaser shall not be bound to see to the regularity of the proceedings, not to the application of the purchase money, and after his name has been entered in the register in respect of such share the validity of the sale shall not be impeached by any person, and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively.

35. Where any share under the powers in that behalf herein contained is sold by the Board and the certificate in respect thereof has not been delivered up to the Company by the former holder of such share, the Board may issue a new certificate for such share distinguishing it in such manner as it may think fit from the certificate not so delivered up.

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TRANSFER AND TRANSMISSION

36. Save as provided in Section 108 of the Act, no transfer of share shall be registered unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee has been delivered to the Company together with the certificate or, if no such certificate is in existence, the letter of Allotment of the share. The instrument of transfer of any share shall specify the name, address and occupation, if any, both of the transferor and the transferee, and the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the Register in respect thereof. Each signature to such transfer shall be duly attested by the signature of one credible witness who shall add his address.

37. Application for the registration of the transfer of a share may be made eigther by the transferor or the transferee, provided that where such application is made by the transferor, no registration shall, in the case of a partly paid share, be effected unless the Company gives notice of the application to the transferee in the manner prescribed by Section 110 of the Act, and subject to the provisions of these Articles the Company shall, unless objection is made by the transferee within two weeks from the date of receipt of the notice, enter in the Register the name of the transferee in the same manner and subject to the same conditions as if the application for registration of the transfer was made by the transferee.

38. The instrument of transfer of any share shall be in writing in the usual common form prescribed by the Stock Exchange of India or in a form as near thereto as circumstances will admit.

39. Subject to the provisions of Section 111 of the Act, the Board, without assigning any reasons for such refusal, may, within one month from the date on which the instrument of transfer was delivered to the Company, refuse to register any tramnsfer of, or the transmission by operation of law of the right to, a share. Provided that the registration of a transfer shall not be refused on the ground that the transferor is either alone or jointly with any other person or persons indebted to the Company on any account whatsoever.

40. No transfer shall be made to a minor or person of unsound mind.

41. Every instrument of transfer shall be left at the office for registration, accompanied by the certificate of the share to be transferred or, if no such certificate is in existence, by the Letter of Allotment of the share and such other evidence as the Board may require to prove the title of the transferor or his right to transfer the share. Every instrument of transfer which shall be registered shall be retained by the Company, but any instrument of transfer which the Board may refuse to register shall be returned to the person depositing the same.

42. If the Board refuses whether in pursuance of Article 39 or otherwise to register the transfer of, or the transmission by operation of law of the right to, any share, the Company shall, within one month from the date on which the instrument of transfer or the intimation of such transmission, as the case may be, was lodged with the Company, send to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be, notice of the refusal.

43. No fee shall be charged for registration of transfers or for transmission of shares or for registration of any power of attorney, probate, letters of Administration or other similar document.

44. The executor or administrator of a deceased member (not being one of several joint-holders) shall be the only person recognised by the Company as having any title to the share registered in the name of such member, and, in case of the death of any one or more of the joint-holders of any registered share, the survivor shall be the only person recognised by the Company as having any title to or interest in such share, but nothing herein contained shall be taken to release the estate of a deceased joint-holder from any liability on the share held by him jointly with any other person. Before recognising any executor or administrator the Board may require him to obtain a Grant of Probate or Letters of Administration or other legal representation, as the case may be, from a competent Court in India: provided nevertheless that in any case where the Board in its absolute discretion thinks fit it shall be lawful for the Board to dispense

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with the production of Probate or letters of Administration or such other legal representation upon such terms as to indemnify or otherwise as the Board, in its absolute discretion, may consider adequate.

45. Any committee or guardian of a lunatic or minor member or any person becoming entitled to or to transfer a share in consequence of the death or bankruptcy or insolvency of any member upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article or of his title as the Board thinks sufficient, may, with the consent of the Board (which the Board shall not be bound to give), be registered as a member in respect of such share, or may, subject to the regulations as to transfer hereinbefore contained, transfer such share. This Article is hereinafter referred to as "The Transmission Article".

46. (1) If the person so becoming entitled under the Transmission Article shall elect to be registered as holder of the share himself, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects.

(2) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing an instrument of transfer of the share.

(3) All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of instruments of transfer of share shall be applicable to any such notice or transfer as aforesaid as if the death, lunacy, bankruptcy or insolvency of the member had not occurred and the notice of transfer were a transfer signed by the member.

47. A person so becoming entitled under the Transmission Article to a share by reason of the death, lunacy, bankruptcy or insolvency of the holder shall, subject to the provisions of Article 79 and of Section 206 of the Act, be entitled to the same dividends and other advantages as he would be entitiled to if he were the registered holder of the share. Provided that the Board may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within ninety days. The Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share, until the requirements of the notice have been complied with.

INCREASE AND REDUCTION OF CAPITAL

48. The Company in general meeting may, from to time, increase the capital by the creation of new shares of such amount as may be deemed expedient.

49. Subject to any special rights or privileges for the time being attached to any shares in the capital of the Company then issued, the new shares may be issued upon such terms and conditions, and with such rights and privileges attached thereto as the general meeting resolving upon the creation thereof, shall direct, and, if no directions be given, as the Board shall determine, and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company.

49A. Subject to the provisions of section 80 of the Act, the Company shall have the power to issue Preference Shares which are or at the option of the Company are liable to redeem in accordance with the provisions of Section 80 and the resolution authorising such issue shall prescribe the manner, terms and conditions of issue and redemption. [inserted vide special resolution dated 26th August, 2002]

50. Before the issue of any new shares, the Company in general meeting may make provisions as to the allotment and issue of the new shares, and in particular may determine to whom the same shall be offered in the first instance and whether at par or at a premium or, subject to the provisions of section 79 of the Act, at a discount; in default of any such provision, or so far as the same shall not extend, the new shares may be issued in conformity with the provisions of Articles 6 (1)

51. Except so far as otherwise provided by the conditions of issue or by these presents, any capital raised by the creation of new shares shall be considered part of the then existing capital of the

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Company and shall be subject to the provisions herein contained with reference to the payment of dividends, calls and instalments, transfer and transmission, forfeiture, lien surrender and otherwise.

52. If, owing to any inequality in the number of new shares to be issued, and the number of shares held by members entitled to have the offer as such new shares, any difficulty shall arise in the apportionment of such new shares or any of them amongst the members, such difficulty shall, in the absence of any direction in the resolution creating the shares or by the Company in general meeting, be determined by the Board.

53. The Company may, from time to time, by Special Resolution, reduce its capital and any Capital Redemption Reserve Account or Share Premium Account in any manner and with and subject to any incident authorised and consent required by law.

ALTERATION OF CAPITAL

54. The Company in general meeting may from time to time.

(a) consolidate and divide all or of its share capital into shares of larger amount than its existing shares.

(b) sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the memorandum so however, that in the sub-divison the proportion between the amount paid and the amount, if any unpaid on each reduced share shall be the same as it was in the case of the Share from which the reduced share is derived.

(c) cancel any shares which at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.

55. The resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub division, one or more of such shares shall have some preference or special advantage as regards dividend, capital, voting or otherwise over or as compared with the others or other, subject, nevertheless, to the provisions of Sections 85,87,88 and 106 of the Act.

56. Subject to the provisions of sections 100 to 105 inclusive of the Act, the Board may accept from any member the surrender on such terms and conditions as shall be agreed of all or any of his shares.

MODIFICATION OF RIGHTS

57. If at any time the share capital is divided into different classes of shares the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of three-fourths of the issued shares of that class, or with the sanction of a Special Resolution passed at a Separate General meeting of the holders of the shares of the class. To every such Separate General Meeting the provisions of these Articles relating to general meetings shall apply, but so that the necessary quorum shall be two person at least holding or representing by proxy one-fifth of the issued shares of the class but so that if at any adjourned meeting of such holder a quorum as above defined is not present, those members who are present shall be a quorum and that any holder of shares of the class present in person or by proxy may demand a poll and, on a poll, shall have one vote for each share of the class of which he is the holder. This Article is not by implication to curtail the power of modification which the Company would have if this Article were omitted. The Company shall comply with the provisions of Section 192 of the Act as to forwarding a copy of any such agreement or resolution to the Registrar.

BORROWING POWERS

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58. The Board may, from time to time, at its discretion, subject to the Provisions of Sections 292, 293 and 370 of the Act, raise or borrow from the Directors or from elsewhere and secure the payment of any sum or sums of money for the purposes of the Company, provided that the Board shall not, without the sanction of the Company in general meeting, borrow any sum of money which together with moneys already borrowed by the Company (apart from temporary loans obtained from the Company's bankers in the ordinary course of business) will exceed the aggregate for the time being of the paid-up capital of the Company and its free reserves, that is to say, reserves not set aside for any specific purpose.

59. The Board may raise or secure the repayment of such sum or sums in such manner and upon terms and conditions in all respects as it thinks fit, and, in particular, by the issue of bonds, perpetual or redeemable, debentures or debenture-stock, or any mortgage, or other security on the undertaking of the whole or any part of the property of the Company (both present and future), including its uncalled capital for the time being.

60. Any debentures, debenture-stock, bonds or other securities may be issued at a discount, premium or otherwise and with any special privileges, as to redemption, surrender, drawings, allotment of shares, appointment of Directors and otherwise. Debentures, debenture-stock, bonds and other securities may be made assignable free from any equities between the Company, and the person to whom the same may be issued. Debentures / Bonds Debenture Stock bonds or other securities with the right to conversion into or allotment of shares shall be issued only with the consent of the Company in the General Meeting.

61. Save as provided in Section 108 of the Act, no transfer of debentures shall be registered unless a proper instrument of transfer duly stamped and executed by the transferor and transferee has been delivered to the Company together with the certificate or certificates of the debentures.

62. If the Board refuses to register the transfer of any debentures the Company shall, within one month from the date, on which the instrument of transfer was lodged with the Company, send to the transferee and to the transferor notice of the refusal.

63. The Statutory Meeting of the Company shall, as required by Section 165 of the Act, be held at such time not being less than one month or more than six months from the date at which the Company shall be entitled, to commence business and at such place as the Board may determine, and the Board shall comply with the other requirements of that Section as to the report to be submitted and otherwise.

GENERAL MEETING

64. In addition to any other meetings, general meetings of the Company shall be held within such intervals as are specified in Section 166 (1) of the Act and subject to the provisions of Section 166 (2) of the Act, at such times and places as may be determied by the Board. Each such general meeting shall be called and "annual general meeting" and shall be specified as such in the notice convening the meeting. Any other meeting of the Company shall, except in the case where an Extraordinary General Meeting is convened under the provisions of the next following Article, be called a "general meeting".

65. The Board may, whenever it thinks fit, call a general meeting, and it shall, on the requisition of such number of members as hold, the date of the deposit of the requisition, not less than one- tenth of such of the paid up capital of the Company as at that date carried the right of voting in regard to the matter to be considered at the meeting, forthwith proceed to call an Extraordinary General meeting, and in the case of such requisition the following provisions shall apply:-

(1) The requisition shall state the matters for the consideration which the meeting is to be called, shall be signed by the requisitionists and shall be deposited at the office. The requisition may consist of several documents in like form each signed by one or more requisitionists.

(2) Where two or more distinct matters are specified in the requisition, the requisition shall be valid only in respect those matter in regard to which the requisition has been signed by the member or members hereinbefore specified.

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(3) If the Board does not, within twenty-one days from the date of deposit of a valid requisition in regard to any matters, proceed duly to call a meeting for the consideration of these matters on a day not later than forty-five days from the date of deposit, the requisitionists or such of them as are enabled so to do by virtue of Section 169 (6) (b) of the Act themselves call the meeting but any meeting so called shall not be commenced after three months from the date of deposit.

(4) Any meeting called under this Article by the requisitionists shall be called in the same manner as nearly as possible as that in which meetings are to be called by the Board but shall be held at the Office.

(5) Where two or more persons hold any shares jointly a requisition or notice calling a meeting signed by one or some only of them shall for the purposes of this Article have the same force and effect as if it had been signed by all of them.

(6) Any reasonable expenses incurred by the requisitionists by reason of the failure of the Board duly to call a meeting shall be repaid to the requisitionists by the Company and any sum so repaid shall be retained by the Company out of any sums due or to become due from the Company by way of fees or other remuneration for their services to such of the Directors as are in default.

66. The Company shall comply with the provisions of Section 188 of the Act as to giving notice of resolutions and circulating statements on the requisition of members.

67. Save as provided in sub-section (2) of Section 171 of the Act, not less than twenty one days' notice shall be given of every general meeting of the Company. Every notice of a meeting shall specify the place and the day and hour of the meeting and shall contain a statement of the business to be transacted thereat. Where any such business consists of "special business" as hereinafter defined there shall be annexed to the notice a statement complying with Section 173 (2) and (3) of the Act. Notice of every meeting of the Company shall be given to every member of the Company, to the Auditors of the Company and to any persons entitled to a share in consequence of the death or insolvency of a member in any manner hereinafter authorised for the giving of notices to such persons. Provided that where the notice of a general meeting is given by advertising the same in a newspaper circulating in the neighbourhood of the Office under sub-section (3) of Section 53 of the Act, the statement of material facts referred to in Section 173 (2) of the Act need not be annexed to the notice as required by that Section but it shall be mentioned in the advertisement that the statement has been forwarded to the members of the Company.

The accidental omission to give any such notice to or in its non receipt by any member or other person to whom it should be given shall not invalidate the proceedings of the meeting.

PROCEEDINGS AT GENERAL MEETING

68. The ordinary business of an Annual General Meeting shall be to receive and consider the Profit and Loss Account, the Balance Sheet and the Reports of the Directors and of the Auditors, to elect Directors in the place of those retiring by rotation, to appoint Auditors and fix their remuneration and to declare dividends. All other business transacted at an Annual General Meeting and all business transacted at any other general meeting shall be deemed special business.

69. No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business. Save as herein otherwise provided five members present in person shall be a quorum.

70. Any act or resolution which, under the provisions of these Articles or of the Act, is permitted or required to be done or passed by the Company in general meeting shall be sufficiently so done or passed if effected by an Ordinary Resolution as defined in Section 189 (1) of the Act unless either the Act or these Articles specially require such 'act' to be done or resolution passed by a Special Resolutions as defined in Section 189 (2) of the Act.

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71. The Chairman of the Board shall be entitled to take the chair at every general meeting. If there be no such Chairman, or if at any meeting he shall not be present within fifteen minutes after the time appointed for holding such meeting, or is unwilling to act, the members present shall choose anothe Director as a Chairman, and if no Director be present, or if all the Directors present decline to take the chair, then the members present shall, on a show of hands or on a poll if properly demanded; elect one of their number, being a member entitled to vote to be Chairman.

72. If within half an-hour from the time appointed for the meeting a quorum be not present, the meeting, if convened upon such requisition as aforesaid, shall be dissolved; but in any other case it shall stand adjourned to the same day in the next week, at the same time and place, or to such other day and to such time and place as the Board may notice appoint and if at such adjourned meeting a quorum be not present those members who are present and not being less than two shall be a quorum and may transact the business for which the meeting was called.

73. Every question submitted to meeting shall be decided, in the first instance by a show of hands, and in the case of an equality of votes both on a show of hands, and on a poll, the Chairman of the meeting shall have a casting vote in addition to the vote to which he may be entitled as a member.

74. At any general meeting, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the Chairman of his own motion, or by at least five members having the right to vote on the resolution in question and present in person or by proxy, or by any member or members present in person-or by proxy and having not less than one-tenth of the total voting power in respect of such resolution, or by any member or members present in person or by proxy and holding shares in the Company conferring a right to vote on such resolutin, being shares on which an aggregate sum has been paid up which is not less than one-tenth of the total sum paid up on all the shares conferring that right, a declaration by the Chairman that the resolution has or has not been carried, or has or has not been carried either unanimously, or by a particular majority, and an entry to that effect in the book contaning the minutes of the proceedings of the Company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes cast in favour of or against the resolution.

75. (1) If a poll be demanded as aforesaid it shall be taken forthwith on a question of adjournment or election of a Chairman and in any other case in such manner and at such time not being later than forty-eight hours from the time when the demand was made, and at such place as the Chairman of the meeting directs, and, subject as aforesaid, either at once or after an interval or adjournment or otherwise, and the result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was demanded.

(2) The demand of a poll may be withdrawn at any time.

(3) Where a poll is to be taken the Chairman of the meeting shall appoint two scrutineers, one at least of whom shall be a member (not being an officer or employee of the Company) present at the meeting provided such a member is available and willing to be appointed, to scrutinise the votes given on the poll and to report to him thereon.

(4) On a poll a member entitled to more than one vote, or his proxy or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.

(5) The demand of a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded.

76. (1) The Chairman of a general meeting may adjourn the same from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

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(2) When a meeting is adjourned it shall not be necessary to give any notice of adjournment or of the business to be transacted at an adjourned meeting.

VOTES OF MEMBERS

77. (1) Save as hereinafter provided, on a show of hands every member present in person and being a holder of Equity Shares shall have one vote and every person present either as a General Proxy (as defined in Article 82) on behalf of a holder of Equity Shares, if he is not entitled to vote in his own right or, as a duly authorised representative of a body corporate, being a holder of Equity Shares, shall have one vote. (2) Save as hereinafter provided, on a poll the voting rights of a holder of Equity Shares shall be as specified in Section 87 of the Act.

(3) The holders of Prefernce Shares, if any shall not be entitled to vote at general meetings of the Company except:-

(i) on any resolution placed before the Company at a general meeting at the date on which the dividend due or any part thereof remains unpaid in respect of any aggregate period of not less than two years preceding the date of commencement of such meeting whether or not such dividend has been declared by the Company, or (ii) on any resolution placed before the Company at a general meeting which directly affects the rights attached to the Preference Shares and for this purpose any resolution for the winding up of the Company or for the repayment or reduction of its share capital shall be deemed to affect the right attached to such shares.

Where the holder of any Preference Shares has a right to vote on any resolution in accordance with the provisions of this Article his voting right on a poll as such holder shall, subjects to any statutory provision for the time being appicable, be in the same proportion as the capital paid up on the Preference shares bears to the total paid up Equity Share Capital of the Company for the time being as defined in Section 87 (2) of the Act. Provided that no company or body corporate shall vote by proxy so long as resolution of its board of Directors under the provisions of Section 187 of the Act is in force and the representative named in such resolution in present at the general meeting at which the vote by proxy is tandered.

78. (1) Where a company or a body corporate (hereinafter called "member company" is a member of the Company, a person duly appointed by resolution in accordance with the provisions of Section 187 of the Act to represent such member company at a meeting of the Company, shall not by reason of such appointment, be deemed to be a proxy, and the lodging with the Company at the Office or production at the meeting of a copy of such resolution duly signed by one Director of such member company and by its Managing Agents (if any) and certified by him or them as being a true copy of the resolution shall, on production at the meeting, be accepted by the Company as sufficient evidence of the validity of his appointment. Such a person shall be entitled to exercise the same rights and powers, including the right to vote by proxy on behalf of the member company which he represents, as that member company could exercise if it were an individual member.

(2) Where the President of India or the Governor of a State is a memeber of the Company, the President or, as the case may be the Governor may appoint such person as he thinks fit to act as his representative at any meeting of the Company or at any meeting of any class of members of the company and such a person shall be deemed to be a member of the Company and shall be entitled to exercise the same rights and powers, including the right to vote by proxy, as the President or, as the case may be, the Governor could exercise as member of the Company.

79. Any person entitled under the Transmission Article to transfer any shares may vote at any general meeting in respect thereof in the same manner as if he were the registered holder of such shares, provided that forty-eight hours at least before the time of holding the meeting or adjourned meeting, as the case may be, at which the propose to vote he shall satisfy the Board of his right to transfer such shares, unless the Board shall have previously admitted his right to vote at such meeting in respect thereof. If any member be a lunatic, idiot or non compos mentis,

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he may vote whether on a show of hands or at a poll by his committee, curator bonis or other legal curator and such last mentioned persons may give their votes by proxy.

80. Where there are joint registered holders of any share any one of such persons may vote at any meeting either personally or by proxy in respect of such share as if he were solely entitled thereof; and if more than one of such joint-holders be present at any meeting either personally or by proxy, that one of the said persons so present whose name stands first on the Register in respect of such share alone shall be entitled to vote in respect thereof. Several executors or administrators of a deceased member in whose name any share is registered shall for the purposes of this Article be deemed jointholders thereof.

81. On a poll votes may be given either personally or by proxy, or, in the case of a body corporate, by a representative duly authorised as aforesaid.

82. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his Attorney duly authorised in writing or if such appointor is a body corporate be under its common seal or the hand of its officer or Attorney duly authorised. A proxy who is appointed for a specified meeting only shall be called a Special Proxy. Any other proxy shall be called a General Proxy. A person may be appointed a proxy though he is not a member of the Company and every notice convening a meeting of the Company shall state this and that a member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him.

83. The instrument appointing a proxy and the Power-of Attorney or other authority (if any) under which it is signed, or a notarially certified copy of that power or authority, shall be deposited at the office not less than forty-eight hours before the time for holding the meeting at which the person named in the instrument purports to vote in respect thereof and in default the instrument of proxy shall not be treated as valid.

84. A vote given in accordance with the terms of an instrument appointing a proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the instrument, or transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, insanity, revocation or transfer of the share shall have been received by the Company at the office before the vote is given: Provided nevertheless that the Chairman of any meeting shall be entitled to require such evidence as he may in his discretion think fit of the due execution of an instrument of proxy and that the same has not been revoked.

85. Every instrument appointing a Special Proxy shall be retained by the Company and shall, as nearly as circumstances will admit, be in the form or to the effect following:

86. No member shall be entitled to exercise any voting rights either personally or by proxy at any meeting of the Company in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to which the company has, and has exercised, any right of lien.

87. (1) Any objection as to admission or rejection of a vote, either, or a show of hands or on a poll made in due time, shall be referred to the Chairman who shall forthwith determine the same, and such determination made in good faith shall be final and conclusive.

(2) No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered and every vote not disallowed at such meeting shall be valid for all purpose.

DIRECTORS

88. Until otherwise determined by Special resolution, the number of the Directors of the Company shall not be less than three nor more than twelve or such maximum number as may be prescribed by the Central Govt. from time to time.

89. Not less than two-thirds of the total number of Directors shall be person whose period of office is liable to determination by retirement of Directors by rotation.

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90. Deleted

91. The persons hereinafter named shall become and be the First Director of the Company, that is to say:-

Mr. Alan Nugent Goring Dalton

Mr. Mavelikalathu Narayana lyer Ramakrishnan

Mr. Reginald Lewis Gale

Mr. Monkompu Sambasivam Ramdas

92. The Board shall have, power, at any time and from time to time, to appoint any person as a Director as an addition to the Board but so that the total number of Directors shall not at any time exceed the maximum number fixed by these Articles. Any Director so appointed shall hold office only until the next Annual General meeting of the Company and shall then be eligible for re-election.

93. Unless otherwise determined by the Company in general meeting, a Director shall not be required to hold any shares in the Company as his qualification.

94. Without prejudice to the restrictions imposed by Section 266 of the Act, a Director who is required to hold qualification shares may act as a Director before acquiring such shares but shall, if he is not already qualified, obtain his qualification, and every Director other than a technical Director or a Director appointed by the Central or a State Government shall file with the Registrar a declaration specifying the qualification shares held by him, within two months from his appointment as a Director.

94. (A) "Notwithstanding anything to the contrary contained in these Articles, so long as moneys remain owing by the Company to the Industrial Credit & Investment Corpn. of India Ltd. (ICICI) and / or other approved Financial Institutions (hereinafter referred to in this Article as the Corporation) the Corporation shall have a right to appoint from time to time any person or persons as a Director or Directors whole time or non whole time(which Director or Directors is/are hereafter referred to as Nominee Directors) on the Board of the Company, and to remove from such office any person or persons so appointed and to appoint any person or persons in his or their place(s) "The Board of Directors of the Company shall have no power to remove from office the Nominee Director(s). At the option of the Corporation such Nominee Director(s) shall not be required to hold any share qualification in the Company. Also at the option of the Corporation such Nominee Director(s) shall not be liable to retirement by rotation of Directors. Subject as aforesaid, the Nominee Director(s) shall be entitled to the same right and privilege and be subject to the same obligations as any other Director of the Company.

The Nominee Director(s) so appointed shall hold the said office only so long as any moneys remain owing by the Company to the Corporation or so long as the Corporation holds Debentures in the Company as a result of direct subscription or private placement and the Nominee Director (s) so appointed in exercise of the said power shall ipso facto vacate such office immediately the money owing by the Company to the Corporation is paid off or on the Corporation ceasing to hold Debentures in the Company.

The Nominee Director(s) so appointed under this Article shall be entitled to receive all notice of and attend all General Meetings/ Board Meetings, and of the Meetings of the Committee of which the Nominee Director(s) is/are member(s) as also the mintues of such meetings. The Corporation shall also be entitled to receive all such notice and minutes.

The Company shall pay to the Nominee Director(s) sitting fees and expenses which the other Directors of the Company are entitled, but if any other fees, commission, moneys or remuneration in any form is payable to the Directors of the Company, the fees, commission moneys and remuneration in relation to such Nominee Director(s) shall accrue to the

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Corporation and the same shall accordingly be paid by the Company Directly to the Corporation Any expenses that may be incurred by the Corporation or such Nominee Director(s) in'connection with their appointment or Directorship shall also be paid or reimbursed by the Company to the Corporation or as the case may be to such Nominee Director(s).

Provided that if any such Nominee Director(s) is an officer of the Corporation the sitting fees in relation to such Nominee Director(s) shall also accrue to the Corporation and the same shall accordingly be paid by the Company directly to the Corporation. Provided further that if such Nominee Director(s) is an Officer of the Reserve Bank of India the sitting fees in relation to such; Nominee Director(s) shall also accrue to IDBI and the same shall accordingly be paid by the Company directly to IDBI.

Provided also that in the event of the Nominee Director(s) being appointed as whole time Director(s) Nominee Director(s) shall exercise such powers and duties as may be approved by the Corporation and have such rights as are usually exercised or available to a wholetime Director in the management of the affair of the Company. Such Nominee Director(s) shall be entitled to receive such remuneration, fees, commission and moneys as may be approved by the Corporation.

Provided that the aforesaid right to apoint a whole-time Director shall be exercised by the Corporation only in the event of the Company committing any default in the observance of the terms and conditions of the Agreement entered into between the company and the Corporation".

95. Unless otherwise determined by the Company in General Meeting, each Directors other than Managing or whole time Director shall be entitled to receive out of the funds of the Company for his services in attending meetings of the Board or at a Committee of the Board, a fee of such sum per meeting of the Board or a Committee of the Board attended by him as determined by the, Board from time to time subject to the ceiling as may be prescribed by the Act or the Central Government from time to time. All other remuneration, if any, payable by the Company to each Director, whether in respect of his services as a Managing Director or a Director in the whole or part time employment of the Company shall be determined in accordance with and subject to the provisions of these Articles and of the Act. The Directors shall be entitled to be paid their reasonable traveling and hotel and other expenses incurred in consequence of their attending at Board and Committee meeting or otherwise incurred in the execution of their duties as Directors.

96. If any Director being willing, shall be called upon to perform extra services or to make any special exertions in going or residing away from his usual place of residence for any of the purpose of the Company or in giving special attention to the business of the Company or as a member of a Committee of the Board then, subject to Sections 198, 309 and 310 of the Act, the Board may remunerate the Director so doing either by a fixed sum or by a percentage of profits or otherwise and such remueration may be either is addition to or in substitution for any other remuneration to which he may be entitled.

97. The continuing Directors may act notwithstanding any vacancy in their body, but so that if the number falls below the minimum above fixed the Board shall not, except for the purpose of filling vacancies, act so long as the number is below the minimum.

98. (1) The office of Director shall ipso facto become vacant if:-

(a) he fails to obtain within the time specified in sub-section (1) of Section 270 of the Act, or at any time thereafter ceases to hold, the share qualification, if any, necessary for his appointment; or (b) he is found to be of unsound mind by a Court of competent jurisdiction; or (c) he applies to be adjudicated an insolvent ; or (d) he is adjudged an insolvent; or (e) he is convicted by a Court of any offence involving moral turpitude and is sentenced in respect thereof to imprisonment for not less than six months; or

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(f) he fails to pay any call in respect of shares of the Company held by him, whether alone or jointly with others, within six months from the last date fixed for the payment of the call unless the Central Government has, by notification in the Offical Gazette, removed the disqualification incurred by such failure; or (g) he absents himself from three consecutive meetings of the Board or from all meetings of the Board for a continuous period of three months, whichever is the longer, without obtaining leave of absence from the Board; or (h) he (whether by himself or by any person for his benefit or on his account), or any firm in which he is a partner, or any private company of which he is a Director, accepts a loan or any guarantee or security for a loan, from the Company in contravention of Section 295 of the Act; or (i) he acts in contravention of Section 299 of the Act; or (j) he becomes disqualified by an order of Court under Section 203 of the Act; or (k) he be removed from office in pursuance of Section 284 of the Act; or (l) having been appointed a Director by virtue of his holding any office or other employment in the Company, he ceases to hold such once or other employment in the company or

(m) by notice in writing to the Company he resigns his office; or (n) and office or place of profit under the Company or under any subsidiary of the Company is held in contravention of Section 314 of the Act and by operation of that Section he is deemed to vacate office.

(2) Notwithstanding any matter or thing in sub-clauses (d), (e) and (j) of clause (1) the disqualification referred to in those sub-clauses shall not take effect:

(a) for thirty days from the date of adjudication, sentence or order ; or (b) where an appeal or petition is preferred within the thirty days aforesaid against the adjudication, sentence or conviction resulting in the sentence, or order until the expiry of seven days from the date on which such appeal or petition is disposed off; or (c) where within the seven days aforesaid, any further appeal or petition is preferred in respect of the adjudication, sentence, conviction or order, and the appeal or petition, if allowed, would result in the removal of the disqualification, until such further appeal or petition is disposed off.

99. Save as permitted by Section 314 of the Act, no Director of the Company, no partner or relative of a Director, no firm in which a Director or his relative is a partner, no private company of which a Director is a Director or member and no Director, managing agent, secretaries and treasurers, or manager of such a private company shall, without the previous consent of the Company accorded by Special Resolution, hold any office or place of profit carrying a total monthly remuneration of five hundred rupees or more, except that of a managing Director, managing agent, secretaries and treasurers, manager, legal or technical advisor, banker or trustee for the holders of debentures of the Company, (i) under the Company or (ii) under any subsidiary of the company unless the remuneration received from such subsidiary in respect of such office or place of profit is paid over to the Company or its holding company.

100. A Director of this Company may be or become a Director or any other company promoted by this Company or in which it may be the interested as a member, shareholder or otherwise and no such Director shall be accountable for any benefits received as a Director or member of such company.

101. Subject to the provisions of Section 297 of the Act neither shall a Director be disqualified from contracting with the Company either as vendor, purchaser or otherwise for goods, materials or service or for underwriting the subscription of any shares in or debentures of the Company nor shall any such contract or arrangement entered into by or on behalf of the Company with a relative of such Director, or a firm in which such Director or relative is a partner or with any other partner in such firm or with a private company of which such Director is a member or Director, be avoided nor shall any Director so contracting or being such member or so interested by liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding office or of the fiduciary relation thereby established.

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102. Every Director who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement, entered into or to be entered into, by or on behalf of the Company not being a contract or arrangement entered into or to be entered into between the Company and any other company where any of the Directors of the Company or two or more of them together holds or hold not more than two per cent of the paid up share capital in the other company shall disclose the nature of his concern or interest at a meeting of the Board as required by Section 299 of the Act. A General notice, renewable in the last month of each, financial year of the Company, that a Director is a Director or a member of any firm and is to be regarded as concerned or interested in any subsequent contract or arrangement with that body corporate or firm shall be sufficient disclosure of concern or interest in relation to any contract or arrangement so made and, after such general notice, it shall not be necessary to give special notice relating to any particular contract or arrangement with such body corporate or firm, provided such general notice is given at a meeting of the Board or the Director concerned takes reasonable steps to secure that it is brought up and read at the first meeting of the Board after it is given. Every Director shall be bound to give and from time to time renew a general notice as aforesaid in respect of all bodies corporate of which he is a Director or member and of all firms of which he is a member.

103. No Director shall, as a Director, take any part in the discussion by of, or vote on any contract or arrangement in which he is in any way, whether directly or indirectly concerned or interested, nor shall his presence count for the purpose of forming a quorum at the time of such discussion or vote. This prohibition shall not apply to (a) any contract of indemnity against any loss which the Directors or any of them may suffer by reason of becoming or being sureties or a surety for the Company; or (b) any contract or arrangement entered into or to be entered into by the Company with a public company, or with a private company which is a subsidiary of a public company, in which the interest of the Director consists solely in his being a Director of such company and the holder of shares not exceeding in number or value the amount requisite to quality him for appointment as a Director thereof, he having been nominated as such Director by the Company or in his being a member of the Company holding not more than two per cent of the paid up share capital of the Company.

ROTATION OF DIRECTORS

104. At each Annual General Meeting of the Company one-third of such of the Directors for the time being as are liable to retire by rotation, or if their number is not three or a multiple of three, then the number nearest to one-third shall retire from office. An additional Director appointed by the Board under Article 92 hereof shall not be liable to fire by rotation within the meaning of this Article.

105. The Directors to retire by rotation at every Annual General Meeting shall be those who have been longest in office since their last appointment, but as between persons who become Directors on the same day those to retire shall, in default of and subject to any agreement among themselves be determined by lot.

106. Save as permitted by Section 263 of the Act, every resolution of a general meeting for the appointment of a Director shall relate to one named individual only.

107. The Company at the Annual General Meeting at which a Director retires by rotation in manner aforesaid may fill up the vacated office by appointing the retiring Director or some other person thereto. If the place of the retiring Director is not so filled up and the meeting has not expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday, at the same time and place. If, at the adjourned meeting also, the place of the retiring Director is not filled up and that meeting also has not expressly resolved not to fill the vacancy, the retiring Director shall be deemed to have been reappointed at the adjourned meeting unless:-

(a) at the meeting or at the previous meeting a resolution for the reappointment of such Director has been put to the vote and lost or (b) the retiring Director has by notice in writing addressed to the Company or the Board expressed his unwillingness to be reappointed; or

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(c) he is not qualified or is disqualified for appointment; or (d) a resolution, whether special or ordinary, is required for hisappointment or re-appointment in virtue of any provisions of the Act; or (e) the proviso to sub-section (2) of Section 263 or sub-section (3) of Section 280 of the Act is applicable to the case.

108. The Company in general meeting may from time to time increase or reduce the number of Directors within the limits fixed by Article 88.

109. The company may, subject to the provisions of Section 284 of the Act, by ordinary resolution of which Special Notice has been given, remove any Director before the expiration of his period of office and may by ordinary resolution of which Special Notice has been given, appoint another person in his stead, if the Director so removed was appointed by the Company in general meeting or by the Board under Article110. The person so appointed shall hold office if he had not been so removed. If the vacancy created by the removal of a Director under the provisions of this Article is not so filled by the meeting at which he is removed the Board may at any time thereafter fill such vacancy under the provisions of Article 110.

110. If any Director appointed by the Company in general meeting vacates office as a Director before his term of office will expire in the normal course the resulting casual vacancy may be filled up by the Board at a meeting of the Board, but any person so appointed shall retain his office so long only as the vacating Director would have retained the same if no vacancy had occurred. Provided that the Board may not fill such a vacancy by appointing thereto any person who has been removed from the office of Director under Article 109.

111. No person not being a retiring Director shall be eligible for appointment to the office of Director at any general meeting unless he or some member intending to propose him has, not less than fourteen days before the meeting, left at the Office a notice in writing under his hand signifying his candidature for the office of Director or the intention of such member to propose him as a candidate for that office as the case may be. The Company shall inform its members of the candidature of a person for the office of Director or the intention of a member to propose such person as a candidate for that office, by serving individual notices on the members not less than seven days before the general meeting; Provided that it shall not be necessary for the Company to serve individual notices upon the members as aforesaid if the Company advertises such candidature or intention not less than seven days before the general meeting in at least two newspapers circulating in the place where the Office is located, of which one is published in the English language and the other in the regional language of that place.

ALTERNATE DIRECTORS

112. The Board may appoint any person to act as alternate Director for Director during the latter's absence for a period of not less than three months from the State in which meetings of the Board are ordinarily held and such appointment shall have effect and such appointee, whilst he holds office as an alternate Director, shall be entitled to notice of meetings of the Board, and to attend and vote there at accordingly; but he shall not require any qualification and shall ipso facto vacate office if and when the absent Director returns to the State in which meetings of the Board are ordinarily held or the absent Director vacates office as a Director.

PROCEEDINGS OF DIRECTORS

113. Subject to the provisions of the Act the Directors may meet together at such places and for the despatch of such business and otherwise regulate their meetings as, they think fit. Reasoable notice for every meeting in the Board shall be given to every Director for the time being' in India, and at his usual address in India to every other Director.

114. A Director may, at any time, convene a meeting of the Board.

115. The Board shall appoint a Chairman of its meetings and determine the period for which he is to hold' office. If no such Chairman is appointed or if at any meeting of the Board, the chairman be not present within five minutes of the time appointed for holding the same, the Directors present shall choose some one of their members to be the Chairman of such meeting.

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116. The quorum for a meeting of the Board shall be determined from time to time in accordance with the provisions of Section 287 of the Act. If a quorum shall not be present within fifteen minutes from the time appointed for holding a meeting of the Board, it shall be adjourned until such date and time as the Chairman of the Board shall appoint.

117. A meeting of the Board at which a quorum be present shall be competent to exercise all or any of the authorities, powers and discretions by or under these Articles or the Act for the time being vested in or exercisable by the Board.

118. Subject to the provisions or Sections 316, 372 (5) and 386 of the Act, questions arising at any meeting shall be decided by a majority of votes, and in case of an equality of votes, the Chairman shall have a second or casting vote.

119. The Board may, subject to the provisions of the Act, from time to time and at any time, delegate any of its powers to a Committee consisting of such Director or Directors as it thinks fit, and may, from time to time, revoke such delegation. Any Committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed upon it by the Board.

120. The meetings and proceedings of any such Committee consisting of two or more members shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Board so far as the same are applicable thereto, and are not superseded by any regulations made by the Board under the last proceeding Article.

121. Acts done by a person as Director shall be valid, notwithstanding that it may afterwards be discovered that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provisions contained in the Act of in these Articles, provided that nothing in this Article shall be deemed to give validity to acts done by a Director after his appointment has been shown to the Company to be invalid or to have terminated.

122. Save in those cases where a resolution is required by Sections 262, 292, 297, 316, 372 (5) and 386 of the Act, to be passed at a meeting of the Board, a resolution shall be as valid and effectual as if it had been passed at a meeting of the Board or Committee of the Board, as the case may be, duly called and constituted, if a draft thereof in writing is circulated, together with the necessary papers, if any to all the Directors, or to all the members of the Committee of the Board, as the case may be, then in India (not being less in number than the quorum fixed for a meeting of the Board or Committee, as the case may be) and to all other Directors or members of the Committee at their usual address in India, and has been approved by such of them as are then in India or by a majority of such of them as are entitled to vote on the resolution.

MINUTES

123. (1) The Board shall, in accordance with the provisions of Section 193 of the Act, cause minutes to be kept by making within fourteen days of the conclusion of every general meeting and of every meeting of the Board or every committee of Board, entries thereof in books provided for the purpose with their pages consecutively numbered, each page of every such book being initialled or signed and the last page of the record of proceedings of each meeting in such books being dated and signed, in the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the Chairman of the said meeting or the Chairman of the succeeding meeting, and in the case of minutes of proceedings, of a general meeting by the Chairman of the same meeting within the aforesaid period of fourteen days or, in the event of the death or inability of that Chairman within that period, by a Director duly authorised by the Board for the purpose, provided that in no case shall the minutes of proceedings of a meeting be attached to any such books as aforesaid by pasting or otherwise.

The Minutes shall contain particulars

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(a) of the names of the Directors present at each meeting of the Board and of any Committee of the Board and in the case of each resolution passed at the meeting, the names of the Directors, if any, dissenting from or not concurring in, the resolution; (b) of all orders made by the Board and Committees of the Board; (c) of all appointments of Directors and other officers of the Company; and (d) of all proceedings of general meeting of the Company and of meetings of the Board and Committees of the Board. The Minutes of each meeting shall contain a fair and correct summary of the proceedings thereat. PROVIDED that no matter need by included in any such Minutes which the Chairman of the meeting, in his absolute discretion, is of opinion:

(a) is, or could reasonably be regarded as, defamatory of any person (b) is irrelevant or immaterial to the proceedings; or (c) is detrimental to the interests of the Company

(2) Any such Minutes of any meeting of the Board or of any Committee of the Board or of the Company in general meeting, if kept in accordance with the provisions of Section193 of the Act, shall be evidence of the matters stated in such Minutes. The Minute Books of general meetings of the Company shall be kept at the office and shall be open to inspection by members during the hours of 10.00 a.m. and 12.00 noon on such business days as the Act requires them to be open for inspection.

POWERS OF THE BOARD

124. Subject to the provisions of the Act, the control of the Company shall be vested in the Board who shall pay all expenses incurred the Board in promoting and registering the Company and shall be entitled to exercise all such powers, and to do all such acts and things as the Company is authorised to exercise and do: Provided that the Board shall not exercise any power or do any act or thing which is directed or required, whether by the Act or any other statute or by the memorandum of the Company or by these Articles or otherwise, to be exercised or done by the Company in general meeting. Provided further that in exercising any such power or doing any such act or thing, the Board shall be subject to the provisions in that behalf contained in the Act or any other stature or in the Memorandum of the Company or in these Articles, or in any regulations not inconsistent therewith and duly made thereunder, including regulation made by the Company in general meeting, but no regulation made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.

125. Subject to the provisions of the Act, the following regulations shall have effect:

(1) The Board may, from time to time, provide for the management of the affairs of the Company outside India (or in any specified locality in India) in such manner as it shall think fit and the provisions contained in the four next following paragraphs shall be without prejudice to the general powers conferred by this paragraph.

(2) The Board may, from time to time and at any time establish delegation any Local Directorate or agencies for Managing any of the affairs of the Company outside India, or in any specified locality in India, and may appoint any persons to be members of such Local Directorate or any managers or agent and may fix their remuneration and, save as provided in Section 292 of the Act, the Board may from time to time and at any time, delegated to any person so appointed any of the powers, authorities and discretions for the time being vested in the Board and may authorise the members for the time being of any such Local Directorate or any of them to fill up any vacancies therein and to act notwithstanding vacancies; and any such appointment or delegation may be made on such terms and subject to such conditions as the Board may think fit and the Board may, at any time, remove any person so appointed and may annual or vary any such delegation.

(3) The Board may, at any time and from time to time, by Power of Attorney under the Seal, appoint any persons to be the Attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those which may be delegated by the Board under the Act) and for such period and subject to such conditions as the Board may, from time to time think, fit; any such appointment may, if the Board think fit, be made in

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favour of the members or any of the members of any Local Directorate established as aforesaid, or in favour of any company or of the Members, Directors, nominees, or officers of any company or firm or in favour of any fluctuating body of persons whether nominated direcetly or indirectly by the Board; and any such Power-of-Attorney may contain such provisions for the protection or convenience of persons dealing with such attorneys as the Board thinks fit.

(4) Any such delegates or attorneys as aforesaid may be authorised by the Board to sub- delegate all or any of the powers, authorities and discretions for the time being vested in them.

(5) The Company may exercise the powers conferred by Section 50 of the Act with regard to having an Official Seal for use 41 abroad, and such powers shall be vested in the Board, and the Company may cause to be kept in any State or country outside India, as may be permitted by the Act, a Foreign Register of Members or Debenture-holders resident in any such State or country and the Board may, from time to time, Foreign Register make such regulations as it may think fit respecting the keeping of any such Foreign register, such regulations not being inconsistent with the provisions of Section 157 and 158 of the Act; and the Baord may, from time to time, make such provisions as it may think fit relating thereto and may comply with the requirements of any local law and shall, in any case, comply with the provision of Sections 157 and 158 of the Act.

MANAGING DIRECTORS

126. (1) Subject to the provisions of Section 269, 316 and 317 of the Act, the Board may, from time to time, appoint one or more Directors to be Managing Director or Managing Directors of the Company for a term not exceeding five years at a time and may, from time to time (subject to the provisions of any contract between him and the Company), remove or dismiss him from office and appoint another in his place.

(2) Subject to the provisions of Section 255 of the Act, a Managing Director shall not, while he continue to hold that office, be subject to retirement by rotation, and he shall not be reckoned as a Director for the purpose of determining the rotation of retirement of Directors of in fixing the number of Directors to retire, but (subject to the provisions of any contract between him and the Company) he shall be subject to the same provisions as to resignation and removal as the other Directors, and he shall, ipso facto and immediately, cease to be a Managing Director if he ceases to hold the office of Director from any cause.

(3) If at any time the total number of Managing Directors is more than one-third of the total number of Directors, the Managing Directors who shall not retire shall be determined by and in accordance with their respective seniorities. For the purpose of this Article the seniorities of the Managing Directors shall be determined by the dates of their respective appointments as Managing Directors by the Board.

(4) Subject to the provisions of Section 309, 310 and 311 of the Act, a Managing Director shall receive such remuneration as may from time to time be sanctioned by the Company in general meeting.

(5) Subject to the provisions of the Act in particular to the prohibitions and restrictions contained in Section 292 thereof, the Board, may from time to time, entrust to and confer upon a Managing Director or Managing Directors for the time being such of the powers exercisable under these presents by the Board as it may think fit, and may confer such powers for such time, and to be exercised for such objects and purposes and upon such terms and conditions, and with such restrictions as it thinks fit; and the Board may confer such powers, either collaterally with, or to the exclusion of, and in substitution for all or any of the powers of the Board in that behalf; and may, from time to time, revoke, withdraw, alter or vary all or any of such powers.

THE SEAL

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127. The Board shall provide for the safe custody of the Seal and the Seal shall never be used except by the authority previously given of the Board or a Committee of the Board authorised by the Board in that behalf and, and save as provided in Article 14 (1) hereof, any two Directors or one Director and such other person as the Board may appoint shall sign every instrument to which the Seal is affixed. Provided nevertheless, that any instrument bearing the Seal of the Company and issued for valuable consideration shall be binding on the Company notwithstanding any irregularity touching the authority of the Board to issue the same.

ANNUAL RETURNS

128. The company shall comply with the Provisions of Sections 159 and 161 of the Act as to the making of Annual Returns.

RESERVES

129. The Board may, from time to time before recommending any dividend set apart any and such portion of the porfits of the Company as it thinks fit as Reserve to meet contingencies or for the liquidation of any debenutres, debts or other liabilities of the Company for equalisation of dividends, for repairing, improving or maintaining any of the property of the Company and for such other purposes of the Company as the Board in its absolute discretion thinks conducive to the interests of the Company: and may, subject to the provisions of Secction 372 of the Act, invest the several sums so set aside upon such investments as it may think fit, and from time to time deal with and vary such investments and dispose of all or any part thereof for the benefit of the Company and may divide the Reserves into such special funds as it thinks it, with full power to employ the Reserves or any parts thereof in the business of the Company, and that without being bound to keep the same separate from the other assets.

130. All moneys carried to the Reserves shall nevertheless remain and the profits of the Company applicable, subject to due provisions being made for actual loss or depreciation, for the payment of dividends and such moneys and all the other moneys of the Company not immediately required for the purposes of the Company may, subject to the provisions of Sections 370 and 372 of the Act, be invested by the Board in or upon such investment or securities as it may select or may be used as working capital or may be kept at any Bank on deposit or otherwise as the Board may, from time to time, think proper.

CAPITALISATION OF RESERVE

131. Any general meeting may resolve that any moneys investments, or other assets forming part of the undivided profits of the Company standing to the credit of the Reserves, or any Capital Redemption Reserve Account, or in the hands of the Company and available for dividend or representing premiums received on the issue of shares and standing to the credit of the Share Premium Account be capitalised and distributed amoungst such of the share-holders as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalised fund be applied on behalf of such shareholders in paying up in full any unissued shares, debentures or debenture-stock of the Company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares, and that such distribution or payment shall be accepted by such shareholders in full satisfaction of their interest in the said capitalised steam. Provided that any sum standing to the credit of a Share Premium Account or a Capital Redemption Reserve Account may, for the purposes of this Article, only be applied in the paying up of unissued shares to be issued to members of the Company as fully paid bonus shares.

132. A general meeting may resolve that any surplus moneys arising from the realisation of any capital assets of the Company or any investments representing the same or any other undistributed profits of the Company not subject to charge for income tax, be distributed among the members on the footing that they receive the same as capital.

133. For the purpose of giving effect to any resolution under the two last preceding Articles the Board may settle any diffculty which may arise in regard to the distribution as it thinks expedient and in particular may issue fractional certificates, and may fix the value for distribution of any specific

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assets, and may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all parties and may vest such cash or specific assets in trustees upon such trusts for the persons entitled to the dividend or capitalised fund as may seem expedient to the Board. Where requisite a proper contract shall be filed in accordance with Section 75 of the Act, and the Board may appoint any person to sign such contract on behalf of the persons entitled to the dividend or capitalised fund, and such appointment shall be effective.

DIVIDENDS

134. Subject to the rights of members entitled to shares (if any) with preferential or special rights attached thereto, the profits of the Company which it shall from time to time be determined to divide in respect of any year or other period shall be applied in the payment of a dividend on the Equity Shares of the Company but so that a partly paid up share shall only entitle the holder with respect thereof to such a proportion of the distribution upon a fully paid up shares as the amount paid thereon bears to the nominal amount of such share and so that where capital is paid in advance of calls upon the footing that the same shall carry interest, such capital shall not rank for dividends or confer a right to participate in profits.

135. The Company in general meeting may declare a dividend to be paid to the memebers according to their rights and interest in the profits and may, subject to the provisions of section 207 of the Act, fix the time for payment.

136. No larger dividend shall be declared than is recommended by the Board, but the Company in general meeting may declare a smaller dividend.

137. Subject to the provisions of Section 205 of the Act, no dividend shall be payable except out of the profit of the Company or out of moneys provided by the Central or a State Government for the payment of the dividend in pursuance of any guarantee given by such Government and no dividend shall carry interest against the Company.

138. The declaration of the Board as to the amount of the net profits fit of the Company shall be conclusive.

139. The Board may from time to time, pay to the members such interim dividends as appear to the Board to be justified by the profits of the Company.

140. The Board may deduct from any dividend payable to any member all sums of money, if any presently payable by him to the company on account of calls or otherwise in relation to the shares of the Company.

141. Any general meeting declaring a dividend may make a call on the, members of such amount as the meeting fixes, but so that the call on each memebr shall not exceed the dividend payable to him, and so that the call be made payable at the same time as the dividend and the dividend may be a set off against the call.

142. No dividend shall be payable except in cash Provided that nothing in the foregoing shall be deemed to prohibit the capitalisation of profits or reserves of the Company for the purpose of issuing fully paid-up bonus shares or paying up any amount for the time being unpaid on the shares held by the members of the Company.

143. A transfer of shares shall not pass the rights to any dividend declared thereon before the registration the transfer by the Company.

144. The Company may pay interest on capital raised for the construction of works or buildings when and so far as it shall be authorised to do by Section 208 of the Act.

145. No dividend shall be paid in respect of any share except to the payable registered holder of such share or to his order or to his bankers but nothing contained in this Article shall be deemed to require the bankers of a registered shareholder to make a separate application to

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the Company for the payment of the dividend. Nothing in this Article shall be deemed to affect in any manner the operation of the Article 143.

146. Any one of several persons who are registered as the joint-holders of any share may give effect receipts for all dividends, bonuses and other payment of such share.

147. Payment of any dividend whether interim or otherwise, shall be made to the persons entitle to share therein in the manner hereinafter provided.

148. Unless otherwise directed in accordance with Section 206 of the Act, any dividend, interest or other moneys payable in cash in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the holder or, in the case of joint-holders, to the registered address of that one of the joint-holders who is the first named in the Register in respect of the joint-holding or to such person and such address as the holder or joint holders, as the case may be, may direct, and every cheque or warrant so sent shall be made payable to the order of the person to whom it is sent.

149. No unclaimed or unpaid dividend shall be forfeited by the Board and the Company shall comply with all the provisions of Section 205A of the Act in respect or unlaimed of unpaid dividend.

BOOKS AND DOCUMENTS

150. The Board shall cause to be kept in accordance with Section 209 of the Act proper books of account with respect to :-

(a) all sums of money received and expended by the Company and the matters in respect of which the receipt and expenditure takes place; (b) all sales and purchases of goods by the Company; and (c) the assets and liabilities of the Company.

151. The books of account shall be kept at the Office or at such other place in India as the Board may decide and when the Board so decides, the Company shall, within seven days of the decision, file with the Registrar a notice in writing giving the full address of that other place.

152. (1) The books of account shall be open to inspection by any Director during business hours. (2) The books of account shall also be open to inspection by the Registrar or by any officer of Government authorised by the Central Government in this behalf if the opinion of the Registrar or such other officer sufficient cause exists for the inspection of the books of account. (3) The Board shall, from time to time determine whether and to what extent, and at what times and places, and under what conditions or regulations, the books of account and books and documents of the Company, other than those referred to in Articles 123 (2) and 177 or any of them, shall be open to the inspection of the members not being Directors and no member (not being a Director) shall have any right of inspecting any books of account or books or document of the company except as conferred by law or authorised by the Board or by the Company in general meeting.

153. The books of account of the Company shall be preserved in good order for a period of not less than eight years, from the date of incorporation of the Company and, after the said period of eight years, the books of account of the company relating to a period of not less than eight years immediately preceding the current year shall be preserved in good order.

BALANCE SHEET AND ACCOUNTS

154. At every Annual General Meeting the Board shall lay before the Company a Balance Sheet and Profit and Loss Account made up in accordance with the provisions of Section 210 of the Act and such Balance Sheet and Profit and Loss Account shall comply with the requirements of Sections 210, 211, 212, 215, and 216 and of Schedule VI to the Act so far as they are applicable to the Company but, save as aforesaid, the Board shall not be bound to disclose greater details of the result or extent of the trading and transactions of the Company than it may deem expedient.

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155. There shall be attached to every Balance Sheet laid before the Company a report by the Board Complying with Section 217 of the Act.

156. A Copy of every Balance Sheet (including the Profit and Loss Account, the Auditors' Report and every document required by law to be annexed or attached to the Balance sheet) shall, as provided by Section 219 of the Act, not less than twently-one days before the meeting be sent to every such member. Debenture holder, trustee and other person to whom the same is required to be sent by the said Section.

157. The Company shall Comply with Section 220 of the Acts as to filing copies of the Balance Sheet and Profit and Loss Account and documents required to be annexed or attached thereto' with the Registrar.

AUDIT

158. The first Auditor or Auditors of the Company shall be appointed by the Board within one month after the date of registration of the Company and the Auditor or Auditors so Appointed shall hold office until the conclusion of the First Annual General Meeting of the Company. 159. Once at least in every year the books of account of the Company shall be examined by one or more Auditor or Auditors.

160. The company shall at each Annual General Meeting appoint an Auditor or Auditors to hold office from the conclusion of that meeting until the conclusion of the next Annual General Meeting and shall, within seven days of the appointment, give intimation thereof to every Auditors so appointed unless he is or they are a retiring Auditor of Auditors: The Appointment, remuneration, rights and duties of the Auditor or Auditors shall be regulated by Section 224 to 227 of the Act.

161. Where the company has a branch office the provisions of Section 228 of the Act shall apply.

162. All Notices of, and other communications relating to any general meeting of the company which any member of the Company is entitled to have sent to him shall also be forwarded to the Auditor of the Company; and the Auditor shall be entitled to attend any general meeting and to be heard at any general meeting which he attends on any part of the business which concerns him as Auditor.

163. The Auditors' Report (including the Auditors separate, special or supplementary report, if any) shall be read before the Company in general meeting and shall be open to inspection by any member of the Company.

164. Every Balance Sheet and Profit and Loss Account of the Company when audited and adopted by the Company in general meeting shall be conclusive except as regards any error discovered therein within three months next after, the adoption thereof. Whenever any such error is discovered within that period the account shall forthwith be corrected and thenceforth shall be conclusive.

SERVICE OF NOTICES AND DOCUMENTS

165. (1) A notice or other document may be given by the Company to any member either personally or by sending it by post to him to his registered address or (if he has no registered address in India) to the Address, if any, within India supplied by him to the Company for the giving of notices to him. (2) Where a notice or other document is sent by post:-

(a) service thereof shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice or document, provided that where a member has intimated to the Company in advance that notices or documents should be sent to him under a certificate of posting or by registered post with or without acknowledgment due and has deposited with the Company a sufficient sum to defray the expenses of doing so,

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service of the notice or document shall not be deemed to be effected unless it is sent in the manner intimated by the member; and. (b) such service shall be deemed to have been effected:

(i) in the case of a notice of meeting at the expiration of forty eight hours after the letter containing the same is posted, and (ii) in any other case, at the time at which the letter would be delivered in the ordinary course of post.

166. A notice or other document advertised in a newspaper circulating in the neighbourhood of the office shall be deemed to be duly served on the day on which the advertisement appears on every members of the Company who has no registered address in India and has not supplied to the Company an address within India for the giving of notices to him. Any member who has no registered address in India shall, if so required to do by the Company, supply the Company with an address in India for the giving of notices to him.

167. A notice or other document may be served by the Company on the joint-holders of a share by giving the notice to the joint-holder named first in the Register in respect of the share.

168. A notice or other document may be served by the Company on the persons entitled to a share in consequence of the death or insolvency of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased, or assignee of the insolvent or by any like description at the address in India supplied for the purpose by the persons claiming to be so entitled, or until such an address has been so supplied, by giving the notice in any manner in which the same might have been given if the death or insolvency had not occurred.

169. Any notice required to be given by the Company to the members or any of them and not expressly provided for by these Articles or by the Act shall be sufficiently given if given by advertisement.

170. Any notice required to be or which may be given by advertisement shall be advertised once in one or more newspapers circulating in the neighbourhood of the Office.

171. Any notice given by advertisement shall be deemed to have been given on the day on which the advertisement shall first appear.

172. Every person who by operation of law transfer or other means whatsoever shall become entitled to any share shall be bound by every notice in respect of such share which previously to his name and address being entered on the Register shall have been duly given to the person from whom he derives his title to such share.

173. Subject to the provisions of Article 168, any notice or document delivered or sent by post to or left at the registered address of any member in pursuance of these Articles shall, notwithstanding such member be then deceased and whether or not the Company have notice of his decease, be deemed to have been duly served in respect of any registered share, whether held solely or jointly with other persons by such member until some other person be registered in his stead as the holder or joint-holders thereof and such service shall for all purpose of these presents be deemed sufficient service of such notice or document on his heirs, executors or administrators and all persons, if any, jointly interested with him in any such share.

174. Subject to the provisions of Sections 497 and 509 of the Act, in the event of a winding-up of the Company, every member of the Company who is not for the time being in Kerala shall be bound, within eight weeks after the passing of an effective resolution to wind up the Company voluntarily or the making of any order for the winding-up of the Company, to serve notice in writing on the Company appointing some householder residing in the neighbourhood of the Office upon whom all summonses, notices process, orders and judgments in relation to or under the windingup of the Company may be served, and, in default of such nomination, the Liquidator of the Company shall be at liberty, on behalf of such member, to appoint some such persons, and service upon any such appointee whether appointed by the member or the

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Liquidator shall be deemed to be good personal service on such member for all purposes, and where the Liquidator makes any such appointment he shall, with all convenient speed, give notice thereof to such member by advertisement in some daily newspaper circulating in the neighbourhood of the Office or by a registered letter sent by post and addressed to such member at his address as registered in the Register and such notice shall be deemed to be served on the day one which the advertisement appears or the letter would; be delivered in the ordinary course of the post. The provisions of this Article shall not prejudice the right of the Liquidator of the Company to serve any notice or other document in any other manner prescribed by these Articles.

KEEPING OF REGISTERS AND INSPECTION

175. The Company shall duly keep and maintain at the Office, in accordance with the requirements of the Act in that behalf, the following Registers:

(1) A Register of Investments not held by the Company in its own name pursuant to Section 49 (7) of the Act. (2) A Register of Charges pursuant to Section 143 of the Act. (3) A Register of Members Pursuant to Section 150 and, whenever the Company has more than 50 members, unless such Register of members is in a form which itself constitutes an index, an index of members pursuant to Section 151 of the Act. (4) A Register Of Renewed and Duplicate Certificates pursuant to Rule 7 (2) of The Companies (Issue of Share Certificates) Rules 1960, or any statutory modification or re- enactment thereof. (5) A Register of Debenture-holders pursuant to Section 152 and, whenever the Company has more than 50 Debenture-holders, unless such Register of Debenture-holders itself constitutes and index, and index of Debenture-holders pursuant to Section 152 (2) of the Act; (6) A Register of Contracts pursuant to Section 301 of the Act. (7) A register of Directors, and Managing Director pursuant to Section 303 of the Act. (8) A Register of Directors' Shareholdings pursuant to Section 307 of the Act. (9) A Register of Loans etc., made by the Company to companies under the same management pursuant to Section 370 of the Act. (10) A Register of Investments made by the Company in shares and debentures of bodies corporate in the same group pursuant to Section 372 of the Act.

176. The Company shall comply with the provisions of sections 39, 118, 163, 192, 196, 219, 301, 302, 304, 307, 370, and 372 of the Act as to the supplying of copies of the Registers, deeds, documents, instruments, returns, certificates and books therein mentioned to the persons therein specified when so required by such persons on payment of the charges, if any prescribed by the said Sections.

177. Where under any provision of the Act any person, whether a member of the Company or not, is entitled to inspect any register, return, certificate, deed, instrument or document required to be kept or maintained by the Company, the person so entitled to inspection shall be permitted to inspect the same during the hours of 10 a.m. and 12 noon on such business days as the Act requires them to be open for inspection.

178. The Company may, after giving not less than seven days previous notice by advertisement in some newspapers circulating in the district in which the Office is situate, close the Register of Members or the Register of Debenture-holders, as the case may be, for any period or periods not exceeding in the aggregate forty five days in each year but not exceeding thirty days at any one time.

RECONSTRUCTION

179. Subject to the provisions of the Act in this behalf, on any sale of the undertaking of the Company, the Board or the Liquidators on windingup may, if authorised by a Special Resolution, accept fully paid or partly paid up shares, debentures or securities of any other company, whether incorporated in India or not either then existing or to be formed for the purchase in whole or in part of the property of the company, and the Board (if the profits of the

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Company permit) or the Liquidators (in a winding-up) may distribute such shares or securities, or any other property of the Company amongst the members without realization, or vest the same in trustees for them, and any Special Resolution may provide for the distribution or appropriation of the Cash, shares or other securities, benefit or property, otherwise than in accordance with the strict legal right of the members or contributories of the Company,and for the valuation of the any such securities or property at such price and in such manner as the meeting may approve and all holders of shares shall be bound to accept and shall be bound by any valuation or distribution so authorised, and waive all rights in relation thereto, save only in case the company is proposed to be or is in the course of being wound up, such statutory rights (if any) under Section 494 of the Act as are incapable of being varied or excluded by these Articles.

SECRECY

180. Every Director, Manager, Secretary, trustee for the Company, its Members of debentureholders, member of a committee, officer, servant, agent, accountant or other persons employed in or about the business of the Company shall, if so required by the Board before entering upon his duties, sign a declaration pledging himself to observe a strict secrecy respecting all transactions of the Company with its customers and the state of accounts with individuals and in matters relating thereto, and shall be such declaration pledge himself not to reveal any of the matters which may come to his knowledge in the discharge of his duties except when required so to do by the Board or by any general meeting or by a Court of law and except so far as may be necessary in order to comply with any of the provisions in these Articles Contained.

181. No member or other person (not being a Director) shall be entitled to enter upon the property of the Company or to inspect or examine the premises or property of the Company without the permission of the Board or subject to Article 152, to require discovery of or any information respecting any detail of the trading of the Company or any matter which is or may by in the nature of a trade secret, mystery of trade, or secret process or of any matter whatsoever which may relate to the conduct of the business of the company and which in the opinion of the Board it will be inexpedient in the interest of the Company to communicate.

WINDING-UP

182. If the Company shall be wound up and the assets available for distribution among the members as such shall be insufficient to repay the whole of the paid up capital such assets shall be distributed so that as nearly as may be the losses shall be borne by the members in proportion to the capital paid up or which ought to have been paid up at the commencement of the winding-up on the shares held by them repectively. And if in a winding-up the assets available for distribution amoung the members shall be more than sufficent to repay the whole of the capital paid up at the commencement of the winding-up, the excess shall be distributed amoungst the members in proportion to the capital at the commencement of the winding-up paid up or which ought to have been paid up on the shares held by them respectively. But this Article is to be without prejudice to the rights of the holders of shares issued upon special terms and conditions.

183. If the Company shall be wound up, whether voluntarily or otherwise, the liquidators may, with the sanction of a Special Resolution, divide among the contributories, in specie or kind, any part of the assets of the Company and may, with the like sanction, vest any part of the assets of the Company Trustees upon such trusts for the benefit of the contributories, or any of them, as the liquidators, with the like sanction, shall think fit.

INDEMNITY

184. Every Director, Manager, Secretary or officer of the Company or any person (whether an officer of the Company or not) employed by the Company and any person appointed Auditor Shall be indemnified out of the funds of the Company against all liability incurred by him as such Director, Manager, Secretary, officer, employee or Auditor in defending any proceedings, whether civil or criminal in which judgement is given in his favour, or in which he is acquitted, or in connection with any application under Section 633 of the Act in which relief is granted to him by the court.

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SECTION X: OTHER INFORMATION

The contracts mentioned below (not being contracts entered into in the ordinary course of business carried on by the Company) are or may be deemed to be material contracts. These contracts and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of the Company situated at TC-79/4, Veli, Thiruvananthapuram, Kerala – 695021 from 11.00 a.m. to 2.00 p.m. on any working day from the date of this LOF until the Issue Closing Date.

Material Contracts

1. Memorandum of Understanding entered into between the Company and the Lead Manager, PNR Securities Limited dated April 7, 2008. 2. Memorandum of Understanding entered into between the Company and Registrar to the issue, RCMC Share Registry Private Limited dated May 12, 2008. 3. Engagement letter dated February 4, 2008 regarding appointment of Lead Manager. Documents for Inspection

1. Memorandum and Articles of Association of the Company, as amended till date. 2. Certificate of Incorporation dated November 18, 1963 issued by the Registrar of Companies, Kerala. 3. Certificate of Commencement of Business granted by the Registrar of Companies, Kerala vide their certificate dated 13th October 1983 w.e.f. 3rd day of October 1964. 4. Copy of the Resolution u/s 81 of the Companies Act, 1956 passed by the Board of Directors in their meeting held on January 25, 2008. 5. Copy of the Resolution passed by the Sub Committee of the Board of Directors for approving the draft Letter of Offer of the Company in their meeting held on May 16, 2008. 6. Copy of the Orders on the Scheme of Arrangement and De-merger between English Indian Clays Ltd and Bharat Starch Products Ltd, of the Hon’ble High Court of Kerala and Hon’ble High Court of Delhi dated December 19, 2007 and January 14, 2008 respectively 7. Consents from the Auditors, Lead Manager to the Issue, Registrar to the Issue, Legal Advisor to the Issue, Bankers to the Issue, Bankers to the Company, Directors, Compliance Officer (Company Secretary) to include their names in this LOF and to act in their respective capacities. 8. Audit report on Restated Financial Statements by the Statutory Auditors of the Company Price Waterhouse dated May 16, 2008 included in this LOF. 9. Certificate from M/s Grewal & Singh, Chartered Accountants dated May 14, 2008 detailing the tax benefits. 10. Copy of Company’s letter dated 28 th September, 2007 regarding appointment of M.N. Dastur & Co. (P) Ltd. for consultancy and detailed engineering services for Shimoga project. 11. Copy of approval order no. C131SP/2008 dated 25-03-2008 for Shimoga project from Commissioner of Industrial Development, Govt. of Karnataka. 12. Posssession Certificate no. KIADB/AE/SMG/15/08-09 dated 29-04-2008 regarding 66.4 Acres of land for Shimoga project, received from KIADB. 13. NOC dated AAI/2001/2/1485/2007-ARI (NOC) dated 08-02-2008 received from Airport Authority of India for Chimney stack height. 14. Letter from ICICI Bank dated May 9, 2008 regarding ECB/loan facility. 15. Certificate from M/s Grewal & Singh, Chartered Accountants dated May 12, 2008 regarding fund deployment on the proposed Shimoga Project upto April 30, 2008. 16. Audited Annual Accounts of the Company for the Financial Year ended March 31, 2008 and Annual Reports of the Company for the financial year ended March 31, 2007; March 31, 2006; March 31, 2005;and March 31, 2004. 17. Copy of the in-principle listing approval letter no. [ ●]dated [ ●] from BSE. 18. Due Diligence certificate dated May 16, 2008 to SEBI issued by the Lead Manager to the Issue, PNR Securities Limited. 19. Copies of General Power of Attorney executed in favour of Mr. Dellinder Kohli and Mr. P.S. Saini by other directors for signing the LOF and making changes therein. 20. SEBI Observation letter no. [ ●]dated [ ●] for the Issue.

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DECLARATION

We, hereby declare that all relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government or the guidelines issued by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Letter of Offer is contrary to the provisions of the Companies Act, 1956 or the Securities and Exchange Board of India Act, 1992 or Rules made there under or guidelines issued by any competent authority. We further certify that all statements in this Letter of Offer are true and correct.

Yours faithfully,

For English Indian Clays Limited

Mr. Karan Thapar* (Chairman)

Mr. Dellinder Kohli (Managing Director)

Mr. Som Nath Dua (Director)

Mr. Suresh Kumar Toshniwal (Director)

Mr. Shankara Pillai Padmakumar* (Director)

Mr. Jainender Kumar Jain* (Director)

Mr. Vijay Rai* (Director)

Mr. S.K. Jain (Vice President – Corporate Finance)

Mr. P.S. Saini (Company Secretary & Compliance Officer)

*through their duly constituted attorney Mr. Dellinder Kohli

Place : Gurgaon, Haryana Date : 16th May 2008

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