Net 4 India Ltd. Delhi 18.07.2001 Sharma Patiala House Salary Addl

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NET 4 INDIA LIMITED [Registration Number: 55-22649]

[Originally incorporated as a public limited company under the provisions of the Companies act, 1956 on November 29, 1985 as “Mangla Chemicals Limited” & obtained Certificate for commencement of business on December 12, 1985 from The Registrar of Companies, Delhi and Haryana, New Delhi. The name was changed to “Trident Developers Limited” vide fresh certificate of incorporation dated April 25, 1994 and “Amulet Developers Limited” vide fresh certificate of incorporation dated October 13, 1998 and subsequently to “Net Four Internet.com Limited” vide fresh certificate of incorporation dated August 3, 2000 and finally to the current name “Net 4 India Limited” vide fresh Certificate of Incorporation obtained on February 28, 2001 from the said Registrar of Companies.]

Registered Office B-4/47, Safdarjung Enclave, New Delhi 110 029, India

(The Registered Office was earlier located at E-1/6, East Patel Nagar, New Delhi 110008 and was changed to S-527 Greater Kailash II, New Delhi 110048 w.e.f. 01.08.1993 and to 10-D Sagar Apts., 6, Tilak Marg, New Delhi 110001 w.e.f 20.07.1994 and to its present location w.e.f. 05.01.2000)

Tel.: +91-11-2610 4192/93 Fax: +91-11-2610 2781 URL: http://www.net4india.com | Contact Person: Krishan Kumar; E Mail ID: [email protected]

OFFER FOR SALE OF 20,68,200 EQUITY SHARES OF RS.10/- EACH FOR CASH AT A PREMIUM OF RS. 10/- (OFFER PRICE RS. 20/-) PER EQUITY SHARE AGGREGATING RS. 413.64 LAKHS (HEREINAFTER REFERRED TO AS ‘OFFER’). THE OFFER CONSTITUTES 12.73% OF THE PAID UP CAPITAL OF NET 4 INDIA LIMITED. THE FACE VALUE OF THE EQUITY SHARE IS RS. 10/- AND THE OFFER PRICE IS 2 TIMES THE FACE VALUE.

GENERAL RISK

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 Offer for Sale. For taking an investment decision, investors must rely on their own examination of the Offeror/ Company and the Offer for Sale including the risks involved. The equity shares offered have not been recommended or approved by the Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this Offer Document. The attention of the investors is drawn to the ‘Risk Factors and Management Perceptions Thereof’’ appearing on page number___ of this Offer Document.

OFFEROR’S AND THE COMPANY’S ABSOLUTE RESPONSIBILITY

The Offeror and the Company having made all reasonable inquiries, accepts responsibility for and confirms that this Offer Document contains all information with regard to the Company and the Offeror, which is material in the context of the Offer, that the information contained in this 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 facts, the omission of which makes this Offer 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 Offer Registrar to the Offer

CENTRUM CAPITAL LIMITED MCS LIMITED SEBI Regn. No.:INM 000010445 SEBI Regn. No.: INR 000000056 UIN: 100016915 UIN: 1000000729

Khetan Bhawan, 5th floor, 198, J. Tata Road Sri Padmavati Bhavan, Plot No.93, Road No. 16, Churchgate, Mumbai 400 020 MIDC, Andheri (East), Mumbai 400 093 Tel: +91-22-22023838; Fax: +91-22-22046096 Tel: +91-22-28368681; 28201785; 28239874; Fax: +91-22-28201783 E-mail: [email protected] E-mail: [email protected]; [email protected] URL: http://www.centrum.co.in URL: http://www.mcsind.com

OFFER PROGRAMME

-----day Month xx, 2005 OFFER CLOSES ON: -----day Month xx, 2005 OFFER OPENS ON

LISTING ARRANGEMENTS The equity shares offered through this Offer Document are proposed to be listed on The Stock Exchange, Mumbai (BSE) (Designated Stock Exchange) and are already listed on The Delhi Stock Exchange, New Delhi (DSE). The in-principle listing from The Stock Exchange. Mumbai (BSE) has been received vide its letter dated ______.

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TABLE OF CONTENTS

I. DEFINITIONS AND ABBREVIATIONS ...... i

II. RISK FACTORS AND MANAGEMENT PERCEPTIONS THEREOF...... iii 1. Forward-Looking Statements; Market Data ...... iii 2. Risk Factors...... iv

III. INTRODUCTION...... 1 1. Summary ...... 1 2. General Information ...... 3 3. Capital Structure of the Company ...... 5 4. Objects of the Offer...... 9 5. Basic Terms of the Offer ...... 10 6. Basis of Offer Price ...... 12 7. Tax Benefits...... 13

IV. ABOUT NET 4 INDIA LIMITED...... 14 1. Industry Overview ...... 14 2. Business Overview...... 14 3. History and Corporate Structure...... 19 4. Management...... 22 5. Promoters of the Company ...... 29 6. Exchange Rates...... 30

V. FINANCIAL INFORMATION...... 31 1. Financial Information of Net4india ...... 31 2. Financial Information of Group Companies / Associate Companies...... 43 3. Changes in Accounting Policy in the last Three Years...... 47 4. Management Discussion and Analysis of Financial Condition ...... 47

VI. LEGAL AND OTHER INFORMATION ...... 51 1. Outstanding Litigations / Disputes/ Defaults ...... 51 2. Government / Statutory Approvals / Registrations ...... 54 3. Statutory Approvals...... 54

VII. OTHER REGULATORY AND STATUTORY DISCLOSURES...... 55 1. Authority for the Present Offer...... 55 2. Eligibility for the Offer for Sale...... 55 3. Impersonation ...... 58 4. Stock Market Data for Net4India Limited ...... 60 5. Investor Grievances and Redressal Mechanism...... 60 6. Options to Subscribe...... 61 7. Purchase Of Property...... 61 8. Classes of Shares...... 61

VIII. OFFER INFORMATION ...... 62 1. Terms of the Offer...... 62 2. Issue Procedure...... 63 3. Principal Terms and Conditions of the Offer ...... 63 4. General Information ...... 67 5. Undertaking by the Company in terms of SEBI Clause 6.5.6. of SEBI Guidelines ...... 69

IX. DESCRIPTION OF EQUITY SHARES AND TERMS OF THE ARTICLES OF ASSOCIATION ...... 70

X. MATERIAL CONTRACTS AND DOCUMENTS ...... 88 1. Material Contracts...... 88 2. Material Documents ...... 88 3. Declaration...... 89

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I. DEFINITIONS AND ABBREVIATIONS

Conventional/ General Terms

Act The Companies Act, 1956 and amendments thereto AGM Annual General Meeting AS Accounting Standards as issued by the Institute of Chartered Accountants of India CAGR Compound Annual Growth Rate CEPS Cash Earnings Per Share EGM Extra Ordinary General Meeting EPS Earnings Per Share GDP Gross Domestic Product GIR General Index Number GoI Government of India HUF Hindu Undivided Family MOU Memorandum of Understanding NA Not Applicable NAV Net Asset Value PAN Permanent Account Number PAT Profit After Tax PBDT Profit Before Depreciation and Tax PBIDT Profit Before Interest, Depreciation and Tax PBT Profit Before Tax P/E Ratio Price-to-Earnings Ratio ROI Return on Investment RONW Return on Net Worth SSI Small Scale Industries Issue Related Terms

Applicant Any prospective investor who makes an application for shares in terms of this Offer Document Application Form The form in terms of which the investors shall apply for the Equity Shares of the company Articles Articles of Association of Net 4 India Limited Auditor The statutory auditors of Net 4 India Limited, M/s. Sandy Associates, Chartered Accountants Banker(s) to the Offer United Bank of India Board Board of Directors of Net 4 India Limited Company Net 4 India Limited Designated Stock Exchange The Stock Exchange, Mumbai Directors Directors on the Board of Net4India Limited Equity Shares Equity Shares of the Company of Rs. 10/- each Lead Manager/LM Lead Managers to the Offer i.e. Centrum Capital Limited (CCL) Memorandum Memorandum of Association of Net 4 India Limited MP Management Perception / Management Proposal Net4Barter Net 4 Barter Private Limited Offer Offer for Sale of 20,68,200 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 10/- (Offer Price Rs. 20/-) per Equity Share aggregating Rs. 413.64 lakhs as per this Offer Document Offer Closing Date The date on which the Offer closes for subscription Offer Document This Offer Document for Offer for Sale filed with the Stock Exchanges containing inter alia the Offer price and the number of equity shares to be offered, offer price and other incidental information Offer Opening Date The date on which the Offer opens for subscription Offer Period The period between the Offer Opening Date and Offer Closing Date and includes both these dates Offer Price The price at which the equity shares will be Offered by the Offerors under this Offer Document Offeror Sterling Capital Private Limited Promoter(s) Promoters shall have the same meaning as ascribed to it under the SEBI Guidelines and which has been particularly detailed in the disclosure in this Letter of Offer Registrar Registrar to the Offer, CMS Limited ROC Registrar of Companies, Delhi and Haryana, New Delhi Trak Online Trak Online Net India (P) Ltd.

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Company / Industry Related Terms

B2B Business to Business BFSI Banking, Financial Services and Insurance sector IDC Internet Data Centres IP Communication Internet Protocol based data, voice and other applications networking ISP Internet Service Provider ISDN Integrated Switch Data Network IT Information Technology ITSP Internet Telephony Service Provider NOC Network Operating Centres PC Personal computers RFI Request for Information RFQ Request for Quotation UPS Uninterrupted power supply system Abbreviations

BSE The Stock Exchange, Mumbai CDSL Central Depository Services (India) Limited CLB Company Law Board CY Calendar Year DCA Department of Company Affairs Depositories Act The Depositories Act, 1996 as amended from time to time Depository A Depository registered with SEBI under the SEBI (Depositories & Participant) Regulations, 1996 as amended from time to time DP Depository Participant DSE The Delhi Stock Exchange Association Limited, New Delhi FCNR Account Foreign Currency Non Resident Account F&A Finance and Accounts FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 read with rules and regulations there under and amendments thereto FI Financial Institution FII(s) Foreign Institutional Investors registered with SEBI under applicable laws FIPB Foreign Investment Promotion Board, Department of Economic Affairs, Ministry of Finance, Government of India FY Financial Year – the twelve months ended March 31st of any particular calendar year IT Act Income Tax Act, 1961 and amendments thereto INR Indian Rupee LC Letters of Credit MAT Minimum Alternate Tax MF Mutual Funds NR Non Resident NRE Account Non Resident External Account NRI(s) Non-Resident Indian(s) NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited POA Power of Attorney RBI The Reserve Bank of India SCRR Securities Contracts (Regulation) Rules, 1957 as amended from time to time SEBI Securities and Exchange Board of India constituted under the Securities and Exchange Board of India Act, 1992 (as amended) SEBI (SAST) Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 SEBI Act Securities and Exchange Board of India Act, 1992 as amended from time to time SEBI Guidelines Means the extant Guidelines for Disclosure and Investor Protection issued by Securities and Exchange Board of India, constituted under the Securities and Exchange Board of India Act, 1992 (as amended), called Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 USD United States Dollars

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

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II. RISK FACTORS AND MANAGEMENT PERCEPTIONS THEREOF

1. Forward-Looking Statements; Market Data

1.1. Forward-looking Statements

This Prospectus contains certain “forward-looking statements”. These forward-looking statements generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue”, “may” or other words or phrases of similar import. Similarly, statements that describe Net4India’s 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 statement. Important factors that could cause actual results to differ materially from the Company’s expectations include, among others: · General socio-political and economic conditions in India and select international markets. · Company’s ability to successfully implement its strategy and growth and expansion plans; · Changes in the value of the Indian Rupee and other currencies, in particular, the US Dollar; · Changes in the laws and regulations that apply to the Indian IT and telecommunication services industry, including with respect to network administration, tax incentives and export benefits; · Increased competition in and the conditions of the Indian and global IT services industry; · The prices the company is able to obtain for its services; · Wage levels in India for IT professionals; · Shortage of IT professionals in India with relevant skill levels; · The loss of significant clients;

For further discussion of factors that could cause the Company’s actual results to differ see Risk Factors on page no. ______of this Offer Document. Neither the Company, its directors any Member of the Issue Management Team, nor any of their respective affiliates has any obligation to update or otherwise revise any statements to reflect circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. Net 4 India Limited and the Lead Managers will ensure that investors in India are informed of material developments until the grant of listing and trading permission by the Stock Exchange.

1.2. Market Data

Market data used throughout this Offer Document was obtained primarily from internal company reports. The information contained in this Offer Document 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 Offer Document 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.

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2. Risk Factors

RISK ENVISAGED BY MANAGEMENT AND MANAGEMENTS PROPOSALS THEREOF An investment in equity shares involves a high degree of risk. Investors should carefully consider all of the information in this Offer Document, including the risks and uncertainties described below, before making an investment in the Equity Shares. If any of the following risks actually occur, the business, results of operations and financial condition of the Company could suffer, the trading price of the Equity Shares could decline, and you may lose all or part of your investment. Unless specified or quantified in the relevant risk factors mentioned below, the Company is not in a position to ascertain the financial and other implications of any of the other risks mentioned below.

2.1. Risk Factors Internal to the Company

1. Criminal Cases. § The State of Maharashtra has filed a criminal case against one of the promoters. For details of the Case please refer to the Para on “Outstanding Litigations and Defaults”. § A criminal case filed by an ex-employee against the Company claiming for reinstatement of employment with back wages is pending.

2. Variation in the Revenues & Profits: The Company’s revenues and profitability are dependent on several factors and may vary significantly from quarter to quarter. Therefore, the historical financial results may not be an accurate indicator of future performance. MANAGEMENT PERCEPTION: The Company enters into contracts with its service subscribers for periods ranging between 3 – 12 calendar months. The entire subscription amount is raised in advance, so as to say, the services are being offered prepaid. This minimizes the risk of contractual loss. However risks do exist in the forms of loss in subscription renewal and/ or renewal of contracts at rates lower than historical average. So historical financial performance should not be relied upon, in its entirety, for an accurate indicator of the Company’s future performance.

3. Sector Diversification: The Company currently has focus on Internet and allied services and has the necessary people and skill only in this domain. MANAGEMENT PERCEPTION: Net 4 India Limited is an IP communication infrastructure and solution provider. It belongs to a conjoint subset of the IT and telecommunication industries. This offers a scope to execute unlimited diversification within the industry itself. The Company retains intellectual capital with cross-industry skills to harness expansion opportunities.

4. Dependence on Technology: The Company is, to a large extent, dependent on technology. MANAGEMENT PERCEPTION: The Company is as much dependent on technology as any other player in the IT and/ or telecommunication services segment. The management recognises the risk of technology obsolescence and periodically reinvests in upgrading technology as well as technical skills.

5. Geographical Diversification: The Company has its physical presence in 11 cities in India. MANAGEMENT PERCEPTION: The Company has direct presence in 11 cities, which account for the majority of Internet users in India. Beyond which it has presence in another 55 urban/ metropolitan areas through franchisee and channel partners. Similarly, it has presence in Middle East, Sub Saharan Africa and South East Asia through international channel partners. A number of services offered by the Company are available online, e.g. domain name registration, and website hosting. Thus, its virtual presence exists in most parts of the world.

6. New Customer Acquisition: The Company’s growth depends on acquiring new customers for its services apart from increasing business from existing customers. MANAGEMENT PERCEPTION: The Company earns much of its revenues through renewable service contracts. Thus the dependence on growth is upon renewal of existing contracts, increment of revenue accrual per existing customer and sourcing of revenue from new customers. In this way the Company distributes, and hence minimizes, its revenue risk.

7. Success in Attracting and Retaining Professionals: The Company’s success depends in large part upon its highly skilled software professionals and its ability to attract and retain these personnel. MANAGEMENTS PERCEPTION: Net4India’s business depends on quality professionals and their longevity with the company. The Company is successful in retaining its workforce and also investing in their skills improvement.

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8. Dependency on Senior Management: The Company’s success depends in large part upon its senior management and key personnel and its ability to attract and retain them. MANAGEMENT PERCEPTION: The top management is committed to the business of the Company and have pioneered foray into the current lines of businesses.

9. Outstanding Receivable: The Company has receivables of Rs. 470.20 lakhs, which is outstanding for a period of more than 6 months as of December 31, 2004. MANAGEMENT PERCEPTION: The Company is making efforts to realize the outstanding receivables and is confident of recovering the dues.

10. Competitive Business Environment: The Company operates in a highly competitive business environment and it is likely to continue into the future. MANAGEMENT PERCEPTION: The competition scenario for the Internet industry has changed since 2002 with industry size rationalization. At present, there are fewer, but more serious, players in the market. The Company maintains its competitiveness through innovative service offerings, responsive customer care and attractive pricing. The strategy will be maintained in the future.

11. Termination of Contracts: The Company’s service contracts with its clients can be terminated without cause and with little or no notice or penalty, which could negatively impact its revenues and profitability. MANAGEMENT PERCEPTION: The Company’s services are mostly pre-paid for the period during which the services are rendered. Termination of service by customer at short notice thus does not affect the business, except to the extent of loss of a customer unit.

12. Losses by Group / Associate Companies: The following Group/ Associate Companies have made losses: § Trak Online posted loss of Rs. 16.78 lakhs for the year ending 31 March 2004: § Jiwan Financial Holdings Limited for the year ended 31 December 2003 of USD 670.

MANAGEMENT PERCEPTION: The losses of the Associated companies do not affect the existing operations, as their relation with the Company is only to the extent of initial promotion.

13. Listing of Shares at DSE: The Delhi Stock Exchange has not listed 85,00,000 shares issued by the Company MANAGEMENT PERCEPTION: In order to acquire the business of Trak Online and improve the liquidity, the Company came with another preferential Issue in March 2002 of 85,00,000 Equity Shares. The Company acquired the business of Trak Online under a slump sale agreement in March 2002 against issue of 75,00,000 Equity Shares of Rs. 10/- each at a premium of Rs. 10/-; and another 10,00,000 Equity Shares of Rs. 10/- each at a premium of Rs. 10/- against cash consideration. The value of preferential allotment was based on valuation report by M/s Uberoi, Sood and Kapoor Chartered Accountants. The listing of the equity shares allotted under this preferential issue is pending as it results higher promoters holding than as prescribed by the SEBI and also due to a valuation query poised by The Stock Exchange Delhi vide their letter no. DSE/LIST/5114/R/Q92 dated March 31, 2004 regarding the Allotment of 75,00,000 shares to M/s Trak Online Net India Pvt. Limited in 2002. Subsequently the Company had appointed M/s Bhandari Dastur Gupta & Associates, Chartered Accountants, a BSE approved valuor for the valuation of the assets against which 75,00,000 shares were issued to Trak Online. M/s Bhandari Dastur Gupta & Associates is expected to submit their Report shortly. Based on this Report, the Company will now make a representation before DSE to justify the allotment to Trak Online. Besides, this Offer to Sale will dilute the current promoter’s holding of equity to within levels prescribed by the SEBI. This should resolve the issue of pending listing with the DSE.

14. Litigations: Against or by the Company/ Promoter

Date Type Petitioner Respondent Place Court Claim Amount Instituted State of Jasjit S. Addl. Session Judge, 1 Criminal Mumbai 11.02.2004 Nil Maharashtra Sawhney Greater Bombay, Sewree Smt. Madhu Metropolitan Magistrate, Reinstate with full back 2 Criminal Net 4 India Ltd. Delhi 18.07.2001 Sharma Patiala House salary Addl. Dist & Session Judge Smt. Madhu Cum presiding officer Reinstate with full back 3 Civil Net 4 India Ltd. Delhi 20.07.2001 Sharma Labour Court-II salary Karkardooma Court M/s Services 4 Civil Net 4 India Ltd. Delhi Civil Court (Sr. Civil Judge) 24.10.2003 Rs. 91,000 International

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M/s Mirc Ajay Arora & Net 5 Civil Delhi Civil Court 24.10.2003 Nil Electronic Ltd. 4 India Ltd.

6 Civil Net 4 India Ltd. Shyam Prasad Secunderabad Metropolitan Magistrate 19.11.2001 Nil Jatin Virmani, Chief Metropolitan 7 Civil Net 4 India Ltd. ED, Somko Delhi 28.11.2003 Rs. 1,50,000 Magistrate Overseas

Against or by Group/ Associate Companies There are no outstanding litigations against the Group/Associate except as under:

Case against Trak Online In two separate issues the Department of Telecommunications has issued a show cause notice bearing no 820-278/2002-LR (Vol- II) dated 03.02.2005 by which it called upon why the following penalties should not be levied on the Company for alleged violation of terms and conditions of the ISP license: a. Levying and recovering an amount of Rs. 14,05,92,102 b. Submitting an additional performance Bank Guarantee of Rs. 1.20 crores.

Cases filed by Net 4 Barter (P) Ltd. The details of legal cases for recovery filed by the Net 4 Barter (P) Ltd are as under:

Type Petitioner Respondent Place Court Date Instituted Claim Amount (Rs.) 1 Civil Net 4 Barter Medworld Delhi Patiala House 01.04.2003 9,30,534 2 Civil Net 4 Barter Kohli Digital Delhi Patiala House 01.04.2003 84,773 3 Civil Net 4 Barter Safeguard Delhi Patiala House 29.12.2003 5,92,702

15. Contingent Liabilities: Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favour of government authorities and others, amounting to Rs. 35.35 lakhs as on 31.12.2004 (Rs. 2.81 lakhs as on 31.03.2004).

16. Capital Commitments: Estimated amount of contracts remaining to be executed on capital accounts not provided for (net of advance) – Rs. 28.29 lakhs as on 31.12.2004 (Rs. 0.33 lakhs as on 31.03.2004)

17. Deferred Tax: Provision for deferred tax for the period ended December 31, 2004 has been made in accordance with the provision of Accounting Standard 22 on Accounting for Taxes on Income, issued by The Institute of Chartered Accountants of India. The deferred tax charge of Rs. 14.26 lakhs (31.03.04 – Rs. 50.16 lakhs), for the current period has been recognized in the Profit & Loss Account.

18. High valuations in IT services sector at present: The valuations in the IT services sector industry are presently high and may not be sustained in the future and may also not be reflective of future valuations. MANAGEMENT PERCEPTION: There are no standard valuation methodology or accounting practices in the emerging Internet and related services. The financials of the Offeror are not strictly comparable with the other players in the industry.

2.2. Risks External to the Company

1. Lack of Active Trading in the Shares: There has been lack of formal market for the Equity Shares of the Company in the past. No assurance can be given regarding an active and/ or sustained trading in the Equity Shares of the Company or regarding the price at which the Equity Shares will be traded after listing. The Company is currently listed at Delhi Stock Exchange where the trading in the shares of the company is sparse/ nil. MANAGEMENT PERCEPTION: The proposed offer for sale is to comply with the continuous listing criterion of The Stock Exchange, Mumbai (BSE). The shareholder base shall be broad based post the current offer. The investors shall at any given point of time have an exit opportunity in case they want to sell the shares.

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2. Globally Competitive Environment: The Company operates in a globally competitive business environment. Growing competition may force it to reduce the price of its products which may reduce its revenues and margins and/ or decrease its market share, either of which could have a materially adverse effect on its business, financial condition and results of operations. MANAGEMENT PERCEPTION: The Company endeavours to increase the scope, volume and value of business in a competitive and risk-prone environment. It may rationalize its product and service offerings from time to time to leverage core competency and maintain competitiveness.

3. Competition: The Company faces competition from the foreign and Indian service providers that offer similar services at competitive prices. MANAGEMENT PERCEPTION: In the last decade, Indian IT services demand has risen. This has been achieved in spite of the competition and the Company expects no change in the scenario in the foreseeable future.

4. Socio-Political and Economic Developments: The Company may face sudden untoward development in socio-political and economic environment that may harm the interest of the Industry’s growth. MANAGEMENT PERCEPTION: Since 1991, the Government of India has pursued policies of economic liberalization, including significantly relaxing restrictions on the expansionary growth of the private sector. Any change in the direction of economic policies, as also specific policies, relating to IT companies could affect the company. Significant changes in India’s economic liberalization and deregulation policies could affect business and economic conditions in India and impact the Company’s business.

5. Disruption of Utility Services: Any disruption in the supply of power, IT infrastructure and telecom lines could disrupt the company’s business process or subject it to additional costs. MANAGEMENT PERCEPTION: To stand breakdowns and disturbances, the Company has built additional infrastructure facilities like UPS, Generator, Battery Backup, ISDN backup to Leased line, multiple vendor telecom lines etc. However all these are inter-related and are effective for short period disruptions. But long disruptions or disruptions at central service providers etc., can disturb the continuity of business. All backup facilities built (and to be added in future) are expensive and will add to costs.

6. Foreign Exchange Fluctuations: Parts of the company’s revenues and expenses are denominated in US Dollars and other international currencies. Thus the Company faces the risk of fluctuating exchange rates. MANAGEMENT PERCEPTION: During the FY 2003-04, only 4.75% of the Company’s total earnings and 9.42% of revenue expenditure was denominated in foreign currencies. Thus, its revenues are not directly affected by fluctuations in foreign exchange rates.

7. Post Offer Volatility in Price of the Script: After this Offer, the price of the company’s equity shares may be highly volatile or an active trading market for its equity shares may not develop. MANAGEMENT PERCEPTION: There has been no public market for the company’s equity shares till date and the price of the equity shares may fluctuate after this Offer. There can be no assurance that an active trading market for the company’s equity shares will develop or be sustained after this Offer, or that the price at which the equity shares are initially offered will correspond to the prices at which they will trade in the market subsequent to this Offer. The trading price of the equity shares may fluctuate after this Offer due to a wide variety of factors including financial performance, competitive conditions, volatility in the stock markets and perceptions about the company and about investments in the IT sector.

8. Effect of Terrorism and Violence: Terrorist attack and other acts of violence or war involving India, the United States, and other countries could adversely affect the financial markets and adversely affect business.

Managements Perception: Since major part of the company’s revenues is from abroad, terrorist attacks or regional conflicts and such acts of violence will significantly hurt its revenues. Such acts impose more restrictions on travel, reduces commitment of customers to grow business relationships, adversely affects the financial markets and all these in turn will adversely affect the company’s business

9. Changes in Domestic Political and Economic Activities: Political, economic and social developments in India could affect Business, which may have a long-term effect on the profitability of the Company Management Perception: Since 1991, the Government of India has pursued policies of economic liberalization, including significantly relaxing restrictions on the Private Sector. Any change in the direction of economic policies as also specific policies relating to IT companies could affect the Company and its operations.

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10. Changes in the Domestic Tax Laws: Any changes in the tax laws in India particularly income tax might lead to increased Tax Liability of the Company thereby putting pressures on profitability. Management Perception: Change in tax laws, particularly income tax, can have an impact on the post-tax profits of the Company.

Notes

1. Pre-Issue Net worth of the Company as on December 31, 2004 is Rs. 3,070.43 lakhs. The Book Value/ NAV per share on the same date is Rs. 18.90

2. The Investors are advised to refer to the section on “Basis of Offer Price“ on page number ______before making an investment in this issue.

3. Size of the present Offer for Sale of 20,68,200 equity shares of Rs.10/- each for cash at premium of Rs.10/- per share aggregating Rs 413.64 lakhs.

4. Investors may please note that in the event of over-subscription, allotment shall be made on a proportionate basis in consultation with The Stock Exchange Mumbai the Designated Stock Exchange.

5. For any complaint/ clarification/ information pertaining to the Issue, the investors may contact the Lead Manager or the Compliance Officer who will be obliged to attend to the same.

6. Since inception, the Company has not issued any bonus shares by capitalization of free reserves.

7. Diminution in Value of Quoted Investments: As per the audited accounts dated 31 December 2004, the company has no investments in quoted securities

8. The Lead Manager and the Company 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 the investors in any manner whatsoever.

9. Related Party Transactions Disclosures: The Company has entered into certain related party transactions. The related party transactions cover the financial transactions carried out in the ordinary course of business and /or discharge of contractual obligations. There are no common pursuits among the group companies and all the transactions are at Arm’s length and are subject to Transfer pricing regulations. The details of the transactions as certified by the auditors of the company are as follows. As required by Accounting Standard 1-8

FY 2001-02

(a) Names of related parties and nature of relationship Category of related parties Names

Holding Companies Nil

Subsidiaries of the Company Nil

Associates Trak Online Net India Pvt Ltd Jiwan Financial Holdings Ltd Net 4 Networks Pvt. Ltd.

Key Management Personnel and their relatives - Executive Directors Jasjit S. Sawhney Desi S. Valli Uday Sodhi Iqbal Gandham S.K.Ghosh - Non Executive Directors Amarjit S. Sawhney Biba Sawhney Manish Wadhavan Bharat Chawla Sanjeev Batra - Relative of Director Pawanjot Kaur Sawhney

Other related parties Sterling Capital Pvt Ltd Net 4 Barter Pvt Ltd

(b) Significant Related Party Transactions during the period (Rs. in Lakhs) Key Management Nature of Transaction Associates Others Total Personnel A Loans-Taken/ (repaid) - (28.00) - (28.00) B Sale of goods/ services 860.96 - - 860.96 C Purchase of goods/ services 461.54 - - 461.54 D Equity Contribution 2.50 - 0.50 3.00 E Expenditure 1.63 - 1.63

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F Purchase of Fixed Assets 54.90 - - 54.90 G Leasing/ Hire Purchase (919.91) - - (919.91) H Remuneration to Directors 20.58 - 20.58 Acquisition of Web Solution I 1500.00 - - 1500.00 and Data Centre Division

· Sundry Debtors include an amount of Rs.622.35 Lakhs being due from associates. · Loans & Advances include Rs. 52.22 Lakhs being due from an associate company. · Current Liabilities include Rs. 0.22 Lakhs being due to directors and Rs. 0.08 Lakhs being sitting fees payable to Directors.

FY 2002-03

(a) Names of related parties and nature of relationship Category of related parties Names

Holding Companies Nil

Subsidiaries of the Company Nil

Associates Trak Online Net India Pvt Ltd Jiwan Financial Holdings Ltd

Other related parties Sterling Capital Pvt Ltd Net 4 Barter Pvt Ltd (Till 16.01.2003)

(b) Significant Related Party Transactions during the period (Rs. in Lakhs) Key Management Nature of Transaction Associates Others Total Personnel A Loans-Taken/ (repaid) 1.50 61.19 - 62.69 B Investment - - 70.50 70.50 C Sale of goods/ services 1032.00 - 2.61 1034.61 D Purchase of goods/ services 1.20 - 4.10 5.30 E Remuneration to Directors - 36.99 - 36.99 F Expenditure 74.14 0.07 14.89 89.10 · Current Liabilities include Rs. 0.07 Lakhs being sitting fees payable to Directors. · Loans & Advances include Rs. Rs. 520.06 Lakhs being due from an associate company.

FY 2003-04 (a) Names of related parties and nature of relationship Category of related parties Names

Holding Companies Nil

Subsidiaries of the Company Nil

Associates Trak Online Net India Pvt Ltd Jiwan Financial Holdings Ltd

Key Management Personnel and their relatives - Executive Directors Jasjit S. Sawhney Desi S. Valli Amarjit S. Sawhney Iqbal Gandham Uday Sodhi - Non Executive Directors S.K.Ghosh Biba Sawhney Manish Wadhavan Bharat Chawla - Relative of Director Pawanjot Kaur Sawhney

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Other related parties Sterling Capital Pvt Ltd

(b) Significant Related Party Transactions during the period (Rs. in Lakhs) Key Management Nature of Transaction Associates Others Total Personnel A Loans-Taken/ (repaid) - 243.08 - 243.08 B Sale of goods/ services 1083/09 - - 1083.09 C Purchase of goods/ services 531.63 - - 531.63 D Expenditure 76.84 0.05 10.44 87.33 · Details of remuneration paid to directors are given in Managerial Remuneration above. · Current Liabilities include Rs. 0.05 Lakhs being sitting fees payable to Directors. · Loans & Advances include Rs.348.69 Lakhs being due from an associate company.

9 MONTHS PERIOD ENDED ON DECEMBER 31, 2004

(a) Names of related parties and nature of relationship Category of related parties Names

Holding Companies Nil

Subsidiaries of the Company Nil

Associates Trak Online Net India Pvt Ltd Jiwan Financial Holdings Ltd

Key Management Personnel and their relatives - Executive Directors Jasjit S. Sawhney Desi S. Valli Amarjit S. Sawhney - Non Executive Directors S.K.Ghosh Biba Sawhney Manish Wadhavan Bharat Chawla - Relative of Director Pawanjot Kaur Sawhney

Other related parties Sterling Capital Pvt Ltd

(b) Significant Related Party Transactions during the period (Rs. in Lakhs) Key Management Nature of Transaction Associates Others Total Personnel A Loans-Taken/ (repaid) - (2.60) - (2.60) B Sale of goods/ services 27.37 - - 27.37 C Purchase of goods/ services 306.95 - - 306.95 D Expenditure - 0.04 - 0.04 · Details of remuneration paid to directors are given in Managerial Remuneration above. · Current Liabilities include Rs. 0.04 Lakhs being sitting fees payable to Directors. · Loans & Advances include Rs. 341.66 Lakhs being due from an associate company.

The information has been provided from the Financial Year 2001-02 when the Accounting Standard 18 on 'Related Party Disclosures' issued by the Institute of Chartered Accountants of India became mandatory.

2.3. Highlights

1. Net 4 India Limited has been making profits consistently since its inception. The net profit of the Company has grown from Rs.0.84 Lakhs in 1999-2000 to Rs. 191.80 Lakhs in 2003-2004 For the period ended December 31, 2004 the net profit after tax of the Company was Rs. 147.32 lakhs 2. The annual turnover of the Company has grown from Rs. 13.37 Lakhs in 1999-2000 to Rs. 3,276.60 lakhs in 2003-04. For the 9 months period ended December 31, 2004, the Company has achieved a turnover of Rs. 2,766.84 Lakhs. 3. The Company has a committed professional management team

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III. INTRODUCTION

1. Summary

1.1. Summary of the Industry and Business of Net 4 India Limited

1. The Internet industry was opened up in India under the New Telecom Policy (1999). Since then the market demand for electronic datacom network has been growing across businesses and homes. Following an initial heavy influx of service providers, the industry has now rationalized, leaving only a few able and dependable service providers. 2. Net 4 India Limited, from its inception, has remained focused on offering IP communication solutions to large and small businesses. The customers derive shared or dedicated services from the Internet infrastructure of the Company. 3. Net 4 India Ltd. provides domain registration, website hosting and server collocation services. It offers Internet bandwidth in major metro cities and IP-telephony service and solutions in India and abroad. 4. Net 4 India Limited has been making profits consistently since its inception. The net profit of the Company has grown from Rs.11.10 lakhs in 1994-95 to Rs. 191.80 lakhs in 2003-2004 at a CAGR of 37.2%. For the period ended December 31, 2004 the net profit after tax of the Company was Rs. 147.32 lakhs. 5. The turnover of the Company has grown from Rs. 23.10 lakhs in 1994-95 to Rs. 3,228.3 lakhs in 2003-04 at a CAGR of 73.1%. For the 9 months period ended December 31, 2004 the Company has achieved a turnover of Rs. 2765.17 lakhs. 6. The Company has a committed professional management team

1.2. Offering Details in Brief

OFFER FOR SALE OF 20,68,200 EQUITY SHARES OF RS.10/- EACH FOR CASH AT A PREMIUM OF RS. 10/- (OFFER PRICE RS. 20/-) PER EQUITY SHARE AGGREGATING RS. 413.64 LAKHS (HEREINAFTER REFERRED IN AS “OFFER”). THE OFFER CONSTITUTES 12.73% OF THE PAID UP CAPITAL OF NET 4 INDIA LIMITED. THE FACE VALUE OF THE EQUITY SHARE IS RS. 10/- AND THE OFFER PRICE IS 2 TIMES THE FACE VALUE.

1.2.1. Paid-up Capital before and after the Offer The paid up Capital before and after the Offer would stand at Rs. 16,25,00,000/-.

1.2.2. Objects of the Offer 1. To comply with the listing norms of minimum 25 percent non promoter shareholding 2. To enlist the equity shares of the Company on The Stock Exchange, Mumbai (BSE) where screen based trading facility is available 3. To enhance the Company’s visibility and corporate image. 4. To provide liquidity to the existing shareholders. 5. To improve opportunity of greater market capitalization The main objects clauses of the Memorandum of Association of the Company enables the Company to undertake the existing activities.

1.2.3. Funds Requirement This being an Offer for Sale of equity shares by existing shareholders of the Company, the data pertaining to cost of project and means of finance are not relevant. The Company will not receive any proceeds from the sale of the equity shares by the Offerors.

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1.3. Summary Financial, Operating and other Data

All figures in Rs. lakh 01.04.04 - For the Year / Nine Months ended 1999-00 2000-01 2001-02 2002-03 2003-04 31.12.04 Income Sales and Services 13.37 612.40 2,238.55 2,969.51 3,228.25 2,765.17 Other Income - 0.04 49.34 1.16 48.35 1.67 Increase/(Decrease) in Stock in trade - - 114.56 199.41 146.86 135.10 Total Revenue 13.37 612.44 2,402.45 3,170.08 3,423.46 2,901.94 Net Profit before tax 1.49 102.37 183.09 268.80 300.96 248.59 Provision for Taxation 0.66 8.60 38.10 74.22 109.16 101.27 Profit after tax 0.84 93.77 144.99 194.58 191.80 147.32 FIXED ASSETS Gross block 15.86 1,339.61 2,157.33 2,351.66 3,112.22 3,420.14 Less: Depreciation and amortization 8.06 3.10 184.44 599.47 975.60 1,317.48 Net block 7.80 1,336.51 1,972.49 1,752.19 2,136.62 2,102.66 Add : Capital work-in-progress - - - - 190.91 237.47 Total 7.80 1,336.51 1,972.49 1,752.19 2,327.53 2,340.13 Investments 0.18 0.18 0.18 70.68 70.50 70.50 Current Assets, Loans & Advances 35.59 96.28 1,620.66 2,347.09 2,456.29 3,190.91 Current Liabilities & Provisions 2.70 750.61 1,063.54 1,442.77 1,938.26 2,533.04 Misc. Expend. (to the extent not written off/adjusted) - 2.80 6.78 4.91 3.40 1.93 Share Capital 25.00 775.00 1,625.00 1,625.00 1,625.00 1,625.00 Reserves & Surplus 15.87 (89.84) 911.57 1,107.10 1,294.46 1,445.43 Net Worth 40.87 685.16 2,536.57 2,732.10 2,919.46 3,070.43 Book Value (Rs) 16.35 28.59 28.44 16.78 17.97 18.88 EPS (Rs) 0.37 (4.43) 1.70 1.20 1.15 0.93

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2. General Information

Net 4 India Limited [Originally incorporated as a public limited company under the provisions of the Companies act, 1956 on November 29, 1985 as “Mangla Chemicals Limited” & obtained Certificate for commencement of business on December 12, 1985 from The Registrar of Companies, Delhi and Haryana, New Delhi. The name was changed to “Trident Developers Limited” vide fresh certificate of incorporation dated April 25, 1994 and “Amulet Developers Limited” vide fresh certificate of incorporation dated October 13, 1998 and subsequently to “Net Four Internet.com Limited” vide fresh certificate of incorporation dated August 3, 2000 and finally to the current name “Net 4 India Limited” vide fresh Certificate of Incorporation obtained on February 28, 2001 from the said Registrar of Companies.]

REGISTERED OFFICE: B-4/47, Safdarjung Enclave, New Delhi 110 029, India (The Registered Office was earlier located at E-1/6, East Patel Nagar, New Delhi 110008 and was changed to S-527 Greater Kailash II, New Delhi 110048 w.e.f. 01.08.1993 and to 10-D Sagar Apts., 6, Tilak Marg, New Delhi 110001 w.e.f 20.07.1994 and to its present location w.e.f. 05.01.2000)

CONTACT: Krishan Kumar (Tel.: +91-11-2610 4192/93 | Fax: + 91-11-2610 2781 | E Mail: [email protected] | URL: http://www.net4india.com )

BOARD OF DIRECTORS OF THE COMPANY

Sr. No Name of the Director Designation Status 1. SANDIP GHOSH Chairman Independent & Non-Executive 2. AMARJIT SINGH SAWHNEY Whole Time Director Promoter & Executive 3. JASJIT SAWHNEY Managing Director Promoter & Executive 4. DESI VALLI Whole Time Director Independent & Executive 5. MANISH WADHAVAN Director Independent & Non-Executive 6. BHARAT CHAWLA Director Independent & Non-Executive 7. BIBA SAWHNEY Director Promoter Group & Non-Executive

COMPANY MANAGEMENT Mr SANDIP K. GHOSH is a graduate in Commerce from St. Xaviers’ College (Kolkata) and a qualified Chartered Accountant. He has over 27 years of experience in accounting and financial management. He started his career in 1977 with Avery India Ltd. as the Divisional Accountant and rose to position of Vice President (Finance). He was appointed as Whole Time Director of Net 4 India Ltd. and was designated as Chief Finance Officer (CFO) of the company with effect from 1 October 2001. He resigned from the post of whole-time directorship w.e.f April 1, 2003 but consented to continue to act as Non-executive Director. In 2004 he was appointed as Chairman of the Company. Mr AMARJIT SINGH SAWHNEY is an entrepreneur with over 37 years of experience in business operations. He had established and operated businesses in Iran and United Kingdom across several industries including apparel manufacturing, realty and steel trading. He had schooled at St. Joseph’s Academy, Dehradun and graduated in Economics from Agra University (1961). The Company benefits from his rich experience in business and finance. He was appointed to the Board on. 5 January 2000 and was appointed as Whole Time Director on 21 March 2003. Mr JASJIT SINGH SAWHNEY is the CEO and Managing Director of Net 4 India Limited. He is considered among the youngest entrepreneurs in India. He had schooled at Welhams’ School, Dehradun, and graduated in Economics & Law from University of London. He started his professional career as a foreign currency trader in London bourses. Thereafter he worked as a consultant with O-net, a premier London-based ISP, where he subsequently became Director of Operations. He joined Net 4 India Ltd. in 1999. The Ministry of Communications & Information Technology has appointed him to the Board of National Internet Exchange of India. He is also a key member of the committees on telecom and IT at CII and FICCI. Mr. DESI S. VALLI is B.E. Electronics & Communication and presently working as Whole Time Director (Technology & Operations). He joined Net 4 India Ltd. as GM (Networking). He was appointed as Director with effect from October 1, 2001 and by virtue of his appointment he became Whole Time Director. He has experience in systems integration and network engineering. He does not hold the directorship in any other company. He is a member of Management Committee of the Net 4 India Ltd. Mr BHARAT CHAWLA is a successful entrepreneur with good knowledge of business administration and management. He joined the Board of Net 4 India Ltd. with effect from 28 September 2001 as Non-executive Director. He does not hold the directorship in any other Company. He is a Member of Audit Committee, Remuneration Committee and Shareholders & Investors’ Grievance Committee of the company. Mr. MANISH WADHAVAN is a successful entrepreneur. He is on Board of Net 4 India Ltd. as Non-executive Director since 1999. He joined the Board with effect from 23 October 1999 as Non-executive Director. He does not hold the directorship in any other Company. He is a member of Audit Committee, Remuneration Committee and Shareholders & Investors’ Grievance Committee of the Company.

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Mrs BIBA SAWHNEY is an entrepreneur and operates apparel retailing in the United Kingdom. She is a highly talented executive with experience in several industries. She helps the Company, selectively, with international sales. She does not hold directorship with any other company registered in India.

COMPLIANCE OFFICER Mr Krishan Kumar Company Secretary Net 4 India Limited B-4/47 Safdarjung Enclave, New Delhi 110 029, India Tel: (011) 2640 4193/94; Fax: (011) 2610 2781; Email: [email protected]

LEGAL ADVISORS TO THE OFFER Meharia & Co. Solicitors & Advocates 6A, Block-Q, Ground Floor, Jungpura Extension, New Delhi-110014 Tel: (011) 24329808; Fax: (011) 24329810

BANKERS TO THE COMPANY State Bank of India South Extension I, New Delhi-110049 Tel: (011) 24693040, Fax 011) 24611867

LEAD MANAGER TO THE OFFER Centrum Capital Limited (SEBI Regn. No. INM 000010445); UIN No. 100016915 Khetan Bhawan, 5th floor, 198, J. Tata Road, Churchgate, Mumbai 400 020. Contact Person: Mr. Mayank Dalal Tel: (022) 22023838; Fax: (022) 22046096; Email: [email protected]

REGISTRAR TO THE OFFER MCS LIMITED (SEBI Regn. No. INR 000000056); UIN No. 1000000729 Sri Padmavati Bhavan, Plot No.,93, Road No. 16, MIDC Andheri (East), Mumbai-400 093 Tel: +91-22-28368681; 28201785; 28239874 Fax: +91-22-28201783 E-Mail: [email protected] Contact Person: Mr. P. N. Rao

BANKERS TO THE OFFER United Bank of India 24, Park Street, Kolkata 700016

BROKERS TO THE OFFER All members of Recognised stock Exchanges would be eligible to as act as Brokers to the Offer.

AUDITORS OF THE COMPANY Sandy Associates Chartered Accountants 104, Delhi Chamber, Delhi Gate, New Delhi 110 002 Tel: +91-11-2328 7162; Email: [email protected]

INTERSE ALLOCATION OF The Offer is Sole managed by Centrum Capital Limited RESPONSIBILITES AMONG LEAD MANAGERS

CREDIT RATING/ DEBENTURE This being an Offer for Sale, no appointment of credit rating agency or debenture trustee is TRUSTEE required

UNDERWRITERS TO THE OFFER This being an Offer for Sale of Equity Shares by existing shareholders, no underwriting is required / proposed. Note: Investors are advised to contact the Registrars to the Offer / Compliance Office in case of any pre-offer / post-offer related problems such as non-receipt of Letter of Allotment or Share Certificates / Refund Orders/ Dematerialised Credit.

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3. Capital Structure of the Company

The Capital Structure of the Company as on February 28, 2005 is as follows: (All figures in in Rs.) Number of Shares Nominal Value Aggregate Value A. AUTHORISED CAPITAL 20,000,000 Equity Shares of Rs. 10/- each 200,000,000 200,000,000 B. ISSUED, SUBSCRIBED AND PAID UP CAPITAL 16,250,000 Equity Shares of Rs. 10/- each fully paid up. 162,500,000 162,500,000

Of the above shares, 7,500,000 Equity Shares are allotted pursuant to Slump Sale Agreement for Consideration other than Cash C. PRESENT OFFER TO THE PUBLIC IN TERMS OF THIS OFFER DOCUMENT 20,68,200 Equity Shares of Rs. 10/- each at a Premium of Rs. 10/- per share (i.e. at 2,06,82,000 4,13,64,000 a price of Rs.20 per share) D. SUBSCRIBED AND PAID UP CAPITAL AFTER THE OFFER 16,250,000 Equity Shares of Rs. 10/- each fully paid up. 162,500,000 162,500,000 E. SHARE PREMIUM AMOUNT - Before the Offer 85,000,000 85,000,000 - After the Offer 85,000,000 85,000,000

This is an Offer for Sale of equity shares by some of the existing Shareholders of the Company and hence it does not have any impact on the Equity Share Capital & Share Premium account of the Company.

Notes Forming Part of the Capital Structure 1. Details of increase in Authorised Share Capital

Sr. No. Particulars of the Increase AGM/ EGM Date of Meeting 1 Rs. 25 Lakh On Incorporation 29.11.1985 2 Rs. 25 Lakhs to Rs. 100 Lakhs EGM 1990 3 Rs. 100 Lakhs to 800 Lakhs EGM 30.11.2000 4 Rs. 800 Lakhs to 1,700 Lakhs EGM 04.02.2002 5 Rs. 1,700 Lakhs to 2,000 Lakhs EGM 17.03.2004

2. Share Capital History of the Company Date of No. of Shares Face Value Issue Price Value (Rs.) Cumulative Consideration Remarks allotment/ fully (Rs.) (Rs.) Paid-up (Cash, Bonus, Paid Up Capital (Rs.) kind etc.)

Subscription of 29.11.1985 70 10 10 700 700 Cash MOA 21.02.1986 2,49,930 10 10 24,99,300 25,00,000 Cash Public Issue Preferential 18.12.2000 75,00,000 10 10 7,50,00,000 7,50,00,000 Cash Allotment

Partly for Cash and Partly for Preferential 26.03.2002 85,00,000 10 20 17,00,00,000 16,25,00,000 Consideration Allotment Other than Cash*

Total 1,62,50,000 * Issued as Slump Sale Consideration to Trak Online Net India Private Limited. All Shares were fully paid-up on the date of allotment.

PREFERENTIAL ALLOTMENTS: The company pursuant to the Resolution passed by the members of the Company in their Extra Ordinary General meeting held on 30-11-2000, the Board of Directors vide their resolution dated 18.12.2000, have allotted 75,00,000 Equity shares of Rs. 10/- each at par by way of Preferential Allotment pursuant to the provisions of Section 81(1A) of the Companies Act, 1956, SEBI Guidelines for Preferential Allotments and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The statutory Auditors of the Company had certified that the Issue of said equity Shares has been in accordance with the requirements contained in the SEBI (DIP) Guidelines, 2000. The said shares are listed on the Delhi Stock Exchange. The Company pursuant to the Resolution passed by the members of the Company in their Extra Ordinary General meeting held on 04-02-2002, the Board of Directors vide their resolution dated 26.03.2002, have allotted 85,00,000 Equity shares of Rs. 10/- at a

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premium of Rs. 10/- each partly by cash and partly by way of consideration other than cash by way of Preferential Allotment pursuant to the provisions of Section 81(1A) of the Companies Act, 1956 and SEBI Guidelines for Preferential Allotments and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The statutory Auditors of the Company had certified that the Issue of said equity Shares has been in accordance with the requirements contained in the SEBI (DIP) Guidelines 2000.

3. Shares Issued for Consideration other than Cash All the Shares have been allotted for cash except 75,00,000 shares issued in March 2002 as slump sale consideration to Trak Online.

4. Promoters Contribution and Lock-in Period The following shares shall be locked in for a period of three years being part of promoter’s contribution. Date of Name of the Consideration No. of Face Value Issue/ % of Post- Lock-in Allotment/ Promoter shares (Rs/ share) Transfer Issue Paid-up Period* Fully paid- Price (Rs./ Capital up share) Other than cash; 26.03.2002 Trak Online against slump sale 32,50,000 10/- 20/- 20.00% 3 years consideration Total 20.00%

*The lock in period shall commence from the date of Allotment of shares in the proposed offer for sale and the last date of the lock in shall be reckoned as three years from the date of Allotment in the public issue.

Other than the above, and the equity shares being offered for sale in this Offer, the entire pre-offer capital of the Company held by Promoters shall be locked in for a period of one year from the date of Allotment of shares in the offer for sale.

5. Shareholding and Lock-in of Promoters The following Equity Shares would be locked-in in respect of promoters whose names appear /figure in the Offer Document as Promoters in the paragraph on “Promoters and their Background” Date of Issue/ Transfer % of Post- Name of the No. of Face Value Lock-in Allotment/ Consideration Price Issue Paid-up Promoter shares (Rs./share) Period Fully paid-up (Rs./ share) Capital Amarjit S. 18.12.2000 Cash 8,00,000 10/- 10/- 4.92% 1 year Sawhney Jiwan Financial 18.12.2000 Cash 35,00,000 10/- 10/- 21.54% 1 year Holdings Ltd. Sterling Capital 18.12.2000 Cash 32,500 10/- 10/- 0.20% 1 year (P) Ltd. Trak Online Net Against slump sale 26.03.2002 42,50,000 10/- 20/- 26.15% 1 year India (P) Ltd. consideration Total 85,82,500 10/- - 52.82% 1 year The lock-in period shall commence from the date of Allotment of shares in the proposed offer for sale

6. Shareholding of Directors of Promoter group and directors of the promoters where promoter is a Company Trak Online Net India Private Limited

DIRECTOR NO. OF SHARES Neeraj Garg Nil Samar Bhanja Nil

Jiwan Financial Holdings Limited

DIRECTOR NO. OF SHARES Amarjit Singh Sawhney 14 Jasjit Sawhney 10 Pawanjot Sawhney 10 Biba Sawhney 66 Jaswinder Singh Nil Dev Joory Nil Couldip Basanta Lala Nil

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Sterling Capital Private Limited (The Offeror)

DIRECTOR NO. OF SHARES

Karamjit Singh 20

Pawanjot Kaur Sawhney 2533500

a) Details of share transactions by Promoters during the past six months are as under:

Sl. No. Name of Transferor Name of Transferee Date of Transfer Number of Shares 1 Sawney India (P) Ltd. Jaswinder Singh 09.05.2005 25,000

b) The equity shares held by persons other than Promoters prior to Offer for Sale which are locked in may be transferred to any other person holding shares which are locked in subject to the continuation of lock in with transferees for the remaining period and in compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable.

c) The equity shares held by the promoters under lock in period shall not be sold/ hypothecated/transferred during the lock in period. However, the equity shares held by promoters, which are locked in, may be transferred to/ and among promoter/promoter group or to a new promoter or persons in control of the Company, subject to the continuation of lock in with the transferees for the remaining period and in compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable. The Promoters may pledge their Equity Shares with banks or financial institutions, as collateral security for loans whenever availed by them from banks or financial institutions provided pledge of shares is one of the terms of sanction of loan.

7. The Company has not issued any Bonus shares 8. Details of the Equity Shares Offered by the Offerors

Name of No. of shares Post Offer No. Of Post Offer % Date of Allotment Cost of Acquisition Shareholders Offered shares held Holding Sterling Capital Private 20,68,200 18/12/2000 Rs. 10/ share 32,500 0.20 Limited

9. Top Ten Shareholders (A) Particulars of top ten shareholders as date of filing the Offer Document with ROC. No. of Shares (of % of post offer Sr. No. Name Rs.10/- each) capital 1. Trak Online Net India Private Limited 75,00,000 46.15 2. Jiwan Financial Holdings Limited 35,00,000 21.54 3. Sterling Capital Private Limited 21,00,700 12.93 4. Amarjit Singh Sawhney 8,00,000 4.92 5. Amicable Investment Services Private Limited 7,25,000 4.46 6. Tenancious Investment Services Private Limited 6,64,000 4.09 7. Rarities Capital Growth Private Limited 2,50,000 1.54 8. Well Built Investment Services Private Limited 2,20,000 1.35 9. Jaswinder Singh 76,000 0.47 10. Gautam Tondon 25,000 0.15

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(B) Particulars of Top-Ten shareholders 10 days prior to the date of filing the Offer Document with ROC. No. of Shares (of % of post offer Sr. No. Name Rs.10/- each) capital 1. Trak Online Net India Private Limited 75,00,000 46.15 2. Jiwan Financial Holdings Limited 35,00,000 21.54 3. Sterling Capital Private Limited 21,00,700 12.93 4. Amarjit Singh Sawhney 8,00,000 4.92 5. Amicable Investment Services Private Limited 7,25,000 4.46 6. Tenancious Investment Services Private Limited 6,64,000 4.09 7. Rarities Capital Growth Private Limited 2,50,000 1.54 8. Well Built Investment Services Private Limited 2,20,000 1.35 9. Jaswinder Singh 76,000 0.47 10. Gautam Tondon 25,000 0.15

(C) Particulars of Top-Ten shareholders as on 15 April 2003 No. of Shares % of post offer Sr. No. Name (of Rs.10/- each) capital 1. Trak Online Net India Private Limited 75,00,000 46.15 2. Jiwan Financial Holdings Limited 35,00,000 21.54 3. Sterling Capital Private Limited 22,00,000 13.54 4. Amarjit Singh Sawhney 800,000 4.92 5. Amicable Investment Services Private Limited 7,25,000 4.46 6. Tenancious Investment Services Private Limited 6,64,000 4.09 7. Rarities Capital Growth Private Limited 2,50,000 1.54 8. Well Built Investment Services Private Limited 2,20,000 1.35 9. Jaswinder Singh 76,000 0.47 10. Gautam Tondon 25,000 0.15

10. Shareholding Pattern - Pre and Post Offer (On the assumption that the Offer is subscribed in full):

Sr. No. Category Pre-Offer as on 10.05.2005 Post-Offer

No. of Shares % of holding No. of Shares % of holding A. Promoter's Holding 1 Promoters - Indian Promoters 1,04,05,700 64.04 83,37,500 51.31 - Foreign Promoters 35,00,000 21.54 35,00,000 21.54 - 2 Persons acting in concert Sub-Total 1,39,05,700 85.57 1,18,37,500 72.85 B. Non-Promoter holding 1 Institutional Investors - - a. - Mutual Funds and UTI - - b. - BFSI (Central/ State Govt. Institutions/ NGO) - - c. - FIIs - -

2 Others a. - Private Corporate Bodies 19,39,000 11.93 b. - Indian Public 3,80,300 2.34 c. - NRIs / OCBs 25,000 0.15 d. - Any Other - Sub-Total 23,44,300 14.43 44,12,500 27.15 GRAND TOTAL 1,62,50,000 100.00 1,62,50,000 100.00 * Amarjit S. Sawhney is an NRI and holds 800,000 shares of the Company

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NOTES:

1. The shares issued on 26 March 2002 towards slump sale consideration to Trak Online Net India Private Limited were issued for consideration other than cash.

2. In the last six calendar months there has been no sale or purchase of shares of the Company by any category of its promoters.

3. The Company/Promoters/Directors/Lead Managers have not entered into buyback/standby or similar arrangements for purchase of securities offered by the Company.

4. The Shareholders of the Company do not hold any warrant, options, convertible loan or any debenture, which would entitle them to acquire further shares of the Company.

5. As per SEBI Guidelines, a minimum of 50% of the net offer to the public is reserved for allotment to individual investors applying for equity shares of or for a value of not more than Rs.1,00,000/-. The remaining 50% of the offer to the public is reserved to individuals applying for equity shares of or for a value more than Rs.1,00,000/- and corporate bodies/institutions etc.; unsubscribed portion in either of these categories shall be added to the other category interchangeably.

6. In the event of over-subscription, Allotment will be made on proportionate basis (subject to minimum allotment being equal to the minimum application size) as detailed under ‘Basis of Allotment’.

7. No single applicant can make an application for number of securities that exceeds the net offer to the public.

8. The Company has not issued any shares out of revaluation reserves or for consideration other than cash, except for the shares issued in lieu of slump sale consideration to Trak Online and as mentioned under the Share Capital History of the Company.

9. There would be no further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any other manner during the period commencing from submission of the Offer Document with SEBI until the Equity Shares offered through this Offer Document have been listed.

10. There shall be only one denomination of the Equity Shares of the Company, unless otherwise permitted by law. The Company shall comply with disclosure and accounting norms as may be specified by the SEBI from time to time.

11. No payment, direct or indirect in the nature of discount, commission allowance or otherwise shall be made either by the Company or the promoters or the Offerors to any persons who receive firm allotments in the offer for sale.

12. The Company has 3,481 shareholder members as on the date of filing the Offer document with ROC.

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

14. Specific written consents have been obtained from Promoter(s)/ Promoter Group for inclusion of their securities as part of Promoter/Promoter Group subject to lock-in.

15. The Company/ Offerors have not availed of any bridge loans against the proceeds of the Issue.

4. Objects of the Offer

4.1. Objects of the Offer

The objects of the Offer are: 1. To Comply with the listing norms of minimum 25 percent non promoter share holding 2. To enlist the equity shares of the Company on The Stock Exchange, Mumbai (BSE) where screen based trading facility is available - Listing on BSE will enhance the Company’s visibility and corporate image. It will also provide liquidity to the Company's existing shareholders.

4.2. Cost of Project / Means of Finance/Appraisal

This being an Offer for Sale of equity shares by existing shareholders of the Company, the data pertaining to cost of project and means of finance are not relevant. The Company will not receive any proceeds from the sale of the Equity Shares by the Offerors.

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4.3. Expenses of the Offer

The total expenses of the Offer are estimated to be approximately 9% of the total proceeds of this offer. The expenses of this Offer include management fees, printing and distribution expenses, legal fees, statutory advertisement expenses and listing fees payable to the stock exchange amongst others. All expenses, other than listing fees, with respect to the Offer would be borne by the Offerors.

4.4. Interim Use of Offer Proceeds

The Offeror undertakes that: · All monies received out of this offer of shares shall be transferred to a separate bank account other than the bank account referred to in sub-section (3) of section 73; of The Companies Act (1956); · The Offerors shall not have any recourse to the Offer proceeds until the approval for trading of the Equity Shares from the Stock Exchanges where the listing is sought, has been received.

5. Basic Terms of the Offer

5.1. Authority for the Present Offer

The Offeror, i.e., Sterling Capital Private Limited, has approved the present Offer vide their Consent Letter dated 30 March 2005. The Board of Directors of Net 4 India Limited, in their meeting held on 8 April 2005, has taken on record the proposed Offer for Sale of 20,68,200 equity shares out of the shares held by the Offerors.

5.2. Principal Terms and Conditions of the Offer

The Equity Shares now being offered are subject to the terms of this Offer Document, the Application Form and Memorandum and Articles of Association of the Company, the Guidelines for listing of Securities issued by Government of India and Guidelines issued by the Securities and Exchange Board of India (SEBI) from time to time, The Depositories Act (1996) and the provisions of The Companies Act (1956). In addition, the equity shares shall also be subject to such other terms and conditions as may be incorporated in the Letter of Allotment, Share Certificates, as per Guidelines, Notifications and other Regulations for the issue of the capital and listing of securities laid down from time to time by the Government of India and/or other authorities and other documents that may be executed in respect of equity shares.

5.3. Face Value of Equity Shares

Each Equity Share being offered is of face value of Rs. 10/- and is offered at a price of Rs. 20/- (including a premium of Rs. 10/- per share)

5.4. Ranking of Equity Shares

The Equity shares being offered shall be subject to the provisions of the Memorandum and Articles of Association. The Allottees will be entitled to dividend or any other corporate benefits (including dividend), if any declared by the Company after the date of allotment.

5.5. Terms of Payment

The Applications should be for a minimum of 250 equity shares and in multiples of 250 equity shares thereafter. The entire amount of Rs. 20/- per share is payable on application.

Share Capital (Rs.) Share Premium (Rs.) TOTAL (Rs.) On Application 10.00 10.00 20.00

Where an applicant is allotted lesser number of equity shares than he/ she has applied for, the excess amount paid on application shall be refunded to the applicant.

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5.6. Rights of the Equity Shareholders

· Right to receive dividend, if declared. · Right to attend General Meeting and exercise voting rights unless prohibited by law. · Right to vote either personally or by proxy. · Right to receive offer for rights shares and the allotted bonus shares. · Right to receive surplus on liquidation. · Such other rights as may be available to a shareholder of a Public Limited Company under The Companies Act (1956).

5.7. Marketable Lot

The Equity Shares of the Company shall be allotted in dematerialised form or physical form. In terms of existing SEBI Guidelines, the trading in the Equity Shares of the Company shall only be in dematerialised form for all investors. Since trading of the Equity Shares is in dematerialised mode the tradable lot is one equity share.

5.8. Minimum and Maximum Application Size

Applications should be for minimum of 250 Equity Shares and in multiples of 250 Equity Shares thereafter. An applicant cannot make an application for that number of Equity Shares exceeding the number of Equity Shares offered to the public.

5.9. Basis of Allotment

In the event of the Present Issue of Equity Shares being oversubscribed, allotment shall be made on a proportionate basis and the basis of allotment will be finalized in accordance with the SEBI Guidelines and in consultation with BSE (Designated Stock Exchange). The Executive Director/Managing Director of BSE along with the Lead Manager and the Registrar to the Issue shall be responsible to ensure that the basis of allotment is finalized in a fair and proper manner in accordance with the following guidelines:

5.9.1. Proportionate Allotment Procedure Allotment shall be on proportionate basis within the specified categories, rounded off to the nearest integer subject to a minimum allotment being equal to the minimum application size i.e. 250 Equity Shares.

5.9.2. Reservation for Retail Individual Investors The above proportionate allotments of Equity Shares in an Offer that is oversubscribed shall be subject to the reservation for Retail individual investors as described below: 1. A minimum 50% of the net offer of Equity Shares to the public shall initially be made available for allotment to retail individual investors, as the case may be. 2. The balance net offer of Equity Shares to the public shall be made available for allotment to: a. individual applicants other than retail individual investors, and; b. other investors including Corporate bodies/ institutions irrespective of the number of shares applied for. 3. The unsubscribed portion of the net offer to any one of the categories specified in (a) or (b) shall / may be made available for allotment to applicants in the other category, if so required. The draw of lots (where required) to finalize the basis of Allotment shall be done in the presence of a public representative on the Governing Board of BSE (designated stock exchange). The basis of allotment shall be signed as correct by the Executive Director/ Managing Director of BSE (designated stock exchange) and the public representative in addition to the Lead Manager and the Registrar to the Offer.

5.9.3. Despatch of Refund Orders The Offerors/ Company shall ensure despatch of Refund Orders of value up to Rs.1,500/- Under Certificate of Posting & Refund Orders of value over Rs.1,500/- and Share Certificates by Registered Post only. The Offeror shall make further, adequate funds for the said purpose available to the Registrar.

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5.9.4. Interest in Case of Delay in Dispatch of Allotment Letters/ Refund Orders The Offeror and the Company agree that as far as possible allotment of securities offered to the public shall be made within 30 days of the closure of the Offer. They further agree that it shall pay interest @ 15 percent per annum if the Allotment Letters/ Refund Orders have not been dispatched to the applicants within 30 days from the date of the closure of the Offer.

6. Basis of Offer Price

The following factors have been considered while arriving at the Offer price of Rs 20/- per Equity Share.

6.1. Qualitative Factors

· It is an established and profit making Company. · The Company is focussed on business of services related to Internet technology. · Professionally managed by a team of qualified personnel. · Proven track record with domestic as well as international customers. · Company has branch operations in 11 top cities across India · Customers include well-known corporate organizations, institutions, civic bodies and renowned individuals.

6.2. Quantitative Factors

1) Adjusted earnings per share (EPS) weighted on face value of Rs 10/- as per Accounting Standard 20

Year EPS (Rs.) Weight 2001/02 1.70 1 2002/03 1.20 2 2003/04 1.15 3 2004/05 (9 month)* 0.93 - Weighted Average (2001/02 – 2003-04) 1.26 - * Not Annualised

2) Price Earning Ratio (PE Ratio)

Particulars PE Ratio

Wtd. Average EPS (2001/02 – 2003 –04) = Rs. 1.26 16.23 Price of Share* = Rs. 20.45

Industry P/E** - Highest 14.3 - Lowest 1.6 - Average 9.5

* Last traded price as on April 2002 at the Delhi Stock Exchange ** Based on “Capital Market” Vol. XX/05 dated May 09- May 22, 2005 for Telecommunications – Service Provider. Trailing Twelve Months P/E Ratio has been taken into consideration.

3) Return on Net Worth (RONW)

Year RONW (%) Weight 2001–02 5.99 1 2002–03 7.17 2 2003–04 6.42 3 Weighted Average 6.59

Minimum return on total net-worth after issue needed to maintain Pre-Issue EPS of Rs. XXX is XXX% at issue price of Rs. XX per share -Not Applicable since it is an offer for sale.

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4) Net Asset Value (NAV) per share

Particulars NAV (Rs.) As on March 31, 2004 17.97 As on December 31, 2004 (Pre Offer) 18.88 Post – Offer for Sale (Assuming 100% Subscription) 18.88 Offer Price Rs. 20.00

5) Comparison of accounting ratios of the Company with the peer group for the FY 2003-04

Company EPS (Rs.) PE Ratio RONW (%) Book Value/ Share (Rs.) Net4India Limited Rs 1.15 15.63 6.42 17.97 Peer – MTNL 15.00 7.70 12.46 174.4 Peer – VSNL 12.80 16.00 7.05 181.30 Peer information based on “Capital Market” Vol. XX/05 dated May 09 – May 22, 2005 for Telecommunications – Service Provider

The face value of shares is Rs. 10/- per Equity Share and the Offer Price is Rs. 20/- per Share. The Offer Price is 2 times the face value

The Lead Manager believes that the Offer Price of Rs. 20/- is justified in view of the qualitative and quantitative parameters. The Investors may want to pursue the risk factors and the financials of the Company including important profitability and return ratios, as set out in the Auditors’ report in Part V of the Offer Document to have a more informed view of the investment proposition

7. Tax Benefits

The Company has been advised by M/s. Sandy Associates, Chartered Accountants of the Company vide their letter dated 18 April 2005 that under the current direct tax laws, the tax benefits interalia will be available to the Company and the shareholders of the Company. A shareholder is advised to consider in his own case the tax implications of an investment in the shares.

TO THE COMPANY The Company will be entitled to claim depreciation allowance at the prescribed rates on tangible and intangible assets under Section 32 of the Income Tax Act, 1961.

TO THE RESIDENT MEMBERS OF THE COMPANY In terms of section 10(38) of the Income Tax Act, 1961 , any long term capital gains arising to a shareholder from transfer of long term capital asset being an equity share in a company would not be liable to tax in the hands of the shareholder if the following conditions are satisfied: (a) The transaction of sale of such equity share is entered into on or after 10th September, 2004. (b) The transaction is chargeable to Securities Transaction tax. As per the new section 111A of the Income Tax Act, 1961, introduced by the Finance Act 2004, and other relevant provisions of the Act, short term capital gains (i.e. if shares are held for a period not exceeding 12 months), arising on transfer of shares shall be taxed at a rate of 10% if the transaction is subject to Securities Transaction Tax. Dividends (whether interim or final) declared, distributed or paid by the Company on or after April 1, 2003 are exempt in the hands of shareholders as per the provisions of Section 10(34) of the Act. Shares of the company held by the shareholder will not be treated as an asset within the meaning of Sec 2(ea) of Wealth Tax Act, 1957 and hence Wealth Tax will not be applicable. Gift made after 1st October 1998 is not liable for any gift tax and hence gift of shares of the company would not be liable for any gift tax.

Notes: In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisor with respect to specific tax consequences of his/her participation in the scheme.

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IV. ABOUT NET 4 INDIA LIMITED

1. Industry Overview

1. In 2004 the number of Internet subscribers in India was over 5 million. It is set to reach 14 million by 2007. The country is poised for significant growth in broadband users, as more and more homes and workplaces will be taking advantage of the competitive bandwidth prices. According to CII National Broadband Committee, India would have 10 million broadband subscribers by 2010 and 35 million by 2020. 2. BFSI, IT and BPO are the leading consumers of Internet bandwidth and telephony services, followed by the retail/ home segment. The growth in Internet allied services is driven by demand from manufacturing, government and other services segments in the forms of e-business, e-governance and distance learning. These segments demand website hosting, server colocation and domain name registration services. Most business enterprises, small and large, are demanding corporate e- mail service and corporate website presence. Gartner Research expects the spending on IT services by Indian enterprises to grow by 17% in 2005 and reach INR 10,500 crores (USD 2.3 billion). The market growth is also apparent from the rise in PC penetration. According to MAIT, the PC penetration in the country grew by 32% p.a. between 2002/03 and 2003/04. It expects the hardware market to reach USD 62 billion in value-terms by 2010. 3. The larger enterprises are migrating much of their business-to-business (B2B) transactions to online platforms, thus leading their partners and associates to adopt the same. Organisations are adopting e-business practices such as web integration of ERP, reverse auction (for procurement) and online customer support. BFSI companies have significantly enhanced their public interaction through their Internet interface. Most banks are not only offering Internet banking services (including e- payments and e-transfers) but also encouraging customers to use it. The volume of securities trading in the secondary market through online interfaces is also reported to be growing with more and more small investors finding such infrastructure more convenient, clarified and controllable. Boston Consulting Group predicts online transactions in India will hit INR 195,000 crores (GBP 28.5 billion) by 2005. With fewer, more dependable online retailers, the overall customer confidence in electronic transaction is being reinstated. The need to authenticate electronic transaction websites as ‘trusted’ is also driving the SSL Certification market. 4. Economic globalisation in India is also benefiting the Internet services industry. With growing international business, the volume of international telephone calls from India is increasing. With the allowance of Internet telephony by the Government, the residents in India can now call international destinations at very economical rates through Internet lines. The volume of long distance tele calling from India is growing. PC-to-phone traffic is expected to grow to 211 million minutes by 2007, according to a report by iLocus, a leading industry research group. The firm says some six million minutes of PC-to-phone traffic originate from Indian ISPs every month. IDC India translates this into a market opportunity of Rs 3,370 million in 2008. Internet telephony traffic is estimated to reach 1,130 million minutes of usage by 2008. This will benefit the Internet Telephony service providers in India. 5. The Government support for the Internet industry is paramount. Recently the Ministry of Communication & Information Technology reported its plans to spend USD 36 billion for improvement of the communication infrastructure in the country. With the shakeout of non-serious ISP during 2002/03, the Indian Internet industry now looks more mature and stable. The players in the industry are those who can deliver the goods. In all the future of the industry looks bright.

2. Business Overview

2.1. Products & Services

1. Net 4 India Limited provides Internet access, IP Telephony, Server co-location, Website hosting, Domain name registration and SSL certificate services. It distributes IP hardware products including VoIP devices, servers, storage devices and datacom equipments (incl. Wireless). 2. The Company has Network Operating Centres (NOC) in Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad and Pune. All these locations also have Internet Data Centres (IDC), excepting Kolkata. These IDC are built with world-best technologies (Cisco, Intel, etc.) and supported by state-of-the-art security, monitoring and server management systems. 3. The Company provides Internet and allied services under the license of Trak Online, which is a licensed Internet Service Provider (Category ‘A’) and licensed Internet Telephony Service Provider. Net 4 India Ltd. is headquartered in New Delhi and has branch operations in cities of Delhi, Mumbai, Chennai, Bangalore, Kolkata, Pune, Hyderabad, Chandigarh, Ahmedabad, Coimbatore and Cochin. 4. The services of the Company are grouped as under: § WEB PRESENCE. The Company offers website hosting, server co-location, domain name registration services, corporate e-mailing solution and SSL certificates. It is currently providing hosting facilities to over 75,000 websites. It currently holds a listing of 30,000 .in domains and 1,70,000 registered names in its name-servers. In 2001 Veri Sign Inc voted the Company as Asia Pacific Champion for Domain Registration Service.

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§ ENTERPRISE ACCESS. The Company offers Broadband access to corporate organizations and retail subscribers over copper wire or wireless network. The access is used for general Internet usage, remote server management and international telephony. The Company has recently obtained wireless frequency license at 3.3 GHz in addition to its usage of 2.4 GHz range. While the corporate clients are serviced directly, the retail users are served through a network of local area business partners. § VOICE SERVICE. Net 4 India Ltd. provides a range of Internet telephony and voice over IP network services. Internet telephony services include long distance international calling from India and other countries. Currently Net4India handles 7,00,000 international telephone calls originating from India every month. The current customer base exceeds 2,50,000 of which 500 are renowned Indian corporate enterprises. The Company has also empowered over 900 public telephone booths with IP-enabled international dialling. § HARDWARE PRODUCTS. Net 4 India Ltd. markets range of IP hardware products. It offers Dial-up IP phone (for dial-up Internet users) and SOHO routers. Our forthcoming products will include a series of wireless, VoIP and conferencing devices. The Company proposes to target the distributors and system/network integrators for this service segment.

2.2. Sustainability and Growth of Business

1. The company operates its marketing and sells at two levels – dichotomised as ‘Direct Business’ and ‘Channel Business’. While Direct business helps the company in providing a depth of services to each individual customer and obtaining higher contribution per account, the Channel business provides the necessary market reach and sales volume. It offers a range of VAS and incentives for maintaining and strengthening customer loyalty and partner commitment. 2. To absorb any domestic demand shocks, the Company has expanded its sales network in international market through a chain of resellers. It sells its services in Canada, USA and in select countries of Africa, Middle East and Europe. About 5% of the Company’s total revenues are generated from exports. 3. To ensure service stability, and hence sustainability, the Company has invested in building adequate infrastructure for dependency and contingency management. Such infrastructure is available for, but not limited to, electrical power supply, bandwidth supply, inter-city network, data-storage system and application servers. The layers of redundancy allows near 99.99% service uptime. Contingency system has also been built for disaster avoidance and management including fire, virus attacks and physical intrusion. This allows the Company to provide “safe and secure” solution to the customers. 4. The IDC and NOC designs of Net 4 India Ltd. are indigenously designed and are hence unique. This serves as a competitive advantage for the Company. 5. The Company’s products and services are designed/ improvised so as to offer end-to-end solution to most enterprises and institutions. This offers a significant opportunity to cross sell. Each service is also graded by capabilities. This allows up selling opportunities to clients over time. A combination of the two ensures a long-term association with most of the existing high net- worth clients.

2.3. Marketing Operations

1. The Company has employed 276 personnel as on 30 April 2005, of which 60% are engaged in sales & marketing activities. In addition, the Company has appointed distributors, dealers and resellers. At present there are over 120 distributors catering to 5,500 retail outlets across 55 urban areas in India. Besides, there are self-managed (or owned) retail outlets in 15 metropolitans. The Company has an electronic ordering systems, supply management and accounting systems in place. 2. The IP-enabled payphone booths commissioned by the Company remain one of its prominent and widely spread channel network. There are over 500 franchised Public telecom outlets offering Internet Telephony services, spread all over India. The numbers are growing every day. 3. Following are the estimates of the market shares for the Company as per services provided as on 31st March 2004, based on industry estimates.

Sl. No. Service [Service Group] Market Share (Estimates) 1. Domain Registration [Web Presence] 20% 2. Web Site Hosting (Direct customers) [Web Presence] 15% 3. Server Colocation [Web Presence] 15 - 20% 4. Internet Telephony (% of legal market) [Voice Service] 20% 5. Internet Access [Enterprise Access] 5% Source: Industry (on best estimate basis)

2.4. Business Strategy & Future Prospects

1. Net 4 India Ltd. will remain focused on Internet technology area and offer higher benefits to its existing and new customers through emerging technologies. 2. It will increase its reach using wireless technology so as to reduce dependency on telecom line providers who are deemed as competition.

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3. The Company will continue to expand its business partner network to thrust its Channel business and gain greater market reach without significant resource deployment over a larger territory. 4. The Company may also contemplate in increasing its branch operations in other Indian cities so as to build brand visibility and better Channel manageability. 5. In Direct business it will emphasize on government contracts and longer-term contracts with corporate institutions. 6. Besides technology services the Company will also aim to provide technical resource services for onsite technology management. 7. The Company is also prospecting into manufacturing of select IP hardware.

2.5. Key Industry Regulation

The New Telecom Policy, The IT Act and the regulations and stipulations issued by the TRAI and DOT from time to time, guides the Industry.

2.6. Capacity and Capacity Utilization

The Company is operating in the Information Technology services domain and so the requirement of Capacity and Capacity Utilization cannot be technically applied to them, the company being a service provider.

2.7. Competitive Strengths

The Company relies on its Intellectual Capital and licensed technologies for remaining competitive in the market. It has a proven track record of implementing projects with minimum time-to-market and successfully managing them in India and overseas. The range and depth of services offered by the company are unique and not matched by any other business operations in India.

2.8. Insurance

The Insurers of the Company are

Insurance Company Address 1. The New India Assurance Co. Ltd. M-66 M Block Market, Greater Kailash, New Delhi 110 048 2. National Insurance Co. Ltd 13/32,WEA, Arya Samaj Road, Karol Bagh, New Delhi 110 005 3. United India Insurance Co. Ltd K-41, Connaught Place, Opp. Plaza Cinema, Ist Floor, New Delhi 110 001 4. Bajaj Allianz General Insurance Company Ltd. C 31/32, 1st floor, Connaught place, New Delhi 1100 001

The Company has insurance policies of the following nature: 1. Insurance of standard fire, burglary and special perils policy for furniture, fixtures and fittings, building(s), electrical & fittings in the office premises (renewed with Bajaj Allianz General Insurance Company Ltd. w.e.f. 19.05.2005) 2. Money Insurance Policy (renewed with Bajaj Allianz General Insurance Company Ltd. w.e.f. 19.05.2005) 3. Burglary & standard fire and special perils policy for stock 4. Overseas Leisure Travel Insurance 5. Marine Cargo (Open Policy for stock)-Inland 6. Transit Insurance

2.9. Property

As per the audited balance sheet dated 31st December 2004, the Company own only one property at D-25, Sector-3, NOIDA, Uttar Pradesh measuring up to 780 sq. mt.

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2.9.1. Leased Properties All branches & other office premises are on lease/ rent basis. The detail of all leased/ rented property is as under:

City Branch Address Landlord Area Covered Period of Lease Lease Deposit Aishabai & Haji Abdul Latif 614-616, Terrace, Shah Charitable Trust Nahar Industrial Estate 15.10.20004 – 1 Mumbai C/O Sopariwala Export, "Nirmal" 7,130 sq. ft. Rs. 7,90,500 Dr. E. Moses Road, Worli, 15.07.2007 21st Floor, Nariman Point Mumbai 400 018 Mumbai 400 021 Rakesh Todi 7-B, Suryarath, Panchvati 1, Milan Park CHS 01.04.2004 – 2 Ahmedabad Ist Lane, Ellisbridge, 695 sq. ft. Rs. 1,08,000 Vastrapur 31.12.2007 Ahmedabad 380 006 Ahmedabad 380 015 E-24 & E-25 , Penta Menaka Shopping Ram Bahadur Singh VIII/1549 25.08.2004 – 3 Cochin Complex, Shanmugham (Old No: CC 8/1547) A.K. Road 700 sq. ft. Rs. 1,00,000 24.07.2005 Road Ernakulam, Cochin Cochin 682 002 682 031 4/f, A ‘Nawazish’ Mr. Mohamed Ali 30, Khader Nawaz Khan 17 30, Khader Nawaz Khan 1.4.2004 – 4 Chennai (1) 1,200 sq. ft. Rs. 1,58,400 Road, Nungambakkam, Road, Nungambakkam, Chennai 31.03.2007 Chennai 600 006 600 006 Mrs. Tahseen Faizan 4/f, B ‘Nawazish’ GB, ‘Nawazish’ 30, Khader Nawaz Khan 1.07.2003 – 5 Chennai (2) 30, Khader Nawaz Khan Road 2,090 sq. ft. Rs. 1,37,940 Road, Nungambakkam, 30.06.2006 Nungambakkam, Chennai 600 Chennai 600 006 006 4/f, C ‘Nawazish’ Mr. Mohamed Ali 30, Khader Nawaz Khan 17, 30, Khader Nawaz Khan 1.07.2003 – 6 Chennai (3) 1,300 sq. ft. Rs. 1,71,600 Road, Nungambakkam, Road, Nungambakkam, Chennai 30.06.2006 Chennai 600 006 600 006 ’Chicago Avenue’ 37/2, Mr. Noor Mohammed Sait & Mr. 5.07.2003 – 7 Bangalore (1) Cunningham Road M. Ismai Sait, 37/12 Cuningham - Rs. 5,42,400 4.06.2006 Bangalore Road, Bangalore 560052 M/s Tanay Trade Links Pvt. Ltd. 302, ’Chicago Avenue’ 304, ‘Chicago Avenue’ 1.6.2003 – 8 Bangalore (2) 37/2, Cunningham Road 568 sq. ft. Rs. 1,32,000 37/2 Cunningham Road 31.05.2006 Bangalore Bangalore 102, ’Chicago Avenue’ M/s Ifcon Multiple Services 1.4.2004 – 9 Bangalore (3) 37/2, Cunningham Road 102, Chicago Avenue, 37/2, - Rs. 2,76,000 31.03.2006 Bangalore Cunningham Road, Bangalore M/s Parm Financial Service (P) 1/f, SCO No. 201-202-203 Ltd. 1.1.2005 – 10 Chandigarh Sector 34 , (Sub City 600 sq. ft. Rs. 1,08,000 SCO 1112-13, Sector 22-B 31.12.2007 Centre), Chandigarh Chandigarh M/s Infinite Products Pvt. Ltd. 2B, Pretoria Street, 17.09.2002 – 11 Kolkata 2B, Pretoria Street, Kolkata 1,700 sq. ft. Rs. 50,000 Kolkata 700 071 16.09.2005 700071 AB-11, Community B.R. Estates Pvt. Ltd. M-25, GK 13 Delhi (1) Centre, Safdarjung II Market, 3,399 sq. ft. 1.9.2004 –31.8.2007 Rs. 3,60,000 Enclave, New Delhi New Delhi 110 048 703, Bhikaji Cama M/s Ram Bahadur Thakur 1.2.2001 –31.1.2004 Bhawan Limited 14 Delhi (2) 1,472 sq. ft. extended further to Rs. 2,64,960 11, Bhikaji Cama Place A-10, Maharani Bagh May, 2005 New Delhi 110 066 New Delhi 110 065 Ground Floor Anil Bali B-4/101/1, Safdarjung A-502, Raheja Vihar, 15.9.2003 – 15 Delhi (3) - Rs. 13,500 Enclave Opp. Chandiwala Studio 14.9.2005 New Delhi 110 029 Pawai, Andheri (East), Mumbai Lt. Col. T.S. Bakshi House B-4/47, Safdarjung No.12 1.1.2000 – 16 Delhi (4) Enclave Sector-8A - Rs. 3,00,000 31.12.2005 New Delhi 110 029 Chandigarh-160018 (Lessee: Trak Online) 710, Navketan Hyderabad Commercial Complex Mazhar Hussain, 16-1-27/C//21 01.08.2004 – 17 673 sq. ft. Rs. 96,000 (1) S.D. Road Secunderabad Saidabad, Hyderabad 500029 30.06.2005 500 003 710, Navketan Hyderabad Commercial Complex Mrs. A.W. Juairah, 16-1-27/C//21 01.08.2004 – 17 673 sq. ft. Rs. 96,000 (2) S.D. Road Secunderabad Saidabad, Hyderabad 500029 30.06.2005 500 003 Mr. D. Md. Rafi under POA from 113, Navketan D.M.K. Basha of 11-2-337/7 Hyderabad Commercial Complex, 01.6.2003 – 18 Anna Nagar, Mylargadda, 780 sq. ft. Rs. 1,00,000 (3) S.D. Road Secunderabad 31.05.2006 Secunderabad 500 003 (Lessee: Trak Online)

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# 49, Cellar, Navketan D.M.K. Basha Hyderabad Commercial Complex, 11-2-337/7 Anna Nagar, 01.10.2004 – 19 190 sq. ft. Rs. 1,00,000 (4) S.D. Road Secunderabad Mylargadda, Secunderabad 31.05.2006 500 003 (Lessee: Trak Online) Mrs.Vaijayanti Vishwas Vishwas Bungalow Sarpotdar Off. Ghole Road 1/f, Vishwas Bungalow Off. 20.2.2004 – 18 Pune 950sq. ft. Rs. 1,25,000 Shivaji Nagar Ghole Road 19.11.2006 Pune 411 005 Shivaji Nagar Pune 411 005 Chenneys Chambers, Chenneys Chambers 9/36A, Dr. 8.12.2003 – 17 Coimbatore 9/36A Dr. Nanjappa Road Nanjappa Road, 120 sq. ft Rs. 6,000 8.12.2005 Coimbatore 641 018 Coimbatore 641 018

2.9.2. Purchase of Property The Company does not propose to purchase or acquire any property in current financial year.

2.10. Financial Performance of Net 4 India Limited

Rs in Lakhs Period ending Year ending Year ending Year ending Year ending Year ending 31.12.20004 (9 31.03.2004 31.03.2003 31.03.2002 31.03.2001 31.03.2000 months) Total Income 2766.84 3276.60 2970.67 2287.89 612.44 13.37 PAT 147.32 191.80 194.58 144.99 93.77 0.84 Equity Capital 1625.00 1625.00 1625.00 1625.00 775.00 25.00 Reserves 1445.43 1294.46 1107.10 911.57 (89.84) 15.87 Dividend (%) Nil Nil Nil Nil Nil Nil EPS (Rs.) 0.93 1.15 1.20 1.70 (4.43) 0.37 Book Value (Rs. /Share.) 18.88 17.97 16.78 28.44 28.59 16.35 *EPS for the period April 1, 2004 to December 31, 2004 has not been annualised.

Net 4 India Limited is not a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1955 or is under winding up.

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3. History and Corporate Structure

3.1. Background

1. Net 4 India Limited was originally incorporated as a public limited company under the provisions of the Companies Act (1956) on November 29, 1985 as “Mangla Chemicals Limited” & obtained Certificate for Commencement of Business on December 12, 1985 from The Registrar of Companies, Delhi and Haryana, New Delhi with the main object of manufacturers, producers, processors, refiners blenders, granulators graders, packers, exporters & importers, agents, buyers, sellers and dealers in all kind of organic chemicals, alum of all grades, pyrites-hydrogen chlorine, polymers, essence and all raw materials, intermediates and compounds required for manufacture of the products. 2. The name was changed to “Trident Developers Limited” vide fresh certificate of incorporation dated April 25, 1994 and “Amulet Developers Limited” vide fresh certificate of incorporation dated October 13, 1998 and subsequently to “Net Four Internet.com Limited” vide fresh certificate of incorporation dated August 3, 2000 and finally to the current name “Net 4 India Limited” vide fresh Certificate of Incorporation obtained on February 28, 2001 from the said Registrar of Companies. 3. The Registered Office of the Company is located at B-4/47, Safdarjung Enclave, New Delhi 110 029, India. The Registered Office was earlier located at E-1/6, East Patel Nagar, New Delhi 110 008 and was changed to S-527 Greater Kailash II, New Delhi 110 048 w.e.f. August 1, 1993 and to 10-D Sagar Apartments, 6, Tilak Marg, New Delhi 110 001 w.e.f July 20, 1994 and to its present location w.e.f. 5 January 2000 4. The Company came out with a public issue on January 21, 1986 for 2,49,930 equity shares (including 99,300 Equity Shares reserved for Promoters) for Rs. 10/- each at par to meet the working capital requirement. The issue was listed with Delhi Stock Exchange. 5. In 1999-2000 the management decided to amend the object clause so as to permit the Company in dealing in Information Technology related activity. To reflect the new business line the name of the Company was changed to Net Four Internet.com Limited in August 2000. The Company made a preferential Issue in December 2000 to fund its foray into the Information Technology arena by way of Issue of 7,50,000 Equity Shares. In February 2001 the name was changed to Net 4 India Limited, when the ROC started allotting names with numeric digits. 6. In order to acquire the business of Trak Online and improve the liquidity, the Company came with another preferential Issue in March 2002 of 85,00,000 Equity Shares. The Company acquired the business of Trak Online under a slump sale agreement in March 2002 and balance 10,00,000 Equity Shares of Rs. 10/- each at a premium of Rs. 10/- for cash. The value of preferential allotment was based on valuation report by M/s Uberoi, Sood and Kapoor Chartered Accountants. The listing of the equity shares allotted under this preferential issue is pending as it results higher promoters holding than as prescribed by the SEBI and also due to a valuation query poised by The Stock Exchange Delhi vide letter no. DSE/LIST/5114/R/Q92 dated March 31, 2004 regarding the Allotment of 75,00,000 shares to M/s Trak Online in 2002. Subsequently the Company had appointed M/s Bhandari Dastur Gupta & Associates, Chartered Accountants, a BSE approved valuor for the valuation of the assets against which 75,00,000 shares were issued to Trak Online. M/s Bhandari Dastur Gupta & Associates, Chartered Accountants have submitted its Report. As per this Report the total value of assets is Rs. ______, which justifies the preferential allotment made to Trak Online against the slump sale consideration. 7. The Shares of the Company are listed on The Delhi Stock Exchange Association Limited (DSE), and there has been no trading since April 2002.

3.2. Important Events in the History of Net 4 India Limited

Year Event 1985 Incorporation Initial Public Offer of 2,49,930 Equity Shares of Rs.10/- each at par of which 99,030 shares were 1986 reserved for subscription for promoters, Directors etc. and balance 1,50,000 shares were offered to the public. 2000 Change in the Object Clause of MOA and started the business relating to Internet 1999 Launched Internet bandwidth service 2000 Preferential Issue of 75,00,000 Equity Shares aggregating of Rs. 750 Lakhs for Rs. 10 per share 2000 Commissioned 6 IDC and became India’s largest domain registration service 2001 The name was changed to Net 4 India Ltd., when ROC started allotting names with numeric digits 2001 Adjudged the largest domain registration company in Asia Pacific by VeriSign Inc. Preferential Issue of 85,00,000 Equity Shares of Rs.10/- each at a premium of Rs.20/-per share 2002 aggregating to Rs. 17 Crores 2002 Started Internet Telephony Services first time in India 2003 Commercial launch of Broadband Service 2004 Appointed as accredited registrar for .in domain.

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3.3. Changes in the Memorandum of Association of the Company

Since incorporation of the Company, the following changes have been incorporated in the Memorandum, after approval of the Members:

Particulars Date of Meeting Type of Meeting

Amendment in MOA increasing the Authorised Share Capital to Rs. 20,00,00,000 divided 17.03.2004 Members into 2,00,00,000 Equity shares of Rs. 10/- each.

Amendment in MOA, increasing the Authorised Share Capital to Rs. 17,00,00,000 divided 04.02.2002 Members into 1,70,00,000 Equity shares of Rs. 10/- each.

Change of name from Net Four Internet.com Limited to Net 4 India Limited 18.01.2001 Members

Amendment in MOA, increasing the Authorized Share Capital to Rs. 8,00,00,000 divided 30.11.2000 Members into 80,00,000 Equity shares of Rs. 10/- each.

Change of name from Amulet Developers Limited to Net Four Internet.com Limited 30.05.2000 Members

Change in the Object Clause III-A by deleting sub-clauses 1, 2, 3, 4 and 5 and adding sub clauses (2) and (3) immediately after existing sub-clause (6) re-designated as sub-clause 13.03.2000 Members (1). Change in the Object Clause III-A by adding sub-clauses (4), (5) and (6) after the existing 03.09.1999 Members sub-clause (3)

Amendment in MOA, increasing the Authorized Share Capital to Rs. 1,00,00,000 divided 07.02.1999 Members into 10,00,000 Equity shares of Rs. 10/- each

Change of name from Trident Developers Limited to Amulet Developers Limited 12.08.1998 Members

Change of name from Mangla Chemicals Limited to Trident Developers Limited 25.04.1994 Members

3.4. Key Customers

Company is providing services to the corporate enterprises and reputed institutions including public offices. The following are some of the esteemed direct-clients of the Company acquired against multiple service lines: · Brakes India Ltd. – Website Hosting service · Computer Age Management Services (CAMS) – Website Hosting service · DTDC Logistics – Website Hosting service · Indian Oil Ltd. – E-mail Service · Larsen & Toubro – Voice Service and Hardware · Nicholas Piramal –E-mail Service · Procter & Gamble (India) Ltd. - Leased line Internet access · Ranbaxy Labs – Website Hosting Service · Sahara Lake City - Leased line Internet access · Secretariat, TN Govt. - Leased line Internet access · Sony Entertainment Television – Website Hosting Service · State Bank of India – SSL Certificate · Tata Consultancy Service - Voice Service and Hardware · Versant (India) - Leased line Internet access · Zensar Technologies - Leased line Internet access

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3.5. Main Objects of the Company

1. To carry on the business of exporters, importers, buyers, sellers, producers, distributors, suppliers, designers, maintainers, repairers, consultants, traders and dealers in all kinds of software and hardware and to carry on the said business in India or elsewhere in the world by itself or through agents or others as may be deemed proper. 2. To carry on the business of providing off-the shelf, ready-to-use Internet, web site planning, designing, maintenance, promotion, business consulting and domestic roaming, online registration to connect to the internet on demand, Computer based Multimedia Training to learn about the Internet, security from virus attacks and control on sites accessed. Adobe Acrobat Reader to read Internet files, Power Zip to compress and extract big files, hi speed dial up access; super-fast host servers; web hosting, providing full-fledged search training, data transmission, electronic art; providing electronic commerce, solutions to Indian businesses, ranging from network solutions to sophisticated Internet-commerce solutions; electronic conferencing, developing, creating, designing and making computer software of all kinds, complete installation and technical support including configuration of any equipment purchased from the Company, technical support regarding Internet applications and Internet related software development and space on the World Wide Web Server. 3. To carry on the business of and to act as agents, distributors representatives, traders, stockists, importers, exporters, entitlement negotiators and for that purpose manufacture, buy, sell, exchange, market, pledge, distribute or otherwise manufacture and deal in commodities, goods, articles, materials and things of every description related to Computers.

3.6. Subsidiaries of the Company

There are no subsidiaries of the Company

3.7. Financial / Strategic Partners

Among the core promoters of the Company is M/s Jiwan Financial Holdings Ltd, a firm registered in Mauritius. M/s Jiwan Financial Holdings had invested a sum of Rs. 3,50,00,000 in Net 4 India Ltd. against equity holding of 35,00,000 shares allotted on 18 December 2000.

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4. Management

The Company is a professionally managed organization. The Company functions under the control of a Board consisting of professional Directors. The day-to-day matters are looked after by qualified key personnel, under the supervisions of a Chairman (Executive) and a Managing Director.

4.1. Board of Directors

Remuneration* Name and Address Date of Birth Qualification Other Directorship Shares Held (Rs. Lakhs) (2003-2004) Amarjit Singh Sawhney Whole Time Director S/o Late Sh. Jiwan Singh Jiwan Financial Holdings 02.01.1941 Graduation in Economics 8,00,000 15.86 70, Poorvi Marg Ltd. Vasant Vihar New Delhi, INDIA Jasjit S. Sawhney Law from University of Net 4 Barter (P) Ltd. Managing Director London, Development Jiwan Financial Holdings S/o Amarjit S. Sawhney Economics of India from 30.09.1973 Ltd. Nil 11.10 70, Poorvi Marg School of Oriental and National Internet Vasant Vihar African Studies, University Exchange of India (NIXI) New Delhi, INDIA of London Desi S. Valli Whole Time Director B.E. Electronics & S/o Sh. S. Vallinaygam 17.11.1972 Nil Nil 3.61 Communication B-4/128, Safdarjung Enclave New Delhi 110029, INDIA Sandip K. Ghosh Non- Executive Director S/o Late Sh. S.N. Ghosh 12.05.1951 Chartered Accountant Net 4 Barter (P) Ltd. Nil N/A 205-206, Double Storey New Rajinder Nagar Delhi, INDIA Manish Wadhavan Non- Executive Direcor S/o Sh. Subash Wadhavan S-2, Paradise Plaza 24.06.1975 Graduate Nil Nil N/A Alaknanda Commercial Complex New Delhi 110019, INDIA Ms. Biba Sawhney Non–Executive Director D/o Amarjit Singh Sawhney 03.01.1971 Graduate Nil Nil N/A 41, Ravenscoft Avenue, Wembley, London UNITED KINGDOM Bharat Chawla Non-Executive Director S/o M. Chawla 05.12.1975 Graduate Nil Nil N/A S-258, Greater Kailash II New Delhi, INDIA *Non Executive Directors are entitled only the sitting fee. No commission/remuneration is payable to them.

The brief profile of the Board members, other than promoters, is given below: SANDIP K. GHOSH is a graduate in Commerce from St. Xaviers’ College (Kolkata) and a qualified Chartered Accountant. He has over 27 years of experience in accounting and financial management. He started his career in 1977 with Avery India Ltd. and as the Divisional Accountant and rose to position of Vice President (Finance). He was appointed as Whole Time Director of Net 4 India Ltd. and was designated as Chief Finance Officer (CFO) of the company with effect from 1 October 2001. He resigned from the post of whole-time directorship w.e.f April 1, 2003 but consented to continue to act as Non-executive Director. In 2004 he was appointed as Chairman of the Company. He is also the Chairman of Audit Committee, Shareholders and Investors Grievance Committee, Remuneration Committee and Member of Management Committee. DESI S. VALLI is B.E. Electronics & Communication and presently working as Whole Time Director (Technology & Operations). He joined Net 4 India Ltd. as GM (Networking). He was appointed as Director with effect from October 1, 2001 and by virtue of his appointment he became Whole Time Director. He has experience in systems integration and network engineering. He does not hold the directorship in any other company. He is the member of Management Committee of the Net 4 India Ltd. BHARAT CHAWLA is a successful entrepreneur with good knowledge of business administration and management. He joined the Board of Net 4 India Ltd. with effect from 28 September 2001 as Non-executive Director. He does not hold the directorship in any other Company. He is the Member of Audit Committee, Remuneration Committee and Shareholders & Investors’ Grievance Committee of the company.

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MANISH WADHAVAN is a successful entrepreneur. He is on Board of Net 4 India Ltd. as Non-executive Director since 1999. He joined the Board with effect from 23 October 1999 as Non-executive Director. He does not hold the directorship in any other Company. He is the member of Audit Committee, Remuneration Committee and Shareholders & Investors’ Grievance Committee of the Company. BIBA SAWHNEY is an entrepreneur and operates apparel retailing in the United Kingdom. She is a highly talented executive with experience in several industries. She helps the Company, selectively, with international sales. She does not hold directorship with any other company registered in India.

4.2. Borrowings Powers

Vide a resolution passed at the Annual General Meeting of the Company held on 28.09.2001 consent of the members of the Company was accorded to the Board of Directors of the company pursuant to Section 293(1)(d) of the Companies Act, 1956 for borrowing from time to time the sum of monies which together with the monies already borrowed by the Company will not exceed 50 crores.

4.3. Appointment and Remuneration of Directors

4.3.1. Jasjit Singh Sawhney – Managing Director The Board of Directors of the Company in their meeting on 5 January 2000 appointed Mr. Jasjit Singh Sawhney as an Additional Director. In the Board Meeting held on 26 March 2001, Mr. Jasjit S. Sawhney was appointed as Managing Director for a period of 2 years commencing from 1March 2001. The Members in their Meeting held on 28 September 2001 confirmed his appointment. The Board of Directors of the Company at their meeting held on 21 March 2003 re-appointed Mr. Jasjit S. Sawhney as Managing Director of the Company for a period of 3 years commencing from 1 March 2003. The Members of the Company have approved the said appointment by passing necessary Ordinary Resolution at their Annual General Meeting held on Tuesday, 30 September 2003. The Board of Directors at their meeting held on 21 March 2003 resolved to increase the remuneration of Jasjit S. Sawhney from Rs. 1.15 lakhs p.m. to Rs. 1.50 lakhs p.m. with effect from 1 April 2003. The said increase was approved by the members of the Company in their Annual General Meeting held on 30 September 2003. The remuneration payable to Jasjit S. Sawhney is as under:

SALARY. Remuneration in the range of Rs. 1,00,000.00 to Rs. 3,00,000.00 per month.

PERQUISITES. Perquisites (evaluated as per Income Tax Rules, wherever applicable, and at actual cost to the company in other cases) like the benefit of the company’s furnished accommodation, gas, electricity, water and furnishings, club fees, personal insurance, use of car and telephone at residence or reimbursement of expenses in lieu thereof, medical reimbursement, leave and leave travel concession, education benefits, provident funds, Superannuation benefits, gratuity and other retirement benefits in accordance with the scheme (s) and rule(s) applicable to the members of the staff from time to time, for the aforesaid benefits. In case company owned accommodation is not provided, Jasjit S. Sawhney shall be eligible for house rent allowance as per the Company Rules and maintenance of accommodation including the furniture and fixtures, as may be provided by the company.

BONUS/ COMMISSION. An amount up to 100 % of his annual salary or such other sums as may be determined by the Board or any Committee thereof, based on achievement of such performance parameters as may be laid down by the Board or any Committee thereof.

In the event of absence or inadequacy of net profits in any financial year, Section II of Part II of Schedule XIII of the Companies Act (1956) or any modification (s) thereto, shall govern the remuneration payable to Jasjit S. Sawhney. Further, the Board of Directors of the Company at their meeting held on 11th February, 2005 resolved to increase the remuneration payable to Jasjit Singh Sawhney with effect from 1st January, 2005 subject to the approval of shareholders in their ensuing General Meeting.

The monthly remuneration payable to Jasjit Singh Sawhney in terms of said resolutions is as under: Basic: Rs. 2,05,000 HRA Rs. 1,02,500 TOTAL: Rs. 3,07,000

OTHER PERQUISITES AND ALLOWANCES: In addition to the salary, he shall also be entitled to perquisites like rent free furnished accommodation, medical allowance/ reimbursement, electricity, water, gas, and soft furnishing, leave travel concession for himself and his family, club fees, medical insurance, earned leave, benefits of Provident Fund and Gratuity Fund, Car, Telephone etc. in accordance with the rules of the Company. In case Company provides the rent free furnished accommodation, he will not be paid house rent allowance as mentioned herein above.

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Provided the total remuneration payable to him by way of Salary of perquisites shall not exceed 5% of Net Profits of the Company calculated in accordance with section 198 and 309 read with Schedule XIII, and other applicable provisions, if any, of the Companies Act (1956).

MINIMUM REMUNERATION: Notwithstanding anything contained herein, where in any financial year, during the tenure of Jasjit Singh Sawhney, Managing Director, the Company has no profits or its profits are inadequate in any financial year, the remuneration payable to him shall be governed by Schedule XIII of the Companies Act (1956) or any Statutory modification thereof.

4.3.2. Amarjit Singh Sawhney – Whole Time Director The Board of Directors of the Company in their meeting on 5 January 2000 appointed Mr. Amarjit Singh Sawhney as an Additional Director. The Board of Directors of the Company at their meeting held on 21 March 2003 appointed Amarjit Singh Sawhney as Whole Time Director of the Company for a period of 3 years commencing from 1 April 2003 to 31 March 2006. The Members of the Company have approved the said appointment by passing necessary Ordinary Resolution at their Annual General Meeting held on Tuesday, 30 September 2003. The Board of Directors at their meeting held on 21 March 2003 resolved to pay remuneration to Amarjit S. Sawhney as enumerated below with effect from 1 April 2003. The said remuneration was approved by the members of the Company in their annual general meeting held on 30 September 2003. Details of the appointment are as follows: “RESOLVED THAT subject to the provisions of the Section 198, 269, 309 and Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956, Mr. Amarjit Singh Sawhney be appointed as Whole Time Director (Treasury & Banking Operations) of the Company for a period of three years effective April 1, 2003 and on the following terms and conditions: a) Salary Remuneration in the range of Rs. 75,000.00 to Rs. 3,00,000.00 per month. The Board or any committee thereof, be and is hereby authorised in its absolute discretion and from time to time, to fix, within the range stated above, the salary payable to Mr. Amarjit Singh Sawhney. b) Perquisites Perquisites (evaluated as per Income Tax Rules, wherever applicable, and at actual cost to the Company in other cases) like the benefit of the Company’s furnished accommodation, gas, electricity, water and furnishings, club fees, personal insurance, use of car and telephone at residence or reimbursement of expenses in lieu thereof, medical reimbursement, leave and leave travel concession, education benefits, provident benefits, superannuation benefit, gratuity and other retirement benefits in accordance with the scheme(s) and rule(s) applicable to the members of the staff from time to time, for the aforesaid benefits. In case company owned accommodation is not provided, Mr. Amarjit Singh Sawhney shall be eligible for house rent allowance as per the Company Rules and maintenance of accommodation including the furniture and fixtures, as may be provided by the Company. c) Bonus/ Commission An amount up to 100% of his annual salary or such other sums as may be determined by the Board or any Committee thereof, based on achievement of such performance parameters as may be laid down by the Board or any Committee thereof. In the event of absence or inadequacy of net profit in any financial year, the remuneration payable to Mr. Amarjit Singh Sawhney shall be governed by Section II of Part II of Schedule XIII of the Companies Act, 1956 or any modification(s) thereto.

4.3.3. Desi S. Valli – Whole Time Director The Board of Directors of the Company in their meeting on 6 September 2001 appointed Mr. Desi S. Valli as Whole Time Director for a period of three years w.e.f. 1 October 2001. The appointment was approved by the Members of the Company on 28 September 2001. The Board of Directors in their Meeting on 30 September 2004 reappointed Mr. Desi Valli for another term of 3 years w.e.f. 1 October 2004 subject to the approval of members in the ensuing General Meeting of the members of the Company. The remuneration payable to Desi S. Valli is as under: a) Salary Remuneration in the range of Rs. 35,000.00 to Rs. 100,000.00 per month.

The remuneration committee thereof, be and is hereby authorised in its absolute discretion and from time to time, to fix, within the range stated above, the salary payable to Mr. Desi S. Valli.

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b) Perquisites Perquisites (evaluated as per Income Tax Rules, wherever applicable, and at actual cost to the Company in other cases) like the benefit of the Company’s furnished accommodation, gas, electricity, water and furnishings, club fees, personal insurance, use of car and telephone at residence or reimbursement of expenses in lieu thereof, medical reimbursement, leave and leave travel concession, education benefits, provident benefits, superannuation benefit, gratuity and other retirement benefits in accordance with the scheme(s) and rule(s) applicable to the members of the staff from time to time, for the aforesaid benefits. In case company owned accommodation is not provided, Mr. Desi S Valli, shall be eligible for house rent allowance as per the Company Rules and maintenance of accommodation including the furniture and fixtures, as may be provided by the Company. In the event of absence or inadequacy of net profit in any financial year, the remuneration payable to Mr. Desi S Valli shall be governed by Section II of Part II of Schedule XIII of the Companies Act, 1956 or any modification(s) thereto. Further, the Board of Directors of the Company at their meeting held on 11 February 2005 resolved to increase the remuneration payable to Desi. S. Valli with effect from 1 January 2005 subject to the approval of shareholders in their ensuing General Meeting. The remuneration payable to Desi S. Valli in terms of said resolutions is as under: Basic: Rs. 1,62,500 HRA: Rs. 35,500 TOTAL: Rs. 1,98,000

OTHER PERQUISITES AND ALLOWANCE: In addition to the salary, he shall also be entitled to perquisites like rent free furnished accommodation, medical allowance/ reimbursement, electricity, water, gas, and soft furnishing, leave travel concession for himself and his family, club fees, medical insurance, earned leave, benefits of Provident Fund and Gratuity Fund, Car, Telephone etc. in accordance with the rules of the Company. In case Company provides the rent free furnished accommodation, he will not be paid house rent allowance as mentioned herein above. Provided the total remuneration payable to him by way of Salary of perquisites shall not exceed 5% of Net Profits of the Company calculated in accordance with section 198 and 309 read with Schedule XIII, and other applicable provisions, if any, of the Companies Act (1956).

MINIMUM REMUNERATION: Notwithstanding anything contained herein, where in any financial year, during the tenure of Desi S. Valli, Whole Time Director, the Company has no profits or its profits are inadequate in any financial year, the remuneration payable to him shall be governed by Schedule XIII of the Companies Act (1956) or any statutory modification thereof.

4.4. Corporate Governance

The Company is already a listed company and hence the provisions of Corporate Governance are applicable. The Company has already constituted various committees in accordance with the requirements of the Code of Corporate Governance under the Listing Agreement.

4.4.1. Composition of the Board of Directors The Composition of the Board of the Directors, as on date, is given below:

Sr. No Name Representing Type of Directorship 1. Sandip K. Ghosh Independent Chairman 2. Amarjit Singh Sawhney Promoter Group Whole Time Director 3. Jasjit Sawhney Promoter Group Managing Director 4. Desi Valli Independent Whole Time Director 5. Manish Wadhvan Independent Director 6. Bharat Chawla Independent Director 7. Biba Sawhney Promoter Group Director The Company has already constituted the following committees and framed their terms of reference.

Audit Committee: The terms of reference of audit committee comply with the requirements of Clause 49 of the listing agreement to be entered in to with the Stock Exchanges. The audit committee consists of three independent directors including the chairman: 1. Sandip K. Ghosh, Chairman 2. Manish Wadhvan 3. Bharat Chawla

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The Audit committee monitors and provides effective supervision of financial reporting, for timely and proper disclosures and to maintain transparency.

Shareholders and Investors Grievance Committee: The present shareholders and investors grievances committee consists of three independent directors including the chairman: 1. Sandip K. Ghosh, Chairman 2. Manish Wadhvan 3. Bharat Chawla The committee shall perform the function of handling shareholders and investor’s grievances and expeditiously dispose off their grievances.

Remuneration Committee: A Remuneration Committee was constituted by the Board of Directors in their meeting held on March 26, 2001. The Committee was reconstituted w.e.f. January 30, 2004. The Present members of the Committee are: 1. Sandip K. Ghosh, Chairman 2. Manish Wadhvan 3. Bharat Chawla

Management Committee: The present members of the Management Committee are as under: 1. Sandip K. Ghosh 2. Amarjit Singh Sawhney 3. Jasjit Sawhney 4. Desi S. Valli

4.4.2. Interest of Promoters and Directors All the Directors may be deemed to be interested to the extent of the sitting fees and other remuneration for the services rendered and the reimbursement of expenses, if any, payable to them under the Articles. The Directors may also be deemed to be interested to the extent of: 1. The shares, if any, held by them or by the relatives or by firms or companies of which any of them is a Partner and a Director / Member respectively. 2. The shares, if any, out of the present issue that may be subscribed for and allotted to them or their relatives or any company in which they are Directors / Members of to firms in which they are Partners. 3. Transactions with entities in which Directors are interested have been disclosed as Related Party Transactions in the Auditor’s Report. The Managing Director is interested to the extent of the remuneration paid to him for services rendered to the Company. Further the Managing Director is interested to the extent of equity shares held by him and also to the extent of any dividends payable to him and other distributions in respect of the said Equity Shares. The Whole Time Directors are interested to the extent of the remuneration paid to them for services rendered to the Company. Further they are interested to the extent of equity shares held by them and also to the extent of any dividends payable to them and other distributions in respect of the said Equity Shares. Except as stated elsewhere in the Document, the Company has not entered into any contracts, agreements or arrangement in which the Directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangement or are proposed to be made.

4.4.3. Payment of Benefit to Promoters and Officers of the Company: Except as stated in the Document, no amount or benefit has been paid or given to the Company’s Promoters or Officers since the incorporation of the Company nor is intended to be paid or given to any Promoter or any Officer of the Company except their normal remuneration and /or reimbursement for services as Directors, Officers or Employees of the Company or otherwise in accordance with law.

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4.4.4. Changes in Board Of Directors During Last Three Years

Name Date of Appointment Date of Resignation Reason Resignation from Whole Time Directorship but continued as non- SANDIP K. GHOSH 01.10.2001 01.04.2003 executive Director SANJEEV BATRA 13.07.1994 05.01.2004 Resigned from Directorship UDAY SODHI 01.10.2001 01.04.2004 Resigned from Directorship IQBAL GANDHAM 01.10.2001 30.06.2004 Resigned from Directorship

4.5. ORGANIZATION STRUCTURE

BOARD OF DIRECTORS S. K. Ghosh (Chairman)

Amarjit S. Sawhney Jasjit S. Sawhney Desi S. Valli Director (F&A, Legal) CEO, MD Director (Operations)

Sr. Manager Company Secretary General Manager General Manager General Manager Head (Finance & Accounts) (Corporate Strategy) (Marketing) (Commercial) (NOC & Integration)

Reg. Accountants/ Executives Managers/ Managers/ Manager Team Executives (Legal & Secretarial) Executives Executives

General Manager General Manager (Sales) (International Sales) Executives

Head Head Branch Heads Manager/ (Systems) (Customer Care) Regional Mgrs. Executives Executives Team Team

4.5.1. Key Managerial Personnel As on 28 February 2005, Net 4 India employs 275 personnel in various capacities. The Company’s management team is made up of qualified professionals with experience in management in their respective fields of expertise. The Managing Director and Executive Director are assisted in their day-to-day responsibilities by a team of professionals as under: Gross Date of Work Exp. Area of Remuneration Name Designation Qualification Birth (Years) Specialization (2003-04) (Rs. Lakhs) Finance, Accounts & Amarjit S. Sawhney Director 02.01.1941 BA (Eco) 37 15.86 Legal Jasjit S. Sawhney CEO 30.09.1973 B.A (Law & Eco), UK 5 Sales & Marketing 11.10 Director Desi S. Valli (Technology & 17.11.1972 B. Tech (Electronics) 5 Technical 3.61 Operations) Sugato Das GM (Strategy) 26.05.1971 MA (Eco), Ph D 10 Strategy & Planning 5.87

Gurpreet S. Ahuja GM (Marketing) 07.11.1969 B.E. (Electronics) 15 Sales & Marketing 7.15

R.Prasanna GM (Sales) 02.09.1973 M. Com., MBA 14 Sales & Marketing 5.50 GM (International Vishesh Gupta 20.11.1969 B.A., MBA 15 Sales & Marketing 5.26 Sales) Company Joined in Krishan Kumar 15.11.1969 B. Com, ISI 11 Secretarial & Legal Secretary May,2004 Swagata Roy Sr. Mgr. (F&A) 19.10.1975 BA (Eco), ACA 4 Finance & Accounts 2.30

SUGATO DAS, Head of Strategy. M.A. (Eco) from Delhi School of Economics and a Ph.D. from IIFT. He has 10 years experience in strategy and management consulting. After brief stint with NCAER, he joined Reliance Industries as a Business Analyst for petrochemicals. He joined Net 4 India Limited in August 2000.

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GURUPREET S. AHUJA, Head of Marketing. B.E. (Electronics) from Pune University. He has over 14 years of experience. He has worked with IT companies like Microland, PCL and Everex. His last assignment before joining Net4India was with NIIT in Malaysia. He joined Net 4 India Limited in January 2001.

R. PRASANNA, Head of Sales. M.Com and MBA from Annamalai University. He started his career with Wings Systems Pvt. Ltd. and later joined Compact Systems. He joined Net 4 India Limited in April 2000.

VISHESH GUPTA, Head of International Sales.BA and MBA from Himachal University. He has an enriching 13 years of experience. He was Regional Manager with Business India Information Technology Limited and joined Net 4 India Ltd. in May 2000.

KRISHAN KUMAR. Company Secretary. B. Com (H) from Delhi University and a qualified Company Secretary. He has earlier worked with SR Oils & Fats Ltd. as an Assistant Company Secretary, and then as a full-rank Company Secretary with M/s Shiva Medicare Ltd. and M/s Usha India Ltd. He joined Net 4 India Ltd. as its Company Secretary in May 2004.

SWAGATA ROY, Sr. Manager – Finance & Accounts. BA (Economics) from Lady Shriram College, Delhi University and a qualified Chartered Accountant. She joined Net 4 India Ltd. as Manager (F&A) in 2002.

The persons whose names appear as key management personnel are on the rolls of the Company as permanent employees. There is no arrangement or understanding with major shareholders, customers, suppliers or others pursuant to which any person was selected as director or member of senior management. None of the key managerial personnel have any relationship with the promoters or directors of the company.

4.5.2. Shareholding of Key Managerial Personnel

Name Number of Equity Shares Amarjit Singh Sawhney 800,000

4.5.3. Bonus or Profit Sharing Plan of the Key Managerial Personnel There is no fixed or certain bonus or profit sharing plan for the key managerial personnel. However, sometimes, the Company makes ex-gratia payments to its employees on the basis of their performance.

4.5.4. Changes in Key Managerial Personnel During the Last 3 Years

Name Designation Date of Joining Date of Cessation Reason Akhilesh Sureen GM Operations 14.06.2000 31.03.2003 Resigned Sreenivas Chedda GM (Business) 29.12.2003 17.12.2004 Resigned Sumit Rasiwasia Company Secretary 25.01.2001 07.02.2004 Resigned Jayant Gupta Company Secretary 01.03.2004 08.04.2004 Resigned Sanjit Chatterjee Head (Channel Marketing) 22.11.2000 12.02.2005 Resigned

4.5.5. Loans to Key Managerial Personnel There are no loans outstanding against key managerial personnel as on 20 May 2005.

4.5.6. Employees The total manpower directly employed by the Company is 276 as on 30 April 2005 including site staffs. For entire labour requirement, the Company banks mainly on its labour contractors.

4.5.7. Disclosures Regarding 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.

4.5.8. Payment or Benefit to Officers of the Company Except the payment of salaries and perquisites, the Company makes ex-gratia payments to its officers as and when it deems fit.

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5. Promoters of the Company

5.1. Promoter Individuals

1. MR. AMARJIT SINGH SAWHNEY NAME AMARJIT SINGH SAWHNEY DESIGNATION Whole Time Director

DRIVING LICENSE NUMBER N.A. PASSPORT NUMBER 093033034 PAN AUTPS5111R VOTER ID N.A.

BACKGROUND Amarjit Singh Sawhney is the promoter of Net 4 India Limited and is the present Whole Time Director. Amarjit Singh Sawhney is an entrepreneur with over 37 years of experience in business operations. He had established and operated businesses in Iran and United Kingdom across several industries including apparel manufacturing, realty and steel trading. He had schooled at St. Joseph’s Academy, Dehradun and graduated in Economics from Agra University (1961). The Company benefits from his rich experience in business and finance. He was appointed to the Board on. 5 January 2000 and was appointed as Whole Time Director on 21 March 2003.

NAME JASJIT SINGH SAWHNEY DESIGNATION Managing Director

DRIVING LICENSE NUMBER N.A. PASSPORT NUMBER 500293601 PAN AUJPS2460H VOTER ID N.A.

BACKGROUND Jasjit Singh Sawhney aged 32 years is the current Managing Director of Net 4 India Limited, did his BL from London. Jasjit Singh Sawhney is the Founder, CEO and Managing Director of Net 4 India Limited. He is considered among the youngest entrepreneurs in India. He had schooled at Welhams School, Dehradun, and graduated in Economics & Law from University of London. He started his professional career as a foreign currency trader in London bourses. Thereafter he worked as a consultant with O-net, a premier London-based ISP, where he subsequently became Director of Operations. He founded Net 4 India Ltd. in 1999. The Ministry of Communications & Information Technology has appointed him to the Board of National Internet Exchange of India. He is also a key member of the committees on telecom and IT at CII and FICCI.

5.2. Promoter Group Companies

The details of the promoter group companies are as follows. Company Name TRAK ONLINE NET INDIA PRIVATE LIMITED PAN AABCT3071E Registration 55-063244 of 1994-95 Nature of Business Information Technology Background The company was incorporated as a private limited company on December 6, 1994 under the name and style of Borealis Polymers Private Limited. The name was subsequently renamed as Trak Polymers Private Limited vide fresh Certificate of Incorporation dated 2 March 1999 and was subsequently renamed to its current name vide fresh certificate of incorporation dated November 25, 1999. The company holds ISP category A and ITSP Licenses issued by the Govt. of India and used by its appointed agent Net 4 India Ltd. As on 31 March 2004, the company had a net worth of Rs. (582.46) lakhs. The authorized share capital of the company is Rs. 50,00,000/- comprising 47,000 equity shares of face value Rs.100/- each and 3,000 unclassified shares of Rs.100/- each and the paid up share capital as on March 31, 2004 was Rs. 3,000,000/- comprising of 30,000 equity shares of Rs. 100/- each fully paid up.

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Company Name JIWAN FINANCIAL HOLDINGS LIMITED PAN NA Registration File No. 13474/1111 Nature of Business Investment and Holding Company Background The company was incorporated as a private company by shares on October 14, 1994 in Port Louis Mauritius vide Certificate of Incorporation dated October 17, 1994. It has an Offshore Certificate issued by The Mauritius Offshore Business Activities Authority, Republic of Mauritius. The main business activity of the company is investments. As on December 31, 2003, the company had a negative net worth of US $ 182,379. The authorized share capital of the company is US$ 10,000 comprising 10,000 ordinary shares of US$ 1 each.

Company Name STERLING CAPITAL PRIVATE LIMITED (The Offeror) PAN AAECS5325B Registration 55-83453 Nature of Business Investment Company Background The company was incorporated as a private limited company on November 22, 1996. The main business activity of the company is investments. As on March 31, 2004, the company had a net worth of Rs. 252.77 lakhs. The authorized share capital of the company is Rs. 26,000,000/- comprising 2,600,000 equity shares of face value Rs.10/- each and the paid up share capital as on March 31, 2004 was Rs. 25,335,200/- comprising of 2,533,520 equity shares of Rs. 10/- each fully paid up.

The details of the litigation, disputes towards tax liabilities or criminal / civil prosecution / complaint against the above mentioned promoters have been disclosed in the chapter “Outstanding Litigations and Disputes” The Permanent Account Number, Bank account number and passport number of the promoters shall be submitted to the stock exchange on which securities are proposed to be listed at the time of filing the Draft Offer Document with them.

5.3. Related Party Transactions

Please refer “Related Party Disclosures” as mentioned in the Auditors’ Report given in this Offer Document on page number ______.

6. Exchange Rates

95.25% of Net 4 India revenues during FY 2003/04 came from India. Its predominant focus is on the domestic market only. Thus, its revenues are not directly affected by fluctuations in foreign exchange rates.

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V. FINANCIAL INFORMATION

1. Financial Information of Net4india

We the Lead Managers to the Offer, confirm that all notes to the accounts, significant accounting policies as well as the Auditors Qualifications if any have been incorporated.

1.1. Auditors’ Report

Sandy Associates 104 Delhi Chamber Delhi Gate, New Delhi 11002 To The Board of Directors, Net 4 India Ltd B-4/47, Safdarjung Enclave New Delhi 110 029

Dear Sirs,

We have examined the financial information of Net 4 India Ltd (‘the Company’) described below in A and B and annexed to this report and initialed by us for identification. The said financial information has been prepared in accordance with the requirements of paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (‘the Act’), the Securities and Exchange Board of India (“SEBI”) – Disclosure and Investor Protection Guidelines, 2000, subsequent amendments and related clarifications. The financial information has been prepared by the Company and approved by the Board of Directors of the Company.

A. Financial Information As Per Audited Financial Statements:

We have examined the attached statement of Profits and Losses as restated to reflect the retrospective effect of the accounting policies adopted by the Company as at December 31, 2004, of the Company for the years ended March 31, 2000, 2001, 2002, 2003, 2004 and for the 9 months ended December 31, 2004 (Annexure I), the attached statement of assets and liabilities as at those period end dates as restated to reflect the retrospective effect of the accounting policies adopted by the Company as at December 31, 2004 (Annexure II), and related information (Annexure V).

Based on our examination of the audited financial statements of the Company and the adjustments made to the aforesaid financial information to arrive at the restated statements, we state that :

· The restated profits and losses have been arrived at after charging all expenses and making such adjustments and regroupings as in our opinion are appropriate in the respective years / period.

· The statements of the Company have been restated with retrospective effect, wherever possible, to reflect the accounting policies adopted by the Company as at December 31, 2004. These are explained in Annexure III.

· There are no qualifications in the auditors’ reports that require any adjustment to the Statements.

· There are no extra-ordinary items that need to be disclosed separately in the Summary Statements.

B. Other Financial Information

We have examined the following financial information relating to the Company proposed to be included in the Prospectus, approved by the Board of Directors and annexed to this report : a. Summary of accounting ratios based on the restated profits relating to earnings per share, net asset value and return on net worth (Annexure VI) b. Tax Shelter Statement (Annexure VII) c. Capitalisation statement of the Company (Annexure VIII)

This report is intended solely for your information and for inclusion in the Prospectus in connection with the proposed Public Issue by the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.

For Sandy Associates Chartered Accountants

Sandeep Gupta (Membership No. 86069) Partner

New Delhi April 18, 2005

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1.2. Statement of Adjusted Profit & Loss Account

Rs. in lakhs

01.04.04 - For the Year / Nine Months ended 1999-00 2000-01 2001-02 2002-03 2003-04 31.12.04

Income Sales and Services 13.37 612.40 2,238.55 2,969.51 3,228.25 2,765.17 Other Income - 0.04 49.34 1.16 48.35 1.67 Increase/(Decrease) in Stock in trade - - 114.56 199.41 146.86 135.10 Total 13.37 612.44 2,402.45 3,170.08 3,423.46 2,901.94

Expenditure Cost of finished goods and services - - 658.24 1,073.74 1,233.98 878.87 Connectivity Charges - - 229.01 143.21 111.70 311.61 Personnel Cost 5.85 197.94 371.61 501.44 591.61 468.95 General and Administrative Expenses 3.45 23.79 483.79 524.52 585.50 478.76 Selling and Marketing Expenses 0.33 284.76 94.08 165.27 108.61 72.74 Interest 0.33 0.48 43.71 78.31 115.76 85.72 Depreciation and amortization 1.92 3.10 326.27 410.08 376.13 353.05 Prior Period Adjustments - - 12.65 4.71 (0.79) 3.65 Total 11.88 510.07 2,219.36 2,901.28 3,122.50 2,653.35

Net Profit before tax 1.49 102.37 183.09 268.80 300.96 248.59 Provision for Taxation Income Tax 0.66 8.60 14.00 21.20 59.00 87.01 Deferred Tax - - 24.10 53.02 50.16 14.26 0.66 8.60 38.10 74.22 109.16 101.27

Profit after tax 0.84 93.77 144.99 194.58 191.80 147.32 Less: Deferred tax/Depreciation - - 186.83 - 6.07 - Balance of Profit brought forward 15.03 15.87 109.64 67.80 262.38 448.11 Profit available for appropriation 15.87 109.64 67.80 262.38 448.11 595.43

Adjustments as per SEBI guidelines Prior Period - 12.65 4.71 (0.79) 3.65 - Deferred tax - 186.83 - - - - Depreciation - - 1.52 4.55 - - Total - 199.48 6.23 3.76 3.65 - Tax impact of adjustments ------

Adjusted Profit available for appropriation 15.87 (89.84) 61.57 257.10 444.46 595.43

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1.3. Statement of Adjusted Assets & Liabilities

Rs. in lakhs

March 31, March 31, March 31, March 31, March 31, December 31, As at 2000 2001 2002 2003 2004 2004

FIXED ASSETS Gross block 15.86 1,339.61 2,157.33 2,351.66 3,112.22 3,420.14 Less: Depreciation and amortization 8.06 3.10 184.44 599.47 975.60 1,317.48 Net block 7.80 1,336.51 1,972.49 1,752.19 2,136.62 2,102.66 Add : Capital work-in-progress - - - - 190.91 237.47 7.80 1,336.51 1,972.49 1,752.19 2,327.53 2,340.13

INVESTMENTS 0.18 0.18 0.18 70.68 70.50 70.50

CURRENT ASSETS, LOANS & ADVANCES Inventories - - 114.56 313.96 460.83 595.93 Sundry Debtors - - 960.96 1,235.32 1,266.50 1,720.32 Cash and Bank Balances 17.78 39.94 41.29 16.09 16.30 58.16 Other Current Assets - 10.84 78.96 105.74 104.13 136.36 Loans and Advances 17.81 45.50 424.89 675.98 608.53 680.14 35.59 96.28 1,620.66 2,347.09 2,456.29 3,190.91 Less: LIABILITIES & PROVISIONS Secured Loans 0.36 - 443.12 751.86 933.35 1,343.82 Unsecured Loans - - - 61.19 304.27 221.50 Deferred Tax Liability - 186.82 210.93 263.95 314.10 328.37 Current Liabilities - 554.62 386.32 306.45 274.22 435.71 Provisions 2.34 9.17 23.17 59.32 112.32 203.64 2.70 750.61 1,063.54 1,442.77 1,938.26 2,533.04 MISCELLANEOUS EXPENDITURE (to the extent not written of/adjusted) - 2.80 6.78 4.91 3.40 1.93

NET WORTH 40.87 685.16 2,536.57 2,732.10 2,919.46 3,070.43

Represented by: Share Capital 25.00 775.00 1,625.00 1,625.00 1,625.00 1,625.00 Reserves & Surplus 15.87 (89.84) 911.57 1,107.10 1,294.46 1,445.43

NET WORTH 40.87 685.16 2,536.57 2,732.10 2,919.46 3,070.43

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1.4. Significant Accounting Policies

1.4.1. Basis of Accounting The financial statements have been prepared under the historical cost convention on an accrual basis, in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956, and the Accounting Standards issued by the Institute of Chartered Accountants of India.

1.4.2. Fixed Assets and Depreciation Tangible Assets: Fixed assets are stated at cost, less accumulated depreciation. Costs directly attributable to the purchase of fixed assets are capitalized until fixed assets are ready for use. Capital work-in-progress comprises of advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended use before the balance sheet date.

Depreciation: Depreciation of Fixed Assets is provided on a pro-rata basis on the written down value method at the rates prescribed under Schedule XIV to the Companies Act, 1956. Individual assets costing less than Rs. 5,000 are depreciated in full in the year of purchase.

Intangible Assets and Amortisation: The management has assessed the future economic benefits using reasonable and supportable assumptions. As per the management’s estimate § Cost of hosting platform and cost of technology are amortised over a period of 8 years. § Cost of Trademarks is amortised over a period of 20 years. § Goodwill is being amortised over a period of 10 years.

Trademarks represent the brand image of the company and constitute an asset with no limited useful life. Based on advice received by the management and as per the provisions of the Trade Marks and Merchandise Act of 1999, the company can retain the ownership and registration of the trademarks perpetually by renewing the registration at the end of every ten years, leading to the view that the useful life of its trademarks is unlimited. However, as a matter of abandon precaution, the cost of the Trademarks is being amortised over a period of 20 years.

1.4.3. Investments Long Term Investments are stated at cost. Provision for diminution in their value is made only if such a decline is other than temporary in the opinion of the management.

1.4.4. Revenue Recognition The Company recognises revenue on accrual basis. § Revenue from the sale of hardware/software products is recognised when the sale is completed with the passing of title. § Revenue from services is recognized in the ratio of period expired over the total agreement period. § Revenue from Fixed Price Contracts is recognised as per the terms of the respective agreements.

1.4.5. Foreign Currency Transactions Transactions denominated in foreign currencies are booked at standard rates determined periodically and the resulting gain or loss on settlement is accounted for on actual realization. Monetary current assets and monetary current liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resulting gain or loss is also recorded in the Profit & Loss Account.

1.4.6. Inventories Inventory is valued at lower of cost (determined on First In First Out basis) and estimated net realisable value. Cost is inclusive of all purchase costs and other costs incurred in bringing the inventories to their present location and conditions.

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1.4.7. Retirement Benefits The company’s contributions towards recognized Provident Fund is charged periodically to revenue on an accrual basis. Gratuity has been provided in the Profit and Loss Account as per the provisions of the Payment of Gratuity Act, 1972. Provision for Leave encashment is made on the basis of unutilised leave due to employees at the end of the year.

1.4.8. Research and Development Revenue expenditure incurred on research and development is expensed as incurred. Capital expenditure incurred on research and development is depreciated over the estimated useful lives of the related assets, where management ascertains that costs incurred will be more than covered by resultant gains over a specific period of time.

1.4.9. Borrowing Cost Interest and other costs in connection with the borrowing of funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalized up to the date when such assets are ready for its intended use and other borrowing costs are charged to Profit & Loss Account.

1.4.10. Earning Per Share Basic earning per share (EPS) is calculated by dividing the net profit after tax for the year (including the post-tax effect of extraordinary items, if any) attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

1.4.11. Taxation Tax expense for the year comprises of current tax and deferred tax. Deferred tax resulting from “timing differences” between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the asset will be realized in future.

1.4.12. Miscellaneous Expenditure Expenses incurred on increase in authorised capital have been capitalised and are being written off over a period of five years commencing from the year of increase.

1.4.13. Contingent Liabilities Contingent Liabilities are disclosed by way of Notes. Provision is made in the accounts for those contingencies which are likely to materialize into liabilities after the year end, till the finalisation of accounts, and have material effect on the position stated in the Balance Sheet.

1.5. Notes on Adjustments

Changes in accounting policies a. Depreciation Until the year ended March 31, 2003, no amortization was being provided on goodwill. In order to comply with the Accounting Standard 26 on Intangible assets issued by the Institute of Chartered Accountants of India, the Company has amortised goodwill over 10 years, with retrospective effect. Accordingly, the fixed assets have been restated and amortization has been recomputed for the years ended on March 31, 2002 and March 31, 2003. b. Deferred Tax The Company adopted Accounting Standard 22, Accounting for taxes on Income issued by the Institute of Chartered Accountants of India for the first time in preparing the financial statements for the year ended March 31, 2002. Accordingly, for the purpose of this statement, the deferred tax asset/liability has been recognized in the respective years of origination, and after considering the adjustment on account of change in accounting policy and other changes with the corresponding effect to the statement of profits, as restated.

Prior Period Adjustments In the financial statements for the year ended March 31, 2002, March 31, 2003, March 31, 2004 and the nine months ended December 31, 2004, the Company had recognized / charged off certain amount of Income and Expense as prior period. For the purpose of this statement, the said income / expense have been appropriately adjusted in the years that it relates to.

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Current Tax Impact of Adjustments Current tax impact of adjustments pertains to tax effect on restatement adjustments provided at the tax rates applicable in the respective years.

1.6. Selective Financial Information

All amounts in the financial statements are presented in Rupees lakhs, except for share data and as otherwise stated. Previous year’s figures have been regrouped, rearranged and reclassified wherever necessary to conform to current year’s classification.

Contingent Liabilities Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favour of various government authorities and others amounting to Rs. 35.35 lakhs. (31.03.04 -Rs. 2.81 lakhs).

Capital Commitments Estimated amount of contracts remaining to be executed on capital accounts not provided for (net of advance) – Rs.28.29 lakhs. (31.03.04 – Rs.0.33 lakhs)

Miscellaneous Expenditure Miscellaneous Expenditure (to the extent not written off /or adjusted) of Rs.1.93 lakhs (31.03.04 – Rs. 3.40 lakhs) represents expenses incurred on increase in authorized capital and is being written off over a period of five years.

Provision for Investments The company evaluates all investments for any diminution in their carrying values that is other than temporary.

Provision for Doubtful Debts Periodically the company evaluates all customer dues to the company for collectibility. The need for provisions is assessed based on various factors including collectibility of specific dues, risk perceptions of the industry in which the customer operates, and general economic factors, which could effect the customer’s ability to settle.

Sundry creditors, to the extent to which they could be identified as small scale and ancillary undertakings on the basis of information available with the company, do not include any amount, which is outstanding for more than one month in excess of Rupees One Lakh.

Leases The company’s leasing arrangements are in respect of operating leases for premises (residential, office, stores etc). These leasing arrangements which are not non cancellable range between 11 months and 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms.

Security for Secured Loans Term Loans are secured by way of first charge on entire fixed assets of the company including equitable mortgage of land and proposed building under construction and further secured by way of extension of charge on entire current assets, both present and future.

Working capital loans are secured by way of hypothecation of stocks, receivables and all movable assets and further secured by charge on all fixed assets of the company, both present and future, including equitable mortgage of land and proposed building under construction.

Facilities are further secured by equitable mortgage of certain immovable assets of directors and pledge of FCNR deposits and further by personal guarantee of directors and their relatives. Vehicle Loans have been secured by way of hypothecation of the vehicles.

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Unsecured Loan of Rs.221.50 lakhs includes Rs. 220.00 lakhs as interest free unsecured loan from a Promoter/Director and Rs.1.50 lakhs from a body corporate, being a related party.

Non-Operating Revenues Other Income, (nett of related expenses) as per the statement of adjusted Profit & Loss, has exceeded net profit before tax by 20% only in the FY 2001-02 on account of non recurring commission income of Rs. 36.09 lakhs out of total non operating revenue of Rs. 49.34 lakhs.

Segment Reporting The proportion of international services revenue to the total revenue is insignificant, being less than 10%, therefore has not been reported separately. As such all other related activities revolve around the main business. i.e. internet related services. Hence there are no such separate reportable segments, as required by the Accounting Standard –17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

Age wise Analysis of Debtors Sundry Debtors (unsecured, considered good) of Rs. 1720.32 lakhs include Rs.1250.12 lakhs as pertaining to less than six months and Rs.470.20/- as pertaining to greater than six months. Loans and advances (unsecured, considered good) of Rs.680.14 lakhs comprise of the following: Advances recoverable in cash or in kind or for value to be received Rs. 431.00 lakhs Advance Tax Rs. 83.65 lakhs Advances to suppliers Rs.158.61 lakhs Other advances Rs. 6.88 lakhs

Deferred Tax Provision for deferred tax for the period ended December 31, 2004 has been made in accordance with the provisions of Accounting Standard 22 on Accounting for Taxes on Income, issued by The Institute of Chartered Accountants of India. The deferred tax charge of Rs. 14.26 lakhs (31.03.04 – Rs. 50.16 lakhs), for the current period has been recognised in the Profit & Loss Account. Dividend The Company has not declared any dividend in any of the previous years.

FOR THE 9 MONTHS / 12 MONTHS ENDED 31.12.04 2003-04 (Rs.) (Rs.) Value of Imports on CIF Basis: Finished Goods 27.83 42.15 Capital Goods 1.29 0.07 29.12 42.22

Earnings in Foreign Exchange: (on receipt basis) FOB Value of Exports 64.02 153.48

Expenditure in Foreign Currency: (on payment basis) Domains 180.05 173.74 Travelling 4.13 14.27 Exhibition Expenses - 1.47 Membership and Subscription 2.32 2.28 186.50 191.76

Managerial Remuneration: Salaries 22.86 42.05 Perquisites 1.01 1.99 Contribution to Provident Fund 2.12 4.19 Director’s Sitting Fees 0.04 0.05 26.03 48.28

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1.6.1. Related Party Transactions The information has been provided from the Financial Year 2001-02 when the Accounting Standard 18 on 'Related Party Disclosures' issued by the Institute of Chartered Accountants of India became mandatory.

FY 2001-02 (a) Names of related parties and nature of relationship Category of related parties Names

Holding Companies Nil

Subsidiaries of the Company Nil

Associates Trak Online Net India Pvt Ltd Jiwan Financial Holdings Ltd Net 4 Networks Pvt. Ltd.

Other related parties Sterling Capital Pvt Ltd Net 4 Barter Pvt Ltd

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FY 2002-03

(a) Names of related parties and nature of relationship Category of related parties Names

Holding Companies Nil

Subsidiaries of the Company Nil

Associates Trak Online Net India Pvt Ltd Jiwan Financial Holdings Ltd

Other related parties Sterling Capital Pvt Ltd Net 4 Barter Pvt Ltd (Till 16.01.2003)

· Current Liabilities include Rs. 0.07 Lakhs being sitting fees payable to Directors. · Loans & Advances include Rs. Rs. 520.06 Lakhs being due from an associate company.

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FY 2003-04

(a) Names of related parties and nature of relationship Category of related parties Names

Holding Companies Nil

Subsidiaries of the Company Nil

Associates Trak Online Net India Pvt Ltd Jiwan Financial Holdings Ltd

Other related parties Sterling Capital Pvt Ltd

· Details of remuneration paid to directors are given in Managerial Remuneration above. · Current Liabilities include Rs. 0.05 Lakhs being sitting fees payable to Directors. · Loans & Advances include Rs.348.69 Lakhs being due from an associate company.

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9 MONTHS PERIOD ENDED ON DECEMBER 31, 2004

(a) Names of related parties and nature of relationship Category of related parties Names

Holding Companies Nil

Subsidiaries of the Company Nil

Associates Trak Online Net India Pvt Ltd Jiwan Financial Holdings Ltd

Other related parties Sterling Capital Pvt Ltd

(b) Significant Related Party Transactions during the period (Rs. in Lakhs) Key Management Nature of Transaction Associates Others Total Personnel A Loans-Taken/ (repaid) - (2.60) - (2.60) B Sale of goods/ services 27.37 - - 27.37 C Purchase of goods/ services 306.95 - - 306.95 D Expenditure - 0.04 - 0.04 · Details of remuneration paid to directors are given in Managerial Remuneration above. · Current Liabilities include Rs. 0.04 Lakhs being sitting fees payable to Directors. · Loans & Advances include Rs. 341.66 Lakhs being due from an associate company.

1.7. Accounting Ratios

Particulars 31.03.2000 31.03.2001 31.03.2002 31.03.2003 31.03.2004 31.12.2004

Earning Per Share (EPS) (Rs.) 0.37 (4.43) 1.70 1.20 1.15 0.93 Return on Net Worth (%) 2.25 (15.49) 5.99 7.17 6.42 4.92 Net Asset Value Per Share (Rs.) 16.35 28.59 28.44 16.78 17.97 18.88

These ratios have been computed using the weighted average no. of equity shares outstanding during the year/ period. Net Profit, as restated and appearing in the Statement of Profit & Loss has been considered for the purpose of computing the above ratios. Earnings per share for the nine months ended December 31, 2004 are not comparable with that of other financial years presented above, as they are not annualised. Negative figures for the FY 2000-01 are on account of provision of Deferred tax accounted for with retrospective effect in later years.

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1.8. Statement of Tax Shelters

Rs. in lakhs

For the Year/ Nine Months ended 31.03.2000 31.03.2001 31.03.2002 31.03.2003 31.03.2004 31.12.2004

Profit before taxes 1.49 102.37 182.93 268.80 300.97 248.60 Tax Rate - normal 35% 35% 35% 35% 35% 35% Surcharge 10.0% 13.0% 2.0% 5.0% 2.5% 2.5% Cess - - - - - 2% Effective Tax Rate 38.50% 39.55% 35.70% 36.75% 35.88% 36.59% Tax at effective tax rate on profit 0.57 40.49 65.31 98.78 107.97 90.96 Adjustments: Permanent Differences Loss on sale of assets - - 0.30 - - - Donation 0.02 0.10 - - - - Total 0.02 0.10 0.30 - - - Timing Differences Depreciation (0.00) (266.97) (187.10) (304.91) (280.47) (105.06) Provision for doubtful debts - - 5.28 45.11 49.72 - Deferred expenses - - 1.87 1.87 1.96 1.47 Amortization of expenses - - 25.94 77.81 82.36 61.77 Prior period adjustment - - 12.71 4.71 - 3.65 Disallowance u/s 43B - - 14.13 5.96 (9.73) 23.06 Other adjustments - - 7.00 14.95 8.57 4.31 Total (0.00) (266.97) (120.17) (154.50) (147.60) (10.80) Net Adjustments 0.02 (266.87) (119.87) (154.50) (147.60) (10.80) Tax savings thereon 0.01 (105.55) (42.79) (56.78) (52.95) (3.95) Profit/(Loss) as per Income Tax Return 1.51 (164.50) 63.06 114.30 153.37 237.79 Brought forward losses/depreciation - - (164.50) (101.44) - - Taxable Income as per MAT - 102.37 182.93 268.80 - - MAT Rate (including surcharge) - 8.40% 7.65% 7.88% - - Tax as returned 0.58 8.60 13.99 21.17 55.02 87.01 Note: The Income Tax liability for the five financial years ended March 31, 2004 has been computed as per relevant Income Tax returns. Tax liability for 9 months ended Dec 31, 2004 is calculated on an estimated basis.

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1.9. Statement of Capitalisation

Rs. in lakhs Particulars Pre issue

BORROWINGS

Short term Debt 333.05 Long term Debt 1,232.27 Total debt 1,565.32

SHAREHOLDERS' FUNDS

Share Capital 1,625.00 Reserves & Surplus 1,445.27 Less : Miscellaneous Expenditure 1.93 (to the extent not written off or adjusted) Total Shareholders' Funds 3,068.34

Long term Debt/Equity Ratio 0.40

Since this being an offer for sale, pursuant to SEBI’s directive for reduction of promoter holding, no change is envisaged after the Public Offer also.

2. Financial Information of Group Companies / Associate Companies

None of the Group/ Associate Companies Mentioned herein after is a Sick Company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1955 or is under winding up.

2.1. Trak Online Net India Private Limited

The company was incorporated as a private limited company on December 6, 1994 under the name and style of Borealis Polymers Private Limited. The name was subsequently renamed as Trak Polymers Private Limited vide fresh Certificate of Incorporation dated 2 March 1999 and was subsequently renamed to its current name vide fresh certificate of incorporation dated November 25, 1999. Currently the main business activity of the company is providing Internet related services. As on 31 March 2004, the company had a net worth of Rs. (582.46) lakhs. The authorized share capital of the company is Rs. 50,00,000/- comprising 47,000 equity shares of face value Rs.100/- each and 3,000 unclassified shares of Rs.100/- each and the paid up share capital as on March 31, 2004 was Rs. 3,000,000/- comprising of 30,000 equity shares of Rs. 100/- each fully paid up.

Shareholding Pattern

Name of shareholders Equity shares (units) % Holding JIWAN FINANCIAL HOLDINGS LIMITED 14,700 49.00 STERLING CAPITAL PRIVATE LIMITED 14,990 49.97 MANPREET SINGH 300 1.00 PAWANJOT KAUR SAWHNEY 10 0.03 TOTAL 30,000 100.00

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Board of Directors

Name of the Director Designation 1. Neeraj Garg Whole Time Director 2. Samar Bhanja Director

Summary of Financials All figures in Rs. Lakhs Particulars For the year ended March 31 2004 2003 2002 Total Income 2,220.00 1,008.47 902.10 Profit After Tax (16.78) (363) (224) Equity Share Capital 30.00 30.00 30.00 Net Worth (582.46) (565.71) (246.48) NAV per share of face value Rs. 100/- each EPS per share of face value Rs. 100/- each Negative Negative Negative Dividend (%) Nil Nil Nil The company does not avail of any overdraft facility from any commercial bank.

Details of Pending Litigations There are no defaults in meeting any statutory/bank/institutional dues. In two separate issues the Department of Telecommunication of the Govt. of India has imposed penalty on Trak Online for alleged violation of terms and conditions of the ISP License. The Department has issued a show-cause notice dated 03.02.2005 for rollback of the levied penalty of Rs. 14,05,92,102/-. Trak Online has represented its case to the Department and expects a favourable reaction, as the imposition is, prima facie, not maintainable. Failing which, Trak Online would still have recourse to appeal its case in the Telecommunication Dispute Settlement Appellate and Tribunal (TDSAT) Court. No proceedings have been initiated for economic offences against it and it is not a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985.

2.2. Sterling Capital Private Limited

The company was incorporated as a private limited company on November 22, 1996. The main business activity of the company is investments. As on March 31, 2004, the company had a net worth of Rs. 252.77 lakhs. The authorized share capital of the company is Rs. 26,000,000/- comprising 2,600,000 equity shares of face value Rs.10/- each and the paid up share capital as on March 31, 2004 was Rs. 25,335,200/- comprising of 2,533,520 equity shares of Rs. 10/- each fully paid up. Shareholding Pattern

Name of Shareholders No. of Equity Shares % Holding KARAMJIT SINGH 20 Negligible PAWANJOT KAUR SAWHNEY 25,33,500 100.00 TOTAL 25,33,520 100.00

Board of Directors

Sr. No. Name of the Director Designation 1. Karamjit Singh Director 2. Pawanjot Kaur Sawhney Director

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Summary of Financials All figures in Rs. Lakhs Particulars For the year ended March 31 2004 2003 2002 Total Income 11.66 10.80 5.40 Profit After Tax 6.08 (6.13) 0.004 Equity Share Capital 25.34 25.34 25.34 Net Worth 252.77 246.42 252.28 NAV per share of face value Rs. 10/- each 9.98 9.73 9.96 EPS per share of face value Rs. 10/- each 0.24 (0.24) 0.00 Dividend (%) - - - The company does not avail of any overdraft facility from any commercial bank.

Details of Pending Litigations There are no pending litigations, disputes or suits against the company other than the litigations as mentioned in ”outstanding litigations or defaults” and there are no defaults in meeting any bank/institutional dues. No proceedings have been initiated for economic offences against it and it is not a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985.

2.3. Jiwan Financial Holdings Limited

The company was incorporated as a private company by shares on October 14, 1994 in Port Louis Mauritius vide Certificate of Incorporation dated October 17, 1994. It has an Offshore Certificate issued by The Mauritius Offshore Business Activities Authority, Republic of Mauritius. The main business activity of the company is investments. As on December 31, 2003, the company had a net worth of USD (182,379). The authorized share capital of the company is US$ 10,000 comprising 10,000 ordinary shares of US$ 1 each. Shareholding Pattern

Name of Shareholders No. of Equity shares % Holding AMARJIT SINGH SAWHNEY 14 14.00 JASJIT SAWHNEY 10 10.00 PAWANJOT KAUR SAWHNEY 10 10.00 BIBA SAWHNEY 66 66.00 TOTAL 100 100.00

Board of Directors

Sr. No. Name of the Director Designation 1. Amarjit Singh Sawhney Director 2. Jasjit Sawhney Director 3. Biba Sawhney Director 4. Jaswinder Singh Director 5. Dev Joory Director 6. Couldip Bastana Lala Director 7. Pawanjot Kaur Sawhney Director

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Summary of Financials All figures in USD Particulars For the year ended December 31 2003 2002 2001 Total Income 263 108 94 Profit After Tax (670) (6,140) (7,307) Equity Share Capital 100 100 100 Net Worth Negative Negative Negative NAV Negative Negative Negative EPS (6.70) (61.40) (61.40) Dividend (%) - - - The Company does not avail of any overdraft facility from any commercial bank.

2.4. Net 4 Barter Private Limited

The company was incorporated as a private limited company on October 16, 2000. The main business activity of the company is e- commerce services. As on March 31, 2004, the company had a net worth of Rs. 113.17 lakhs. The authorized share capital of the company is Rs. 42,500,000/- comprising 425,000 equity shares of face value Rs.100/- each and the paid up share capital as on March 31, 2004 was Rs. 27,00,000/- comprising of 2,70,000 equity shares of Rs. 10/- each fully paid up. Shareholders

Name of shareholders No. of Equity shares % Holding Rakesh S. Bhatnagar 99,750 36.94 Manish Dutta 99,750 36.94 Net 4 India Limited 70,500 26.11 Total 2,70,000 100.00

Board of Directors

Sr. No. Name of the Director Designation 1. Sandip K. Ghosh Director 2. Jasjit Sawhney Director 3. Rakesh S. Bhatnagar Director 4. Manish Dutta Director

Summary of Financials All figures in Rs. Lakhs Particulars For the year ended March 31 2004 2003 2002 Total Income 907.05 521.32 145.66 Profit After Tax 100.84 (219.79) 0.58 Equity Share Capital 270.00 270.00 0.02 Net Worth 113.17 12.27 111.55 NAV per share of face value Rs. 100/- each 41.91 4.54 (557766.60) EPS per share of face value Rs. 100/- each 37.35 (475.96) 2882.40 Dividend (%) Nil Nil Nil The company does not avail of any overdraft facility from any commercial bank.

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2.5. Ventures with which Promoters have disassociated in the last 3 Years

There are no Ventures with which the Promoters have disassociated in the last three years except for Sawhney India (P) Ltd. who were one of the Promoters of the Company who have disassociated themselves from the Company. As there is no common business interest Sawhney India (P) Limited have disassociated themselves by selling their shares on 12th May 2005.

3. Changes in Accounting Policy in the last Three Years

There are no major changes in accounting policies in the last three years except as stated otherwise in the section titled ‘Auditors’ Report’ on page 31of this Offer Document.

4. Management Discussion and Analysis of Financial Condition

4.1. Overview of the Business of the Company

Net 4 India Ltd. offers complete stream of integrated IP Communications services and Solutions for businesses. It provides Internet and allied services under the license of Trak Online, which is a licensed Internet Service Provider (Category ‘A’) and licensed Internet Telephony Service Provider. The services can be grouped as – Data centre services, Internet access services, Voice services and IP-hardware/ solutions. The list of services include domain registration, website hosting, server colocation, e-mail service, Internet access – leased line and shared network, international IP telephony, international number service, public phone- booth (PCO) franchisee, and select datacom/ telecom hardware. The Company is headquartered in New Delhi and has branch operations in cities of Delhi, Mumbai, Chennai, Bangalore, Kolkata, Pune, Hyderabad, Chandigarh, Ahmedabad, Coimbatore and Cochin. The Company has Network Operating Centres (NOC) in Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad and Pune. All these locations also have Internet Data Centres (IDC), excepting Kolkata. These IDC are built with world-best technologies (Cisco, Intel, etc.) and supported by state-of-the-art security, monitoring and server management systems.

4.2. Significant Development Subsequent to the Last Financial Year

During the FY 2004/05, the Company has introduced new service lines and put thrust on the existing ones. The most notable being awarded the registry status for “.in” domain names by the Government of India. This opened up a new market and business line for the Company. Other significant initiatives during the year had been the growth of PCO franchisee business, international sales of telephony service and the expansion of shared network high speed Internet service. On the downside had been the Government’s silence on the issue of unbundling of local loop by the incumbent telecom companies in its Broadband Policy.

4.3. Factors that may affect Results of the Operations

Operating risks of the Company include competition from the foreign and Indian service providers that offer similar services at competitive prices. It also regards changes in political, economic and social conditions that may lead to change in taste, preference or restrictive legislation as an operating risk. Changes in infrastructure conditions like disruption in the power supply, IT infrastructure and telecom lines due to industrial reason or acts of god may affect the operations. Finally the financial operations of the company are exposed to the risks of interest rate and exchange rate fluctuations. The management of the Company makes best effort to minimize the risks. These include continuous strategising of market competitiveness and enhancing technical efficiency through training and technology upgrade. The infrastructure risks are minimised by building appropriate redundancy, backups, contingency and disaster recovery programs. However, it is to be understood that best efforts can only minimize the operation risks and not vacate them entirely.

4.4. Comparison of Financial Performances

The following discussions on the financial operations and performance should be read in conjunction with the audited financial results of the Company for the year ended on March 31, financial years 2001-02, 2002-03, 2003-04 and the 9 months period ending on December 31, 2004.

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Period Ending on Year ending on Particulars December 31, 2004 March 31, 2004 March 31, 2003 March 31, 2002 INCOME Export 64.02 153.48 30.58 365.83 Domestic 2701.15 3074.77 2938.93 1872.72 Other Income 1.67 48.35 1.16 49.34 TOTAL 2,766.84 3,276.60 2,970.67 2,287.89 EXPENDITURE TOTAL 2,079.48 2,483.75 2,213.48 1,734.82 PBDIT 687.36 792.85 757.19 553.07 Depreciation 353.05 376.13 410.08 326.27 PBIT 334.31 416.72 347.11 226.80 Interest 85.72 115.76 78.31 43.71 PBT 248.59 300.96 268.80 183.09 Tax (Incl. Deferred tax) 101.27 109.16 74.22 38.10 PAT 147.32 191.80 194.58 144.99

April 1, 2004 to December 31, 2004 vs. Financial Year 2003-04

1 April – 31 December, 2004 FY 2003- 04 Reduction in bandwidth prices, Starting of Broadband Service, Major Events Growth in international business Growth in Internet telephony business Total Income 2,766.84 3,276.6 - Other Income 1.67 146.86 Expenditure 2,079.48 2,483.75 Depreciation 353.05 376.13 Interest 85.72 115.76 Profit After Tax 147.32 191.80

Sales: The sales of the Company during first 9 months ended 31.12.04 is Rs 2765.17 lakhs against last year (2003-04) sales of Rs 3228.25 lakhs and we hope to achieve a 25% growth over last year. The sales for 9 months ended 31.12.03 was Rs. 2289.78 lakhs. Cost of Materials sold and connectivity charges: The cost of sales is 38.17% for the period ended 31.12.04 (after considering increase/ decrease in stock in trade) where as it worked out to 37.14% of sales during FY 2003-04. The effect of decrease in bandwidth cost would be reflected in the last quarter for the year ended 31.03.05. Operating expense: The operating expense has marginally increased to Rs 1024.10 lakhs for the 9 months period ended 31.12.04, as compared to Rs 1284.93 lakhs in FY 2003-04. Interest and Financial Expenses: The Interest and Financial Expenses are Rs.85.72 lakhs till 31.12.04 and were Rs. 115.76 lakhs in FY 2003-04 on account of working capital and term loan facilities availed. Profit after tax: The Profit after tax is at Rs. 147.32 lakhs for the period till 31.12.04 while it was at Rs 191.80 lakhs in the year 2003- 04. This is higher than the amount of Rs. 109.73 lakhs achieved for the 9 months ended 31.12.03.

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Financial Year 2003-2004 vs. Financial Year 2002-2003

FY 2003-04 FY 2002-03 Starting of Broadband Service, Growth in Internet telephony Launching Internet Telephony services in India – strategic Major Events business – alliance with Net2Phone Inc. alliance with Delta Three Total Income 3,276.6 2,970.67 - Other Income 146.86 1.16 Expenditure 2,483.75 2,213.48 Depreciation 376.13 410.08 Interest 115.76 78.31 Profit After Tax 191.80 194.58 Sales: The sales of the company increased from Rs 2969.51 lakhs during FY 2002-2003 to Rs 3228.25 lakhs in FY 2003-04, mainly due to increase in Internet Telephony and Web Presence Services. Cost of Materials sold and connectivity charges: The cost of sales was 37.14 % during FY 2003-04 as compared to 34.27% of sales during FY 2002-03, due to increase in requirement of bandwidth. Operating expenses: The operating expense marginally increased to Rs.1284.93 lakhs in FY 2003-04 from Rs 1191.23 lakhs in FY 2002-03. Interest and Financial Expenses: The Interest and Financial Expenses has increased in FY 2003-04 to Rs 115.76 lakhs from Rs. 78.31 lakhs in FY 2002-03 on account of availing of additional working capital and term loan facilities. Profit after tax: The Profit after tax decreased to Rs. 191.80 lakhs in FY 2003-04 from Rs 194.58 lakhs in FY 2002-03, primarily on account of benefit of MAT being no longer available.

Financial Year 2002-2003 vs. Financial Year 2001-2002

FY 2002-03 FY 2001-02 Assumes the position of largest domain registration service Launching Internet Telephony services in India – strategic Major Events in Asia Pacific (outside Japan); IDC becomes operational in alliance with Delta Three 6 cities Total Income 2,970.67 2,287.89 - Other Income 1.16 49.34 Expenditure 2,213.48 1,849.38 Depreciation 410.08 326.27 Interest 78.31 43.71 Profit After Tax 194.58 144.99 Sales: The turnover of the company has decreased from Rs. 2238.55 lakhs during FY 2001-2002 to Rs. 2969.51 lakhs in FY 2002- 03 due to introduction of Internet telephony services. Cost of Materials sold and connectivity charges: The cost of sales was 34.27% during FY 2002-03 as compared to 34.52% during FY 2001-02. Operating expenses: The operating expense increased to Rs.1191.23 lakhs in FY 2002-03 from Rs. 949.48 lakhs in FY 2001-02 on account of appointment of additional manpower and increase in administrative, selling and other expenses. Interest and Financial Expenses: The Interest and Financial Expenses increased in FY 2002-03 to Rs. 78.31 lakhs from Rs. 43.71 lakhs in FY 2001-02 on account of availing of additional working capital facilities. Profit after tax: The Profit after tax increased to Rs 194.58 lakhs in FY 2002-03 from Rs. 144.99 lakhs in FY 2001-02. Financial Year 2001-2002 vs. Financial Year 2000-2001

FY 2001-02 FY 2000-01 Assumes the position of largest domain registration service in Company launches NOC and IDC in 6 cities across India – Major Events Asia Pacific (outside Japan) strategic tie-up with Veri Sign Inc. Total Income 2,287.89 612.44 - Other Income 49.34 0.04 Expenditure 1,849.38 510.07 Depreciation 326.27 3.10 Interest 43.71 0.48 Profit After Tax 144.99 93.77

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4.5. Factors affecting Financial Performance

1. Unusual or infrequent events or transactions. There have been no events, to the best of our knowledge, other than as described in this Offer Document, which may be called “unusual” or “infrequent”. Unusual events like war, natural calamities or breakdown of world economic order and disasters like flood, water shortage, disease etc., can affect the company’s operations temporarily, However, the application is hosted at the customer site with back up for disaster recovery. Our own development centres have a back up and recovery plan. As they may be hosted and managed through the Internet, the company’s operations can be re-established in a week through remote management. 2. Significant economic/regulatory changes. There have been no significant changes in the laws governing the Information Technology industry in the recent past. The Ministry of Information Technology, Government of India regulates the IT business. The economic changes that can affect the company are changes in tax laws. 3. Known trends or Uncertainties. The major part of the Company’s business is in the Internet and related services domain. There is no unusual or infrequent event or transaction that can materially affect these transactions. The business is unlikely to witness wild fluctuations or to be materially affected by economic changes. They do not affect income from continuing operations in a significant manner. The economic changes that can affect the company are only changes in tax laws. Other than as described in this Offer Document, to our knowledge, there are no known trends or uncertainties that have or had or are expected to have a materially adverse impact on revenue or income of the Company from continuing operations. 4. Future relationship between costs and income. The Company is continuously working to create efficient processes resulting in cost reduction and have a better control over its activities. Other than as described in this Letter of Offer, to our knowledge, there are no known factors, which will affect the future relationship between the costs and income, or which will have a material impact on the operations and finances of the Company. 5. Seasonality of business. The business of the company is not seasonal. However there are significant variations in the quarterly revenues and profits because of various factors like general economic conditions, festivals and financial year-ends. 6. Increase in Sales and Revenue. The increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices. The Company has steadily grown over a period of time and as such the company is able to isolate itself from increase in material cost or decrease in sales volume. 7. The size of Industry segments in which the company operates has been appropriately explained elsewhere in the Letter of Offer. 8. Competitive conditions. The business environment for Internet industry has changed since 2002 through rationalization. Currently, there are fewer, but more serious, players in the market. The Company maintains its competitiveness through innovative service offerings at attractive prices. The Directors confirm that there have been no events or circumstances since the date of the last financial statements as disclosed in the prospectus which materially or adversely affect or is likely affect the trading or profitability of the company, or the value of its assets, or its ability to pay liabilities within next twelve months. The Directors confirm that there have been no events or circumstances since the date of the last financial statements as disclosed in the prospectus which materially or adversely affect or is likely affect the trading or profitability of the company, or the value of its assets, or its ability to pay liabilities within next twelve months.

4.6. Material Developments

In the opinion of the Company there have been no material developments after the date of latest balance sheet, which would have an impact on the performance and the prospects of the Company other than what has been set out elsewhere in this Offer Document.

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VI. LEGAL AND OTHER INFORMATION

1. Outstanding Litigations / Disputes/ Defaults

The Company has no criminal, securities, statutory or other litigations except the following. Further no proceeding has been initiated for economic offences against Net 4 India Limited and is not a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985.

1.1. Litigation involving the Company

The Company has the following outstanding litigations, its associate Companies, Promoters and Directors

1.1.1. Criminal Case Court before which Date Sl. No. Name of the Opposite Party Place of Litigation Claim Amount Litigation is Pending Instituted Smt. Madhu Sharma Metropolitan Magistrate, Reinstate with full 1 Delhi 18.07.2001 W/o Sh. Arun Sharma Patiala House back salary

CASE HISTORY 1. Madhu Sharma was appointed as Marketing Co-ordinator at Head Business Operation, Delhi dated 7.08.2000. She was on probation period for 6 months from the date of joining the duty. The management did not find her service satisfactory and thus extended her probation period for a further of 3 months. Throughout her probation period Ms. Madhu Sharma was absent from her duty without sanctioned leave. As a result her probationary services were rightly terminated in accordance with the terms of agreement of employment vide letter dated 25.05.2001. Subsequently, she filed a criminal complaint U/s 23 of the Maternity Benefit Act, 1961 and made an application U/s 319 of Cr. P.C. in the court of Metropolitan Magistrate, Patiala House, New Delhi. The matter is pending before the abovementioned Hon’ble Court.

1.1.2. Civil Cases Court before which Date Sl. No. Name of the Opposite Party Place of Litigation Claim Amount Litigation is Pending Instituted Addl. Dist & Session Smt. Madhu Sharma W/o Sh. Judge Cum presiding Reinstate with full 1. Delhi 20.07.2001 Arun Sharma officer Labour Court-II back salary Karkardooma Court

2. M/s Services International Delhi Civil Court (Sr. Civil Judge) 24.10.2003 91,000/-

M/s Mirc Electronic Limited Onida House 3. Delhi Civil Court 20.12.2001 Nil G-1, MIDC, Mahakali caves, Andheri (E) Mumbai

CASE HISTORY

1. As stated above in criminal matter of Ms. Madhu Sharma, she also filed the complaint in the labour court alleged that the conduct of the Company’s management besides being illegal and arbitrary also amounts to that of unfair labour practice and called upon the Company to recall the termination order dated 25.05.2001 and reinstate her with full consequential benefits. 2. M/s Services International, a partnership firm on 24.10.2003, filed a suit against the Company claiming Rs. 91,000/- i.e. Rs. 77,100 as service charges paid in advance for subscribing the key words by the Company and Rs. 13,900/- (being the interest @ 18% accrued from the date of filing of the suit till the date of realization). Key Word Service, which was subscribed by the Company, became non- operational/ Functional. The services availed by M/s Services International were discontinued only in the last quarter of 2002 due to discontinuation of services to company by M/s Real Name Corporation (Universal Key Word Registry). Thus M/s Services International demanded the refund of money. In view of invalid cause of action by M/ Services International and thus the suit is liable to be dismissed.

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3. This matter related to use of domain name “onidaservice.com”. Case has been filed by Mirc Electronics Ltd. against the Mr. Ajay Arora, who booked this domain through our company, and also made our company as party to this matter. Our company has only booked the domain on behalf of defendant No. 1.

Further, the Company received a letter no. IVD/NRO/02/245/2003 RB dated October 02, 2004 from SEBI, by which Investigation in the trading of shares by some members of company was intimated. The company has provided all the required detail and till date no order against the company or its directors has been passed by SEBI.

1.2. Litigations by the Company

Cases Filed by Company Court before Sl. Name of the Opposite Party Place of Litigation which Litigation is Date Instituted Claim Amount No. Pending

Hon’ble FIR filed by Shyam Prasad 1 Secunderabad Metropolitan 19.11.2001 company for

Magistrate embezzlement

Jatin Vermani, Executive Director Chief Metropolitan 2. Somko Overseas Pvt. Ltd. New Delhi 28.11.2003 Rs. 1.50 Lakhs Magistrate G-7A, 11-G.F., DLF Phase-I DLF City, Gurgaon 122022

CASE HISTORY 1. An FIR (No. 215) was lodged before Inspector of Police, Secunderabad-500003 on date 19.11.2001 under Act I.P.C. Sections 408, 403 I.P.C. against Shyam Prasad who was working with Net 4 India ltd. for 18 months. He was deputed to deposit office cash and cheques in office current account in Canara Bank of which he has allegedly misappropriated the cash monies. Shyam Prasad has admitted his intention to cheat the Company in writing by him by way of a letter to the Company. 2. A complaint by Net 4 India Ltd. has been filed u/s 138 of Negotiable Instruments Act against M/s Somko Overseas Pvt. Ltd. and its Executive Director Jatin Virmani, on account of dishonouring of Cheques issued by him.

There are no other pending litigations against the company. There are no outstanding litigations, defaults etc pertaining to matter likely to affect operations and finances of the company including prosecution under any enactment in respect of Schedule XIII of the Companies Act 1956 (1 of 1956). There are no such cases of pending litigations, defaults etc in respect of Companies/firms/ventures with which the promoters were associated in the past but are no longer associated, and their names continue to be associated with particular litigation. No disciplinary action/ investigation has been taken by Securities and Exchange Board of India(SEBI)/ Stock Exchanges against the Company, its directors , promoters and their other business ventures (irrespective of the fact whether or not they fall under the purview of section 370(1B) of the Companies Act 1956. There are no cases against the Company or its Promoters of economic offences in which penalties were imposed on promoters. The Company, confirms that there are no pending litigations, defaults, non payment of Statutory dues, proceedings initiated for economic offences/civil offences, any disciplinary action taken by the Board /Stock Exchanges against the Company/Promoters and their business ventures/Directors other than those mentioned in this Offer Document and that no litigations have arisen after the issue of SEBI’s Observation letter and the Company and its Directors take full responsibility of the information mentioned in the Offer Document. There are no major creditors having an outstanding balance for more than six months as on 30th September 2004.

1.3. Litigations against the Promoters/ Directors

There are no outstanding litigations, disputes, defaults non-payment of statutory dues, over dues to banks and/ or FIs, defaults against banks and/or FIs, proceedings initiated for economic/civil/any other offences (including past cases where penalties may /may not have been awarded and irrespective of whether they are specified under paragraph (1) of Part (1) of schedule XIII of Companies Act 1956 against Promoters/ Directors of Net 4 India Ltd. except as stated below:

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Court before which Litigation Sl. No. Petitioner Respondent Place of Litigation Date Instituted is Pending Addl. Session Judge 1 State of Maharashtra Jasjit S. Sawhney Mumbai 11 February 2004 Greater Mumbai, Sewree

CASE HISTORY 1. The case was filed against Mr. Jasjit S. Sawhney, MD, Net 4 India Ltd., on the basis of FIR filed by the CID, Government of India alleging running of illegal phone exchange in the branch office of the Company at Mumbai. It was submitted before the Court that the said violation was done by one of the customers of the Company, M/s Echovox. The Hon’ble Court has granted anticipatory bail to Mr. Jasjit S. Sawhney, and the matter is currently subjudice.

1.4. Litigations against/ by Group Companies / Associate Concerns

Trak online Net India Private Limited In two separate issues the Department of Telecommunications has issued a show cause notice bearing no 820-278/2002-LR (Vol- II) dated 03.02.2005 by which it called upon why the following penalties should not be levied on the Company for alleged violation of terms and conditions of the ISP license: a. Levying and recovering an amount of Rs. 14,05,92,102 b. Submitting an additional performance Bank Guarantee of Rs. 1.20 crores. Trak Online has represented its case to the Department, failing which, Trak Online would still have recourse to appeal its case in the Telecommunication Dispute Settlement Appellate and Tribunal (TDSAT) Court. Apart from the above there are no are no criminal, securities, statutory or other litigations against any of the Group/Associate Companies. There are no outstanding litigations, disputes, penalties including tax liabilities economic offence, criminal/civil prosecutions for any offence irrespective of whether specified under any enactment in paragraph (1) of Part (1) of schedule XIII of Companies Act 1956 against the Group companies / Associate Concerns promoted by the Promoters except as mentioned hereunder: There are no outstanding litigations, defaults, etc., pertaining to matters likely to affect operations and finances of the Company including disputed tax liabilities, prosecution under any enactment in respect of Schedule XIII to the Companies Act, 1956 (1 of 1956) except as stated above. No new litigations have arisen against them after the SEBI observation letter.

Net 4 Barter Pvt. Ltd. There are three civil cases filed by Net4Barter against its customers for realization of outstanding payments against services rendered to them. The cases are stylised below:

Type Petitioner Respondent Place Court Date Instituted Claim Amount (Rs.) 1 Civil Net4Barter Medworld Delhi Patiala House 1.4.2003 9,30,534 2 Civil Net4Barter Kohli Digital Delhi Patiala House 1.4.2003 84,773 3 Civil Net4Barter Safeguard Delhi Patiala House 29.12.2003 59,2702

1.5. Amounts Owed to Small Scale Undertakings

Sundry Creditors, to the extent to which they could be identified as small scale and ancillary undertakings on the basis of information available with the Company, do not include any amount that is outstanding for more than one month and not in excess of Rupees One Lakh.

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2. Government / Statutory Approvals / Registrations

The Company can undertake all the present and proposed activities in view of the present approvals mentioned hereinafter and no further approvals from any government authorities are required by the Company to undertake the present and proposed activities except those approvals that may be required to be taken in the normal course of business from time to time. It must be specifically understood that in giving the above approvals, the Central Government / RBI does not take any responsibility for the financial soundness of any scheme or for correctness of any of the statements made or opinions expressed with regard thereto. The Company has received the following Government Approvals/Licenses/Permissions: 1. The Company is registered with the Electronics And Computer Software Export Promotion Council, New Delhi (ECSEPROCIL), as a Merchant Exporter vide IEC NO. 0594069351 and Registration No. 02:E&CSEPC:DEL:REG:4719:NEW DELHI:2004-05 dated 20-08-2004. 2. Original approval No. 844/SIA/IMO/2004 dated 12.03.2004 from the Secretariat for Industrial Assistance, Ministry of Commerce & Industry, Government of India and subsequent amendment dated 10.11.2004 for the manufacture of: · Computer Software based Internet telephony Services including Voice Over Internet. · Computer based Data Access Services of Internet Broadband and Leased Line Connections with Cable and Wireless. · Computer Software and Internet related Services of Web Hosting, Collection, Domain Registration, E-mails etc. 3. Approval granted from Software Technology Parks of India (STPI) vide letter no. PCMG/PSE/06/1074/STPIN/671 dated 02- 05-2001 to set up a unit under STPI. Application for renewal of Green card is pending. The Company did not execute any software export order for the last two years, but exploring possibilities in the near term. No further approvals from any Government authority/Reserve Bank of India (RBI) are required by the Company to undertake the current activities, save and except those approvals.

3. Statutory Approvals

The Company can undertake all the present activities in view of the present approvals mentioned hereinbefore and no further approvals from any government authorities are required by the Company to undertake the present activities.

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VII. OTHER REGULATORY AND STATUTORY DISCLOSURES

1. Authority for the Present Offer

The present Offer has been approved by the Offerors, i.e. M/s Sterling Capital Private Limited vide their consent letter dated 24 March 2005. The board of directors of Net 4 India Limited, in their meeting held on April 8, 2005, has taken on record the proposed Offer for Sale of 20,68,200 equity shares held by the Offerors. Details of the Equity Shares being offered in this Offer for Sale are given below:

Sr. No Name of the Offeror Equity Shares Offered 1 Sterling Capital Private Limited 20,68,200 Total 20,68,200

The Offeror has good and clear title to the Equity Shares forming part of this Offer and the Equity Shares are free of all restrictions on transfer, liens, encumbrances, security interests and claims whatsoever. There are no legal or regulatory restrictions on the Selling Shareholder undertaking this Offer.

Prohibition by SEBI The Company, its 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 assessing the capital market under any order or directions passed by SEBI. The listing of any securities of the issuer has never been refused at anytime by any of the stock exchanges in India.

2. Eligibility for the Offer for Sale

The Company has complied with the SEBI (Disclosure and Investor Protection) Guidelines 2000, for the Offer for Sale as stipulated under clause 2.2.3.1 and clause 2.2.1, enumerated hereunder: 1. The Company has a net tangible asset of more than Rs. 300 Lakhs in each of the preceding 3 full years (of 12 months each) of which, not more than 50% is held in monetary assets. 2. The Company has a track record of distributable profits in terms of Section 205 of the Companies Act, for at least three (3) out of the immediately preceding five (5) years In Rs Lakhs Particulars 2004-05 (9 Months) 2003-04 2002-03 2001-02 Net Fixed Assets 2,340.13 2,327.53 1,752.19 1,972.49 Investments 70.50 70.50 70.68 0.18 Net Current Assets 659.80 521.43 909.23 563.90 Net Tangible Assets 3,070.43 2,919.46 2,732.10 2,536.57 Pre Offer Net worth 3,070.43 2,919.46 2,732.10 2,536.57 Profit After Tax 595.43 444.46 257.10 61.57

3. The Company has a pre-issue net worth of at least Rs. 100 Lakhs in each of the preceding 3 full years (of 12 months each). 4. The Company has not changed its name within the last one year. 5. The aggregate of the proposed issue and all previous issues made in the same financial year in terms of size (i.e. offer through offer document + firm allotment + promoters’ contribution through the offer document), does not exceed five (5) times its pre-issue net worth as per the audited balance sheet of the last financial year.

Note: This being an Offer for Sale, there will be no change in the paid up capital of the Company The Company is fulfilling the criteria of eligibility norms for Offer for Sale being the same as for Public Issue by unlisted company as specified in the Clause 2.2.1 of SEBI Guidelines 2000. The Company is an existing listed Company on the Delhi Stock Exchange and to meet the continuous listing requirements for listing on The Stock Exchange, Mumbai (BSE) the current Offer for Sale is envisaged.

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The Board of Directors of the Company took on record vide their note dated 8 April 2005 the proposed Offer for Sale of 20,68,200 Equity Shares out of the shares held by the Offeror for the Offer for Sale of its equity shares under this Offer Document and pursuant to relevant clause of the extant SEBI Guidelines.

Disclaimer SEBI DISCLAIMER CLAUSE AS REQUIRED, A COPY OF THIS OFFER DOCUMET HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (HEREINAFTER REFERRED TO AS SEBI). “IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF OFFER DOCUMENT TO SEBI SHOULD NOT, IN ANY WAY, BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR FOR THE PROJECT FOR WHICH THE OFFER IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE OFFER DOCUMENT. THE LEAD MANAGERS, CENTRUM CAPITAL LIMITED HAVE 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 AN INVESTMENT IN THE PROPOSED OFFER. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT, WHILE THE OFFEROR / COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE OFFER DOCUMENT, THE LEAD MANAGERS ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGERS CENTRUM CAPITAL LIMITED, HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED MONTH 24 MAY 2005 IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS, 1992, WHICH READS AS FOLLOWS: a. 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 OFFER; b. 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 OFFER, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY. WE CONFIRM THAT: 1. THE OFFER DOCUMENT FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE OFFER; 2. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID OFFER AND ALSO THE GUIDELINES, INSTRUCTIONS ETC., ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND 3. 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 OFFER 4. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE PROSPECTUS ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATION IS VALID WE CERTIFY THAT WRITTEN CONSENT FROM SHAREHOLDERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SECURITIES AS PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN WILL NOT BE DISPOSED/ SOLD/ TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT OFFER DOCUMENT WITH THE BOARD TILL DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT OFFER DOCUMENT. THE FILING OF OFFER DOCUMENT 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 OFFER. SEBI, FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MERCHANT BANKER(S) ANY IRREGULARITIES OR LAPSES IN THE OFFER DOCUMENT.”

General Disclaimer The Offeror, the Company and the Lead Manager accept no responsibility for statements made otherwise than in this Offer Document or in the advertisement or any other material issued by or at the instance of the Offerors, the Company and the Lead Manager and that anyone placing reliance on any other source of information would do so at their own risk

General Disclaimer of the Offeror

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The Offeror and Company accepts full responsibility for the accuracy of the information given in this Offer Document and confirms that to the best of their knowledge and belief, there are no other facts, the omission of which make any statement in this Offer Document misleading and they further confirm that they have made all reasonable inquiries to ascertain such facts. The Company further declares that the stock exchanges to which an application for official quotation is proposed to be made do not take any responsibility for the financial soundness of this offer or for the price at which the equity shares are offered or for the correctness of the statements made or opinions expressed in this Offer Document. The promoters/directors declare and confirm that no information/material likely to have a bearing on the decision of investors in respect of the shares offered in terms of this Offer Document has been suppressed, withheld and/or incorporated in the manner that would amount to misstatement/misrepresentation and in the event of its transpiring at any point of time till allotment/refund, as the case be, that any information/material has been suppressed/withheld and/or amounts to a misstatement/misrepresentation, the promoters/directors undertake to refund the entire application monies to all the subscribers within seven days thereafter without prejudice to the provisions of Section 63 of the Companies Act, 1956.

Disclaimer in Respect of Jurisdiction This Offer is being made in India to persons resident in India (including Indian nationals resident in India who are majors, HUFs, companies, corporate bodies and societies registered under the applicable laws in India and authorised to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regional rural banks and co-operative banks (subject to RBI permission if any), trust registered under the Societies Registration Act, 1860, or any other trust law and who are authorised under their constitution to hold and invest in shares. This Offer Document does not, however, constitute an offer to sell or an invitation to subscribe to shares offered hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Offer Document comes is required to inform himself about and to observe any such restrictions. Any disputes arising out of this offer will be subject to the jurisdiction of appropriate courts at New Delhi, India only. No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that this Offer Document has been submitted for approval of and has been filed with SEBI. Accordingly, the equity shares represented thereby may not be offered or sold, directly or indirectly, and this Offer Document may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Offer Document nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of Net4India Limited since the date hereof or that the information contained herein is correct as of any time subsequent to this date.

DISCLAIMER CLAUSE OF STOCK EXCHANGES Disclaimer Clause Of The Stock Exchange, Mumbai As required, a copy of this prospectus has been submitted to the BSE. BSE (“the Exchange”) has given vide its letter dated ______, 2005 permission to this Company to use the Exchange’s name in this prospectus as one of the Stock Exchange on which the Companies securities are proposed to be listed. The Exchange has scrutinised this prospectus for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. BSE does not in any manner-

§ Warrant, certify or endorse the correctness or completeness of any of the contents of this prospectus, § Warrant that this Company’s securities will be listed or will continue to be listed on the Exchange, or § Take any responsibility for the financial or other soundness of this Company or its promoters, its management or any scheme or project of this Company, and it should not for any reason be deemed or construed that this Prospectus has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.

The Stock Exchange Association Limited, New Delhi The Delhi Stock Exchange Association Limited, (‘The Exchange’) has given its no objection to the company vide letter dated ______2005 to use the name of the Exchange in this Offer Document as one of the Stock Exchanges on which the company’s securities are listed. The Delhi Stock Exchange has scrutinized this Offer Document for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the company. The Delhi Stock Exchange Association Limited does not in any manner: 1. Warrant, certify or endorse the correctness or completeness of any of the contents of this Offer Document; 2. Warrant that this company’s securities will be listed or will continue to be listed on DSE; 3. Take any responsibility for the financial or other soundness of this Company, Promoters, Management of any Scheme or Project of this Company.

DRAFT OFFER DOCUMENT

and it should not be, for any reason be deemed or construed that this Letter of Offer has been cleared or approved by DSE. 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 claims against DSE, whatsoever, by reason of any loss which may be suffered by such person consequent to or in connection with such subscription / acquisition whether by reason of anything stated in the Letter of Offer or any other reason whatsoever.

Filing 1. Copy of this Offer Document, along with the documents required to be filed under Section 60 of the Act having attached thereto, shall be delivered for registration to the Registrar of Companies, Delhi and Haryana at New Delhi. 2. Copy of the Offer Document has been filed with SEBI, New Delhi

Listing The shares of the Company are already listed with The Delhi Stock Exchange of India Ltd. An initial listing application has been made to The Stock Exchange, Mumbai (BSE- Designated Stock Exchange) for permission to list the Equity Shares and for an official quotation of the equity shares of the Company. In case the permission for listing of the equity shares is not granted by the above mentioned Stock Exchange, the Company shall forthwith repay, without interest all monies received from the applicants in pursuance of this Offer Document. If such money is not repaid within 8 days after the day from which the Issuer becomes liable to pay it, then the Company and every director of the Company who is an officer in default shall, on and from expiry of 8 days, be jointly and severally liable to repay that money with interest as prescribed under Section 73 of the Companies Act, 1956. In case the permission to deal in and for official quotation of the shares is not granted by these stock exchanges, the Offeror shall forthwith repay, without interest, all monies received from applicants in pursuance of this Offer Document and if such money is not repaid within eight days after the Offeror become liable to repay it (i.e. from the date of refusal or within 10 weeks from the date of closing of the subscription list, whichever is earlier), then the Offeror will be liable to repay the money, with interest, as prescribed under Section 73(2) of the Companies Act. The Company shall ensure that all steps for the completion of necessary formalities for listing and commencement of trading at BSE are taken within 7 working days of the finalization and adoption of the basis of Allotment for the offer.

3. Impersonation

As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub- section (1) of Section 68A of the Companies Act, 1956 (hereinafter referred to as the Act) which is reproduced below: “Any person who 1. makes in a fictitious name an application to a Company for acquiring or subscribing for any shares therein, or 2. 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.”

Consents Consents in writing of the Directors, Auditors, Lead Managers to the Issue, Banker to the issue, Company Secretary, Compliance Officer, Legal Advisor and Registrars to the Issue to act in their respective capacities have been obtained and filed along with copy of Prospectus with the Registrar of Companies, New Delhi as required under Section 60 of the Act, and none of them have withdrawn the said consents up to the time of delivery of a copy of this Prospectus for registration with the said Registrar of Companies, . M/s. Sandy Associates, Chartered Accountants, Auditors of the Company have also given their consent to the inclusion of their report as appearing hereinafter in the form and context in which it appears in this Prospectus and also of the tax-benefits accruing to the Company and to the members of the Company and such consent and report have not been withdrawn up to the time of delivery of a copy of this Prospectus for registration with the Registrar of Companies, New Delhi.

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Expert Opinion Except for the various tax benefits available to the Company and its members expressed by the Auditors of the Company given elsewhere in this Offer Document, the Company has not obtained any other expert opinion.

Expenses of the Offer The expenses of the Offer payable by the Company / Offeror inclusive of fees payable to the Lead Manager, Fees of Legal Advisors, Stamp Duty, Printing, Publication, Advertising and Distribution expenses, Bank charges, Fees payable to the Registrars to the Offer, Listing Fees, Brokerage and other Miscellaneous Expenses which are estimated to be approximately 9-% of the Offer size, and will be met out of the proceeds of the Offer.

Fees Payable to the Lead Manager to the Offer The total fees payable to the Lead Manager will be as per the Memorandum of Understanding signed with the Lead Manager, a copy of which is available for inspection at the Corporate Office of the Company.

Fees Payable to the Registrar to the Offer The fees payable to the Registrar to the Offer will be as per the Memorandum of Understanding signed with the Company, a copy of which is available for inspection at the Corporate Office of the Company.

Brokerage & Selling Commission Brokerage will be paid by the Company at the rate of 1.50% on the offer price of Equity Shares offered to the public on the basis of Allotment made against applications bearing the stamp of the members of any recognized Stock Exchanges in India in the broker’s column. Brokerage at the same rate will also be payable to the Bankers to the Offer in respect of Allotments made against applications procured by them provided the relevant forms of applications bear their respective stamps in the Broker’s column. In case of tampering or over stamping of Brokers’/Agents’ codes on the application forms , the Offeror /Company’s decision to pay brokerage in this respect will be final and no further correspondence will be entertained in this matter.

Previous Issue of Capital During Last Five Years: The Company has not made any public issue of equity / debentures during the last five years prior to this issue. The details of issue of capital have been outlined in the paragraph on the build up of the share capital under the capital structure on page No. ____

Issue Otherwise than for Cash The Company has issued 75,00,000 equity shares by way of Slump Sale Consideration. Except for the above no further shares are issued for consideration other than cash.

Commission or Brokerage on Previous Issues Net 4 India has made only one public Issue since its inception and has paid underwriting commission not exceeding 2.5% of the amount underwritten, subject to individual agreements with the underwriters. The Company has also paid the brokerage @ 1.5% on the Issue Price of the Equity Shares on the basis of allotment. Particulars in regard to Net 4 India Ltd. and other listed companies under the same management within the meaning section 370 (1)(B) of the Companies Act, 1956 which made any capital Issue during the last three years. Neither Net4India, nor any other listed companies under the same management within the meaning section 370 (1)(B) of the Companies Act, 1956, has made any capital Issue during the last three years.

Promise vis-à-vis Performance - Net 4 India Limited There were no Promise vis-à-vis Performance in the last issue made by Net 4 India Limited.

- Listed Ventures of the Promoters There are no other listed Ventures of the Promoters.

Outstanding Redeemable Preference Shares and Debentures

DRAFT OFFER DOCUMENT

The Company since its incorporation has not issued any redeemable preference shares and Debentures.

4. Stock Market Data for Net4India Limited

The existing Equity Shares, except 85,00,000 equity shares allotted on 26 March 2002, of the Company are listed on The Delhi Stock Exchange Association Limited (DSE).

4.1. As per The Delhi Stock Exchange Association Limited, Delhi (DSE)

Price for the last three years

High Low Average Price Calendar Year for the Year Date Price (Rs.) Volume (No.) Date Price (Rs.) Volume (No.) (Rs.) 2002 17.04.2002 20.45 200 17.04.2002 20.45 200 20.45 2003 No Trading - - No Trading - - 2004 No Trading - - No Trading - - Source: http://www.dseindia.org.in

“There has been no trading in the Equity Shares of the Company since 17th April 2002.” (Source: http:///www.dseindia.org.in) The high and low prices of the Company’s shares as quoted on the Delhi Stock Exchange (DSE) immediately after the Board of Directors approved the Offer for sale at the meeting held on 8 April 2005 was as follows: “There has been no trading in the equity shares of the Company on DSE since 2002.” (Source: http:///www.dseindia.org.in)

5. Investor Grievances and Redressal Mechanism

5.1. Redressal Mechanism

The company has appointed the registrar to the issue, to handle the investor 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 the Compliance Officer, giving full details such as name, address of the applicant, number of equity shares applied for, amount paid on application and bank and branch. The company would monitor the work of the registrar to ensure that the investor grievances are settled expeditiously and satisfactorily. The Registrar to the issue, namely, MCS Limited will handle investors grievances pertaining to the offer .A fortnightly status report of the complaints received and redressed by them would be forwarded to the company. The company would also be co-ordinating with the registrar to the offer in attending to the grievances to the investor. The company assures that the Board of Directors in respect of the complaints, if any, to be received shall adhere to the following schedules:

Nature of complaint Time Table Within 7 days of receipt of complaint subject to production of 1. Non-receipt of refund satisfactory evidence 2. Change of Address Notification Within 7 days of receipt of information

3. Any other complaint in relation to Offer for Sale Within 7 days of receipt of complaint with all relevant details

The company has appointed Krishan Kumar as Compliance Officer who would directly deal with SEBI officer with respect, to implementation/ compliance of various laws, rules, regulations and other directives issued by SEBI and matters related to investor complaints .The investors may contact the Compliance Officer in case of any offer for sale related problems. The Compliance Officer would be available at the Registered Office of the Company.

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5.2. Status of Complaints

Particulars Status

No. of Shareholders complaints as of date NIL

Total number of complaints received during 01.04.2004 to 30.04.2005 NIL

Status of complaints NIL

Time normally taken by the Company for disposal of various types of investor grievances One Week

5.3. Changes in Auditors during the Last Three Years and Reasons thereof

Name Date of Appointment Date of Resignation Reason

M/s Uberoi, Sood & Kapoor 28.09.2001 01.05.2002 Resigned

M/s Madan, Dogra & Associates 01.05.2002 11.11.2002 Resigned

M/s Sandy Associates 11.11.2002 NA N/A

5.4. Capitalisation of Reserves or Profits (during last five years)

The Company has not capitalised any reserves till date

5.5. Revaluation of Assets, if any during last five years

None of the assets of the Company have been revalued during last five years.

6. Options to Subscribe

Except as otherwise stated in this Offer Document, the Company has not entered into, nor does it at present propose to enter into any contract or arrangements whereby any option or preferential right of any kind has been, or is proposed to be, given to any person to subscribe for any shares of the Company.

7. Purchase Of Property

Except as stated in “Objects of the Issue” in this Prospectus and save in respect of the property purchased or acquired or to be purchased or acquired in connection with the business or activities contemplated by the objects of the Issue, there is no property which the Company has purchased or acquired or proposes to purchase or acquire which is to be paid for wholly or partly out of the proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of this Prospectus, other than property in respect of which:

§ The contracts for the purchase or acquisition, if any, were entered into in the ordinary course of the business, and the contracts were not entered into in contemplation of the Issue nor is the Issue contemplated in consequence of the contracts; or § The amount of the purchase, if any, is not material. Except as elsewhere stated in this Prospectus, the Company has not purchased any property in which any of its promoters and / or Directors, have any direct or indirect interest in any payment made thereof.

8. Classes of Shares

The authorized share capital of the Company is Rs.20,00,00,000/- (Rupees Two Thousand Lakhs only) divided into 2,00,00,000 (Two Hundred Lakhs) Equity shares of Rs.10/- each.

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VIII. OFFER INFORMATION

1. Terms of the Offer

Ranking of Equity Shares The Equity shares being offered shall be subject to the provisions of the Memorandum and Articles of Association. The Allocatees will be entitled to dividend or any other corporate benefits (including dividend), if any declared by the Company after the date of allotment.

Face Value and Offer Price Each Equity Share being offered is of face value of Rs. 10 and is offered at a price of Rs. 20/-

Rights of the Equity Shareholders § Right to receive dividend if declared. § Right to attend general meeting and exercise voting rights unless prohibited by law. § Right to vote either personally or by proxy. § Right to receive offer for rights shares and the allotted bonus shares. § Right to receive surplus on liquidation. § Such other rights as may be available to a shareholder of a Public Limited Company under the Companies Act, 1956.

Market Lot The Company shall allot the Equity Shares in dematerialised form or physical form. The trading in the Equity Shares of the company shall only be in dematerialised form for all investors., where the tradable lot is one equity share. The marketable lot for the purpose of allotment is 250 shares Nomination Facility to Investor In accordance with Section 109A of the Act, applicants, may nominate any one person in whom, in the event of the death of the applicants, as the case may be, the equity shares allotted if any, shall vest. A person being a nominee, entitled to the equity shares by reason of death of the original holders (s), shall in accordance with Section 109A of the Act be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the equity shares. Where the nominee is a minor, the holder may make a nomination to appoint, in the prescribed manner, any person to become entitled to equity shares in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale of equity shares by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made on a prescribed form available on request at the registered office of the Company or to the Registrar and Transfer Agents of the company. In accordance with Section 109B of the Act, any person who becomes nominee by virtue of 109A of the Act shall upon production of such evidence as may be required by the Court, elect either: 1. To register himself or herself as holder of Equity Shares or 2. To make such transfer of the Equity Shares, as the deceased holder could have made. Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with, within a period of 90 days, the Board may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the equity shares, until the requirement of the notice have been complied with. In case of allotment in dematerialised form; the nominations registered with the respective depository participants of the applicant would prevail. Minimum Subscription This being an Offer for Sale the provisions of Minimum Subscription are not applicable.

Arrangements for Disposal of Odd Lots The Company /Offeror has not made any arrangements for disposal of odd lot of shares arising out of this Offer as the tradable lot is ONE.

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Restrictions, if any, on Transfer and Transmission of Shares and on their Consolidation/Splitting None

2. Issue Procedure

Authority of the Present Offer The present Offer has been approved by the Offerors, i.e. Sterling Capital Ltd. vide their consent letter dated 30 March 2005. The board of directors of Net 4 India Limited, in their meeting held on 8 April 2005, has taken on record the proposed Offer for Sale of 20,68,200 equity shares held by the Offerors. Details of the Equity Shares being offered in this Offer for Sale are given below:

Name of the Offeror Equity Shares Offered 1 Sterling Capital Limited 20,68,200 Total 20,68,200

3. Principal Terms and Conditions of the Offer

3.1. Availability of Application Forms and Offer Document

Application forms with Memorandum containing salient features of the Offer Document and copies of the Offer Document under Section 56(3) of the Act may be obtained from the Registered Office of the Company, the Lead Manager to the Offer and the Bankers to the Offer named herein or from their branches as stated on the reverse of the application form.

3.2. Who can apply?

Applications may be made by: 1. Indian nationals resident in India who are not minor, in single or joint names (not more than three); 2. Hindu Undivided Families through the Karta of the HUF; 3. Companies, Corporate bodies and Societies registered under the applicable law in India and authorized to invest in the shares; 4. Scientific and/or Industrial Research Organizations, which are authorized to invest in shares; 5. Indian Mutual Funds registered with SEBI, Indian Financial Institution, Commercial Banks and Regional Rural Banks, Co- operative Banks may also apply subject to permission from RBI; 6. Indian Financial Institutions and Banks; 7. Trusts or Societies registered under the Societies Registration Act, 1860 or any other applicable Trust Law and which are authorized under their constitution to hold and invest in equity shares of a Company; 8. Non Resident Indians (NRIs) on a non-repatriation basis. 9. Foreign Institutional Investors

Application not to be made by: § Minors § Foreign Nationals § Partnership firms or their nominees § Trusts (except as stated above) § HUFs (except as stated above) § NRIs (except as stated above) § OCBs Minimum and Maximum Application Size Applications should be for a minimum of 250 Equity Shares and in Multiples of 250 Equity Shares thereafter. A single application can be made only for the number of equity shares that are being offered to each respective category.

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Option to Subscribe As on the date of this document, there are no pending options to subscribe to the Equity Shares or convertible instruments pending conversion into Equity Shares of any kind. The Investor shall have the option to subscribe to Equity Shares to be dealt with in a depository. The investor shall have the option to either receive the security certificate or to hold the Equity Shares in dematerialised form with a depository. Shares shall be issued in physical form only at the option of the applicant.

3.3. Procedure for Application

Application by Resident Indian Public Application must be: 1. Made only in the prescribed application form accompanying the memorandum. 2. Completed in full in block letters in English except signatures in accordance with the instructions contained herein and in the application form. Applications not so made are liable to be rejected. 3. For a minimum of 250 equity shares and in multiples of 250 thereafter. 4. In the name of Resident Indian Individuals, Limited Companies, Statutory Corporations/ Institutions Incorporated in India, Indian Mutual Funds registered with SEBI and Banks. Applications in the name of minors, foreign nationals, Trusts not registered under the Societies Registration Act, 1860, or any other Trust laws, partnership firms or their nominees, OCBs, NRIs on repatriation basis will be treated as invalid. 5. HUF should specify that the application is being made in the name of the HUF in the application form as “Name of the sole or first applicant: XYZ HUF applying through XYZ, where XYZ is the name of the Karta”. Application by HUFs would be considered at par with those from individuals. 6. Applicants residing at places where no collection centres have been opened may submit / mail their applications at their sole risk along with application money due there unto by Demand Draft to the Registrar to the Offer, MCS Limited super-scribing the envelope “ Net4India - Offer” so as to reach the Registrar on or before the closure of the Subscription List. Such demand drafts should be payable at New Delhi only. The charges, if any, for purchase of the demand draft will have to be borne by the applicant. 7. Application by Mutual Funds: A separate application can be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications provided the applications made by the Mutual Funds / Trustees / the Custodians clearly indicate their intention as to each Scheme concerned for which application has been made. 8. Subscription by NRIs/FIIs registered with SEBI: As per the extant policy of the Government of India, OCBs cannot participate in this Issue. Investments made by NRIs/ FIIs are governed by the regulations contained in FEMA 20/2000-RB dated May 3, 2000 read with AP (DIR Series) Circular No.38 dated December 2, 2003 shall be applicable. It is to be distinctly understood that there is no reservation for NRIs and FIIs registered with SEBI and all NRI and FII registered with SEBI applicants will be treated on the same basis with other categories for the purpose of allotment. 9. All cheques / bank drafts accompanying the application should be crossed “ A/c payee only” and made payable to the Bankers to the Issue and lodged at any of their nominated branches and should bear the words “ Net4India-Sterling – Offer for sale”. Applicants should indicate the application numbers on the reverse of the instrument through which the payment is made. All application forms duly completed together with cash / cheques / demand draft drawn on any of the Bankers to the issue mentioned on the prescribed application form for the amount payable on application at the rate of Rs.20/- per equity share, should be lodged with the bankers to the offer mentioned in the prescribed application form.

Instructions for Payment § Payments should be made in cash or cheque or demand draft drawn on any Bank (including a Co-operative Bank), which is situated at, and is a member or a sub-member of the Bankers’ “Clearing House” located at the Centers (indicated in the Application Form) where the Application is accepted. A separate cheque / demand draft should accompany each Application. § Money orders, postal orders, outstation cheques or demand drafts, cheques / draft drawn on banks not participating in the “clearing” will not be accepted and applications accompanied with such instruments may be rejected. § In case payment is effected in contravention of the conditions mentioned herein, the application money will be refunded and no interest will be paid thereon.

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§ Investors will not have facility of applying through stock invest instrument as RBI has withdrawn the stock invest scheme vide notification no.DBOD.NO.FSC.BC.42/24.47.001/2003-04 dated 5/11/2003. APPLICATION(S) WILL NOT BE ACCEPTED BY THE LEAD MANAGERS OR REGISTRAR TO THE OFFER EXCEPT AS MENTIONED:

Technical Grounds for Rejections Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following:

1. Bank account details are not provided 2. Age is not mentioned 3. Application by Minors 4. PAN or GIR number is not given if the value of the application is for Rs.50,000/- or more. 5. Multiple applications 6. In case of applications under power of attorney or by limited companies, corporate, trust etc., relevant documents are not submitted. 7. Applications accompanied by Stock invests 8. Application by OCBs 9. Applications not duly signed by the sole/joint applicants 10. Application forms do not have the applicant’s depository account details. 11. Application not for a minimum of 250 shares or multiples of 250 thereafter.

Particulars of Bank Account All the applicants should mention particulars relating to Savings Bank/Current Account number and the name of the bank and branch with whom such account is held in the appropriate place in the application form to enable the Registrar to print the said details in the refund orders after the name of the payee. Please note that it is mandatory to provide the afore-mentioned details. Applications without these details would be treated as incomplete and applications are liable to be rejected.

Note Applicants are requested to write their names and application serial number on the reverse of the instruments by which the payments are being made to avoid misuse of instruments submitted along with the applications for equity shares. For further instructions, please read the Application Form carefully.

Disposal of Application and Application Money No receipt will be issued for application money. However, the Bankers to the Offer receiving the application will acknowledge the receipt of the application by stamping and returning the detachable acknowledgment slip appended to each application. The sum received in respect of the issue will be kept in separate bank accounts and the Offeror/ Company will not have any access to the funds unless approval of The Stock Exchange, Mumbai, the designated Stock Exchange is obtained for the basis of Allotment and listing approval from the Stock Exchanges where listing is proposed or exists.

The Company reserves the full unqualified and absolute right to accept or reject any application in whole or part and in either case without assigning any reason thereof.

3.4. Basis of Allotment

In the event of the Offer being oversubscribed, the Allotment will be on a proportionate basis subject to market lots as explained below: a. A minimum 50% of the net Offer to the Indian public will be made available for allotment in favour of those retail individual applicants who have applied for Equity Shares of or for a value not more than Rs. 1,00,000/-. This percentage may be increased in consultation with the Designated Stock Exchange depending on the extent of response to the Issue from investors in this category. In case allotments are made to a lesser extent than 50% because of lower subscription in the above category,

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the balance Equity Shares would be added to the higher category and allotment made on a proportionate basis as per relevant SEBI Guidelines. The Executive Director / Managing Director of The Stock Exchange, Mumbai along with the Lead Manager and the Registrars to the Offer shall be responsible to ensure that the basis of Allotments finalized in a fair and proper manner in accordance with the guidelines. b. The balance of Net Offer to Indian Public shall be made available to investors including corporate bodies/ institutions and individual applicants who have applied for Equity Shares for a value more than Rs.1,00,000/-. c. The Unsubscribed portion of the net Offer to any of the categories specified in (a) or (b) shall be made available for allotment to applicants in the other category, if so required. d. Applicants will be categorized according to the number of equity shares applied for. e. The total number of equity shares to be allocated to each category as a whole shall be arrived at on a proportionate basis i.e. the total number of shares applied for in that category (number of applications in the category multiplied by the number of equity shares applied for) multiplied by the inverse of the over subscription ratio. f. Number of equity shares to be allocated to the successful allocatees will be arrived at on a proportionate basis i.e. total number of equity shares applied for by each applicant in that category multiplied by the inverse of the over subscription ratio. g. In all the applications where the proportionate allotment works out to less than 250 equity shares per applicant, the Allotment shall be made as follows: (i) Each successful applicant shall be allotted a minimum of 250 equity shares, and (ii) The successful applicants out of the total applicants of that category shall be determined by draw of lots in such a manner that the total number of equity shares allotted in that category is equal to the number of equity shares worked out as per (b) above. (iii) The draw of lots (where required) to finalise the Basis of allotment, shall be done in the presence of a public representative on the Governing Body of the BSE. The basis of allotment shall be signed as correct by the Governing Body of The Stock Exchange Mumbai and the public representative (where applicable) in addition to the Lead Manager and the Registrars to the Issue. h. If the proportionate allotment to an applicant works out to a number that is more than 250 but is not a multiple of 250(which is the marketable lot for the purpose of allotment) the number in excess of the multiple of 250 would be rounded off to the higher multiple of 250 if that number is 125 or higher. If that number is lower than 125, it would be rounded off to the lower multiple of 250. All applicants in such categories would be allotted equity shares arrived at after such rounding off. If the equity shares allocated on a proportionate basis to any category is more than the equity shares allocated to the applicants in the category, the balance available equity shares for allotment shall be first adjusted against any other category where the allotted equity shares are not sufficient for proportionate allotment to the successful applicants in that category. The balance equity shares if any, remaining after such adjustment will be added to the category comprising of applicants applying for minimum number of equity shares.

3.5. Issue of Certificates

In terms of Sec 68B of the Companies Act, 1956, the company will not issue any share certificates. Instead, the Company shall give credit to the beneficiary account with Depository participant within 2 working days of finalization of allotment of shares.

3.6. Allotment Letters & Refunds

In accordance with The Companies Act, 1956 and the requirement of stock exchanges, the Company shall pay interest @ 15 percent per annum on the entire amount if the Allotment of the Equity Shares has not been made within 30 days from the date of closure of the Offer. This interest will be paid from the 31st day from the closure of the Offer until the actual date of Allotment. Alternatively, in case of any delay in the dispatch of refund order’s beyond 30 days from the closure of the Offer, interest @ 15 percent per annum, will be paid on the refund amount from the 31st day from the closure of the Offer until the date of dispatch of the refund orders. The Offeror shall ensure dispatch of refund orders of value up to Rs. 1,500 under certificate of posting / Allotment advice and/ or regret letters together with refund orders over Rs. 1,500 by Registered Post only. The Offeror has undertaken to make available necessary funds to the Registrar for the purpose of dispatch of Allotment Letters/ Refund Orders as stated above.

3.6.1. Interest on Excess Application Money Payment of interest @15 percent per annum on excess application money (after adjusting the amount due on allotment) will be made to the applicants, if refunds are not dispatched within 30 days from the date of the closure of the Offer as per the Guidelines issued by the Government of India, Ministry of Finance vide their letter no. F-8/6/SE/79 dated July 21, 1983, as amended vide their letter no. F/14/SE/85 dated September 27, 1985 addressed to the Stock Exchanges, and as further modified by SEBI’s circular MD/RCG/33/1819/96 dated May 15, 1996.

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3.6.2. Interest in case of delay on Allotment& dispatch a. As far as possible, allotment of securities offered to the public shall be made within 30 days of the closure of this Issue. b. The Offerors / Company shall pay interest @ 15 percent per annum for the period of delay beyond 30 days if the Allotment has not been made and / or refunds have not been dispatched to the investors within 30 days from the date of closure of the Offer.

3.7. Scope of activities of the Registrars to the Offer

The Registrars to the offer shall also be the Share Transfer Agent and would also be responsible for all the post offer activities pertaining to this offer.

4. General Information

(i) Joint Applications. An application may be made in single or joint names (not more than three) as mentioned elsewhere in the prospectus. In case of a joint application, refund pay order (if any) and dividend / warrants, etc. will be made out in favour of the first applicant. All communications will be addressed to the applicant whose name appears first and will be dispatched to the first applicant’s address stated in the application form.

(ii) Multiple Applications. An applicant should submit only one application (and not more than one) for the total number of equity shares required. Applications may be made in single or joint names (not more than three). Two or more applications, in single and / or in joint names will be deemed to be multiple applications if the sole and / or first applicant is one and the same. No separate applications for dematerialised and physical is to be made. If such applications are made, the applications for physical shares will be treated as multiple applications and rejected accordingly.

(iii) Application under Power of Attorney. In case of applications under a Power of Attorney or by limited companies or bodies corporate or societies, the relevant Power of Attorney or the relevant resolution or authority to make the application, as the case may be, together with a certified true copy thereof along with a copy of Memorandum and Articles of Association and /or bye-laws must be attached to the Application Form at the time of making the application or lodged for scrutiny separately indicating the Serial No. of the Application Form with the Registrar to the Offer at their address, within 10 days from the closure of the Issue, failing which, the Company / Offeror reserves the full, unqualified and absolute right to accept or reject any application in whole or in part and in either case without assigning any reason thereof. The Company, in their absolute discretion, reserves the right to relax the condition of lodging of the Power Of Attorney along with the application form subject to such terms and conditions that the Company/Lead Manager may deem fit.

(iv) Thumb impression or signature in language other than English, Hindi or any other language specified in the 8th Schedule of the Constitution of India must be attested by Magistrate or Notary Public or a special Executive Magistrate under his official seal.

(v) All communications should be addressed to the Registrar to the Offer.

(vi) The applicant should mention the Application Form number on the reverse of the instrument through which payment is made.

(vii) Applicants are advised that it is mandatory for them to indicate in the space provided in the application form, details regarding their Savings Bank / Current Account Numbers and the name of the branch of the bank to which they want the proceeds of refund to be credited. Applications not containing such details are liable to be rejected.

(viii) Where an application is for Allotment of equity shares for a total value of Rs. 50,000 or more i.e. the total number of securities applied for multiplied by the Issue price is Rs. 50,000/- or more, the applicant or in the case of applicants in joint names, each of the applicants should mention his permanent account number allotted under the Income Tax Act, 1961 or where the same has not been allotted, the GIR number and the Income Tax Circle / Ward / District should be mentioned. In case where neither the Permanent Account Number (PAN) nor the GIR number has been allotted, the fact of non- allotment should be mentioned in the application form. Application forms without this information will be considered incomplete and will be liable to be rejected.

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(ix) Having regard to provisions of Section 269SS of the Income Tax Act, 1961, the application for subscription to the equity shares for an amount of Rs. 20,000 or more should not be effected in cash and must be offered only by an A/c. payee cheque / bank draft. In case payment is effected in contravention of the provisions, the application is liable to be rejected and application money will be refunded without interest.

(x) A separate cheque / bank draft must accompany each application form.

(xi) Depository option to Investors. Investors have an option to be allotted and hold shares in physical form or dematerialised form but trading of securities will be only in dematerialised form.

In case of partial allotment, allotment will be done in dematerialised option for the shares sought in dematerialised and balance if any will be allotted in physical form,

Tripartite agreements have been signed between the Company, the registrar and CDSL and NSDL. The ISIN No. allotted to the Company is INE553E01012.

Application from any investor, opting for allotments in dematerialised form, without the following details of his or her depository account is liable to be rejected.

1. An applicant applying for equity shares must have at least one beneficiary account either of the depository participants of NSDL or CDSL prior to making the Application. 2. The applicant must necessarily fill in the details (including the beneficiary account number and depository participants identification number) appearing in the application form. 3. Equity shares allotted to applicant will be credited in electronic form directly to the beneficiary account (with the depository participant) of the applicant. 4. Names in the application form should be identical to those appearing in the account details in the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the Depository account of the applicants(s). If incomplete or incorrect details are given under the heading applicant Depository account details in the application form it is liable to be rejected. 5. The applicant is responsible for the correctness of his or her demographic details given in the application form vis-à-vis those with his or her Depository participant. 6. It may be noted that equity shares in electronic form can be traded only on the Stock exchanges having electronic connectivity with NSDL or CDSL. The stock exchange where our equity shares are proposed to be listed is connected to NSDL and CDSL. 7. The trading of equity shares would be in dematerialised form only for all investors.

Marketable Lot a. The Company shall allot the Equity Shares in dematerialised form or physical form. The trading in the Equity Shares of the company shall only be in dematerialised form for all investors., where the tradable lot is one equity share. b. The marketable lot for the purpose of allotment is 250 shares

Nomination Facility to Investor In accordance with Section 109A of the Act, applicants, may nominate any one person in whom, in the event of the death of the applicants, as the case may be, the equity shares allotted if any, shall vest. A person being a nominee, entitled to the equity shares by reason of death of the original holders (s), shall in accordance with Section 109A of the Act be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the equity shares. Where the nominee is a minor, the holder may make a nomination to appoint, in the prescribed manner, any person to become entitled to equity shares in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale of equity shares by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made on a prescribed form available on request at the registered office of the Company or to the Registrar and Transfer Agents of the company. In accordance with Section 109B of the Act, any person who becomes nominee by virtue of 109A of the Act shall upon production of such evidence as may be required by the Court, elect either: a. To register himself or herself as holder of Equity Shares or

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b. To make such transfer of the Equity Shares, as the deceased holder could have made. Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with, within a period of 90 days, the Board may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the equity shares, until the requirement of the notice have been complied with. In case of allotment in dematerialised form; the nominations registered with the respective depository participants of the applicant would prevail. FOR FURTHER INSTRUCTIONS REGARDING APPLICATIONS FOR THE EQUITY SHARES, INVESTORS ARE REQUESTED TO READ THE APPLICATION FORM CAREFULLY.

5. Undertaking by the Company in terms of SEBI Clause 6.5.6. of SEBI Guidelines

The Company hereby undertakes: a. That the complaints received in respect of the Offer shall be attended to expeditiously and satisfactorily; b. That all steps for completion of the necessary formalities for listing and commencement of trading at Stock Exchange where the securities are to be listed shall be taken within 7 working days of finalization of basis of Allotment. c. That the funds required for dispatch of refund orders/allotment letters by registered post shall be made available to the Registrar to the Offer by the Offeror d. That share certificates/refund orders to the non-resident Indians shall be dispatched within specified time; e. That no further issue of securities 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. The Company, its promoters, any of the company’s associates or group companies, and other Companies with which directors of the company are associated as directors or promoters have neither been suspended by SEBI or been prohibited from accessing the capital market or any disciplinary action taken by any order or direction passed by SEBI.”

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IX. DESCRIPTION OF EQUITY SHARES AND TERMS OF THE ARTICLES OF ASSOCIATION

The Articles of Association of the Company inter-alia provide for the following.

SHARES Article 3. Share Capital The Share Capital of the company is Rs.20,00,00,000 (Rupees Twenty Crores only) divided into 2,00,00,000 (Two Lakhs) Equity shares of Rs.10/- with power to subdivide consolidate and increase or decrease and with power from time to time issue any shares of original capital with and subject to any preferential, qualified or special rights, privileges or conditions as may be thought fit and upon the subdivision of shares to apportion the right to participate in profits, in any manners as between the shares resulting from sub-division.

Article 4. Redeemable Preference shares The Company shall have power to issue Preference Share carrying right of redemption out of profits which would otherwise be available for dividend, or out of the proceeds of a fresh issue of Shares made for the purpose of such redemption, or liable to be redeemed at the option of the Company, and the Board may subject to the provisions of Section 80 of the Act, exercise such power in such manner as it thinks fit.

Article 5. Allotment of Shares Subject to the provisions of these Articles, the allotment of Shares shall be under the control of the Directors who may allot or otherwise dispose of the same to such terms and conditions and at such times as the Directors think fit and with power to issue any Shares as fully paid up in consideration of services rendered to the Company in its formation of otherwise, provided that where the Directors decide to increase the issued capital of the Company by the issue of further Shares, the provisions of Section 81 of the Act will be complied with. Provided further that the option or right to call of Shares shall not be given to any person except with the sanction of the Company in general meeting.

Article 6. Issue of Shares at a discount Subject to the provisions of the Act, it shall be lawful for the Company to issue at a discount, Shares of a class already issued.

Article 7. Commission for placing shares The Company may, subject to compliance with the provisions of Section 76 of the Act, exercise the powers of paying commission on the issue of Shares and debentures. The commission may be paid or satisfied in cash or share, debentures or debenture stock of the Company.

Article 8. Brokerage The Company may pay a reasonable sum of brokerage, subject to the ceiling prescribed under the Act.

Article 9. Trust not recognized Save as herein otherwise provided, the Company shall be entitled 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 law required, be bound to recognize any trust benami or equitable or other claim to or interest in such Shares on any fractional part of share whether or not it shall have express or other notice thereof.

CERTIFICATE Article 10. Certificate The certificate of title to shares shall be issued under the Seal of the Company.

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Article 11. Member’s right to certificate Every member shall be entitled free of charge to one certificate for all the Shares of each class registered in his name or, if any member so wishes, to several certificate each for one or more of such Shares. Unless the Conditions of issue of any Shares otherwise provide, the Company shall either within three months after the date of allotment and on surrender to the Company of its letter making the allotment or of its letter making the allotment or of its letter making the allotment or of its fractional coupons of requisite value (save in the case may be issue against letters of acceptance or of renunciation or in case of issue of bonus shares) or within one month or receipt of the application for registration of the transfer, subdivision, consolidation renewal or exchange of any of its shares, as the case may be complete and have ready for 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 thereon. Particulars of every certificate issued shall be entered in the Register maintained in the form set out in the form set out in the Companies, (issue of Share-Certificates) Rules, 1960.

Article 12. As to issue of new certificate 1. If any certificate of any share or shares be surrendered to the Company for sub-division or consolidation or if any certificate be defaced, torn or old, decrepit, worn-out or where the cages on the reverse for recording transfer have been duly utilized, 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 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 relate. Where a new certificate has been issued as aforesaid it shall state on the face of it and against the stub or counterfoil that it is issued as aforesaid and against the stub or counterfoil that it is issued in lieu of shares certificate or is a duplicate issued for the one so replaced and in the case 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. For every certificate issued under this Article, there shall be paid to the Company such out of pocket expenses incurred by the Company 2. No fee shall be charged for sub-division and consolidation of share and debenture certificate and for subdivision letters allotment and split, consolidation, renewal and pucca transfer receipt into denominations corresponding to the market units of trading, for sub-division of renounciable letters of right : 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 utilized. Provided that the Company may charge such fees as may be agreed by it with the Stock Exchange with which its shares may be enlisted for the time being 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 haves been fully utilized. Provided that the Company may charge such fees as may be agreed by it with the Stock Exchange with which its shares may enlisted for the time being for issue of new certificate in replacement of those that are torn, defaced, lost or destroyed, and for subdivision and consolidation of shares and debenture certificates and for sub-division of letters of allotment and split, consolidation, renewal and pucca transfer receipts into denominations other than those fixed for the market units of trading.

JOINT – HOLDERS OF SHARES Article 13. Fee on sub-division of shares, issue of new certificates etc Where two or more persons are registered as the holders of any share they shall be deemed to be deemed to hold the same as joint-tenants with benefit of survivorship subject to provisions following and to the other provisions of these Articles relating to joint holders:- Maximum number a. The Company shall not be bound to register more than four persons as the joint holder of any share

Liability several as well as joint b. The joint holders of a share shall be liable severally as well as jointly in respect of all payments that ought to be made in respect such shares.

Survivors of joint holders only recognized c. On the death of any one of such joint-holders the survivor or survivor shall be the only person recognized by the Company as having a any title to or interest in such share but the Board may require such evidence of death as it may deemed fit.

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Delivery of Certificates d. Only the person whose named stands first in the Register as one of the Joint-holders of any share shall be entitled to delivery of the certificate relating to such share.

CALLS Article 14. Calls The Directors may, from time to time, subject to the terms on which any share may have been issued, make such calls as they think fit upon the members in respect of all moneys unpaid on the shares held by them respectively, and not by the conditions of allotment thereto 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 place appointed by the Directors. A call may be made payable by instalments.

Article 15. When call deemed to have been made A call shall be deemed to have been made at the time when the resolution of the Directors authorizing such call was passed.

Article 16. Notice to call Not less than 30 (thirty) days notice of any call shall be given specifying the time and place of payment and to whom such call shall be paid.

Article 17. Amount payable If by the terms of any share or otherwise, the whole or part of the amount of issue price thereof is made payable at any fixed time or by instalment at fixed times, every such amount or issue price or instalment thereof shall be payable as if it were a call duly made by Directors and of which due notice had been given and all the provisions herein contained in respect of call shall apply to such amount or issue price or instalments accordingly.

Article 18. Interest to be charged on non-payment of calls If the sum payable in respect of any call or instalment be not paid on or before the day appointed for the payment thereof, the holder for the time being of the share in respect of which the call shall have been made or the instalment shall have been made or the instalment shall be due, shall pay interest for the same at the rate of 12 (twelve) percent per annum, from the day appointed for the payment thereof to the actual payment or at such other rate as the Directors may determine but they shall have power to waive the payment thereof wholly or in part.

Article 19. Evidence in actions by Company against shareholders On the trial or hearing of any action or suit brought by the Company against any member or his representative to recover any debt or money claimed to be due to the Company in respect of his shares, it shall be sufficient to prove that the name of the defendant is, or was when the arose, on the Register of the Company as a holder, or one of the holders of the number of shares in respect of which such claim is made, that the resolution making the call is duly recorded in the minute book and that the amount claimed is not entered as paid in the book of the com, and shall not be necessary to prove the appointment of the Directors, who make any call not that a quorum if Directors was present at the meeting at which any call was made not that such meeting was duly convened or constituted, nor any other matter whatsoever; but the proof of the matters aforesaid shall be conclusive evidence of the debt.

Article 20. Payment of calls in advance 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 shares held by him beyond the sums actually called for, and upon the money so paid or satisfied in advance or so much thereof as form time to time exceeds the amount of calls then made upon the share in respect of such advance has been made, the Company may pay interest at such rate not exceeding unless the Company in general meeting shall otherwise direct, six percent per annum as the member paying such sum as advance and the Board agree upon. Money so paid in excess of the amount of call shall not rank for dividends or confer a right to participate in profits. The Board may at any time repay the amount so advanced upon giving such member not less than three months notice in writing.

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FORFEITURE AND LIEN Article 21. Notice may be given at call or investment not paid If any member fails to pay and call or instalment on or before the day appointed for the payment of the same, the Directors may, at any time thereafter during such time as the call or instalment remains unpaid, serve a notice on such member requiring him to pay the same together with any interest that may have accrued, and expense they may have been incurred by the Company by reason of such non-payment.

Article 22. Form of Notice The notice shall name a day, (not being less than (thirty) days from the date of service of notice), and a place or place on and at which such call or instalment and such interest and expenses aforesaid are to be paid. The notice shall also state that in the event of non-payment at or before the time, and place or places appointed, the shares in respect of which such call was made or instalment was payable will be liable to be forfeited.

Article 23. If notice not complied with shares may be forfeited If the requirement of any such notice as aforesaid are not complied with, any shares in respect of which such notice has been given may at any time thereafter, before the payment of calls or instalments, interest and expenses due in respect thereof, be forfeited by a resolution of the Directors to the effect. Such forfeiture shall include all dividends declared in respect of the forfeited share not actually paid before the forfeiture. Neither the receipt by the Company of the portion of any money which shall from time to time be due from any member of the Company in respect of his shares either by way of principal or interest, nor any indulgency granted by the Company from thereafter proceeding to enforce a forfeiture of such shares as herein provided.

Article 24. Notice after forfeiture When any share shall have been so forfeited, notice of the forfeiture shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture with the date thereof shall forthwith be made in the Register but no forfeiture shall be in any manner be invalidated by any omission or neglect to give such notice or to make such entry as aforesaid.

Article 25. Forfeited shares to become the property of the Company Any share so forfeited shall be deemed to be the property of the Company, and the Directors may sell, re-allot or otherwise, dispose of the same in such manner, as they think fit.

Article 26. Power to annul forfeiture The Directors may at any time, before any share so forfeited shall not be sold, re-allotted or otherwise disposed of, annul the forfeited thereof upon such conditions as they think fit.

Article 27. Arrears to be paid notwithstanding forfeiture Any member whose shares have been forfeited shall notwithstanding such forfeited, be liable to pay and shall forthwith pay to the Company all calls, instalments, interest and expenses owing upon or in respect of such shares at the time of all instalments, interest and the forfeited together with interest thereon, for the time of forfeited until payment, at 12% (Twelve per cent) per annum or such other rate as the Directors may determine, and the Directors may enforce the payment thereof without any deduction of allowance for the value of shares at the time of forfeited, but shall not be under any obligation to do so.

Article 28. Effect of forfeiture The forfeited of a share shall involve the extinction of all interest in and also of all claims and demands against the Company in respect of eh share, and all other rights incidental to the share except only such of those rights as by this Articles are expressly saved.

Article 29. Evidence of forfeiture A duly verified declaration in writing that the declarant is a Director of the o and that a share in the Company and that a share in the Company has been duly forfeited on a date stated in the declaration shall be conclusive evidence of the fact therein stated as against all persons claiming to be entitled to the share. The Company may receive the consideration, if any, given for the shares on the sale or disposition thereof, shall constitute a given title to such shares

Company’s Lien of Shares

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Article 30. Company’s Lien of Shares The Company shall have a first and paramount lien upon all shares (not fully paid up) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof for all moneys (whether presently payable or not) called or payable at fixed time in respect of such share, and no equitable interest in any share shall be created except upon the footing and condition that Article 9 hereof is to have full effect. Unless otherwise agreed, the registration of a transfer of a share shall operate as a waiver of the Company’s lien, on such shares.

Article 31. Intention as to enforcing lien For the purpose of enforcing such lien, the Directors may sell the share subject thereto, in such manner as it thinks fit, but no sale shall be made until such period as aforesaid shall have elapsed and until notice in writing of the intention to sell shall have been served on such member, his committee, curator bonis or other person recognized by the Company as entitled to represent such member and default shall have been made by him or them in payment of the sum payable as aforesaid, in respect of such share for thirty days after the date of such notice. The net proceeds of any such sale shall be applied in or towards satisfaction of such part of the amount in respect of which the lien exists as is presently payable by such member, and residue (if any) paid to such member, his executors administrators, or other representatives or person so recognized as aforesaid.

Article 32. Validity of shares Upon any sale after forfeited or for enforcing a lien in purported exercise of the powers by these presents given, the Directors may appoint some person to execute and instrument of transfer of the shares sold and cause the purchaser’s name to entered in the register in respect of such shares shall not be affected by any irregularity or invalidity in the proceedings in damages only and against the Company exclusively.

Article 33. Power to issue new Certificates Where any shares under the powers in that behalf herein contained are sold by the Directors and certificate thereof has not been delivered to the Company be former holder of the said shares the Directors may issue new certificate in lieu of certificate not so delivered up.

TRANSFER AND TRANSMISSION OF SHARES Article 34. Execution of transfer etc. Subject to the provisions of the Act, no transfer of shares shall be registered unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor or transferee has been delivered to Company together with the certificate or certificates of the shares, or if no such certificate is in existence along with the letter of allotment of shares. The instrument of transfer of any shares shall be signed both by or on behalf of 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.

Article 35. Application for transfer Application for the registration of the transfer of a share may be made either by transferor or the transferee provided that, where such application is made by the transferor, no registration shall in the case of partly paid shares be effected unless the Company gives notice of the application to the transferee in the manner prescribed by the Act, and, subject to the provision of the Articles 8, 37, & 38 hereof, 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 application for registration was made by the transferee.

Article 36. Notice of transfer to registered holder Before registering any transfer tender for registration the Company may, if it so thinks fit, give notice by the letter posted in the ordinary course to the registered holder that such transfer deed has been lodged and that, unless objection is taken, the transfer will be registered and if such registered holder fails to lodge an objection is taken, the transfer will be registered and if such registered holder fails to lodge and objection in writing at the office of the Company within seven days from the posting of such notice to him, he shall be deemed to have admitted the validity of the said transfer.

Article 37. Register of transfer The Company shall keep a “Register of transfers” and therein shall be fairly and distinctly entered particulars of every transfer of any share.

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Article 38. In what case to decline to register transfer of shares Subject to the provisions of Section 111 of the Act, the Board, without assigning any reason for such refused, may within one month from the date on which the instrument of transfer was delivered to the Company, refused to register any transfer of the share upon which the Company has a lien and in the case of a share not fully paid up, may refuse to register a transfer to the transferee of whom the Board does not approve.

Article 39 (1) No transfer to minor etc. Provided that the registration of the transfer of share shall not be refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the company on any account whatsoever. 1. No transfer shall be made to a minor or a person of unsound mind. Article 39 (2) No fee for registration for transfer etc: No fee shall be charged for registration of transfer, grant of probate, grant of letter of administration, certificate to death or marriage, power of attorney of similar other instruments.

Article 40. When instrument of transfer to be retained The instruments if transfer duly approved shall be retained by the Company and in the case of refusal, instrument of transfer shall be returned to the person who lodged the transfer deeds.

Article 41. Notice of refusal to register transfer If the Directors refuse to register the transfer of any shares, the Company shall, within one month from the date on which the instrument of transfer was lodged with the Company or intimation given, send to the transferor and the transferee or the person giving intimation of such transfer notice of such refusal.

Article 42. Power to close transfer books and register On giving seven day’s notice by advertisement in a newspaper circulating in the District in which the office of the Company is situated the Register of Members may be closed during such time as the Directors think fit not exceeding in the whole forty five days in each year but not exceeding in the whole forty five days in each year but not exceeding thirty days at a time.

Article 43. Transmission of registered shares The executors or administrators or the holder of a succession certificate in respect of shares of a deceased member (not being one of the several joint-holders) shall be the only person whom the Company shall recognize as having any title to the shares 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 shares the survivors shall be only persons recognized by the Company as having any title to or interest in such shares but nothing herein contained shall be taken to release the estate of a deceased joint-holder from any liability on shares held by him jointly with any other person. Before recognizing any legal representative or heir or a person otherwise claiming title to the shares of the Company may require him to obtain a grant of probate or letters of administration or succession certificate, or other legal representation, as the case may be from a competent Court, provided nevertheless that in any case where the Board in its absolute discretion thinks fit it shall be lawful for the Board to dispense with production of probate or letters of administration or a succession certificate or such other legal representation upon such terms as to indemnity or otherwise as the Board may consider desirable.

Article 44. As to transfer of shares of deceased or insolvent members Transmission Articles Any person becoming entitled to or to transfer shares in consequence of the death or insolvency of any member upon producing such evidence that he sustains the character in respect of which proposes to act under this article or of his title as the Directors thinks sufficient, may with the consent of the Directors (which they shall not be under any obligation to give), be registered as a member in respect of such shares or may, subject to the regulations as to transfer herein before contained transfer such shares. This article is hereinafter referred to as “The transmission Article”. Subject to any other provisions of these Articles if the person so becoming entitled to shares under this or the last preceding Article shall elect to be registered as a member in respect of the share himself he shall delivered or send to the company a notice in writing signed by him stating that be so elect. If he shall elect to transfer to some other person he shall execute an instrument of transfer to some other person he shall execute an instrument of transfer in accordance with the provisions of these articles relating to transfer of shares. All the limitations, restrictions and provisions of the Articles relating to the rights to transfer of shares. All the limitations, restrictions and provisions of the Articles relating to the rights to transfer and the registration of transfers of shares shall be applicable to any such notice of transfer as aforesaid.

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Article 45. Notice of election to be registered Subject to any other provisions of these Articles if the Directors in their sole discretion are satisfied in regard thereof, a person becoming entitled to a share in consequences of the death or insolvency of a member may received and give a discharge for any dividends or other moneys payable in respect of the share.

Article 46. Provision of articles relating to transfer applicable The instrument of transfer shall be in writing and all the provisions of Section 108 of the Companies Act, 1956 and of statutory modification thereof for the time being shall be duly complied with in respect of all transfers of shares and the shares and the registration thereof.

SHARE WARRANTS Article 47. Rights of executers and trustees Subject to the provisions of Section 114 and 115 of the Act and subject to any directions which may be given by the Company in General Meeting, the Board may issue share-warrants in such manner and on such terms and conditions as the Board may deem fit. In case of such issue Regulations 40 to 43 of Table “A” in Schedule I to the Act, shall apply.

STOCKS Article 48. Power to issue share warrants The Company may exercise the power of conversion of its shares into stock and in that case regulations 37 to Table “A” in Schedule I to the Act shall apply.

ALTERATION OF CAPITAL Article 49. Power to subdivide and consolidate The Company may be ordinary resolution from time to time alter the condition of Memorandum of Association as follows in respect of capital clause:- a. Increase the Share Capital by such amount to be divided into shares of such amount as may be specified in the resolution. b. Consolidate and divide all or any of its share capital into shares of larger amount than its existing shares. c. 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-division the proportion between the amount paid and amount paid and the amount, if any unpaid on each reduced share shall be the same as it was in the share from which the reduced share is derived, and d. 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 hare capital by the amount of the share so cancelled.

Article 50. Surrender Subject to the provisions of Sections 100 to 104, of the Act, the Board may accept from any member the surrender of all or any of his shares on such terms and conditions as shall be agreed.

MODIFICATION OF RIGHTS Article 51. Power to modify rights If 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 share of that class) may whether or not the Company is being wound up, be carried with consent in writing of the holders of three-fourths of the passed at a Separate Meeting of the holders of shares of that class. To every such Separate Meeting the provisions of the Article relating to general meeting shall apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one tenth of the issued share of the lass but so that if at any adjourned meeting of such holders a quorum an that any holder of shares of the class present in person or proxy may demand a poll and, on a poll, shall have one vote for each shares of the class of which he is the holder. The Company shall comply with the provisions of Section 192 of the Act as the forwarding a copy of any such agreement or resolution to the Registrar of Companies.

Article 52. Power to borrow The Board may, from time to time, at its discretion; subject to the provisions of Section 58A, 292 and 293 of the Act, raise or borrow, either from the Directors or from elsewhere and secure the payment of any sum or sums of money for the purposes of the Company.

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Article 53. Condition on which money may be borrowed The Board may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in al respects as it thinks fit, and in particular, by the issue of bonds, perpetual or redeemable debenture or debenture stock, or any mortgage, or other security on the undertaking of the whole or of the property of the company (both present and future), including its uncalled capital for the time being, provided that debentures with the rights to allotment of or conversion into shares shall not be issued except with the sanction of the Company in general meeting and subject to the provisions of the Act.

Article 54. Issue at discount etc. or within special privileges Any debentures, debenture stock, bonds or other securities may 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.

Article 55. Instrument of transfer Save as provided in Section 108 of the Act, no transfer of debenture 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 debentures.

Article 56. If the Board refuses to register the transfer of any debentures the Company shall, within two months 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.

RESERVES Article 57. Reserves Subject to the provisions of the Act, the Board shall in accordance with Section 205(2A) of the Act, before recommending any dividend set aside out of the profits of the Company such sums as it thinks proper as reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied an pending such application may at the like discretion, either be employed in the business of Company or be invested in such investments (other than shares of the Company as the Board may from time to time thinks fit). The Board may also carry forward profit which it may think prudent not be divide without setting them aside as a reserve.

Article 58. Capitalisation Any General Meeting may resolve that the whole or any part of the undivided profits of the Company (which expression shall include any premiums received on the issue of shares and any profits or other sums which have been set aside as a reserve or reserves or have been carried forward without being divide) be capitalized and distributed amongst such of the members as would be entitled to receive the same if distributed by way of dividend and in the same proportions of the footing that they become entitled thereto as capital and that all or any part of such capitalized amount be applied on behalf of such members in paying up in full any un-issued shares of the Company which shall be distributed accordingly or in or towards payment forfeited the uncalled liability on any issued shares, and that such distribution or payment shall be accepted by such members in full satisfaction of their interest in the said capitalized amount. 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 forfeited un-issued shares to be issued to member of the Company as fully paid bonus shares.

Article 59. Fractional Certificate For the purpose of giving effect to any resolution under two last preceding Articles the Directors may settle any difficulty which may arise in regard to the distribution as they think expedient and in particular any issue fractional certificate, and may determine that cash payments shall be made to any members in order to adjust the rights of all parties and may vest such cash in trustees upon such trusts for persons entitled to the dividend or capitalized funds as may seem expedient to the Directors. Where requisite, a proper contract shall be filed in accordance with Section 75 of the Act and the Directors may appoint any persons entitled to the dividend or capitalize fund and such appointment shall be effective.

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GENERAL MEETINGS Article 60. Extraordinary General Meeting The Directors may, whenever they think fit, call an extra ordinary general meeting provided however if any time there are not in India Directors capable of acting who are sufficient in number to form a quorum any Directors present in India may call an extra ordinary general meeting in the same manner as nearly as possible as that in which such a meeting may be called by the Board.

Article 61. Calling of Extra ordinary General Meeting on Requisition The Board of Directors of the Company shall on the requisition of such member or members of the Company as is specified in sub- section (4) of Section 169 of the Act forthwith proceed to call and extra ordinary general meeting the Company and in respect of any such requisition and of any meeting to be called pursuant thereto, all the other provisions of Section 169 of the Act and of any statutory modification thereof for the time being shall apply.

Article 62. Quorum The quorum for a general meeting shall be five members present in person.

Article 63. Chairman At every General Meeting, the Chair shall be taken by the Chairman of Board of Directors. If at any meeting the Chairman of the Board of Directors be not present within fifteen minutes after the time appointed for holding the meeting or, though present be unwilling to act as chairman, the members present shall choose one of the Directors present to be Chairman or if no Director shall be present and willing to take the Chair then the members present shall choose one of their members present shall choose one of their members, being a member entitled to vote, to be Chairman.

Article 64. Sufficiency of ordinary resolutions Any act or resolution which, under the provisions of this article or of the Act, is permitted shall be sufficiently so done or passed if effected by an ordinary resolution unless either the Act or the articles specifically require such act to be done or resolution passed by a special resolution.

Article 65. When if quorum be not present meeting to be dissolved and when adjourned If within half an hour from time appointed for the meeting a quorum be not present, the meeting, if convened upon a requisition of share holders shall be dissolved but in any other case it shall stand adjourned to the same day in the next week at same time and place, unless the same shall be public holiday when the meeting shall stand adjourned to the next day not being a public holiday at the same time and place and if at such adjourned meeting a quorum be not present within half an hour from the time appointed for the meeting, those members who are present and not being less than two persons shall be a quorum and may transact the business for which the meeting was called.

Article 66. How questions or resolutions to be decided at meetings In the case of an equality of votes the Chairman shall both on a show of hands and a poll have a casting vote in addition to the vote or votes to which he may be entitled as a member.

Article 67. Power to adjourn General Meeting The Chairman of 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 adjourned took place. It shall not be necessary to gibe notice to the members of such adjournment or of the time, date and place appointed for the holding of the adjourned meeting.

Article 68. Business may proceed not withstanding demand of poll If a poll be demanded, the demand of a poll shall not prevent the continuance of meeting for the transaction of any business other than the question on which a poll has been demanded.

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VOTES OF MEMBERS Article 69. Vote of members 1. 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 proxy on behalf of a holder of Equity Shares or as a duly authorized representative of a body corporate being a holder of Equity Shares, if he is not entitled to vote in his own rights, shall have one vote. 2. On a poll the voting rights of a holders of the Preference Shares shall be specified in Section 87 of the Act. 3. The voting rights of the holders of the Preference Shares including the Redeemable Cumulative Preference share shall be in accordance with the provisions of Section 87 of the Act. 4. No company or body corporate shall vote proxy so long as a resolution of its Boards of Directors under Section 187 of the Act is in force and the representative named in such resolution is present at the General Meeting at which the vote by proxy is tendered.

Article 70. Votes in respect of deceased, insolvent and insane members A person becoming entitled to a share shall not before being registered as a member in respect of the share entitled to exercise in respect thereof any right conferred by membership in relation to meetings of the Company. If any member be a lunatic or idiot, he may vote whether on a show of hands or at a poll by its committee, or other legal curator and such last mentioned persons may give their votes by proxy provided that twenty four hours at least before the time of holding the meeting, as the case may be , at which any such person proposes to vote he shall satisfy the Board of his rights under this Article unless the Board shall have previously admitted his right under this Article unless the Board shall have previously admitted his right to vote at such meeting in respect thereof.

Article 71. Joint Holders Where there are joint holders of any one of such persons may vote at any meeting either personally or by proxy in respect of such shares as if he were solely entitled thereto and if more than one of such joint-holders be present at any meeting either personally or by proxy then that one of the said persons so present whose name stands prior in order on the register in respect of such share shall alone be entitled to vote in respect thereof.

Article 72. Instrument appointing proxy too in writing The instrument appointing a proxy shall be in writing under the hand of the appointer or of his Attorney duly authorized in writing or if such appointer is a corporation under its common seal or the hand of its Attorney.

Article 73. Instrument appointing Proxy to be deposited at the office 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 of authority shall be deposited at the office not less than forty eight hours before the time for holding the time for holding the meeting at which the person named in the instrument proposes to vote in default the instrument of proxy shall not be treated as valid.

Article 74. When vote by proxy valid though authority revoked A vote given in accordance with the terms of any instrument appointing a proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of transfer of the share in respect of which the vote is given. Provided no intimation is written of the death, insanity, revocation or transfer or the share shall have been received at the office or by the chairman of the meeting 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 any instrument of proxy and that the same has not been revoked.

Article 75. Form of instrument appointing proxy Every instrument appointing a proxy shall, as nearly as circumstances will admit, in the form set out in Schedule IX to the Act.

Article 76. Validity of vote No objection shall be taken to the validity of any vote except at the meeting or poll at which such vote shall be tendered and every vote not disallowed at such meeting or poll and whether given personally or by proxy otherwise shall be deemed valid for all purposes.

Article 77. Restrictions on voting

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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 such sum presently payable by him have not been paid or in regard to which the Company has and has exercised any right or lien.

DIRECTORS GENERAL PROVISIONS Article 78. Number of Directors The number of Directors shall not be less than three and not more than twelve including nominee Directors.

Article 79. First Directors The first three subscribers to the Memorandum of Association in sariatium shall be the First Directors of the Company.

Article 80. Power of Directors to add its numbers The Directors shall power at any time and from time to time to appoint any person as a Director a san addition to the Directors but so that the total number of Directors shall not at any time exceed the maximum number fixed by the Articles, any director so appointed shall hold office only until the next Annual General Meeting of the Company and shall be eligible for re-election.

Article 81. Shares qualification of Directors A Director shall not be required to hold any share qualification.

Article 82. Remuneration of Directors Each Director shall be entitled to be paid put of the funds of the Company by way of remuneration for his services not exceeding the sum of Rs. 250 (Rupees Two Hundred Fifty only) as may be fixed by Directors from time to time for every meeting of the Board of Directors attended by him. Subject to the provisions of the Companies Act, the director shall also be entitled to receive in each year a commission @ 1 per cent of the net profits of the Company in all, such commission to be calculated on the net profits of the Act, 1995 and such commission shall be divided among the Directors in such proportion and manner as may be determined by them. The Directors may allow and pay to any Director who for the time being is resident out of the place at which any meeting of the Directors may be held and who shall come to that place for the purpose of attending such meeting such sum as the Directors may consider fair and reasonable for his expenses in connection with his attending at the meeting in addition to his remuneration as above specified. If any Director being willing is appointed to and executive office either whole time or part time or be called upon to perform extra services or to make any special exertions for any of the purposes of the Company then subject to Section 198, 309, & 314 of the Act the Board may remunerate such Director either by a fixed sum or by a percentage of profits or otherwise and such remuneration may be entitled to.

Article 83. Continuing Directors may act The continuing Directors may act notwithstanding any vacancy in their body but so that if the number falls below the minimum number above fixed the Directors shall not except for the purpose of filling vacancies or of summoning a General Meeting act so long as the number is below the minimum.

Article 84. Directors may contract with Company Subject to the provisions of Sections 297, 299, 300 & 314 of the Act, the Director (including Managing Director) shall not be disqualified by reason of his or their office as such, from holding office under the Company or from contracting with the Company either as vendor, purchaser, lender, agent, broker, lessor or otherwise, not shall other such contract or any contract or arrangement entered into by or on behalf of the Company with a relative of such Directors or the Managing Director or with any firm in which any Director or a relative shall be a partner or with any other partner or with a private company in which such Director is a member or Director interested be avoided, nor shall any Director or otherwise so contracting or being such member or so interested be liable to account to the Company for any project realized by such contract or arrangement by reason only such Director holding that office or of the fiduciary relation thereby established.

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APPOINTMENT OF DIRECTORS Article 85. Appointment of Directors The Company in General Meeting, may subject to the provisions of these Articles and the Act, at any time elect any person to be a Director and may from time to time increased or reduced number of Directors and may also determine in what rotation such increased or reduced number is to go out of office.

Article 86. Board may fill-up casual vacancies If any Director appointed by the Company in General Meeting vacates office of 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 a the vacating Director would have retained the same if any vacancy had occurred. Provided that the Board may fill such a vacancy by appointing thereto any person who has been removed from the office of Director under Section 284 of the Act.

Article 87. Nominee Directors The Company shall subject to the provisions of the Act, be entitled to agree with any person, firm or corporation that he or it shall have the right to appoint his or its nominee on the Board of Directors of the Company upon such terms and conditions as the Company may deem fit. The Corporation, firm or person shall be entitled from time to time to remove any such Director or Directors and appoint another or privileges land be subject to the same obligation as any other Director of the Company.

Article 88. Alternative Directors Subject to the provisions of Section 313 of the Act, the Board appoint any person to act as an alternate director during the latter’s absence for a period of not less than tree 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 ipso facto vacate office if and/when the absent director returns to state in which meetings of the Board are ordinarily held or the absent Director vacates office as a Director.

ROTATION OF DIRECTORS Article 89. Rotation of Directors 1. Not less than tow thirds of the total number of Directors shall be persons whose period of office is liable to be determined by retirement of Directors by rotation. 2. At each Annual General Meeting of the Company one third of such of Directors for time being as are liable to retire by rotation or if their number is not three or a multiple of three, then the number is not three or a multiple of three, then the number nearest to one-third shall retire from office. 3. 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 became Directors on the same day those to retire shall in default of and subject to any agreement among themselves be determined by lot. 4. If at any Annual General Meeting all the Directors appointed under Article 87 and 108 hereby are not exempt from retirement by rotation under section 255 of the Act then to the extent permitted by the said Section the exemption shall extend to the Director or Directors appointed under Article 87. Subject to the foregoing provisions as between Directors appointed under any of articles referred to above, the Director or Directors who shall not be liable to retire by rotation shall be determined by and in accordance with their respective seniorities as may be determined by the Board.

Article 90. Retiring Director eligible for re-election A retiring Director shall be eligible for re-election and shall act as a Director throughout the meeting at which he retires.

Article 91. Subject to any resolution for reducing the number of directors, if at any meeting at which an election of Directors ought to take place, the places of the retiring Directors not filled up, the meeting shall stand adjourned till the next succeeding day which is not a public holiday at the same time and place and if at the adjourned meeting, the places of the Directors are not filled up, the retiring Directors or such of them as have not had their places filled ups shall (id will to continue in office) be deemed to have been re- elected at the adjourned meeting.

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PROCEEDING OF DIRECTOR Article 92. Meeting of Directors The Directors may meet together for the dispatch of business, adjourned and otherwise regulate their meetings and proceeding as they think fit. Notice in writing of every meeting of the Directors shall ordinarily be given by a director or such other officer of the company duly authorized in this behalf to every director for the time behalf to every Director for the time being in India and at his usual address in India.

Article 93. Quorum The quorum for a meeting of the Directors shall be determined from time to time in accordance with the provisions Section 287 forfeited the Act. If a quorum shall not be present within fifteen minutes from the time appointed for holding a meeting of the Directors, it shall be adjourned until such date and time as the Directors present shall appoint.

Article 94. Summoning of Meeting of directors The Secretary may at any time, and upon request of any two Directors shall summon a meeting of the Director.

Article 95. Voting at meeting Subject to the provisions of Section 316, 372(5) and 386 of the Act, questions arising at any meeting shall be decided by a majority of votes each director having one vote and in case of any equality of votes, the Chairman shall have a second or casting vote.

Article 96. Chairman of meeting The Chairman of the Board of Directors shall be the Chairman of the meeting of Directors. Provided that if the Chairman of the Board of director is not present within five minutes after the appointed time for holding the same, the Directors present shall choose one of their member to be Chairman of such meeting.

Article 97. Act of meeting A meeting of Directors for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions by or under the Articles of the Company and the act for the time being vested in or exercisable by the Directors generally.

Article 98. To appoint committee and to delegate power and to revoke it The Directors may subject to compliance of the provisions of the Act from time to time delegate any of their powers to Committees consisting of such member or members of their body as they think fit and may from time to time revoke such delegation. Any Committee so formed shall in exercise of the powers so delegated confirm to any regulations that may from time to time be imposed on it by the Directors. The meeting and proceedings of any such committee, if consisting of two or more members, shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Directors so far as the same are applicable thereto and are not superseded by any regulation made by the Directors under this Article.

Article 99. Validity of Acts All acts done at any meeting of directors or of a Committee of the Directors or by any person acting as a Director shall be valid notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Directors, Committee or person acting as aforesaid or that they or any of them were disqualified.

Article 100. Resolution of circulation Except a resolution which the Companies Act requires it specifically to be passed in a board meeting a resolution may be passed by the Directors of Committee thereof by circulation in accordance with the provisions of Section 289 of the Act. And any such minutes of any meeting of Director or of any Committee or of the Company if purporting to be signed by the Chairman of the such meeting or by the Chairman of next succeeding meeting shall be receivable as prima facie evidence of the matters in such minutes.

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POWER OF DIRECTORS Article 101. General powers of the Company vested in the Directors Subject to the provisions of the Act, the control of the Company shall be vested in the Directors who shall be entitled to exercise all such powers and do all such acts and things as may be exercised or done by the Company and are not hereby or by law expressly required or directed to be exercised or done by the Company in General Meeting but subject nevertheless to the provisions of any law and of these presents from time to time made by the Company in General Meeting; provided that no regulation so made shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made.

Article 102. Power to delegate Without prejudice to the general powers conferred by the preceding article the Directors may from time to time and at any time subject to the restrictions contained in the Act, delegate to managers, secretaries, officers assistants and other employees or other persons (including any firm or body corporate) any of the powers authorized and discretions for the time being vested in the Directors.

Article 103. Power to authorize sub-delegation The Directors may authorize any such delegate or attorney as aforesaid to sub-delegated all or any of the powers, authorities and discretion for the time being vested in them.

Article 104. Signing of Documents All deeds, agreements and documents and all cheques, promissory notes, drafts, hundies, bills of exchange and other negotiable instruments, and all receipts for money paid to the Company shall be signed, drawn, accepted or endorsed or otherwise executed, as the case may be by such persons (including any firm or body corporate) whether in the employment to the Company or not and in such manner as the Directors shall from time to time by resolution determine.

Article 105. Management abroad The Directors may make such arrangement as may be thought fit for the management of the Company’s affairs abroad, and may for this purpose (without prejudice to the generality of their powers) appoint local bodies, and agents and fix their remuneration, and delegate to them such powers as may be deemed requisite or expedient. The foreign seal shall be affixed by the authority and in the presence of and instruments sealed therein shall be signed by such persons as the Directors shall from time to time by writing under the common seal appoint. The Company may also exercise the powers of keeping Foreign Registers. Such regulations not being in consistent with the provisions of Section 157 and 158 of the Act, the board 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.

Article 106. Manager or Secretary A manager or secretary may be appointed by the Directors on such terms, at such remuneration and upon such conditions as they may think fit, and any manager or secretary so appointed may be removed by the Directors. A Director may be appointed as Manager or Secretary, subject to Section 314, 197A, 383A, 387 and 388 of the Act.

Article 107. Act of Director, Manager or Secretary A provision of the Act or these regulation required or authorizing a thing to be done by a Director, Manager or Secretary shall not be satisfied by its being done by the same person acting both as Director and as, or in place of the Manager or Secretary.

MANAGING DIRECTOR Article 108. Power to appoint Managing Director Subject to the provisions of Sections 197A, 269, 316 and 317 of the Act, the Board may, from time to time appoint one or more Directors to the Managing Director or Managing Directors of the Company and may, from time to time (subject to the provisions of any contract between him or them and the Company), remove or dismiss him or them from office and appoint another or others in his place or their places.

Article 109. To what provisions he shall be subjected Subject to the provisions of Section 255 of the Act and Article 89(4) hereof, a Managing Director shall not, while he continues to hold that office, be subject to retirement by rotation, but (subject to the provisions of any contract between him and the Company) he shall be subject to the provisions as the resignation an removal as the other Director if he shall, ipso facto and immediately, cease to be a Managing Director if he ceases to hold the office of Director from any cause.

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Article 110. Remuneration of Managing Director Subject to the provisions of Sections 198, 309, 310 and 311 of the Act, Managing Director shall, in Addition to the remuneration payable to him as a Director of the Company under the Articles, receive such additional remunerations as may from to time be sanctioned by the Company.

Article 111. Power of Managing Director 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 for the time being such of the powers exercisable 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 the exclusion of, and in substitution for 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.

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Article 112. Compliance before commencement of new business The Company shall not at nay time commence any business out of other objects of its Memorandum of Association unless the provisions of sub-section 2(B) of Section 149 of the Act have been duly complied with by it.

Article 113. Custody of seal The Directors shall provide for the safe custody of the Seal and the Seal shall never be used except by the authority of the Director or a Committee of the Directors previously given and one Director at least 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 not withstanding any irregularity touching the authority of the Directors to issue the same.

DIVIDEND Article 114. How profits shall be divisible Subject to the rights of members entitled to shares (if any) with preferential or special rights attached to them, the profits of the Company from time to time determined to be distributed as dividend in respect of any year or other period shall be applied for payment of dividend on the shares in proportion to the amount of capital paid up on the shares provided that unless the Board otherwise determines all dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid up on the shares during any portion or portions of the period in respect of which dividend is paid. Provided always that subject as aforesaid any capital paid up on a share during the period in respect of which a dividend is declared shall (unless the Board otherwise determines or the terms of issue otherwise provide, as the case may be), only entitle the holder of such share to an apportioned amount of such dividend as from the date of payment but so hat where capital is paid up in advance of calls such capital shall not confer a right to participate in profits.

Article 115. Declaration of dividends The Company in General Meeting may declare a dividend to be paid to the members according to their rights and interests in the profits and may subject to the provisions of Section 207 of the Act fix the time for payment.

Article 116. Restriction on amount of dividends No larger dividend shall be declared than is recommended by the Directors, but the Company in General Meeting may declare a smaller dividend.

Article 117. Dividends out of profits only No dividend shall be payable except out of the net profits of the Company of the year or any other undistributed profits and no dividend shall carry interest as against the Company.

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Article 118. What to be deemed net profits? The Declaration of the Directors as to the members such interim dividends as in their judgement the position of the Company for any year shall be conclusive.

Article 119. Interim dividends The Directors may from time to time pay the members such interim dividends as in their judgement the position of the Company justifies.

Article 120. Debts may be deducted The Director may retain any dividends on which the Company has a lien and may apply the same in or towards satisfaction of the debts liabilities or engagements in respect of which the lien exist subject to Section 205 A of the Act.

Article 121. Dividends and call together Any General Meeting declaring dividend may make a call on the members of such amount as the meeting fixes but so that the call on each member shall not exceed the dividend payable to him and so that the call be made payable at the same time as the dividend and the dividend may, if so arranged between the Company and the member, be set off against the call.

Article 122. A transfer of shares shall not pass the rights to any dividend declared thereon before the registration of the transfer.

Article 123. Retention in certain cases The Directors may retain the dividends payable upon shares in respect of which any person is under the transmission Article entitled to become a member or which any person under that Article is entitled to transfer until such person shall duly become a member in respect thereof or shall transfer the same

Article 124. Dividend to joint-holders Any one of the several persons who are registered as joint-holders of any share may give effectual receipts of all dividends and payment on account of dividends in respect of such shares.

Article 125. Payment by post Unless otherwise directed, any dividend may be paid by cheque or warrant send through the post to the registered address of the member or person entitled thereto, or in the case of joint-holders to the registered address of that one whose name stands first on the Register in respect of the joint-holding or to such person and such address and the member or person entitled or such joint holders as the case may be, may direct and every cheque or warrant so sent shall be made payable at par to the person or to the order of the person to whom it is sent or the order of such other person as the member or person entitled or such joint-holders, as the case may be, may direct.

Article 126. When payment a good discharge The payment of every cheque or warrant sent under the provisions of the last preceding Article shall, if such cheque or warrant purports to be duly endorsed, be a good discharge to the Company in respect thereof, provided nevertheless that the Company shall not be responsible for the loss of any cheque, dividend warrant or postal money order which shall be sent by post to any member or by his order to any other person in respect of any dividend. a. Any dividend remaining unpaid or unclaimed after having been declared shall be dealt in accordance with Section 205A and 205B of the Companies Act, 1956. b. Non unclaimed dividend shall be forfeited by the Board and the Company shall comply with the provision of Section 205A of the Companies Act, 1956 in respect of such dividend.

Article 127. Where to be kept The Books of Account shall be kept at the registered office or at such other place as the directors thinks fit, and shall be open to inspection by the Directors during business hours.

Article 128. Inspection by members

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Subject to Section 293, Directors shall from time to time determine whether and to what extent and at what time and places and places and under what conditions or regulations the accounts or books or documents of the Company or any of them shall be open for inspection to members not being Directors and no member (not being a Director) shall have any right of inspecting any books of account or documents of the Company except as conferred by law or authorized by the Directors or by the Company in General Meeting.

BALANCE SHEET AND PROFIT AND LOSS ACCOUNT Article 129. Balance sheet and Profit and Loss Account The Directors shall lay before each Annual General Meeting, Profit and Loss Account for the financial year of the Company and Balance Sheet made up to the end of the financial year audited by the qualified auditor under the provisions of Act.

AUDIT Article 130. Audit The first auditors of the Company shall be appointed by the Board of Directors within one month after its incorporation who shall hold office till the conclusion of first Annual General Meeting.

Article 131. The directors may fill up any casual vacancy in the office of the auditors.

Article132. The remuneration of the auditors shall be fixed by the Company in General Meeting except that remuneration of the first or any auditors appointed by the Directors, may be fixed by the Directors.

NOTICES Article 133. How notices served on members? The Company shall comply with the provisions of Section 53, 172 and 190 of the Act as the serving of notices.

Article 134. Transferee etc. bound by prior notices Every person who, by operation of law, or by transfer or by 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 be duly given to the person from whom he derives his title to such share.

Article 135. Notice valid though member deceased Any notice or document delivered or sent by post to or left at the registered address of any member in pursuance of these presents shall not withstanding such member be then decease and whether or not the Company has notice of his demise, he deemed to have been duly served in respect of any registered shares 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 of such notice or document on his or her heirs executors or administrators and all persons, if any, jointly interested with him or her in any such share.

Article 136. How notice to be signed? The signature to many notice to be given by the Company may be written or printed.

RECONSTRUCTION Article 137. Reconstruction On any sale of the undertaking of the Company, the Directors of Liquidators on a winding up may, if authorized 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 other than existing or to be formed for the purchase in whole or part of the property of the Company and the Directors (if the profits of the 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 distribution or appropriations of the cash, shares or other securities, benefits or properties or property at such price and 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 authorized, and waive all rights in relation thereto save only in case the Company is proposed to be or is in the

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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 presents.

SECRECY Article 138. No shareholder to enter the premises of the Company without permission No member or other person (not being a Director) shall be entitled to enter upon the property of the Company or inspect or examine the con’s premises or properties of the Company without the permission of the Directors, or subject to Article 126 to require discovery or any information respecting any detail of the Company’s trading or any matter which is or may be 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 Directors it will be inexpedient in the interest of the members of the Company to communicate.

WINDING UP Article 139. Winding up 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 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 respectively. And if in a winding up the assets available for distribution among the members shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed amongst 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 rights of the holders of shares issued upon special terms and conditions.

Article 140. Distribution of Assets in specie In the event of Company being wound up, whether voluntarily or otherwise, the liquidators may with the sanction of a Special Resolution divide among the contributories, in specie or in kind any part of the assets of the Company and may with the like sanction vest any part of the assets of the Company in Trustees upon such trusts for the benefits of the contributories or any of them, as the liquidators, with like sanction shall think fit.

INDEMINITY Article 141. Indemnity Subject to the provisions of Section 201 of the Act, every Director Manager, Secretary and other officer or employee of the Company shall be indemnified against and it shall be the duty of the Directors to pay out of the funds of the Company all costs, losses and expenses including travelling expenses) which any such Directors, Manager or Secretary or other officer or employee may incur or become liable to by reason of any contract entered into or any way in the discharge of his or their duties and in particular and so as not to limit the generality of the foregoing provisions against all bonafide liabilities incurred by him or by them as such Director, Manager, Secretary, Officer or employee in defending any proceeding whether civil or criminal in which judgement is given in his or their favour or he or they is or are acquitted, or in connection with application under Section 633 of the Act in which relief is granted by the Court and the amount for which such indemnity is provided shall immediately attach as a lien on the property of the Company and have priority as between the members over all other claims.

Article 142. Individual responsibility of Directors Subject to provisions of the Act and so far as such provisions permit no Director, Auditor or other Officer of the Company shall be liable for acts, receipts neglects or defaults of any other Director or Officer or for joining in any receipt or act for conformity, or for any loss or expenses happening to the Company through the insufficiency or deficiency of title to any property required by order of the Director for or on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss occasioned by any error of judgement, omission, default, or oversight on his part or for any loss, damage or misfortune whatever which shall happen in execution of the duties of his office or in relation thereto unless the same happens through his own dishonesty.

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X. MATERIAL CONTRACTS AND DOCUMENTS

The following contracts and agreements referred to below (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by the Company or contracts entered into more than two years before the date of this Offer Document) which are/or may be deemed to be material have been entered into by or on behalf of the Company. Copies of these contracts together with copies of documents referred to below, all of which have been attached to the copy of the Offer Document and which have been delivered to the Registrar of Companies, Delhi and Haryana, may be inspected at the Registered Office of the Company between 11.00 a.m. and 3.00 p.m. on any working day from the date of the Offer Document until the date of closing of subscription list.

1. Material Contracts

1. Letter from the Offeror and Company dated 18th February 2005 and 30 March 2005 respectively appointing Centrum Capital Limited as Lead Manager to the Offer and acceptance thereto. 2. Memorandum of Understanding between the Offeror and the Lead Manager, Centrum Capital Limited, dated 25 April 2005. 3. Memorandum of Understanding dated 23 May 2005, between the Company/Offerors and the Registrar, MCS Limited. 4. Copy of tripartite agreement entered into between CDSL, the Company and the Registrar, MCS Limited dated 1 November 2001. 5. Copy of tripartite agreement entered into between NSDL, the Company and the Registrar, MCS Limited dated 5 December 2001. 6. Consent Letters dated 30 March 2005 from the Offeror i.e., Sterling Capital Private Limited for offering their shares for Sale through the Offer. 7. Copy of Agreement between Trak Online and Net4India, wherein the later is appointed, on a non-exclusive basis, to provide services in relation to the running of servers, systems and networks and maintenance there of for the servers, systems and networks of Trak Online.

2. Material Documents

1. Memorandum of Association and Articles of Association of the Net 4 India Limited as amended from time to time 2. Certificate of Incorporation dated 29 November 1985 3. Certificate of Commencement of Business dated 12 December 1985 4. Certificate / Form 18 filed with ROC pertaining to Change in Name as well as Change in Registered Office since inception 5. Copies of Resolutions for Preferential allotments made to the Promoters/ Promoter Groups. 6. Copies of all Insurance policies 7. Copies of all Government Approvals as mentioned in the Offer Document 8. Board Note dated 8 April 2005 for taking on record the proposed Offer for sale of Equity Shares out of the shares held by the Offeror(s) for the Offer for Sale of its equity shares under this offer 9. Letters from The Stock Exchange, Mumbai (BSE) dated ____ and The Delhi Stock Exchange Association Limited, New Delhi (DSE) dated _____ granting the ‘in-principle’ approval to the Offer for Sale. 10. Copies of Auditors Reports (i) Report mentioned on Offer Document -dated 18 April 2005 (ii) Report on tax benefits dated 18 April 2005 11. Consent letters from the Directors of the Company, Directors of the Offeror, Lead Manager to the Offer, Bankers to the Offer, Auditors, Solicitors Registrar to the Offer, Company Secretary and Compliance Officer to act in their respective capacities and for inclusion of their names in the Offer Document. 12. Copy of Board Resolutions dated 5 January 2000, 26 March 2001, 6 September 2001, 30 September 2004, 21 March 2003 and 11 February 2005 along with members’ resolution dated 28 September 2001 and 30 September 2003 for appointment and fixation of remuneration of Jasjit Singh Sawhney as Managing Director, Amarjit Singh Sawhney as Whole-time Director and Desi S. Valli as Whole Time Director along with the respective contracts with the Company. 13. Power of Attorney(s) executed by the Directors / Offerors for signing and making correction in the Offer Document on their behalf. 14. Copies of Lease Agreements as mentioned in the Offer Document

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15. Copies of Annual Reports for the last five accounting periods, i.e., FYs 1999-2000, 2000-2001, 2001-2002, 2002-2003 and 2003-2004of the Company 16. Copies of Annual Reports of Group/Associate companies as mentioned in the Offer document. 17. Due diligence certificate dated ______issued by Lead Manager to the Offer, Centrum Capital Limited. 18. SEBI observation letter No.______dated ______.

3. Declaration

This is to confirm that all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government have been complied with and no statement made in this Offer Document is contrary to the provisions of the Companies Act, 1956 and rules made there under. All the legal requirements connected with this said offer as also the guidelines, instructions etc., issued by SEBI, the Government and any other competent authority in this behalf have been duly complied with. We the Directors of Net 4 India Limited and the Offeror(s), declare and confirm that no information/material likely to have a bearing on the decision of the investor in respect of the equity shares offered in terms of this Offer Document have been suppressed/withheld and/or incorporated in a manner that would amount to misstatement/misrepresentation and in the event of it transpiring at any point of time till Allotment/refund, as the case may be, that any information/material has been suppressed/withheld and/or amounts to misstatement/misrepresentation, we undertake to refund the entire application moneys to all the subscribers within seven days thereafter, without prejudice to the provisions of Section 63 of the Act. Since the date of last financial statement disclosed in this Offer Document, there have been no circumstances that materially and adversely affects or is likely to affect the profitability of the Company or the value of its assets or its ability to pay off its liabilities within a period of next twelve months. The Directors of the Company, The Directors of the Offeror on behalf of the Offeror and Sandip K. Ghosh, Director of the Company certify that all disclosures made in the Offer Document are true and correct.

Signed by For Net 4 India Limited

Name Signature

Amarjit Singh Sawhney 1. (By Sandip K. Ghosh, duly constituted POA holder)

2. Jasjit Singh Sawhney

3. Desi Valli

Manish Wadhvan 4. (By Sandip K. Ghosh duly constituted POA holder)

Bharat Chawla 5. (By Sandip K. Ghosh duly constituted POA holder)

Biba Sawhney 6 (By Jasjit S. Sawhney duly constituted POA holder)

7 Sandip K. Ghosh

For and on Behalf of the Offerors For Sterling Capital Private Limited

Director (by Jasjit S. Sawhney duly constituted POA holder) Place: New Delhi Date: 20th May 2005