LETTER OF OFFER For Equity Shareholders only Private and Confidential ELECTROLUX KELVINATOR LIMITED (Originally incorporated as Maharaja International Limited on August 8, 1989 under the Companies Act, 1956 in the state of Delhi. The registered office of the Company was shifted to the state of Rajasthan on December 13, 1995. Subsequently, the registered office was shifted to the National Capital Territory of Delhi on October 16, 2000. The name of the Company was changed to Electrolux Kelvinator Limited on February 8, 1999) Registered Office: Flat No. 201-202, A-22, Green Park, Aurobindo Marg, New Delhi – 110 016 Tel: +91 11 2686 6184/85/86; Fax: +91 11 2686 2625. Corporate Office: Global Business Park, Tower A, Mehrauli-Gurgaon Road, Gurgaon – 122 002 Tel: +91 124 280 3250; Fax: +91 124 280 3292 Email: [email protected] Website: www.electrolux.co.in Issue of 19,97,74,709 Equity Shares of Rs. 10/- each for cash at par aggregating Rs. 199,77,47,090/- on a rights basis to the Equity Shareholders of the Company in the ratio of 8 (eight) Equity Shares for every 7 (seven) Equity Shares held on the Record Date (i.e. March 12, 2004). GENERAL RISKS Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors on page no. i carefully before taking an investment decision in this offering. For taking an investment decision investors must rely on their own examination of the Issuer and the offer including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India, nor does the Securities and Exchange Board of India guarantee the accuracy or adequacy of the information contained in this document. ISSUERS ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Offer Document contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Letter of Offer is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respects. LISTING The Company’s existing Equity Shares are listed on the Stock Exchanges at Delhi, Mumbai, Jaipur, Bangalore, Kolkata and Ahmedabad. The Company has received “in-principle” approvals from these Stock Exchanges vide their letters dated January 17, 2004, June 21, 2003, December 30, 2003, December 29, 2003, January 28, 2004 and July 15, 2003 respectively. Applications will be made to these Stock Exchanges for permission to deal in and for an official quotation in respect of the new Equity Shares now being offered in terms of this Letter of Offer. To ensure adequate capitalisation, ABE has declared its intention to subscribe to shares beyond its entitlement, if other shareholders do not exercise their rights entitlement. If as a result of the Rights Issue, the non-promoter shareholding, required to be maintained for continuous listing, in the Company falls below the prescribed limits, the Company and ABE will comply with the provisions of Securities & Exchange Board of India (Delisting of Securities) Guidelines - 2003 by offering to buy out the remaining holders at the price of the Rights Issue. However, investors may please note that Mr. Harish Kumar, a shareholder and director of the Company, and his wife, Mrs. Anita Kumar have filed a civil writ petition before High Court of Delhi, inter-alia, challenging the validity of the SEBI (Delisting of Securities) Guidelines, 2003. For details of the litigation, please refer to Page no.76 Lead Manager to the Issue Registrars to the Issue Ambit Corporate Finance Private Ltd. Intime Spectrum Registry Limited 109-112, Dalamal Towers,Nariman Point, A-31, Naraina Industrial Area, Mumbai - 400 021 Phase I New Delhi – 110 028 Tel: 022-56371819 Tel: 011 – 51410592/93/94 Fax : 022- 56373020 Fax: 011 – 51410591 Email: [email protected] Email: [email protected] ISSUE OPENS ON LAST DATE FOR RECEIPT OF ISSUE CLOSES ON REQUESTS FOR SPLIT FORMS Friday, March 26, 2004 Thursday, April 15, 2004 Monday, April 26, 2004 TABLE OF CONTENTS Abbreviations Joint Applicants ................................................................ 15 Risk Factors envisaged by the Management and Proposal to Application on Plain Paper ............................................... 15 address the risks ...................................................................... i Option to receive the Shares in Dematerialised Form .. 16 Internal to the Company .................................................. i Applications under Power of Attorney ............................ 16 External to the Company ................................................. xii Minimum Subscription ..................................................... 16 I. General Information ......................................................... 1 Utilisation of Proceeds ..................................................... 16 Disclaimer Clause of SEBI .............................................. 1 Allotment and Refund Orders ......................................... 16 Disclaimer Clause of the Stock Exchanges .................. 2 General ............................................................................. 17 Disclaimer In Respect of Jurisdiction ............................. 2 Undertaking by the Company ......................................... 17 Caution ............................................................................. 2 Utilisation of Issue Proceeds .......................................... 17 Filing of Letter of Offer .................................................... 2 IV. Tax Benefits...................................................................... 18 Listing ............................................................................... 3 V. Particulars of the Issue ................................................... 20 Personation for Acquisition .............................................. 3 Objects of the Present Issue .......................................... 20 Minimum Subscription ..................................................... 3 Fund Requirements ......................................................... 20 Allotment and Refunds .................................................... 3 Voluntary Retirement Scheme ........................................ 20 Declaration ....................................................................... 3 Loan Repayments ........................................................... 20 Issue Schedule ................................................................ 3 Means of Finance ............................................................ 20 Lead Manager to the Issue ............................................. 3 Bridge Funding or Financial assistance ......................... 20 Registrar to the Issue ...................................................... 3 VI. Company, Management and Project .............................. 22 Auditors to the Company ................................................. 3 History, Main Objects and Present Business ................ 22 Legal Advisors to the Issue ............................................ 4 Main Objects of the Company ........................................ 24 Bankers to the Issue ....................................................... 4 Subsidiaries ...................................................................... 24 Principal Bankers to the Company ................................. 4 Key Managerial Personnel and Compliance Officer & Company Secretary ................... 4 Managerial Competence ................................................. 24 Credit Rating and Trustees ............................................. 4 Board of Directors ........................................................... 28 II. Capital Structure .............................................................. 5 Corporate Governance ................................................... 31 III. Terms of the Present Issue ............................................ 10 Infrastructure ................................................................... 32 Authority for the Issue ..................................................... 10 Manufacturing Process ................................................... 32 Issue size and Basis of Offer ......................................... 10 Plant Details...................................................................... 33 Principal terms of the Issue ............................................ 10 Schedule of Implementation ............................................ 36 Market lot .......................................................................... 10 SWOT Analysis ................................................................ 36 Ranking of Equity Shares ............................................... 10 Products ........................................................................... 37 Rights Entitlement ............................................................ 10 Marketing & Selling Arrangements ................................. 39 Nomination facility