CMYK RED HERRING PROSPECTUS Dated: November 21, 2007 Please read Section 60B of the Companies Act, 1956 100% Book Building Issue (We were incorporated as GEA Energie Systems India Private Limited on February 18, 1985. Our name was changed to GEA Energy System (India) Private Limited by a resolution of our shareholders on October 17, 1986, and a fresh certificate of incorporation consequent on change of name was issued to us on April 3, 1987 by the Registrar of Companies, Andhra Pradesh at Hyderabad (the “RoC”). Our status was subsequently changed to a public limited company by a special resolution of our shareholders passed at the annual general meeting held on December 10, 1993. The fresh certificate of incorporation consequent on conversion was issued to our Company on March 3, 1994. Our name was changed to BGR Energy Systems Limited by a resolution of our shareholders on June 25, 2007. The fresh certificate of incorporation consequent to the change in name was issued to our Company on June 28, 2007 by the RoC. For details of changes in name refer to “History and Certain Corporate Matters” on page 115). Registered Office: A-5, Pannamgadu Industrial Estate, Ramapuram Post, Sullurpet Village, Nellore District, Andhra Pradesh 524 401, India Tel: (91 44) 2794 8249; Fax: (91 44) 2794 8359 Corporate Office: 443, Anna Salai, Teynampet, Chennai 600 018, Tamil Nadu, India Tel: (91 44) 2432 6171; Fax: (91 44) 2436 0576 Email: [email protected]; Website: www.bgrcorp.com Company Secretary and Compliance Officer: Mr. R. Ramesh Kumar PUBLIC ISSUE OF 9,136,000 EQUITY SHARES OF Rs. 10 EACH OF BGR ENERGY SYSTEMS LIMITED (“BGR ENERGY” OR THE “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF Rs. [] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF Rs. [] PER EQUITY SHARE), CONSISTING OF A FRESH ISSUE OF 4,320,000 EQUITY SHARES AND AN OFFER FOR SALE OF 4,816,000 EQUITY SHARES BY MR. B.G. RAGHUPATHY AND MS. SASIKALA RAGHUPATHY (THE “SELLING SHAREHOLDERS”), AGGREGATING Rs. [] MILLION (THE “ISSUE”). THE ISSUE COMPRISES A NET ISSUE TO THE PUBLIC OF 8,636,000 EQUITY SHARES OF RS. 10 EACH (THE “NET ISSUE”) AND A RESERVATION OF UP TO 500,000 EQUITY SHARES OF RS. 10 EACH FOR ELIGIBLE EMPLOYEES (AS DEFINED HEREIN) (THE “EMPLOYEE RESERVATION PORTION”). THE ISSUE WOULD CONSTITUTE 12.69% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY. THE NET ISSUE WILL CONSTITUTE 11.99% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY. PRICE BAND: RS. 425 TO RS. 480 PER EQUITY SHARE OF FACE VALUE OF RS. 10 EACH. THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 AND THE FLOOR PRICE IS 42.5 TIMES OF THE FACE VALUE AND THE CAP PRICE IS 48 TIMES OF THE FACE VALUE In case of revision in the Price Band, the Bidding Period shall be extended for three additional working days after revision of the Price Band subject to the Bidding /Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to the National Stock Exchange of India Limited (“NSE”) and the Bombay Stock Exchange Limited (“BSE”), by issuing a press release, and also by indicating the change on the websites of the Book Running Lead Managers and at the terminals of the Syndicate. In terms of Rule 19(2)(b) of the Securities Contract Regulation Rules, 1957 (“SCRR”), this being an Issue for less than 25% of the post–Issue capital, the Issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue will be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs”), out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to all QIBs including Mutual Funds, subject to valid bids being received from them at or above the Issue Price. If at least 60% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% of the Net Issue will be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price. Further upto 500,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid bids being received at or above Issue Price. RISK IN RELATION TO THE FIRST ISSUE This being the first public issue of Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Equity Shares is Rs.10 per Equity Share and the Issue Price is [] times of the face value. The Issue Price (as determined by the Company and the Selling Shareholders in consultation with the Book Running Lead Managers, on the basis of assessment of market demand for the Equity Shares offered by way of the book building process) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. 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. GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The Equity Shares offered in the Issue 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 Red Herring Prospectus. Specific attention of the investors is invited to “Risk Factors” on page xvi. IPO GRADING The Issue has been graded by ICRA Limited as IPO Grade 3 indicating average fundamentals. ISSUER’S AND SELLING SHAREHOLDERS ABSOLUTE RESPONSIBILITY The Issuer and the Selling Shareholders, having made all reasonable inquiries, accept responsibility for and confirm that this Red Herring Prospectus contains all information with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Red Herring Prospectus 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 Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING ARRANGEMENT The Equity Shares offered through this Red Herring Prospectus are proposed to be listed on the NSE and the BSE. We have received in-principle approval from NSE and BSE for the listing of our Equity Shares pursuant to letters dated August 29, 2007 and September 6. 2007, respectively. For purposes of this Issue, the Designated Stock Exchange is the NSE. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE SBI Capital Markets Limited Kotak Mahindra Capital Company Limited UBS Securities India Private Limited CLSA India Limited Intime Spectrum Registry Limited 202, Maker Tower E, Cuffe Parade, 3rd Floor, Bakhtawar, 229, Nariman Point, 2/F, Hoechst House, Nariman Point, 8/F, Dalamal House, Nariman Point, C-13, Pannalal Silk Mills Compound, Mumbai 400 005, India Mumbai 400 021, India Mumbai 400 021, India Mumbai 400 021, India. LBS Marg, Bhandup (West), Tel: (91 22) 2218 9166 Tel: (91 22) 6634 1100 Fax: (91 22) 2283 7517 Tel: (91 22) 2286 2062 Fax: (91 22) Tel : (91 22) 6650 5050 Mumbai 400 078 India Fax: (91 22) 2218 8332 Email:[email protected] 2281 4676 Fax: (91 22) 2285 6524 Tel: (91 22) 2596 0320 Email: [email protected] Investor grievance id: Email: [email protected] Email: [email protected] Fax: (91 22) 2596 0329 Website: www.sbicaps.com [email protected] Website:www.ibb.ubs.com/Corporates/ Website: www.india.clsa.com Email: [email protected] Website: www.kotak.com indianipo Contact Person: Mr. Sumit Jalan Website: www.intimespectrum.com Contact Person: Ms. Neha Nagpal Contact Person: Mr. Chandrakant Bhole Contact Person: Mr. Venkat Ramakrishnan SEBI Registration Number: Contact Person: Mr. Sachin Achar SEBI Registration Number: SEBI Registration Number: SEBI Registration Number: INM000010809 INM000010619 SEBI Registration Number: INR00003761 INM000003531 INM 000008704 BID / ISSUE PROGRAMME BID/ISSUE OPENS ON : WEDNESDAY, DECEMBER 05, 2007 BID/ISSUE CLOSES ON : WEDNESDAY, DECEMBER 12, 2007 CMYK TABLE OF CONTENTS SECTION 1- GENERAL ......................................................................................................................................................................... i DEFINITIONS AND ABBREVIATIONS ............................................................................................................................................... i PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA ................................................................................................. xiii FORWARD-LOOKING STATEMENTS ...............................................................................................................................................