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Letter of Offer

CASH OFFER BY

This Letter of Offer is being sent to you as an equity shareholder of FAL Industries Limited. If you require any clarifications about the action to betaken, you may consult your stock broker or investment consultant or the Manager to the Offer / Registrar to the Offer. In case you have sold yourequity shares in FAL Industries Limited, please hand over this Letter of Offer and the accompanying Form of Acceptance-cum-Acknowledgement,Form of Withdrawal and Transfer Deed to the purchaser of the equity shares or the member of stock exchange through whom the sale was effected.

Sterling Investment Corporation Private LimitedRegistered Office: 70, Nagindas Master Road, 1st Floor, Mumbai – 400 023, India.

Tel: +91 22 2287 1040; Fax: + 91 22 5633 8176

The schedule of activities is as per the following table: ACTIVITY ORIGINAL DATE/DAY REVISED DATE/DAYPublic Announcement Date October 11, 2003/ Saturday October 11, 2003/ SaturdaySpecified Date October 14, 2003/ Tuesday October 14, 2003/ TuesdayLast date for announcement of competitive bid November 01, 2003/ Saturday November 01, 2003/ SaturdayDate by which Letter of Offer will be dispatched to the shareholders November 20, 2003/ Thursday January 17, 2004/ SaturdayAddendum Public Announcement Date - January 17, 2004/ SaturdayOffer Opening Date November 25, 2003/ Tuesday January 22, 2004/ ThursdayLast date for revising the Offer Price/number of equity shares December 15, 2003/ Monday February 11, 2004/ WednesdayLast day for shareholders of FAL for withdrawing their acceptancetendered from the Offer December 21, 2003/ Sunday February 17, 2004/ TuesdayOffer Closing Date December 24, 2003/ Wednesday February 20, 2004/ FridayDate by which the acceptance/ rejection would be communicated/ January 23, 2004/ Friday March 21, 2004/ Sundaydispatched and the corresponding payment for the shares bedispatched and/ or the share certificate for the rejected shares will bedispatched/ credited

AlongwithShapoorji Pallonji & Co. Limited Cyrus Investments Limited

Registered Office: 70, Nagindas Master Road, Registered Office: Esplanade House,1st Floor, Mumbai – 400 023, India. Hazari Mal Somani Marg, Fort, Mumbai -400 001, India

Tel: +91 22 2287 1040; Tel: +91 22 2287 1040;Fax: + 91 22 5633 8176 Fax: + 91 22 5633 8176

The Offer is being made by Sterling Investment Corporation Private Limited (“Sterling”), along with Shapoorji Pallonji & Co. Limited (“SP”) andCyrus Investments Limited (“Cyrus”) pursuant to regulation 11(1) and 12 of Chapter III of and in compliance with the Securities and ExchangeBoard of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 and subsequent amendments thereto (the “Regulations”).For the purpose of the Offer and in terms of the Regulations, Sterling is hereinafter referred to as the “Acquirer”, and SP and Cyrus, together,are hereinafter referred to as “Persons Acting in Concert” or “PACs”.The Offer is subject to the approval of the Reserve Bank of India (“RBI”) under the Foreign Exchange Management Act, 1999 (“FEMA”) foracquiring shares tendered by non-resident shareholders including NRIs, OCBs, FIIs and foreign shareholders under this Offer. To the best ofknowledge and belief of the Acquirer and PACs, there are no other statutory approvals envisaged to acquire equity shares that are tenderedpursuant to this Offer. In case of non-receipt of any approval within time, Securities and Exchange Board of India (“SEBI”) has the power togrant extension of time to Acquirer and PACs for payment of consideration to shareholders subject to Acquirer and PACs agreeing to payinterest as directed by SEBI.Shareholders who have accepted the Offer by tendering the requisite documents, in terms of the Public Announcement / Letter of Offer, canwithdraw the same up to three working days prior to the date of the closure of the OfferAcquirer, PACs have the option to revise the Offer Price upward any time up to seven working days prior to the date of the closure of the Offer(i.e. by or before February 11, 2004). In the event of such revision, an announcement to this effect will be made in the newspapers as specifiedin Para 2 of this Letter of Offer and such revised price would be payable by Acquirer for all the shares tendered in the Offer at any time duringthe Offer period.If there is a competitive bid:● The public offers under all the subsisting bids shall close on the same date;● As the Offer Price cannot be revised during seven working days prior to the closing date of the offers/bids, it would, therefore, be in

the interest of shareholders to wait till the commencement of that period to know the final offer price of each bid and tender theiracceptance accordingly.

A copy of the Public Announcement and the Letter of Offer (including Form of Acceptance-cum-Acknowledgement and Form of Withdrawal)is also available on SEBI’s web-site (www.sebi.gov.in).

MANAGER TO THE OFFER REGISTRAR TO THE OFFERJM Morgan Stanley Private Limited MCS Limited141, Maker Chambers III Unit : FAL Oppen OfferNariman Point, Mumbai – 400 021, India Sri Venkatesh Bhavan, Plot No. 27,Phone: +91 22 5630 3030 Road No. 11, M.I.D.C., Andheri (East),Fax:: +91 22 2202 8224 Mumbai 400 093. IndiaEmail: [email protected] Phone: +91 22 2821 5235Contact Person: Mr. Sunil Eshwar/Ms. Ami Parikh Fax:: +91 22 2835 0456

Email : [email protected] Person: Mr. Ashok Gupta

for purchase of up to 911,756 paid-up Equity Sharesrepresenting up to 20% of the Voting Capital of

FAL INDUSTRIES LIMITEDRegistered Office: No.40, Anna Nedunchalai, Perungudi, Chennai - 600 096, India;

Tel: +91 44 24960728 / 9 / 737 ; Fax: + 91 44 24960158

at Rs. 25/- per Equity Share (the “Offer Price”)

TABLE OF CONTENTSPAGE

Disclaimer Clause ----------------------------------------------------------------------------------------------------------------------------- 01Details of the Offer ---------------------------------------------------------------------------------------------------------------------------- 01Reasons for the Offer and Future Plans ------------------------------------------------------------------------------------------------- 02Background of Acquirer, PACs, Forbes Gokak Limited, Forbes Estates Limitedand Warrior (Investments) Limited ------------------------------------------------------------------------------------------------------- 03Disclosure in terms of Regulation 21(3) ------------------------------------------------------------------------------------------------- 18Background of FAL Industries Limited--------------------------------------------------------------------------------------------------- 19Offer Price ---------------------------------------------------------------------------------------------------------------------------------------- 22Financial Arrangement ----------------------------------------------------------------------------------------------------------------------- 23Terms and Conditions of the Offer -------------------------------------------------------------------------------------------------------- 23Procedure for Acceptance and Settlement -------------------------------------------------------------------------------------------- 25Documents for Inspection ------------------------------------------------------------------------------------------------------- ----------- 29Responsibility Statement -------------------------------------------------------------------------------------------------------------------- 30Annexures :

Form of WithdrawalForm of Acceptance

ABBREVIATIONS / DEFINITIONSAcquirer or Sterling ------------------------------- Sterling Investment Corporation Private LimitedBSE ---------------------------------------------------- The Stock Exchange, MumbaiCyrus -------------------------------------------------- Cyrus Investments LimitedEligible Persons ------------------------------------ All owners of shares, registered or unregistered, of FAL other than

Acquirer, PACs, Forbes Gokak Limited, Forbes Estates Limited andWarrior (Investments) Limited, who own equity shares at any timeprior to the closure of the Offer

FAL or Target Company -------------------------- FAL Industries LimitedFEL ----------------------------------------------------- Forbes Estates LimitedFGL ----------------------------------------------------- Forbes Gokak LimitedForm of Acceptance ------------------------------ Form of Acceptance-cum-AcknowledgementFY------------------------------------------------------- Financial Year ending March 31Manager/ Manager to the Offer --------------- JM Morgan Stanley Private LimitedMSE ---------------------------------------------------- Madras Stock Exchange LimitedNRI ----------------------------------------------------- Non-resident IndianOCB ---------------------------------------------------- Overseas Corporate BodyOffer --------------------------------------------------- Cash offer being made by Acquirer and PACs to shareholders of FALOffer Price -------------------------------------------- Rs. 25/- per Equity Share of FALPACs --------------------------------------------------- Persons Acting in Concert (Shapoorji Pallonji & Co. Limited and Cyrus

Investments Limited)Public Announcement ---------------------------- Public Announcement of the Offer made by Acquirer and PACs on

October 11, 2003RBI ----------------------------------------------------- Reserve Bank of IndiaRegistrar/ Registrar to the Offer --------------- MCS LimitedSEBI ---------------------------------------------------- Securities and Exchange Board of IndiaSP ------------------------------------------------------ Shapoorji Pallonji & Co. LimitedSpecified Date*------------------------------------- October 14, 2003The Regulations ------------------------------------ SEBI (Substantial Acquisition of Shares and Takeovers)

Regulations, 1997WIL ----------------------------------------------------- Warrior (Investments) Limited

* Specified Date is only for the purpose of determining the names of the shareholders as on the date to whom the Letter ofOffer would be sent and all Eligible persons can participate in the Offer

CURRENCY OF PRESENTATION

In this Letter of Offer, all references to “Rs.” are to Indian Rupee. In this Letter of Offer, any discrepancy in any table betweenthe total and sums of the amount listed are due to rounding off.

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1 DISCLAIMER CLAUSE

IT IS TO BE DISTINCTLY UNDERSTOOD THAT FILING OF DRAFT LETTER OF OFFER WITH SEBI SHOULD NOT IN ANY WAYBE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED, VETTED OR APPROVED BY SEBI. THE DRAFTLETTER OF OFFER HAS BEEN SUBMITTED TO SEBI FOR A LIMITED PURPOSE OF OVERSEEING WHETHER THEDISCLOSURES CONTAINED THEREIN ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE REGULATIONS.THIS REQUIREMENT IS TO FACILITATE THE SHAREHOLDERS OF FAL TO TAKE AN INFORMED DECISION WITH REGARDTO THE OFFER. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR FINANCIAL SOUNDNESS OF THE ACQUIRER ORFAL OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER. ITSHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE ACQUIRER IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS,ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THIS LETTER OF OFFER, THE MERCHANT BANKER ISEXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT ACQUIRER DULY DISCHARGES ITS RESPONSIBILITYADEQUATELY. IN THIS BEHALF, AND TOWARDS THIS PURPOSE, THE MERCHANT BANKER, JM MORGAN STANLEY PRIVATELIMITED, HAS SUBMITTED A DUE DILIGENCE CERTIFICATE DATED OCTOBER 20, 2003 TO SEBI IN ACCORDANCE WITHTHE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVER) REGULATIONS 1997 AND SUBSEQUENTAMENDMENT(S) THEREOF. THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ACQUIRERFROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSEOF THE OFFER.

Acquirer, PACs and the Manager to the Offer accept no responsibility for statements made otherwise than in the Letter ofOffer or in the advertisement or any material issued by, or at the instance of Acquirer, PACs and the Manager to the Offer, andanyone placing reliance on any other source of information would be doing so at his/her/their own risk.

2 DETAILS OF THE OFFER

On the date of Public Announcement, Shapoorji Pallonji & Co. Ltd. (“SP”) and its subsidiaries Sterling and Cyrus InvestmentsLimited (“Cyrus”) held 3.81%, 63.81% and 2.85% respectively, of the equity share capital of Forbes Gokak Limited (“FGL”).FGL and its subsidiary, Forbes Estates Limited (“FEL”) and its associate company, Warrior (Investments) Limited (“WIL”) hold31.64%, 5.81% and 0.24%, respectively of the equity share capital of FAL. SP & Sterling hold 0.83% and 0.74% respectivelyof the equity share capital of FAL.

On October 10, 2003, Sterling decided to acquire an aggregate of up to 911,756 fully paid-up equity shares of FAL of facevalue Rs. 10/- each (representing up to 20% of the voting capital of FAL) at a price of Rs. 25/- (Rupees Twenty Five only) perfully paid-up equity share.

Pursuant to the above, the Acquirer is making an open offer to all Eligible Persons in terms of the Regulations, to acquirefrom them up to 911,756 fully paid-up equity shares of FAL (representing up to 20% of the subscribed and fully paid-upequity shares of FAL), at a price of Rs. 25/- (Rupees Twenty Five only) per fully paid-up equity share payable in cash, on theterms and subject to the terms and conditions set out herein. The acquisition will be funded by the Acquirer’s internalaccruals.

The present subscribed and paid up equity share capital of FAL comprises of 4,558,777 equity shares of Rs. 10/- each.

The Acquirer, PACs, FGL, FEL and WIL together hold 1,789,084 equity shares in FAL, as under:

% of Subscribed and paid-upName No. of equity shares equity capital of FAL

Cyrus ................................................................... 0 0.00

FEL ....................................................................... 264,652 5.81

FGL....................................................................... 1,442,280 31.64

SP ......................................................................... 37,800 0.83

Sterling ................................................................ 33,600 0.74

WIL ....................................................................... 10,752 0.24

Total ...................................................................... 1,789,084 39.24

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Other than the above, neither the Acquirer and PACs nor the directors of Acquirer and PACs have acquired any equity sharesof FAL from the date of the Public Announcement till the date of this Letter of Offer.

For the purpose of this Offer, Sterling is the Acquirer and SP and Cyrus are PACs. FGL, FEL and WIL are deemed to be actingin concert with Acquirer by virtue of Regulation 2(1)(e)(2) of the Regulations. FGL, FEL and WIL are not participating in theOffer, and they will neither acquire any shares under the Offer nor will they fund the acquisition thereof.

In case the equity shares tendered in the Offer by the shareholders of FAL are more than the equity shares to be acquiredunder the Offer, the acquisition of equity shares from each shareholder will be as per the provisions of Regulation 21(6) ofthe Regulations on a proportional basis, irrespective of whether the equity shares are held in physical or dematerialisedform. The equity shares of FAL are compulsorily traded in dematerialised mode and the minimum marketable lot is oneequity share.

At present Acquirer does not have any plan to change the Board of Directors of FAL after the Offer.

The Offer is not subject to any minimum level of acceptance i.e. the Acquirer will acquire all the paid-up equity shares of FALthat are validly tendered and accepted in terms of this Offer up to 911,756 equity shares.

The Public Announcement, as per Regulation 15(1) of the Regulations, was made in the following newspapers on October11, 2003:

Newspaper Language Editions

The Financial Express ....................... English Mumbai, Bangalore, Kolkata, Chandigarh,Kochi, New Delhi, Chennai

Janasatta ........................................... Hindi New Delhi, Kolkata

Punyanagari ...................................... Marathi Mumbai

Dinamani ........................................... Tamil Chennai

Further public announcement in deference to SEBI Letter No. DCR/MM/04/405 dated January 07, 2004 is being made by theAcquirer on January 17, 2004 in the above editions of the above newspaper. The copies of these Public Announcements arealso available on the SEBI website at www.sebi.gov.in

Any upward revision in the Offer Price or withdrawal of the Offer under Regulation 27 of the Regulations, will be announcedin the above-mentioned newspapers and the revised price would be payable by the Acquirer for all the valid shares tenderedin the Offer at any time during the Offer period.

Based on the information available from the Acquirer, PACs, FGL, FEL, WIL, FAL and the SEBI website, the Acquirer, PACs,FGL, FEL, WIL and FAL have not been prohibited by SEBI from dealing in securities, in terms of directions under Section 11Bof the SEBI Act, 1992.

3 REASONS FOR THE OFFER AND FUTURE PLANSThe Offer to the shareholders of FAL is a voluntary offer by Acquirer made pursuant to Regulation 11(1) and 12 of Chapter IIIof and in compliance with the Regulations for the purposes of substantial acquisition of voting rights, consolidation ofshareholding and to acquire control .

The shares of FAL are not frequently traded and demonstrate limited liquidity. The Offer provides an opportunity to thepublic shareholders to make an appropriate choice under the prevailing circumstances.

Other than in the ordinary course of business of FAL and to the extent required for the purposes of any compromise orarrangement, reconstruction, restructuring, merger, demerger, rationalising and/or streamlining of various operations, assets,liabilities, investments, businesses or otherwise of FAL, the Acquirer may dispose off or otherwise encumber any assets ofFAL in succeeding two years. For such future proposal, if any, the Acquirer will present the same to the Board of Directors ofFAL, who will take appropriate decisions in these matters. The Acquirer undertakes that, it shall not sell, dispose of orotherwise encumber any substantial assets of FAL except with the prior approval of the shareholders of FAL.

The Acquirer intends to review from time to time FAL’s business affairs and financial position. Based on such evaluation andreview, as well as general economic and industry conditions existing at the time, the Acquirer may consider, from time totime, various alternative courses of action including demerger or merger of FAL. Such actions may include, subject tonecessary compliance of applicable laws at the relevant time including Regulation 20A, the acquisition of additional equityshares through open market purchases, privately negotiated transactions, tender offer, exchange offer or otherwise orsupport to the proposals for buyback of shares by FAL.

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4 BACKGROUND OF ACQUIRER, PACs, FGL, FEL and WIL

4.1 Sterling

Sterling was incorporated on June 03, 1943 as a private limited company. Its registered office is at 70, Nagindas MasterRoad, 1st Floor, Mumbai - 400 023. In 1988, it became a deemed public company under Section 43A of the Companies Act1956. On May 10, 2001, the status of Sterling was changed to a private limited company under the name Sterling InvestmentCorporation Private Limited. Sterling, a 100% subsidiary of Shapoorji Pallonji & Company Limited, belongs to the ShapoorjiPallonji Group and is mainly engaged in investment activity. Sterling is not listed on any stock exchange. As on September30, 2003, the Equity Share Capital of Sterling comprised of 24,400 fully paid-up equity shares of Rs. 1,000/- each.

The details of the Board of Directors of Sterling are as follows:

Name Residence Address

Mr. Shapoor Pallonji Mistry ------------------------------------------- 103, Sterling Bay, Walkeshwar Road, Walkeshwar,Mumbai – 400 006.

Mr. Cyrus Pallonji Mistry -------------------------------------------- 103, Sterling Bay, Walkeshwar Road, Walkeshwar,Mumbai – 400 006.

Mrs. Patsy Pallonji Mistry -------------------------------------------- 903, Twin Towers, Baniyas Street, Deira,P.O. Box 3389, Dubai, UAE.

Ms. Roshen M. Nentin -------------------------------------------- Kings Bldg, Dr. Ambedkar Road, Parel,Mumbai – 400 012.

Mr. Jimmy Jehangir Parakh ------------------------------------------- 502, Sterling Tower, Harishchandra GoregaonkarMarg, Gamdevi, Mumbai – 400 007.

Correspondence, if any, addressed to the above directors may be forwarded at the Registered Office of Sterling at 70,Nagindas Master Road, 1st Floor, Mumbai- 400 023, India. None of the above directors are on the Board of Directors of FAL.

Summary of the audited financial details of Sterling for the financial years ended March 31, 2001; March 31, 2002 and March31, 2003 and certified unaudited financials for the quarter ended June 30, 2003 is as follows:

(in Rs. Million)

Financial Financial Financial Quarteryear ended year ended year ended ended

March 31, March 31, March 31, June 30,Profit and Loss Statement 2001 2002 2003 2003

(Audited) (Audited) (Audited) (Unaudited)

Income from operations ------------------------------------- 22.38 98.39 168.11 2.97

Other income --------------------------------------------------- 24.99 23.63 20.02 3.68

Total Income --------------------------------------------------- 47.37 122.02 188.13 6.65

Total Expenditure ---------------------------------------------- (10.25) (13.38) (8.03) (19.17)

Profit before Depreciation, Interest and Tax ----------- 37.12 108.64 180.10 (12.52)

Depreciation --------------------------------------------------- (1.28) (1.39) (2.10) —

Interest --------------------------------------------------- (44.85) (53.46) (112.10) (8.10)

Profit Before Tax ----------------------------------------------- (9.01) 53.79 65.90 (20.62)

Provision for Tax ----------------------------------------------- (8.50) (8.50) (12.40) —

Profit After Tax -------------------------------------------------- (17.51) 45.29 53.50 (20.62)

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(in Rs. Million)

As at March As at March As at MarchBalance Sheet Statement (Audited) 31, 2001 31, 2002 31, 2003

Sources of Funds

Paid-up Share Capital ----------------------------------------- 35.80 24.40 24.40

Reserves and surplus(excluding revaluation reserves) -------------------------- 362.18 408.02 416.53

Net Worth ------------------------------------------------- 397.98 432.42 440.93

Secured Loans -------------------------------------------------- 31.85 1,107.77 1,012.23

Unsecured Loans ---------------------------------------------- 219.90 33.00 396.00

Total ------------------------------------------------- 649.73 1,573.19 1,849.16

Uses of Funds

Net fixed Assets ------------------------------------------------ 27.82 29.49 49.85

Investments --------------------------------------------------- 546.61 1,431.87 1,662.67

Net Current Assets -------------------------------------------- 75.00 111.60 136.37

Total misc. exp. not written-off ---------------------------- 0.30 0.23 0.15

Deferred Tax Asset -------------------------------------------- — — 0.12

Total ------------------------------------------------- 649.73 1,573.19 1,849.16

As at March As at March As at MarchOther Financial Data (Audited) 31, 2001 31, 2002 31, 2003

Dividend (%) --------------------------------------------------- — — 184.40

Earnings Per Share (Rs.) ------------------------------------- — 1,856.28 2,192.66

Return on Net Worth (%) ------------------------------------ — 10.47 12.13

Book Value Per Share (Rs.) ---------------------------------- 16,310.47 17,721.96 18,070.87

In the above financial statements,

a) There were no adjustments/ rectification required for any incorrect accounting policies or failures to make provisionsor other adjustments, which resulted in audit qualifications.

b) There was no material amount in the Profit and Loss Account for the year ended 31st March, 2003, relating to adjustmentsfor last three years which require adjustment in arriving at the profits of the years to which they relate.

c) There was no change in the last three years in the accounting policies regularly employed by Sterling.

d) There were no extraordinary items accounted in the said Profit and Loss Account.

On October 09, 2001, Sterling acquired 6.77% of the paid-up equity share capital of FGL from companies belonging to TataGroup, thereby increasing shareholding of Acquirer and PACs in FGL to 14.89%. Subsequently Sterling, SP and Cyrus madean Open Offer on October 15, 2001 under the Regulations to acquire upto 20% of the equity shares of FGL. This offer wascompleted in February 2002. Securities and Exchange Board of India (“SEBI”), vide their letter No. TO/AS/10286/03 datedMay 29, 2003, addressed to Sterling, SP and Cyrus, have issued a show cause notice to them for alleged violation by themof the provisions of Regulations 10 and 12 read with Regulation 14(1) and 14(3) of the Regulations for not making an openoffer for shares of FAL, allegedly having acquired control over FAL by virtue of having acquired control over FGL. Sterling,SP, and Cyrus’s legal counsel, M/s. Gagrat & Co. have vide their letter No. PK/8443 dated June 30, 2003 replied to SEBI

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making their submission that they have not violated the provisions of the Regulations as alleged in the said show causenotice. The matter is pending before SEBI. Depending upon the outcome of the aforesaid proceedings pending with SEBI,there is a possibility of the Acquirer being directed to make another public announcement for another Open Offer takingOctober 15, 2001 as the reference date for calculation of the offer price.

4.2 SP

Shapoorji Pallonji & Company Limited (“SP”) the Flagship Company of the Shapoorji Pallonji Group was incorporated on23rd January 1943 as a private limited company. Its registered office is at 70, Nagindas Master Road, 1st Floor, Mumbai - 400023. In 1988, it became a deemed public company under Section 43A of the Companies Act, 1956. SP is presently a publiclimited company. It is mainly engaged in the activity of construction. It is the holding company of Sterling and is not listed onany stock exchange. As on September 30, 2003, the Equity Share Capital of SP comprised of 82,000 fully paid-up equityshares of Rs. 100/- each.

The shareholding pattern of SP as on September 30, 2003 is as follows:

No. & Percentage ofequity shares held

Sr. No Shareholder’s Category No. %

1. Shapoor Pallonji Mistry -------------------------------------------------------- 8,110 9.89

2. Cyrus Pallonji Mistry ----------------------------------------------------------- 8,110 9.89

3. SC Finance & Investments Private Limited ------------------------------ 4,190 5.11

4. SP Finance Private Limited. -------------------------------------------------- 4,190 5.11

5. Pallonji Shapoorji & Co. Private Limited ---------------------------------- 7,800 9.51

6. Shapoorji Pallonji & Co. (Rajkot) Private Limited ----------------------- 34,440 42.00

7. Shapoorji & Co. (Rajkot) Private Limited --------------------------------- 14,760 18.00

8. Silver Streak Investments Private Limited ------------------------------- 400 0.49

Total Paid-Up Capital ------------------------------------------------------- 82,000 100.00

The details of the Board of Directors are as follows:


Mr. Pallonji Shapoorji Mistry ------------------------------------- 903, Twin Towers, Baniyas Street, Deira, P.O. Box 3389,Dubai, UAE.

Mr. Shapoor Pallonji Mistry --------------------------------------- 103, Sterling Bay, Walkeshwar Road, Walkeshwar,Mumbai – 400 006.

Mr. Cyrus Pallonji Mistry ------------------------------------------- 103, Sterling Bay, Walkeshwar Road, Walkeshwar,Mumbai – 400 006.

Mr.Firoze Kavshah Bhathena ------------------------------------- C/203, Seth Shapoorji Pallonji Mistry Bldg., Dr. R.K.Shirodkar Road, Parel, Mumbai – 400 012.

Mr. Khushroo Burjor Captain------------------------------------- D/4, Palm Springs, Cuffe Parade, Mumbai - 400 005.Mr. Jimmy Jehangir Parakh -------------------------------------- Flat No. 502, 5th Flr, Sterling Tower, Harishchandra

Goregaonkar Marg, Gamdevi, Mumbai – 400 007.

Correspondence, if any, addressed to the above directors may be forwarded at the Registered Office of SP at 70, NagindasMaster Road, 1st Floor, Mumbai- 400 023, India. None of the above directors are on the Board of Directors of FAL.

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Summary of the audited financial details of SP for the financial years ended March 31, 2001; March 31, 2002 and March 31,2003 and certified unaudited financials for the quarter ended June 30, 2003 is as follows:

(in Rs. Million)




Income from operations ------------------------------------- 2,215.95 2,614.61 2,887.66 830.01

Other income --------------------------------------------------- 214.39 243.82 202.50 51.25

Total Income --------------------------------------------------- 2,430.34 2,858.43 3,090.16 881.26

Total Expenditure ---------------------------------------------- (2,162.11) (2,627.69) (2,858.07) (818.78)

Profit before Depreciation, Interest and Tax ----------- 268.23 230.74 232.09 62.48

Depreciation --------------------------------------------------- (50.94) (47.35) (52.83) (14.78)

Interest --------------------------------------------------- (129.27) (133.38) (104.60) (27.52)

Profit Before Tax ----------------------------------------------- 88.02 50.01 74.66 20.18

Provision for Tax ----------------------------------------------- (31.00) (5.00) (18.97) (4.87)

Profit After Tax -------------------------------------------------- 57.02 45.01 55.69 15.31

(in Rs. Million)


Sources of Funds



Net Worth --------------------------------------------------- 922.30 923.44 941.80

Secured Loans -------------------------------------------------- 367.91 451.76 736.93

Unsecured Loans ---------------------------------------------- 710.00 494.70 477.50

Total ------------------------------------------------- 2,000.22 1,869.90 2,156.23

Uses of Funds

Net fixed Assets ------------------------------------------------ 345.29 326.37 406.61

Investments --------------------------------------------------- 931.29 723.88 724.81



Total ------------------------------------------------- 2,000.22 1,869.90 2156.23

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Dividend (%) --------------------------------------------------- 100 500 —

Earnings Per Share (Rs.) ------------------------------------- 695.40 548.91 679.09

Return on Net Worth (%) ------------------------------------ 6.18 4.87 5.91

Book value per Share (Face Value per share: Rs. 100) (Rs.) 11,247.60 11,261.40 11,485.33




c) There was no change in the last three years in the accounting policies regularly employed by SP.


4.3 Cyrus

Cyrus, earlier known as F.E. Dinshaw Private Limited, was incorporated on 8th March 1923. Its registered office is at EsplanadeHouse, Hazari Mal Somani Marg, Fort, Mumbai- 400 001, India. In 1988, it became a deemed public company under Section43A of the Companies Act, 1956. Cyrus is presently a public limited company. It is mainly engaged in investment activity.Cyrus is not listed on any stock exchange.

As on September 30, 2003, the equity share capital of Cyrus comprised of 148,222 Class ‘A’ Equity Shares of Rs. 1,000/- eachfully paid and 3,222 Class ‘B’ Equity Shares of Rs. 750/- each fully paid.

The shareholding pattern of Cyrus as on September 30, 2003 is as follows:No. & Percentage ofequity shares held


1. Sterling Investment Corporation Private Ltd.

Class ‘A’ ----------------------------------------------------------------------------- 3,222 3.74

Class ‘B’ ---------------------------------------------------------------------------- 3,222

2. Shapoorji Pallonji & Co. Ltd. ------------------------------------------------- 96.26

Class ‘A’ ----------------------------------------------------------------------------- 145,000

Total Paid-Up Capital ------------------------------------------------------- 151,444 100.00



Mr. Pallonji Shapoorji Mistry ------------------------------------- 903, Twin Towers, Baniyas Street, Deira, P.O. Box 3389,Dubai, UAE.

Mr. Shapoor Pallonji Mistry --------------------------------------- 103, Sterling Bay, Walkeshwar Road, Walkeshwar,Mumbai – 400 006.

Mr. Cyrus Pallonji Mistry ------------------------------------------- 103, Sterling Bay, Walkeshwar Road, Walkeshwar,Mumbai – 400 006.

Mr. Khushroo Burjor Captain ------------------------------------ D/4, Palm Springs, Cuffe Parade, Mumbai-400 005.Mr. Rustom S. Khusrokhan --------------------------------------- Jyoti Sadan, 137 Marine Drive, Mumbai – 400 020.Mr.Firoze Kavshah Bhathena ------------------------------------- C/203, Seth Shapoorji Pallonji Mistry Bldg., Dr. R.K.

Shirodkar Road, Parel, Mumbai – 400 012.

Correspondence, if any, addressed to the above directors may be forwarded at the Registered Office of Cyrus at EsplanadeHouse, Hazari Mal Somani Marg, Fort, Mumbai- 400 001, India. None of the above directors are on the Board of Directors ofFAL.

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Summary of the audited financial details of Cyrus for the financial years ended March 31, 2001; March 31, 2002 and March31, 2003 and certified unaudited financials for the quarter ended June 30, 2003 is as follows:

(in Rs. Million)





Other income --------------------------------------------------- 0.44 0.14 0.14 0.03

Total Income --------------------------------------------------- 98.50 98.92 105.72 1.95

Total Expenditure ---------------------------------------------- (2.01) (2.26) (25.45) (0.37)

Profit before Depreciation,Interest and Tax ------------------------------------------------ 96.49 96.65 80.27 1.58

Depreciation --------------------------------------------------- — — — —

Interest --------------------------------------------------- (24.16) (57.50) (57.50) (14.48)

Profit Before Tax ----------------------------------------------- 72.34 39.15 22.78 (12.90)

Provision for Tax ----------------------------------------------- (5.65) — 3.71 —

Profit After Tax -------------------------------------------------- 66.69 39.15 26.49 (12.90)

(in Rs. Million)


Sources of Funds



Net Worth --------------------------------------------------- 571.04 610.21 586.03

Secured Loans -------------------------------------------------- 460.00 460.00 460.00

Unsecured Loans ---------------------------------------------- — — —

Total ------------------------------------------------- 1,031.04 1,070.21 1,046.03

Uses of Funds

Net fixed Assets ------------------------------------------------ 0.42 0.41 0.41

Investments --------------------------------------------------- 736.06 971.00 967.69


Deferred Tax --------------------------------------------------- — — 7.32

Total ------------------------------------------------- 1,031.04 1,070.21 1,046.03

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Dividend (%) --------------------------------------------------- — — 26.50



Book Value Per Share (Rs.) ---------------------------------- 3,790.79 4,050.81 3,890.37




c) There was no change in the last three years in the accounting policies regularly employed by Cyrus.


4.4 INFORMATION ABOUT OTHER MAJOR COMPANIES PROMOTED BY THE ACQUIRER AND PACs

4.4.1 Palchin Real Estate Pvt. Limited

Date of Incorporation: January 19, 1995

Nature of Business: Real Estate DevelopmentYear ended March 31,

2001 2002 2003

(in Rs. Million except per share data)

Sales and other Income ------------------------------------- 3.88 1.16 0.99

Profit after tax --------------------------------------------------- 1.72 0.38 (1.97)

Equity Capital --------------------------------------------------- 0.0002 0.0002 0.50

Reserves ---------------------------------------------------------- 1.74 2.13 0.16

Earnings per share (of Rs. 10 each) (Rs.) --------------- 86,174.60 19,112.00 (39.38)

Book Value per share (of Rs. 10 each) (Rs.) ------------ 87,158.80 106,271.35 13.13

4.4.2 Shapoorji Pallonji Infrastructure Capital Co. Limited

Date of Incorporation: June 09, 1997

Nature of Business: Investment in Infrastructure companiesYear ended March 31,

2001 2002 2003


Sales and other Income ------------------------------------- — — 0.10

Profit after tax --------------------------------------------------- (0.42) (0.19) (0.06)

Equity Capital --------------------------------------------------- 196.10 196.10 196.10

Reserves --------------------------------------------------- 8.05 7.85 8.07

Earnings per share (of Rs. 10 each) (Rs.) --------------- (0.02) (0.01) —

Book Value per share (of Rs. 10 each) (Rs.) ------------ 14.46 10.40 10.41

10

4.4.3 Manjri Stud Farm Ltd.

Date of Incorporation: October 26, 1939

Nature of Business: Stud Farming and Property Development

Year ended March 31,

2001 2002 2003



Profit after tax --------------------------------------------------- (4.63) (1.62) (2.69)

Equity Capital --------------------------------------------------- 37.50 37.50 37.50

Reserves --------------------------------------------------- (31.54) (32.84) (35.53)

Earnings per share (of Rs. 1,000 each) (Rs.) ----------- (191.43) (34.62) (71.67)

Book Value per share (of Rs. 1,000 each) (Rs.) -------- 158.89 124.27 52.60

4.4.4 Floreat Investments Pvt. Ltd.

Date of Incorporation: March 30, 1989

Nature of Business: Property Development & Investment


2001 2002 2003



Profit after tax --------------------------------------------------- (0.21) (0.70) 3.52

Equity Capital --------------------------------------------------- 9.50 9.50 9.50

Reserves --------------------------------------------------- — — 2.69

Earnings per share (of Rs. 100 each) --------------------- (2.24) (7.89) 35.50

Book Value per share (of Rs. 100 each) ----------------- (98.63) (91.26) 128.35

4.4.5 United Motors (India) Ltd.

Date of Incorporation: August 04, 1920

Nature of Business: Retail Marketing


2001 2002 2003



Profit after tax --------------------------------------------------- (9.23) (89.97) (83.41)

Equity Capital --------------------------------------------------- 7.98 7.98 7.98

Reserves --------------------------------------------------- 115.42 22.94 (62.44)

Earnings per share (of Rs. 10 each) ---------------------- (11.57) (112.75) (104.53)

Book Value per share (of Rs. 10 each) ------------------- 154.65 38.75 (68.26)

11

4.4.6 SIV Industries Ltd.

Date of Incorporation: August 22, 1957

Nature of Business: Manufacture of manmade fibres

18 month period 6 month period Yearended September ended March ended March

30, 2001 31, 2002 31, 2003


Sales and other Income ------------------------------------- 3,651.65 156.39 64.11

Profit after tax --------------------------------------------------- (1,482.46) (730.95) (1,125.04)

Equity Capital --------------------------------------------------- 691.20 691.20 691.20

Reserves --------------------------------------------------- (2,516.19) (3,247.14) (4,372.18)

Earnings per share (of Rs. 10 each) ---------------------- (24.92) (10.58) (16.28)

Book Value per share (of Rs. 10 each) ------------------- (17.72) (28.30) (44.57)

4.4.7 Forbes Gokak Limited

Please refer para 4.5 below.

As referred to in Para 4.1, pursuant to an Open Offer made by Sterling, SP and Cyrus on October 15, 2001 under theRegulations, Acquirer/ PACs acquired control over FGL and became its Promoters.

Other than SIV Industries Limited, none of the above companies is a SICK COMPANY as defined under Sick IndustriesCompanies (Special Provisions) Act, 1985

4.5 FGL

FGL is a public limited company, having its Registered Office at Forbes Building, Charanjit Rai Marg, Fort, Mumbai- 400 001.FGL is a company arising out of the amalgamation of the erstwhile Forbes Forbes Campbell and Company Limited withGokak Patel Volkart Limited with effect from January 1, 1992. The activities of FGL include manufacture of yarn, engineeringproducts, and shipping agencies, clearing and forwarding business and investments in various subsidiaries and affiliatecompanies. The shares of FGL are listed on BSE.

The shareholding pattern of FGL as on September 30, 2003 is as follows:No. & Percentage ofequity shares held


1. Promoters ------------------------------------------------------------------------- 8,927,896 71.69

2. Mutual Funds and UTI --------------------------------------------------------- 260 0.00

3. Banks, Financial Institutions, Insurance Companies ------------------ 1,399,759 11.24

4. FII & NRI / OBC ------------------------------------------------------------------- 329,596 2.65

5. Indian Public ---------------------------------------------------------------------- 1,655,533 13.29

6. Other -------------------------------------------------------------------------------- 140,358 1.13

Total Paid-Up Capital ------------------------------------------------------- 12,453,402 100.00

12

The details of the Board of Directors of FGL are as follows:


Mr. Shapoor P. Mistry ---------------------------------------------- 103, Sterling Bay, Walkeshwar Road, Walkeshwar,Mumbai – 400 006.

Mr. Pallonji S. Mistry ----------------------------------------------- 903, Twin Towers, Baniyas Street, Deira, P.O. Box 3389,Dubai, UAE.

Mr. K. C. Mehra ------------------------------------------------------ Volkart House, Flat No.11, 63 Westfield Estate Lane, offBhulabhai Desai Road, Mumbai – 400 026.

Mr. D. B. Engineer --------------------------------------------------- Jehangir Mansion, 2nd Floor, 71, N.S.Patkar Marg,Mumbai – 400 007.

Mr. D. S. Sohan ------------------------------------------------------ 41, Sagar Tarang, 15A, Worli Seaface, Mumbai – 400 025.Mr. C. G. Shah -------------------------------------------------------- Carmel, Flat No. 71, 30 Nepean Sea Road,

Mumbai – 400 036.Mr. R. N. Jha ---------------------------------------------------------- Flat No. 101B, Cottage Land Co-operative Housing

Society Ltd., Plot 16A, Sector 19A, Navi Mumbai.Mr. Cyrus P. Mistry -------------------------------------------------- 103, Sterling Bay, Walkeshwar Road, Walkeshwar,

Mumbai – 400 006.

Correspondence, if any, addressed to the above directors may be forwarded at the Registered Office of FGL at ForbesBuilding, Charanjit Rai Marg, Fort, Mumbai – 400 001, India. Other than Mr. K.C.Mehra and Mr. C.G.Shah, none of the abovedirectors are on the Board of Directors of FAL.

Summary of the audited financial details of FGL for the financial years ended March 31, 2001; March 31, 2002 and March 31,2003 and certified unaudited financials for the period ended June 30, 2003 is as follows:

(in Rs. Million)




Income from operations ------------------------------------- 3,393.12 2,852.33 3,107.38 736.00

Other income --------------------------------------------------- 269.16 372.43 142.95 21.00

Total Income --------------------------------------------------- 3,662.28 3,224.76 3,250.33 757.00

Total Expenditure ---------------------------------------------- 3,290.39 2,895.89 2,939.78 675.00


Depreciation --------------------------------------------------- 168.36 151.51 158.54 42.00

Interest --------------------------------------------------- 113.22 94.56 56.58 16.00


Provision for Tax ----------------------------------------------- 19.01 (13.00) (16.50) (2.00)

Profit After Tax -------------------------------------------------- 71.30 95.80 111.93 26.00

13

(in Rs. Million)


Sources of Funds


Reserves and surplus(excluding revaluation reserves) -------------------------- 1,872.03 1,794.60 1,871.41

Net Worth --------------------------------------------------- 1,996.57 1,919.14 1,995.95

Secured Loans -------------------------------------------------- 620.02 513.70 631.75

Unsecured Loans ---------------------------------------------- 486.60 521.62 373.57

Defferred Tax Liability ---------------------------------------- — 134.22 109.22

Total ------------------------------------------------- 3,103.19 3,088.68 3,110.49

Uses of Funds

Net fixed Assets ------------------------------------------------ 1,194.23 1,075.94 1,007.49

Investments --------------------------------------------------- 769.40 822.60 924.51

Net Current Assets -------------------------------------------- 1,049.67 1,058.14 1,077.05


Total ------------------------------------------------- 3,103.19 3,088.68 3,110.49


Dividend (%) --------------------------------------------------- 30 20 25



Book Value Per Share (Rs.) ---------------------------------- 160.32 154.11 160.27


(in Rs. Million)

2001 2002 2003

l Auditors had mentioned in their report that theyare unable to express opinion about receivables(Net of provisions) aggregating --------------------- 384.001 498.322 299.543

l Profit and loss account included credit for provisionfor diminution in value of investments written back — 96.52 10.23

l Profit and loss account included debit for provisionfor doubtful loans and advances and diminution invalue of investments ------------------------------------ 44.75 31.45 7.65

Notes:

1. The amount pertains to following:

a) An amount of Rs. 396.88 million pertains to the amount due from Svadeshi Mills Company Limited (SMCL), a

14

company which has been referred to the Board for Industrial and Financial Reconstruction (BIFR), in respect ofwhich a provision of Rs. 222.26 million has already been made. The BIFR has issued an order inter-alia opiningthat SMCL is not viable and should be wound up and has forwarded the opinion to the High Court, Mumbai. TheAppellate Authority of the BIFR has rejected an appeal filed against such order. The company has a secondcharge on the assets of SMCL and further provision is not considered to be necessary. The Court Receiver, HighCourt, Mumbai has taken a possession of some of the assets of SMCL.

b) The amount of Rs. 94.64 million pertains to an amount due from Campbell Knitwear Limited (CKL), a whollyowned subsidiary, which has substantial accumulated losses, but has reported profits for the year. The companyhas an investment of Rs. 266.69 million in CKL in respect of which a provision of Rs. 236.69 million for diminutionin value of investment has been made.

c) The amount of Rs. 84.75 million pertains to amount due from Sundry Debtors, due since 1994-95, in respect ofwhich, a Court has given an ad-interim injunction restraining the company from invoking the Bank Guarantee. Inthe year 1994-95, the company had entered into a Memorandum of Understanding giving sole and exclusiveright for developing a part of its land at Chandivali, Mumbai. The balance amount of Rs. 84.75 million, in respectof which the said transaction is recoverable and included in Sundry Debtors, for which the company holds a bankguarantee. The bank guarantee was invoked on April 29, 1998. The developers had filed an application in a courtand the court has issued an ad-interim injunction restraining the company from receiving any money under thesaid bank guarantee, pending the disposal of the matter. The company had initiated further action as advised byits advocates.


a) An amount of Rs. 436.36 million pertains to the amount due from SMCL, a company which has been referred tothe BIFR, in respect of which a provision of Rs. 222.26 million has already been made. The BIFR has issued anorder inter-alia opining that SMCL is not viable and should be wound up and has forwarded the opinion to theHigh Court, Mumbai. The Appellate Authority of the BIFR has rejected an appeal filed against such order. Thecompany has a second charge on the assets of SMCL and further provision is not considered to be necessary.The Court Receiver, High Court, Mumbai has taken a possession of some of the assets of SMCL.

b) The amount of Rs. 85.78 million pertains to an amount due from CKL, a wholly owned subsidiary, which hassubstantial accumulated losses, but has reported profits for the last two years. The company has an investmentof Rs. 266.69 million in CKL in respect of which a provision of Rs. 153 million for diminution in value of investmenthas been made.

c) Please refer note 1(c) above


a) An amount of Rs. 437.05 million pertains to the amount due from SMCL, a company which has been referred tothe BIFR, in respect of which a provision of Rs. 222.26 million has already been made. The BIFR has issued anorder inter-alia opining that SMCL is not viable and should be wound up and has forwarded the opinion to theHigh Court, Mumbai. The Appellate Authority of the BIFR has rejected an appeal filed against such order. Thecompany has a second charge on the assets of SMCL and further provision is not considered to be necessary.The Court Receiver, High Court, Mumbai has taken a possession of some of the assets of SMCL.

b) Please refer note 1(c) above

Other than the above:

a) There were no adjustments/ rectification required for any incorrect accounting policies or failures to make provisionsor other adjustments, which resulted in audit qualifications

b) There was no material amount in the Profit and Loss Account for the year ended 31st March, 2003, relating to adjustmentsfor last two years which require adjustment in arriving at the profits of the years to which they relate.

c) There was no change in the last two years in the accounting policies regularly employed by FGL.

15


4.6 FEL

FEL was incorporated on 18th December, 1981. Its registered office is at Aarti Chambers, 3rd Floor, 189, Mount Road, Chennai600 006, India. It is mainly engaged in investment activity. FEL is a wholly owned subsidiary of FGL and is not listed on anystock exchange. As on September 30, 2003, the Equity Share Capital of FEL comprised of 2,500 fully paid-up equity sharesof Rs. 10/- each and 490,000 partly paid up shares of Rs. 10/- each (Rs. 4.50 paid up).



Mr. C. G. Shah -------------------------------------------------------- Carmel, Flat No. 71, 30 Nepean Sea Road,Mumbai – 400 036.

Mr. R. T. Doshi -------------------------------------------------------- D-12A, Rameshwar, Opp. Khira Nagar, Santacruz (W),Mumbai – 400 054.

Mr. M. L. Khetan ----------------------------------------------------- C-2-1, Tata Housing Center, Lallubhai Park Road, Andheri(West), Mumbai – 400 058.

Mr. A. T. Shah -------------------------------------------------------- 10, Mohan Apartments “A” Kasturba Cross Road No.1,Borivali (E), Mumbai – 400 066.

Correspondence, if any, addressed to the above directors may be forwarded at the Registered Office of FEL at Aarti Chambers,3rd Floor, 189, Mount Road, Chennai 600 006, India. Other than Mr. C.G. Shah, none of the above directors is on the Boardof Directors of FAL.

Summary of the audited financial details of FEL for the financial years ended March 31, 2001; March 31, 2002 and March 31,2003 and certified unaudited financials for the quarter ended June 30, 2003 is as follows:

(in Rs. Million)





Other income --------------------------------------------------- — — — —

Total Income --------------------------------------------------- 2.39 1.07 1.00 0.07

Total Expenditure ---------------------------------------------- 0.01 0.01 0.05 0.00


Depreciation --------------------------------------------------- — — — —

Interest --------------------------------------------------- — — — —


Provision for Tax ----------------------------------------------- 0.11 0.12 0.14 0.03

Profit After Tax -------------------------------------------------- 2.27 0.94 0.81 0.04

(in Rs. Million)

16


Sources of Funds


Reserves and surplus (excluding revaluation reserves) 5.84 6.78 6.92

Net Worth --------------------------------------------------- 8.07 9.01 9.15

Secured Loans -------------------------------------------------- — — —

Unsecured Loans ---------------------------------------------- — — —

Total ------------------------------------------------- 8.07 9.01 9.15

Uses of Funds

Net fixed Assets ------------------------------------------------ — — —

Investments --------------------------------------------------- 5.32 5.32 5.32


Total misc. exp. not written-off ---------------------------- — — —

Total ------------------------------------------------- 8.07 9.01 9.15


Dividend (%) --------------------------------------------------- — — —







c) There was no change in the last two years in the accounting policies regularly employed by FEL.


4.7 WIL

WIL was incorporated on 4th July, 1975. Its registered office is at Forbes Building, Charanjit Rai Marg, Fort, Mumbai 400 001,India. It is mainly engaged in investment activity. WIL is an associate company of FGL. FGL holds 49% shares in WIL. WIL isnot listed on any stock exchange.

The shareholding pattern of WIL as on September 30, 2003 is as follows:

17

No. & Percentage ofequity shares held


1. FGL ---------------------------------------------------------------------------------- 980,000 49

2. Forbes Campbell Holding Limited ------------------------------------------ 720,000 36

3. FAL ---------------------------------------------------------------------------------- 300,000 15

Total Paid-Up Capital ------------------------------------------------------- 20,000,000 100



Mr. C.G. Shah --------------------------------------------------------- Carmel, Flat No. 71, 30 Nepean Sea Road,Mumbai – 400 036.

Mr. K. C. Mehra ------------------------------------------------------ Volkart House, Flat No.11, 63 Westfield Estate Lane, offBhulabhai Desai Road, Mumbai – 400 026.

Mr. R. T. Doshi -------------------------------------------------------- D-12A, Rameshwar, Opp. Khira Nagar, Santacruz (W),Mumbai – 400 054.

Mr. M.L. Khetan ------------------------------------------------------ C-2-1, Tata Housing Center, Lallubhai Park Road, Andheri(West), Mumbai – 400 058.

Correspondence, if any, addressed to the above directors may be forwarded at the Registered Office of WIL at ForbesBuilding, Charanjit Rai Marg, Fort, Mumbai 400 001, India. Other than Mr. K.C.Mehra and Mr.C.G. Shah, none of the abovedirectors is on the Board of Directors of FAL.

Summary of the audited financial details of WIL for the financial years ended March 31, 2001; March 31, 2002 and March 31,2003 and certified unaudited financials for the quarter ended June 30, 2003 is as follows:

(in Rs. Million)





Other income --------------------------------------------------- — 32.92 — —

Total Income --------------------------------------------------- 9.33 45.91 7.05 0.91



Depreciation --------------------------------------------------- — — — —

Interest --------------------------------------------------- 0.10 0.05 — —


Provision for Tax ----------------------------------------------- - 2.68 2.00 0.30

Profit After Tax -------------------------------------------------- 8.90 42.70 4.64 0.53

(in Rs. Million)

18


Sources of Funds



Net Worth --------------------------------------------------- 57.05 77.70 80.35

Secured Loans -------------------------------------------------- — — —

Unsecured Loans ---------------------------------------------- 0.35 — —

Total ------------------------------------------------- 57.40 77.70 80.35

Uses of Funds

Net fixed Assets ------------------------------------------------ — — —

Investments --------------------------------------------------- 49.86 31.18 31.15


Total misc. exp. not written-off ---------------------------- — — —

Total --------------------------------------------------- 57.40 77.70 80.35


Dividend (%) --------------------------------------------------- — 100 10





a) There were no adjustments/ rectification required for any incorrect accounting policies or failures to make provisions orother adjustments, which resulted in audit qualifications.


c) There was no change in the last two years in the accounting policies regularly employed by WIL.


Acquirer, PACs, FGL, FEL and WIL have complied with the applicable provisions of Chapter II of the Regulations with regardto their share holding in FAL.

5 DISCLOSURE IN TERMS OF REGULATION 21(3)

Pursuant to this Offer the public shareholding will not be reduced to 10% or less of the Voting Capital of FAL and thereforeRegulation 21(3) of the Regulations is not applicable. During the Offer Period the Acquirer and PACs may purchase, additionalequity shares of FAL in accordance with the Regulations, to the extent and in the manner that the public shareholding of FALwill not be reduced to 10% or less of its voting capital.

19

6 BACKGROUND OF FAL

FAL is a public limited company, having its Registered Office at No.40, Anna Nedunchalai, Perungudi, Chennai – 600 096.

The issued, subscribed and paid-up equity share capital of FAL as on the date of this Announcement is Rs. 45.588 millioncomprising 4,558,777 fully paid up equity shares of Rs. 10 each. The shares of FAL are listed on BSE and the MSE. There areno outstanding partly paid shares as on the date of this announcement.

FAL was incorporated in 1962, in collaboration with Facit AB, Sweden. In 1989, Facit AB disinvested its 26% stake. The nameof the Company was changed to FAL INDUSTRIES LIMITED from Facit Asia Limited and a fresh Certificate of Incorporationconsequent on change of name was issued by the Registrar of Companies, Tamil Nadu on 26th October 1993. FAL is aDomestic Appliances Company, deriving about 70% of its revenue from sale of vaccum cleaners and motors used fordomestic appliances. FAL also manufactures and sells Mechanical Typewriters, Injection Moulded Plastic Components andsophisticated Tools and Mixies.

Based on the information received from FAL, there were no mergers, demergers and spin-offs involving FAL during the lastthree years.

Based on the information received from FAL, FAL has complied with the reporting formalities under the applicable provisionsof Chapter II of the Regulations. FAL has also complied with all the provisions of the listing agreement entered into with thestock exchanges and no punitive action has been initiated by any of the stock exchanges against it.



Mr. K. C. Mehra ------------------------------------------------------ Flat 11, Volkart House, 63, Westfield Estate Lane, Off.Bhulabai Desai Road, Mumbai - 400 026.

Mr. M. Singh ---------------------------------------------------------- ‘Sangeetha’, No.6, Kasturi Estate, II Street, Poes Garden,Chennai - 600 086.

Mr. K.R.N. Menon --------------------------------------------------- Arjay Apex Centre, III Floor, 24, College Road,Chennai - 600 006.

Mr. C. G. Shah -------------------------------------------------------- 30, Nepean Sea Road, Carmel, Flat No.71,Mumbai - 400 036.

Mr. V. Narayanan ---------------------------------------------------- Flat No.19, ‘THE MANOR’, 1, Cenotaph II Street,Teynampet, Chennai - 600 018.

Mr. R. Sankaran ------------------------------------------------------ Flat GB, “Sivedha”, New No.27, Old No.16, Third Avenue,Besant Nagar, Chennai – 600 090

Correspondence, if any, to the above directors may be forwarded to the Registered Office of FAL at No.40, Anna Nedunchalai,Perungudi, Chennai – 600 096, India. Of the above directors, Mr. K.C.Mehra (first appointed on September 23, 1997) and Mr.C.G. Shah (first appointed on May 27, 1995) are representatives of the Acquirer on the Board of FAL. Accordingly, Mr.K.C.Mehra and Mr. C.G. Shah have recused themselves and not participated in any matter(s) concerning or relating to theOffer including any preparatory steps leading to the Offer as per Regulation 22(9) of the Regulations.

The share capital structure of FAL as on the date of the Public Announcement is as follows:

Paid up Equity Shares of Target Company No. of Shares / voting rights % of shares/voting rights

Fully paid-up equity shares ------------------------------ 4,558,777 100

Partly paid-up equity shares ----------------------------- — —

Total paid-up equity shares ------------------------------ 4,558,777 100

Total voting rights in FAL --------------------------------- 4,558,777 100

20

Summary of the audited financial details of FAL for the financial years ended March 31, 2001; March 31, 2002 and March 31,2003 and unaudited financials for the quarter ended June 30, 2003 is as follows:

(in Rs. Million)





Other income --------------------------------------------------- 7.67 29.57 4.57 1.66

Total Income --------------------------------------------------- 679.27 712.94 745.71 133.41



Depreciation --------------------------------------------------- 19.77 21.40 21.63 5.51

Interest --------------------------------------------------- 37.86 37.20 29.39 4.74

Profit Before Tax ----------------------------------------------- 7.25 3.02 9.40 (1.59)

Provision for Tax ----------------------------------------------- 0.50 (1.34) 1.78 (0.33)

Profit After Tax -------------------------------------------------- 6.75 4.36 7.62 (1.26)

(in Rs. Million)


Sources of Funds

Paid-up Equity Share Capital ------------------------------- 45.59 45.59 45.59

Reserves and surplus (excluding revaluation reserves) 215.48 174.13 176.61

Net Worth --------------------------------------------------- 261.07 219.72 222.20

Secured Loans -------------------------------------------------- 165.47 136.66 147.55

Unsecured Loans ---------------------------------------------- 139.19 122.04 59.55

Total ------------------------------------------------- 565.73 478.42 429.30

Uses of Funds

Net fixed Assets ------------------------------------------------ 208.10 191.05 185.26

Investments --------------------------------------------------- 38.11 35.80 35.72



Total ------------------------------------------------- 565.73 478.42 429.30

21


(Audited) (Audited) (Audited)

Dividend (%) --------------------------------------------------- 10 10 10

Earning Per Share --------------------------------------------- 1.48 0.96 1.67

Return on Net worth (%) ------------------------------------ 2.59 1.98 3.43

Book Value Per Share ----------------------------------------- 57.27 48.20 48.74

The issued and subscribed equity shareholding in FAL before the Offer (as on October 01, 2003) and after the Offer(assuming full acceptance of the Offer) is given in the table below1:

Issued & Subscribed Shareholding/voting Issued &equity share capital rights to be acquired Subscribed equity

prior to the Offer in the Offer (assuming share capital(on October 01, 2003) full acceptance) after the Offer

Shareholders’ Category No. of % No. of % No. of % Shares Shares Shares

1. Acquirer /PACs

SP --------------------------------------------- 37,800 0.83 — — 37,800 0.83

Sterling ---------------------------------------- 33,600 0.74 911,756 20.00 945,356 20.74

Cyrus ------------------------------------------- — — — — — —

Total ------------------------------------------ 71,400 1.57 911,756 20.00 983,156 21.57

2. Promoter Group2

FGL --------------------------------------------- 1,442,280 31.64 1,442,280 31.64

FEL --------------------------------------------- 264,652 5.81 264,652 5.81

WIL --------------------------------------------- 10,752 0.24 10,752 0.24

Total ------------------------------------------ 1,717,684 37.69 1,717,684 37.69

3. Financial Institutions, Insurance Companies, Banks & Mutual Funds

a. Financial Institutions(LIC, UTI & Insurance Cos.) -------- 432,712 9.49

b. Banks ------------------------------------- 27,475 0.60

c. Mutual Funds -------------------------- 1,075 0.02

d. NRI individuals/OCBs ---------------- 5,058 0.11 (911,756) (20.00) 1,857,937 40.76

Total ------------------------------------------ 466,320 10.23

4. Others3

(not included in 1, 2 & 3) ---------------- 2,303,373 50.53

Total ------------------------------------------ 4,558,777 100 4,558,777 100

Notes to the table above:

1. The above figures are based on information provided by FAL, except shareholding of Acquirer and PACs, which has been disclosedby Acquirer and PACs.

2. FGL, FEL and WIL are deemed to be acting in concert with Acquirer by virtue of Regulation 2(1)(e)(2) of the Regulations. FGL, FELand WIL are not participating in the Offer, and they will neither acquire any shares under the Offer nor will they fund the acquisitionthereof.

3. As per data available from FAL, the other major shareholders of FAL are: private corporate bodies: 23.95% (including Tata InvestmentCorporation Limited: 3.16%, Tata Chemicals Limited: 12.19% and Tata Tea Limited: 5.30%) and Institutional shareholders :9.49%.

22

7 OFFER PRICE

As mentioned above, the equity shares of FAL are listed on BSE and MSE. The equity shares are infrequently traded on BSEwithin the meaning of Regulation 20 of the Regulations. No public information on trading of equity shares of FAL on MSE isreadily available. The details of trading volumes on the above stock exchanges are provided below:

Total equity shares traded Annualised trading turnoverduring the six calendar months Total number of listed as a % of total number of

prior to the announcement equity shares listed equity sharesof the Offer

BSE 101,080 4,558,777 4.43%

MSE 0 4,558,777 0.00%

Source: Official data obtained from the respective stock exchanges.

As the annualised trading turnover on BSE and MSE is less than 5% of the total number of listed shares, the shares of FALare deemed to be infrequently traded on these exchanges as per the explanation to Regulation 20(5) of the Regulations.

The Offer Price of Rs.25/- per Share, is justified in terms of Regulation 20(5) of the Regulations in view of the following:

l The Acquirer and PACs have not acquired any equity shares of FAL during the 26 weeks period prior to this publicannouncement.

l Based on the information available, the average of the weekly high and low of closing prices for the equity shares of FALon BSE for the 26-week period preceding the date of this announcement is Rs. 10.40 per equity share.

l Based on the information available, the average of the daily high and low prices for the equity shares of FAL on BSE forthe 2-week period preceding the date of this announcement is Rs. 10.66 per equity share.

The financial parameters of FAL based on audited accounts for the Financial Year 2002-03 are as under:

Earnings Per Equity Share ---------------------------------------------- Rs. 1.67

Price/Earning Multiple -------------------------------------------------- 14.97x based on Offer Price of Rs. 25/-per equity share

Industry1 Price/Earning Multiple -------------------------------------- Full Year : 1.3x(Source Capital Market Volume Sept 29-Oct 12, 2003) -------- Trailing Twelve Month : 2.2x

Return on Net Worth ----------------------------------------------------- 3.43%

Industry1 Return on Net Worth ---------------------------------------- 5.80%(Source Capital Market Volume Sept 29-Oct 12, 2003)

Book Value per equity share of face value of Rs.10 afteradjusting Miscellaneous Expenses not written off andrelevant contingent liabilities ------------------------------------------ Rs. 39.14

Price/Book Value Multiple ----------------------------------------------- 0.64x based on Offer Price of Rs. 25/-per equity share

Industry1 Price/Book Value ---------------------------------------------- 0.49x(Source: Capital Market Volume Sept 29-Oct 12, 2003)

1 Domestic Appliances Industry

The Fair value of FAL as determined by M/s. N.M. Raiji & Co., Chartered Accountants (situated at Universal Insurance Building,Pherozeshah Mehta Road, Mumbai – 400 001, India, Telephone: 2287 0068 Fax: 2282 8646), vide their valuation certificatedated October 09, 2003 is Rs. 15.33 per equity share with reference date of October 09, 2003. The Fair value of FAL, as per thevaluation methodology laid down by Hon’ Supreme Court in case of HLL Union Vs HLL, as determined by M/s. N.M. Raiji &Co., Chartered Accountants, vide their valuation certificate dated January 15, 2004 is Rs. 14.92 per equity share with referencedate of October 09, 2003.

23

Neither Sterling, SP, Cyrus, FGL, FEL and WIL nor, to the best of the knowledge of Acquirer and PACs, any of the directors ofthe said companies have acquired any equity shares of FAL either by way of allotment, in public or rights issue or by way ofpreferential allotment by FAL or otherwise during the 26 weeks period prior to the date of this public announcement.

No equity shares of FAL have been acquired by the Acquirer or PACs through any agreement under Regulation 14(1). Thereis no non-compete agreement under Regulation 20(8) of the Regulations between Acquirer, PACs and any other entity withregard to FAL.

Thus, the Offer Price is justified in terms of Regulation 20 of the Regulations.

The Acquirer is permitted to revise the Offer Price upward up to seven working days prior to the date of closure of the Offer.In the event of such revision, an announcement will be made in the same newspapers where this public announcement hasappeared and the same price would be paid by the Acquirer for all the equity shares tendered in the Offer anytime during theOffer Period.

Acquirer and PACs shall not acquire during the Offer Period, any shares in FAL except in compliance with the Regulationsand the details of such acquisitions shall be disclosed to the stock exchanges and to the Manager within 24 hours thereof interms of the Regulation 22(17). No acquisition will be made by Acquirer and PACs in the open market during the last sevenworking days prior to the Offer Closing Date. If Acquirer and PACs acquire shares in the open market or through negotiationor otherwise, after the date of Public Announcement at a price higher than the Offer Price, then the highest price paid forsuch acquisition shall be payable for all acceptances received under the Offer.

8 FINANCIAL ARRANGEMENT

The maximum purchase consideration payable by the Acquirer in the case of full acceptance of the Offer would be Rs. 22.79million, which will be funded from internal accruals. In accordance with the provisions of Regulation 28 of the Regulations,Sterling has created an Escrow Account in the form of Bank Guarantee of Rs. 6.00 million issued by Standard Chartered BankLimited, 90, M.G. Road, Mumbai- 400 001 valid until January 31, 2004 (being at least 30 days from the date of the proposedclosure of the Offer) in favour of the Manager to the Offer. Sterling has empowered the Manager to realise the value of theEscrow Account under the Regulations.

Sterling has also made a cash deposit of Rs. 0.30 million (being more than 1% of the purchase consideration payable underthis Offer) in an Escrow Account with Standard Chartered Bank Limited, 90, M.G. Road, Mumbai- 400 001 on which a lien hasbeen granted in favour of the Manager to the Offer.

In view of the revision in the Offer schedule, the validity of the aforesaid Escrow arrangements (including Bank Guarantee)have been extended upto April 15, 2004.

M/s. N.M. Raiji & Co., Chartered Accountants, (Partner Mr. M N Thakkar, Membership No. 8873) situated at Universal InsuranceBuilding, Pherozeshah Mehta Road, Mumbai – 400 001, India, Telephone: 2287 0068; Fax: 2282 8646, have vide their certificatedated October 10, 2003 ,confirmed that sufficient resources are available to enable the Acquirer to fulfil its obligations in fullunder the Offer. The Manager to the Offer has satisfied itself that the Acquirer has the ability to implement the Offer inaccordance with the Regulations.

9 TERMS AND CONDITIONS OF THE OFFER

(a) The Offer is being made in accordance with the provisions of Regulations 11(1), 12 and other applicable provisions ofChapter III of and in compliance with the Regulations.

(b) Acquirer and PACs have made the Public Announcement on October 11, 2003 for the Offer. This Offer is made to all theEligible Persons. However, the Letter of Offer is being mailed to those shareholders whose names appear on theRegister of Members of FAL at the close of business on the Specified Date.

(c) The acceptance of the Offer made by the Acquirer and PACs is entirely at the discretion of the equity shareholders ofFAL and each shareholder of FAL to whom this Offer is being made, is free to offer his shareholding in FAL, in whole orin part while accepting the Offer.

(d) Any equity shares of FAL that are subject matter of litigation or are held in abeyance due to pending court cases,wherein the shareholder(s) of FAL may be precluded from transferring the equity shares during pendency of the saidlitigation are liable to be rejected in case directions/orders to the contrary regarding these equity shares are not

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received together with the equity shares tendered under the Offer. The Letter of Offer in some of these cases,wherever possible would be forwarded to the concerned statutory authorities for further action at their end.

(e) The Offer will open on January 22, 2004 and close on February 20, 2004 (both days inclusive).

(f) Accidental omission to dispatch this Letter of Offer or any further communication to any person to whom this Letter ofOffer is made or the non-receipt of this Letter of Offer by any such person shall not invalidate the Offer in any way.

(g) The instructions, authorisations and provisions contained in the Form of Acceptance and Form of Withdrawal constitutean integral part of the terms of this Offer.

(h) The acceptance of the Offer must be unconditional and should be sent in the attached Form of Acceptance along withthe other documents duly filled in and signed by the applicant shareholder(s) which should be received by the Registrarto the Offer at any of the collection centres mentioned in paragraph 10(f) under “Procedure for Acceptance andSettlement” on or before February 20, 2004. If any change or modification is made in the Form of Acceptance, the sameis liable to be rejected.

(i) The Offer is subject to the Acquirer obtaining the approval of RBI under FEMA, for acquiring and transferring the equityshares of non-resident shareholders tendered in this Offer. The application to RBI would be made after closure of theOffer.

(j) To the best of knowledge and belief of the Acquirer and PACs, as of the date of this Letter of Offer, there are no furtherstatutory approvals required to implement the Offer other than those indicated above. If any other statutory approvalsare required or become applicable, the Offer would be subject to such statutory approvals. The Acquirer and PACs willnot proceed with the Offer in the event that such statutory approvals are not obtained.

(k) In case of delay in receipt of any statutory approval, SEBI has the power to grant an extension of the time required forpayment under the Offer provided that the Acquirer and PACs agree to pay interest in accordance with Regulation22(12) of the Regulations. Further, if the delay occurs due to the willful default of Acquirer in obtaining the requisiteapprovals, Regulation 22(13) of the Regulations will also become applicable.

(l) In case RBI approval for acquisition of shares from non-resident shareholders is unduly delayed, Acquirer reserves theright to proceed with payment to the resident shareholders whose shares have been accepted by Acquirer in terms ofthis Offer, pending payment to the non-resident shareholders, subject to the entire amount payable to non-residentshareholders being kept in an Escrow Account whose value can be realised by the Manager as per the Regulations.

(m) Acquirer will not be responsible in any manner for any loss of equity share certificate(s) and offer acceptance documentsduring transit and the equity shareholders of FAL are advised to adequately safeguard their interest in this regard.

(n) As already mentioned elsewhere in this Letter of Offer, the Offer is not subject to any minimum level of acceptance andAcquirer will acquire all the paid-up equity shares of FAL that are validly tendered in terms of this Offer up to a maximumof 911,756 equity shares. Thus, the Acquirer and PACs will proceed with the Offer even if it is unable to obtain acceptanceto the full extent of the equity shares of FAL for which this Offer is made.

(o) Shares that are subject to any charge, lien or encumbrance are liable to be rejected.

(p) The Acquirer and PACs reserve the right of upward revision of price at any time up to seven working days prior to theclosure of the Offer, as per Regulation 26 of the Regulations. If there is any upward revision in the Offer Price before thelast date of revision (i.e. February 11, 2004), the same would be informed by way of Public Announcement in thenewspapers mentioned in para 2 of this Letter of Offer. Such revised Offer Price would be payable to all shareholderswho tender their shares at any time during the Offer and which are accepted under the Offer.

(q) The shareholders holding shares in physical form, who have sent their shares for dematerialisation need to ensurethat the process of getting the equity shares dematerialised is completed well in time so that the credit in theEscrow Account should be received on or before the date of closure of the Offer, i.e. February 20, 2004, else Acquirerreserves the right to reject such equity shares.

(r) If the aggregate of the valid responses to the Offer exceeds 911,756 paid-up equity shares, then the Acquirer shallaccept the valid applications received on a proportionate basis in accordance with Regulation 21(6) of the Regulations.The equity shares of FAL are in compulsory dematerialised form and the minimum marketable lot is one equity

25

share.

(s) The Acquirer will also accept all locked in shares of Target Company, if any, tendered pursuant to the Offer subject tocontinuation of lock-in period in the hands of the Acquirer. No discrimination in the acceptance would be madebetween the locked-in shares and non locked-in shares tendered.

10 PROCEDURE FOR ACCEPTANCE AND SETTLEMENT

Shareholders of FAL, who wish to avail this Offer should forward the under mentioned documents by hand delivery or byregistered post to the Registrar to the Offer at their office at MCS Limited, Unit: FAL Open Offer, Sri Venkatesh Bhavan, PlotNo. 27, Road No.11, M.I.D.C., Andheri (East), Mumbai – 400 093, India, Phone: +91 22 2821 5235; Fax: +91 22 2835 0456. orby hand delivery only at the collection centres given under para (f) below so as to reach the Registrars on or before February20, 2004 (the Offer Closure Date) on their working days during business hours indicated in sub-para (f) below. In the case ofdemat shares, the Registrar is not bound to accept equity shares which have not yet been credited to the Special DepositoryEscrow Account as on the date of closure of the Offer, i.e. February 20, 2004.

(a) Documents to be submitted (Also read para (b), (c), (d) and (e) below)

(i) For equity shares held in physical form

l Form of Acceptance duly completed and signed in accordance with the instructions contained therein, bysole/ all shareholder(s) whose name(s) appear on the share certificates (in case of joint holdings) in thesame order in which their names appear in the Register of Members.

l Original Share Certificate(s).

l Valid Share Transfer deed(s) duly signed as transferors by all shareholders (in case of joint holdings) in thesame order and as per specimen signatures lodged with FAL and duly witnessed at the appropriate placeby a Notary or Bank Manager or Member of Stock Exchange under their seal of office and membershipnumber. The Transfer Deed should be left blank, excepting the signatures as mentioned above.

l Documents mentioned in para 10(d),for NRI/OCB/FII shareholders

(ii) For equity shares held in demat form

l Form of Acceptance duly completed and signed in accordance with the instructions contained therein, bysole/all shareholder(s) whose name(s) appear (in case of joint holdings) in the same order in which theirnames appear in their beneficiary account. The Form of Acceptance has to be tendered by the beneficialholder of shares only.

l A photocopy of the Delivery Instruction Slip duly acknowledged by the DP filled as per the instructionsgiven hereunder:

— The Beneficial Owners who hold shares in demat form are required to execute a trade by tenderingthe Delivery Instruction for debiting their Beneficiary Account with the concerned DP and creditingthe Special Depository Escrow Account. The credit in the Special Depository Escrow Account shouldbe received on or before the date of closure of the Offer, i.e. February 20, 2004.

— The Delivery Instructions to be given to the DP should be in “For Off Market Trade” mode only. Foreach Delivery Instruction the Beneficial Owner should submit a separate Form of Acceptance.

l Registrar to the Offer has opened a Depository Account (hereinafter referred to as “Special DepositoryEscrow Account”) with National Securities Depository Ltd. (NSDL) named as “MCS Escrow A/c - FAL OpenOffer” as per details given below:

Depository Participant Name : HDFC Bank Limited

Client ID Number : 41223122

DP ID Number : IN300476

Shareholders having their beneficiary account in Central Depository Services India Limited (CDSL) have to

26

use inter-depository delivery instruction slip for the purpose of crediting their shares in favour of thespecial depository account with NSDL.

l Documents mentioned in para 10(d), for NRI/OCB/FII shareholders

l In case of non-receipt of the aforesaid documents, but receipt of the shares in the Special DepositoryEscrow Account, the Acquirer may deem the Offer to have been accepted by the shareholder

l Shareholders should ensure that the credit for the delivered shares should be received in the SpecialDepository Escrow Account on or before the Closure of the Offer (i.e. February 20, 2004).

The above documents should not be sent to Acquirer or PACs or to FAL or to the Manager to the Offer. The sameshould be sent to the Registrar to the Offer only at collection centres given below.

(b) All Eligible Persons can participate in the Offer. Unregistered owners can send their application in writing to the Registrarto the Offer. They are required to submit, besides the documents as mentioned above, other documents to prove theirtitle to the shares offered for acceptance, such as original brokers contract note, transfer deed(s) executed by theregistered holders of the shares in addition to the Form of Acceptance and share certificate(s). No indemnity is requiredfrom unregistered shareholders. Unregistered owners, if they so desire, may also apply on the Form of Acceptancedownloaded from SEBI’s website (www.sebi.gov.in). Notwithstanding that the signature(s) of the transferor(s) havebeen witnessed as aforesaid, if the signature(s) of the transferor(s) differs from the specimen signature(s) recorded withFAL or are not in the same order, such shares are liable to be rejected under this Offer even if the Offer has beenaccepted by a bona fide owner of such shares.

(c) In case of non-receipt of the Letter of Offer, eligible persons may send their acceptance to the Registrar to the Offer, ona plain paper stating the Name, Address, No. of shares held, Distinctive Nos., Folio No., No. of shares offered, alongwith documents as mentioned above, so as to reach the Registrar to the Offer on or before the close of the Offer. Noindemnity is required in this regard. Shareholders who have lodged their shares for transfer with FAL must also sendthe acknowledgement, if any, received from FAL towards such lodging of shares.

(d) As per the provisions of Section 196D(2) of the Income Tax Act, 1961 (“Income Tax Act”), no deduction of tax at sourceshall be made before remitting the consideration for equity shares tendered under the Offer by Foreign InstitutionalInvestors (“FIIs”), as defined in Section 115 AD of the Income Tax Act, 1961. However, while tendering their equityshares under the Offer, NRIs, OCBs and other Non Resident Shareholders will be required to submit details of theirPermanent Account Number for tax purposes and a No Objection Certificate (NOC) or Tax clearance certificate fromIncome Tax Authorities, under the Income Tax Act, 1961, indicating the amount of tax to be deducted by the Acquirerbefore remitting the consideration. In case the aforesaid NOC or Tax clearance certificate is not submitted, theAcquirer will arrange to deduct tax at the maximum marginal rate as may be applicable to the category of shareholders,on the entire consideration amount payable to such shareholders. While tendering equity shares under the Offer,NRIs/OCBs/Foreign Shareholders will be also required to submit the RBI approvals (specific or general) that theywould have obtained for acquiring equity shares of FAL. In case the RBI approvals are not submitted, the Acquirerreserves the right to reject such equity shares.

(e) The shareholders should also provide all relevant documents, which are necessary to ensure transferability of theshares in respect of which the application is being sent. Such documents may include, but are not limited to:

i) duly attested death certificate and succession certificate (in case of single shareholder) if the original shareholderis deceased;

ii) duly attested Power of Attorney if any person apart from the shareholder has signed the application form and/ortransfer deed(s);

iii) no objection certificates from the chargeholder/lender, if the shares in respect of which the application is sent, areunder any charge, lien or encumbrance;

iv) in case of companies, the necessary corporate authorisation (including Board Resolutions);

v) any other relevant documentation.

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(f) The documents referred to above should be hand delivered to any of the following collection centres:

Collection Center Contact Person Mode of Delivery Telephone No. Fax No.

Ahmedabad................................. Mr. Mahendra Singh Hand Delivery +91-79- 6582878 +91-79- 6584027101, Shatdal Complex, 1st Floor,Opp. Bata Showroom,Ashram RoadAhmedabad 380 009

Baroda/Vadodara...................... Mr. J P Mehta Hand Delivery +91-265- 2339397 +91-265- 2341639Neelam Apartments88, Sampatrao ColonyB/H Standard Chartered BankAlkapuri, Baroda 390 007

Kolkata......................................... Mr. S K Jhanwar Hand Delivery +91-33- 24767350 +91-33- 2474767477-2A, Hazra Road, 3rd & 5th FloorKolkata 700 029

Mumbai (Andheri)....................... Mr. Ashok Gupta Registered +91-22- 28215235 +91-22- 28350456Sri Venkatesh Bhavan Post orPlot No.27, Road No.11 Hand DeliveryMIDC Area, Andheri EastMumbai 400 093

Mumbai (Fort)................................ Mr. Rajendra G Hand Delivery +91-22- 22691266 +91-22- 22691567C/o Ghia Textile Products Co.Agra Building, 1st Floor, Room 5Above Bank of BarodaUniversity Branch,121, M G Road, FortMumbai 400 001

New Delhi................................... Mr. D C Verma Hand Delivery +91-11- 26384909 +91-11- 26384907W-40, Okhla Industrial Area +91-11- 26384910/11Phase II, New Delhi 110 020

Pune......................................... Mr. Pramod N. Hand Delivery +91-20- 26129597 +91-20 -26129597116/118, Akshay Complex RanadeOff Dhole Patil RoadNear Ganesh MandirPune 411 001

Chennai....................................... Mr. N Swaminathan Hand Delivery +91-44- 25240121 +91-44- 25223306New No.118 Old No.591st Floor, Moore StreetGeorge Town, Chennai 600 001

Note:

A. Documents will be hand delivered at the aforesaid Collection Centres

B. Registered Post / Courier only at MCS Andheri

C. Timings : Mondays to Fridays between 10.00 am to 1.00 pm & 2.00 pm to 4.00 pmSaturdays between 10.00 am to 1.00 pmClosed on Sundays and Holidays

Applicants may send their documents only by Registered Post, at their own risk, if not hand delivered, to the Registrar atMCS Limited, Unit: FAL Open Offer, Sri Venkatesh Bhavan, Plot No. 27, Road No.11, M.I.D.C., Andheri (East), Mumbai –400 093, India,Phone: +91 22 2821 5235; Fax: +91 22 2835 0456; Email: [email protected] (Contact Person: Mr. AshokGupta) during business hours indicated above, other than on holidays.

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(g) Payment of consideration will be made by crossed account payee cheques /demand drafts and sent by registered postand /or courier in case of consideration amount exceeding Rs.1,500/- (Under Certificate of Posting otherwise) to thoseshareholders whose share certificates and other documents are found in order and accepted by Acquirer. All cheques/demand drafts will be drawn in the name of the first holder, in case of joint registered holders.

(h) In case of physical shares, the Registrar to the Offer will hold in trust the share certificates, Form of Acceptance dulyfilled in and the transfer deed/s on behalf of shareholders of FAL who have accepted the Offer, till the cheques /drafts forthe consideration and/or the share certificates are posted.

(i) In case of dematerialised shares, the shares would reside in the Special Depository Escrow Account as mentionedabove. The Registrar to the Offer will debit the Special Depository Escrow Account to the extent of payment ofconsideration made by the Acquirer and give instructions for credit of the beneficial account of Acquirer.

(j) Barring unforeseen circumstances and factors beyond their control, the Acquirer intends to complete all formalitiespertaining to the purchase of the shares, including dispatch of consideration to the shareholders who have acceptedthe Offer, by March 21, 2004.

(k) In case of physical shares, to the extent the equity shares are not accepted under the Offer, the rejected Share Certificates,transfer deeds and other documents, if any, will be returned by registered post by the Registrar to the Offer to theshareholders /unregistered owners. For the physical shares accepted under the Offer, the Registrar shall take action fortransferring the shares to Acquirer after the consideration cheques are released to the shareholders concerned.

(l) The Equity Shares held in dematerialised form to the extent not accepted under the Offer will be released to theBeneficial Owner’s Depository Account with the respective DP as per details furnished by the Beneficial Owner in theForm of Acceptance, at the sole risk of the Beneficial Owner. An intimation to that effect will be sent to the BeneficialOwner by Ordinary Post. For the shares lying in the Special Depository Escrow Account, the Registrar shall take actionfor transferring the shares to Acquirer after the consideration cheques are released to the Beneficial Owners.

(m) In terms of Regulation 22(5A) of the Regulations, shareholders desirous of withdrawing their acceptances tendered inthe Offer, can do so up to three working days prior to the date of Closure of the Offer. The withdrawal option can beexercised by submitting the document as per the instructions detailed below, so as to reach the Registrar to the Offerat any of the collection centers mentioned above as per the mode of delivery indicated therein on or before February17, 2004.

l The withdrawal option can be exercised by submitting the Form of Withdrawal as enclosed herewith.

l The shareholders are advised to ensure that the Form of Withdrawal should reach the Registrar to the Offer at anyof the collection centres mentioned above as per the mode of delivery indicated therein on or before the last dateof withdrawal.

l Shareholders should enclose the following:-

For Equity Shares held in demat form:-

Beneficial owners should enclose:

- Duly signed and completed Form of Withdrawal.

- Copy of the Form of Acceptance-cum-Acknowledgement/ Plain Paper Application submitted and theAcknowledgement Slip.

- Photocopy of the delivery instruction slip in “Off-market” mode or counterfoil of the delivery instructionslip in “Off-market” mode, duly acknowledged by the DP.

For Equity Shares held in physical form:-

Registered Shareholders should enclose:


- Copy of the Form of Acceptance-cum-Acknowledgement/ Plain Paper Application submitted and theAcknowledgement Slip.

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- In case of partial withdrawal, Valid Share Transfer form(s) duly signed as transferors by all registeredshareholders (in case of joint holdings) in the same order and as per specimen signatures registered withFAL and duly witnessed at the appropriate place.

Unregistered owners should enclose:


- Copy of the Form of Acceptance-cum-Acknowledgement /Plain Paper Application submitted and theAcknowledgement Slip.

l The withdrawal of equity shares will be available only for the Share Certificates / Shares that have been receivedby the Registrar to the Offer or credited to the Special Depository Escrow Account.

l The intimation of returned shares to the Shareholders will be sent by Registered Post at the address as per therecords of FAL / Depository as the case may be.

l The Form of Withdrawal along with enclosure should be sent to the Registrar to the Offer only.

l In case of partial withdrawal of equity shares tendered in physical form, if the original share certificates arerequired to be split, the same will be returned on receipt of share certificates from FAL. The facility of partialwithdrawal is available only to Registered shareholders.

l Shareholders holding Shares in dematerialised form are requested to issue the necessary standing instruction forreceipt of the credit in their DP account.

l In case of non-receipt of the Form of Withdrawal, the withdrawal option can be exercised by making an applicationon plain paper along with the following details:

- In case of physical shares: Name, Address, Distinctive Nos., Certificate Nos., Folio Number, Number ofShares tendered

- In case of demateralised shares: Name, Address, Number of Shares tendered, DP name, DP ID, beneficiaryaccount number and a photocopy of delivery instructions slip in “off market” mode or counterfoil of thedelivery instruction slip in “off market” mode, duly acknowledged by the DP, in favour of the SpecialDepository Escrow Account.

11 DOCUMENTS FOR INSPECTION

The following documents will be available for inspection to the shareholders of FAL at the Administrative Office of Sterlingat Shapoorji Pallonji Centre, 41/44 Minoo Desai Marg, Colaba, Mumbai – 400 005 between 10 a.m. and 1 p.m. on all workingdays except Saturdays, Sundays and Bank Holidays, till the Offer Closing Date (i.e. February 20, 2004):

1. Certificate of Incorporation, Memorandum and Articles of Association of Sterling, SP, Cyrus, FGL, FEL and WIL

2. Certificate of Incorporation, Memorandum and Articles of Association of FAL

3. Certificate dated October 10, 2003 by N M Raiji & Co. regarding the adequacy of financial resources with Acquirer tofulfill the Offer obligations

4. Audited accounts of FAL for last three financial years

5. Audited accounts of Sterling, SP, Cyrus, FGL, FEL and WIL for last three financial years

6. Copy of documents entered into for creation of 1% cash escrow in favour of the Manager to the Offer

7. Bank Guarantee in favour of the Manager to the Offer

8. Copies of Board Resolutions dated October 10, 2003 of Sterling for making the Offer

9. Copy of letter received from SEBI, Ref. Nos. DCR/MM/O4/405 dated January 07, 2004, in terms of proviso to Regulation18(2)

10. Copy of Public Announcement made on October 11, 2003 and January 17, 2004 by Acquirer and PACs

30

11. Data downloaded from BSE website containing the share price and volume

12. Valuation Certificates dated October 09, 2003 and January 15, 2004 of N M Raiji & Co.

13. Copy of the documents entered into with Depository participant for opening a Special Depository Escrow Account forthe purpose of the Offer

12 RESPONSIBILITY STATEMENT

The Boards of the Acquirer and PACs accept full responsibility for the information contained in this Letter of Offer and alsofor the respective obligations of Acquirer, PACs respectively, as laid down in the Regulations and any subsequent amendmentsmade thereto. Mr. Jimmy Parakh and Ms. Roshen Nentin are severally and jointly responsible for ensuring compliance withthe Regulations. All information contained in this document is as on the date of the Public Announcement, unless statedotherwise. Mr. Jimmy Parakh and/or Ms. Roshen Nentin have been authorised by the Board of Directors of the Acquirer andPACs, to sign the Letter of Offer.

By the Order of the Board,

ForSterling Investment Corporation Private LimitedShapoorji Pallonji & Company LimitedCyrus Investments Limited

sd/-Authorised Signatory

Place : Mumbai

Date : January 16, 2004

Attached : Form of Acceptance-cum-Acknowledgement

Form of Withdrawal

To,MCS LimitedUnit: FAL Open OfferSri Venkatesh Bhavan, Plot No. 27, Road No.11, M.I.D.C., Andheri (East), Mumbai – 400 093, IndiaPhone: +91 22 2821 5235; Fax: +91 22 2835 0456; Email: [email protected]

Sub: Open Offer for the purchase of up to 911,756 paid-up equity shares of Rs 10 each, representing up to 20% of the Voting capitalof FAL Industries Limited at a price of Rs 25/- per equity share of FAL Industries Limited by Sterling Investment Corporation PrivateLimited (“Sterling” or hereinafter referred to as “Acquirer”), along with Shapoorji Pallonji & Co. Limited (“SP”) and Cyrus InvestmentsLimited (“Cyrus”), hereinafter referred to together as “Persons Acting in Concert” or “PACs”

Dear Sir,I/We refer to the Letter of Offer dated January 16, 2004 for acquiring the equity shares held by me / us in FAL Industries Limited. I/We theundersigned, have read the Letter of Offer and accept unconditionally its contents including the terms and conditions as mentionedtherein.For Shares In Physical Form:I/We, accept the Offer and enclose the original share certificate(s) and duly signed valid Transfer Deed(s) in respect of my/our shares asdetailed below:

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION(Please send this Form with enclosures to the Registrars to the Offer at their address given in para 10(f))FORM OF ACCEPTANCE-CUM-ACKNOWLEDGEMENTFrom:

Tel No: Fax No: E-mail:

I/We have done an off market transaction for crediting the shares to the Escrow Account named “MCS Escrow A/c - FAL Open Offer “(the “Special Depository Escrow Account”) with the following particulars:

Depository Participant Name: HDFC Bank Limited Client ID No.: 41223122 DP ID No.: IN300476

Shareholders whose shares are held in beneficiary Account with CDSL have to use an inter–depository delivery instruction slip for thepurpose of crediting their shares in favour of the Special Depositary Escrow Account with NSDL.

I/We note and understand that the Shares would lie in the Special Depository Escrow Account until the time the Acquirer makes paymentof the purchase consideration as mentioned in the Letter of Offer.

Note : All future correspondence, if any, should be addressed to the Registrar to the Offer at the following address:MCS Limited, Unit: FAL Open Offer

Sri Venkatesh Bhavan, Plot No. 27, Road No.11, M.I.D.C., Andheri (East), Mumbai – 400 093, IndiaPhone: +91 22 2821 5235; Fax: +91 22 2835 0456; Email: [email protected]

Contact Person: Ashok Gupta

Tear along this line

DP Name DP ID Client ID Name of Beneficiary No. of Equity Shares

I/We note and understand that the original share certificate(s) and valid share transfer deed will be held in trust for me/us by the Registrarto the Offer until the time the Acquirer pays the purchase consideration as mentioned in the Letter of Offer. I/We also note and understandthat the acquirer will pay the purchase consideration only after verification of the documents and signatures and obtaining ncessaryapprovals.For Shares held in Demat FormI/We hold shares in demat form and accept the Offer and enclose photocopy of the Delivery Instruction duly acknowledged by my/ourDP in respect of my/our equity shares as detailed below:

Sr. No. Distinctive Nos. No. of Equity Shares

From To

(In case the space provided is inadequate, please attach a separate sheet with details.) Total No. of Equity Shares

Certificate No.

1

2

3

4

5

OFFEROpens on : January 22, 2004Closes on : February 20, 2004Last date of withdrawal : February 17, 2004

For NRIs/OCBs/FIIs/Foreign Shareholders:

I/we have enclosed the following information / documents:

o Details of Permanent Account Number

o No Objection Certificate / Tax Clearance Certificate from Income Tax Authorities.

o Previous RBI approvals for holding the shares of FAL Industries Limited hereby tendered in the Offer.

I/We confirm that the equity shares of FAL Industries Limited which are being tendered herewith by me/us under this Offer, are free fromliens, charges and encumbrances of any kind whatsoever.

I/We authorise the Acquirer to accept the shares so offered which it may decide to accept in consultation with the Manager to the Offerand in terms of the Letter of Offer and I/We further authorise the Acquirer to return to me/us, equity shares/share certificate(s) in respectof which the Offer is not found valid / not accepted without specifying the reasons thereof.

I/We authorise the Acquirer or the Manager to the Offer to send by registered post, the draft / cheque in settlement of the amount, to thesole / first holder at the address mentioned below.

Yours faithfully,

Signed and Delivered:

FULL NAMES SIGNATURE(S)

First/Sole Shareholder

Second Shareholder

Third Shareholder

Fourth Shareholder

Address of First/Sole Shareholder

Place: Date :

Note: In case of joint holdings, all shareholders must sign. A corporation must affix its common seal.So as to avoid fraudulent encashment in transit, the shareholder(s) holding shares in physical form should provide details of bankaccount of the first/sole shareholder and the consideration cheque or demand draft will be drawn accordingly. For shares that aretendered in electronic form, the Bank account as obtained from the beneficiary position download to be provided by the depositorieswill be considered and the cheque or demand draft will be issued with the said Bank particulars.

Name of the Bank _________________________________________________________________________________________________________

Branch_____________________________________________ Account Number _____________________________________ Savings/Current

Others (please specify) __________________________________________________________________________

Tear along this line

Income Tax Permanent Account Number

Acknowledgement Slip

Received from Mr/Ms. ______________________________________________________________________Address ______________________________________________________________________________________________________________________________________________________________________________

Form of acceptance cum acknowledgement, # _______________________________ Number of ShareCertificates for __________________________________ Equity Shares/#copy of Delivered instruction to(DP) for ________________________________________ Equity Shares# Delete whatever is not applicable.

Stamp ofCollection

Centre

Signature ofofficial and

Date ofReceipt

Sterling Investment Corporation Private LimitedRegistered Office: 70, Nagindas Master Road, 1st Floor, Mumbai – 400 023, India.

Tel: +91 22 2287 1040; Fax: + 91 22 5633 8176

Folio No.

Sr. No.

FORM OF WITHDRAWALOFFER

Opens on : January 22, 2004Closes on : February 20, 2004Last date of withdrawal : February 17, 2004To,

Sterling Investment Corporation Private Limited70, Nagindas Master Road,1st Floor, Mumbai – 400 023, India.Tel: +91 22 2287 1040; Fax: + 91 22 5633 8176

Dear Sir,

Sub: Open Offer for the purchase of up to 911,756 paid-up equity shares of Rs 10 each, representing up to 20% of the Voting capital ofFAL Industries Limited at a price of Rs 25/- per equity share of FAL Industries Limited by Sterling Investment Corporation PrivateLimited (“Sterling” or hereinafter referred to as “Acquirer”), along with Shapoorji Pallonji & Co. Limited (“SP”) and Cyrus InvestmentsLimited (“Cyrus”), hereinafter referred to together as “Persons Acting in Concert” or “PACs”

I/We refer to the Letter of Offer dated January 16, 2004 for acquiring the equity shares held by me/us in FAL Industries Limited. I/We theundersigned, have read the Letter of Offer and accept unconditionally its contents including the terms and conditions as mentionedtherein and more particularly as mentioned in para 10(m) therein.

I/We hereby consent unconditionally and irrevocably to withdraw my/our equity shares from the Offer and I/We further authorise theAcquirers to return to me/us, the tendered equity share certificate(s)/ share(s) at my/our sole risk.

I/We note that upon withdrawal of my/our equity shares from the Offer, no claim or liability shall lie against the Acquirers/Manager to theOffer/Registrar to the Offer.

I/We note that this Form of Withdrawal should reach the Registrar to the Offer at any of the collection centres mentioned in para 10 (f) ofthe Letter of Offer as per the mode of delivery indicated therein on or before the last date of withdrawal (i.e. February 17, 2004)

I/We note that the Acquirers/Manager to the Offer/Registrar to the Offer shall not be liable for any postal delay/loss in transit of the equityshares held in physical form and also for the non receipt of equity shares held in the dematerialised form in the DP account due toinaccurate/incomplete particulars/instructions.

I/ We also note and understand that the Acquirers will return Original Share Certificate(s), Share Transfer Deed(s) and equity shares onlyon completion of verification of the documents, signatures carried out by FAL Industries Limited and/ or their R & T Agents and beneficiaryposition data as available from the Depository from time to time, respectively.

The particulars of tendered original share certificate(s) and duly signed transfer deed(s) and wish to withdraw are detailed below:

Ledger Folio No.__________________No. of Share Certificate(s) ___________________No. of Equity Shares ____________________

Sr. No. Distinctive Nos. No. of Equity Shares

1.

2.

3.

1.

2.

From To

Total No. of Certificates

(In case of insufficient space, please use an additional sheet and authenticate the same)

Certificate No.

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(Please read para 10(m) of the Letter of Offer carefully)

Tendered

Withdrawal

3.

................................................................................................................... Tear along this line ..........................................................................................

Note : In case of joint holders all must sign. In case of body corporate, stamp of the company should be affixed and necessary Boardresolution should be attached.

Place : __________________________ Date : ______________________

Signed and delivered Full Name(s) Signature(s) Verified and Attested by us. Please affix thestamp of DP (in case of demat Shares)/Bank (in case of physical Shares)

I/We hold the following equity shares in dematerialised Form and tendered the Shares in the Offer and had done an off-market transactionfor crediting the Shares to the “MCS Escrow A/c - FAL Open Offer” (Special Depositary Escrow Account) as per the following particulars:-

DP Name – HDFC Bank Limited Client ID - 41223122 DP ID – IN300476

Please find enclosed a photocopy of the Depository Delivery Instruction(s) duly acknowledged by DP.

The particulars of the account from which my/our equity shares have been tendered are as detailed below:

DP Name DP ID Client ID Name of Beneficiary No. of Equity Shares

I/We note that the equity shares will be credited back only to that Depository Account, from which the equity shares have been tendered andnecessary standing instructions have been issued in this regard.

I/We confirm that the particulars given above are true and correct.

In case of dematerialised equity shares, I/We confirm that the signatures of the beneficiary holders have been verified by the DP as per therecords maintained at their end and the same have also been duly attested by them under their seal.

Yours faithfully,Signed and delivered

1st Shareholder

2nd Shareholder

3rd Shareholder

Acknowledgement Slip

Received from Mr/Ms./M/s ___________________________________________________________________ Form of

Withdrawal, # _____________________________________ Number of Share Certificates for Equity Shares/#copy of

Delivered instruction to (DP) for ___________________________________ Equity Shares

Stamp of Collection Centre

Note : All future correspondence, if any, should be addressed to the Registrar to the Offer at the following address:MCS Limited, Unit: FAL Open Offer

Sri Venkatesh Bhavan, Plot No. 27, Road No.11, M.I.D.C., Andheri (East), Mumbai – 400 093, IndiaPhone: +91 22 2821 5235; Fax: +91 22 2835 0456; Email: [email protected]

Contact Person: Ashok Gupta

# Delete whatever is not applicable.