rama newsprint & papers limited · email: [email protected]; website: for private...

C M Y K

C M Y K

DRAFT LETTER OF OFFERJune 07, 2010

LAST DATE FOR RECEIVING REQUESTSFOR SPLIT FORMS

ISSUE PROGRAMME

ISSUE OPENS ON ISSUE CLOSES ON

[●●●●●] [●●●●●] [●●●●●]

LEAD MANAGER TO THE ISSUE

SMC CAPITALS LIMITED3rd Floor, ‘A’ wing, Laxmi Tower,Bandra Kurla Complex, Mumbai – 400051Tel : +91–22–61383873Fax : +91–22–61383899E-mail: [email protected] Person: Mr. Satish MangutkarWebsite: www.smccapitals.comSEBI Regn. : INM000011427

REGISTRAR TO THE ISSUE

LINK INTIME INDIA PVT. LTD.C-13, Pannalal Silk Mills Compound,LBS Road, Bhandup West, Mumbai – 400 078Tel.: +91-22-25960320Fax: +91-22-25960329E-mail: [email protected] Person: Mr. Pravin KasareWebsite: www.linkintime.co.inSEBI Regn. : INR 000004058

RAMA NEWSPRINT & PAPERS LIMITED(CIN No. L21010GJ1991PLC019432)

(Our Company was incorporated on 10/07/1991 at Mumbai, Maharashtra under Companies Act, 1956. The Registered office of ourCompany was shifted from the state of Maharashtra to the state of Gujarat w.e.f. 11/05/1993 and subsequently new certificate of registrationis obtained from Registrar of Companies, Gujarat.

Registered Office: Village Barbodhan, Tal. Olphad, Dist. Surat -395 005, Gujarat;Tel: +91-026212- 24203; Fax: +91-026212-24206

Corporate Office : Shree Niwas House, 3rd Floor, Hazarimal Somani Marg, Fort, Mumbai – 400 001;Tel: +91-22-22016798; Fax: +91-22-22016803

Contact person: Mr. Girish Sharma, Vice President (F&A) and Company Secretary & Compliance OfficerEmail: [email protected]; Website: www.ramanewsprint.com

FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY

ISSUE OF [ ●] EQUITY SHARES OF RS.10/- EACH AT PREMIUM OF RS. [●] / - PER SHARE (ISSUE PRICE OFRS. [●]/-) AGGREGATING TO AN AMOUNT NOT EXCEEDING RS. 5000.00 LACS ON RIGHTS BASIS TO THEEXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF [●] EQUITY SHARE FOR EVERY[●] EQUITY SHARE (I.E. [●]) HELD ON [●] (THE RECORD DATE).THE ISSUE PRICE IS [●] TIMES THE FACEVALUETHE PROMOTER OF THE OF THE COMPANY IS THE WEST COAST PAPER MILLS LIMITED

GENERAL RISKS

Investment in Equity and Equity related securities involve a degree of risk and investors should not invest any funds inthis issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factorscarefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely ontheir own examination of the Issuer and the Issue including the risks involved. The securities have not been recommendedor approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or the adequacy ofthis document. The attention of investors is drawn to the statement of Risk Factors appearing on page nos. [vii] to [xiv] ofthis Letter of Offer.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Draft Letter of Offercontains all information with regard to the Issuer and the Issue, which is material in context of the Issue, that the informationcontained in this draft Letter of Offer is true and correct in all material respects and is not misleading in any materialrespect, that the opinions and intentions, expressed herein are honestly held and that there are no other facts, the omissionof which makes this document as a whole or any of such information or the expression of any such opinions or intentionsmisleading in any material respect.

LISTING

Our existing Equity Shares are listed on the Bombay Stock Exchange Ltd.(BSE) & The National Stock Exchange of India Ltd(NSE). The Company has received in-principle approval from BSE vide their letter no. [●] dated [●] & from NSE vide theirletter no. [●] dated [●] respectively for listing of the equity share being issued in terms of this Letter of Offer.

TABLE OF CONTENTS

SECTION CONTENTS

PAGE NOS.

I GENERAL ii II RISK FACTORS vii III INTRODUCTION

A Summary 1 B General Information 5

C Capital Structure of Our Company 9 D Objects of the Issue 16 E Basis for Issue Price 20 F Statement of Tax Benefits 22

IV ABOUT US A Industry Overview 32 B Our Business 36 C Key Industry Regulations & Policies 40 D Our History and Corporate Structure 41 E Our Management 45 F Our Promoter & Promoter Group 55 G Dividend Policy 59

V FINANCIAL INFORMATION A Auditor’s Report 60 B Changes in Accounting Policies 87 C Management’s Discussion and Analysis 87

VI LEGAL AND OTHER INFORMATION A Outstanding Litigations and Defaults 92 B Government Approvals 119

VII OTHER REGULATORY AND STATUTORY DISCLOSURES 120 VIII OFFERING INFORMATION

A Terms of the Issue & Issue Procedure 128 IX TERMS OF ARTICLES OF ASSOCIATION 153 X OTHER INFORMATION Material Contracts and Documents for Inspections 168 Declaration 169

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I. GENERAL

PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA Unless stated otherwise, the financial data in this Draft Letter of Offer is derived from our financial information which has been prepared in accordance with Indian GAAP and in accordance with SEBI ICDR. Our current financial year commenced on April 1, 2010 and will end on March 31, 2011. In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off, and unless otherwise specified, all financial numbers in brackets represent negative figures. Unless stated otherwise, industry data used throughout this Draft Letter of Offer has been obtained from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Neither we nor the Lead Manager has independently verified this data and neither we nor the Lead Manager make any representation regarding the accuracy of such data. Accordingly, Investors should not place undue reliance on this information.

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FORWARD LOOKING STATEMENTS We have included statements in this Letter of Offer which contain words or phrases such as “will”, “may”, “is likely to result”, “believe”, “expect”, “continue”, “anticipate”, “estimate”, “intend”, “contemplate”, “future”, “project”, “should”, and similar expressions or variations of such expressions, that are “forward looking statements”. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to: • General economic and business conditions in India and other countries; • Company’s ability to successfully implement its strategy and its growth and expansion plans; • Factors affecting the industry; • Increasing competition in the industry; • Increases in labour costs, raw materials prices, prices of plant & machineries and insurance premium; • Cyclical or seasonal fluctuations in the operating results; • Amount that our Company is able to realize from the clients; • Changes in laws and regulations that apply to the industry; • Changes in fiscal, economic or political conditions in India; • Changes in the foreign exchange control regulations, interest rates and tax laws in India. For a further discussion of factors that could cause our actual results to differ, please refer to the sections titled “Risk Factors”, commencing on page (vii) of this Draft Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither us including our Directors and officials nor the Lead Manager nor any of their respective affiliates or advisors have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI and Stock Exchanges’ requirements, we and Lead Manager shall ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges.

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DEFINITIONS AND ABBREVIATIONS Company/Industry Related Terms

Abbreviation Full Form “RNPL” or “the Company” or “Our Company” or “we” or “us” or “our”

Rama Newsprint & Papers Limited, a company incorporated under the provisions of Companies Act, 1956

Articles Articles of Association of our Company

Auditor The statutory auditors of our Company i.e. Haribhakti & Co.

Board Board of Directors of our Company Directors The directors of our Company Promoter(s) Promoter(s) of our Company i.e. The West Coast Paper Mills

Limited Issue Related Terms

Term Description

Application Supported by Blocked Amount/ ASBA

The application (whether physical or electronic) used by an Investor to make an application authorizing the SCSB to block the amount payable on application in their specified bank account

ASBA Investor An applicant who intends to apply through ASBA process and: holds the shares of our Company in dematerialized form as on

the record date and has applied for entitlements and / or additional shares in dematerialized form;

has not renounced his/her entitlements in full or in part; is not a renounce; is applying through a bank account maintained with SCSBs.

Bankers to the Issue The Bankers to the Issue being [●]

BSE/Designated Stock Exchange

Bombay Stock Exchange Limited

CAF/ Composite Application Form

The form used by an Investor to make an application for allotment of Equity Shares

Equity Shareholders Equity Shareholders of the Company whose name appear as: Beneficial Owners as per the list furnished by the

depositories in respect of Equity Shares held in electronic form and

On the Register of Members of the Company in respect of the Equity Shares held in Physical form

Equity Shares Equity Shares of RNPL of Rs.10/- each

Lead Manager SMC Capitals Limited

Investor(s) The Equity Shareholders of our Company on the Record Date i.e. [●] and renounces

Issue/ Rights Issue The issue of [●] Equity Shares of Rs.10/- each for cash at premium

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Term Description of Rs. [●] (Issue Price Rs. [●]) on rights basis to existing Equity Shareholders of the Company in the ratio of [●] Equity Shares for every [●] Equity Shares held on [●] (Record Date) aggregating not more than Rs.5000.00 lacs as per this Draft Letter of Offer.

Issue Closing Date [●]

Issue Opening Date [●]

Issue Price Rs. [●] per Equity Shares

Letter of Offer/ LOO/ Offer Document

The Letter of Offer dated [●] circulated to the Equity Shareholders and filed with the Stock Exchanges containing inter alia the Issue price and the number of equity shares to be issued and other incidental information.

NSE National Stock Exchange of India Ltd.

Record Date [●]

Renouncee A person who has acquired rights entitlement from equity shareholders.

Rights Entitlement The no. of equity shareholders that a shareholder is entitled to in proportion to his/her shareholding in the Company as on the record date.

Registrar to the Issue Link Intime India Pvt. Ltd.

SAF Split Application Forms

Stock Exchanges The BSE and NSE where our equity shares are presently listed Conventional / General Terms

Term Description

ASBA Application Supported by Blocked Amount

Companies Act The Companies Act, 1956 and subsequent amendments thereto

FY/ Financial year/Fiscal Year The period of 12 months beginning April 1 and ending March 31 of that particular year, unless otherwise stated

IT Act The Income Tax Act, 1961 and amendments thereto

SEBI ICDR The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009and any amendments thereto

Takeover Code Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Wealth-Tax Act The Wealth-Tax Act, 1957 and amendments thereto

MODVAT Modified Value Added Tax Abbreviations

Term Description

BSE Bombay Stock Exchange Limited

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Term Description

CDSL Central Depository Services (India) Limited

DP Depository Participant

ECS Electronic Clearing Service

EGM Extra Ordinary General Meeting

EPS Earnings Per Share

FEMA Foreign Exchange Management Act, 1999 read with rules and regulations there under and amendments thereto

FI Financial Institution

FII (s) Foreign Institutional Investors registered with SEBI under applicable laws.

GDP Gross Domestic Production

GIR Number General Index Registry Number

HUF Hindu Undivided Family

MoU Memorandum of Understanding

NA Not Applicable

NAV Net Assets Value

NEFT National Electronic Fund Transfer

NRE Account Non Resident External Account

NRI(s) Non Resident Indians

NRO Account Non Resident Ordinary Account

NSDL National Securities Depository Limited

P/E Price/Earnings Ratio

PAN Permanent Account Number

PAT Profit After Tax

RBI The Reserve Bank of India

RoC Registrar of Companies, Gujarat

RONW Return on Networth

RTGS Real time gross Settlement

SCSB Self Certified Syndicate Bank(s)

SEBI Securities and Exchange Board of India

TPA Tonnes Per Annum

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II. RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all information in this Draft Letter of Offer, including the risks and uncertainties described below, in evaluating our Company, before making an investment decision. If any of the following risks and uncertainties actually occur, our business, financial condition, results of operations and prospects could suffer, the trading price of our Equity Shares could decline. Additionally, our business operations could also be affected by additional factors that are not presently known to us or that we currently consider as immaterial to our operations. The financial and other implications of material impact of risks concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. However, there are certain risks where the impact is not quantifiable and hence the same has not been disclosed in such risk factors. The following factors have been considered for determining the materiality: 1. Some events may not be material individually but may be found material collectively. 2. Some events may have material impact qualitatively instead of quantitatively. 3. Some events may not be material at present but may have material impact in future. Internal Risk Factors 1. We are involved in various legal proceedings both as plaintiffs and defendants in which we may not

prevail and which could have an adverse impact on us.

Criminal Matter

The charge sheet was filed by CBI in the year 2000 against our Company and some of the officers of our Company and certain officials of the Central Excise Department, Surat, Gujarat. It was alleged that the accused committed criminal misconduct by entering into criminal conspiracy and cheated the Central Excise Department to the tune of Rs. 12,85,33,777/- for claiming MODVAT credit. (for further details please refer page no.92) Subsequently, vide CESTAT Order No. A/1746 to 1754/WZB/06 C-III (EB) dated 30/08/2006 and Order of the Excise Commission Dated 30/01/2008, the Company was allowed to claim the disputed MODVAT credit. Our Company preferred a discharge application and the same has been disallowed. To challenge the said order disallowing discharge, our Company has filed Criminal Revision Application No. 476 of 2009 in Gujarat High Court. The matter is pending for hearing. The next date for listing is 23/06/2010.

Other Matters

Besides above we are parties to various legal proceedings incidental to our business and operations. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. Such litigation could divert management time and attention, and consume financial resources in their defense or prosecution. No assurance can be given that we will prevail in the proceedings. In addition, should any new developments arise such as changes in Indian law or rulings against us by the regulators, appellate courts or tribunals, we may need to make provisions in our financial statements, which could increase our expenses and our current liabilities.

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A classification of the legal proceedings and the monetary amount involved in these cases are mentioned in brief below:

Sr. no

Particulars No. of cases/disputes

Approx .amount involved where

quantifiable (Rs. in lacs)

1. Criminal 1 Nil 2. Civil 9 1376.58 3. Income Tax 3 905.74 4. Central Excise and Customs 3 168.71 5. Labour 5 Back wages 6. Arbitration 1 2483.15 7. Others 2 0.09

For more information please refer to the section “Outstanding Litigations and Defaults” commencing on page no. 92 of this Draft Letter of Offer.

2. We have contingent liabilities and our financial condition and profitability could be adversely

affected if any of these contingent liabilities materialize

As per the audited accounts as of 31/03/2010, we have contingent liabilities of Rs.8449.01 Lacs, determination of which against us may adversely affect the financial position of our Company. The details of contingent liabilities as per the audited accounts are as follows:

(Rs. in lacs) Particulars As at 31/03/2010

Water Charges 1159.38Stamp Duty 130.75Electricity charges for Intake well 81.95Arbitration (Jessop & Co.) 139.05Excise and Custom Duty 6.71Intake well rent 5.63Bank Guarantee 1158.04Unexpired Letter of Credit 3697.62Arrears of Cumulative Preference Dividend 2069.95

Total 8449.01

3. We had faced financial difficulties in the past and could not pay our debt obligations and we went into Corporate Debt Restructuring. We also reduced our paid up capital to streamline the capital structure.

We had incurred losses since its incorporation due to adverse market conditions, low import duty on newsprint and high cost of raw materials and overheads. Till September 2003, we had accumulated losses of Rs. 10224.74 lacs. Consequently our Company has defaulted to the Financial Institutions and Banks against both principal and interest on the term loans availed and privately placed debentures. The Company also defaulted to Public Debenture holders. To revive the operations, we have approached the Corporate Debt Restructuring (CDR) Cell for restructuring of our debts. The restructuring of debt was approved on 27/09/2003. The total outstanding debts of Rs 43404 lacs (as on 30/09/2003) were realigned to a serviceable Debt of Rs.21000 lacs and balance was waived. Subsequently, in September 2003, The West Coast Paper Mills

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Ltd. has acquired controlling stake in our Company and the management of our Company has been changed. In addition, to rectify the asset – liability mismatch to the extent of accumulated losses of Rs.6493.55 lacs and to make the capital structure of the Company conducive to future capital expansion plans, we undertook a proposal to reduce the share capital and the same has been approved by the Hon’ble High Court of Gujarat, Ahmedabad vide their order dated 05/05/2006. We had successfully implemented CDR scheme and came out of CDR in November 2006. We had also redeemed all public debentures along with due interest.

4. We have incurred losses to the extent of Rs. (2727.09) lacs & Rs. (5664.56) in F.Y. 2008-09 & F.Y. 2009-

10 respectively. We have incurred losses to the extent of Rs. (2727.09) lacs & Rs. (5664.56) in F.Y. 2008-09 & F.Y. 2009-10 respectively. The losses are mainly on account of fluctuation in prices of newsprint, competition from cheap imports and fluctuation in raw material price. Our inability to obtain and/or maintain sufficient cash flow in future, credit facilities and other sources of funding, in a timely manner, or at all, to meet our requirement of working capital or pay our debts, could adversely affect our operations, financial condition and profitability. We have taken various steps to improve financial strengths of the Company such as reschedulement of term loan, conversion of excess working capital borrowings into working capital term loan etc. Besides this, we are also planning to unlock the potential of the surplus land available with the our Company at our plant (for further details please refer section “Our Business” on page 36)

5. Increased costs of raw materials and interruption in their availability may affect our operating costs. Our business is significantly affected by the availability, supply, cost and quality of raw materials, which exposes us to market demand and supply fluctuations. Our principal raw material is recycled wastepaper and pulp. The prices and supply of these and other raw materials depend on factors beyond our control, which include economic conditions, competition, consumer demand, production levels, transportation costs and import duties. We do not have long-term supply contracts with respect to our raw material requirements and the supply of raw materials may not adequately meet any increased demands. Any significant change in the cost structure or disruption in the supply may affect our operations. Moreover, if we are unable to increase the cost of our products/ services commensurate with the increase in the cost of our raw materials, our profitability may be adversely affected. However we generally keep a strict vigil on the movement of the prices of raw material i.e. pulp, wastepaper & other raw materials to take strategic decisions regarding sourcing of these materials i.e. either from domestic or international market. Generally we buy more quantity of primary raw material in case of uptrend in the prices of raw material and vice versa.

6. We imports about 50%- 60% of our raw material requirements which is prone to foreign exchange

fluctuations.

Our functional currency is the Indian rupee although we transact a portion of our business in other currencies and accordingly face foreign currency exposure through our purchases from overseas suppliers and sales to overseas customers, in various foreign currencies. Accordingly, changes in exchange rates may have a material adverse effect on our gross margin and net income, and may

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have a negative impact on our business, financial condition and results of operations. However, in our view, the corresponding effect of the same on imported newsprint prices (which will in turn influence the selling prices of domestic newsprint) will mitigate the negative impact of exchange fluctuations to a great extent.

7. An in-cordial relationship with labour may subject our Company to industrial unrest, slowdowns,

and increased wage costs.

India has stringent labour legislation that protects the interests of workers, including legislation that sets forth detailed procedures for the establishment of unions, dispute resolution and workers removal and legislation that imposes certain financial obligations on workers upon retrenchment. Our workers have formed unions to safeguard their interests. We have already faced disruption in our manufacturing facility in January-February 2010 due to labour strike. There can be no assurance that such things will not happen in future. Any such in-cordial relationships with our workers may have adversely impact on our business. However we had entered into a long-term settlement on 22/02/2010 with our employee unions assuring industrial peace.

8. Our ability to generate cash depends on many factors beyond our control, and we may not be able to

generate the cash required to service our debt. Our ability to make payments on any indebtedness and to fund our operations will depend on our ability to generate cash in the future. Our future financial results may be subject to substantial fluctuations due to many factors, including our future operating performance. If we are unable to meet our debt service obligations or fund our other liquidity needs, we may need to refinance all or a portion of our debt before maturity, seek additional equity capital or, subject to restrictions in our debt instruments or sell assets. However, we cannot assure you that, if we are unable to pay our debt, we will be able to refinance it, obtain additional equity capital or sell assets, in each case on commercially reasonable terms, or at all, or otherwise to fund our liquidity needs.

9. The Objects of the Issue for which funds are being raised has not been appraised by any Bank or

Financial Institution Objects of the Issue for which the funds are being raised have not been separately appraised by any Bank or Financial Institution. However the present Rights issue is for the purposes of financing our long term working capital requirements. Bank of India, the leader of the consortium of banks from whom we have availed working capital facilities have assessed and approved the working capital requirements of the Company.

10. We are subject to restrictive covenants in certain debt facilities provided to us There are restrictive covenants in agreements our Company has entered into with certain banks and financial institutions for short-term loans and long-term borrowings. These restrictive covenants requires to seek the prior permission of the said banks / financial institutions for various activities, including amongst others, alteration of the capital structure, raising of fresh capital, incurring expenditure on new projects, entering into any merger/amalgamation/ restructuring, change in management, payment of dividends etc. There can be no assurance we will be able to comply with these financial or other covenants or that we will be able to obtain the consents necessary to take the actions we believe are necessary to operate and grow our business.

However the present Rights issue is for the purposes of financing our long term working capital requirements. Bank of India, the leader of the consortium of banks from whom we have availed working capital facilities, have assessed and approved the working capital requirements of the

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Company. The management does not foresee any problem on account of any restrictive covenants as far as present rights issue is concerned.

11. The Paper Industry in which we operate is cyclical in nature

Paper industry has linear relationship with GDP growth rate. As the GDP growth rate grows during economic development phase, the demand for paper also goes up thereby leading to increase in paper prices. When the paper prices go up alongwith demand, the manufacturers are encouraged to expand their capacity in order to take advantage of the booming prices. As long as the increase in supply matches the growth in demand and the economy continue to grow, the prices remain firm. However, as and when there is slow down in the growth of economy, the demand also reduces, creating cut throat competition among the manufacturers due to excess supply and forcing them to reduce the prices. Once the down cycle is over and the economy starts recovering, the demand surges and due to lesser supply available the prices again show upward movement.

12. Our insurance coverage may not adequately protect us against certain operating hazards and this may have an adverse effect on our business. While we believe that we have taken adequate insurance cover to protect against all potential losses, there can be no assurance that any claim under our insurance policies will be honoured fully or promptly. Accordingly, to the extent we suffer loss or damage that is not covered by insurance or which exceeds our insurance coverage, our business, financial condition and results of operations may be adversely affected.

13. We operate in highly competitive markets in which our performance could be affected if we were unable to respond to rapid changes in the market, consumer preferences or other competitive factors. The businesses that we are engaged in are highly competitive and we have competitors in our business on a local, regional, national and international level. Maintaining or increasing our market share will, amongst other things, depend upon our ability to anticipate and respond to various competitive factors affecting the business, including our ability to improve our manufacturing process and technique, responding to pricing strategies of our competitors and adopting changes in technology efficiently. Increased competition may reduce the growth in our customer base, reduce the profit margins and our market share. Failure by us to compete effectively could have a material adverse effect on our business and profitability.

14. Our management team and other key personnel are critical to our continued success and the loss of any such personnel could harm our business. Our future success substantially depends on the continued service and performance of the members of our management team and other key personnel. These personnel possess technical and business capabilities that are difficult to replace. If we lose the services of any of these or other key personnel, we may be unable to replace them in a timely manner, which may affect our ability to continue to manage our business.

15. The name of one of our Group Company i.e. Fort Gloster Industries Limited (“FGIL”) is appearing on the defaulter list of the Reserve Bank of India. FGIL is also a sick Company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985

The Board for Industrial and Financial Reconstruction (BIFR) at the hearing held on 10/09/2001, declared FGIL as a sick industrial company within the meaning of Clause (o) of Section 3(1) of the

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Sick Industrial Companies (Special Provisions) Act, 1985 and appointed Industrial Development Bank of India (IDBI) as the Operating Agency. In terms of the above Order, FGIL submitted various rehabilitation proposals from time to time to IDBI but the same were not acceptable to the Operating Agency and the Banks. BIFR at the hearing held on 18/11/2003 ordered publication of advertisement for change of management. FGIL filed a writ petition in the Hon’ble High Court at Calcutta and obtained stay against operation of the said Order of BIFR. In a hearing held on 02/03/2010 BIFR ordered that if the Hon’ble Calcutta High Court permits withdrawal of the writ petition, IDBI may go ahead with the process of change of management of FGIL. Accordingly FGIL has withdrawn its petition of stay on change of management and since been passed. The advertisement by the IDBI for Change of Management has not yet been made.

The name of FGIL is also appearing on the defaulter list of the Reserve Bank of India for non payment of dues to the Bankers.

16. Some of our Promoter Group Companies have incurred losses during the last three years

The following are the Promoter Group companies having incurred losses during any of the last three years:-

Sr. Name of the Promoter Group company Net Profit/ (Loss)(Rs in Lacs) FY 2008-09 FY 2007-08 FY 2006-07

1 The KIL Kotagiri Tea & Coffee Estates Company Ltd.

11.66 (18.66) 27.94

2 West Bengal Properties Ltd. 0.15 (0.79) (2.92)3 Speciality Coatings and Laminations Ltd. (343.86) (467.20) (319.92)4 Fort Gloster Ltd. (2011.85) (1736.89) (1701.77)5 Union Company Ltd. (0.63) 11.24 1.426 The Diamond Company Ltd. 1.46 2.43 (80.43)7 Shree Satyanarayan Properties Pvt.Ltd. 1.05 1.68 (0.04)8 Siddhi Trade & Holdings Pvt. Ltd. 0.14 1.74 (0.03)9 Bahubali Paper Mills Ltd. (8.14) 6.06 (0.07)

17. Our Promoters & Promoter group companies are involved in various legal proceedings

Our Promoters & Promoter Group companies are parties to various legal proceedings. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. For details please refer section ‘Outstanding Litigations & Defaults’ commencing on page no.92 of this Draft Letter of Offer.

External Risk Factors 1. The extent and reliability of Indian infrastructure could adversely impact our results of operations

and financial condition.

India’s physical infrastructure is less developed than that of many developed nations and problems with its port, rail and road networks, electricity grid, communication systems or any other public facility could disrupt our normal business activity. Any deterioration of India’s physical infrastructure would harm the national economy, disrupt the transportation of goods and supplies, and add costs to doing business in India. These problems could interrupt our business operations, which could have a material adverse effect on our results of operations and financial condition.

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2. Natural disasters in India could have a negative impact on the Indian economy and cause our

Company’s business to suffer.

India has experienced significant natural disasters in recent years such as earthquakes, tsunami, flooding and drought. The extent, location and severity of these natural disasters determine their impact on the Indian economy and our Company’s business. Further, natural disasters could reduce economic activity in India generally, and adversely affect our Company’s business.

3. Changes in Indian Government policies could adversely affect economic conditions in India, and

thereby adversely impact our results of operations and financial condition.

Our production facility is located in India, and a significant portion of its revenue is derived from sales of its products in the Indian market. Consequently, our Company, and the market price and liquidity of the Equity Shares, may be affected by changes in the policy of the Government of India. For example, the imposition of foreign exchange controls, rising interest rates, inflation, increases in taxation or the creation of new regulations could have a detrimental effect on the Indian economy generally and us in particular.

4. Financial instability in other countries, particularly countries with emerging markets, could disrupt

Indian markets and our business and cause the trading price of our Equity Shares to decrease.

The Indian financial markets and the Indian economy are influenced by economic and market conditions in other countries, particularly emerging market countries in Asia. Further the current financial turmoil in the United States & Europe has had a significant impact on the Indian economy as well as the stability of the Indian Markets. Financial instability in other countries such as Latin America, Russia and elsewhere in the world in recent years have had limited impact on the Indian economy and India was relatively unaffected by financial and liquidity crises experienced elsewhere. Although economic conditions are different in each country, investors´ reactions to developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss of investor confidence in the financial systems of other emerging markets may cause volatility in Indian financial markets and, indirectly, in the Indian economy in general. Any worldwide financial instability could also have a negative impact on the Indian economy. This in turn could negatively impact the movement of exchange rates and interest rates in India. In short, any significant financial disruption could have an adverse effect on our business, future financial performance and the trading price of the Equity Shares.

5. Any downgrading of India´s debt rating by an international rating agency could have a negative

impact on our business and the trading price of the Equity Shares.

Any adverse revisions to India´s credit ratings for domestic and international debt by international rating agencies may adversely affect our ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have an adverse effect on our ability to obtain financing to fund our growth on favourable terms or at all and, as a result, could have a material adverse effect on our results of operations and financial condition.

6. Shareholders will bear the risk of fluctuations in the price of our Equity Shares.

The price of our Equity Shares on the Indian stock exchanges may fluctuate after this issue as a result of several factors, including: volatility in the Indian and global securities market; operations and performance of our Company; performance of our competitors; adverse media reports on our Company; changes in the estimates of our Company’s performance or recommendations by financial

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analysts; significant developments in India’s economic liberalization and deregulation policies; and significant developments in India’s fiscal and environmental regulations. There can be no assurance that the prices at which our Equity Shares are initially traded will correspond to the prices at which our Equity Shares will trade in the market subsequently.

Notes to the Risk Factors: 1. Issue of [●] Equity Shares of Rs. 10 each at a premium of Rs. [●] per Equity Share not exceeding

Rs.5000 Lacs in the ratio of [●] Equity Share for every [●] Equity Shares held on the Record Date i.e. [●]

2. The networth of our Company was Rs. 22144.44 lacs as of 31/03/2010, as per audited financial

statement.

3. For details of group companies with having business interest or other interests in our Company please refer to section “Our Promoter & Promoter Group” on page 55.

4. For details of transactions by our Company with the Group Companies during the last one year preceding the date of filing of this Draft Letter of offer, the nature of transactions and the cumulative value of transactions, please refer to section “Financial Information - Related party transaction” on page no. 74.

5. The investors may contact Lead Manager to the Issue for any complaint pertaining to the Issue.

6. For details of transaction during the past 6 months on the stock exchanges in the equity shares of our Company by the Promoters/Promoter group/Directors of the Company please refer page 13.

1

III. INTRODUCTION

A. Summary

Industry Summary Paper plays a key role in communication and as a packaging material. Demand for paper is closely linked to prevalent economic conditions. A strong economic growth boosts demand for paper and vice versa. India accounts for nearly 15% of the world population; it consumes only 1% of the global paper production. Most of the the Indian Paper Industry is broadly categorized into writing and printing, industrial and newsprint segments. Of the total paper demand in 2008-09, industrial paper accounted for about 47%, writing and printing and newsprint accounted for 30% and 20%, respectively and specialty paper accounted for 3% (source: CRISIL Research, Industry). The Indian paper industry is highly fragmented. According to estimates, the total number of mills varies from 500 to over 1,000. Wood and wood-based pulp form the major raw materials required to manufacture writing and printing paper & wastepaper is a key input in the production of packaging paper, newsprint and paperboards. ‘Newsprint’ is a special type of paper used for printing newspaper and magazine. The Indian newsprint industry’s market size in 2008-2009 was estimated at around Rs. 60.6 billion, with a capacity of 1.167 thousand tones. Total market size of the domestic paper industry is around Rs. 320.6 billion. Thus, newsprint accounts for around 19 percent of the total market. Market size of the newsprint industry has grown over the last few years from around Rs. 32 billion in 2003-04 to Rs. 60.6 billion in 2008-09. However, Imports account for nearly 55-60 percent of it (source: CRISIL Research, Industry). As per recent report from CRISIL Research, paper industry demand is expected to grow at a CAGR of 6.8% between 2008-09 and 2013-14.

With the continuous growth in the GDP and improvements in literacy rate and standard of living, the demand for paper and paper products is growing at the annual rate of 7 - 8%. As per CRISIL Research’s estimates the demand for newsprint is to increase by 8.6 % CAGR and demand for writing & printing paper is to increase by 6.5% CAGR from 2008-09 to 2013-14. The increase in demand for newsprint will be in line with the expected growth in circulation of print media, particularly vernacular newspapers and demand for writing & printing paper will be mainly driven by Government’s education initiatives. (source : CRISIL Research, Industry).

Business Summary We are one of the India’s largest private sector Newsprint and Writing & Printing paper manufacturing Company at a single location in India and has a significant contribution towards total newsprint production in India (source: CRISIL Research, Industry). We have manufacturing plant spread over more than 400 acres of land in Village Barbhodhan, Gujarat with a installed capacity of 1,32,000 tpa. The plant is equipped to manufacture Newsprint and Printing & Writing Paper from Virgin Pulp as well as Non-Conventional raw materials namely; recycled fibre. We have also demonstrated deep commitment to the cause of preserving the environment, by setting up a state of the art facility for manufacture of Environment friendly Chlorine free paper from recycled fibre. Our captive power plant and captive water works, ensures uninterrupted power and water supply leading to non-stop production. Another contributing feature is the in-house engineering workshop for

2

preventive maintenance and repairs leading to continuous improvisation of process, quality and productivity. We also have a strong Research & Development backup aided by a qualified and committed workforce of more than 500 personnel. Our Competitive Strengths Startegic location of our plant We have a strategically located plant at village Barbodhan, Dist. Surat, Gujarat. Our plant is spread over more than 400 acres of land. It has close proximity to both Navasheva (Mumbai) & Magdalla (Surat) ports and is well connected with rail & road network. Moreover our plant is also close to major paper market in western region which has strategic importance when it comes to import of raw material as well as distribution of finished products. Swing production facility The machines at our plant are capable of producing both newsprint as well as Writing & Printing grade paper. We can take advantage of this swing facility on these machines as per market demand. Our Strategy To unlock the potential of surplus land available with us We intend to unlock the potential of the surplus land of more than 250 acres available at our plant location. To implement this strategy, we have already completed our study for analyzing the suitability of the said land for any industrial/ real estate development including developing a Special Economic Zone. We have appointed agencies to prepare feasibility report for the project of developing the said surplus land. To enter into new strategic partnerships We intend to build partnerships with key international newsprint manufacturers to take advantage of operational efficiencies and resultant economies of scale. We believe that our experience in newsprint and printing paper manufacturing has uniquely positioned us to partner international newsprint manufacturers and offer them the cost advantage associated with India. We believe that our strategic partnerships with international manufacturers would enable us to emerge as a major player in the paper outsourcing business. Issue Details Issue of [●] equity shares of Rs. 10 each for cash at a premium of Rs. [●] per equity share aggregating to an amount not exceeding Rs. 5000.00 lacs to the equity shareholders on rights basis in the ratio of [●] equity shares for every [●] equity shares held on the record date i.e. [●] (the “Issue”). The issue price of each equity share is [●] times the face value of the equity share.

3

Summary of Financial Data

Statement of Balance Sheet (Rs. in Lacs)

Particulars As at 31-Mar-10

As at 31-Mar-09

As at 31-Mar-08

As at 31-Mar-07

As at 31-Mar-06

A Fixed Assets Gross Block 71,154.88 70,334.42 70,081.52 67,621.11 66,904.96 Less : Depreciation 36,905.87 33,444.83 30,018.38 26,585.11 23,288.66 Net Block 34,249.01 36,889.59 40,063.14 41,036.00 43,616.70 Capital Work-in-progress 176.53 874.56 886.73 2,648.15 660.61 Total Fixed Assets 34,425.54 37,764.15 40,949.87 43,684.15 44,277.31 B Investments 1.63 1.63 1.63 1.68 1.68 C Deferred Tax Asset 6,168.20 5,019.02 2,874.71 2,929.83 4,147.16

D Current Assets, Loans and Advances :

Inventories 7,016.28 8,820.53 8,165.66 4,356.26 4,536.90

Sundry Debtors 4,122.77 3,918.38 4,779.64 5,350.29 5,035.62 Cash & Bank Balance 101.71 47.09 37.27 79.23 88.46

Loans and Advances 3,527.91 3,234.13 3,441.91 2,764.36 2,530.15 Total Current Assets 14,768.67 16,020.13 16,424.48 12,550.14 12,191.13 E Total Assets (A+B+C+D) 55,364.04 58,804.93 60,250.69 59,165.80 60,617.28

F Liabilities and Provisions

Secured Loans 21,183.10 19,842.94 21,234.64 22,127.95 24,069.23 Unsecured Loans 2,429.79 2,429.79 2,429.79 2,429.79 2,646.46

Current Liabilities and Provisions 9,608.70 8,725.20 6,052.17 4,180.56 5,926.42

Total Liabilities and Provisions 33,221.59 30,997.93 29,716.60 28,738.30 32,642.11

G Net Worth (E-F) 22,142.45 27,807.00 30,534.09 30,427.50 27,975.17 Represented by Shareholders’ Funds : H Share Capital 5,815.80 5,815.80 5,815.80 5,815.80 23,263.21 Reserves 22,719.34 22,719.34 22,719.34 22,719.34 11,765.48

Less:- Revaluation Reserve - - - - -

I Total 28,535.14 28,535.14 28,535.14 28,535.14 35,028.69

J Misc. Expenditure (not written off) - - - - -

K Accumulated Profit/(Loss) (6,392.69) (728.14) 1,998.95 1,892.36 (7,053.52)

Net Worth (H+I-J+K) 22,142.45 27,807.00 30,534.09 30.427.50 27,975.17

4

Statement of Profit & Losses (Rs. in Lacs)

Year Ended 31-Mar-10

Year Ended31-Mar-09




INCOME : Sales:- Sale of Products manufactured by the Company 31,222.78 34,228.45 35,648.37 35,210.90 32,436.86

Total Gross Sales 31,222.78 34,228.45 35,648.37 35,210.90 32,436.86 Less:- Excise Duty on Sales 311.06 6.42 71.64 12.65 226.22 Net Sales 30,911.72 34,222.03 35,576.73 35,198.25 32,210.64 Other Income 581.95 452.88 365.50 384.12 268.47 Total Income (a) 31,493.67 34,674.91 35,942.23 35,582.37 32,479.11 EXPENDITURE : (Increase) / Decrease in Inventories 2,918.49 (3,494.79) (988.27) (476.90) 1,127.40

Raw Materials Consumed 19,402.79 26,018.76 20,850.73 18,438.50 18,261.98 Manufacturing Expenses & Other Exps. 9,280.49 9,949.94 9,062.15 7,925.70 8,207.97

Interest & Lease Rent 3,241.56 3,620.12 3,402.47 2,705.27 2,242.79 Depreciation 3,464.08 3,435.28 3,433.40 3,299.91 3,199.67 Total Expenditure (b) 38307.41 39,529.31 35,760.48 31,892.48 33,039.81 Net Profit /(Loss) before tax and Extraordinary Items (a-b) (6,813.74) (4,854.40) 181.75 3,689.89 (560.70)

(Add)/Less: Extraordinary Items - - - - 28.25 Net Profit / (Loss) before Tax (6,813.74) (4,854.40) 181.75 3,689.89 (532.45) Less: Taxation(FBT) - 17.00 20.05 20.23 16.11 Less: Deferred Tax Liability / (Assets) (1,149.18) (2,144.31) 55.11 1,217.34 11.39

Net Profit /(Loss) after Tax (5,664.56) (2,727.09) 106.59 2,452.32 (559.95) Add : Balance brought forward (728.13) 1,998.95 1,892.36 * (559.96) (6,493.57) Profit/ (Loss) Available for Appropriation (6,392.69) (728.14) 1,998.95 1,892.36 (7,053.52)

APPROPRIATIONS : - - - - - Balance carried to Balance Sheet (6,392.69) (728.14) 1,998.95 1,892.36 (7,053.52) BROUGHT FORWARD LOSS FROM 31-Mar-06 (7,053.52) Less: Adjusted against capital reduction (See note given in Annexure 5 -Capitalisation Statement)

6,493.56

Balance (559.96) Note: The total reduction of share capital of Rs. 17,447.41 lacs, pursuant to the approval of the share holder of the company and Gujarat high court order dated 05/05/2006, has been adjusted partly against the debit balance in the Profit and Loss a/c amounting to Rs. 6,493.56 lacs as on 31/03/2005 and for the balance of the cancelled capital a capital reserve of Rs. 10,953.85 has been created.

5

B. General Information Dear shareholder(s), The Board of Directors of our Company at its meeting held on 07/01/2010 has decided to raise funds by way of Rights Issue. The Board of Directors in their meeting held on [•] has decided to make the following offer to the Equity Shareholders of our Company, with a right to renounce: ISSUE OF [●] EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PREMIUM OF RS. [●] PER EQUITY SHARE AGGREGATING TO AN AMOUNT NOT EXCEEDING RS. 5000.00 LACS TO THE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [●] EQUITY SHARES FOR EVERY [●] EQUITY SHARES HELD ON THE RECORD DATE i.e. [●] (THE “ISSUE”). THE ISSUE PRICE OF EACH EQUITY SHARE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARE. For details in payment methods see ―Terms of the Issue & Issue Procedure on page 127. Registered office of Our Company Rama Newsprint & Papers Limited Village: Barbodhan, Taluk: Olpad District : Surat; Gujarat - 395005 Corporate Identity No.: L21010GJ1991PLC019432 Corporate Office of Our Company Shree Niwas House, 3rd Floor, Hazarimal Somani Marg, Fort, Mumbai 400 001 Tel: +91-22-22016798; Fax: +91-22- 22016803 Email: [email protected]; Website: www.ramanewsprint.com Address of the RoC Registrar of Companies, Gujarat ROC Bhavan, Opp Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad - 380013 The Equity Shares of our Company are listed on Bombay Stock Exchange Limited and the National Stock Exchange of India Ltd. Important

1. This Issue is pursuant to the resolution passed at Board Meeting held on 07/01/2010 & [●].

2. This Issue is applicable to such Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the electronic form and on the Register of Members of the Company at the close of business hours on the [●] (Record Date)

3. Your attention is drawn to the section on risk factors starting from page no. (vii) of this Draft Letter of Offer.

6

4. Please ensure that you have received the CAF with this Letter of Offer.

5. Please read the Letter of Offer and the instructions contained herein and in the CAF carefully before filling in the CAFs. The instructions contained in the CAF are an integral part of this Letter of Offer and must be carefully followed. An application is liable to be rejected for any non compliance of the Letter of Offer or the CAF.

6. All enquiries in connection with this Letter of Offer or CAFs should be addressed to the Registrar to the Issue, quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned in the CAFs.

7. The Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of the draft Letter of Offer with SEBI.

8. All the legal requirements as applicable till the filing of the Draft Letter of Offer with the Designated Stock Exchange have been complied with.

Board of Directors Our Board of Directors comprises of:

Name of the Director Category/Designation Mr. Shree Kumar Bangur Chairman – Non Executive Mr. Virendra Bangur Vice Chairman – Non Executive Mr. Kanhaiya Lal Chandak Director – Non Executive Mr. Vaishnav Das Bajaj Executive Director Mr. M. P.Taparia Independent Director Mr. Sudarshan Somani Independent Director Mr. Haigreve Khaitan Independent Director Mr. Janak Mehta Independent Director Lt. Gen (Retd.) Ashok Kapur Independent Director Mr. S. Doreswamy Independent Director

For further details of the Directors, see “Our Management” on page 45 Issue Management Team

Company Secretary & Compliance Officer

Mr. Girish Sharma Vice President (F & A) and Company Secretary Rama Newsprint & Papers Ltd. Shree Niwas House, 3rd Floor, Hazarimal Somani Marg, Fort, Mumbai 400 001 Tel: +91-22-22016798; Fax: +91-22- 22016803 Email: [email protected]; Website: www.ramanewsprint.com Investors can contact the Compliance Officer in case of any pre-issue or post-issue related problems such as non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary account or refund orders etc.

7

Legal Advisors to the Offer Paras Kuhad & Associates, Advocates, 903, Peninsula Towers, Wing – A, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013 Tel: +91-22-66695959 Fax: +91-22-66695999 Email:[email protected] Bankers to the Company

Bank of India Bank of India Bldg., 4th Floor, 70-80, M. G. Road, Fort Mumbai – 400 001 Tel: +91-22-22623656 ; Fax: +91-22-22671718

Oriental Bank of Commerce 181-A, Maker Tower ‘E’, 18th Floor, Cuffe parade, Mumbai – 400 005 Tel: +91-22-22154656; Fax: +91-22-22153533

Central Bank of India 1st Floor, MMO Building, Fort, Mumbai – 400 023 Tel: +91-22-40785858; Fax: +91-22-40785840

Axis Bank Maker Tower ‘F’, 13th Floor, Cuffe parade, Mumbai – 400 005 Tel: +91-22-67074407 Fax: +91-22-22186944

Lead Manager to the Issue SMC Capitals Limited 3rd Floor, A-Wing, Laxmi Towers, Bandra Kurla Complex, Mumbai – 400051 Tel: +91–22– 61383838; Fax: +91–22– 61383899 E-mail: [email protected] Contact Person: Mr. Satish Mangutkar Website: www.smccapitals.com SEBI Regn: INM000011427 Registrar to the Issue Link Intime India Pvt. Ltd. C-13, Pannalal Silk Mills Compound, LBS Road, Bhandup West, Mumbai – 400 078 Tel.: +91-22-2596 0320; Fax: +91-22-2594 0329 E-mail: [email protected] Contact Person: Mr. Pravin Kasare Website:www.linkintime.com SEBI Regn. No.: INR 000004058 Bankers to the Issue To be appointed

8

Auditors to the Company Haribhakti & Co. Chartered Accountants 42, Free Press House, 4th Floor, 215, Nariman Point, Mumbai – 400 021 Tel: +91-22-663921101-04 Fax: +91-22-22856237 Email: [email protected] Website: www.haribhaktigroup.com Interse Allocation of Responsibilities Not Applicable Credit Rating/Debenture Trustee This being Rights Issue of equity shares, no Credit Rating or appointment of Debenture Trustee is required. Monitoring Agency Not Applicable Appraising Entity Not Applicable Underwriting/ Standby Support This issue of equity shares is not being underwritten and/or no standby support is being sought for the said issue. However the Promoters of the Company have undertaken to subscribe the unsubscribe portion in the present Rights Issue. Issue Schedule The subscription will open upon the commencement of the banking hours and will close upon the close of banking hours on the dates mentioned below: Issue Opens On : [●] Last date for receiving requests for Split Forms: [●] Issue Closes On : [●]

9

C. Capital Structure of Our Company

Details as on date of Draft Letter of Offer Aggregate Nominal Value

(Rs. In Lacs) A. Authorized Capital

23,30,00,000 Equity Shares of Rs. 10/- each

23300.00

B. Issued, Subscribed & Paid-up Capital

5,81,58,032 Equity Shares of Rs.10/- each

5815.80

C. Present Rights Issue [●] Equity Shares of Rs. 10/- each

[●]

D. Post Issue Capital [●] Equity Shares of Rs.10/- each

[●]

E. Share Premium Account Before the Offer After the Offer

[●] Changes in the Authorised Capital of our Company:

Date of resolution Increased From Increased To 18/05/1992 Rs.5.00 Lacs comprising of 50,000

equity shares of Rs. 10/- each Rs.400.00 Lacs comprising of 40,00,000 equity shares of Rs. 10/- each

17/04/1993 Rs.400.00 Lacs comprising of 40,00,000 equity shares of Rs. 10/- each

Rs.13500.00 Lacs comprising of 13,50,00,000 equity shares of Rs. 10/- each

31/10/1994 Rs.13500.00 Lacs comprising of 13,50,00,000 equity shares of Rs. 10/- each



Rs.18500.00 Lacs comprising of 17,50,00,000 equity shares of Rs. 10/- each & 10,00,000 preference shares of Rs.100/- each

30/09/1996 Rs.18500.00 Lacs comprising of 17,50,00,000 equity shares of Rs. 10/- each & 10,00,000 preference shares of Rs.100/- each

20000.00 Lacs comprising of 19,00,00,000 equity shares of Rs. 10/- each & 10,00,000 preference shares of Rs.100/- each

29/09/1997 20000.00 Lacs comprising of 19,00,00,000 equity shares of Rs. 10/- each & 10,00,000 preference shares of Rs.100/- each

Rs.22700.00 Lacs comprising of 19,00,00,000 equity shares of Rs. 10/- each & 37,00,000 preference shares of Rs.100/- each

10

20/09/2001 Rs.22700.00 Lacs comprising of 19,00,00,000 equity shares of Rs. 10/- each & 37,00,000 preference shares of Rs.100/- each

Reclassfied as Rs.22700.00 Lacs comprising of 22,70,00,000 equity shares of Rs. 10/- each



Notes to Capital Structure: 1. Details of changes in the paid-up Equity Share capital are as follows:

Date of Allotment/

change

Face Value (Rs.)

Issue Price (Rs.)

No. of Shares

Cumulative No. of shares

Considerat-ion

Nature of allotment

12/07/1991 10 10 80 80 Cash Allotted to Signatories to the Memorandum and Articles of Association

18/05/1992 10 10 966870 966950 Cash Issued to erstwhile Promoters 28/12/1992 10 10 1712350 2679300 Cash Issued to erstwhile Promoters 18/03/1993 10 10 400000 3079300 Cash Issued to erstwhile Promoters 29/03/1994 10 10 2999100 6078400 Cash Issued to erstwhile Promoters 29/03/1994 10 10 6000000 12078400 Cash Issued to Financial Institutions 26/12/1994 10 10 85921600 98000000 Cash Public Issue 26/12/1994 10 10 36000000 134000000 Cash Partly convertible debentures

converted into shares

25/01/2000 10 10 15000000 149000000

Cash Preferential allotment to the erstwhile Promoters

31/03/2000 10 10 38132129 187132129

Cash Equity shares allotted to ICICI Ltd. by conversion of loan & outstanding interest

15/12/2001 10 10 37000000 224132129

Cash Equity shares allotted to ICICI Ltd. by conversion of preference shares

24/10/2002 10 10 2867871 227000000


15/02/2003 10 10 5632129 232632129


07/06/2006 10 N.A. - 58158032 N.A. See note below Note: The Hon’ble High Court of Gujarat, Ahmedabad, by its order dated 05/05/2006 approved the reduction in the paid up equity share capital of our Company. Consequent to which:

Rs.7.50 of every equity share of Rs.10/- each fully paid up was cancelled and;

Simultaneously four fully paid-up equity shares of Rs.2.50 each were consolidated into one equity share of Rs.10/- each fully paid (after cancellation of 1 (one) fractional equity share), resulting in reduction in the issued, subscribed and paid up equity share capital of the Company

11

from Rs.2326321290 consisting of 232632129 equity shares of Rs.10/- each to Rs.581580320 consisting of 58158032 equity shares of Rs.10/- each fully paid up, w.e.f. 07/06/2006.

Details of changes in the Preference Share capital are as follows:

Date of Allotment/

change

Face Value (Rs.)

Issue Price (Rs.)

No. of Shares

Cumulative No. of shares

Considerat-ion

Nature of allotment

11/04/1998 100 100 2700000 2700000 Cash Optionally Convertible Preference Shares issued to ICICI Ltd.

15/04/1998 100 100 1000000 3700000 Cash Optionally Convertible Preference Shares issued to ICICI Ltd.

15/12/2001 - - 3700000 - - Converted into equity shares of the Company

2. Promoters’ Contribution and Lock-in

The present issue being a rights issue, provisions of promoters’ contribution and lock-in are not applicable.

3. Present Rights Issue :

Type of Instrument Ratio Face Value (Rs.)

No. of shares Issue Price (Rs.)

Consideration

Equity Shares [●] 10/- [●] [●] Cash 4. Pre & Post issue shareholding pattern of our Company assuming full subscription in the rights

issue is given below :-

Category of Shareholder

Pre-issue (As on 31/03/2010)

Post-issue

Number of Shares

% Number of Shares

%

(A) Shareholding of Promoter and Promoter Group

1 Indian (a) Individuals/ Hindu Undivided Family 3441535 5.92 [●] [●](b) Bodies Corporate 27473137 47.24 [●] [●] Sub- Total (A)(1) 30914662 53.16 [●] [●]2 Foreign (a) Individuals/ Hindu Undivided Family 246841 0.42 [●] [●](b) Bodies Corporate 1314850 2.26 [●] [●] Sub-Total (A)(2) 1561691 2.69 [●] [●] Total Shareholding of Promoter and Promoter

Group (A)= (A)(1)+(A)(2) 32476353 55.84 [●] [●]

(B) Public shareholding 1 Institutions (a) Mutual Funds/UTI 60000 0.10 [●] [●](b) Financial Institutions / Banks 22625 0.04 [●] [●](c ) Foreign Institutional Investors 129742 0.22 [●] [●](d) Foreign Mutual Fund 12300 0.02 [●] [●]

12

Category of Shareholder

Pre-issue (As on 31/03/2010)

Post-issue

Number of Shares

% Number of Shares

%

Sub-Total (B)(1) 224667 0.39 [●] [●]2 Non-institutions (a) Bodies Corporate 9582686 16.48 [●] [●](b) Individuals-

12919653 22.21 [●] [●]i. Individual shareholders holding nominal share capital up to Rs. 1 lacs.

ii. Individual shareholders holding nominal share capital in excess in excess of Rs. 1 lacs. 2269495 3.90 [●] [●]

(c) Others(NRIs/OCB/Trust/Firm/HUF/CM) 685178 1.18 [●] [●] Sub-Total (B)(2) 25457012 43.77 [●] [●] Total public shareholding (B)= (B)(1)+(B)(2) 25681679 44.16 [●] [●] TOTAL (A)+(B) 58158032 100.00 [●] [●]

5. The shareholding pattern of the promoter group is as detailed below:

Particulars

Present Post Rights No. of equity shares of Rs.

10/- each

% of present capital

No. of equity shares of Rs.

10/- each

% of post issue

capital a) Promoters

• The West Coast Paper Mills Ltd.

21124791

36.32 [●] [●]

Sub - Total 21124791

36.32 [●] [●]

b) Immediate relatives of promoters (Spouse, Parent, Child, Brother, Sister):

NA

NA

c) Company in which 10% or more of the share capital is held by the promoter/his immediate relative firm or HUF in which the promoter or his immediate relative is a member.

d) Company in which the Company

mentioned in (c ) above holds 10% or more of the share capital

e) HUF in which aggregate share of the promoter and his immediate relatives is equal or more than 10% of the total.

f) Promoter Group /Associates /Persons acting in concert :

1. Shree Satyanarayan Investment Co.

Ltd 2. Orbit Udyog Ltd. 3. The Diamond Company Ltd. 4. Veer Enterprises Ltd.

1692645

831326 690348

1583248

2.91

1.43 1.19 2.72

[●] [●]

13

Particulars

Present Post Rights No. of equity shares of Rs.

10/- each

% of present capital

No. of equity shares of Rs.

10/- each

% of post issue

capital 5. The Indra Company Ltd. 6. Gold Mohore Investment Co Ltd. 7. Soumya Trade & Fiscal Services Pvt

Ltd 8. Rangnath Shree Kumar Bangur 9. Shree Kumar Bangur 10. Shashi Devi Bangur 11. Virendra Bangur 12. Saurabh Bangur 13. Mega Star Investment Ltd. 14. Indo Gulf Enterprises Ltd. 15. Highrise Properties Pvt. Ltd. 16. Ramesh Kumar Ruchiram Narang

528769 306435 715015

510725

1327885 715015 445352 442558 750000 564850

550 246841

0.91 0.53 1.23

0.88 2.28 1.23 0.77 0.76 1.29 0.97 0.00 0.42

Sub-Total 11351562 19.52 [●] [●]Grand Total 32476353 55.84 [●] [●]

The promoters intend to subscribe to their rights entitlement in full. In case of under subscription in the present Rights Issue, promoters have undertaken to subscribe to entire unsubscribed portion by the public shareholders therein. As a result of this subscription and consequent allotment, the promoters may acquire Equity Shares over and above their entitlement in the Issue, which may result in their shareholding in the Company being above their current shareholding. Presuming no subscription is received from other shareholders and the promoters subscribing to Rights Issue as mentioned, their shareholding shall increase to [●]% of the post Rights Issue equity capital of our Company. This subscription and acquisition of additional equity shares by the Promoters, if any, will not result in change of control of the management of our Company and shall be exempt in terms of provision to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

6. There are no outstanding warrants, options, convertible loan, debentures or any other securities convertible at a later date into equity in our Company, which would entitle the holders to acquire further equity shares of our Company.

7. Equity shares of our Company are being traded in compulsory dematerialized mode. The market lot

of the equity shares is 1 (one).

8. There are no transactions in the securities of our Company on stock exchange during preceding 6 months which were financed/undertaken directly or indirectly by the promoters, their relatives, their group companies or associates or by the above entities directly or indirectly through other persons except as below:

Name of Promoter Group Company Nature of

Transaction No. of Shares

Date of Transaction

Avg. price

The Indra Co. Ltd. Buy 109144 23/12/09 47.42The Indra Co. Ltd. Buy 54624 24/12/09 49.67Veer Enterprises Ltd Buy 150000 24/12/09 49.77

14

Veer Enterprises Ltd Buy 50000 30/12/09 49.77Veer Enterprises Ltd Sell -2974 31/12/09 54.84Veer Enterprises Ltd Sell -1548 04/01/10 57.65Veer Enterprises Ltd Sell -195478 13/01/10 44.12The Indra Co. Ltd Sell -125000 14/01/10 41.86Gold Mohore Investment Company Ltd. Buy 306435 22/01/10 48.95Orbit Udyog (Pvt.) Ltd. Buy 715015 22/01/10 48.95Rangnath Shree Kumar Buy 510725 22/01/10 48.95Saumya Trade & Fiscal Services Pvt Ltd. Buy 715015 22/01/10 48.95Shree Satyanarayan Investments Co.Ltd. Buy 1532175 22/01/10 48.95Mr. Saurabh Bangur Buy 442558 22/01/10 48.95Mr. Shree Kumar Bangur Buy 1327885 22/01/10 48.95Mr. Virendra Bangur Buy 445352 22/01/10 48.95Smt. Shashi Devi Bangur Buy 715015 22/01/10 48.95The Diamond Company Ltd. Buy 612870 22/01/10 48.95The Indra Co. Ltd Buy 357507 22/01/10 48.95Veer Enterprises Ltd. Buy 1583248 22/01/10 48.95Orbit Udyog P.Ltd Sell -100000 08/04/10 26.13Shree Satyanarayan Investments Co.Ltd. Sell -100000 09/04/10 27.27

9. Our Company/Promoters/Directors/Lead Merchant Bankers have not entered into buyback or

similar arrangements for purchase of securities issued by the Company. 10. Our equity shares are of face value of Rs.10/-. At any given time there shall be only one

denomination for the shares of the Company and the disclosures and accounting norms specified by SEBI from time to time will be complied with.

11. The total numbers of shareholders in the Company as on 31/03/2010 are 103900. 12. The ten largest shareholders two years prior to the date of filing of this draft Letter of Offer with

Stock Exchanges are as follows :

No. Name of the Shareholders Number of Equity Shares

Percentage of shareholding

1 The Westcoast Paper Mills Ltd. 21124791 36.32 2 Indo US Enterprises Ltd. 6470343 11.12 3 Amit Vashu Ramsinghani 2792997 4.80 4 Adya Agarwal 906290 1.56 5 Short Developers Pvt. Ltd. 888246 1.53 6 Mega Star Investments Ltd. 750000 1.29 7 Indo Gulf Enterprises Ltd. 564850 0.97 8 Hitech Comtrade Pvt. Ltd. 497712 0.86 9 Jagdish Amritlal Shah 287500 0.49

10 Prasam trading and Finance Pvt. Ltd. 267515 0.46

15

10. The ten largest shareholders as on 10 days prior to the date of filing of the draft Letter of Offer with

Stock Exchanges are as follows :



1 The Westcoast Paper Mills Ltd. 21124791 36.32 2 Prism Impex Pvt. Ltd. 2435471 4.18 3 Veer Enterprises Ltd. 1583248 2.72 4 Shree Satyanarayan Invt. Co. Ltd. 1532175 2.63 5 PAN Emami Cosmed Ltd. 1383740 2.38 6 Shree Kumar Bangur 1327885 2.28 7 TMT Viniyogan Ltd. 909866 1.56 8 Emami Paper Mills Ltd. 817939 1.41 9 Mega Star Investments Ltd. 750000 1.29

10 Orbit Udyog Pvt. Ltd. 731326 1.26

11. The ten largest shareholders as on the date of filing of the draft Letter of Offer with Stock Exchanges are as follows :



1 The Westcoast Paper Mills Ltd. 21124791 36.32 2 Prism Impex Pvt. Ltd. 2435471 4.18 3 Veer Enterprises Ltd. 1583248 2.72 4 Shree Satyanarayan Invt. Co. Ltd. 1532175 2.63 5 PAN Emami Cosmed Ltd. 1383740 2.38 6 Shree Kumar Bangur 1327885 2.28 7 TMT Viniyogan Ltd. 909866 1.56 8 Emami Paper Mills Ltd. 817939 1.41 9 Mega Star Investments Ltd. 750000 1.29

10 Orbit Udyog Pvt. Ltd. 731326 1.26 12. We shall not make any further issue of capital whether by way of issue of bonus shares, preferential

allotment, rights issue or public issue or in any other manner during the period commencing from the submission of the Draft Letter of Offer to SEBI for the Rights Issue till the securities referred in the Letter of Offer have been listed or application money refunded on account of failure of the issue.

13. Further, presently we do not have any proposal, intention, negotiation or consideration to alter the

capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of Equity Shares or any other securities within a period of six months from the date of opening of the present Issue. However, if business needs of our Company so require, we may alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities whether in India or abroad during the period of six months from the date of listing of the Equity Shares issued under this Draft Letter of Offer or from the date the application moneys are refunded on account of failure of the Issue, after seeking and obtaining all the approvals which may be required for such alteration.

14. The entire issue price is to be paid on application hence there will be no partly paid up shares arising

out of this issue.

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D. Objects of the Issue The object of the issue is to augment long term resources for meeting working capital requirements and for meeting the expenses of the issue. The main object clause of the Memorandum & Articles of Association of our Company enables us to undertake the existing activities and the activities for which the funds are being raised through the present issue. Funds Requirements (Rs. In Lacs)

To augment long-term working capital requirements [●]Issue Expenses [●]

Total [●] Funding Plan (Rs. In Lacs)

Proceeds of the Rights Issue [●]Total [●]

Details of Funds requirement 1. Working capital requirement

Assessment of Working capital requirement The working capital requirements of our Company are assessed by the consortium of Banks. Bank of India (leader of consortium of Banks) vide their letter dated 12/09/2009 has confirmed our working capital requirement as assessed and approved. Calculation of maximum permissible bank finance(as assessed)

(Rs. in Lacs) Sr. No.

Particulars 2009-10 (Projected)

A Total current Assets 18229.66 B Current liabilities (excluding installments of Term

Loan payable during the year) 5672.66

C Working Capital Gap (A-B) 12557.00 D Minimum stipulated net working capital (25% of A). 4557.00 E Actual/ projected Net Working Capital (NWC) 4557.00 F Item C – D 8000.00 G Item C – E 8000.00 H Maximum permissible bank finance (MPBF)

(lower of F & G) 8000.00

I Actual/Estimated Bank Borrowings 8000.00

Our Current ratio, as per the working capital assessment was to be 1.03 (1.33 without considering the instalments of term loans due within one year). However, the current ratio as on 31/03/2010 has gone down to 0.78 (0.91 without considering the installments of term loans due within one year). Hence there is a need to infuse fresh funds in the business to have comfortable liquidity and to improve the current ratio.

17

Therefore we are proposing to deploy the proceeds of the present issue to part finance the margin money required for working capital. Inventory & Receivables Holding Levels (as assessed):

Particulars Audited Projected

Holding Level

(Months)

31/03/2009 (Rs.in Lacs)

Holding Level

(Months)

31/03/2010 (Rs.in Lacs)

Raw Materials - Imported - Indigenous Chemicals Packing materials

1.500.060.931.12

1285.0553.41

243.6234.84

2.501.001.501.50

2396.66958.66555.1457.07

Stock in Process

0.69 294.21 0.49 193.16

Finished Goods for outside sales

1.92 4699.39 0.48 1694.93

Other Consumable spares - Imported - Indigenous

--

265.641944.36

--

470.242764.27

Receivables - Export - Domestic

-1.38

-3918.38

1.001.50

76.175963.44

Other Current Assets - 3139.79 - 3099.92Total Current Assets - 15878.69 - 18229.66Creditors 3.06 7087.73 2.45 4800.00Other Current Liabilities - 1062.53 - 872.66Total Current Liabilities (excluding installments of Term Loan payable during the year)

- 8150.26 - 5672.66

Justification for holding levels : Raw Materials : The major raw material required by us is waste papers, white ledger cuttings, pulp, chemicals, etc. The waste paper is either imported or locally procured, depending upon availability and price differentials. Another raw material is chemicals which are procured locally. During FY 2008-09 consumption ratio is indigenous and imported raw material was 56% and 44% respectively. Chemicals are available freely in the local market. The cost of raw material has gone up last year by 17% and hence holding level in terms of value has also gone up in view of increase in production capacity and increase in cost of raw material. The holding level of imported raw material was 1.5 months during 2008-09. We have estimated the holding level of imported raw material at 2.50 months for FY 2009-10. The combination of imported and indigenous RM is dependent upon price of material. Since the cost of imported RM is going up we are purchasing material locally. The overall level of imported + indigenous RM remains more or less at the same level. Finished Goods: The actual level of finished goods was 0.49 months during 2007-08. In view of overall slowdown in market, there has been excessive built up of inventory of finished goods during

18

2008-09 and the inventor level had gone up to 1.92 months. The production was more and sale was less. We have shifted one machine for manufacturing writing and printing papers and excess stock of newsprint has been liquidated. We have estimated the level of finished goods at 0.48 months for FY 2009-10. The same is in line with the actual level during 2007-08 and much below the actual level as on 31/03/2009. Receivables: We expect domestic receivable to remain at the same level during 2009-10. Domestic receivables are estimated at 1.50 months as on 31/03/2010 as against actual of 1.38 months as on 31/03/2009 which is at accepted level. Creditors : The raw material is purchased directly from suppliers against confirmed orders and under L/C. The creditors includes acceptances under L/Cs and also direct creditors. The actual level of creditors was 2.61 months as on 31/03/08. This level has increased as on 31/03/2009 to 3.06 months, as we could not pay to the creditors because of liquidity problems. This level is very high. The estimated/ projected level of creditors at 2.45 months in FY 2009-10 is in line with the past trend. Bank Limits The existing fund based limits Rs.8000 Lacs and non-fund based limits Rs.7500 Lacs are shared amongst consortium banks as follows:

(Rs.in Lacs) S.No

Name of Bank

Total Fund Based Limits

Amount

%

Non-Fund Based Limits

Amount

%1 Bank of India 2800 35.00 2625 35.002 Oriental Bank of Commerce 2400 30.00 2250 30.003 Central Bank of India 1860 23.25 1745 23.274 Axis Bank 940 11.75 880 11.73

Total 8000 100.00 7500 100.00

The estimated MPBF works out to Rs.8000.00 Lacs. We have a working capital gap of Rs.12557.00 Lacs. The proceeds of the Rights issue to the extent of Rs.[●] Lacs would be infused which will go a long way in improving the current ratio and also would improve the liquidity position.

2. Issue Expenses

The expenses of this Issue include, among others, lead management fees, printing and distribution expenses, legal fees, advertisement expenses and listing fees. The estimated Issue expenses are as follows:

Sr. No.

Particulars Amount (Rs. in Lacs)

1 Fees to Lead Merchant Banker, Registrar to the Issue & other intermediaries

[●]

2 Printing & Stationery, distribution, Postage etc [●]3 Advertisement & Marketing Expenses [●]4 Other Expenses [●] Total [●]

19

Appraisal Objects of the Issue for which the funds are being raised have not been separately appraised by any Bank or Financial Institution. However the present Rights issue is for the purposes of financing our long term working capital requirements. Bank of India, the leader of the consortium of banks from whom we have availed loan facilities have assessed and approved the working capital requirements of the Company. Schedule of Implementation The funds raised through this issue will be primarily deployed on long term working capital needs of our Company immediately on access of funds. Sources and Deployment Not Applicable Interim use of Funds The deployment of funds raised through the rights issue would be mainly for the purposes of funding long term working capital requirements and other objects of the issue immediately on completion of the rights issue. And hence the interim use of funds is not applicable.

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E. Basis for Issue Price Qualitative Factors 1. RNPL is one of the major player in newsprint segment 2. Promoted by experienced promoter in the paper industry 3. Flexible production facility to manufacture newsprint and writing & printing paper Quantitative Factors (a) Earnings Per Share (EPS)

Year ended 31st March EPS(Rs) Wts 2007-2008 0.18 1 2008-2009 (4.69) 2 2009-2010 (9.74) 3 Weighted Average EPS (6.37)

Since our Company had a negative EPS for the past 2 years, the weighted average EPS is not a meaningful quantitative measure.

(b) Price Earning Ratio (PE)

Since our Company had a negative EPS as on 31/03/2010 i.e. Rs. (9.74), the PE ratio is irrelevant. (c) Return on Networth (RONW)

Year RONW(%) Wts 2007-2008 0.35 1 2008-2009 (9.81) 2 2009-2010 (25.58) 3 Weighted Average RONW (-16.00)

(d) Minimum Return on Total Net Worth needed after the Issue to maintain EPS at Rs. (9.74) per

equity share is not meaningful since it is a negative quantity. (e) Net Asset Value (NAV)

NAV (pre issue) (as on 31/03/2010) (Rs.) 38.07 NAV (post issue) (Rs.) [●]

(f) Industry P/E Ratio

Highest (Ballarpur Industries) 16.50 Lowest (AP Paper) 5.76 Average 11.58 (Source: Capital Market May 17-28, 2010, Paper Industry)

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Comparison of key ratios with the companies in the same industry group

Company Name Book Value EPS RONW P/E

(Rs.) (Rs.) Ratio

AP Paper 153.6 16.5 10.74% 5.76 Ballarpur Induistries 24.7 2 8.10% 16.50 JK Paper 51.5 4.6 8.93% 12.39 Rainbow Papers 118.6 13.4 11.30% 15.67 Sheshasayee Paper 171.1 12.8 7.48% 16.02 T N Newsprint 96 12.7 13.23% 7.64 West Coast Paper Mills Ltd. 82 13.9 16.95% 7.12

(Source: Capital Market May 17-28, 2010, Paper Industry) The Issue Price of Rs. [●] per share is [●] times of the Face Value of Rs. 10/- per share of the equity shares being issued. Considering the above factors, the issue price of Rs. [●] per equity share is justified.

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F. Statement of Tax Benefits

To The Board of Directors, Rama Newsprint & Papers Limited, Shreeniwas House,3rd Floor, Hazarimal Somani Marg , Fort, Mumbai- 400 001 Dear Sirs, We hereby report that the enclosed annexure states the possible tax benefits that may be available to Rama Newsprint & Papers Limited (the “Company”) and to the Shareholders of the Company under the provisions of the Income Tax Act, 1961 and other allied direct and indirect tax laws presently prevailing and in force in India. The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and the interpretation of the current tax laws in force in India. Several of these benefits are subject to the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws and their interpretations. Hence, the ability of the Company or its Shareholders to derive tax benefits is subject to fulfillment of such conditions. The benefits discussed in the annexure are not exhaustive. The information being furnished by us is in general in nature and it is neither designed nor intended to be a substitute for professional tax advice. Investors are advised to consult their own tax consultants with respect to the specific tax implication arising out of their participation in the Issue. Unless otherwise specified, sections referred to below are sections of the Income-tax Act, 1961 (“the Act”). The income tax rates referred here are the existing tax rates based on the rates prescribed in the Finance (No.2) Act, 2009 for the Financial Year 2009-10. All the provisions set out below are subject to conditions specified in the respective sections We do not express any opinion or provide any assurance as to whether

i) The Company or its shareholders will continue to obtain these benefits in future or ii) The conditions prescribed for availing the benefits have been / would be met with.

This report is intended solely for information and for the inclusion in the Offer Documents in connection with the proposed Rights Issue of the Company and is not to be used, referred to or distributed for any other purpose

For Haribhakti & Co. Chartered Accountants

FRN No. 103523W Sd/-

Rakesh Rathi Place: Mumbai Partner Date: 29th May 2010. Membership No. 045228

23

STATEMENT OF TAX BENEFITS I. Statement of Special Tax Benefits:

a. Special Tax Benefits available to the company There are no special Tax benefits available to company

b. Special Tax Benefits available to the share holder There are no special Tax benefits available to the share holder

II. Statement of General Tax Benefits:

These are the general tax benefits available to the all companies and shareholders, subject to compliance with relevant provisions.

A. Under the Income Tax Act, 1961 (ITA) I. Benefits available to the Company

1. As per Section 10(34) of the ITA, any income by way of dividends referred to in Section 115 – O (i.e.

dividends declared, distributed or paid on or after 1st April, 2003 by domestic companies) received on the shares of any company is exempt from tax. Moreover, the company will also be entitled to avail the credit of dividend received by it from its subsidiaries in accordance with the provisions of section 115-O(1A) on which tax on distributed profits has been paid by the subsidiary. Furthermore, the amount of above said dividend shall be reduced by amount of dividend paid to any person for the New Pension System Trust referred to in clause (44) of section 10 of the ITA.

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

(a) Income received in respect of the units of a Mutual Fund specified under clause (23D) of Section 10 or

(b) Income received in respect of units from the Administrator of the specified undertaking; or

(c) Income received in respect of units from the specified company:

However, this exemption does not apply to any income arising from transfer of units of the Administrator of the specified undertaking or of the specified Company or of a mutual fund, as the case may be.

3. As per Section 2(29A) read with Section 2(42A), shares held in a company or a Unit of a Mutual Fund specified under clause (23D) of Section 10 are treated as long term capital asset if the same are held by the assessee for more than twelve months period immediately preceding the date of its transfer. Accordingly, the benefits enumerated below in respect of long term capital assets would be available if the shares in a company or a Unit of a Mutual Fund specified under clause (23D) of Section 10 are held for more than twelve months.

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

24

5. The company will be entitled to amortize preliminary expenditure, being expenditure incurred on public issue of shares, under Section 35D(2)(c)(iv) of the ITA, subject to the limit specified in Section 35D(3).

6. As per Section 54EC of the ITA and subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered under Section 10(38) of the ITA) arising on the transfer of a long-term capital asset will be exempt from capital gains tax to the extent such capital gains are invested in a “long term specified asset” within a period of 6 months after the date of such transfer. It may be noted that investment made on or after April 1, 2007 in the long term specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs. However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money. A “long term specified asset” for making investment under this section on or after 1st April 2007 means any bond, redeemable after three years and issued on or after the 1st April 2007 by:

a) National Highways Authority of India constituted under Section 3 of the National Highways

Authority of India Act, 1988; or\ b) Rural Electrification Corporation Limited, a company formed and registered under the

Companies Act, 1956. 7. As per Section 111A of the ITA, short term capital gains arising to the Company from the sale of

equity share or a unit of an equity oriented fund transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 15% (plus applicable surcharge and education cess).

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

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

10. Deduction under Section 32: As per provisions of Section 32(1)(iia) of the Act, the company is

entitled to claim additional depreciation of 20% of the actual cost of any new machinery or plant which has been acquired and installed after 31st March, 2005 subject to fulfillment of conditions prescribed therein.

25

11. Short-term capital loss suffered during the year shall be set off against income if any under the head capital gain; balance loss if any, could be carried forward for set off against capital gains of future years upto eight subsequent assessment years.

12. Long-term capital loss suffered during the year is allowed to be set-off only against long-term

capital gains; balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years’ long-term capital gains.

II. Benefits available to Resident Shareholders

1. As per Section 10(34) read with Section 115-O(6) of the ITA, any income by way of dividends

referred to in Section 115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by the domestic companies) received on the shares of the Company is exempt from tax.

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

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

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

However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money. A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st day of April 2007:

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

(b) by the Rural Electrification Corporation Limited, a company formed and registered under the

Companies Act, 1956.

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

(a) if the individual or Hindu Undivided Family-

26

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

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

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

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

If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the capital gain, the same proportion as the cost of the new residential house bears to the net consideration, will be exempt. If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be income chargeable under the head “Capital Gains” of the year in which the residential house is transferred.

6. As per Section 74 Short-term capital loss suffered during the year is allowed to be set-off against

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

7. As per Section 111A of the ITA, short term capital gains arising from the sale of equity shares of the Company transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 15% (plus applicable surcharge and education cess).

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

III. Benefits available to Non-Resident Indians/Non-Resident Shareholders (Other than FIIs) 1. As per Section 10(34) read with Section 115-O(6) of the ITA, any income by way of dividends



27

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

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

5. As per Section 54EC of the ITA and subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered under Section 10(38) of the ITA) arising on the transfer of a long-term capital asset will be exempt from capital gains tax to the extent such capital gains are invested in a “long term specified asset” within a period of 6 months after the date of such transfer. It may be noted that investment made on or after April 1, 2007 in the long term specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs. However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money.

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

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

(b) Rural Electrification Corporation Limited, a company formed and registered under the


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

(a) if the individual or Hindu Undivided Family-

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

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

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

(b) the income from such residential house, other than the one residential house owned on the

date of transfer of the original asset, is chargeable under the head “Income from house property”.

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If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the capital gain, the same proportion as the cost of the new residential house bears to the net consideration, will be exempt. If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be income chargeable under the head “Capital Gains” of the year in which the residential house is transferred.

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


9. As per Section 115E of the ITA, in the case of a shareholder being a Non-Resident Indian, and subscribing to the shares of the Company in convertible foreign exchange, in accordance with and subject to the prescribed conditions, long term capital gains arising on transfer of the shares of the Company (in cases not covered under Section 10(38) of the ITA) will be subject to tax at the rate of 10% (plus applicable surcharge and education cess), without any indexation benefit.

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

11. As per Section 115G of the ITA, Non-Resident Indians are not obliged to file a return of income

under Section 139(1) of the ITA, if their only source of income is income from specified investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the ITA.

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

13. As per Section 115I of the ITA, a Non-Resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing a declaration along with his

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return of income for that assessment year under Section 139 of the ITA, that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the ITA. For the purpose of aforesaid clauses “Non-Resident Indian” means an Individual, being a citizen of India or a person of Indian origin who is not a “resident”. A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India. Provisions of the ITA vis-à-vis provisions of the Tax Treaty In respect of non-residents, the tax rates and consequent taxation mentioned above will be further subject to any benefits available under the Tax Treaty, if any, between India and the country in which the non-resident is resident. As per the provisions of Section 90(2) of the ITA, the provisions of the ITA would prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the non-resident.

IV. Benefits available to Foreign Institutional Investors (‘FIIs’) 1. As per Section 10(34) read with Section 115-O(6) of the ITA, any income by way of dividends



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

4. As per Section 54EC of the ITA and subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered under Section 10(38) of the ITA) arising on the transfer of a long-term capital asset will be exempt from capital gains tax to the extent such capital gains are invested in a “long term specified asset” within a period of 6 months after the date of such transfer. It may be noted that investment made on or after April 1, 2007 in the long term specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs. However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money. A “long term specified asset” for making investment under this Section on or after 1st April 2007 means any bond, redeemable after three years and issued on or after the 1st April 2007 by: (i) National Highways Authority of India constituted under Section 3 of the National Highways

Authority of India Act, 1988; or (ii) Rural Electrification Corporation Limited, a company formed and registered under the


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


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

Nature of income Rate of tax (%) Long term capital gains 10 Short term capital gains (other than referred to in Section 111A)

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The above tax rates have to be increased by the applicable surcharge and education cess. In case of long term capital gains, (in cases not covered under Section 10(38) of the ITA), the tax is levied on the capital gains computed without considering the cost indexation and without considering foreign exchange fluctuation.

8. As per Section 196D, no tax is to be deducted from any income, by way of capital gains arising from

the transfer of shares payable to Foreign Institutional Investor. Provisions of the ITA vis-à-vis provisions of the Tax Treaty

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

B. Benefits available under the Wealth Tax Act, 1957 Asset as defined under Section 2(ea) of the Wealth tax Act, 1957 does not include shares in companies and hence, shares of the Company are not liable to wealth tax in the hands of shareholders. C. Benefits available under the Gift Tax Act, 1958 Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares of the Company will not attract gift tax. Notes: The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares;

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The above Statement of Possible Direct Tax Benefits sets out the possible tax benefits available to the Company and its shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws; In respect of non resident, the tax rates and consequent taxation mentioned above will be further subject to any benefits available under the relevant DTAA, if any, between India and the country in which the non residents has fiscal domicile. The above Statement of Possible Direct Tax Benefits is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his own tax consultant with respect to specific tax implication arising out of their participation in the issue.

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IV. ABOUT US

A. Industry Overview

The information presented in this section has been obtained from publicly available documents from various sources, including officially prepared materials from the Government of India and its various ministries, industry websites/publications and company estimates. Industry websites/publications generally state that the information contained in therein has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Company believes industry, market and government data used in this Draft Letter of Offer is reliable, it has not been independently verified. Similarly, internal Company estimates, while believed to be reliable, have not been verified by any independent agencies. Introduction Paper plays a key role in communication and as a packaging material. India accounts for nearly 15% of the world population; it consumes only 1% of the global paper production. Most of the Indian Paper Industry is broadly categorized into writing and printing, industrial and newsprint segments. Of the total paper demand in 2008-09, industrial paper accounted for about 47%, writing and printing and newsprint accounted for 30% and 20%, respectively and specialty paper accounted for 3%.

Structure of Paper Industry

The Indian paper industry is highly fragmented. According to estimates, the total number of mills varies from 500 to over 1,000. Wood and wood-based pulp form the major raw materials required to manufacture writing and printing paper, especially in the higher end value chain such as mapilitho and coated paper. Wastepaper is a key input in the production of newsprint, packaging paper and paperboards. Production of specialty paper involves the use of different varieties of pulp, which lend special characteristics to the paper. Demand and Supply Scenario Demand Consumption of paper is closely linked to the economic development of the country. In India, though the per capita consumption of paper is low, it is gradually improving with the buoyant economic growth. Industrial production, expenditure incurred on the print media, government spending on education, population growth. Industrial production, expenditure incurred on the print media, government spending on education, population growth and literacy levels are the other contributing factors. With

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stable economic growth witnessed by the country, domestic demand for paper (including news print) has been steadily increasing over the years. It has grown at a CAGR of 6.5 % from 6 Million Tons in 2003- 04 to 9.3 Million Tons in 2008-09.

Source : CRISIL Research, Industry Supply The total number of mills has declined over the last few years. Most mills that have closed down are small units (shut down due to increased pressure on cost structure and lower demand for their low-quality paper). However, the industry’s capacity and production have been growing, with larger player adding capacities and operating efficiently.

Paper: Demand –Supply ('000 Tones) 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 CAGR

(%) Capacity 7290.00 7502.00 7632.00 8052.00 8502.00 9102.00 4.5 Production 5530.00 5870.00 6277.00 6660.00 7066.00 7458.00 6.2 Capacity Utilization 75.9% 78.2% 82.2% 82.7% 83.1% 81.9%

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Demand 5452.00 5793.40 6170.40 6579.50 7040.80 7488.50 6.60 Imports 172.00 195.00 314.00 377.00 469.40 572.60 27.20

Exports 250.00 275.00 421.00 458.10 494.70 531.30 16.30 Waste Paper Increasingly Used In Paper Production Most small mills use waste paper as their main raw material. In 2008-09, nearly 38% of the total paper production was waste based. Low quality writing and printing paper and most varieties in the industrial paper segment such as Kraft paper and duplex boards are manufactured from wastepaper. Even large mills use some amount of waste paper, as it’s economical. Although waste paper is procured locally, India does not have a well developed wastepaper collection mechanism, which has resulted in lower availability of wastepaper. Hence a, large quantity of waste paper is imported, main sources of waste paper in India are industrial waste, household waste & government waste. However the collection mechanism in the country is inefficient. The time lag between the collection and the use of waste paper is high, resulting in deterioration of the quality of wastepaper. Imported wastepaper accounts for 40-50% of the total demand. Most imports are from the US, as it’s the world’s largest wastepaper markets. Domestic Newsprint Industry ‘Newsprint’ is a special type of paper used for printing newspaper and magazine. There was no indigenous capacity for newsprint in India till 1955. However the entire requirement was imported under open general license (OGL). In 1989-90, the government reformed the policy and permitted the private players to manufacture newsprint, which resulted increase in the supply of newsprint. The change in government policy encouraged the private players. The Newsprint market accounts for around 19% of the total paper market.

The Indian newsprint industry’s market size in 2008-2009 was estimated at around Rs. 60.6 billion, with a capacity of 1.167 thousand tones. Total market size of the domestic paper industry is around Rs. 320.6 billion. However, Imports account for nearly 55-60 percent of it (Source: CRISIL Research, Industry). Domestic Demand - Newsprint Demand for newsprint increased from 1.64 mtpa in 2007-08 to 1.82 mtpa in 2008-09 whereas imports increased from 0.89 mtpa in 2007-08 to 1.04 mtpa in 2008-09. India imports almost 55-60% of its newsprint

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requirements. During the last 5 years (2003-04 to 2008-09), newsprint demand has increased as a CAGR of 6%. (Source: CRISIL Research, Industry) In 2008-09, demand for newsprint witnessed a growth of nearly 8% given the increase in number of newspapers, their circulation as well as readership; most of the demand was met through imports. The demand for newsprint was affected due to sudden recession in world economy in the second half of 2008-09 & 2009-10 worldwide. However the second half of 2009-10 has seen the economy improving, which translates into higher growth in demand over next few years. The Increasing level of literacy, strong growth in GDP and higher urbanization are instrumental for the growth in newsprint demand. Outlook As per recent report from CRISIL Research, paper industry demand is expected to grow at a CAGR of 6.8% between 2008-09 and 2013-14.

With the continuous growth in the GDP and improvements in literacy rate and standard of living, the demand for paper and paper products is growing at the annual rate of 7 - 8%. As per CRISIL Research’s estimates the demand for newsprint is to increase by 8.6 % CAGR and demand for writing & printing paper is to increase by 6.5% CAGR from 2008-09 to 2013-14. The increase in demand for newsprint will be in line with the expected growth in circulation of print media, particularly vernacular newspapers and demand for writing & printing paper will be mainly driven by Government’s education initiatives. (source : CRISIL Research, Industry).

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B. Our Business

Overview We are one of the India’s largest private sector Newsprint and Writing & Printing paper manufacturing Company at a single location in India and has a significant contribution towards total newsprint production in India (source: CRISIL Research, Industry). we have manufacturing plant spread over more than 400 acres of land in Village Barbhodhan, Gujarat with a installed capacity of 1,32,000 tpa. The plant is equipped to manufacture Newsprint and Printing & Writing Paper from Virgin Pulp as well as Non-Conventional raw materials namely; recycled fibre. we have also demonstrated deep commitment to the cause of preserving the environment, by setting up a state of the art facility for manufacture of Environment friendly Chlorine free paper from recycled fibre. Our captive power plant and captive water works, ensures uninterrupted power and water supply leading to non-stop production. A contributing feature is the in-house engineering workshop for preventive maintenance and repairs leading to continuous improvisation of process, quality and productivity. We also have a strong Research & Development backup aided by a qualified and committed workforce of more than 500 personnel. We have incurred net losses to the extent of Rs. (2727.09) lacs & Rs. (5664.56) in F.Y. 2008-09 & F.Y. 2009-10 respectively. The losses are mainly on account of fluctuation in prices of newsprint, competition from cheap imports and fluctuation in raw material price. We have taken various steps to improve financial strengths of the company such as re-schedulement of term loan, conversion of excess working capital borrowings into working capital term loan etc. Capacity and Capacity Utilistion

Particulars 2009-10 2008-09 2007-08 Installed Capacity 1,32,000 MT 1,32,000 MT 1,32,000 MT Production 1,04,931 MT 1,24,509 MT 1,38,771 MT Capacity Utilisation(%) 79.49 94.32 105.13

The capacity utilization in second half of F.Y. 2008-09 and F.Y. 2009-10 was low, since the Company has to resort to supply management to minimize the impact of reduction in demand due to global recession. Corporate Social Responsibilities We are continuously conscious about our social responsibilities towards the public living within the vicinity of our plant. Apart from imparting regular health check facilities for the community in the nearby villages and distributing free medicines to the needy, we also supply free drinking water on a regular basis to the nearby villages. We have opened a modern English Medium School to impart quality education to the students in the vicinity. In addition, we also undertake various community welfare jobs as and when needed. Our Competitive Strengths Startegic location of our plant We have a strategically located plant at village Barbodhan, Dist. Surat, Gujarat. Our plant is spread over more than 400 acres of land. It has close proximity to both Navasheva (Mumbai) & Magdalla (Surat) ports

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and is well connected with rail & road network. Moreover our plant is also close to major paper market in western region which has strategic importance when it comes to import of raw material as well as distribution of finished products. Swing production facility The machines at our plant are capable of producing both newsprint as well as Writing & Printing grade paper. We can take advantage of this swing facility on these machines as per market demand. Our Strategy To unlock the potential of surplus land available with us We intend to unlock the potential of the surplus land of more than 250 acres available at our plant location. To implement this strategy, we have already completed our study for analyzing the suitability of the said land for any industrial/ real estate development including developing a Special Economic Zone. We have appointed agencies to prepare feasibility report for the project of developing the said surplus land. To enter into new strategic partnerships We intend to build partnerships with key international newsprint manufacturers to take advantage of operational efficiencies and resultant economies of scale. We believe that our experience in newsprint and printing paper manufacturing has uniquely positioned us to partner international newsprint manufacturers and offer them the cost advantage associated with India. We believe that our strategic partnerships with international manufacturers would enable us to emerge as a major player in the paper outsourcing business. Details of the Business of Our Company Location of the plants Our manufacturing facility is situated at village Barbhodhan, District Surat in Gujarat state. Our plant is spread over more than 400 acres of land. The close proximity of our plant to both Nhavasheva (Mumbai, Maharashtra) and Magdalla Ports (Surat, Gujarat) and to major paper markets of western region is of strategic importance when it comes to import of raw material as well as distribution of finished products. Our plant has a capacity to manufacture 1,32,000 tonnes per annum of newsprint and writing/printing paper. Manufacturing Process and Technology Our Mill has two imported large width sophisticated paper machines and de-inking plant is equipped to manufacture Newsprint and Printing & Writing Paper from Virgin Pulp and recycled fibre. This capability is utilised to meet specific customer requirements for Newsprint & Printing & Writing Paper. The plant is also equipped with fully computerised process monitoring and control system called QCS and DCS, designed, supplied and operated as per international standards by manufacturer of international repute. We are also the first licensee in India of the highly sophisticated de-inking technology derived from technical collaboration with international majors like Garden State Paper Inc., New Jersey, USA.

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We have installed a state-of-the-art equipment for bleaching and flotation de-inking process supplied by proven international vendors. This enables the mills to manufacture Newsprint from Non-Conventional raw materials and Printing & Writing Paper from Virgin Pulp and recycled fibre. The use of latest technology is also the hallmark of the entire production process ranging from the pulping of the raw material to its screening, cleaning, washing and chlorine-free bleaching. Treatment with various de-inking, slime control and fluff control chemicals and engymes are also part of the process. In addition to this, we have our own effluent treatment plant (ETP) which takes care of any chemical run-off. Solid waste management is done as per the standards prescribed by Gujarat State Pollution Control Board. Infrastructure Facilities Raw Material

We are using eco-friendly raw material of recycled fibre viz., old newspaper (ONP), other waste papers and pulp for manufacturing Newsprint and high quality waste paper & vergin pulp for writing & Printing Paper through total chlorine free process. We imports as well as procures raw materials domestically. We are complying with the requirements of “Hazardous Material (Management, Handling & Transboundry Movement) Rules, 2007 for import of waste paper. Although we do not have a any long term contract with suppliers, we have well knit and resourceful supply chain partners for uninterrupted supply of raw material.

Utilities

Water: Our Company has adequate water supply for its plants and for general human consumption from Narmada & Water Resources Department, Government of Gujarat. We have also taken various initiatives for water conservation such as Rain water harvesting, recycling & re-use of water in the process of manufacturing. Power: We have 23 MW captive power plant installed at our premises, which ensures supply of quality power for continuous operation of the plant without any interruption due to power cuts. We also have standby unit of 17 MW installed at our premises. Majority of our power demand is met through our captive plant. However we have power sanction limit of 8500 KVA for our paper mill and 550 KVA for our raw water supply intake pump house from Gujarat Electricity Board in case of any eventuality or excess demand. Environmental Management: Company is conscious of the need for environmentally clean and safe operations. We have obtained “No Objection” from Gujarat Pollution Control Board vide their consent order dated 17/03/2008 which is valid upto 01/01/2013 and we are complying with all the norms prescribed for water pollution, air pollution and solid waste management.

Manpower: We believe that the people working in and with the organization are key resources for the success of organization. Paper industry in India faces dearth of talented and experienced people. Therefore, we firmly believe in developing and nurturing its human resources and improving their skills & talents. We recruit fresh trainees in different categories every year and train them to occupy suitable position in various departments. Training programmes are organized both in-house and also by deputing the employees to other forums and participating in technical seminar for updating knowledge and skill levels of the employees. The details of existing manpower are given below:

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S.No Requirements ExistingA Mills 1 Executives 1882 Non Executives 953 Workmen 2504 Trainees 24 Sub Total 557

Besides this we also take services of contract labours as and when required.

Products All our products conform to BIS standards. In terms of range, we offer a wide variety of width sizes, colour codes and special coatings. In newsprint, the range offered is 40-52gsm and in writing/printing paper the range is of 40-120gsm. Colour coated paper is also available for special publications such as the distinctive pink for financial publications; yellow for yellow pages and so on. Our general product range is as under: • CREAM WOVE • SUPER PRINTING • BASE PAPER FOR COATING • MAPLITHO • SS MAPLITHO • COPIER PAPER • NEWSPRINT Market, Marketing Strategy & Competition The demand for Newsprint and Printing & Writing paper in India and many developing countries far exceeds the supply. We have tapped this ready market by focusing our exports to Bangladesh, Sri Lanka, Nepal, etc., in South Asia, the Middle East and West Asia as well as the continents of Africa. Emulating the success in the Newsprint Export business, we have developed the export markets for Printing & Writing Papers. In a short period of time we have bagged and executed orders of overseas customers from countries including Egypt, Mauritius, Indonesia, Sri Lanka etc. We supply newsprint to major publishers like The Times of India, Gujarat Samachar, Sandesh, Rajasthan Patrika, Dainik Bhaskar, Indian Express, Amar Ujala, Lokmat etc. Our major clients in writing & printing papers are notebook manufacturers and book publishers. We face competition in domestic market from major players like Hindustan Newsprint, Mysore Papers, NEPA Papers, Emami Papers and Khanna Papers in newsprint segment. Our presence in market for writing & printing paper is also growing gradually. Insurance Adequate Insurance Cover has been taken for all the properties viz. Building, Plant & Machinery, Furniture & Fixtures, Vehicles, and all stocks/stores, etc of our Company. The risks covered are fire &

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shock, earthquake, lightening, explosion and implosion, aircraft damage, storm, cyclone, typhoon tempest, hurricane, tornado, flood and inundation, subsidence and landslide including rock slide, bursting and/or overflowing of water tanks, apparatus and pipes, missile testing operations, bush fire, etc. Property We own land of more than 400 acres at village Barbodhan, Talika-Olpad, Dist- Surat, Gujarat where our plant and registered office is situated. Purchase of Property The Company does not propose to purchase any property in the form of land, building or other structures out of the proceeds of the present rights issue.

C. Key Industry Regulations & Policies There are no industry regulations specific to the activities for which the funds are being raised by us in this Issue, other than those currently applicable to our business.

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D. Our History and Corporate Structure Our Brief History Our Company was incorporated under the Companies Act, 1956 on 10th July 1991 and is having its registered office at Village Barbodhan, Taluka Olpad, District Surat, Gujarat 395005. We have came out with Public Issue in October, 1994. We are India’s one of largest private sector Paper manufacturing facility of Newsprint and Writing and Printing Papers at a single location (source: CRISIL Research, Industry). The plant is based on the concept of recycling of waste paper, which is totally environment friendly and pollution free. Our Company was originally promoted by Mr. Vashu J. Ramsinghani. We started our commercial production with its first machine (Capacity 61380 TPA) in 1996-97. The second machine (Capacity 70620 TPA) started its commercial production in 1999-2000. We have incurred losses since its incorporation due to adverse market conditions, low import duty on newsprint and high cost of raw materials and overheads. In course our Company had substantial accumulated losses as on 30th September 2003. Consequent to that our Company defaulted to the Financial Institutions and Banks against both principal and interest on the term loans availed and privately placed debentures. The Company also defaulted to Public Debenture holders. To make our Company viable and competitive, The West Coast Paper Mills Limited (WCPM), having one of the largest integrated pulp and paper mills in Dandeli, Karnataka, came forward to takeover the management and infuse fresh funds in our Company. Subsequently we approached the Corporate Debt Restructuring (CDR) Cell for restructuring of our debt. The restructuring of debt was approved on 27/09/2003. The total outstanding debts of Rs 43404 lacs (as on 30th September 2003) were realigned to a serviceable debt of Rs.21000 lacs and balance was waived. In September 2003, WCPM acquired 33.85% stake of ICICI Bank Limited in our Company by way of share purchase agreement. Consequent to the said acquisition WCPM has made an open offer to the shareholders and the offer formalities were completed in 2004. Pursuant to takeover by WCPM, the management of our Company was changed in January 2004 whereby WCPM appointed five nominee Directors on the Board of the Company. The Company with new management, capitalizing its strengths and expertise, has taken major initiatives to streamline the operations, upgrade the quality of products, strengthening of demand and supply chain, initiated aggressive marketing of products and brand building exercise. We have successfully implemented the CDR package in 2007. We have also redeemed all public debentures along with due interest. The new management has put strategy and plans in place to put the Company on to a sustainable growth path. Accordingly, to rectify the asset – liability mismatch to the extent of accumulated losses of Rs.6493.55 lacs and to make the capital structure of the Company conducive to future capital expansion plans, We undertook a proposal to reduce the share capital and the same has been approved by the Hon’ble High Court of Gujarat, Ahmedabad vide their order dated 05/05/2006. Consequent to which:

Rs.7.50 of every equity share of Rs.10/- each fully paid up was cancelled and;

Simultaneously four fully paid-up equity shares of Rs.2.50 each were consolidated into one equity share of Rs.10/- each fully paid (after cancellation of 1 (one) fractional equity share), resulting in reduction in the issued, subscribed and paid up equity share capital of the Company from Rs.2326321290 consisting of 232632129 equity shares of Rs.10/- each to Rs.581580320 consisting of 58158032 equity shares of Rs.10/- each fully paid up, w.e.f. 07/06/2006.

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With the sustained efforts of the management the capacity utilization of our company has improved significantly till first half of F.Y. 2008-09. The capacity utilization in second half of F.Y. 2008-09 and F.Y. 2009-10 was low, since the Company has to resort to supply management to minimize the impact of reduction in demand due to global recession. We have incurred losses to the extent of Rs. (2727.09) lacs & Rs. (5664.56) in F.Y. 2008-09 & F.Y. 2009-10 respectively. The losses are mainly on account of fluctuation in prices of newsprint, competition from cheap imports and fluctuation in raw material price. We have taken various steps to improve financial strengths of the Company such as re-schedulement of term loan, conversion of excess working capital borrowings into working capital term loan etc. Besides this, we are also planning to unlock the potential of the surplus land available with the our Company at our plant. Our Main Objects Our main objects are as follows: (As set out in the Memorandum and Articles of Association of our Company)

1. To carry on the business of manufacturers, importers, exporters, converters, merchants and dealers in paper, board and pulp including writing paper, printing paper, absorbant paper, newsprint paper, wrapping paper, tissue paper, cover paper, blotting paper, filter paper, antique paper, ivory finish paper, coated paper, cartridge paper, cloth - lined paper, laid down woven paper, presspahn paper, creamlaid grease proof paper, gummed paper, handmade paper, parch-ment paper, drawing paper, insulated paper, kraft paper, manila paper, envelope paper, tracing paper, vellum paper, water-proof paper, carbon paper, sensitised paper, chemically treated paper, litmus paper, photographic paper, glass paper, emery paper, paste board.

2. To carry on the business as manufacturers, importers, exporters, merchants and dealers in

packing materials and containers of all kinds including adhesive tapes, corrugated containers, display boxes, corrugated, wrappers, post card papers harian papers, card straw boards, paste board, pulp board, mill board duplex and triplex boards, plywood boards, hard board in India and abroad.

The object clause of the Memorandum enables us to undertake the activities for which funds are being raised in the present issue. Changes in Memorandum of Association

Date of Approval Amendment

18/05/1992 Change in Authorised Capital from Rs.5.00 Lacs comprising of 50,000 equity shares of Rs. 10/- each to Rs.400.00 Lacs comprising of 40,00,000 equity shares of Rs. 10/- each

07/12/1992 Change in registered office of the Company from the state of Maharashtra to the state of Gujarat.

17/04/1993 Change in Authorised Capital from Rs.400.00 Lacs comprising of 40,00,000 equity shares of Rs. 10/- each to Rs.13500.00 Lacs comprising of 13,50,00,000 equity shares of Rs. 10/- each

31/10/1994 Change in Authorised Capital from Rs.13500.00 Lacs comprising of 13,50,00,000 equity shares of Rs. 10/- each to Rs.14000.00 Lacs comprising of 14,00,00,000 equity shares of Rs. 10/- each

30/09/1995 Change in Authorised Capital from Rs.14000.00 Lacs comprising of 14,00,00,000 equity shares of Rs. 10/- each to Rs.18500.00 Lacs comprising of 17,50,00,000 equity

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shares of Rs. 10/- each & 10,00,000 preference shares of Rs.100/- each 30/09/1996 Change in Authorised Capital from Rs.18500.00 Lacs comprising of 17,50,00,000

equity shares of Rs. 10/- each & 10,00,000 preference shares of Rs.100/- each to 20000.00 Lacs comprising of 19,00,00,000 equity shares of Rs. 10/- each & 10,00,000 preference shares of Rs.100/- each

29/09/1997 Change in Authorised Capital from 20000.00 Lacs comprising of 19,00,00,000 equity shares of Rs. 10/- each & 10,00,000 preference shares of Rs.100/- each to Rs.22700.00 Lacs comprising of 19,00,00,000 equity shares of Rs. 10/- each & 37,00,000 preference shares of Rs.100/- each

28/09/2002 Change in Authorised Capital from Rs.22700.00 Lacs comprising of 19,00,00,000 equity shares of Rs. 10/- each & 37,00,000 preference shares of Rs.100/- each to Rs.23300.00 Lacs comprising of 23,30,00,000 equity shares of Rs. 10/- each

Subsidiaries of our Company We do not have any subsidiary company. Shareholder’s Agreements Date of Agreement: 06/09/2003 Parties to Agreement:

The West Coast Paper Mills Limited hereinafter referred as “West Coast” Vashu J Ramsinghani Manju V Ramsinghani Sonia S Chhabria Rama Chemicals (I) Pvt. Ltd. Highrise Properties Pvt. Ltd. Rama Fininvest (I) Pvt. Ltd. Indo US Enterprises Ltd. Vams Investment Ltd. Indo Gulf Enterprises Ltd. Ramesh Narang Usha Narang Mega Star Investments Ltd.

collectively referred as “Vashu Group”

Rama Newsprint and Papers Ltd. hereinafter referred as “Company” Background: The Vashu Group was holding 23.70% of the total paid capital of the Company. The Company has submitted a debt restructuring proposal to ICICI Bank Ltd. on similar lines of CDR. As per restructuring exercise ICICI Bank Ltd. agreed to sell its holding of 33.85% of the total paid up capital of the Company and subsequently the management was to be taken over by West Coast. The agreement sets out the terms and conditions under which Vashu Group and West Coast as shareholders of the Company will manage and operate the Company and the manner in which their respective rights as shareholders in the Company shall be regulated.

44

Salient Features of Agreement: Board of Directors West Coast will have to appoint a majority of the Directors and Vashu group will have the right to appoint 2 directors on the Board of the Company. Further Vashu group will be entitled to nominate and be represented on the Board of Directors of the Company so long as it holds at least 10% of the voting rights of the Company. Voting Rights Vashu group has accordingly executed an irrevocable power of attorney in favour of West Coast authorizing it to exercise voting rights (save & except the decision relating to further issue of equity shares or any securities convertible into equity shares) in respect of shares held by it in the company. In the event that any resolution is proposed for the further issue of equity shares or any securities convertible into equity shares and any of Vashu’s group nominee on the Board or Vashu Group as shareholders vote against such resolution, West Coast shall have option to purchase the entire and not part of the shareholding of Vashu Group in the Company by giving written notice to Vashu Group within 15 days. Disposal of Shares Vashu group shall not sell, transfer , assign or otherwise dispose of shares of the Company representing more than 10% of the total capital of the Company in any financial year except to West Coast. If at any time, the Vashu Group are desirious of disposing, all part of its shares in the Company, it shall first offer the same to West Coast for purchase by it and/or its nominee. If the said offer is not accepted by West Coast within 7 days, then Vashu Group shall have right to dispose off the said shares within the next 30 days subject to maximum of 10% in any financial year. Non Competition by Vashu Group For so long West Coast and Vashu Group are shareholders in the Company, Vashu Group covenant and agree that they shall not at any time, directly or indirectly set-up any unit in the state of Gujarat for manufacture of paper, board and/or newsprint. Current Status In terms of agreement Vashu Group has sold 92,63,800 equity shares comprising 15.93% of total paid up capital to West Coast & its group on 22/01/2010. Vashu Group currently holds 2.69% of paid up equity capital of our Company and do not have any representation on our Board. Other Agreements Besides agreements entered into normal course of business, we have not entered into any other agreement.

45

E. Our Management

Our Board of Directors

Particulars Other Directorship

Tenure

Mr. Shree Kumar Bangur Age: : 60 years Designation : Chairman Qualifications: B.Com. DIN : 00053237 Occupation : Industrialist Address : 16, Alipore Road, Kolkata – 700 027.

• The Diamond Company Ltd. • Gloster Telecom Ltd. • Hindustan National Glass &

Industries Ltd. • Jayshree Chemicals Ltd. • The Kil Kotagiri Tea & Coffee

Estates Co. Ltd. • Laxmi Asbestos Products Ltd. • Mothola Company Ltd. • Shree Satyanarayan Investments

Co. Ltd. • Union Company Ltd. • The West Coast Paper Mills Ltd. • The Marwar Textiles (Agency) Pvt.

Ltd. • Shree Satyanarayan Properties Pvt.

Ltd.

Liable to retire by rotation

Mr. Virendra Bangur Age: : 35 years Designation : Vice Chairman Qualifications: B.Com. DIN : 00237043 Occupation : Industrialist Address : 16, Alipore Road, Kolkata – 700 027.

• Akhiva Tea Plantations & Agro Industries Limited.

• Gold Mohore Investment Company Limited.

• Jayshree Chemicals Ltd. • Taparia Tools Ltd. • Union Company Limited • High Profile Travels Pvt. Ltd. • Shree Satyanarayan Properties Pvt.

Ltd. • Suraj Agencies Private Limited


Mr. Kanhaiya Lal Chandak Age: : 63 years Designation : Director Qualifications: B.Com., ACA DIN : 00013487 Occupation : Service Address : ‘I’, Type No.1, Bangur Nagar, Dandeli-581 325.

• Bahubali Paper Ltd. • The West Coast Paper Mills Ltd.


Mr. Vaishnav Das Bajaj Age: : 59 years Designation : Executive Director Qualifications: Masters in Commerce DIN : 00034710

Nil upto 08/01/2011

46


Tenure

Occupation : Service Address : 42, 4th Floor, Mamata-D CHS, A.M. Marg, Prabhadevi, Mumbai - 400 025 Mr. M. P. Taparia Age: : 72 years Designation : Independent Director Qualifications: B.A. DIN : 0011246 Occupation : Industrialist Address : Girish Kunj, Netaji Subhash Road, Marine Drive, Mumbai – 400 021.

• Supreme Petrochem Limited • The Supreme Industries Limited • Supreme Capital Management Ltd. • SPL Industrial Park Ltd. • SPL Industrial Support Services

Ltd. • Kabra Extrusion Technik Ltd. • Multilayer Films Pvt. Ltd. • Jagatguru Investment & Trading

Co. Pvt. Ltd.


Mr. Sudarshan Somani Age: : 46 years Designation : Independent Director Qualifications: B.A. DIN : 0011246 Occupation : Industrialist Address : Shree Niketan, 2nd Floor, 86/A, Marine drive, Mumbai-400 002.

• Sudarshan Investment & Exports Co. Pvt. Ltd.

• Satyanarayan Trader & Investors Pvt. Ltd.

• Amigo Mercantile Pvt. Ltd. • Kanakratan Agency Pvt. Ltd. • Elmbridge Traders Pvt. Ltd.


Mr. Haigreve Khaitan Age: : 39 years Designation : Independent Director Qualifications: L.L.B. DIN : 00005290 Occupation : Professional Address : 1104 Sterling Seaface, Dr. Annie Besant Road, Worli,Mumbai 400018

• Ceat Limited • Dhunseri Tea & Industries Ltd. • Harisons Malayalam Ltd • Hindustan Composites Ltd. • Inox Leisure Ltd. • National Engineering Industries

Ltd. • Jindal Steel & Power Limited • Sterlite Technologies Ltd. • The Madras Aluminium Co. Ltd. • The Oudh Sugar Mills Ltd. • Xpro India Limited • AVTEC Limited • Bennett, Coleman & Co. Ltd. • Bonanza Trading Company Pvt.

Ltd. • BTS Investment Advisors Pvt. Ltd. • Great Eastern Energy Corpn. Ltd. • I.E.G. (India) Ltd. • Khaitan Consultants Ltd. • Vinar Systems Pvt. Ltd. • Bajaj Corp Limited


47


Tenure

Mr. S. Doreswamy Age: : 72 years Designation : Independent Director Qualifications: B.Sc., B.L. DIN : 00042897 Occupation : Retd. Prefessional Banker Address : 33, Juhu Shalimar, Gulmohar Cross Road, No.10, JVPD Scheme, Mumbai – 400 049.

• Ceat Ltd. • Pantaloon Retail (India) Ltd. • Sakthi Sugars Ltd. • Caliber Point Business Solutions

Ltd. • D.S.P. Black Rock Trustee Co. Pvt.

Ltd. • Hexaware Technologies Ltd.


Lt. Gen. (Retd.) Ashok Kapur Age: : 62 years Designation : Independent Director Qualifications: S.S.C & joined NDA in Khadakwasla. DIN : 02536372 Occupation : Retd. Ltd. Gen. Address : 164, Vasant Enclave, Rao Tularam Marg, Vasant Vihar, New Delhi - 110057

NIL Liable to retire by rotation

Mr. Janak Mehta Age: : 46 years Designation : Independent Director Qualifications: B.Com. DIN : 02758787 Occupation : Stock Broker Address : Flat No.8, 4th Floor, Sea Glimpse Apt, 69, Worli Hill Road, Worli, Mumbai – 400018

NIL Liable to retire by rotation

Brief Profile of our Directors Mr. Shree Kumar Bangur Mr. Shree Kumar Bangur is Chairman of our Company. He is an eminent industrialist hailing from the well known family of Bangurs – the Scions of Industry and noted philanthropists. He is 60 year of age and a Graduate from Calcutta University. Mr. Bangur has wide experience of various industries like paper, newsprint, cables, chemicals, plantations, etc. He has been actively involved with the activities of Indian Paper Manufacturers’ Association and has also been the President of the same. Mr. Bangur is the President of the Indian Chamber of Commerce, Kolkata and the Committee Member of the Federation of Indian Chambers of Commerce & Industry (FICCI) and Bharat Chamber of Commerce. He is also associated with various charitable and philanthropic organisations carrying on the traditions of the Bangur family.

48

Mr. Virendra Bangur Mr. Virendra Bangur, who is about 35 years of age, is Vice Chairman of our Company. He is a Commerce Graduate with Honours from Calcutta University. Mr. Bangur has experience of industries like newsprint, chemicals, cables, etc. He has extensive experience of Management & Administration of corporate affairs. Mr. Kanhaiya Lal Chandak Mr. Kanhaiya Lal Chandak, is a coveted rank holder in Chartered Accountancy examination. He has expertise in Finance and Accounts as well as general administration & management of company affairs. He is also the Executive Director of The West Coast Paper Mills Limited. Mr. Vaishnav Das Bajaj Mr. Vaishnav Das Bajaj, Masters in Commerce- Gold Medalist, joined paper industry in the year 1970 and has 40 years of experience in the industry. He started his career as Management Trainee in M/s J.K. Paper Mills, Rayagada (Orissa) & rose up to the rank of Vice President (Works)- heading entire unit operations. He joined The West Coast Paper Mills Limited, in September 1998 as President (Corporate), to look after Marketing & Sales, Purchases, coordination with mills and other related corporate functions. He is associated with our Company as Executive Director since 09/01/2004. Mr. M. P. Taparia Mr. M. P. Taparia is a reputed industrialist and has expertise and wide Experience in business management, marketing operations and actively involved in various industry forums. Mr. Sudarshan Somani Mr. Sudarshan Somani has expertise and wide experience in International commodity trading and terminal markets such as London Metal Exchange. He has dealt in soft & hard commodities specializing in Non- ferrous metals, agriculture produce & waste paper. Mr. Haigreve Khaitan Mr. Haigreve Khaitan, is an Advocate by profession since 1995 having expertise in Commercial & Corporate Laws, Tax Laws, Mergers and Acquisitions, Restructuring, Foreign Collaboration, Licensing etc. Mr. S. Doreswamy Mr. S. Doreswamy, is a professional banker with about 40 years experience in commercial banking. During this period, he has held a variety of senior operational and administrative assignments. He was the Chairman and Managing Director of two large public sector banks - Dena Bank and Central Bank of India, making significant contribution to their growth and progress during his tenure. He is presently engaged in financial consultancy and associated with educating and training of banking professionals. He is also associated with well known and leading Investment Banks, Mutual Funds and Rating Agency.

49

Lt. Gen. (Retd.) Ashok Kapur Lt. Gen (Retd.) Ashok Kapur, has vast administrative experience and have successfully performed various assignments for the Indian Army. At the time of his retirement from Indian Army he was chief staff, Southern Command, Pune. Post retirement he was Director General of Operation, Administration of the Military World & Additional Director, General, Common Wealth Youth Game in Pune. Currently he is advisor to D.Y. Patil deemed University for conducting educational programmes for the retired soldiers. Mr. Janak Mehta Mr. Janak Mehta, a Commerce Graduate, is the promoter and president of M/s LKP Securities Ltd. He has attended various executive programmes at Harvard Business School, ISB etc and is Member of the various Committees on Bombay Stock Exchange. He has about 23 years of experience in the business of stock broking. Relationship among Directors None of our Directors are related to each other except Mr. Virendra Bangur, who is son of Mr. Shree Kumar Bangur. Compensation of Directors Compensation of Executive Director

Mr. Vaishnav Das Bajaj was re-appointed as Executive Director of the Company for the period from 09/01/2007 to 08/01/2011. The terms of compensation for the period from 01/04/2010 to 08/01/2011, as approved in remuneration committee, is as follows:

Salary : Rs.2,53,692/- per month Special Allowance

: Rs.8000/- per month

Perquisites : Housing : Furnished accommodation with free electricity, gas and water supply Medical Reimbursement: Medical and Hospitalisation benefit for him and his family by way of reimbursement expenses actually incurred, the total cost of which to the company shall not exceed one month’s salary in a year or a three month’s salary over a period of three years. Leave: On full pay in accordance with rules of company Leave Travel Concession: For him and his family once in a year in accordance with the rules of company Club Fees: Fees and subscription of two clubs Personal Accident Insurance: Premium as per the rules of the company Provident Fund: Contribution to Provident Fund in accordance with the rules of the company. Gratuity: One half month’s salary for each completed year of service in accordance with the rules of the company. The past period of his service as an Executive Director of the company will be reckoned for determining the completed years of service. Conveyance: Provision of Car for use on the Company’s business. In case car is not provided, then reimbursement of expenses incurred on conveyance upto Rs.60,000/- per month. Telephone: Free telephone facility at residence.

50

Other benefits: as are applicable to other senior executives of the Company. Termination : The appointment may be terminated by either party by giving three months notice

of such intention in writing to either party. Compensation to Non-Executive Directors

The Directors other than executive directors are presently getting Rs.4000/- per meeting as sitting fees . No commission is paid to any Director. Borrowing powers of Directors

As per the Articles of Association of the Company (Article 158) the Board of Directors of the Company may, from time to time at its discretion, subject to the provisions of Sections 292 and 293 of the Companies Act, raise or borrow, either from the Directors or from banks and financial institutions and secure the payment of any sum of money for the purposes of the Company. The Board of Directors is empowered to borrow up to the amount that may exceed our aggregate of the paid up share capital and free reserves, that is to say, reserves no set apart for any specific purpose, provided that the total amount of money/monies borrowed at any time shall not exceed Rs. 750 crores. Compliance to Corporate Governance requirements Corporate governance is administered through our Board and the Committees of the Board. In compliance with Clause 49 of the Listing Agreement with the Stock Exchanges, we have the following Board level Committees: (i) Audit Committee; (ii) Remuneration Committee and (iii) Share Transfer/Grievance Committee. However, the primary responsibility for upholding corporate governance and providing necessary disclosures within the framework of legal provisions and institutional conventions with commitment to enhance shareholders‘ value vests with our Board. As a listed company we are in compliance with the applicable provisions of the Listing Agreements pertaining to corporate governance, including appointment of independent Directors and constitution of Committees. We have complied with the requirements of Corporate Governance contained in the Listing Agreement, particularly those relating to the composition of Board of Directors and the constitution of committees including the Audit Committee, Remuneration Committee and the Share Transfer/Grievance Committee. A brief description of the composition of Board, key committees, their scope, composition and meetings for the current year is as follows: a) Composition of the Board

The Company’s Board presently comprises of Ten Directors, nine of whom are Non-Executive Directors including six Independent Directors.

None of the Directors of our Company is a member of more than 10 committees or is the chairman of more than five committees across all companies in which they are Directors.

b) Constitution and composition of committees formed

• Audit Committee

The Audit Committee presently comprises of Mr. S. Doreswamy (Chairman of Committee), Mr. Sudarshan Somani, Lt. Gen. (Retd.) Ashok Kapur and Mr. Vaishnav Das Bajaj of which three members are Independent Directors. All committee members are financially literate and majority has accounting & financial expertise. The Statutory Auditors, internal Auditors and Head of the Finance are invitees to the Audit Committee Meetings.

51

The Audit Committee met seven times during fiscal 2010.

• Remuneration Committee

The Remuneration Committee was constituted on 09/01/2004 to decide the remuneration of Executive Director. The Remuneration Committee was last reconstituted on 30/01/2010. At present the Remuneration Committee comprises of Mr. M. P.Taparia (Chairman of Committee), Mr. Haigreve Khaitan, Mr. Sudarshan Somani and Mr. Kanhaiya Lal Chandak, of which three members are Non-executive and Independent.

The Committee has not met during fiscal 2010.

• Share Transfer / Grievance Committee

This Committee looks into redressal of Shareholders and Investors Grievances with respect to transfer of shares, non-receipt of annual reports etc. and also approves split/consolidation of shares, issue of duplicate share certificate etc. The Committee also reviews the processes and service standards adopted by the Registrar and Transfer Agent, the complaints received by the company and their resolution.

The Committee comprises Mr. Kanhaiya Lal Chandak (Chairman of Committee), Mr. Vaishnav Das Bajaj & Mr. Haigreve Khaitan. Mr. Girish Sharma, Vice President (F & A) and Company Secretary is the Compliance Officer of our Company.

Shareholding of Directors The details of shareholding of our Directors are as follows:

Name of Director No. of Shares Mr. Shree Kumar Bangur 13,27,885 Mr. Virendra Bangur 4,45,352 Mr. Kanhaiya Lal Chandok 6,250

None of the other directors are holding any equity shares of our Company. Interest of Directors

All the Non-Executive Directors may be deemed to be interested to the extent of sitting fees and reimbursement of expenses, if any, payable to them under the articles. The Executive Director is interested to the extent of compensation paid by our Company for services rendered by them. The Directors may also be deemed to be interested to the extent of the shares, if any, held by them or by the relatives or by firms or companies of which any of them is a partner and a Director/ Member respectively and the shares if any, out of the present Offer that may be subscribed for and allotted to them or their relatives or any Company in which they are Directors / members of firms in which they are partners. Change in Board of Directors

Details of Changes in Board of Directors during last three years:

S.No. Name of Directors Date of Appointment /

Resignation

Reason for Appointment/Resignation

1 Mr. Vashu J. Ramsinghani 07/04/2010 Resigned 2 Mr. Amit V. Ramsinghani 07/04/2010 Resigned 3 Mr. Janak Mehta 20/07/2009 Appointed as additional director

52

4 Lt. Gen Ashok Kapur 21/01/2009 Appointed as additional director 5 Mr. Ashok Alladi 21/07/2009 Nomination withdrawn by ICICI Bank 6 Mr. S Doreswamy 20/08/2008 Appointed as additional director 7 Mr. Anupam Verma 29/07/2008 Nomination withdrawn by ICICI Bank 8 Mr. Haigreve Khaitan 27/06/2008 Appointed as additional director 9 Mr. Chandravadan Desai 28/12/2007 Resigned

10 Mr. Sudarshan Somani 28/12/2007 Appointed as additional director 11 Mr. M.P.Taparia 03/05/2007 Appointed as additional director 12 Mr. Madhukar Gore 03/05/2007 Resigned

Organisation Structure

V. D. BajajExecutive Director

BOARD OF DIRECTORS

D. C. AgrawalJt.President

(Works)

K. D. MantriV.P. Utilities

B. K. SuranaSr. V.P

(Comml.)

P. S. MaharajV.P Corporate

Girish SharmaV.P. (F&A) &

Company Secretary

S. K. JainGM Sales (Mktg)

A. H. YadavGM (Project & Devl.

and Deinking)

GM (Purchase)Vacant

R. G. MenonGM (Purchase -

Imports)

C. S. VenugopalGM (Dev.)S. S. Adak

GM (Mech.Maint.)

Details of Key Managerial Personnel Our Company is managed by its Board of Directors, assisted by qualified professionals, with vast experience in the field of production/engineering/distribution/marketing/finance and corporate laws.

53

Following are our key functionaries in different functions excluding our promoters/directors: -

Sr. No

Name & Designation Age (Years)

Qualifications Experience in the

Company

Total Experience

and Previous Company

No of Shares held

1. Mr. Dinesh Chandra Agrawal - Joint President (Works)

57 Years

B.Sc, B Tech (Chemical

Engineering) From I.T.B.H.U

(1974)

8 months 35 Years Century Pulp & Papers Ltd.

Nil

2. Mr. Shyam Sunder Adak - General Manager (Mechanical & Maintainenece)

58 Years

Diploma In Mechanical Engineering

17.5 Years 35 Years Rama Pulp & Papers Ltd.

50

3. Mr. Amawash H Yadav -General Manager (Project Development and De- Inking)

49 Years

B.E. (Chem) AMIE

5 Years 24.5 Years Murli Agro

Products Ltd.

Nil

4. Mr. Binay Kumar Surana - Sr.Vice President (Commercial)

57 Years B.Com, LLB, FCA

4 Years 31 Years Birla Group

of Companies

2000

5. Mr. Krishna Das Mantri - Vice President (Utilities)

63 Years B.E (Mech) 17 Years 41 Years J.K.Paper Mills Ltd.

1100

6. Mr. P S Maharaj - Vice President (Corporate)

56 Years B.Sc Hons In Maths, MBA

Marketing From Kolkatta

University

4 Years 34 Years Jayshree

Chemicals Ltd.

Nil

7. Mr. Girish Sharma - Vice President (F & A)and Company Secretary)

49 Years MBA, FICWA, FCS

3 Years 26 Years JK Dairy & Foods Ltd.

Nil

8. Mr. Shashi Kanth Jain - General Manager (Sales and Marketing)

51 Years M.Com, MMS (Marketing)

3.5 Years 27.5 Years Indian Agro & Recycled Paper Mills Association

Nil

9. Mr. Rajgopal Menon - General Manager (Purchase)

55 Years B. Com 15 Years 29.5 Years Rohit Pulp & Paper Mills

Ltd.

Nil

10. Mr. C.S. Venugopal – General Manager (Corporate Development)

66 Years M.Tech (Chemical Engg.)

18 Years 41 Years Paper Tech Engg. Pvt.

Ltd.

50

All the above mentioned key managerial personnel are permanent employees of our Company. The remuneration of each of key managerial personnel includes salary, bonus, Company’s contribution to Provident Fund, Leave Travel Allowance/Concession, medical expenses and value of other facilities inclusive of accommodation as may be applicable in such case. We have not offered any profit sharing plan to our Key Managerial Personnel.

54

Changes in Key Managerial Personnel (last 3 years)

Name & Designation Date of Appointment

Date of Resignation

Reason

Mr.Rai Harish Sinha (Vice President –Tech.) 25/11/05 20/08/08 Resignation Mr.A.K. Bhatia (Jt. President – Works) 05/04/08 N.A. Appointment Mr.Bankatlal N Asopa (Advisor – Comm) 11/03/04 31/03/08 Resignation Mr.S.L. Patel, General Manager (P, H & A) 01/08/98 15/12/07 Resignation Mr.R. Hegde, General Manager (P & D) 18/11/04 22/11/07 Resignation Mr.Kamal Jaisalmeria (Vice President – Comm)

19/04/07 25/08/07 Resignation

Mr.S.S. Pal (President – Opt) 01/01/04 04/08/07 Resignation Mr.B.S.Mundra (Advisor) 03/08/07 N.A Appointment

Employee Stock Option Schemes Till date, we have not introduced any Employees Stock Option Scheme/Employee Stock Purchase Scheme. Payment or Benefit (Non-Salary Related) to our officers Except as stated in this Draft Letter of Offer, no amount or benefit has been paid or given or is intended to be paid or given during the preceding two years to any of our officers except for the normal remuneration paid to Directors, officers or employees since the incorporation of our Company. Except as mentioned in the section ‘Financial Information - Related Party Transactions’ on page 74 none of the beneficiaries of loans, advances and sundry debtors are related to the Company’s Directors.

55

F. Our Promoter & Promoter Group Our Company is promoted by The West Coast Paper Mills Limited. The details of our promoter are as follows: The West Coast Paper Mills Limited (WCPML)

Date of Incorporation : 25/03/1955 CIN : L02101KA1970PLC001936 Registered office : P.B.No.5, Bangur Nagar, Dandeli – 581325, Maharashtra

WCPML was incorporated on 25/03/1955 with a facility of manufacturing 18,000 TPA of writing, printing and packaging paper, the commercial production of which commenced in May 1959. With continuous capacity addition over the years, production capacity of WCPML is increased to 3,20,000 TPA. The present promoter of WCPML is Mr. Shree Kumar Bangur. Principle Business of WCPML WCPML is engaged in the business of manufacturing paper and paper board with installed capacity of 3,20,000 MT per annum at Dandeli. Apart from this WCPML is also manufacturing optical fibre cable with installed capacity of 83500 km at Mysore. Board of Directors of WCPML The Board of Directors of WCPML consists of Mr. Shree Kumar Bangur, Mrs. Shashi Devi Bangur, Mr. Raghunandan Mody, Mr. C.K.Somany, Mr. Premal N. Kapadia, Mr. Saurabh Bangur, Lt.Gen(Retd) Utpal Bhattacharyya, Mr. Krishna Kumar Karwa, Mr. Sanjay Kothari, Mr. K.L. Chandak. Shareholding Pattern of WCPML as on 31/03/2010

Category of Shareholder Total No. of Shares Total Shareholding as a % of total No. of Shares

Promoter and Promoter Group (1) Indian 32,481,383 51.76 (2) Foreign - - Sub Total 32,481,383 51.76 Public Shareholding (1) Institutions 5,246,937 8.36 (2) Non-Institutions 25,020,588 39.87 Sub Total 30,267,525 48.24

Total 62,748,908 100 Financial details of WCPML

(Rs. in Lacs) Particulars (As at March 31st) 2009-10* 2008-09 2007-08

Total Income 62885.78 64014.80 60231.64 PAT /(Loss) 5470.21 9053.82 8190.33 Equity Share Capital 1254.98 1207.51 1147.51 Preference Share Capital (8.5% Cumulative Redeemable Non-Convertible Preference Shares of Rs.100/- each fully paid up)

6500.00 6500.00 -

56

Particulars (As at March 31st) 2009-10* 2008-09 2007-08

Reserves 52378.28 47920.21 38770.70 Book Value (Rs) (Face value of Rs.2/-per share) 85.47 81.37 66.12 EPS (Rs) 8.80 15.74 17.06

(*Source : BSE website ) Details of listing and Highest & Lowest market price during the preceding six months The equity shares of the WCPML are listed on BSE & NSE. Monthly High & Low price of the Equity shares of WCPML at BSE & NSE are as follows:

Month BSE NSE High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

December 09 76.00 63.70 76.00 64.20 January 10 77.70 62.60 77.90 62.40 February 10 67.40 59.75 67.10 59.50 March 10 64.20 54.55 64.20 55.00 April 10 91.80 61.35 91.70 61.25 May 10 99.90 78.75 77.10 99.95

(Source: BSE & NSE website) Other Information WCPML has not made any Public/Rights Issue during last three years. However WCPML has allotted 23,73,578 equity shares of the face value of Rs 2/- each on 29/06/2009 to the persons / entities in the Promoter Group (SK Bangur Group) on preferential allotment basis, at Rs 48.45 per share, including premium of Rs 46.45 per share as per extant SEBI Guidelines. WCPML is neither a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985 nor is it under winding up. We confirm that the permanent account number, bank account number, company registration number and the address of the Registrar of Companies where WCPML is registered, have been submitted to BSE and NSE at the time of filing the Draft Letter of Offer with them. Promoter Group In addition to the Promoter named above, following companies form part of our Promoter group: Name of Company Nature of business Nature & extent of

interest of promoter Jayshree Chemicals Ltd. Manufacturing of Caustic soda, Liquid

Chlorine and Hydrochloric Acid (HCL) based on Mercury Cell Technology

Promoter Group

The Thirumbadi Rubber Company Ltd.

Growing & Manufacturing natural Rubber

Promoter Group

57

Name of Company Nature of business Nature & extent of interest of promoter

The KIL Kotagiri Tea & Coffee Estates Company Ltd.

Growing & Manufacturing Tea & Coffee

Promoter Group

Amrit-Villa Investments Ltd. Non Banking Financial Company Promoter Group

Union Company Ltd. Trading in Land Promoter Group

Mothola Company Ltd. Non Banking Financial Company Promoter Group

East Coast Power Ltd. Company has not yet commenced any business. Company has received License from the government of Orissa for setting up Irrigation Reservoir based Hydel Power Project in Orissa.

Subsidiary of Jayshree Chemicals Ltd.

Fort Gloster Industries Ltd. The company is in BIFR & currently not carrying any business.

Shareholding of more than 10% by our promoter

Speciality Coatings and Laminations Ltd

Manufactures of Coated Papers and Boards. Factory is closed.

Shareholding of more than 10% by our promoter

Shree Satyanarayan Investments Company Ltd.

Investment Company Company holding more than 10% in our Promoter company

Veer Enterprises Ltd. Manufacturing & trading of Textile. Company holding more than 10% in our Promoter company

West Bengal Properties Ltd Acquiring properties and leasing Promoter Group Gold Mohore Investment Co. Ltd.

Investment Company Promoter Group

Saumya Trade and Fiscal Services Pvt Ltd

Investment Company Promoter Group

Gloster Telecom Ltd. Manufacturing of Electrical wires and cables

Promoter Group

The Indra Company Ltd. Investment Company Promoter Group

Shree Packaging Pvt Ltd Manufacturers of Packaging Material Promoter Group Siddhi Trade and Holdings Pvt Ltd

Acquiring properties and leasing Promoter Group

Orbit Udyog Pvt Ltd Investment Company Promoter Group

Shree Satyanarayan Properties Pvt Ltd

Acquiring properties and leasing Promoter Group

58

Name of Company Nature of business Nature & extent of interest of promoter

High Profile Travels Pvt Ltd Tours & Travels. The company has not commenced any business.

Promoter Group

The Diamond Company Ltd Investment Company Promoter Group Akhivi Tea Plantation & Agro Industries Ltd.

Non Banking Financial Company Promoter Group

Bahubali Paper Mills Ltd. Manufacturing of paper Promoter Group Related Party Transactions

For details please refer page no. 74. Disassociation of the Promoters Promoters have not disassociated with any entity. Common Pursuits Out Promoter The West Coast Paper Mills Ltd. (WCPML) has existing operations in manufacturing of printing & writing paper and packaging papers, which is similar to the business of our Company. Since the product range of WCPML is entirely different than of our Company, there is conflict of interest between WCPML & our Company. The Promoters of our Company are interested to the extent of their shareholding in us and the dividend they are entitled to receive, if declared, by our Company. Except as stated otherwise in this Draft Letter of Offer, we have not entered into any contracts, agreements or arrangements during the preceding two years from the date of this Draft Letter of Offer in which the Promoters are directly or indirectly interested and no payments have been made to them in respect of the contracts, agreements or arrangements which are proposed to be made with them other than in the normal course of business. Further, except as disclosed in the sections titled “Our Promoters and Promoter Group” on page 55 of this Draft Letter of Offer, our Promoters do not have any interest in any venture that is involved in any activities similar to those conducted by us. Confirmations One of our promoter group company Fort Gloster Industries Ltd. has been declared as defaulter by the RBI. Further, Fort Gloster Industries Ltd. is also a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985 Besides this, none of our Promoter or Promoter Group has been declared as a willful defaulter by the RBI or any other governmental authority and there are no violations of securities laws committed by the Promoters in the past or are pending against them. Further, except as mentioned above, none of our Promoter or Promoter Group companies have become sick companies within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985 and none of them is under the process of winding up. In addition, except West Bengal Properties Ltd. & Speciality Coatings and Laminations Ltd. none of Promoter or Promoter Group companies had negative net worth as on the date of the respective last audited financial statements.

59

Payment of benefits to our Promoters Except as stated in the section “Financial Information - Related Party Transactions” on page 74 of this Draft Letter of Offer, there has been no payment of benefits to our Promoters during the two years prior to the filing of this Draft Letter of Offer.

G. Dividend Policy

The declaration and payment of dividends will be recommended by the Board of Directors and approved by the shareholders of our Company, at their discretion, and will depend on a number of factors, including but not limited to the Company’s profits, capital requirements, and overall financial requirements. We have not paid any dividend in last five years.

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V. FINANCIAL INFORMATION

A. Auditor’s Report

To, The Board of Directors, Rama Newsprint and Papers Limited, Shreeniwasan House, 3rd Floor, Hazarimal Somani Marg, Fort, Mumbai - 400 001. Dear Sirs, 1) We have examined the attached financial information of Rama Newsprint and Papers Limited (the

“Company”) approved by the Board of Directors of the Company, prepared in terms of the requirements of -

(i) Paragraph B of Part II of Schedule II to the Companies Act, 1956, (ii) Securities and Exchange Board of India (Issue of Capital and Disclosures Requirements)

Regulation 2009. (iii) In terms of our engagement agreed upon with you in accordance with your mandate letter dated

30/04/2010 wherein you have requested us to examine the Financial Information referred to above and proposed to be included in the Offer Document of the Company in connection with its proposed rights issue of Equity shares.

2) This Financial information has been extracted by management from the audited financial statements

for the year ended March 31, 2006, 2007, 2008, 2009 and 2010, which were prepared in accordance with the provisions of the Companies Act, 1956. The preparation and presentation of this financials information is the responsibility of the Company’s management and has been approved by the board of directors.

3) In accordance with the requirements of paragraph B of Part II of schedule II of the act, the SEBI

regulation and terms of our engagement letter agreed with you, we have examined the following financials information set out in the following annexure prepared by the management and approved by the board of directors for the purpose of inclusion in the Offer Document:-

a) “Summary Statement of Assets and Liabilities” of the Company as at March 31,2010, 2009, 2008,

2007 and 2006 as set out in annexure-1 to this report is after making adjustment and regrouping as in our opinion were appropriate.

b) “Summary Statement of Profit and Loss” of the Company for the period ended March 31, 2010,

2009, 2008, 2007 and 2006 as set out in annexure-2 to this report is after making adjustment and regrouping as in our opinion were appropriate

c) “Cash flow Statement” of the Company for the period ended March 31 2010, 2009, 2008, 2007 and

2006 as set out in annexure-3 to this report is after making adjustment and regrouping as in our opinion were appropriate

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4) We have also examined the following other financial information setout in Annexure prepared by the management and approved by the board of directors relating to the Company for the year ended on March 31 2010, 2009, 2008, 2007 and 2006.

d) Statement of Accounting Ratios included in Annexure 4 e) Statement of Capitalisation as at 31st March 2010 included in Annexure 5

f) Statement of Taxation Annexure 6

g) Statement of Other Income included in Annexure 7

h) Statement of Secured loan included in Annexure 8

i) Statement of Unsecured loan included in Annexure 9

j) Statement of Sundry Debtors Annexure 10

In our opinion the financial information contained in Annexure 1 to 10 of this report read together with the Significant Accounting Policies, and notes to account, prepared after making adjustments and regrouping as considered appropriate have been prepared in accordance with the Part II of schedule II of the Companies Act 1956 and SEBI (Issue of Capital and Disclosures Requirement) Regulation, 2009.

5) Except for the information-referred hereinabove, we have not examined other information contained in the Offer Document.

6) This report should neither in any way be construed as a re-issuance or redrafting of any of the

previous audit reports issued by us nor construed as a new opinion on any financial statement referred to herein.

7) This report is intended solely for the use of the management and for inclusion in the offer documents

in connection with the proposed right issue of equity shares of the Company and should not be used, referred to or distributed for any other purpose without our prior written consent.

For Haribhakti & Co. Chartered Accountants

FRN No. 103523W SD/-

Rakesh Rathi Partner

Membership No.045228

Place: Mumbai

Date : 29th May 2010.

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ANNEXURE –1

STATEMENT OF ASSETS & LIABILITIES (Rs. in Lacs)


As at 31-Mar-09

As at 31-Mar-08

As at 31-Mar-07

As at 31-Mar-06

A Fixed Assets Gross Block 71,154.88 70,334.42 70,081.52 67,621.11 66,904.96 Less : Depreciation 36,905.87 33,444.83 30,018.38 26,585.11 23,288.66 Net Block 34,249.01 36,889.59 40,063.14 41,036.00 43,616.70 Capital Work-in-progress 176.53 874.56 886.73 2,648.15 660.61 Total Fixed Assets 34,425.54 37,764.15 40,949.87 43,684.15 44,277.31 B Investments 1.63 1.63 1.63 1.68 1.68 C Deferred Tax Asset 6,168.20 5,019.02 2,874.71 2,929.83 4,147.16

D Current Assets, Loans and Advances :

Inventories 7,016.28 8,820.53 8,165.66 4,356.26 4,536.90

Sundry Debtors 4,122.77 3,918.38 4,779.64 5,350.29 5,035.62 Cash & Bank Balance 101.71 47.09 37.27 79.23 88.46

Loans and Advances 3,527.91 3,234.13 3,441.91 2,764.36 2,530.15 Total Current Assets 14,768.67 16,020.13 16,424.48 12,550.14 12,191.13 E Total Assets (A+B+C+D) 55,364.04 58,804.93 60,250.69 59,165.80 60,617.28

F Liabilities and Provisions

Secured Loans 21,183.10 19,842.94 21,234.64 22,127.95 24,069.23 Unsecured Loans 2,429.79 2,429.79 2,429.79 2,429.79 2,646.46

Current Liabilities and Provisions 9,608.70 8,725.20 6,052.17 4,180.56 5,926.42

Total Liabilities and Provisions 33,221.59 30,997.93 29,716.60 28,738.30 32,642.11

G Net Worth (E-F) 22,142.45 27,807.00 30,534.09 30,427.50 27,975.17 Represented by Shareholders’ Funds : H Share Capital 5,815.80 5,815.80 5,815.80 5,815.80 23,263.21 Reserves 22,719.34 22,719.34 22,719.34 22,719.34 11,765.48

Less:- Revaluation Reserve - - - - -

I Total 28,535.14 28,535.14 28,535.14 28,535.14 35,028.69

J Misc. Expenditure (not written off) - - - - -

K Accumulated Profit/(Loss) (6,392.69) (728.14) 1,998.95 1,892.36 (7,053.52)

Net Worth (H+I-J+K) 22,142.45 27,807.00 30,534.09 30.427.50 27,975.17

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ANNEXURE - 2 STATEMENT OF PROFIT AND LOSSES

(Rs. in Lacs)






INCOME : Sales:- Sale of Products manufactured by the Company 31,222.78 34,228.45 35,648.37 35,210.90 32,436.86

Total Gross Sales 31,222.78 34,228.45 35,648.37 35,210.90 32,436.86 Less:- Excise Duty on Sales 311.06 6.42 71.64 12.65 226.22 Net Sales 30,911.72 34,222.03 35,576.73 35,198.25 32,210.64 Other Income 581.95 452.88 365.50 384.12 268.47 Total Income (a) 31,493.67 34,674.91 35,942.23 35,582.37 32,479.11 EXPENDITURE : (Increase) / Decrease in Inventories 2,918.49 (3,494.79) (988.27) (476.90) 1,127.40 Raw Materials Consumed 19,402.79 26,018.76 20,850.73 18,438.50 18,261.98 Manufacturing Expenses & Other Exps. 9,280.49 9,949.94 9,062.15 7,925.70 8,207.97

Interest & Lease Rent 3,241.56 3,620.12 3,402.47 2,705.27 2,242.79 Depreciation 3,464.08 3,435.28 3,433.40 3,299.91 3,199.67 Total Expenditure (b) 38307.41 39,529.31 35,760.48 31,892.48 33,039.81 Net Profit /(Loss) before tax and Extraordinary Items (a-b) (6,813.74) (4,854.40) 181.75 3,689.89 (560.70)

(Add)/Less: Extraordinary Items - - - - 28.25 Net Profit / (Loss) before Tax (6,813.74) (4,854.40) 181.75 3,689.89 (532.45) Less: Taxation(FBT) - 17.00 20.05 20.23 16.11 Less: Deferred Tax Liability / (Assets) (1,149.18) (2,144.31) 55.11 1,217.34 11.39

Net Profit /(Loss) after Tax (5,664.56) (2,727.09) 106.59 2,452.32 (559.95) Add : Balance brought forward (728.13) 1,998.95 1,892.36 * (559.96) (6,493.57) Profit/ (Loss) Available for Appropriation (6,392.69) (728.14) 1,998.95 1,892.36 (7,053.52)

APPROPRIATIONS : - - - - - Balance carried to Balance Sheet (6,392.69) (728.14) 1,998.95 1,892.36 (7,053.52)

BROUGHT FORWARD LOSS FROM 31-Mar-06 (7,053.52) Less: Adjusted against capital reduction (see below note) 6,493.56 Balance (559.96)

Note:

The total reduction of share capital of Rs. 17,447.41 lacs, pursuant to the approval of the share holder of the company and Gujarat high court order dated 5th May 2006, has been adjusted partly against the debit balance in the Profit and Loss a/c amounting to Rs. 6,493.56 lacs as on 31st March 2005 and for the balance of the cancelled capital a capital reserve of Rs. 10,953.85 has been created.

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ANNEXURE - 3 CASH FLOW STATEMENT

(Rs in Lacs)

Particulars Year

Ended 31-Mar-10

Year Ended

31-Mar-09

Year Ended

31-Mar-08

Year Ended

31-Mar-07

Year Ended

31-Mar-06

A Cash flow from operating activities

Net Profit /(Loss) before Taxation (6,813.74) (4,854.40) 181.76 3,689.89 (560.70)

Adjustments for:

Depreciation 3,464.08 3,435.28 3,433.40 3,299.91 3,199.67

Interest 2,405.29 3,620.12 3,402.47 2,705.27 2,242.79

Other Income (9.24) (8.96) (20.78) 43.02 (268.47)

Loss on sale of assets(net) 1.49 - 0.03 2.12 0.65

Operating Profit/(Loss) before working capital changes (952.12) 2,192.04 6,996.88 9,654.17 4,613.94

Adjustments for :

(Increase)/Decrease in Inventory 1,804.25 (654.87) (3,809.41) 180.64 1,635.73

(Increase)/Decrease in Debtors (204.38) 861.25 570.65 (314.67) -(1,484.72)

(Increase)/Decrease in Loans & Advances (293.77) 207.77 (677.55) (234.21) 24.44

Increase/(Decrease) in Trade, Provision and Other Payable 883.50 2,729.07 1,871.68 (1,734.89) (16.93)

Cash generated from Operations 1,237.48 5,335.26 4,952.25 7,551.04 4,772.46

Direct taxes refund/ ( paid ) - (17.00) (20.05) (20.23) (16.11)

Cash flow before extraordinary items 1,237.48 5,318.26 4,932.20 7,530.81 4,756.35

Extraordinary Items - - - - 268.62

Net Cash from Operating Activities (A) 1,237.48 5,318.26 4,932.20 7,530.81 5,024.97

B Cash flow from Investing Activities

Purchase of Fixed Assets including Capital work in progress (130.09) (250.07) (699.26) (2,711.76) (2,590.0)3

Sale of Fixed Assets 3.11 0.53 0.11 2.90 2.31

Interest Received 9.18 8.92 20.72 42.98 28.22

Sale of Investment - - 0.05 - -

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Dividend Received 0.06 0.04 0.06 0.04 0.03

Net Cash used in Investing Activities (B) (117.73) (240.58) (678.32) (2,665.84) (2,559.47)

C Cash flow from financing Activities

Proceeds from equity capital arrears - - - - 0.01

Proceeds from Borrowings 4,500.00 1,171.06 3,169.30 122.39 145.44

Repayment of Borrowings (3,159.84) (2,562.76) (4,062.60) (2,280.35) (534.02)

Interest Paid (2,405.29) (3,676.15) (3,402.54) (2,716.24) -(2,189.46)

Net Cash used in Financing Activities(C) (1,065.13) (5,067.85) (4,295.84) (4,874.20) (2,578.03)

Net Increase/(Decrease) in Cash & Cash equivalent (A+B+C) 54.61 9.82 (41.96) (9.23) (112.53)

Opening Balance -Cash & Cash Equivalents 47.09 37.27 79.23 88.46 200.99

Closing Balance -Cash & Cash Equivalents 101.71 47.09 37.27 79.23 88.46

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Significant Accounting Policies & Notes to Accounts For The Period Ended 31sr March 2010 : I Significant Accounting Policy 1) Method of Accounting:

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956 on the basis of accrual basis of accounting, except unascertained insurance claims and comply in all material respects with the accounting standards issued by the Institute of Chartered Accountants of India / accounting standards notified under sub-section (3C) of section 211 of the Companies Act, 1956 (to the extent applicable).

2) Use of estimates The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the period in which the results are known / materialize.

3) Revenue recognition

Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

a) Sale of Product

Revenue is recognized when the significant risks & rewards of ownership of the goods have passed to the buyer. Sales include the amount of Sales Tax/Vat refunds received/due in accordance with incentive scheme.

b) Interest and Dividend Income Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognized when the shareholders’ right to receive dividend is established.

c) Export Incentive Incentive on Export Income is recognized when certainty of receipts is established.

d) Insurance Claim Claims receivable are accounted at the time when such income has been earned by the Company depending on the certainty of receipts.

e) Rent Rent Income is recognized on the accrual basis based on agreement entered by the Company with the tenants.

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4) Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation thereon. The cost of fixed assets comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

5) Borrowing cost:

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to the revenue.

6) Depreciation: Depreciation has been provided on straight-line basis pursuant to Schedule XIV of the Companies Act, 1956.

7) Foreign Currency Transactions:

a) Fixed Assets acquired out of foreign currency loans are recorded at the actual transaction rate. As per revised Accounting Standard – 11 “The Effects of changes in Foreign Exchange Rates”, the gain or loss due to exchange rate fluctuations on repayment of such loans during the year is recorded at the actual transaction rates and consequent adjustments are made to the Profit & Loss Account. The gain or loss on translation of such loan liabilities at the year-end is adjusted in the Profit & Loss Account.

b) Foreign Currency Current Assets and Current Liabilities are recorded at the actual transaction

rate. The gain or loss arising out of settlement/ translation of the assets and liabilities at the closing rates due to exchange fluctuations is recognized as income/ expenditure in the profit and loss account.

c) Premium or discount arising at the inception of forward exchange contract is amortized as

expense or income over the life of the contract. Any gain or loss arising due to exchange difference at the end of the year on such contract are recognized in profit & loss account.

8) Taxation:

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law), deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the period)

Current Tax: Provision for current tax is made on the basis of estimated taxable income for the accounting year in accordance with the Income Tax Act, 1961.

Deferred taxation: In compliance with Accounting Standard - 22 issued by the Institute of Chartered Accountants of India, The deferred tax charge or credit and the corresponding deferred tax liabilities and assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date Deferred tax assets, subject to the consideration of prudence, are recognized and carried forward only to the extent that there is reasonable certainty that the sufficient future taxable income will be available against which such deferred tax can be realized. However, where there is

68

unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realizations of the assets.

9) Inventories: Inventories are valued at cost or net realizable value whichever is lower. The costs for the purpose of valuation are determined as under:

- Finished goods and Stock-in-process : - Manufacturing cost - Raw materials & Others : - Weighted Average cost - Coal & Chemical : - FIFO 10) Investments:

Investments are classified into long-term investments and current investments. Investments that are intended to be held for one year or more are classified as long-term investments and investments that are intended to be held for less than one year are classified as current investments. Long term investments are valued at cost. Provision for diminution in value of long term investments is made if in the opinion of management such a decline is other than temporary. Current investments are valued at cost or market/fair value, whichever is lower.

11) Research & Development Expenditure: Revenue expenditure on research & development is charged to Profit & Loss account and capital expenditure is added to the cost of fixed assets in the year in which it is incurred.

12) Preliminary and Issue Expenses: Preliminary and share/debenture issue expenses are amortized over a period of ten years.

13) Bad debts/ advances are written off in the year in which they become irrecoverable. 14) Contingent Liabilities are shown by way of notes. 15) Employee Benefits

Contributions to defined contribution schemes such as Provident Fund etc. are charged to the Profit and Loss account as incurred. The Company also provides for retirement/post-retirement benefits in the form of gratuity and leave encashment. Such defined benefits are charged to the Profit and Loss account based on valuations, as at the balance sheet date, conducted by independent actuaries. The Company has classified various employee benefits as under: (A) Defined Contribution Plans

a. Provident fund b. State defined contribution plans

- Employers’ Contribution to Employees’ State Insurance

The provident fund and the state defined contribution plan are operated by the Regional Provident Fund Commissioner. Under the schemes, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes, to fund the benefits. These funds are recognized by the Income tax authorities.

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(B) Defined Benefit Plans

a. Gratuity b. Leave Encashment Leave encashment is payable to eligible employees who have earned leaves, during the employment and/or on separation as per the Company’s policy.

II Notes to Accounts 1) The Company has recognized the following amounts in the Profit and Loss Account for the period

ended 31.03.2010. (Rs in Lacs)

Sr no.

Particulars Year Ended 31-Mar-10


(i) Contribution to Provident Fund 81.09 80.54

(ii) Contribution to Employee’s State Insurance Scheme 0.69 0.60

Total 81.78 81.14 2) The following table set out the gratuity plan as required under Accounting Standard 15

(Rs in Lacs) Particulars Year ended

31-Mar-10 Year ended 31-Mar-09

(i) Changes in present value of Obligation (a) Present value of Obligation as at 1st April 2009 153.91 127.13 (b) Interest Cost 13.4 10.51 ( c) Past Service Cost - (d) Current Service Cost 19.77 13.41 (e) Benefits Paid (12.27) (18.3) (f) Actuarial (Gains)/Loss 1.66 21.17 (g) Present value of obligation as at 31st March,2010 176.48 153.91(ii) Amount recognized in the Balance Sheet (a) Present value of obligation as at 31st March 2010 176.48 153.91 (b) Fair value of plan assets as at 31st March 2010 ( c) (Asset)/Liability recognized in the balance sheet 176.48 153.91(iii) Expenses recognized in the Profit and Loss Account (a) Current service cost 19.77 13.41 (b) Past Service Cost - - ( c) Interest Cost 13.4 10.51 (d) Curtailment Cost/(Credit) - - (e) Settlement Cost/(Credit) - - (f) Net Actuarial (Gain)/Loss 1.66 21.17

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Particulars Year ended 31-Mar-10

Year ended 31-Mar-09

(g) Employer's Contribution - (h) Total Expenses recognized in the P & L A/c 34.84 45.09(iv) Details of Assumption (a) Discounted Rate 8.25% 8.00% (b) Salary Escalation 4.50% 4.50% ( c) Attrition Rate 2.00% 2.00%

Note: The above working is based on upper limit of Rs.3.50 lacs, which has now been enhanced to Rs.10.00 lacs w.e.f. 18/05/2010.

3) Contingent Liability

a) Claims against the Company not acknowledged as debts Rs. 1,523.40 Lacs (as on 31.03.2009 Rs.1,541.52 Lacs) as under

(Rs in Lacs) Particulars As at

31-Mar-10 As at

31-Mar-09Water Charges - Interest & Penalty 1140.42 1082.10Water Charges – Drinking 18.96 18.96Interest on delayed payment of Sales Tax - 87.31Stamp Duty 130.75 130.75Electricity charges for Intake well 81.95 73.97Jessop & Co. Claim 139.05 139.05Excise Demands 6.71 4.00Intake Well Rent 5.63 5.38

Total 1523.47 1541.52 b) Other Contingent Liability


As at31-Mar-09

Bank Guarantee issued by the Banks 1,158.04 207.19Unexpired Letter of Credits in respect of P&M, Raw Materials and Stores & Spares.

3,697.62 4457.02

Arrears of Cumulative Preference Dividend 2,069.95 2,069.95Total 6,925.61 6734.16

4) Estimated amount of contracts remaining to be executed on Capital Account (Net of Advance) NIL

(as on 31.03.2009 : NIL) . 5) Balances with Excise & Sales Tax Authorities are subject to confirmation.

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6) In Respect of Plant & Machinery taken on lease during financial year 1996–97 & 1997-98, the future

minimum lease rent payable is as under: (Rs in Lacs)

Particular As at 31-Mar-10

As at31-Mar-09

Not later than one year 833.23 833.23Later than one year and not later than five years 1248.13 2081.36Later than five years - -

Total 2,081.36 2914.59 7) Interest free Loan under Sales Tax deferral scheme from Government of Gujarat is repayable in six

equal annual installments starting from 31.05.2010. However, the Company has approached the government of Gujarat for deferment in the repayment schedule.

8) There are no amounts outstanding to Micro, Small & Medium Enterprises for more than 45 days as

on the date of Balance Sheet. No interest is outstanding to any Small Scale or Ancillary Unit as on 31st March., 2010, under the provisions of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1993.

9) Exchange difference (net) Credit of Rs. 604.66 Lacs (as on 31.03.2009 Debit Rs.708.42 Lacs) has been

included in respective heads of accounts in Profit and Loss account. 10) In view of tax Remission Scheme availed by the company VAT/ CST on sales up to 26th March 2010

i.e. up to validity of the scheme, has been credited to sales. 11) Details of consumption of raw materials:


As at 31-Mar-09

Quantity(MT)

Value(Rs. In lacs)

Quantity (MT)

Value(Rs. In lacs)

Old Newsprint 58,469.96 5,044.01 91,026.00 9,013.75White Ledger Cuttings 7,286.47 889.70 2,125.00 261.10Pulp 6,010.26 1,328.53 560.00 164.06Others 72,922.63 7,665.26 93,523.00 11,457.05 1,44,689.32 14,927.50 1,87,234.00 20,895.96

Break-up of consumption of imported and indigenous raw materials, chemicals and stores and spares

Particulars

As at 31-Mar-10

As at 31-Mar-09

Value(Rs. In lacs)

% Value (Rs. In lacs)

%

Indigeneous 7,309.19 37.67 12,691.15 48.78

Imported 12093.60 62.34 13,327.11 51.22 19,402.79 100.00 26,018.76 100.00

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12) Particulars of Capacity, Production, Stock and Turnover:


As at 31-Mar-09

Quantity(MT)

Value(Rs. in lacs)

Quantity (MT)

Value(Rs. in lacs)

* Installed Capacity (per annum) Newsprint /Writing & Printing Paper 1,32,000 ---- 1,32,000 ----a) Opening Stock -- Newsprint 19,913 4814.45 2,012 447.55 -- Writing & Printing Paper 26 8.60 2,529 852.01 -- TOTAL 19,939 4823.05 4,541 1,299.56b) Production -- Newsprint 71,849 ------- 1,24,428 ----- -- Writing & Printing Paper 33,082 ------- 81 ----- -- TOTAL 1,04,931 ------- 1,24,509 -----c) Sales -- Newsprint 89,392 21,250.17 1,06,527 33,346.83 -- Writing & Printing Paper 30,003 9,647.56 2,584 858.14 -- TOTAL 119,395 30,897.73 1,09,111 34,204.97d) Closing Stock -- Newsprint 2,370 606.22 19,913 4,814.45 -- Writing & Printing Paper 3,105 1,067.81 26 8.60 -- TOTAL 5,475 1,674.03 19,939 4,823.05e) Other Sales ---- 13.99 ---- 16.46

*As certified by the Management, this being a technical matter. 13) The details of remuneration paid to Executive Director is as follows:

(Rs in Lacs) Particulars For the Year

Ended 31-Mar-10

For the Year Ended

31-Mar-09Salary 29.10 27.49Contribution to Provident Fund 3.11 3.18Other perquisites 9.01 11.09

Total 41.22 41.76 14) Value of Imports calculated on C.I.F. basis:


31-Mar-10 As at

31-Mar-09 a) Capital Goods ---- ----b) Raw Materials, Chemicals & Coal 7793.52 8,259.54c) Spare Parts 352.16 473.12d) Components ---- ----

Total 8145.68 8,732.66

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15) Expenditure in Foreign Currency:


31-Mar-10 As at

31-Mar-09a) Traveling Expenses 2.60 1.64b) Foreign Technicians Fees ---- ----c) Interest on FCNR Loans 22.34 71.16d) Others ---- 0.77

Total 24.94 73.57 16) Earnings in Foreign Exchange:


31-Mar-10 As at

31-Mar-09 Export of goods calculated on F.O.B basis 1,066.95 95.42

17) As per the Accounting Standard (AS) 22 on Accounting for Taxes on Income issued by ICAI, the

Deferred tax Assets/(Liability) comprises the following: (Rs in Lacs)


For the year ended

31.03.10

As at 31-Mar-10

a) Deferred Tax Liability on account of: Depreciation 8,961.03 1,433.25 7,527.78 8,961.03 1,433.25 7,527.28b) Deferred Tax Assets on account of: Unabsorbed Depreciation 12,937.27 (812.32) 12,124.96 Unabsorbed Business Loss 955.79 536.15 1,491.94 Provision for Doubtful Debts and Advs. 9.64 (9.64) Nil

Provision for Retirement Benefits 77.34 1.74 79.08 13,980.05 (284.07) 13,695.98 Net Deferred Tax Asset 5,019.02 1,149.18 6,168.20

The Company has recognised the Deferred Tax Asset, as the Management strongly believes that there is a virtual certainty about the availability of future taxable income and such deferred tax asset would be realized.

18) Earnings per share:

Particulars Year Ended 31-Mar-10

Year Ended31-Mar-09

a) Net Profit (Rs. in Lacs) (5,664.56) (2,726.37)b) Weighted average number of equity shares of Rs.10

each outstanding during the year (No. of shares) 58158032 58158032

c) Basic / Diluted Earnings per Share (Rs.) (9.74) (4.69)

74

19) The Company’s product namely Newsprint and Writing Printing are classified under one segment. 20) The Company has not paid any dividend for the past five years. 21) Particulars of Derivative Instruments

a) No Derivative Instruments are acquired for hedging purpose b) No Derivative Instrument are acquired for speculation purpose c) Foreign currency exposure that are not hedged by the derivative instruments or otherwise are:

Currency Current

year Previous

yearUSD (in lacs) 85.08 78.42Equivalent to Rupees (in lacs) 3856.51 4022.17

22) Statement of Investment

(Rs.in Lacs) LONG TERM: As at

31-Mar-10 As at

31-Mar-09Non-trade Investments A)QUOTED: EQUITY SHARES 50 Equity Shares of Rs.10/-each of the Andhra Pradesh Paper Mills Ltd. 0.083 0.08303 Equity Shares of Rs.10/-each of the Bengal & Assam Co. Ltd. 0.033 0.0341000 Equity Shares of Rs.1/- each of Orient Paper Mills Ltd. 0.238 0.238250 Equity Shares of Rs.2/- each of West Coast Paper Mills Ltd. 0.019 0.019165 Equity Shares of Rs.10/- each of Shree Vindhya Paper Mills Ltd. 0.133 0.13350 Equity Shares of Rs.10/- each of Nath Pulp & Paper Mills Ltd. 0.042 0.042500 Equity Shares of Rs.10/- each of Pudumjee Pulp & Paper Mills Ltd. 0.147 0.147300 Equity Shares of Rs.2/- each of Ballarpur Industries Ltd. 0.284 0.284100 Equity Shares of Rs.10/- each of Sirpur Paper Mills Ltd. 0.073 0.07350 Equity Shares of Rs.10/- each of Rohit Pulp & Paper Mills Ltd. 0.058 0.058180 Equity Shares of Rs.10/-each of J.K.Lakshmi cement ltd. 0.307 0.307100 Equity Shares of Rs.10/-each of Mysore paper mills Ltd. 0.006 0.006600 Equity Shares of Rs.10/-each of Tamilnadu Newsprint and Papers Ltd.

0.184 0.184

1.606 1.607B)UNQUOTED: EQUITY SHARES 100 Equity Shares of Rs.10/-each of Titaghur Paper Mills Ltd. 0.024 0.024

Total 1.630 1.632Note: Market value of Quoted investments as on 31.3.2010 Rs. 1.48 Lacs (As on 31.3.2009 - Rs.0.96lacs)

23) Related Party Disclosures:

i) Related Party Relationships

a) Enterprises who exercise control The West Coast Paper Mills Ltd.

b) Key Management Personnel Mr. V.D.Bajaj – Executive Director

75

c) Enterprises owned or significantly influenced by Relatives of Key Management Personnel

Sai Jyoti Paper Products Pvt. Ltd. Shrinath Printers Pvt.Ltd.

Note: In respect of above parties, there is no provision for doubtful debts as on 31st March, 2010 and no amount has been written off or written back during the year in respect of debts due from/to them. ii) Transactions with Related Parties:

(Rs. in Lacs) Type of Related Party

Nature of the transaction


Outstanding as on 31-Mar-10


Outstanding as on 31-Mar-09

Receivable Payable Receivable PayableEnterprises who exercise control

Rent 1.2 ---- ---- 1.2 ---- 0.3ICD taken 500 ---- ----- 1,20

0---- -----

ICD repaid 500 ---- ----- 1,200

---- -----

Interest paid on ICD

43.38

---- ----- 14 ---- -----

Security deposit given

---- 2 ---- ---- 2 ----

Key Management Personnel

Managerial Remuneration Paid

41.22

---- ---- 41.76

--- ---

ANNEXURE 4 ACCOUNTING RATIOS


31-Mar-10

As at 31-Mar-09

As at 31-Mar-08

As at 31-Mar-07

As at 31-Mar-06

A Net Profit After Tax (Excluding Extraordinary Items)

(5,664.56) (2,727.09) 106.59 2,452.32 (588.20)

B Weighted Average Number of Equity Shares (Nos. in Lacs)

581.58 581.58 581.58 581.58 2326.32

C Networth (excl. Revaluation Reserve)

22,142.44 27807 30534.09 30427.5 27975.17

D No. of Equity Share outstanding as on balance sheet date

581.58 581.58 581.58 581.58 2326.32

Accounting Ratios

1 Basic and Diluted Earnings per (9.74) (4.69) 0.18 4.22 -0.25

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Share (excluding Extra-ord. Items) [ A /B ]

2 Return on Net Worth [ A/C ] (25.58%) (9.81%) 0.35% 8.06% (2.10%)

3 Net Asset Value per Share [ C/D ] 38.07 47.81 52.5 52.32 12.03 ANNEXURE 5 CAPITALISATION STATEMENT

(Rs in Lacs) Particulars Pre-Issue

as at 31-Mar-10 Post Issue*

Debt Short Term Debt 2,993.90 2,993.90 Long Term Debt 20,618.99 20,618.99Total Debt [A] 23,612.89 23,612.89 Shareholder’s Fund Share Capital 5,815.80 [●] Reserves & Surplus 22,719.33 [●] Less : P&L a/c (Debit Balance) (6,392.69) [●]Total Shareholder’s Fund [B] 22,142.44 [●]Long Term Debt / Equity 0.98 [●]

* Information pertaining to post issue can be ascertained only after finalization of issue price. Note: Since 31-3-2006 (which is the last date as of which financial information has been given in Para of this document) share capital was reduced form Rs. 23,263.21 lacs to Rs.5815.80 lacs by virtue of reduction in paid-up share capital of the company as per the Gujarat high court order dated 5th May 2006. ANNEXURE - 6 STATEMENT OF TAXATION

(Rs in Lacs)

Financial Year Year

Ended 31-Mar-10

Year Ended

31-Mar-09

Year Ended

31-Mar-08

Year Ended

31-Mar-07

Year Ended

31-Mar-06

Profit/ (Loss) before tax and after extra ordinary items (A) (6,813.74) (4,854.40) 181.76 3,689.89 (532.45)

Tax Rates 30.90% 30.90% 33.99% 33.99% 33.99%

Tax at notional rate on profit (2,105.45) (1,500.01) 61.78 1,242.02 (179.22)

Other Adjustment: 3.50 (0.04) 10.07 2.08 -Permanent Difference (B) 3.50 (0.04) 10.07 2.08 -Timing Difference Difference between tax depreciation and book depreciation 2,062.45 1,988.92 1,808.82 1,903.72 1,771.94

Sec. 43B items 93.78 49.71 15.42 6.50 Other Adjustment - (215.38) (286.28) 494.29 (3.48)

Total Timing Difference (C) 2,156.23 1,823.25 1,537.96 2,404.51 1,768.47

77

Financial Year Year

Ended 31-Mar-10

Year Ended

31-Mar-09

Year Ended

31-Mar-08

Year Ended

31-Mar-07

Year Ended

31-Mar-06

Net Adjustment (B+C) 2,159.73 1,823.21 1,548.03 2,406.59 1,768.47Tax Saving Thereon 667.36 563.37 526.18 810.06 595.27Profit /Loss as per Income Tax Returns (A+B+C) (4,654.01) (3,031.19) 1,729.79 6,096.48 1,236.02

Brought forward business loss set off - - 117.49 6,096.48 1,236.02Brought forward depreciation set off - - 1,612.29 - -Taxable Income - - - - -Total Taxation - - - - -Taxation on Extra ordinary items - - - - -Tax on Profit before extra ordinary items - - - - -

Note: Above data are compiled as per Income Tax Return Furnished under Section 139(1) of the Income Tax Act, 1961. Except for the year ended Mar 31, 2010 for which return is yet to be submitted. ANNEXURE - 7 SCHEDULE OF OTHER INCOME

(Rs in Lacs) Particulars Year

Ended 31-Mar-10

Year Ended 31-Mar- 09




Recurring/ Non Recurring

Business/ Non Business

Interest from Banks and Others

10.63 8.92 20.72 42.98 28.22 Recurring Non Business

Dividends 0.06 0.04 0.06 0.04 0.03 Non recurring

Non Business

Excess provision Written Back

0 0 3.91 0 0 Non-recurring

Business

Export Incentives 52.07 4.7 3.11 9.62 25.13 Non-recurring

Business

Insurance claims received

84.77 30.76 18.94 80.7 58.37 Non-recurring

Business

Sale of Scrap 128.9 328.91 246.01 192.12 146.45 Non-recurring

Business

Profit on sale of Assets (Net)

0 0.22 0 0 0 Non-recurring

Business

Miscellaneous Income 305.52 79.33 72.75 58.66 10.27 Non-recurring

Non Business

Total 581.95 452.88 365.5 384.12 268.47

78

ANNEXURE - 8 DETAILS OF SECURED LOANS AS AT 31st March, 2010

(Rs in Lacs) Particulars Sanctioned Outstand

ing Rate of Int.

Repayment schedule

% p.a. Term Loan Bank of India 8,249.40 5,957.70 11.25% 8 equal quarterly installments

of Rs.2.50 crores each commencing from 15/08/2010 to 15/05/2012. 4 equal quarterly installments of Rs.3.00 crores each commencing from 15.08.2012 to 15/05/2013. 4 equal quarterly installments of Rs.6.8950 crores each commencing from 15/08/2013 to 15/05/2014. (As Rescheduled in July 2009)

ARCIL(Assigned from IIBI) 571.00 476.13 Zero 10 equal quarterly installments of Rs.0.4758 crores each commencing from 15/05/2010 at premium of 10%. (As per Corproate Debt Restructuring Scheme approved in September 2003)

LIC 1,376.42 573.51 10% 10 equal quarterly installments of Rs.0.5735 crores each commencing from 15/05/2010 (As per Corproate Debt Restructuring Scheme approved in September 2003).

Axis Bank 8,000.00 3,000.00 10.65% 12 equal quarterly installments of Rs.2.50 crores each commencing from 30/06/2010 (As Rescheduled in August 2009).

WCTL Bank of India 1,575.00 1,575.00 12% 12 equal quarterly installments

of Rs.1.3125 crores each commencing from 25/08/2010.

Oriental Bank of Commerce 1,350.00 1,350.00 12% 12 equal quarterly installments of Rs.1.1250 crores each commencing from 13/03/2011.

Axis Bank 529.00 529.00 12% 12 equal quarterly installments of Rs.0.4408 crores each commencing from 31/03/2011.

Central Bank of India 1,046.00 1,046.00 12% 12 equal quarterly installments of Rs.0.8717 crores each

79

Particulars Sanctioned Outstanding

Rate of Int.

Repayment schedule

% p.a. commencing from 05/04/2011.

Bank Borrowings : Working Capital Demand Loan & cash credit from Banks

6,675.76

Total 21,183.10 Details of the Security: 1. The Term Loans are secured by first charge ranking pari passu on all immovable properties of the

company, both present and future and hypothecation of all Company's movable machinery, spares ,tools and accessories, present and future, subject to prior charges created on Company's stock of raw materials, stock- in - process, finished goods, consumables stores etc. in favour of the company's bankers for securing borrowings for working capital requirements, and Corporate guarantee by The West Coast Paper Mills Ltd.

2. Working Capital Term Loan are secured by first charge ranking pari passu on all immovable

properties of the company, both present and future and hypothecation of all Company's movable machinery, spares ,tools and accessories, present and future, subject to prior charges created on Company's stock of raw materials, stock- in - process, finished goods, consumables stores etc. in favour of the company's bankers for securing borrowings for working capital requirements.

3. Working capital demand loan and cash credit are secured by hypothecation of the Company's

stocks of finished goods, stock in process, raw materials, stores and spares,book debts,etc.and by a second charge created/agreed to be created on all immovable properties of the company, both present and future.

ANNEXURE – 9 DETAILS OF UNSECURED LOANS AS AT 31st March, 2010

(Rs.in Lacs) Particulars Amount Effective

Cost p.a.

Repayment Schedule

Term Loan: Interest free loan from Government of Gujarat.

2,429.79

Nil

Six equal annual installments starting from 31.05.2010. However the Company has approached government of Gujarat for deferment in the repayment schedule.

Total 2,429.79

80

ANNEXURE - 10 SUNDRY DEBTORS

(Rs.in Lacs) Particulars As at As at As at As at As at

31-Mar-10 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06 Debts outstanding for a period exceeding six months

Considered Good 301.76 96.24 169.85 107.45 48.58

Considered Doubtful - - 28.35 28.35 28.35

301.76 96.24 198.20 135.80 76.93 Other Debts

Considered Good 3,821.00 3,822.14 4,609.79 5,242.84 4,987.04

Considered Doubtful - Less: Provision for Doubtful Debt - - (28.35) (28.35) (28.35 )

Total 4,122.77 3,918.38 4,779.64 5,350.29 5,035.62

----------------------- End of Report ------------------------

81

Financial Information of our Group Companies Details of the five largest listed companies within the promoter group companies 1. Jayshree Chemicals Limited (JCL)

Date of Incorporation: 17th April 1962 Nature of Activities: Manufacturing of Caustic soda, Liquid Chlorine and Hydrochloric Acid (HCL) based on Mercury Cell Technology

Financials

(Rs. in Lacs) Particulars (As at 31st March) 2009-10 2008-09 2007-08Equity Capital 2932.64 533.21 533.21Net Reserves 2081.72 507.74 112.73Income 5210.71 5962.24 5264.02PAT/(Loss) 472.90 488.59 359.36EPS (Basic & Diluted) (Rs) 7.14 7.60 6.74Book Value (Rs) 17.10 19.52 12.11

Listing The shares of JCL are listed on Bombay Stock Exchange Limited. The details of stock market data is as follows:

High/ Low price in the last 6 months Rs.39.00/Rs.15.75Market price on date of filing of Letter of offer with Stock Exchange(Rs.) [●]Market capitalisation one month prior to the date of filing (Rs. in Lacs) 4765.55

Other information: The company has made a Rights issue of equity shares which opened on 26/02/2010 & closed on 18/03/2010. The details are as follows: Issue price: Rs. 15/- per share Current market Price (as on 04/06/2010): Rs.15.10 Size of the Issue: Rs.3599.16 Lacs The object of this Rights Issue is to part finance the conversion of existing plant based on Mercury Cell Technology to Membrane Cell Technology and also increasing the existing production capacity of Caustic Soda from 65 TPD of to a capacity of 152 TPD. The project is proposed to be completed by February 2011. JCL is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 nor it’s under winding up.

2. The Thirumbadi Rubber Company Limited (TTRCL)

Date of Incorporation: 23rd December 1919 Nature of Activities: Growing & Manufacturing Natural Rubber

82

Financials

(Rs. in Lacs) Particulars (As at 31st March) 2009-10 2008-09 2007-08Equity Capital 28.83 28.83 28.83Net Reserves 915.44 686.09 590.80Income 835.49 780.70 745.23PAT/(Loss) 130.52 108.78 162.81EPS (Basic & Diluted) (Rs) 45.27 37.73 56.47Book Value (Rs) 327.87 247.96 214.91

Listing The shares of TTRCL are listed on Madras Stock Exchange Limited & Coimbatore Stock Exchange. The details of stock market data is as follows:

High/ Low price in the last 6 months (Rs) Not TradedMarket price on date of filing of Letter of offer with Stock Exchange(Rs.) [●]Market capitalisation one month prior to the date of filing (Rs. Lacs) Not Applicable

Other information: There has been no change in capital structure of TTRCL during last six months. TTRCL has not made any public or rights issue during past three years. TTRCL is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 nor it’s under winding up.

3. The KIL Kotagiri Tea & Coffee Estates Company Limited (KKTCEL)

Date of Incorporation: 28th July 1948 Nature of Activities: Growing and manufacturing tea & coffee

Financials

(Rs. in Lacs) Particulars (As at 31st March) 2009-10 2008-09 2007-08Equity Capital 72.12 72.12 72.11Net Reserves 725.14 627.58 617.79Income 1019.54 674.14 515.29PAT/(Loss) 97.55 11.66 (18.66)Profit after extra ordinary items 97.55 9.79 5.97EPS (Rs) 13.53 1.36 0.83Book Value (Rs) 110.57 88.02 86.66

Listing The shares of KKTCEL are listed on Madras Stock Exchange Limited & Coimbatore Stock Exchange. The details of stock market data is as follows:

High/ Low price in the last 6 months (Rs) Not Traded

83

Market price on date of filing of Letter of offer with Stock Exchange(Rs.) [●]Market capitalisation one month prior to the date of filing (Rs. Lacs) Not Applicable

Other information: There has been no change in capital structure of KKTCEL during last six months. KKTCEL has not made any public or rights issue during past three years. KKTCEL is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 nor it’s under winding up.

4. Amrit-Villa Investments Limited (AVIL)

Date of Incorporation: 4th January 1975 Nature of Activities: Non Banking Financial Company

Financials

(Rs. in Lacs) Particulars (As at 31st March) 2009-10 2008-09 2007-08Equity Capital 20.00 20.00 20.00Net Reserves 80.70 80.48 77.58Income 1.30 11.41 7.38PAT/(Loss) 0.22 2.90 0.27EPS (Rs) 0.11 1.45 0.14Book Value (Rs) 50.35 50.24 48.79

Listing The shares of AVIL are listed on Calcutta Stock Exchange Association Limited. The details of stock market data is as follows:


Other information: There has been no change in capital structure of AVIL during last six months. AVIL has not made any public or rights issue during past three years. AVIL is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 nor it’s under winding up.

5. Mothola Company Limited (MCL)

Date of Incorporation: 5th March 1874 Nature of Activities: Non Banking financial company

84

Financials (Rs. in Lacs)

Particulars (As at 31st March) 2009-10 2008-09 2007-08Equity Capital 54.00 54.00 54.00Net Reserves 32.03 25.05 19.57Income 9.71 10.97 7.37PAT/(Loss) 6.98 5.47 2.69EPS (Rs) 1.29 1.01 0.50Book Value (Rs) 15.93 13.13 49.49

Listing The shares of MCL are listed on Calcutta Stock Exchange Association Limited. The details of stock market data is as follows:


Other information: There has been no change in capital structure of MCL during last six months. MCL has not made any public or rights issue during past three years. MCL is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 nor it’s under winding up.

Details of the companies with having negative networth within the promoter group companies

6. West Bengal Properties Ltd. (WBPL)

Date of Incorporation: 3rd May 1955 Nature of Activities: owning Land & Building

Financials

(Rs. in Lacs) Particulars (As at 31st March) 2008-09 2007-08 2006-07Equity Capital 26.50 26.50 26.50Net Reserves 0.81 0.81 0.81P&L Debit balance (31.74) (31.89) (31.10)Income 2.24 0.44 0.44PAT/(Loss) 0.15 (0.79) (2.92)EPS (Rs) (F.V. Rs.100 per share) 0.58 Negative NegativeBook Value (Rs) (F.V. Rs.100 per share) Negative Negative Negative

Listing The shares of WBPL are not listed on any stock exchanges.

85

Other information: There has been no change in capital structure of WBPL during last six months. WBPL is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 nor it’s under winding up.

7. Speciality Coatings and Laminations Ltd. (WBPL)

Date of Incorporation: 5th March 1993 Nature of Activities: Manufacture of coated papers and boards. Currently not doing any business and the factory is closed.

Financials

(Rs. in Lacs) Particulars (As at 31st March) 2008-09 2007-08 2006-07Equity Capital 470.65 460.65 435.65Net Reserves 664.21 664.21 664.21P&L Debit balance 1420.49 1118.14 655.26Income 18.90 1190.01 3142.17PAT/(Loss) (343.86) (467.20) (319.92)EPS (Rs) Negative Negative NegativeBook Value (Rs) Negative Negative Negative

Listing The shares of WBPL are not listed on any stock exchanges.

Other information: There has been no change in capital structure of WBPL during last six months. WBPL is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 nor it’s under winding up.

Details of the sick company within the promoter group companies

8. Fort Gloster Industries Ltd. (FGIL)

Date of Incorporation: 24th August 1956 Nature of Activities: FGIL is in the business of manufacturing power cables like XLPE cables, PVC cables, PILC cables & rubber. However there is no production activity carried out by the company since the factory of FGIL is closed since December, 2003.

Financials

(Rs. in Lacs) Particulars (As at 31st March) 2008-09 2007-08 2006-07Equity Capital 1215.33 1215.33 1215.33Net Reserves (Net of revaluation reserve) 24.22 24.22 24.22P&L Debit balance (16527.78) (14515.92) (12722.57)

86

Income 17.38 44.52 33.96Profit/(Loss) after Tax (2011.85) (1736.89) (1701.77)EPS (Rs) Negative Negative NegativeBook Value (Rs) Negative Negative Negative

Listing The shares of FGIL are listed on Calcutta Stock Exchange. There has been no trading in the equity shares of the FGIL since last three years.

Other information: There has been no change in capital structure of FGIL during last six months. The Board for Industrial and Financial Reconstruction (BIFR) at the hearing held on 10/09/2001, declared FGIL as a sick industrial company within the meaning of Clause (o) of Section 3(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 and appointed Industrial Development Bank of India (IDBI) as the Operating Agency. In terms of the above Order, FGIL submitted various rehabilitation proposals from time to time to IDBI but the same were not acceptable to the Operating Agency and the Banks. BIFR at the hearing held on 18/11/2003 ordered publication of advertisement for change of management. FGIL filed a writ petition in the Hon’ble High Court at Calcutta and obtained stay against operation of the said Order of BIFR. In a hearing held on 02/03/2010 BIFR ordered that if the Hon’ble Calcutta High Court permits withdrawal of the writ petition, IDBI may go ahead with the process of change of management of FGIL. Accordingly FGIL has withdrawn its petition of stay on change of management and since been passed. The advertisement by the IDBI for Change of Management has not yet been made.

The name of FGIL is also appearing on the defaulter list of the Reserve Bank of India for non payment of dues to the Bankers.

87

B. Changes in Accounting Policies

There has been no change in accounting policies of our Company in last five years.

C. Management’s Discussion and Analysis Overview of our business We are one of the India’s largest private sector Newsprint and Writing & Printing paper manufacturing Company at a single location in India and has a significant contribution towards total newsprint production in India (source: CRISIL Research, Industry). We have manufacturing plant spread over more than 400 acres of land in Village Barbhodhan, Gujarat with a installed capacity of 1,32,000 tpa. The plant is equipped to manufacture Newsprint and Printing & Writing Paper from Virgin Pulp as well as Non-Conventional raw materials namely; recycled fibre. We have also demonstrated deep commitment to the cause of preserving the environment, by setting up a state of the art facility for manufacture of Environment friendly Chlorine free paper from recycled fibre. Our captive power plant and captive water works, ensures uninterrupted power and water supply leading to non-stop production. A contributing feature is the in-house engineering workshop for preventive maintenance and repairs leading to continuous improvisation of process, quality and productivity. A strong Research & Development backup aided by a qualified and committed workforce of more than 500 personnel has now seen us diversify into synergetic products as well as establish an export presence in Asia and Africa. We expect that the paper industry demand to grow at a CAGR of 6.8% over the next two years. We believe that favourable developments in paper industry such as increase in demand for paper in education sector due to higher Government spending on education, launches of new newspaper editions and revival of other allied industries such as advertising will result in the growth of paper industry. Apart from this we intend to unlock the potential of the surplus land of about 250 acres available at our plant location. We have already completed our study for analyzing the suitability of the said land for any industrial/ real estate development including the possibility of developing of a Special Economic Zone. We have appointed agencies to prepare feasibility report for the project of developing the said surplus land. Significant development after the date of last Audited Accounts i.e.31/03/2010 The selling prices of our products i.e. Newsprint and Printing & writing paper, has gone up by Rs.3000/- per MT since April 2010. This will have significant impact on the profitability of our Company. Besides this, to our knowledge and belief, no circumstances have arisen since the date of the last financial statements contained in the Draft Letter of Offer which materially affect or are likely to affect, the trading and profitability of the Company, or the value of our assets or our ability to pay material liabilities within the next 12 months.

88

Factors that may affect results of Operations ♦ Unusual or infrequent events or transactions

There are no material infrequent transactions which may affect results of operations of our Company.

♦ Significant economic changes

Recently the Government of India has reduced CVD (Counter Veiling Duty) on imported waste paper for use in manufacturing writing & printing paper grades from 8% to 4% w.e.f. 29/04/2010. Besides this, any other major changes in the policies of the government & GDP growth rate would have significant impact on our profitability.

♦ Known trends or uncertainties

Rise in the prices of raw material prices can put margin pressure on the sales of our products. However the prices of raw material are now stabilizing and in fact in certain varieties shown downward trend. On the contrary the selling prices are showing upward trend, which will have a positive impact on the profitability of our Company. Besides this, there are no known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

♦ Future changes in relationship between costs and revenues

The prices of raw material are now stabilizing and in fact in certain varieties shown downward trend. On the other hand the selling prices of our finished products are showing upward trend. For instance the selling prices of our products i.e. Newsprint and Printing & writing paper, has gone up by Rs.3000/- per MT since April 2010. If this trend continues i.e. decrease in cost of raw material coupled with increase in selling price of finished product, it will have a significant impact on the profitability of our Company.

♦ New Products

We are currently not proposing to introduce any new product in our portfolio.

♦ Seasonality of business

Paper industry has linear relationship with GDP growth rate. As the GDP growth rate grows during economic development phase, the demand for paper also goes up thereby leading to increase in paper prices. When the paper prices go up alongwith demand, the manufacturers are encouraged to expand their capacity in order to take advantage of the booming prices. As long as the increase in supply matches the growth in demand and the economy continue to grow, the prices remain firm. However, as and when there is slow down in the growth of economy, the demand also reduces, creating cut throat competition among the manufacturers due to excess supply and forcing them to reduce the prices. Once the down cycle is over and the economy starts booming, the demand surges and due to lesser supply available the prices again show upward movement. Any failure to adapt such rapid economic changes may affect the operations of the Company.

89

♦ Dependence on single or few suppliers/customers

We are not dependent on single or few suppliers as we have established a wide network of resourceful supply chain partners to ensure constant supplies for uninterrupted production. Similarly, we have a wide base of customers and are not dependent on single or few customers.

♦ Competitive Conditions

Due to current economic conditions and favourable market developments, we perceive a healthy competitive trend emerging in India.

Results of Operations Results of operations for the last three years/periods are as follows:

Year Ended 31-Mar-10 31-Mar-09 31-Mar-08

INCOME : Gross Sales 31,222.78 34,228.45 35,648.37 Less:- Excise Duty on Sales 311.06 6.42 71.64 Net Sales 30,911.72 34,222.03 35,576.73 Other Income 581.95 452.88 365.50 Total Income (a) 31,493.67 34,674.91 35,942.23 EXPENDITURE : (Increase) / Decrease in Inventories 2,918.49 (3,494.79) (988.27) Raw Materials, Chemicals, stores & packing materials Consumed

19,402.79 26,018.76 20,850.73

Manufacturing Expenses & Other Expenses 9,280.49 9,949.94 9,062.15 Interest & Lease Rent 3,241.56 3,620.12 3,402.47 Depreciation 3,464.08 3,435.28 3,433.40 Total Expenditure (b) 38,307.41 39,529.31 35,760.48 Net Profit / (Loss) before Tax (6,813.74) (4,854.40) 181.75 Less: Taxation(FBT) - 17.00 20.05 Less: Deferred Tax Liability/(Assets) (1,149.18) (2,144.31) 55.11 Net Profit /(Loss) after Tax (5,664.56) (2,727.09) 106.59

Comparison of Results of operation : F.Y 2009-10 v/s F.Y. 2008-09. Revenues Gross Sales:: Gross Sales decreased by 8.78% from Rs. 34228.45 lacs for F.Y. 2008-09 to Rs. 31222.78 lacs for the F.Y. 2009-10. However we have registered total sales volume of 1,19,395 MT in F.Y.2009-10 as against 1,09,111 MT in F.Y. 2008-09. Excise Duty: Excise duty paid by the Company increased substantially from Rs. 6.42 lacs for F.Y. 2008-09 to Rs. 311.06 lacs for the F.Y. 2009-10. The increase in the amount for the excise duty paid was due to increase in volume of writing & printing grades.

90

Other Income: The other income of the Company increased by 28.50% from Rs. 452.88 lacs for F.Y. 2008-09 to Rs. 581.95 lacs for the F.Y. 2009-10. The increase in other income was mainly due to sales tax refunds of earlier years. Expenditure

Raw Material, Chemicals, stores & packing materials Consumed: The raw material consumption by the Company decreased by 25.43% from Rs.26018.76 lacs for F.Y. 2008-09 to Rs. 19402.79 lacs for the F.Y. 2009-10. The decrease in raw material consumption was mainly due to reduction in raw material and chemical rates. Manufacturing, Administrative & Other Expenses: The manufacturing, administrative and other expenses of company decreased by 6.73% from Rs. 9949.94 lacs for F.Y. 2008-09 to Rs. 9280.49 lacs for the F.Y. 2009-10. This decrease in expenses was primarily due to comparatively lower production during the year. Interest & Lease Rent: The Interest & Lease rent of the Company decreased by 10.46% from Rs.3620.12 lacs for F.Y. 2008-09 to Rs. 3241.56 lacs for the F.Y. 2009-10. This decrease was due to lower level of outstanding loans. Profit/(Loss) after Tax: The Company incurred loss of Rs.5664.56 lacs for F.Y. 2009-10, which is substatially higher than loss of F.Y. 2008-09. F.Y 2008-09 v/s F.Y. 2007-08 Revenues

Gross Sales:: Gross sales decreased by 3.98% from Rs. 35648.37 lacs for F.Y. 2007-08 to Rs. 34228.45 lacs for the F.Y. 2008-09. We have registered total sales volume of 1,09,111 MT in F.Y.2008-09 as against 1,36,505 MT in F.Y. 2007-08. With a view to reduce the excessive inventory of finished goods, we have resort to supply management and also undertook annual maintenance shut of the plant to carry out non-recurring maintenance. As a result, the saleable production during F.Y.2008-09 was 1,24,508 MT against 1,38,771 MT during F.Y.2007-08 Excise Duty: Excise duty paid by the Company decreased by 91.04% from Rs. 71.64 lacs for F.Y. 2007-08 to Rs. 6.42 lacs for the F.Y. 2008-09. The decrease in the amount for the excise duty paid was due to decrease in volume of products manufactured. Other Income: The other income of the Company increased by 23.91% from Rs. 365.50 lacs for F.Y. 2007-08 to Rs. 452.88 lacs for the F.Y. 2008-09. The increase in other income was mainly due to increase in income from sale of scrap. Expenditure

Raw Material, Chemicals, stores & packing materials Consumed: The raw material consumption by the Company increased by 24.79% from Rs. 20850.73 lacs for F.Y. 2007-08 to Rs. 26018.76 lacs for the F.Y. 2008-09. The increase in raw material consumption was mainly due to increase in cost of our basic raw materials requirements i.e. wastepaper & pulp. Manufacturing, Administrative & Other Expenses: The manufacturing, administrative and other expenses of company increased by 9.80% from Rs. 9062.15 lacs for F.Y. 2007-08 to Rs. 9949.94 lacs for the F.Y. 2008-09. This increase in expenses was primarily due to increase in power and fuel cost by Rs. 931.96 lacs.

91

Interest & Lease Rent: The Interest & Lease rent of the Company increased by 6.40% from Rs. 3402.47 lacs for F.Y. 2007-08 to Rs. 3620.12 lacs for the F.Y. 2008-09. This increase was primarily due to increase in cost of working capital borrowings. Profit/(Loss) after Tax: The Company incurred loss of Rs.2727.09 lacs for F.Y. 2008-09 as against profit of Rs.106.59 lacs for F.Y. 2007-08. During F.Y. 2008-09 there was steep decline in demand for newsprint due to recession. As a result the selling price of newsprint declined sharply. On other hand there was no respite in cost of production due to high cost of inventory. All this resulted into shrinkage of profit margin. F.Y 2007-08 v/s F.Y. 2006-07 Revenues

Gross Sales: Gross sales marginally increased by 1.24% from Rs. 35210.90 lacs for F.Y. 2006-07 to Rs. 35648.37 lacs for the F.Y. 2007-08. We have registered total sales volume of 1,36,505 MT in F.Y.2007-08 as against 1,30,869 MT in F.Y. 2006-07. The saleable production during F.Y.2007-08 was 1,38,771 MT against 1,33,144 MT during F.Y.2006-07. Excise Duty: Excise duty paid by the Company decreased by 466.32% from Rs.12.65 lacs for F.Y. 2006-07 to Rs. 71.64 lacs for the F.Y. 2007-08. The increase in the amount for the excise duty paid was due to increase in volume of products manufactured. Other Income: The other income of the Company decreased by 4.85% from Rs. 384.12 lacs for F.Y. 2006-07 to Rs. 365.50 lacs for the F.Y. 2007-08. Expenditure

Raw Material, Chemicals, stores & packing materials Consumed: The raw material consumption by the Company increased by 13.08% from Rs. 18438.50 lacs for F.Y. 2006-07 to Rs. 20850.73 lacs for the F.Y. 2007-08. The raw material cost during the year increased by 17% contributing to approx. Rs.24 cr reduction in the profit of the Company. Manufacturing, Administrative & Other Expenses: The manufacturing, administrative and other expenses of company increased by 14.34% from Rs.7925.70 lacs for F.Y. 2006-07 to Rs. 9062.15 lacs for the F.Y. 2007-08. This increase in expenses was primarily due to increase in power and fuel cost by Rs. 757.43 lacs. Interest & Lease Rent: The Interest & Lease rent of the Company increased by 25.77% from Rs. 2705.27 lacs for F.Y. 2006-07 to Rs. 3402.47 lacs for the F.Y. 2007-08. This increase was primarily due to increase in cost of working capital borrowings. Profit/(Loss) after Tax: The profit of the Company has decreased by 95.65% from Rs. 2452.32 lacs for F.Y. 2006-07 to Rs. 106.59 lacs for the F.Y. 2007-08. The profitability of the Company during the year has been adversely affected due to steep hike in the cost of raw material and power without a commensurate rise in the selling prices of finished products. Working Results

Information relating to the company sales, gross profit etc., as required by the Ministry of Finance Circular No.F2/5/SE/76 dated February 5, 1977 read with the amendments of even No. dated March 8, 1977 as under: The unaudited working results of the company for the period [•] to [•] are given hereunder:

92

VII. LEGAL AND OTHER INFORMATION

A. Outstanding Litigations and Defaults There are no pending proceedings initiated for economic offences against the Company. No disciplinary action/ investigation have been taken by the SEBI against the Company. The promoters, their relatives, Rama Newsprint & Papers Ltd., are not declared as willful defaulters by RBI/Government authorities and there are no violations of securities laws committed by them in part or pending against them. OUTSTANDING LITIGATIONS AGAINST OUR COMPANY Criminal Matter

Nature : Criminal Revision Application No. 476 of 2009; Gujarat High Court Parties: Rama Newsprint & Paper Ltd., Vasu Ram Shinghani, C. U. Mangtani, Rajesh Phervani,

Ramcharan Bharadwaj, Natverlal S Patel v/s State of Gujarat and CBI. Background: The charge sheet No. 31/2000 dated 30th November 2000 was filed by CBI against our

Company and some of the officers of our Company and certain officials of the Central Excise Department, Surat, Gujarat. It was alleged that the accused committed criminal misconduct by entering into criminal conspiracy and cheated the Central Excise Department to the tune of Rs. 12,85,33,777/- for claiming MODVAT credit by using official rubber stamps showing the ‘receipt’ of the forms 57T(1) and 57T(2) declaration on back dates after expiry of the time meant for exemption of duty i.e. filing of back dated forms. The charge sheet also mentioned that our Company had fraudulently taken MODVAT credit in its account. It is further mentioned that our premises were raided and incriminating documents which were fraudulently prepared by the accused were found.

Subsequently, vide CESTAT Order No. A/1746 to 1754/WZB/06 C-III (EB) dated 30th August 2006 and Order of the Excise Commission Dated 30th January, 2008, the Company was allowed to claim the disputed MODVAT credit.

Our Company preferred a discharge application and the same has been disallowed. To challenge the said order disallowing discharge, our Company has filed Criminal Revision Application No. 476 of 2009 in Gujarat High Court. The matter is pending for hearing. The next date for listing is 23/06/2010.

Civil Matters

S. No.

Reference Number / Court Case Number

Name of Parties Nature of Dispute and Legal Actions taken

Disputed Amount

Status as on 11th May 2010

1 Special Civil Application 17116/2004 in Gujarat High Court

Rama Newsprint and Papers Ltd. v/s Gujarat Electricity Board

• The Gujarat Electricity Board has issued a bill dated 3rd December 2004 of Rs. 33,13,530.

• The Board has applied the HTP – II (A) tariff for supply of electrical

Rs. 33,13,350 By order dated 30th December 2004 the Gujarat Electricity Board has been restrained

93

S. No.



Disputed Amount


energy for water works connection of the Company.

from enforcing recovery of bill Matter pending for final hearing and disposal.

2 Special Civil Application 17825/05 High Court, Gujarat

Rama Newsprint and Papers Ltd. v/s State of Gujarat & Ors.

• The Company was issued demand notices dated 13th July 2005, 12th August 2005 and 23rd August 2005 by Surat Irrigation Circle, Narmada Water Resources and Water Supply & Kalpsar Department, Surat in respect of outstanding water charges with respect to Company’s unit at Barbodhan.

• The Company filed the application against the demand notices and prayed for ad-interim reliefs in terms of grant of stay. Stay was granted.

• The Company gave an undertaking that in case it fails in the petition, it will pay the demand amount with interest at the rate of 12% per annum.

Rs. 11,59,85,832

Stay granted. Matter pending

3 Civil Application No. 4757 of 2002 in LPA 464 of 2002 in Special Civil Application No. 8749 of 2000 Gujarat High

Surat Municipal Corporation v./.s Rama Newsprint and Papers Ltd.

Letters Patent Appeal has been filed by Surat Municipal Corporation against order dated 17th Jan 2002 of Gujarat High Court directing the Corporation to reconsider the application of the

Rs. 3,44,000 By order dated 17th July 2002 the order dated 17th Jan 2002 has been stayed till the pendency of

94

S. No.



Disputed Amount


Court Company for refund of octroi.

the LPA.

4 Special Civil No. 364/1995 Civil Judge, Senior Division, Surat

Maniben N Patel & Ors. v/s Rama Newsprint and Papers Ltd.

Dispute with respect to compensation for usage of property for laying of pipelines by the Company.

Rs. 26,29,000 with interest

The suit is pending further hearing. Next date of hearing is not confirmed.

5 Special Civil No. 57 of 2009 and 842 of 1999 Civil Judge, Senior Division, Surat

Bhagwati Patel & Ors. v/s Rama Newsprint and Papers Ltd.

Dispute with respect to compensation for usage of property for laying of pipelines by the Company.

Rs. 29,00,000 The suit is pending further hearing. Next date of hearing is not confirmed.

6 Civil First Appeal (ST.) 2932 of 2006 Gujarat High Court

Harish Construction Company v/s Rama Newsprint

Harish Constructions was directed by the order dated 28th March 2006 in Civil suit No. 3 of 1997 to pay amount of Rs. 5,38,843 together with interest to the Company in respect of purchase of flats by the Company from Harish Construction. The present appeal has been filed by Harish Constructions against the said order.

Nil Execution proceedings for execution of decree of the civil court dated 28th March 2006 have been initiated.

7 Pre-litigation Case No. 3968 Lok Adalat, legal Aid Committee, Surat

Idea Cellular Ltd. v/s Rama Newsprint and Papers Ltd.

• Idea Cellular had issued a bill of amount Rs. 1700.

Rs. 1700 Matter is pending

8 Special Civil No. 239 of 2003 X Civil Judge, Senior Division, Surat

Rama Newsprint and Papers Ltd. v/s Deputy Collector

• Dispute relating to payment of stamp duty.

Rs. 1,21,02,500

The suit is pending further hearing. Next date of hearing is not confirmed.

9 Special Civil No. 19 of 2004 VII Civil Judge,

Rama Newsprint and Papers Ltd. v/s Collector

• Vacant land taken on rent from Collector.

Rs. 3,82,000 The suit is pending further

95

S. No.



Disputed Amount


Senior Division, Surat

• Suit against the Collector and Ors. for levy of exorbitant interest rates on delayed payment of rent.

hearing. Next date of hearing is not confirmed.

Taxation Matters

S. No.


Name of Parties

Nature of Dispute and Legal Actions taken

Disputed Amount


1 AY 2007-08 Appeal to CIT (Appeals) – VII, Mumbai under Section 246(A)(1)(j) of the IT Act against order of assessing officer dated 10th March 2010

Rama Newsprint and Papers Ltd. v/s Assessing Officer

The assessing officer by his order dated 10th March 2010 levied penalty under section 271(1)(c) of the IT Act for filing inaccurate particulars of income in respect of : (a) Provision for leave encashment; and (b) Project expenses. The present appeal is directed against the said order of the assessing officer. The Company, vide its letter dated 9th April 2010, sought a stay of the order of the assessing officer

Rs. 5,14,456 (along with interest, if any, on the said amount that may be imposed)

Stay has been granted.

96

S. No.


Name of Parties


Disputed Amount


2 AY 2006-07 Appeal to ITAT under Section 246(2)(a) against the order of CIT (A) dated 27th May 2009 passed under Section 131(2), 154, 250, 271, 271 A, 272 A.

Dy. CIT v/s Rama News Print and Papers (P) Ltd.

The CIT by order dated 27th May 2009 set aside the order of the assessing officer dated 26th December 2008 and allowed the claim of depreciation of Rs. 3,15,37,167 in the value of fixed assets. The Department has filed present appeal against the said order of the CIT(A).

Rs. 2,31,124 Appeal pending.

3 AY 2005-06 Appeal to ITAT against the order of CIT(A) dated 22nd August 2008 passed under Section 131(2)/154/250/271/271A/272A

DCIT Central Circle 2 v/s Rama News Print and Papers (P) Ltd.

• The CIT by its order dated 22nd August 2008 set aside the order by which the assessing officer had increased the gross profit the Company to 15.01% from 14.1% and also disallowed the claim of depreciation of Rs. 57,123,234 and added Rs. 57,98,646 on account of MODVAT credit and interest of Rs. 2,53,768.

• The present appeal is filed in the ITAT against this order of CIT dated 22nd August 2008

Rs. 8,98,28,411

Appeal pending.

Labour Matters

S. No.


Name of Parties


Disputed Amount


1. LCS No. 334 of 2000 before the Hon’ble Labour Court at Surat

Navinchandra Balubhai Patel v/s

• Claim by Mr. Navinchandra that he was wrongfully

Back wages. Matter is pending further hearing. Next

97

S. No.


Name of Parties


Disputed Amount


Rama Newsprint and Papers Ltd.

terminated • Claim reinstatement

and payment of back wages.

date of hearing is not confirmed.

2. LCS No. 72/2002 before the Hon’ble Labour Court at Surat

Mr. S T Soni v/s Rama Newsprint and Papers Ltd.

• Dismissed for absenteeism

• Claim reinstatement and payment of back wages.

Back wages and other benefits

Matter is pending further hearing. Next date of hearing is not confirmed.


Mr. D I Bombaywalla v/s Rama Newsprint and Papers Ltd.

• Dismissed for misconduct.





Mr. Ishwarbhai Patel v/s Rama Newsprint and Papers Ltd.

• Dismissed for misconduct.





Mr. Vijay C Patel v/s Rama Newsprint and Papers Ltd.

• Employee was dismissed for misconduct.

• The employee claims reinstatement and payment of back wages with full benefits.



Arbitrations

S. No.


Name of Parties


Disputed Amount


1. Arbitration proceedings

Jessop & Co. Ltd. and Rama Newsprint and Papers Limited

Dispute arising out of agreement dated 24th June 1993 between the parties for design, manufacture and supply for rebuilding two numbers of paper machines. In the same dispute the

Rs. 24,83,15,000 along with Interim Interest and Interest on Award @ 24 % per

Matter pending at evidence stage

98

S. No.


Name of Parties


Disputed Amount


Company filed a counter claim seeking, interalia, an award or in the alternative, an enquiry into the loss and damage suffered by the Company and compensation for the same and also an enquiry as to entitlement of MODVAT benefit as per the terms of purchase order to the Company and award for such sum as may be found due on such enquiry.

annum. Counter claim by Company of Rs. 288,51,58,100.

Notices issued to the company

S. No.



Disputed Amount


1. Show cause notice dated 17th April 2001 issued by Deputy Commissioner of Central excise under Rule 233 A of Central Excise Rules, 1944

Demand of Central Excise duty on paper waste emerging during the course of manufacture of newsprint (duty free) and other paper products (dutiable) which was captively used as input for manufacture between April 2000 and Sep 2000.

Rs, 4,00,096 Matter pending for hearing.

2. Application dated 28th December 2009 by Rama Newsprint and Papers Ltd. before the Commissioner, Central Excise and Customs (Appeals), Surat II.

The present application has been filed for stay of Order in Original No. 168/AC-DK/DEM/2009 dated 5th November 2009 of Assistant Commissioner, Central Excise imposing a penalty of Rs. 2,71,473 for availing excess and ineligible CENVAT credits.

Rs. 2, 71,000 approx along with any interest that may be levied.

Application for stay pending.

3. Show cause notice dated 8th December 2009 issued by Commissioner of Central excise

The notice alleges that the Company had short paid the duty on ‘Depot Transfer’ of ‘News Print Reels’ during November 2008 to Jan 2009.

Rs. 1,62,00,000 along with any interest and penalty that may be imposed.

The Company has sought an extension to file the reply.

4. Show cause notice dated 1st December 2008 issued by Collector, Surat

The notice alleges that the Company has breached the condition of land allotment by failing to develop the 16 acre land as Gauchar out of the total 30 acre land

Nil Reply dated 28th January 2009 to the show cause

99

S. No.



Disputed Amount


allotted to the Company by the Collector.

notice has been filed by the Company.

5. Show cause notice dated 14th September 2009 issued by the Ministry of Corporate Affairs, Registrar of Companies, Gujarat Ref: ROC/GUJ/JTA(R)/209-A/Rama News/2009/11844

Show caused notice dated 14 September 2009 alleges contravention of Section 224(8) of the Companies Act, 1956 for failure for passing the requisite Board resolution for fixing the remuneration of the statutory auditors which was passed in the shareholders meeting dated 19-09-2008, 27-09-2007 and 28-09-2006. The Company by its letter dated 23rd September 2009 replied to the show cause notice and subsequently filed compounding application dated 24th September 2009.

Rs. 9,000 Matter pending for hearing. Next date of hearing is not confirmed.

Past penalties imposed on the company

S. No.



Disputed Amount


1. Show cause notice dated 17th July 2009 issued by the Ministry of Corporate Affairs, Registrar of Companies, Gujarat Ref: ROC/GUJ/JTA(R)/2009-A/Rama News/2009/7528

Show cause notice dated 17th July 2009 alleged contravention of Section 301 of the Companies Act, 1956. The Company by its letter dated 25th July 2009 replied to show cause notice and subsequently filed compounding application dated 11th August 2009.

Total penalty levied is Rs. 10,000 as follows: 1. The Company - Rs. 5,000 2. Mr. Vaishnav Das Bajaj - Rs. 5,000

Offenses compoundedMatter is closed.

Outstanding Litigation and Past penalties imposed against Directors of the Company ( and other officers in default)

S. No.



Disputed Amount


Show cause notice dated 17th July 2009 issued by the Ministry of Corporate Affairs, Registrar of Companies, Gujarat Ref: ROC/GUJ/JT(R)/209-

Show cause notice dated 17th July 2009 alleged contravention of Section 211 with respect to schedule VI of the Companies Act, 1956 for classification of the value of imports calculated on CIF basis by the Company. The Company replied to the notice

Total penalty levied is Rs. 9,000 as follows: 1. Shri. Vaisnav Das Bajaj , Executive

Offenses compounded Matter is closed.

100

A/Rama News/2009/7485

by its letter dated 25th July 2009 and subsequently filed compounding application. for compounding of the offenses. The company also filed application 11th August 2009 for compounding of offenses.

Director Rs.3,000 2. Other Officers in default Rs.6,000

Show cause notice dated 17th July 2009 issued by the Ministry of Corporate Affairs, Registrar of Companies, Gujarat Ref: ROC/GUJ/JTA(R)/209-A/Rama News/2009/7529

Show cause notice dated 17th July 2009 alleged non compliance with Accounting Standard 19 with respect to finance lease granted to the company for purchase of fixed assets on lease and the payment of lease rentals. The company by its letter dated 25th July 2009 replied to the show cause notice and subsequently filed compounding application dated 11th August 2009.

Total penalty levied is Rs.9,000 as follows: 1. Shri. Vaisnav Das Bajaj, Executive Director Rs.3,000 2. Other Officers in default Rs.6,000



Show cause notice dated 17th July 2009 alleged contravention of Section 211 of the Companies Act, 1956 for finalizing their balance sheet and profit and loss accounts without obtaining the confirmation of their debtors, creditors, balance with excise authorities, etc. for the years 31-03-2004, 31-03-2005, 31-03-2006, 31-03-2007, 31-03-2008. The Company by its letter dated 25th July 2009 filed replied to the replied to the show cause notice and subsequently filed compounding application dated 14th August 2009.

Total penalty levied is Rs. 15,000 as follows: 1. Shri. Vaisnav Das Bajaj,Executive Director Rs. 5,000 2. Other Officers in default Rs.10,000

Offenses compoundedMatter is closed.


Show cause notice dated 17th July 2009 alleged contravention of Section 211 of the Companies Act, 1956 for non disclosure of expenditure in foreign currency as per accounting standard 11. The company by its letter dated 25th July 2009 replied to the show cause notice and subsequently filed compounding application dated 11th August 2009

Total penalty levied is Rs. 9,000 as follows: 1. Shri. Vaisnav Das Bajaj Executive Director Rs. 3,000 2. Other Officers in default Rs. 6,000


101

Pursuant to CESTAT Order No. A/1746 to 1754/WZB/06 C-III (EB) dated 30th August 2006.

The Company filed an Appeal dated 28th February 2006 against Order passed by the Commissioner of Central Excise, Surat II, dated 22nd November 2005 which related to the earlier Order of denial of MODVAT credit. By Order No. A/1746 to 1754/WZB/06 C-III (EB) dated 30th August 2006, the CESTAT allowed the Company appeals and upheld the eligibility to credit and directed the Commissioner of Central Excise to re-determine the penalty and other liabilities against the officials of Rama News Print in de novo or fresh proceedings and after the fraud and fabrication investigations were concluded by the CBI. After the conclusions of the CBI investigations, in de novo proceedings, Central Excise and Customs Commissionerate, Surat II by order dated 30th January 2008 found the Company and its officials guilty of violation of Rule 57Q and 57T of the Central Excise Rules, 1944. By the said Order certain monetary penalties were imposed on the officials of the Company.

Total penalty levied is Rs. 12,000 as follows: 1. Vasu Ram Shinghani, then Chairman cum MD Rs. 2,000 2. U. Mangtani, VP Rs. 2,000 3. Rajesh Phervani, Dy. Manager Rs. 2,000 4. Ramcharan Bharadwaj, Sr. Assistant Rs. 2,000 5. Jignesh Desai, then Assitant Rs. 2,000 6. Rachna Mahesh Gwalani, then General Manager Rs. 2,000

Matter disposed. Penalties imposed as stated.

102

LITIGATION AND LEGAL INFORMATION OF PROMOTER COMPANY West Coast Paper Mills Limited

S. No.


Name of Parties


Disputed Amount


Taxation Matters 1 AY 1999-00

Income Tax Appeal No. 543 of 2007 against ITAT Mumbai Bench order dated 3rd April 2006 in IT Act number 3187/Mum/20 03 Before the High Court, Bombay

West Coast Paper Mills Ltd. v/s CIT – I

Claim of deduction under 80-IA of Income Tax Act, 1961 and inclusion of electricity duty in the computation of transfer price in respect of power generated for captive use. The Appeal is admitted and issues have been framed.

Nil Appeal pending hearing.

2 AY 2000-01 Income Tax Appeal No. 441 of 2008 against ITAT Mumbai Bench order dated 31st January 2007 in ITA number 8243/Mum/2004 and 275/Mum/2005 Before the High Court, Bombay

West Coast Paper Mills Ltd. v/s CIT – I

Claim of deduction under 80-IA of Income Tax Act, 1961 and inclusion of electricity duty in the computation of transfer price in respect of power generated for captive use. Deductions under section 43B, Section 18-HHC and Section 80-HHC of IT Act, etc. have also been raised. The Appeal is admitted and issues have been framed.

Rs. 81,42,047 Appeal pending hearing

3 AY 2001-02 Income Tax Appeal No. 442 of 2008 ITAT Mumbai Bench order dated 31st January 2010 in ITA number 8243/Mum/2004 and 275/Mum/2005 In the High Court, Bombay

Claim of deduction under 80-IA of Income Tax Act, 1961 and inclusion of electricity duty in the computation of transfer price in respect of power generated for captive use. Deductions under section 43B, Section 18-HHC and Section 80-HHC of IT Act, etc. have also been raised. The Appeal is admitted and issues have been framed.

Rs. 2,71,63,658 Appeal pending hearing.

4 AY 1999-00 Income Tax Appeal (L) No. 1760 of 2007

CIT – I Mumbai v/s West Coast

The ITAT by its order dated 3rd April 2006 allowed the deduction under 80-IA of ITA in

Rs. 2,74,34,523 Notice of Motion filed for seeking stay of ITAT

103

S. No.


Name of Parties


Disputed Amount


Notice of Motion 3249 of 2007 In the High Court, Bombay

Paper Mills Ltd.

respect of power generated by certain power units against which the Department has filed an appeal u/s 260A of ITA challenging the said order of the ITAT.

order dated 3rd April 2006. Appeal at pre-admission stage.

5 AY 2000-01 Income Tax Appeal (L) No. 750 of 2008 In the High Court, Bombay

CIT – I Mumbai v/s West Coast Paper Mills Ltd.

The ITAT by its order dated 31st January 2007 allowed the deduction under 80-IA of ITA in respect of power generated by certain power units against which the Department has filed an appeal u/s 260A of ITA challenging the said order of the ITAT. Appeal admitted.

Rs. 7,18,34,206 Appeal pending hearing.

6 AY 2001-02 Income Tax Appeal (L) No. 1771 of 2007 Notice of Motion 3248 of 2007 In the High Court, Bombay

CIT – I Mumbai v/s West Coast Paper Mills Ltd.

The ITAT by its order dated 31st January 2007 allowed the deduction under 80-IA of ITA in respect of power generated by certain power units against which the Department has filed an appeal u/s 260A of ITA challenging the said order of the ITAT.

Rs. 2,74,24,523 Notice of Motion filed for seeking stay of ITAT order dated 31st January 2007. Appeal at pre-admission stage.

Labour Matters

1 KID 15/2004 Additional Labour Court, Hubli

Ramchandra Naik v/s The Management of West Coast Paper Mills, Dandeli

Dismissal of employee for misconduct. Employee seeks reinstatement with back wages and other benefits.


Matter pending further hearing. Next date of hearing not confirmed.

2 Ref. 15/2006 Additional Labour Court, Hubli

Gajanan Binge v/s The Management of West Coast



Matter pending further hearing. Next date of hearing not

104

S. No.


Name of Parties


Disputed Amount


Paper Mills, Dandeli

confirmed.

3 Ref. 24/2006 Additional Labour Court, Hubli

Abdul Gaffar Mohamed Shaikh v/s The Management of West Coast Paper Mills, Dandeli




4 KID No. 7/2007 Additional Labour Court, Hubli

Dhondo N Naik v/s Management of West Coast Paper Mills

Premature superannuation alleged. Employee seeks reinstatement with back wages and other benefits.



5 KID No. 10/2009 Additional Labour Court, Hubli

Habibullah Khan v/s Management of West Coast Paper Mills




6 Ref. 29/2007 Sundarao Bikku v/s Management of West Coast Paper Mills

Enquiry against employee for misconduct. Employee allegedly resigned. The Employee claims that resignation was obtained under coercion and reinstatement with back wages and other benefits.



7 Ref. 28/2007 Shrimati Kallawa Yakkundi v/s Management of West Coast Paper Mills

Enquiry against employee for misconduct. Employee allegedly resigned. The Employee claims that resignation was obtained under coercion and reinstatement with back wages and other benefits.



8 KID No. 60 of 2008 Additional Labour Court, Hubli

Maktum Hussain v/s Manageme



Matter pending further hearing.

105

S. No.


Name of Parties


Disputed Amount


nt of West Coast Paper Mills

Next date of hearing not confirmed.

9 KID No. 7 of 2009 M S Mathpati v/s Management of West Coast Paper Mills





Mr. Chandra Sen v/s Management of West Coast Paper Mills





Constans Antony Lobo v/s Management of West Coast Paper Mills

Employee suspended for misconduct and was paid Subsistence allowance. Suspension revoked but employee did not report for work on certain days and eventually resigned. Employee demands full wages and other benefits for the suspension period.

Rs. 1,24,000 wit 18% interest.



Shri Jockey v/s Management of West Coast Paper Mills



Matter pending further hearing. Next date of hearing not confirmed


Mr. Shrikant Naik v/s Management of West Coast Paper Mills





Mr. Ashok F. Pawase v/s Management of West Coast Paper Mills




106

S. No.


Name of Parties


Disputed Amount


15 Ref. No. 4 of 2010 J S Dharane v/s Management of West Coast Paper Mills



Matter pending for filing of written statement. Next date not confirmed.

16 PGA No. 177 of 2008 Additional Labour Commissioner and Controlling Authority under Payment of Gratuity Act, 1972 – Hubli

Maktum Hussain v/s Management of West Coast Paper Mills

Application filed by employee applicant for payment of difference in gratuity amount

Rs. 14,490 Matter pending further hearing. Next date of hearing not confirmed

17 PGA CR 80 of 2009 Additional Labour Commissioner and Controlling Authority under Payment of Gratuity Act, 1972 – Hubli

Mr. Gnaneshwar v/s the Executive Director, West Coast Paper Mills Ltd.

Application filed by employee applicant for payment of difference in gratuity amount

Rs. 78,170 Matter at the stage of filing of objections. Next date of hearing not confirmed.

18 IDA No. 1/2009 Deputy Labour Commissioner and Conciliation Officer, Belgaum

Mr. Yashwant Wani V/s Management of West Coast Paper Mills Ltd.


Back wages and other benefits.


Criminal Matters

1 Criminal Complaint No. 651 of 2004 Judicial Magistrate First Class, Dandeli, Karnataka

Karnataka State Pollution Control Board v/s Mr. K I Chandak, Executive Director, West Coast Paper Mills Ltd.

Complaint filed for violation under section 24 and 25 of the Water (Prevention and Control of Pollution) Act, 1974 alleging that samples of trade effluents were not in conformity with the standards prescribed.

Section 43 and 44: Imprisonment of minimum 2 years and which may extend up to 6 years and fine

Matter pending at evidence stage. Next date of hearing not confirmed.

2 Criminal Complaint. No. 550 of 2009

West Coast Paper Mills

Violation of Section 630 of the Companies Act, 1956

Nil Matter pending at

107

S. No.


Name of Parties


Disputed Amount


Judicial Magistrate, First Class, Dandeli, Karnataka

Ltd. v/s Mr. Gajanan R Bhinge

alleged on account of wrongfully withholding company accommodation.

evidence stage. Next date of hearing not confirmed.

3 Criminal Complaint. No. 963 of 2009 Judicial Magistrate, First Class, Dandeli, Karnataka

West Coast Paper Mills Ltd. v/s Mr. J S Dharme

Violation of Section 630 of Companies Act, 1956 alleged on account of wrongfully withholding company accommodation.

Nil Non-bailable warrant issued against the accused.

Civil Matters

1 Original Suit No. 165 of 2006 under Order 7 Rule 1 Code of Civil Procedure, 1908 Civil Judge Senior Division, Sirsi

West Coast Paper Mills Ltd. v/s Ameer U Khan

Breach of contract for maintenance, renovation and construction of building alleged. Suit instituted by West Coast for recovery of advance payment of Rs. 11,19,575.

Nil Matter pending at evidence stage. Next date of hearing not confirmed.

2 Original Suit No. 184 of 2006 under Order 7 Rule 1 Code of Civil Procedure, 1908 Civil Judge Senior Division, Sirsi

West Coast Paper Mills Ltd. v/s Industrial Investment Bank of India, Kolkata and Bangalore branches

West Coast alleges breach of loan agreement dated 29 January 2001 by the Bank on account of non-disbursal of loan amount.

Nil Matter pending at evidence stage. Next date of hearing not confirmed.

3 Special Leave Petition (Civil) No. 21538 of 2008 against final judgment and order dated 17th April 2008 of Karnataka High Court in Writ Appeal No. 3466 of 2005 Supreme Court of India

West Coast Paper Mills Ltd. v/s Deputy Commissioner

‘Reserve Forest’ land allotted to the West Coast for manufacturing paper. Area subsequently dereserved but continued to be shown as ‘Reserve Forest’ in the revenue records. West Coast filed writ petition for removal of the word ‘Reserve Forest’ before the Karnataka High Court. Aggrieved by the order of the High Court, West Coast filed the present SLP.

Nil The Hon’ble Supreme Court by dated 8th September 2008 directed parties to maintain status quo. Matter pending hearing.

108

S. No.


Name of Parties


Disputed Amount


4 Writ Petition No. 16501 of 2006 Karnataka High Court

The West Coast Paper Mills Ltd. v/s Union of India & Ors.

The Railway Rate Tribunal by its order dated 22nd December 2005 held that the increased freight charges levied by the Railways were unreasonable. Railways refused refund of amount and adjusted the same against various other unrelated heads. Present petition filed against revision of minimum weight condition for transport of good and for raising undercharges there under.

Nil Writ Petition is pending hearing.

LITIGATION AND LEGAL INFORMATION OF OUR PROMTER GROUP COMPANIES The details of litigations involving top five listed companies, companies with negative networth and Sick companies within the promoter group is as follows: Jayshree Chemicals Limited

S. No.


Name of Parties


Disputed Amount


1 Order – In - Appeal No.39/Ce/B-I/2008 dated 15.12.2008 passed by the Commissioner (Appeals), Bhubaneshwar arising out of Order – In – Original No.9(10/07) AC/BBSR-BAM/CE/2008 dated 30.04.2008

Jayshree Chemicals Ltd. V/s Assistant Commissioner of Central Excise, Bhubaneshwar Division

The case relates to demanding of interest by the Central Excise Department on differential duty due to upward revision of price of goods sold by the company. The Commissioner (Appeals) is remanded the case to the Assistant Commissioner, Central Excise, Customs & Service Tax, Bhubaneshwar Division for de-novo adjudication.

Rs.52,000/- Pending for decision

2 Show cause Notice No.V(3)7-MODVAT / RDA / 94 /9804 dated 26.12.1994 issued by

Central Excise Department and

The Show cause Notice pertains to eligibility of MODVAT Credit availed by Jayshree Chemicals

Rs.30,000/- along with any penalty that may be

Pending for hearing and decision

109

S. No.


Name of Parties


Disputed Amount


the Central Excise Department to Jayshree Chemicals Ltd.

Jayshree Chemicals Ltd.

Ltd. in respect of capital goods. Reply dated 12.06.1995 has been filed by Jayshree Chemicals Ltd. The case is pending before the Assistant Commissioner of Central Excise, Customs, Service Tax, Bhubaneshwar Division

levied by Central Excise Department

3 Appeal No.EA-560/09 against Order-In-Appeal No.74/CE/B-I/2009 dated 29.07.2009 passed by Commissioner (Appeals), Bhubaneshwar

Commissioner, Central Excise & Customs, Bhubaneshwar-I Commissionerate, Bhubaneshwar V/s Jayshree Chemicals Ltd.

The case pertains to disallowance of CENVAT Credit availed by Jayshree Chemicals Ltd. on GTA (Outward Transportation of Finished Goods)

Rs.14,87,071/- Pending for hearing and decision

4 Show cause Notice No.IV (7) 211/ST/JS/BBSR/2005/4665 dated 20.10.2006 before The Assistant Commissioner of Central Excise, Customs & Service Tax, Bhubaneshwar Division

Central Excise Department and Jayshree Chemicals Ltd.

The Central Excise Department raised a demand dated 20.10.2006 on the Company for recovery of Service Tax not paid by the Company for providing management consultancy services. Reply dated 16.11.2006 has been filed by the Company

Rs.68,850/- along with any interest and penalty that may be levied by Central Excise Department

Personal hearing concluded on 16.03.2010. Order is awaited.

5 Show cause Notice No.V (28) 15/Adjn/B-1/CENVAT/20/08/8716-A dated 04.04.2008 before the Additional Commissioner, Central Excise, Customs, Bhubaneshwar-I Commissionerate


The case pertains to disallowance of CENVAT credit availed on Chlorine containers as inputs. Reply dated 13.12.2008 has been filed by Jayshree Chemicals Ltd.

Rs. 12,64,024/- along with any interest and penalty that may be levied by Central Excise Department


6 Demand-cum- Show cause Notice No. V(73) 15/Adjn/B-I/CEN/9/07/5921A

Central Excise Department and

The case pertains to disallowance of CENVAT credit availed by the Company on input

Rs. 10,20,816/- along with any interest and penalty


110

S. No.


Name of Parties


Disputed Amount


dated 21.03.2007 before the Joint Commissioner, Central Excise, Customs & Service Tax, Bhubaneshwar-I Commissionerate

Jayshree Chemicals Ltd.

service. Reply dated 12.07.2007 has been filed by Jayshree Chemicals Ltd.

that may be levied by Central Excise Department

7 Show cause Notice No.V(28) 15/Adjn/B-I/11A/13/06/8235A dated 05.05.2006 before the Commissioner, Central Excise, Customs & Service Tax, Bhubaneshwar-I Commissionerate


The case pertains to demand of Central Excise duty on transportation and handling costs. Reply dated 25.08.2006 has been filed by Jayshree Chemicals Ltd.

64,18,350/- along with any interest and penalty that may be levied by Central Excise Department


8 Reference No. 10 (C), 1985-1986, before the Sales Tax Tribunal, Orissa, Cuttack.

Jayshree Chemicals Ltd. v/s State of Orissa represented by Commissioner of Sales Tax, Orissa, Cuttack.

Sales Tax matter under the Central Sales Tax Act.

Rs. 5,57,921 Pending for hearing.

9 Sales Tax Appeal No. AAC.6 of year 1986-1987, before the Office of Assistant Commissioner of Sales Tax, Ganjam Range, Berhampur.

Jayshree Chemicals Ltd. v/s State of Orissa represented by Commissioner of Sales Tax


Rs. 14,230 Pending for hearing.

10 Sales Tax Appeal No. AAC. 28 of year 1991-1992 before the Office of Assistant Commissioner of Sales Tax




111

S. No.


Name of Parties


Disputed Amount


11 2006-2007 Revision Case No. AA52 VAT/2008-2009. Before the Office of the Commissioner of Commercial Taxes, Orissa.


Sales Tax matter under Orissa Value Added Tax Act.


12 2001-2002 Tax Appeal Petition No. 2 of 2006. Before The High Court of Orissa.


Sales Tax matter under Orissa Entry Tax Act.

Rs. 12,54,480.32

Pending for hearing.

13 2002-2003 Sales Tax Tribunal, Cuttack, Orissa


Sales Tax matter under Orissa Entry Tax Act.


14 1997-1998 Tax Appeal No. AAC.1 OF 200-2001 before the Office of Assistant Commissioner of Sales Tax, Ganjam Range, Berhampur.



Rs. 63,219 Pending for hearing.

15 1988-1989 Sales Tax Appeal No. 448 of 1993-1994 before the Division Bench, Orissa Sales Tax Tribunal, Cuttack

Jayshree Chemicals Ltd. v/s State of Orissa represented by Commission

Sales Tax matter under Orissa Sales Tax Act.


112

S. No.


Name of Parties


Disputed Amount


er of Sales Tax

16 M/s. J. C. Ltd. Vs. Mr. M. S. Sahu and E.S.I.C.

A.H.O. 49/93 High Court, Cuttack

Mr. M. S. Sahu filed a compensation case in the Dist. Judge Court claiming compensation for his alleged eye accident in the Factory. The Dist. Judge dismissed his claim. Mr. Sahu filed an appeal before the High Court. The High Court accepted the claim of Mr. Sahu advising the Company to pay compensation. The Company filed review before the Bench of the High Court.

Compensation to be determined by the High Court.

The High Court has granted stay subject to deposit of Rs. 0.27 Lacs. The Company has deposited the said amount and the stay is continuing.

17 J.C.L V/s P.F. Authority

High Court, Cuttack Writ case No. OJC- 2962 of 2000 Misc. case No. OJC-2983 of 2000

Reduction of PF contribution (Employer’s share) from 12% to 10% with effect from Feb.2000 to 2006. Writ has been filed before High Court, Cuttack claiming relief granted to sick Company by reducing existing 12% to 10% PF contribution. After our Company came out of sickness, we have started paying employer’s contribution @ 12% with effect from1.1.2006.

2% differential P.F during that period along with penal damage to be determined the court.

High Court ordered not to take coercive action against Company. The case is continuing.

18 J.C.L v/s Labour Court, Jeypur & Mr. C.P.Nayak

High Court Case No. OJC 4928/2001 Misc. case No.5204 / 2001 arising out of I. D. Case No. 62/99 Labour Court

The Government has referred The termination case of Mr. Chakrapani Nayak (who was dismissed from the service of the Company in the year 1996 due to disobedience and misbehavior) to the Labour Court, Jaipur for adjudication. Mr. Nayak has submitted claim

If ordered for reinstatement back wages shall be paid.

The High Court has granted the stay petition filed before the Labour Court to wait till further orders.

113

S. No.


Name of Parties


Disputed Amount


Jeypore statement. The Company has filed the written statement. The Labour Court rejected the petition of the Company for taking up enquiry as the preliminary issues. We have filed a writ before the Hon’ble High Court.

19 JCL v/s E.S.I Corporation.

SPJC 3, 4 & 5 / 2003 in Dist. Judge Court, Berhampur

i) ESI has assessed/ claimed the dues in respect of contractor laborers.

Rs. 1.36 Lacs. Further interest @ 15% for each day of default will be charged till the date of deposit.

50% of the claimed amount has been deposited with Dist. Judge & Stay granted.

20 JCL v/s E.S.I Corporation

2000-01 E.S.I. Directorate BBSR.

ii) ESI has claimed Rs. 0.64 Lacs towards differential payment in respect of contractor labourers for the year April, 2000 to March, 2001. We have already submitted our reply. The matter is pending in the office of Regional Director, E.S.I. Corporation, Bhubaneswar.

Rs. 0.64 Lacs Matter pending.

The Thirumbadi Rubber Company Limited (TTRCL)

S. No.


Name of Parties


Disputed Amount

Present Status

1 SA 193/97 Hon’ble High Court of Kerala

Mr. Damodharan Nair and other v/s The Thirumbadi Rubber Company Ltd.

Land dispute matter. Appeal filed by Damodharan Nair & Ors. Mr. Damodharan Nair and other legal heirs of the lesser filed a suit in the Munsiff court for the tenancy right in the leased land against the Company. The court issued the order in favour of the Company. The applicant filed an

N.A Matter pending hearing.

114

S. No.


Name of Parties


Disputed Amount

Present Status

appeal before the District Court which confirmed the findings of the Munsiff Court. The Petitioners had filed an appeal before the High Court against the order of the District Court.

2 IA 23/2006 Hon’ble High Court of Kerala

Damodharan Nair & Ors. v/s Thirumbadi Rubber Company Ltd.

Wind fallen rose wood. Petition filed by Mr. Damodharan Nair & Ors.to restrain the company & permit the applicant to cut and remove the tree. On direction from the High Court Rs. 36,000 was deposited with the court and got permission for removing the rose wood tree. Now we have disposed off the trees for Rs. 32,000. The above matter came up for hearing before the Hon’ble Justice K. Ram Kumar on 13/01/09. Since the award has not been passed in the above case the court directed that the amount may not be disbursed and the parties can move the court at the time when the award is passed and the amount kept with the Spl. Tahsildar, land acquisition. Applied for the copy of the order.

Rs. 36,000 was deposited with High Court pending final order.

Order Awaited

3 OP 56/05 District Court, Kozhikode

Thirumbadi Rubber Company Ltd. v/s KSEB

KSEB higher compensation appeal filed. The Electricity Board could offer only Rs. 90,000 more which makes the total amount to Rs. 1,87,360 only, against our claim amount of Rs. 36.74 lacs. The offer was refused by us and we will continue our proceedings in the Court.

Our claim amount Rs. 36.74 lacs. Commission ascertained Rs. 30.58 lacs. Received Rs. 97,360.

Matter pending.

115

S. No.


Name of Parties


Disputed Amount

Present Status

4 GC 46/05 & Appeal GC 21/06

Mr. Haridas Menon v/s Thirumbadi Rubber Company Ltd.

Gratuity case before the authority under Gratuity Act. Complainant Mr. Haridas Menon, Ex. Manager of Thirumbady Estate Appeal GC No. 21/06 filed by the company against the order of the DLO before RJLC.

As may be awarded

Matter pending for final order.

5 OS 375/06 Sub Court – 11A, Kozhikode

C. Hamsa v/s Thirumbadi Rubber Company Ltd.

Pitting Contractor C. Hamsa claiming payment. Non-compliance of contract terms by contractor and the contractor filed for claim of Rs. 93,614.

Rs. 93,614 Matter pending.

6 WPC/21893 of 2003 Hon’ble High Court of Kerala

Thirumbadi Rubber Company Ltd. v/s District Magistrate

Stay Petition against the order of the District Magistrate WPC/21893 of 2003 at High Court to close down the factory for not having proper affluent treatment plant for our factory.

N.A. Stay obtained. Matter pending.

7 Appeal No. WP(C)17431/06 Hon’ble High Court of Kerala

Thirumbadi Rubber Company Ltd. v/s Labour Commissioner, Trivandrum

Appeal No. WP (C) 17431/06 before the High Court of Kerala against the order of the Labour Commissioner, Trivandrum for payment of medical expenses amounting to Rs. 30,228.34 to Smt. Neduvanchery Pathumma (Worker TH division). The worker claimed for medical expenses amounting to Rs. 30,228. The Labour Commissioner issued the order in favour of the worker. The company filed an appeal before the High Court of Kerala against the Labour Commissioner’s order.

Rs. 30,228.34 Matter pending further hearing

8 IA 11924/2004 in WP (C) No.7888/04 Hon’ble High Court of Kerala

Stay Petition for PF orders before the

Stay order IA 11924 of 2004 in WP (C) No.7888 of 04 22nd September 04, regarding penalty for

Stayed proceedings of the Commissione

116

S. No.


Name of Parties


Disputed Amount

Present Status

Hon’ble High Court of Kerala

delay in payment of PF remittances

r’s order till the disposal of the matter.

9 ATA 596 (7)/2002 PF Appeal at Tribunal, New Delhi

PF Appeal at Tribunal, New Delhi to pay penalty for delay in deposit of PF dues Case No.ATA 596(7)02 Rs. 301,866.

Rs. 301,866. Final order awaited.

10 ATA 146 (7)/2004 PF Appeal at Tribunal, New Delhi

PF Appeal at Tribunal, New Delhi Case No.ATA 146(7) 04 Rs. 1,25,202. Penalty for delay deposit if PF dues.

Rs. 1,25,202 Matter pending further hearing.

11 WC 271/96 Deputy Labour commissioner

Ms. Pushpavally w/o Radhakrishnan v/s Thirumbadi Rubber Company Ltd.

Workmen compensation case filed by Pushpavally w/o Radhakrishnan, our ex-employee.

Compensation as may be awarded

Matter pending at evidence stage.

12 WC/142/98 Deputy Labour commissioner

Workmen compensation. One worker died accidently while felling rubber trees in slaughter area by the contractor. Case was posted to 13/10/2009 for taking our evidence but the opposite party raised objection against the legality of the agreement made between the party and the company

Matter pending hearing on the preliminary points. Hearing is not over.

13 C.C. 284/06 First Class Judicial Magistrate Court, Thamarassery

State of Kerala v/s Sudheesh (and certain other workers)

Criminal Prosecution case against Sudheesh & 8 other workers for damaging the bungalows and vehicles

Case pending

14 WPC/13527/2007 (I) Thirumbadi Rubber Company Ltd v/s. KSEB

KSEB for not obtaining permission for installing additional load in 90’s when some new machines were installed in crumb factory etc. Claim for 9.8 lacs by Dy CE KSEB. Further reduced to Rs.

Rs. 441,677 Matter pending.

117

S. No.


Name of Parties


Disputed Amount

Present Status

441,677 by CE (Appeal) which was challenged in the Hon’ble High Court and got stay on payment of Rs. 100,000. KSEB continued to raise penalty upto April 07. The matter has been stayed by High Court.

15 CMP No.29794/2001 in OP No.184/94/2001 B- High Court Hon. High Court of Kerala

T Moideen Koya v/s Thirumbadi Rubber Company Ltd.

Suit filed by T Moideen Koya regarding his dismissal.

Reinstatement and back wages.

Matter pending.

The KIL Kotagiri Tea & Coffee Estates Company Limited (KKTCEL) KKTCEL has no outstanding litigations

Amrit-Villa Investments Limited (AVIL) AVIL has no outstanding litigations Mothola Company Limited (MCL)

MCL has no outstanding litigations West Bengal Properties Ltd. (WBPL) WBPL has no outstanding litigations Speciality Coatings & Laminations Private Limited

S. No.


Name of Parties


Disputed Amount


1 OA 34/2010 Before the Debt Recovery Tribunal III, Delhi

Oriental Bank of Commerce v/s Speciality Coatings & Laminations Pvt. Ltd.

Proceedings filed by the Bank for recovery of Cash Credit Hypothecation granted to the Company.

Rs. 5,62,45,764 together with interest at 11% monthly rest. The said amount may be recovered by sale of property located at Gurgaon mortgaged to

The matter is coming up for hearing on 13th May 2010 for the appearance of Defendant Nos. 2 & 3.

118

S. No.


Name of Parties


Disputed Amount


the bank by Speciality Coatings.

2 Suit No. 335 of 2009 District Judge, Central Delhi

Speciality Coatings & Laminations Pvt. Ltd. v/s M S Handa Enterprises & Anr.

Suit for recovery of price of goods (paper and other materials) sold by the Company along with interest amounting to Rs. 10,83,606.

Nil Matter is pending for hearing

Fort Gloster Industries Ltd. (FGIL) The Board for Industrial and Financial Reconstruction (BIFR) at the hearing held on 10/09/2001, declared FGIL as a sick industrial company within the meaning of Clause (o) of Section 3(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 and appointed Industrial Development Bank of India (IDBI) as the Operating Agency. Consequent to various hearings BIFR ordered publication of advertisement for change of management. The advertisement by the IDBI for Change of Management has not yet been made. The status of outstanding litigations against FGIL is not available due to close down of factory & office premises. However based on annual report of FGIL for the year 2008-09, following litigations form part of contingent liabilities not provided for: There have been statutory dues of Rs. 1126.75 lacs towards Sales tax for period of 1992-93, 1998-99 to 2003-04 including interest upto 30/09/2008 and Fringe benefit tax pertaining to the period April08 to Sept.08, which were outstanding as at 31st March 2009. There have been disputed statutory dues aggregating to Rs.312.88 lacs towards Excise duty, Sales Tax, Munciple Tax, Income Tax & Provident Fund, which have not been deposited by FGIL on account of matters pending before appropriate authorities. FGIL has defaulted in repayment of dues of Rs.12484.88 lacs to financial institutions and banks. The default in repayment of dues to banks is even after restructuring of dues.

119

B. Government Approvals On the basis of the indicative list of approvals below, we are permitted to carry on business activities and no further approvals from any Government authorities/RBI are required by us to undertake the present business. It must be distinctly understood that, in granting these licenses, the Government of India and/or RBI does not take any responsibility for Company’s financial soundness or for the correctness of any of the statements made or opinions expressed in this behalf. The approvals obtained and/or required to be obtained relate to our Company and also particularly to each of its manufacturing units. We have obtained necessary approvals and registrations from various authorities in relation to its business activities; which include: i) Permanent Account Number and Tax Deduction Account Number under the Income Tax Act, 1961; ii) Registration under Central Sales Tax Act, 1959, Gujarat Sales Tax Act, 1969, and Gujarat Value

Added Tax Act, 2003; iii) Importer-Exporter Code Number under the Foreign Trade Development and Regulation Act, 1992; iv) Registration with the Employees’ State Insurance Corporation under Employees’ State Insurance

Act., 1948; v) Registration under Employees Provident Fund & Miscellaneous Provisions Act, 1952; and We have also obtained necessary approvals from various authorities for conduct of business at the manufacturing unit located at Village Barbodhan, Dist Surat. These approvals include: i) License to work a factory from Directorate Industrial Safety & Health, Gujarat State. The same is

valid till 31/12/2010; ii) Letter of Intent from Department of Industrial Development, Secretariat for Industrial Approvals,

Ministry of Industry, Government of India. iii) Consent letter from Gujarat State Pollution Control Department Except as mentioned above no further material approvals are required for carrying on present activities by our Company.

120

VII. OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Present Issue The Board of Directors of our Company in their meeting held on 07/01/2010 decided to make the rights issue of equity shares to the extent of Rs.5000.00 lacs and accordingly the draft letter of offer was approved by the Board of Directors of the Company in their meeting held on 29/05/2010. The ratio and price per equity share will be decided by our Board of Directors prior to the issue at the appropriate time and as per the applicable rules/ regulations. Prohibition by SEBI Neither our Company, nor the Directors nor the Promoters nor the Group Entities, or companies with which the Company‘s Directors are associated with as directors or Promoters, have been prohibited from accessing or operating in the capital markets under any order or direction passed by SEBI. Further, none of the Directors or person(s) in control of the Promoters has been prohibited from accessing the capital market under any order or direction passed by SEBI. Further, except Fort Gloster Industries Ltd., whose name has been included in the list of defaulters by RBI, neither our Promoters nor our Company nor our Group Entities have been declared as willful defaulters by RBI / Government authorities. Eligibility for the issue Rama Newsprint and Papers Limited is an existing listed Company. It is eligible to offer this Rights Issue in terms of Chapter IV of ICDR Regulations, 2009. Disclaimer clause AS REQUIRED, A COPY OF THIS LETTER OF OFFER HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). “IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF OFFER DOCUMENT TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE OFFER DOCUMENT. LEAD MANAGER, SMC CAPITALS LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN OFFER DOCUMENT, LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER SMC CAPITALS LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 07/06/2010 WHICH READS AS FOLLOWS : 1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO

LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH

121

COLLABORATORS ETC. AND OTHER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY,

ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:

A) THE DRAFT LETTER OF OFFER FILED WITH THE BOARD IS IN CONFORMITY

WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

B) ALL THE LEGAL REQUIREMENTS TO THE SAID ISSUE AS ALSO THE REGULATIONS GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

C) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND

ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.

3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE

LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE SUCH REGISTRATION IS VALID.

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS TO

FULFIL THEIR UNDERWRITING COMMITMENTS – NOT APPLICABLE. 5. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS

ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE “MAIN OBJECTS” LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

6. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT

THE MONIES RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONIES SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FORM ALL THE STOCK EXCHANGES MENTIONED IN THE OFFER DOCUMENT. WE FURHTER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION- NOTED FOR COMPLIANCE

7. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT OFFER DOCUMENT

THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.

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8. WE CERTIFY THAT ALL APPLICABLE DISCLOSURES MANDATED IN SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN THE ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.

9. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE LETTER

OF OFFER:

A) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE SHARES OF THE COMPANY AND

B) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.

10. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO THE

ADVERTISMENT IN TERMS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE.

11. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN

EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OF THE ISSUER, SITUATION AT WHICH THE PROPOSED BUISNESS STANDS, THE RISK FACTORS, PROMOTERS’ EXPERIENCE, ETC.

12. WE ENCLOSE A CHECKLIST CONFIRMING REGULATIONWISE COMPLIANCE WITH THE

APPLICABLE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT OFFER DOCUMENT WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.

THE FILING OF THE OFFER DOCUMENT DOES NOT, HOWEVER, ABSOLVE THE ISSUER FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER ANY IRRREGULARITIES OR LAPSES IN OFFER DOCUMENT”. Caution statement / Company Disclaimer

Our Company and the Lead Manager accept no responsibility for statements made otherwise than in this Draft Letter of Offer or in any advertisement or other material issued by us or by any other persons at the instance of our Company. Anyone placing reliance on any other source of information would be doing so at his/her own risk.

The Lead Manager and our Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports, etc. after filing of this Draft Letter of Offer with SEBI.

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Disclaimer in respect of Jurisdiction This Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Gujarat, India only. Disclaimer Clause of the BSE As required, a copy of this Draft Letter of Offer has been submitted to BSE. The Disclaimer Clause as intimated by BSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing with the Stock Exchanges. Disclaimer Clause of the NSE As required, a copy of this Draft Letter of Offer has been submitted to NSE. The Disclaimer Clause as intimated by NSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing with the Stock Exchanges. Filing with SEBI The Draft Letter of Offer has been filed with SEBI, Unit No: 002, Ground Floor, SAKAR I, Near Gandhigram Railway Station Opp. Nehru Bridge Ashram Road, Ahmedabad - 380009, for its observations. After SEBI gives its observations, the Letter of Offer will be filed with the Stock Exchanges as per the provisions of the Companies Act. Listing The existing Equity Shares are listed on the Stock Exchanges. The Company has made applications to the Stock Exchanges for permission to deal in and for an official quotation in respect of the Equity Shares being offered in terms of this Draft Letter of Offer. The Company has received in-principle approvals from the BSE and the NSE by letters dated [●] and [●], respectively. The Company will apply to the Stock Exchanges for listing of the Equity Shares to be issued pursuant to this Issue. If the permission to deal in and for an official quotation of the Equity Shares is not granted by any of the Stock Exchanges mentioned above, within 15 days from the Issue Closing Date, the Company shall forthwith repay, without interest, all monies received from Investors in pursuance of this Draft Letter of Offer. If such money is not paid within eight days after the Company becomes liable to repay it (i.e. 15 days from the Issue Closing Date), then the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under the section 73 of the Act. Impersonation Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below: "Any person who-

(a) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or

(b) otherwise induces a Company to allot or register any transfer of shares therein to him, or any other person in a fictitious name,

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shall be punishable with imprisonment for a term which may extend to five years." Consents Consents in writing of the Auditors, Lead Manager, Legal Advisor to the Issue, Registrar to the Issue, to act in their respective capacities have been obtained and filed with SEBI, along with a copy of the Draft Letter of Offer and such consents have not been withdrawn up to the time of delivery of this Draft Letter of Offer for registration with the Stock Exchanges. Haribhakti & Co., the Auditors of the Company have given their written consent for the inclusion of their Audit Report in the form and content as appearing in this Draft Letter of Offer and such consents and reports have not been withdrawn up to the time of delivery of this Draft Letter of Offer for registration with the Stock Exchanges. Haribhakti & Co. have given their written consent for inclusion of the statement of tax benefits in the form and content as appearing in this Draft Letter of Offer, accruing to the Company and its members. All the necessary consents required for this Issue including consents from the lenders, industry sources and other third parties have been obtained by the Company. To the best of the Company‘s knowledge there are no other consents required for making this Issue. However, should the need arise, necessary consents shall be obtained by the Company. Expert opinion Except as stated in “Statement of Tax Benefits” and “Financial Information” on pages 22 and 60, respectively, no expert opinion has been obtained by the Company in relation to this Draft Letter of Offer. Expenses of the Issue The expenses of the Issue payable by us including fees and reimbursement to the Lead Manager, Auditors, Legal Advisor to the Issue, Registrar to the Issue, printing and distribution expenses, publicity, listing fees, stamp duty and other expenses are estimated at Rs. [●]and will be met out of the proceeds of the Issue.

Sr. no. Particulars Amount (Rs. in lacs)

Amount as a % of total

issue expenses

Amount as a % of total issue size

1 Fees to Lead Merchant Banker, Registrar to the Issue & other intermediaries

[●] [●] [●]

2 Printing & Stationery, distribution, Postage etc

[●] [●] [●]

3 Advertisement & Marketing Expenses [●] [●] [●]4 Other Expenses [●] [●] [●] Total [●] [●] [●]

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Public or rights issues by us in last five years We have not made any public/rights issue of its equity shares during the last five years. Previous Issues of Securities otherwise than for cash We have not issued any securities otherwise than for cash. Commission and brokerage on previous issues We have not made any Public/Rights Issue during last five years, hence no commission or brokerage has been paid. Previous issues in the last three years We have not made any public or rights issue in the last three years. The capital issues made by our listed group companies during last three years is as follows :

1 Name of the Company: Jayshree Chemicals Limited Year of the Issue: F.Y. 2009-10 Type of Issue: Rights Issue Amount of Issue: Rs.3599.16 Lacs Date of Closure of Issue: 18/03/2010 Date of completion of delivery of share certificate: 01/04/2010 Date of completion of project: The project is proposed to be completed by February 2011 Rate of dividend paid: Nil for F.Y.2009-10

Besides this none of listed group company has made any Public/Rights Issue during last three years. Promise vis-à-vis performance We have not made any public/rights issue during the period of last ten years. Issues made by our listed group companies during last ten years and implementation status of object of issue are as follows: Jayshree Chemicals Limited The company has made a Rights issue of equity shares which opened on 26/02/2010 & closed on 18/03/2010. The object of this Rights Issue is to part finance the conversion of existing plant based on Mercury Cell Technology to Membrane Cell Technology and also increasing the existing production capacity of Caustic Soda from 65 TPD of to a capacity of 152 TPD. The project is proposed to be completed by February 2011. Besides this none of our group company made any Public/Rights Issue during last ten years. Outstanding instruments There are no outstanding debentures or bonds and redeemable preference shares and other instruments issued by the issuer, outstanding as on the date of this Draft Letter of Offer.

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Stock market data for shares of our company The equity shares of our company are listed on The Bombay Stock Exchange Ltd. (BSE) and The National Stock Exchange of India Limited (NSE). The stock market data for the equity shares are as follows: BSE

Particulars

High Low Average Price (Rs.)

Total Volume (no of

shares)

High (Rs)

Date Volume on date of

high (no of

shares)

Low (Rs)

Date Volume on date of Low (no of

shares) 2007 48.30 08/01/07 126360 24.25 05/11/07 26545 36.27 16666942 2008 48.40 08/01/08 1161067 11.22 01/12/08 1757 29.81 17311021 2009 54.05 30/12/09 154714 10.95 06/03/09 8410 32.50 16683179

Dec 09 54.05 30/12/09 154714 20.00 01/12/09 1652361 37.02 8390662 Jan 10 50.45 04/01/10 142449 31.10 29/01/10 28874 40.77 1570208 Feb 10 35.10 01/02/10 30157 20.20 24/02/10 59113 27.65 1552086 Mar 10 25.25 11/03/10 305093 18.55 03/03/10 808570 21.90 3462683 Apr 10 27.30 09/04/10 710597 20.60 20/04/10 52757 23.95 2673665 May 10 21.75 11/05/10 23932 18.00 26/05/10 22746 19.87 398732

(Source: BSE) NSE

Particulars

High Low Average Price (Rs.)

Total Volume (no of

shares)

High (Rs)

Date Volume on date of

high (no of

shares)

Low (Rs)

Date Volume on date of Low (no of

shares) 2007 48.00 08/01/07 243050 25.05 22/08/07 18392 36.52 19161658 2008 48.35 08/01/08 1130111 11.20 16/12/08 76592 29.77 22474974 2009 54.00 30/12/09 197173 10.30 05/03/09 16883 32.15 21561133

Dec 09 54.00 30/12/09 197173 20.00 01/12/09 1397733 37.00 9361770 Jan 10 50.00 05/01/10 90128 32.40 28/01/10 1566053 41.20 3423410 Feb 10 34.80 01/02/10 78345 20.05 24/02/10 118599 27.42 2391560 Mar 10 25.60 11/03/10 373248 18.70 03/03/10 496187 22.15 4595042 Apr 10 27.55 09/04/10 911825 20.50 21/04/10 63142 24.02 5574454 May 10 21.90 11/05/10 50620 17.90 26/05/10 62234 19.90 543650

(Source: NSE) Week -end price of equity Shares of RNPL on the BSE & NSE.

Week ended BSE NSE Price (Rs) Price (Rs)

04/06/2010 18.60 18.50 28/05/2010 19.25 19.15 21/05/2010 19.25 19.05 14/05/2010 20.35 20.40

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The market price of our equity shares as on 07/01/2010, the date on which the resolution of the Board of Directors approving the issue was passed is Rs.47.20 (BSE) & Rs.47.15 (NSE). The market price of our equity shares as on [•], the date on which the resolution of the Board of Directors deciding the record date price, ratio of rights issue was passed is Rs. [•] (BSE) & Rs. [•] (NSE). Our equity shares were in no delivery period from [•] to [•]. The cum-rights closing price of the shares of our Company as on [•] was Rs. [•]. The ex-rights closing price of the shares of our Company as on [•] was Rs. [•].

Investor grievance redressal system

The investor grievances against our Company will be handled by the Registrars and Transfer Agent in consultation with the Share Transfer/ Grievance Committee. Mr. Girish Sharma is the Compliance Officer of the Company. He will supervise redressal of complaints received from the investors at the office of the Company as well as the Registrars to the Rights Issue and ensure timely settlement. All grievances related to the issue may be addressed to the Registrar to the Rights Issue quoting the application No. (Including prefix), Number of equity shares applied for, amount paid on application, date, Bank and branch/ Collection center where application was submitted. Change in auditors There have been no changes in Auditors of the Company during last three years. Capitalisation of reserves or profits We have not capitalized reserves or profit during the last five years. Revaluation of assets We have not revalued any of our fixed assets during the last five years.

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VIII. OFFERING INFORMATION

A. Terms of the Issue & Issue Procedure

The Equity Shares proposed to be issued on rights basis, are subject to the terms and conditions contained in the Draft Letter of Offer, the enclosed CAF, the Memorandum of Association and Articles of Association of the Company, the provisions of the Companies Act, the terms and conditions as may be incorporated in the Foreign Exchange Management Act, 1999, as amended (“FEMA”), guidelines and regulations issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time, terms and conditions as stipulated in the allotment advice or security certificate and rules as may be applicable and introduced from time to time. Basis for the Issue The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the Depositories in respect of the Equity Shares held in the Electronic Form and on the Register of Members of the Company in respect of the Equity Shares held in physical form at the close of business hours on the Record Date, fixed in consultation with the Stock Exchanges. Rights Entitlement As your name appears as beneficial owner in respect of Equity Shares held in the electronic form or appears in the register of members as an Equity Shareholder of the Company as on the Record Date, i.e., [●], you are entitled to the number of Equity Shares as set out in Part A of the enclosed CAFs. Principal Terms of the Equity Shares Face Value Each Equity Share will have the face value of Re. 10/-. Issue Price Each Equity Share shall be offered at an Issue Price of Rs. [●] for cash at a premium of Rs. [●] per Equity Share. The Issue Price has been arrived in consultation between the Company and the Lead Managers. Entitlement Ratio The Equity Shares are being offered on rights basis to the Equity Shareholders in the ratio of [●] Equity Shares for every [●] Equity Share held on the Record Date. Terms of Payment Full amount of Rs. [●] per Equity Share is payable on application. Fractional Entitlements For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the Equity Shareholders is less than [●] Equity Shares or not in the multiple of [●], the fractional entitlement of such

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Equity Shareholders shall be ignored. Shareholders whose fractional Rights Entitlements are being ignored would be given preference in allotment of one additional Equity Share each if they apply for additional Equity Shares. For example, if an Equity Shareholder holds between [●] and [●] Equity Shares, he will be entitled to [●] Equity Shares on a rights basis. He will also be given a preference for allotment of one additional Equity Shares if he has applied for the same. Those Equity Shareholders holding less than [●] Equity Shares will therefore be entitled to zero Equity Share under this Issue and shall be despatched a CAF with zero entitlement. Such Equity Shareholders are entitled to apply for additional Equity Shares. However, they cannot renounce the same in favour of third parties. CAF with zero entitlement will be non-negotiable/non-renounceable. For example, if an Equity Shareholder holds between one and [●] Equity Shares, he will be entitled to nil Equity Shares on rights basis. He will be given a preference for allotment of [●] additional Equity Share if he has applied for the same. Ranking The Equity Shares being issued shall be subject to the provisions of our Memorandum of Association and Articles of Association. The Equity Shares shall rank pari passu, in all respects including dividend, with our existing Equity Shares. Listing and trading of Equity Shares proposed to be issued The Company’s existing Equity Shares are currently traded on the Stock Exchanges under the ISIN INE278B01020. The fully paid up Equity Shares proposed to be issued on a rights basis shall be listed and admitted for trading on the Stock Exchanges under the existing ISIN for fully paid Equity Shares of the Company. The listing and trading of the Equity Shares shall be based on the current regulatory framework applicable thereto. Accordingly, any change in the regulatory regime would accordingly affect the schedule. The Equity Shares allotted pursuant to this Issue will be listed as soon as practicable but in no case later than seven working days from the finalisation of the basis of allotment. The Company has made an application for “in-principle” approval for listing of the Equity Shares respectively to the BSE and the NSE through letters dated [●] and [●] and has received such approval from the BSE pursuant to the letter no. [●] dated [●] and from the NSE pursuant to letter no. [●] dated, [●]. Rights of the Equity Shareholder Subject to applicable laws, the Equity Shareholders of the Company shall have the following rights:

Right to receive dividend, if declared; Right to attend general meetings and exercise voting powers, unless prohibited by law; Right to vote in person or by proxy; Right to receive offers for rights shares and be allotted bonus shares, if announced; Right to receive surplus on liquidation; Right to free transferability of Equity Shares; and Such other rights as may be available to a shareholder of a listed public company under the

Companies Act and Memorandum of Association and Articles of Association.

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General Terms of the Issue Market Lot The Equity Shares of the Company are tradable only in dematerialized form. The market lot for Equity Shares in dematerialised mode is one. In case of holding of Equity Shares in physical form, the Company would issue to the allottees one certificate for the Equity Shares allotted to each folio (“Consolidated Certificate”). Joint Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint tenants with the benefit of survivorship subject to the provisions contained in the Articles of Association. Nomination In terms of Section 109A of the Companies Act, nomination facility is available in case of Equity Shares. The Investor can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. In case of Equity Shareholders who are individuals, a sole Equity Shareholder or the first named Equity Shareholder, along with other joint Equity Shareholders, if any, may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity Shares. A person, being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity Shares by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. Fresh nominations can be made only in the prescribed form available on request at the registered office of the Company or such other person at such addresses as may be notified by the Company. The Investor can make the nomination by filling in the relevant portion of the CAF. Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already registered the nomination with the Company, no further nomination needs to be made for Equity Shares that may be allotted in this Issue under the same folio. In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective Depositary Participant (“DP”) of the Investor would prevail. Any Investor desirous of changing the existing nomination is requested to inform its respective DP. Notices All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English language national daily newspaper, one Hindi national daily newspaper and one regional language daily newspaper with wide circulation in [●] and/or, will be sent by ordinary post/registered post/speed post to the registered holders of the Equity Shares from time to time.

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Additional Subscription by the Promoter The Promoters have confirmed that they intend to subscribe to the full extent of their Rights Entitlement in the Issue. Subject to compliance with the Takeover Code, the Promoters and Promoter Group reserve their right to subscribe for Equity Shares in this Issue by subscribing for renunciation, if any, made by any other Promoters or Promoter Group or any other shareholders. The Promoters have undertaken to apply for additional Equity Shares in the Issue, to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent allotment, the Promoters and Promoter Group may acquire Equity Shares over and above their Rights Entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the Rights Entitlement. This subscription and acquisition of additional Equity Shares by the Promoters and Promoter Group through this Issue to the extent of under subscription, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section “Objects of the Issue” on page [●], there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments to the Promoters and Promoter Group, in this Issue, the Promoters’ shareholding in the Company exceeds their current shareholding. The Promoters and Promoter Group shall subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to the Promoters and Promoter Group of any unsubscribed portion, over and above their Rights Entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. For details, please see the section “Basis of Allotment” on page [●]. Procedure for Application The CAF for Equity Shares would be printed in black ink for all Equity Shareholders. In case the original CAFs are not received by the Investor or is misplaced by the Investor, the Investor may request the Registrars to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. In case the signature of the Equity Shareholder(s) does not agree with the specimen registered with the Company, the application is liable to be rejected. Acceptance of the Issue You may accept the offer to participate and apply for the Equity Shares offered, either in full or in part, by filling Part A of the enclosed CAFs and submit the same along with the application money payable to the Bankers to the Issue or any of the collection branches as mentioned on the reverse of the CAFs before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company in this regard. Investors at centres not covered by the branches of collecting banks can send their CAFs together with the cheque drawn at par on a local bank at Mumbai/demand draft payable at Mumbai to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. For further details on the mode of payment, see “Mode of Payment for Resident Equity Shareholders/Investors” and “Mode of Payment for Non-Resident Equity Shareholders/Investors” on pages [●] and [●], respectively. Option available to the Equity Shareholders The CAFs will clearly indicate the number of Equity Shares that the Shareholder is entitled to. If the Equity Shareholder applies for an investment in Equity Shares, then he can:

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Apply for his Rights Entitlement of Equity Shares in part; Apply for his Rights Entitlement of Equity Shares in part and renounce the other part of the Equity

Shares; Apply for his Rights Entitlement of Equity Shares in full; Apply for his Rights Entitlement in full and apply for additional Equity Shares; Renounce his Rights Entitlement in full.

Additional Equity Shares You are eligible to apply for additional Equity Shares over and above your Rights Entitlement, provided that you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, subject to sectoral caps and in consultation if necessary with the Designated Stock Exchange and in the manner prescribed under “Basis of Allotment” on page [●].If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. The Renouncee applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange. Renunciation This Issue includes a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favour of any other person or persons. Your attention is drawn to the fact that the Company shall not allot and/or register and Equity Shares in favour of more than three persons (including joint holders), partnership firm(s) or their nominee(s), minors, HUF, any trust or society (unless the same is registered under the Societies Registration Act, 1860 or the Indian Trust Act, 1882 or any other applicable law relating to societies or trusts and is authorized under its constitution or bye-laws to hold Equity Shares, as the case may be). Any renunciation from Non-resident Indian Shareholder(s) to Resident Indian(s) is subject to the renouncer(s)/renouncee(s) obtaining the approval of the FIPB and/or necessary permission of the RBI under the FEMA and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid approvals are liable to be rejected. Additionally, any renunciation by any Equity Shareholder resident in/outside India to any non-resident is prohibited. By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, the existing Equity Shareholders of the Company who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of Renouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). Part ‘A’ of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. Submission of the enclosed CAF to the Banker to the Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (Part ‘B’ of the CAF) duly filled in shall be conclusive evidence for the Company of the person(s) applying for Equity Shares in Part ‘C’ of the CAF to receive allotment of such Equity Shares. The Renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Part ‘A’ of the CAF must not be used by the Renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any Equity Shares in favour of any other person.

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Procedure for renunciation To renounce all the Equity Shares offered to a shareholder in favour of one Renouncee If you wish to renounce the offer indicated in Part ‘A’, in whole, please complete Part ‘B’ of the CAF. In case of joint holding, all joint holders must sign Part ‘B’ of the CAF. The person in whose favour renunciation has been made should complete and sign Part ‘C’ of the CAF. In case of joint Renouncees, all joint Renouncees must sign this part of the CAF. To renounce in part/or renounce the whole to more than one person(s) If you wish to either accept this offer in part and renounce the balance or renounce the entire offer under this Issue in favour of two or more Renouncees, the CAF must be first split into requisite number of forms. Please indicate your requirement of SAFs in the space provided for this purpose in Part ‘D’ of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of receiving requests for SAFs. On receipt of the required number of SAFs from the Registrar, the procedure as mentioned in paragraph above shall have to be followed. In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the specimen registered with the Company, the application is liable to be rejected. Renouncee(s) The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part ‘C’ of the CAF and submit the entire CAF to the Bankers to the Issue on or before the Issue Closing Date along with the application money in full. Change and/or introduction of additional holders If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is/are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed. However, this right of renunciation is subject to the express condition that the Board of Directors of the Company shall be entitled in its absolute discretion to reject the request for allotment from the Renouncee(s) without assigning any reason thereof. Instructions for Options The summary of options available to the Equity Shareholder is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the enclosed CAF:

Options Available Action Required 1 Accept whole or part of your Rights

Entitlement without renouncing the balance

Fill in and sign Part A (All joint holders must sign)

2 Accept your Rights Entitlement in full and apply for additional Equity Shares

Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

3 Renounce your Rights Entitlement in Fill in and sign Part B (all joint holders must sign)

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full to one person (Joint Renouncees are considered as one).

indicating the number of Equity Shares renounced and hand it over to the Renouncee. The Renouncee must fill in and sign Part C (Alljoint Renouncees must sign)

4 Accept a part of your Rights Entitlement and renounce the balance to one or more Renouncee(s) OR Renounce your Rights Entitlement to all the Equity Shares offered to you to more than one Renouncee

Fill in and sign Part D (all joint holders must sign) requesting for SAFs. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for SAFs. Splitting will be permitted only once. On receipt of the SAF take action as indicated below. For the Equity Shares you wish to accept, if any, fill in and sign Part A. For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand it over to the Renouncee. Each of the Renouncee should fill in and sign Part C for the Equity Shares accepted by them

5 Introduce a joint holder or change the sequence of joint holders This will be treated as a renunciation.

Fill in and sign Part B and the Renouncee must fill in and sign Part C

Please note that:

Part ‘A’ of the CAF must not be used by any person(s) other than the Equity Shareholder to whom this Draft Letter of Offer has been addressed. If used, this will render the application invalid.

Request for SAF should be made for a minimum of one Equity Share or, in either case, in multiples thereof and one SAF for the balance Equity Shares, if any.

Request by the Investor for the SAFs should reach the Company on or before [●]. Only the Equity Shareholder to whom this Draft Letter of Offer has been addressed shall be entitled

to renounce and to apply for SAFs. Forms once split cannot be split further. SAFs will be sent to the Investor (s) by post at the applicant’s risk.

Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the Investor, the Registrar to the Issue will issue a duplicate CAF on the request of the Investor who should furnish the registered folio number/ DP and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue within [•] days from the Issue Opening Date. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the Investor violates such requirements, he / she shall face the risk of rejection of both the applications. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Issue on plain paper, along with Demand

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Draft, net of bank and postal charges payable at Mumbai which should be drawn in favour of the “RNPL - Rights Issue” and the Equity Shareholders should send the same by registered post directly to the Registrar to the Issue. The envelope should be super scribed “RNPL – Rights Issue” and should be postmarked in India. The application on plain paper, duly signed by the Investors including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:

Name of Issuer, being Rama Newsprint Limited; Name and address of the Equity Shareholder including joint holders; Registered Folio Number/ DP and Client ID no.; Number of Equity Shares held as on Record Date; Number of Equity Shares entitled to; Number of Equity Shares applied for; Number of additional Equity Shares applied for, if any; Total number of Equity Shares applied for; Total amount paid at the rate of Rs. [●] per Equity Share; Particulars of cheque/draft; Savings/Current Account Number and name and address of the bank where the Equity Shareholder will be depositing the refund order; and Except for applications on behalf of the Central or State Government and the officials appointed by

the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue.

Please note that those who are making the application otherwise than on original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the Investor violates such requirements, he/she shall face the risk of rejection of both the applications. The Company shall refund such application amount to the Investor without any interest thereon. Last date of Application The last date for submission of the duly filled in CAF is [•]. If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/ Committee of Directors, the invitation to offer contained in the Letter of Offer shall be deemed to have been declined and the Board/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under the section “Terms of the Issue – Basis of Allotment” on page [●]. Basis of Allotment Subject to the provisions contained in the Letter of Offer, the Articles of Association of the Company and the approval of the Designated Stock Exchange, the Board will proceed to Allot the Equity Shares in the following order of priority: a) Full allotment to those Equity Shareholders who have applied for their Rights Entitlement either in

full or in part and also to the Renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part.

b) Allotment pertaining to fractional entitlements in case of any shareholding other than in multiples of [●].

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c) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as part of the Issue and have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an undersubscribed portion after making full allotment in (a) and (b) above. The allotment of such Equity Shares will be at the sole discretion of the Board / Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and will not be a preferential allotment.

d) Allotment to Renouncees who having applied for all the Equity Shares renounced in their favour, have applied for additional Equity Shares provided there is surplus available after making full allotment under (a), (b) and (c ) above. The allotment of such Equity Shares will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential allotment.

After taking into account allotment to be made under (a) above, if there is any unsubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code which would be available for allocation under (b), (c) and (d) above. The Promoters have confirmed that they intend to subscribe to the full extent of their Rights Entitlement in the Issue. Subject to compliance with the Takeover Code, the Promoter and Promoter Group reserve their right to subscribe for Equity Shares in this Issue by subscribing for renunciation, if any, made by any other Promoters or Promoter Group or any other shareholders. The Promoters have undertaken to apply for additional Equity Shares in the Issue, to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent allotment, the Promoters and Promoter Group may acquire Equity Shares over and above their Rights Entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the Rights Entitlement. This subscription and acquisition of additional Equity Shares by the Promoters and Promoter Group through this Issue, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section “Objects of the Issue” on page [●], there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments to the Promoters and Promoter Group, in this Issue, the Promoters’ shareholding in the Company exceeds their current shareholding. The Promoters and Promoter Group shall subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to the Promoters and Promoter Group of any unsubscribed portion, over and above their Rights Entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. Procedure for Application through the Applications Supported by Blocked Amount (“ASBA”) Process This section is for the information of the ASBA Investors proposing to subscribe to the Issue through the ASBA Process. The Company and the Lead Managers are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Draft Letter of Offer. Equity Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and to ensure that the CAF is correctly filled up. The list of banks who have been notified by SEBI to act as SCSB for the ASBA Process are provided on http://www.sebi.gov.in/pmd/scsb.pdf. For details on designated branches of SCSB collecting the CAF, please refer the above mentioned SEBI link. Equity Shareholders who are eligible to apply under the ASBA Process The option of applying for Equity Shares in the Issue through the ASBA Process is only available to Equity Shareholders of the Company on the Record Date and who:

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are holding the Equity Shares in dematerialised form as on the Record Date and have applied

towards his/her Rights Entitlements or additional Equity Shares in the Issue in dematerialised form; have not renounced his/her Rights Entitlements in full or in part; are not a Renouncee; are applying through blocking of funds in a bank account with one of the SCSBs.

CAF The Registrar will despatch the CAF to all Equity Shareholders as per their Rights Entitlement on the Record Date for the Issue. Those Equity Shareholders who wish to apply through the ASBA payment mechanism will have to select for this mechanism in Part A of the CAF and provide necessary details. Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF only. Application in electronic mode will only be available with such SCSB who provides such facility. The Equity Shareholder shall submit the CAF to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. Acceptance of the Issue You may accept the Issue and apply for the Equity Shares either in full or in part, by filling Part A of the respective CAFs sent by the Registrar, selecting the ASBA process option in Part A of the CAF and submit the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company in this regard. Mode of payment The Equity Shareholder applying under the ASBA Process agrees to block the entire amount payable on application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB. After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrars. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per Registrar’s instruction allocable to the Equity Shareholders applying under the ASBA Process from bank account with the SCSB mentioned by the Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI Regulations, into the separate bank account maintained by the Company as per the provisions of section 73(3) of the Companies Act, 1956. The balance amount remaining after the finalisation of the basis of allotment shall be either unblocked by the SCSBs or refunded to the investors by the Registrar on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Managers to the respective SCSB. The Equity Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF. The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Equity Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the application by the SCSB, the Company would have a right to reject the application only on technical grounds.

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Options available to the Equity Shareholders applying under the ASBA Process The summary of options available to the Equity Shareholders are presented below. You may exercise any of the following options with regard to the Equity Shares, using the respective CAFs received from Registrar:

Options Available Action Required 1 Accept whole or part of your Rights

Entitlement without renouncing the balance

Fill in and sign Part A (All joint holders must sign)

2 Accept your Rights Entitlement in full and apply for additional Equity Shares

Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

The Equity Shareholder applying under the ASBA Process will need to select the ASBA option process in the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the SCSB with the relevant details required under the ASBA process option and SCSB blocks the requisite amount, then that CAF would be treated as if the Equity Shareholder has selected to apply through the ASBA process option. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares that you are entitled too, provided that (i) you have applied for all the Equity Shares (as the case may be) offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under “Terms of the Issue -Basis of Allotment” on page [●]. If you desire to apply for additional Equity Shares please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. Renunciation under the ASBA Process Renouncees cannot participate in the ASBA Process. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF and who is applying under the ASBA Process may make an application to subscribe to the Issue on plain paper, along with Demand Draft, net of bank and postal charges payable at Mumbai which should be drawn in favour of the “RNPL – Rights Issue” and the Equity Shareholders should send the same by registered post directly to SCSB. The envelope should be super scribed “RNPL – Rights Issue” and should be postmarked in India. The application on plain paper, duly signed by the Investors including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:

Name of Issuer, being Rama Newsprint Limited; Name and address of the Equity Shareholder including joint holders;

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Registered Folio Number/ DP and Client ID no.; Number of Equity Shares held as on Record Date; Number of Equity Shares entitled to; Number of Equity Shares applied for; Number of additional Equity Shares applied for, if any; Total number of Equity Shares applied for; Total amount paid at the rate of Rs. [●] per Equity Share; Particulars of cheque/draft; and Except for applications on behalf of the Central or State Government and the officials appointed by

the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue.

Option to receive Equity Shares in Dematerialized Form EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY UNDER THE ASBA PROCESS CAN BE ALLOTTED ONLY IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE BEING HELD ON RECORD DATE. General instructions for Equity Shareholders applying under the ASBA Process

(i) Please read the instructions printed on the respective CAF carefully. (ii) Application should be made on the printed CAF only and should be completed in all respects. The

CAF found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of this Letter of Offer are liable to be rejected. The CAF must be filled in English.

(iii) The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose bank account details are provided in the CAF and not to the Bankers to the Issue/Collecting Banks (assuming that such Collecting Bank is not a SCSB), to the Company or Registrar or Lead Managers to the Issue.

(iv) All applicants, and in the case of application in joint names, each of the joint applicants, should mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. Except for applications on behalf of the Central or State Government and the officials appointed by the courts, CAFs without PAN will be considered incomplete and are liable to be rejected.

(v) All payments will be made by blocking the amount in the bank account maintained with the SCSB. Cash payment is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

(vi) Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company/or Depositories.

(vii) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with the Company. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.

(viii) All communication in connection with application for the Equity Shares, including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole applicant Equity Shareholder, folio numbers and CAF number.

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(ix) Only the person or persons to whom the Equity Shares have been offered and not renouncee(s) shall be eligible to participate under the ASBA process.

Do’s: a. Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled

in. b. Ensure that you submit your application in physical mode only. Electronic mode is only available

with certain SCSBs and not all SCSBs and you should ensure that your SCSB offers such facility to you.

c. Ensure that the details about your Depository Participant and beneficiary account are correct and the beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only.

d. Ensure that the CAFs are submitted at the SCSBs and details of the correct bank account have been provided in the CAF.

e. Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied for} X {Issue Price of Equity Shares, as the case may be}) available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.

f. Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on application mentioned in the CAF, in the bank account maintained with the respective SCSB, of which details are provided in the CAF and have signed the same.

g. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form.

h. Except for Bids on behalf of the Central or State Government and the officials appointed by the courts, each applicant should mention their PAN allotted under the I. T. Act.

i. Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF.

j. Ensure that the Demographic Details are updated, true and correct, in all respects. Don’ts: a) Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB. b) Do not pay the amount payable on application in cash, by money order or by postal order. c) Do not send your physical CAFs to the Lead Managers to Issue / Registrar / Collecting Banks

(assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only.

d) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground.

e) Do not instruct your respective banks to release the funds blocked under the ASBA Process. Grounds for Technical Rejection under the ASBA Process In addition to the grounds listed under “Grounds for Technical Rejection” on page [●], applications under the ABSA Process are liable to be rejected on the following grounds: a) Application for Rights Entitlements or additional shares in physical form. b) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available

with the Registrar.

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a) Sending CAF to a Lead Managers / Registrar / Collecting Bank (assuming that such Collecting Bank is not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company.

b) Renouncee applying under the ASBA Process. c) Insufficient funds are available with the SCSB for blocking the amount. d) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen

pursuant to regulatory orders. e) Account holder not signing the CAF or declaration mentioned therein. Depository account and bank details for Equity Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Equity Shareholders applying under the ASBA Process should note that on the basis of name of these Equity Shareholders, Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of these Equity Shareholders such as address, bank account details for printing on refund orders and occupation (“Demographic Details”). Hence, Equity Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF. These Demographic Details would be used for all correspondence with such Equity Shareholders including mailing of the letters intimating unblock of bank account of the respective Equity Shareholder. The Demographic Details given by Equity Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Equity Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Letters intimating allotment and unblocking or refund (if any) would be mailed at the address of the Equity Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. Refunds, if any, will be made directly to the bank account in the SCSB and which details are provided in the CAF and not the bank account linked to the DP ID. Equity Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of bank account may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Equity Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of bank account. Note that any such delay shall be at the sole risk of the Equity Shareholders applying under the ASBA Process and none of the Company, the SCSBs or the Lead Managers shall be liable to compensate the Equity Shareholder applying under the ASBA Process for any losses caused due to any such delay or liable to pay any interest for such delay.

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In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Equity Shareholders (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected. Underwriting The Issue is not underwritten. Issue Schedule Issue Opening Date: [●] Last date for receiving requests for SAFs: [●] Issue Closing Date: [●] The Board may however decide to extend the issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date. Allotment Advices / Refund Orders The Company will issue and dispatch allotment advice/ share certificates/demat credit and/or letters of regret along with refund order or credit the allotted Equity Shares to the respective beneficiary accounts, if any, within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier) the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to pay the money with interest as prescribed under Section 73 of the Companies Act. Investors residing at centers where clearing houses are managed by the Reserve Bank of India (“RBI”) will get refunds through Electronic Clearing Service (“ECS”) except where Investors are otherwise disclosed as applicable/eligible to get refunds through direct credit and real time gross settlement (“RTGS”). In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, advice regarding their credit of the Equity Shares shall be given separately. Investors to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit of refund within 15 days of the Issue Closing Date. In case of those Investors who have opted to receive their Rights Entitlement in physical form and the Company issues letter of allotment, the corresponding share certificates will be kept ready within three months from the date of allotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Companies Act or other applicable provisions, if any. Investors are requested to preserve such letters of allotment, which would be exchanged later for the share certificates. For more information, please see the section “Terms of the Issue” on page [●]. The letter of allotment / refund order exceeding Rs. 1,500 would be sent by registered post/speed post to the sole/first Investors registered address. Refund orders up to the value of Rs. 1,500 would be sent under certificate of posting. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole/first Investor. Adequate funds would be made available to the Registrar to the Issue for this purpose.

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Payment of Refund Mode of making refunds The payment of refund, if any, would be done through any of the following modes: 1. ECS – Payment of refund would be done through ECS for Investors having an account at any of the

68 centres where such facility has been made available. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. The payment of refunds is mandatory for Investors having a bank account at any centre where ECS facility has been made available by the RBI (subject to availability of all information for crediting the refund through ECS), except where the Investor, being eligible, opts to receive refund through National Electronic Fund Transfer (“NEFT”), direct credit or RTGS.

2. NEFT – Payment of refund shall be undertaken through NEFT wherever the Investors’ bank has been

assigned the Indian Financial System Code (IFSC), which can be linked to a MICR, if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Investors have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the Investors through this method.

3. Direct Credit – Investors having bank accounts with the Bankers to the Issue shall be eligible to

receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by the Company.

4. RTGS – Investors having a bank account at any of the 68 centres where such facility has been made

available and whose refund amount exceeds Rs. 50 lacs, have the option to receive refund through RTGS. Such eligible Investors who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the refund bank(s) for the same would be borne by the Company. Charges, if any, levied by the Investor’s bank receiving the credit would be borne by the Investor.

5. For all other Investors, including those who have not updated their bank particulars with the MICR

code, the refund orders will be despatched under certificate of posting for value up to Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/first Investor and payable at par.

6. Credit of refunds to Investors in any other electronic manner permissible under the banking laws,

which are in force, and is permitted by the SEBI from time to time. Printing of Bank Particulars on Refund Orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the Investor’s bank account are mandatorily required to be given for printing on the refund orders. Bank account particulars will be printed on the refund orders/refund warrants which can then be deposited only in the account specified. The Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud.

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Allotment advice / Share Certificates/ Demat Credit Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered address of the first named Investor or respective beneficiary accounts will be credited within 15 days, from the Issue Closing Date. In case the Company issues allotment advice, the relative shared certificates will be dispatched within one month from the date of the allotment. Allottees are requested to preserve such allotment advice (if any) to be exchanged later for share certificates. Option to receive Equity Shares in Dematerialized Form Investors to the Equity Shares of the Company issued through this Issue shall be allotted the Equity Shares in dematerialized (electronic) form at the option of the Investor. The Company signed a tripartite agreement with NSDL on 13/07/2007 which enables the Investors to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of physical certificates. The Company has also signed a tripartite agreement with CDSL on 27/10/2006 which enables the Investors to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of physical certificates. In this Issue, the allottees who have opted for Equity Shares in dematerialized form will receive their Equity Shares in the form of an electronic credit to their beneficiary account as given in the CAF, after verification with a depository participant. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Allotment advice, refund order (if any) would be sent directly to the Investor by the Registrar to the Issue but the Investor’s depository participant will provide to him the confirmation of the credit of such Equity Shares to the Investor’s depository account. CAFs, which do not accurately contain this information, will be given the Equity Shares in physical form. No separate CAFs for Equity Shares in physical and/or dematerialized form should be made. If such CAFs are made, the CAFs for physical Equity Shares will be treated as multiple CAFs and is liable to be rejected. In case of partial allotment, allotment will be done in demat option for the Equity Shares sought in demat and balance, if any, will be allotted in physical Equity Shares. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM. Procedure for availing the facility for allotment of Equity Shares in this Issue in the electronic form is as under:

Open a beneficiary account with any depository participant (care should be taken that the beneficiary account should carry the name of the holder in the same manner as is exhibited in the records of the Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as with the Company). In case of Investors having various folios in the Company with different joint holders, the Investors will have to open separate accounts for such holdings.

Those Equity Shareholders who have already opened such beneficiary account(s) need not adhere to this step

. For Equity Shareholders already holding Equity Shares of the Company in dematerialized form as on

the Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Equity Shares pursuant to this Issue by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of Equity Shares arising out of this Issue may be made in dematerialized form even if the original Equity Shares of the Company are not dematerialized. Nonetheless, it should be ensured that the depository account is in

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the name(s) of the Equity Shareholders and the names are in the same order as in the records of the Company. Responsibility for correctness of information (including Investor’s age and other details) filled in the CAF vis-à-vis such information with the Investor’s depository participant, would rest with the Investor. Investors should ensure that the names of the Investors and the order in which they appear in CAF should be the same as registered with the Investor’s depository participant. If incomplete / incorrect beneficiary account details are given in the CAF the Investor will get Equity Shares in physical form.

The Equity Shares allotted to applicants opting for issue in dematerialized form, would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s depository participant will provide to him the confirmation of the credit of such Equity Shares to the applicant’s depository account. Renouncees will also have to provide the necessary details about their beneficiary account for allotment of Equity Shares in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected.

General instructions for Investors (a) Please read the instructions printed on the enclosed CAF carefully. (b) Application should be made on the printed CAF, provided by the Company except as mentioned

under the head “Application on Plain Paper” on page [●] and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of the Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the Investors, details of occupation, address, father’s / husband’s name must be filled in block letters.

The CAF together with cheque/demand draft should be sent to the Bankers to the Issue/Collecting Bank or to the Registrar to the Issue and not to the Company or Lead Managers to the Issue. Investors residing at places other than cities where the branches of the Bankers to the Issue have been authorised by the Company for collecting applications, will have to make payment by Demand Draft payable at [●] of an amount net of bank and postal charges and send their CAFs to the Registrar to the Issue by registered post. If any portion of the CAF is/are detached or separated, such application is liable to be rejected.

Applications where separate cheques/demand drafts are not attached for amounts to be paid for Equity Shares are liable to be rejected.

(c) Except for applications on behalf of the Central and State Government and the officials appointed by the courts, all Investors, and in the case of application in joint names, each of the joint Investors, should mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.

(d) Investors are advised that it is mandatory to provide information as to their savings/current account

number and the name of the bank with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Application not containing such details is liable to be rejected.

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(e) All payment should be made by cheque/DD only. Application through the ASBA process as mentioned above is acceptable. Cash payment is not acceptable. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

(f) Signatures should be either in English or Hindi or in any other language specified in the Eighth

Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company.

(g) In case of an application under power of attorney or by a body corporate or by a society, a certified

true copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Issue and to sign the application and a copy of the Memorandum and Articles of Association and / or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with the Company, the same need not be a furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue.

(h) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and

as per the specimen signature(s) recorded with the Company. Further, in case of joint Investors who are Renouncees, the number of Investors should not exceed three. In case of joint Investors, reference, if any, will be made in the first Investor’s name and all communication will be addressed to the first Investor.

(i) Application(s) received from NRs/NRIs, or persons of Indian origin residing abroad for allotment of

Equity Shares shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of application money, allotment of Equity Shares, subsequent issue and allotment of Equity Shares, interest, export of share certificates, etc. In case a NR or NRI Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF.

(j) All communication in connection with application for the Equity Shares, including any change in

address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole Investor, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to the Registrar and Transfer Agents of the Company, in the case of Equity Shares held in physical form and to the respective depository participant, in case of Equity Shares held in dematerialized form.

(k) SAFs cannot be re-split. (l) Only the person or persons to whom Equity Shares have been offered and not Renouncee(s) shall be

entitled to obtain SAFs. (m) Investors must write their CAF number at the back of the cheque /demand draft. (n) Only one mode of payment per application should be used. The payment must be by cheque

/demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is

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a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted.

(o) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or

postdated cheques and postal / money orders will not be accepted and applications accompanied by such cheques / demand drafts / money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in cash. (For payment against application in cash please refer point (e) above).

(p) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank/

Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.

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

Amount paid does not tally with the amount payable for; Bank account details (for refund) are not given; Age of first Investor not given; Except for CAFs on behalf of the Central or State Government and the officials appointed by the

courts, PAN number not given for application of any value; In case of CAF under power of attorney or by limited companies, corporate, trust, relevant

documents are not submitted; If the signature of the Equity Shareholder does not match with the one given on the CAF and for

renounce(s) if the signature does not match with the records available with their depositories; If the Investors desires to have Equity Shares in electronic form, but the CAF does not have the

Investor’s depository account details; CAFs are not submitted by the Investors within the time prescribed as per the CAF and the Letter of

Offer; CAFs not duly signed by the sole/joint Investors; CAFs by OCBs CAFs accompanied by Stockinvest; In case no corresponding record is available with the depositories that matches three parameters,

namely, names of the Investors (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity;

CAFs that do not include the certification set out in the CAF to the effect that the subscriber is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the securities in compliance with all applicable laws and regulations;

CAFs by ineligible non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided;

CAFs where the Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements;

In case the GIR number is submitted instead of the PAN; Applications by renouncees who are persons not competent to contract under the Indian Contract

Act, 1872, including minors; and Multiple CAFs, including cases where an Investor submits CAFs along with a plain paper

application.

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Please read the Letter of Offer and the instructions contained therein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are each an integral part of the Letter of Offer and must be carefully followed. CAF is liable to be rejected for any non-compliance of the provisions contained in the Letter of Offer or the CAF. Mode of payment for Resident Equity Shareholders/ Investors

All cheques / drafts accompanying the CAF should be drawn in favour of the Collecting Bank (specified on the reverse of the CAF), crossed ‘A/c Payee only’ and marked “[●]”;

Investors residing at places other than places where the bank collection centres have been opened by the Company for collecting applications, are requested to send their CAFs together with Demand Draft for the full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed ‘A/c Payee only’ and marked “[●]” payable at [●] directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.

Investment by FIIs In accordance with the current regulations, the following restrictions are applicable for investment by FIIs: The Issue of Equity Shares under this Issue to a single FII should not exceed 10% of the post-issue paid up capital of the Company. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts the investment on behalf of each sub-account shall not exceed 5% of the total paid up capital of the Company. Investment by NRIs Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. Procedure for Applications by Mutual Funds A separate application can be made in respect of each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications. The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made. Mode of payment for Non-Resident Equity Shareholders/ Investors As regards the application by non-resident Equity Shareholders, the following conditions shall apply:

Individual non-resident Indian applicants can obtain application form at the following address: [●] Tel: [●] Fax: [●] Email: [●] Website: [●] Contact Person: [●]

Payment by non-residents must be made by demand draft payable at [●]/cheque payable drawn on a bank account maintained at [●] or funds remitted from abroad in any of the following ways:

Application with repatriation benefits

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By Indian Rupee drafts purchased from abroad and payable at [●] or funds remitted from abroad

(submitted along with Foreign Inward Remittance Certificate); or By cheque/draft on a Non-Resident External Account (NRE) or FCNR Account maintained in [●]; or By Rupee draft purchased by debit to NRE/FCNR Account maintained elsewhere in India and

payable in [●]; or FIIs registered with SEBI must remit funds from special nonresident rupee deposit account.

Non-resident investors applying with repatriation benefits should draw cheques/drafts in favour of ‘[●]’ and must be crossed ‘account payee only’ for the full application amount, net of bank and postal charges.

Application without repatriation benefits

As far as non-residents holding Equity Shares on non-repatriation basis are concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in [●] or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at [●]. In such cases, the allotment of Equity Shares will be on non-repatriation basis.

All cheques/drafts submitted by non-residents applying on a non-repatriation basis should be drawn in favour of ‘RNPL – Rights Issue - NR’ and must be crossed ‘account payee only’ for the full application amount, net of bank and postal charges. The CAFs duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

Investors may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR/ NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected.

New demat account shall be opened for holders who have had a change in status from resident Indian to NRI.

Notes:

In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to IT Act.

In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares cannot be remitted outside India.

The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

In case of an application received from non-residents, allotment, refunds and other distribution, if any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.

Impersonation As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-section (1) of section 68A of the Companies Act which is reproduced below: “Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or otherwise induces a Company to allot, or register any transfer of shares

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therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years”. Dematerialized dealing The Company has entered into agreements dated 13/03/2007 and 27/10/2006 with NSDL and CDSL, respectively, and its Equity Shares bear the ISIN INE278B01020. Payment by Stockinvest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003- 04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue. Disposal of application and application money No acknowledgment will be issued for the application moneys received by the Company. However, the Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the Investor within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to repay it, the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the Companies Act. For further instruction, please read the CAF carefully. Utilisation of Issue Proceeds The Board of Directors declares that: (i) All monies received out of this Issue shall be transferred to a separate bank account other than the

bank account referred to sub-section (3) of Section 73 of the Companies Act; (ii) Details of all monies utilized out of the Issue shall be disclosed under an appropriate separate head in

the balance sheet of the Company indicating the purpose for which such monies have been utilised; and

(iii) Details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the form in which such unutilized monies have been invested.

(iv) The Company may utilize the funds collected in the Issue only after the basis of allotment is finalized. Undertakings by the Company The Company undertakes the following: 1. The complaints received in respect of the Issue shall be attended to by the Company expeditiously

and satisfactorily.

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2. All steps for completion of the necessary formalities for listing and commencement of trading at all Stock exchanges where the Equity Shares are to be listed will be taken within seven working days of finalization of basis of allotment.

3. The funds required for making refunds to unsuccessful applicants as per the modes disclosed shall be made available to the Registrar to the Issue by the Company.

4. The Company undertakes that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the Investor within 15 days of the Issue Closing Date, giving details of the banks where refunds shall be credited along with amount and expected date of electronic credit of refund.

5. Adequate arrangements shall be made to collect all ASBA applications and to consider then similar to non-ASBA applications while finalising the Basis of Allotment.

6. At any given time there shall be only one denomination for the shares of the Company. 7. We shall comply with such disclosure and accounting norms specified by SEBI from time to time. Minimum Subscription If the Company does not receive the minimum subscription of 90% of the Issue, the Company shall forthwith refund the entire subscription amount received within 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier) the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under sub-section (2) and (2A) of Section 73 of the Companies Act. Important

Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the accompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected.

All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for

SAFs must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and super scribed ‘[●]’ on the envelope and postmarked in India) to the Registrar to the Issue at the following address:

LINK INTIME INDIA PVT. LTD. C-13, Pannalal Silk Mills Compound, LBS Road, Bhandup West, Mumbai – 400 078 Tel.: +91-22-25960320 Fax: +91-22-25940329 E-mail: [email protected] Contact Person: Mr. Pravin Kasare Website:www.linkintime.co.in SEBI Regn. : INR 000004058

It is to be specifically noted that this Issue of Equity Shares is subject to the risk factors mentioned in the section “Risk Factors” on page [●].

The Issue will remain open for a minimum 15 days. However, the Board will have the right to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.

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RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of GoI and FEMA. While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. By way of Circular No. 53 dated December 17, 2003, the RBI has permitted FIIs to subscribe to shares of an Indian company in a public offer without the prior approval of the RBI, so long as the price of the equity shares to be issued is not less than the price at which the equity shares are issued to residents. Transfers of equity shares previously required the prior approval of the FIPB. However, vide a RBI circular dated October 4, 2004 issued by the RBI, the transfer of shares between an Indian resident and a nonresident does not require the prior approval of the FIPB or the RBI, provided that (i) the activities of the investee company are under the automatic route under the foreign direct investment (FDI) Policy and transfer does not attract the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (ii) the non-resident shareholding is within the sectoral limits under the FDI policy, and (iii) the pricing is in accordance with the guidelines prescribed by the SEBI/RBI. As per the existing policy of the Government of India, OCBs cannot participate in this Issue.

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IX. TERMS OF ARTICLES OF ASSOCIATION

Main provisions of the Articles of Association Capital and Increase and Reduction of Capital

Article No.

4. The Authorized Share Capital of the Company is Rs. 2,33,00,00,000 (Rupees Two Hundred Thirty Three Crores Only) divided into 23,30,00,000 (Twenty Three Crores Thirty Lacs) Ordinary Shares of Rs. 10/- each

5. The Company in General Meetings may from time to time, by an ordinary resolution increase the capital by the creation of new shares, such increase to be of such aggregate amount and to be divided into shares of such respective amounts as the resolution shall prescribe. Subject to the provisions of the Act any shares of the original or increased capital shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the General Meeting resolving upon the creation thereof, shall direct, and if no direction be given, as the Directors shall determine and in particular, such shares may be issued with a preferential or qualified right to dividends, and in the distribution of assets of the Company, and with a right of voting at the General Meetings of the Company in conformity with Sections 87 and 88 of the Act. Whenever the capital of the Company has been increased under the provisions of this Article, the Directors shall comply with the provisions of Section 97 of the Act

6. Except so far as otherwise provided by the conditions of issue or by these presents any capital raised by the creation of new shares shall be considered as part of the existing capital, and shall be subject to the provisions herein contained, with reference to the payment of calls and installments, forfeiture, lien, surrender, transfer and transmission, voting and otherwise.

7. Subject to the provisions of Section 80 of the Act, the Company shall have the power to issue Preference Shares which are or at the option of the Company are liable to be redeemed and the resolution authorizing such issue shall prescribe the manner, terms and conditions of redemption. Unless the terms of the issue otherwise provide the said preference shares shall be deemed to have been issued upon the terms that they are at the option of the Company liable to be redeemed at any time after expiration of such period as may be fixed by directors at that time of issue of shares upon six months notice being given for such purpose to the holders thereof issue the holders thereof in any manner authorized for the time being by this Article and so that such option may be exercised in respect of such number or number of shares as the Company may, from time to time, previously determined, ascertain by draw of lots to be made in such manner as the Board of Directors shall think fit. Such notice to be given as aforesaid shall fix place for payment of the redemption monies and delivery of the certificates relating to the shares to be redeemed and date fixed for redemption. Each shareholder whose shares are to be redeemed shall deliver to the Company the certificate for such shares in order that the same may be cancelled and from such date no dividend shall be payable in respect of such shares. If any share so drawn for redemption comprises a part only of the shares represented by any certificate, a new certificate shall be issued for the undrawn balance, of such shares.

8. On the issue of redeemable preference shares under the provisions of Articles 7 hereof, the following provisions shall take effect.

a. no such shares shall be redeemed except out of the profits of the Company

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which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of the redemption;

b. no such shares shall be redeemed unless they are fully paid; c. the premium, if any, payable on redemption must have been provided for out

of the profits of the Company or the Company's Share Account before the shares are redeemed;

d. where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall out of profits which would otherwise have been available for dividend be transferred to a reserve fund to be called the "Capital Redemption Reserve Account" a sum equal to the nominal amount of the shares redeemed and the provisions of the Act relating to the reduction of the share capital of the Company shall, except, as provided in Section 80 of the Act, apply as if the Capital Redemption Reserve Account were paid-up share capital of the Company.

9.

The Company may, (subject to the provisions of Section 78, 80, 100 to 105 inclusive, of the Act), from time to time, by Special Resolution, reduce its capital and any Capital Redemption Reserve Account or Premium Account in any manner for the time being authorized by law, and in particular capital may be paid off on the footing that it may be called up on again or otherwise. This Article is not to derogate from any power the Company would have if it were omitted.

10. Subject to the provisions of Section 94 of the Act, the Company in General Meeting may, from time to time, sub-divide or consolidate all or any of its share capital into shares of larger amount than its existing shares or sub-divide its shares, or any of them into shares of a smaller amount than is fixed by the Memorandum; subject nevertheless, to the provision of clause (d) of sub-section (7) of section 94; and the resolution where any share is sub-divided may determine that, as between the holders of the shares resulting from such-division one or more of such shares shall have some preference or special advantage as regards dividend, capital or otherwise over or as compared with the other. Subject as aforesaid, the Company in General Meeting may also cancel shares which have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of shares so cancelled.

11. If any time the share capital, by reason of the issue of preference shares or otherwise, is divided into different classes of shares, all or any of the rights, and privileges attached to any class (unless otherwise provided by the terms of the issue of the shares of that class) may, subject to the provisions of Sections 106 and 107 of the Act and whether or not the Company is being wound up, be varied, modified, commuted, affected or abrogated with the consent in writing of the holders of three-fourth of the issued shares of that class or with the consent of the Special Resolution passed at special General Meeting of the holders of the Shares of that class. This Article shall not derogate from any power which the Company would have if this Article is omitted. The provision of these Articles relating to General Meeting shall mutatis mutandis apply to every such separate meeting, but so that if in any adjourned meeting of such holders, a quorum as defined above is not present, those persons who are present shall be the quorum.

Shares and Certificates 12. The Company shall cause to be kept a Register and Index of Members in accordance with

Section 150 and 151 of the Act. The Company shall be entitled to keep in any state or country outside India a branch Register of Members resident in that State or Country.

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12A. Notwithstanding anything contained in these Articles, the Company shall be entitled to dematerialize its securities and to offer securities in a dematerialized form pursuant to the Depositories Act, 1996 and the Rules framed there under. The company shall further be entitled to maintain a Register of members with the details of members holding shares both in material and dematerialized form in any media as permitted by law including any form of electronic media.

13. The Shares in the capital shall be numbered progressively accordingly to their several denominations, and except in the manner herein before mentioned no shares shall be sub-divided, the words, "provided, however, that the provisions relating to progressive numbering shall not apply to the shares of the Company which have been dematerialized.

14. (a) Where at any time after the expiry of two years from the formation of the Company or at any time after the expiry of one year from the allotment of shares in the Company made for the first time after its formation whichever is earlier, it is proposed to increase the subscribed capital of the Company by allotment of further shares whether out of unissued share capital or out of increased share capital, then such further shares shall be offered to the persons who at the date of the offer, are holders, of the Company in proportion as nearly as circumstances admit, to the capital paid up on these shares at that date. Such offer shall be made by the notice specifying the number of shares offered and limiting a time not being less than fifteen days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined. After the expiry of the time specified in the notice aforesaid or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board may dispose of them in such manner as they think most beneficial to the Company. (b) Notwithstanding anything contained in the preceding sub-clause, the Company may :-

(i) by a special resolution; or (ii) where no such special resolution is passed, if the votes cast (whether on a show of hands, or on a poll as the case may be) in Favor of the proposal contained in the resolution moved in that General Meeting (including the casting vote, if any, of the Chairman) by members who, entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any cast against the proposal by members so entitled and voting and the Central Government is satisfied, on an application made by the Board of Directors in this behalf, that the proposal is most beneficial to the Company, Offer further shares to any person or person, and such person or persons may or may not include the persons who at the date of offer, are the holders of the equity shares of the Company.

(c) Notwithstanding anything contained in sub-clause (a) above, but subject, however, to Section 81(3) of the Act, the Company may increase its subscribed capital on exercise of an option attached to the debentures issued or loans raised by the Company to convert such debentures or loans into the shares, or to subscribe for shares in the Company.

15. a) Subject to the provisions of these Articles and of the Act, the shares (including any shares forming part of any increased capital of the Company) shall be under the control of the directors; who may allot or otherwise dispose of the same to such persons in such proportion on such terms and conditions and at such times as the Directors think fit and subject to the sanction of the Company in General Meeting with full power to give any person the option to call for or be allotted shares of any class of the Company either, (subject to the provisions of

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Sections 78 and 79 of the Act), at a premium or at par or at a discount and such option being exercisable for such time and for such consideration as the Directors may think fit. The Board shall cause to be filed the returns as to allotment provided for in section 75 of the Act. (b) Subject to the provisions of the Act, and these Articles, the Board may allot and issue shares in the capital of the Company as payment for any property sold or transferred or for services rendered to the Company in the conduct of its business and any shares which may be so issued shall be deemed to be fully paid-up shares.

15A. The company shall not give to any person option or right to call of any shares without the consent of the members in the General Meeting.

16. In addition to and without derogating from the powers for that purpose conferred on the Board under Articles 14 and 15, the Company in General Meeting may, subject to the provisions of Section 81 of the Act, determine that any shares (whether forming part of the original capital or of any increased capital of the Company) shall be offered to such persons (whether members or not) in such proportion and on such terms and conditions and either (subject to compliance with the provisions of Section 78 and 79 of the Act), at a premium or at par or at a discount, as such General Meeting shall determine and with full power, to give any person (whether a member or not) the option to call for or be allotted shares of any class of the Company either (subject to compliance with the provisions of Section 78 and 79 of the Act), at a premium or at par or at a discount, such option being exercisable at such times and for such consideration as may be directed by such General Meeting or the Company in General Meeting may make any other provision whatsoever for the issue, allotment or disposal of any shares.

17. Any application signed by or on behalf of any applicant for shares in the Company, followed by an allotment of any shares therein shall be an acceptance of shares within the meaning of these Articles, and every person who thus or otherwise accepts any shares and whose name is on the Register shall for the purposes of these Articles, be a member.

18. The money (if any) which the Board shall, on the allotment of any shares being made by them, require or direct to be paid by way of deposit, call or otherwise, in respect of any shares allotted by them, shall immediately on the insertion of the name of the allottee in the Register of Members as the name of the holder of such shares, become a debt due to and recoverable by the Company from the allottee thereof, and shall be paid by him accordingly.

19. Every member, or his heirs, executors or administrators, shall pay to the Company the portion of the capital represented by his shares or shares which may for the time being, remain unpaid thereon, in such amounts, at such time or times, and in such manner as the Board shall, from time to time in accordance with the Company's regulations, required or fix for the payment thereof.

20. (a) Every member or allottee of shares shall be entitled without payment, to receive one certificate specifying the name of the person in whose favor it is issued, the shares to which it relates and the amount paid-up thereon. However, when the holdings of a member is in excess of the marketable lot, such member shall be entitled to receive without any payment, one certificate for every block of shares representing the marketable lot. Such certificate shall be issued only in pursuance of the resolution passed by the Board and on surrender to the Company of its letter of allotment or fractional coupons of requisite value, save in cases of issues against letters of acceptance or of renunciation or in cases of issue of bonus shares, or in case of allotment without there being a letter of allotment issued by the Company. Every such certificate shall be issued under the seal of the Company, which shall be affixed in the presence of two Directors or persons acting on behalf of the Directors under a duly registered

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power of attorney and the Secretary or some other person appointed by the Board for the purpose, and two Directors or their Attorneys and the Secretary or other person shall sign the shares certificate, provided that if the composition of the Board permits of it, at least one of the aforesaid two Directors shall be a person other than a Managing or a Whole-time Director. Particulars of every share certificate issued shall be entered in the Register of Members against the name of the person to whom it has been issued, indicating the date of issue. (b) Any two or more Joint allottees of a share shall for the purpose of this Article, be treated as a single member and the certificate of any share, which may be subject to joint membership, may be delivered to any one of such joint owners on behalf of all of them and the Company shall not be bound to issue more than one certificate and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all such holders. (c) A Director may sign a share certificate by affixing his signature thereon by means of any machine, equipment or other mechanical means, such as engraving in metal or lithography, but not by means of a rubber stamp, provided that the Director shall be responsible for the safe custody of such machines, equipment or other material used for the purpose.

21. (a) No certificate of any share or shares shall be issued either in exchange for those which are sub-divided or consolidated or in replacement of those which are defaced, torn or old, decrepit, worn out or where the cages on the reverse for recording transfers have been duly utilized, unless the certificate in lieu of which it is issued is surrendered to the Company. The Company shall not charge any fees for the same. (b) When a new share certificate has been issued in pursuance of clause (a) of this Article, it shall state on the face of it and against the stub or counterfoil to the effect that it is issued in lieu of share certificate No. sub-divided/replaced/on consolidation of shares. (c) If a share certificate is lost or destroyed, a new certificate in lieu thereof shall be issued only with the prior consent of the Board and on such terms, if any, as to evidence and indemnity as to the payment of out-of-pocket expenses incurred by the Company in investigating evidence, as the Board think fit. (d) When a new share certificate has been issued in pursuance of clause (c) of this Article, it shall on the face of it and against the stub or counterfoil to the effect that it is "duplicate issued in lieu of share certificate No.". The word "Duplicate" shall be punched in bold letters across the face of the share certificate. (e) Where a new share certificate has been issued in pursuance of clause (a) or clause (c) of this Article, particulars of every such share certificate shall be entered in a Register of Renewed and Duplicate Certificate indicating against the names of the persons to whom the certificate is issued, the numbers and date of issue of the share certificate in lieu of which the new certificate is issued, and the necessary changes indicated in the Register of Members by suitable cross reference in the "Remarks" column. (f) All blank forms to be issued for issue of share certificates shall be printed and the printing shall be done only on the authority of a resolution of the Board. The blank forms shall be consecutively machine numbered and the forms and the blocks engravings, facsimiles and hues relating to the printing of such forms shall be kept in the custody of the Secretary or of such other person as the Board may appoint for the purpose, and the Secretary or the other person aforesaid shall be responsible for rendering an account of these forms to the Board.

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(g) The Managing Director of the Company for the time being, or if the Company has no Managing Director, every Director of the Company shall be responsible for the maintenance, preservation and safe custody of all books and documents relating to the issue of shares certificates except the blank forms of share certificates referred to in sub Article (f). (h) All books referred to in sub-Article (g) shall be preserved in good order permanently.

22. If any share stands in the names of two or more persons, the person first named in the register shall, as regard receipts of dividends or bonus or service of notice and all or any other matter connected with the Company, except voting at meetings, and the transfer of the shares, be deemed the sole holder thereof but the joint-holders of shares shall be severally as well as jointly be liable for the payment of all installments and calls due in respect of such share and for all incidents thereof according to the Company's regulations.

23. Except as ordered by a Court of competent jurisdiction or as by law required, the Company shall not be bound to recognize any equitable, contingent, future or partial interest in any share or (except only as is by these Articles otherwise expressly provided) any right in respect of a share other than an absolute right thereto in accordance with the Articles, in the person from time to time registered as the holder thereof; but the Board shall be at liberty at their sole discretion to register any share in the joint names of any two or more persons or the survivor or survivors of them.

24 (a) Notwithstanding anything herein contained, a person whose name is at any time entered in the Register of Members of the Company as the holder of share(s) in the Company, but who does not hold the beneficial interest in such share(s), shall within such time and in such form as may be prescribed, make a declaration to the Company specifying the name and other particulars of the person or persons who hold the beneficial interest in such share(s) in the manner provided in Section 187-C of the Act.

(b) A person who holds a beneficial interest in shares or class of shares of the Company shall, within the time prescribed, after his becoming such beneficial owner, make a declaration to the Company specifying the nature of his interest, particulars of the person in whose name the shares stand in the Register of Members of the Company and such other particulars as may be prescribed in Section 187-C of the Act. (c) Whenever there is a change in the beneficial interest in shares referred to above, the beneficial owner shall, within the time prescribed from the date of such change make a declaration to the Company in such form and containing such particulars as may be prescribed as provided in Section 187-C of the Act. (d) Notwithstanding anything contained in Section 153 of the Act and Article 24 hereof, where any declaration referred to above is made to the Company, the Company shall make a note of such declaration in the Register of Members and file within the time prescribed from the date of receipt of the declaration a return in the prescribed form with the Registrar of Companies with regard to such declaration.

24A. Notwithstanding anything continued in the Article, the Company shall be entitled to treat the person whose name appears on the Register of Members as the holder of any share or whose name appears as the Beneficial Owner of shares in the records of the Depository, as the absolute owner thereof and accordingly shall not (except as ordered by a Court of competent jurisdiction or as by law required) be bound to recognize any benami trust or equity or equitable, contingent or other claim or interest in such share on the part of any other person whether or not it shall have express or implied notice thereof.

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25. None of the funds of the Company shall be applied in the purchase of any shares of the

Company, and it shall not give any financial assistance for or in connection with the purchase or subscription of any shares in the Company or in its holding company save as provided by Section 77 of the Act.

Transfer and Transmission of Shares and Debentures 54. The company shall keep a “Register Of transfers” and therein shall be fairly and distinctly

entered particulars of every transfer or transmission of any share.

55. (a) Except as hereinafter provided, no shares in the Company shall be transferred unless and until the rights of pre-emption hereinafter conferred shall have been exhausted. (b) Every member or other person entitled to any shares who intends to transfer such shares (herein-after called "the Vendor") shall give notice in writing (hereinafter referred to "a transfer notice") to the Board of his intention. Such notice shall specify the number and class of the shares which the vendor desires to transfer and shall constitute the Board his agent for the sale of the said shares in one or more lots at the discretion of the Board to members of the company (other than the vendor) at a price to be agreed upon between the vendor and Board or in default of such agreement, on the application of either party at a price which the Auditor of the Company for the time being shall certify in writing under his hand, to be in his opinion the fair selling value thereof as between a willing vendor and a willing purchaser. (c) Upon the price being fixed as aforesaid the Board shall forthwith give notice to all the members of the Company of the number and price of the shares to be sold and invite each of them to state in writing within thirty days from the date of the said notice whether he is willing to purchase any, and if so, what maximum number, of the said shares. (d) At the expiration of the said period of thirty days, the Board shall allocate the said shares to or amongst the member or members who shall have expressed his or their willingness to purchase as aforesaid and, if more than one, so far as may be, prorata according to the number of shares already held by them respectively; provided that no member shall be obliged to take more than the maximum number of such shares which he has expressed his willingness to take as aforesaid. Upon any such allocation as aforesaid being made, the vendor shall be bound on payment of the said price to transfer the shares to the purchaser or purchasers, and if he makes default in so doing, the Board may receive and give a good discharge for the purchase money on behalf of the vendor and may authorize some person to execute the transfer of such shares in favor of the Purchaser or Purchasers and may enter the name or names of the Purchaser or Purchasers in the Register of Members as holder or holders by transfers of the said shares so purchased by him or them. (e) In the event of all the said shares not being sold under sub-clause (d) hereof, the Vendor may at any time within three calendar months after the expiration of the said thirty days, transfer the shares, remaining unsold to any person and at any price. (f) The provisions of sub-clause (a), (b), (c), (d) and (e) hereof shall not apply to a transfer to a person who is already a member of the Company nor to transfer merely for the purposes of effectuating the appointment of new trustees, nor to a transfer by executors or administrators to a legatee under the will of, or the husband, wife, child, grand-child or next of kin of a deceased member, nor to a transfer to a trustee of a beneficiary nor in case the member is a body corporate from that body corporate to any of its subsidiary holding or associate body

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corporate; Provided that it is proved to the satisfaction of the Board that the transfer bonafide falls within one of these exceptions. (g) Notwithstanding anything contained in this Article 55, Vashu Group shall not sell, transfer, assign or otherwise dispose of shares of the Company representing more than 10% of the total capital of the Company in any Financial Year except to West Coast. If at any time the Vashu Group are desirous of disposing, all or part of its shares in the Company, it shall first offer the same to West Coast for purchase by it and /or its nominees at a price which shall be the average of the daily high and low prices of the National Stock Exchange during the seven trading days prior to such date. West Coast shall have the right to accept the offer within 7days from the date of receipt of the offer. In case no written acceptance is received, Vashu Group shall have the right to dispose of the shares offered on no more favorable terms than those offered to West Coast and at a price which is not lower than 20% than the price offered to West Coast through the recognized stock exchanges within the next thirty days subject to a maximum of 10% of the paid up share capital of the Company in any Financial Year. In case, the offer is accepted by West Coast, West Coast shall make the payment for shares to be purchased within 15 days from the date of acceptance of the offer. For the provisions of this Article 55 (g) copies of all notices shall be marked to the Company.

56. Shares in the company may be transferred by an instrument in writing in the form prescribed under the companies act, 1956 and shall be duly stamped and delivered to the company within the prescribed period.

57. The instrument of transfer duly stamped and executed by the transferor and transferee shall be delivered to the company in accordance with the provisions of the Act. The instrument of transfer shall be accompanied by such evidences as the board may require to prove the title of transferor and his right to transfer the shares and every registered instrument of transfer shall remain in the custody of the company until destroyed by order of the board. The transferor shall have been entered in the register of members in respect thereof. Before the registration of transfer, the certificate or certificates of shares must be delivered to the company.

58. The board shall have power on giving not less than 7 days previous notice by advertisement in some newspaper circulating in the district in which the office of the company is situate to close the Transfer Books, the Register of members or Register Of Debenture Holders at such time or times and for such period or periods not exceeding 30 days at a time and not exceeding in the aggregate 45 days in each year.

59. Subject to the provisions of Section III of the Act and Section 22A of the Securities Contract (Regulation) Act 1956, the board may, at its own absolute and uncontrolled discretion and without assigning any reason, refuse to register or acknowledge any transfer of shares, whether fully paid assigning any reason, refuse to register or acknowledge any transfer of shares, whether fully paid or not (notwithstanding that the proposed transferee be already a member) but in such cases, it shall, comply with the requirements of Section III of the Act and/ or Section 22A of the Securities Contracts (Regulation) Act, 1956, as the case may be. Provided that the registration of a transfer shall not be refused on the grounds of the transferor being either alone or jointly with any other person(s) indebted to company on any account whatsoever.

60. Where in the case of partly paid shares, an application for registration is made by the transferor; the company shall give notice of the application to the transferee in accordance with the provisions of section 110 of the Act.

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61. Subject to Article 24 hereof, in case of the death of any 1 or more of the persons named in the Register Of Members as the joint holders of any share, the survivor or survivors shall be the only persons recognized by the company as having any title to or interest in such share, but nothing, herein contained shall be taken to release the estate of a deceased joint holder from any liability on shares held by him with any other person.

62. The executors or administrator or holders of succession certificate or the legal representatives of a deceased member (not being 1 or 2 or more joint holders) shall be the only persons recognized by the company as having any title to the shares registered in the name of such member, and the company shall not be bound to recognize such executors or administrators or holders of a succession certificate or the legal representatives unless such executors or administrators or legal representatives shall have first obtained probate or letters of administration or succession certificate as the case may be, from a duly constituted court in the Union Of India; provided that in any case where the board in its absolute discretion thinks fit, the board may dispense with production of probate or letter of Administration or succession certificate upon such terms as to indemnity or otherwise as the board in its absolute discretion may think necessary and under Article 65 register the name of any person who claims to be absolutely entitled to Article 65 register the name of any person who claims to be absolutely entitled to the shares standing in the name of the deceased member, as a member.

63. No share shall in any circumstances be transferred to insolvent or person of unsound mind.

64. If any member of the company dies, and the company through any kind of its principal officers within the meaning of the Estate Duty Act, 1953, has knowledge of the death, it shall not be lawful for the company to register the transfer of any shares standing in the name of the deceased member unless the company is satisfied that the transferee has acquired such shares for valuable consideration or there is produced to it a certificate from the controller, deputy controller or assistant controller of estate duty in respect thereof that consideration has been paid or will be paid or none is due as the case may be. Where the company has come to know through any of its principal officers of the death of any member, the company shall, within 3 months of the receipt of such knowledge furnish to the assistant controller or deputy Controller of the Estate Duty who is exercising the functions of the Income tax officers under the income tax act in relation to the company, such particulars as may be prescribed by the estate duty rules, 1953.

65. Subject to the provisions of the Act and Articles 60 & 61 any person becoming entitled to shares in consequences of the death, lunacy, bankruptcy, or insolvency of any member, or by any lawful means other than by a transfer in accordance with these articles, may within the consent of the board ( which it shall not be under any obligation to give) upon producing such evidences that he sustains the character in respect of which he proposes to act under this article or of such title as the board thinks sufficient either by registering himself as the holder of the shares or elect to have some persons nominated by him and approved by the board registered as such holder provided nevertheless that if such person shall elect to have his nominee registered he shall testify the election by execution in favor of his nominee an instrument of transfer in accordance with the provisions herein contained and until he does so, he shall not be freed from any liability in respect of the shares.

66. A person entitled to a share by transmission shall, subject to the right of the directors to retain such dividends or moneys as hereinafter provided, be entitled to receive and may give a discharge for, any dividends or other moneys payable in respect of the share.

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67. The company shall not charge any fees for registration of any transfer or transmission of shares or for effecting transmission or for registering any letters of probate, letter of administration and similar other documents.

68. The company shall incur no liability or responsibility whatsoever in consequences of its registering or giving effect to any transfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing in the register of member) to the prejudice to persons having claiming any equitable right, title or interest to or in the said shares notwithstanding that the company may had notice of such equitable right, title or interest or notice prohibiting registration or such transfer and may have entered such notice, referred thereto, in any book of the company, and the company shall not be bound or require to regard or attend or give effect to any notice which may be given to it of any equitable right, title or interest or be under any liability whatsoever for refusing or neglecting so to do though it may have entered or referred to in some book of the company, but the company shall nevertheless be at a liberty to regard and attend to any such notice and give effect thereto if boards shall so think fir.

68A. Notwithstanding anything contained in the Articles herein above relating to transfer and transmission of share and debentures, in the case of transfer of shares or other marketable securities where the company has not issued any certificate and where such shares or securities are being held in an electronic and fungible form by a depositary, the provisions of the depositaries Act,1966 shall apply.

Conversion of Shares into Stock and Re-conversion 75. The Company in general meeting may convert any paid-up shares into stock and when any

shares shall have been converted into stock, the several holders of such stock may thenceforth transfer their respective interest therein, or part of such interest, in the same manner and subject to the same regulations as, and subject to which shares from which the stock arose might have been transferred if no such conversion had taken place, or as near thereto as circumstances will admit. The Company may at any time reconvert any stock into paid-up shares of any denomination.

76. The holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the Company, and other matters, as if they held the shares from which the stock arose; but no such privileges or advantages (except participation in the dividends and profits of the Company and in the assets on winding-up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred that privileges or advantages.

Meeting of Members 77. The Company shall in each year hold a General Meeting as its Annual General Meeting in

addition to any other meetings in that year. All General Meetings other than Annual General Meetings shall be called Extraordinary General Meetings. The first Annual General Meeting shall be held within eighteen months from the date of incorporation of the Company. Not more than fifteen months shall lapse between the date of one Annual General Meeting and that of the next. Nothing contained in the foregoing provisions shall be taken as affecting the rights conferred upon the Registrar under the provisions of Section 166(1) of the Act to extend the time within which any Annual General Meeting may be held. Every Annual General Meeting shall be called for the time being during business hours, on a day that is not a public holiday and shall be held at the Office of the Company or at some other place within the city

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in which the Office of the Company is situated as the Board may determine and the Notices calling the Meeting shall specify it as the Annual General Meeting. The Company may in any of the Annual General Meetings fix the time for its subsequent Annual General Meetings. Every Member of the Company shall be entitled to attend either in person or by proxy and the Auditor of the company shall have the right to attend and to be heard at any General Meeting which he attends on any part of the business which concerns him as Auditor. At every Annual General Meeting of the Company, there shall be laid on the table the Director's Report and Audited Statements of Accounts, Auditors' Report (if not already incorporated in the Audited Statement of Accounts), the Proxy Register with proxies and the Register of Directors' shareholding which shall remain open and accessible during the continuance of the meeting.

78. The Board may whenever it thinks fit call an Extraordinary General Meeting and it shall do so upon a requisition in writing by any member or members holding in the aggregate not less than one-tenth of such of the paid-up capital as at that date carried the right of voting in regard to the matter in respect of which the requisition has been made.

79. Any valid requisition so made by members must state object or objects of the meeting proposed to be called, and must be signed by the requisitionists and be deposited at the office provided that such requisition may consist of several documents in like form each signed by one or more requisitions.

80. Upon receipt of any such requisition, the Board shall forthwith call an Extraordinary General Meeting, and if they do not proceed within twenty-one days from the date of the requisition being deposited at the office, of course a meeting to be called on the day not later than forty-five days from the date of deposit of the requisition, the requisitionists, or such of their number as present either a majority in value of the paid up share capital held by all of them or less than one-tenth of such of the paid up share capital of the Company as is referred to in Section 169(4) of the Act, whichever is less, may themselves call the meeting, but in either case any meeting so called shall be held within three months from the date of the delivery of the requisition as aforesaid.

81. Any meeting called upon the foregoing Articles by the requisitionists shall be called in the same manner, as early as possible as that in which meetings are to be called by the Board.

82. At least twenty-one days' notice of every General Meeting, Annual or Extraordinary, and by whatsoever called specifying the day, place and hours of meeting, and the general nature of the business to be transacted thereat, shall be given in the manner hereinafter provided, to such persons as are under these Articles entitled to receive notice from the Company. Provided that in the case of an Annual General Meeting with the consent in writing of all the members entitled to vote thereat and in case of any other meeting with the consent of members holding not less than 95 percent of such part of the paid-up share capital of the Company as gives a right to vote at the meeting, a meeting may be convened by a shorter notice. In the case of an Annual General Meeting, if any business other than (i) the consideration of the Accounts, Balance Sheets and Reports of the Board of Directors and Auditors (ii) the declaration of dividend, (iii) the appointment of Directors in place of those retiring, (iv) the appointment of, and fixing of the remuneration of the Auditors, is to be transacted, and in the case of any other meeting in any event there shall be annexed to the notice of the Meeting a statement setting out all material facts concerning each such item of business, including in particular the nature of the concern or interest, if any, therein of every Director, and the Manager (if any) Where any such item of special business relates to, or effects any other Company, the extent of shareholding interest in other Company of every

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Director, and the Manager, if any, of the Company shall also be set out in the statement if the extent of such shareholding interest is not less than 20 percent of the paid-up share capital of that other Company. Where any item of business consists of the according of approval to any document by the meeting, the time and place where the document can be inspected shall be specified in the statement aforesaid.

83. The accidental omission to give notice to, or the non-receipt of notice by, any member or other person to whom it would be given shall not invalidate the proceedings at any such meeting.

84. General Meeting, Annual or Extraordinary, shall be competent to enter upon, discuss or transact any business which has not been mentioned in the notice or notices upon which it was convened.

85. Five members present in person shall be quorum for a General Meeting.

86. A body corporate being a member shall be deemed to be personally present if it is represented in accordance with Section 187 of the Act.

87. If, at the expiration of half an hour from the time appointed for holding a meeting of the Company, a quorum shall not be present, the meeting, if convened by or upon the requisition of members, shall stand dissolved, but in any other case the meeting shall stand adjourned to the same day in the next week or if that day is a public holiday until the next succeeding day which is not a public holiday at the same time and place or to such other day and at such other time and place in the city or town in which the Office of the Company is for the time being situated, as the Board may determine, and if at such adjourned meeting a quorum is not present at the expiration of half an hour from the time appointed for holding the meeting, the members present shall be a quorum, and may transact the business for which the meeting was called.

88. The Chairman (if any) of the Directors shall be entitled to take the Chair at every General Meeting whether Annual General or Extraordinary. If there be no such Chairman of the Directors or if at any meeting he shall not be present within fifteen minutes of the time appointed for holding such meeting or if he shall be unable or unwilling to take the Chair then the Vice Chairman of the Board as appointed for holding such meeting or if he shall be unable or unwilling to take the Chair then the members present or if all the Directors present decline to take the Chair, then the members present shall elect one of their number to be Chairman.

89. No business shall be discussed at any General Meeting except the election of a Chairman, whilst the Chair is vacant.

90. The Chairman with the consent of the members may adjourn any meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

91. At any General Meeting a resolution put to the vote of the meeting shall be decided, on a show of hands, unless a poll is (before or on declaration of the result of the show of hands) demanded by at least five members having the right to vote on the resolution and present in person or by proxy, or by the Chairman of the meeting or by the member or members holding not less than one-tenth of the total voting power in respect of the resolution or by any member or members present in person or by proxy and holding shares in the Company conferring a right to vote on the resolution being shares on which an aggregate sum has been paid-up which is not less than one-tenth of the total sum paid-up in all shares conferring that right,

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and unless a poll is demanded a declaration by the Chairman that a resolution has by a show of hands, been carried or carried unanimously, or by a particular majority or lost, and an entry to that effect in the Minute Book of the Company shall be conclusive evidence of the fact, without proof of the number of proportion of the votes recorded in favor of or against that resolution.

92. In the case of an equality of votes, the Chairman shall both on show of hands and at a poll (if any) have a casting vote in addition to the vote or votes to which he may be entitled as a member.

93. If a poll is demanded as aforesaid the same shall subject to Article 95 be taken at such time (not later than forty-eight hours from the time when the demand was made) and place in the city or town in which the Office of the Company is for the time being situated and either by open voting or by ballot, as the Chairman shall, direct, and either at once or after an interval or adjournment, or otherwise, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn at any time by the person or persons who made the demand.

94. Where a poll is to be taken the Chairman of the Meeting shall appoint two scrutinizers to scrutinize the vote given on the poll and to report thereon to him. One of the scrutinizers so appointed shall always be a member, (not being an officer or employee of the Company) present at the meeting, provided such a member is available and willing to be appointed. The Chairman shall have power at any time before the result of the poll is declared to remove a scrutinizer from office and fill vacancies in the office of scrutinizer arising from such removal or from any other cause.

95. Any poll duly demanded on the election of a Chairman of a meeting or any question of adjournment shall be taken at the meeting forthwith.

96. The demand for a poll except of the question of the election of the Chairman and of an adjournment shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll has been demanded.

Votes of Members 97. No member shall be entitled to vote either personally or by proxy at any General Meeting or

Meeting of a class of share-holders either upon a show of hands or upon a poll in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to which the Company has, and has exercised, any right of lien.

98. Subject to the provisions of these Articles and without prejudice to any special privileges, or restrictions as to voting for the time being attached to any class of shares for the time being forming part of the capital of the Company, every member, not disqualified by the last preceding Article shall be entitled to be present, and to speak and vote at such meeting, and on show of hands every member present in person shall have one vote and upon a poll the voting right of every member present in person or by proxy shall be in proportion to his share of the paid-up equity share capital of the Company. Provided, however, if any preference shareholder be present at any meeting of the Company, save as provided in clause (b) of sub-section (2) of Section 87, he shall have a right to vote only on resolutions placed before the meeting which directly affect the rights attached to the preference shares.

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99. On a poll taken at a meeting of the Company a member entitled to more than one vote, or his

proxy or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.

100. A member of unsound mind or in respect of whom an order has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll by his nominee or other legal guardian, and any such nominee or guardian may, on poll vote by proxy. If any member be a minor, the vote in respect of his share or shares shall be by his guardian, or any one of his guardian, if more than one are to be selected in case of dispute by the Chairman of the meeting.

101. A member of unsound mind or in respect of whom an order has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll by his nominee or other legal guardian, and any such nominee or guardian may, on poll vote by proxy. If any member be a minor, the vote in respect of his share or shares shall be by his guardian, or any one of his guardian, if more than one are to be selected in case of dispute by the Chairman of the meeting.

102. Subject to the provisions of these Articles votes may be given either personally or by proxy. A body corporate being a member may vote either by a proxy or by a representative duly authorized in accordance with Section 187 of the Act and such representative shall be entitled to exercise the same rights and powers (including the right to vote by proxy) on behalf of the body corporate which he represents as that body could exercise if it were an individual member.

103. Any person entitled under Article 65 to transfer any share may vote at any General Meeting in respect thereof in the same manner as if he were the registered holder of such shares provided that forty-eight hours at least before the time of holding the meeting or adjourned meeting, as the case may be, at which he proposes to vote he shall satisfy the Directors of his right to transfer for such shares and give such indemnity (if any) as the Directors may require or the Directors shall have previously admitted his right to vote at such meeting in respect thereof.

104. Every proxy (whether a member or not) shall be appointed in writing under the hand of the appointer or his attorney, or if such appointer is a body corporate under the common seal of such corporation, or be signed by an officer or any attorney duly authorized by it, and any nominee or guardian may appoint such proxy. The proxy so appointed shall not have any right to speak at the meetings.

105. An instrument of proxy may appoint a proxy either for the purpose of a particular meeting specified in the instrument and any adjournment thereof or it may appoint for the purpose of every meeting of the Company, or of every meeting to be held before a date specified in the instrument and every adjournment of any such meeting.

106. A member present by proxy shall be entitled to vote only on a poll

107. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority, shall be deposited at the office not later than forty-eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote, and in default the instrument or proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiration of twelve months from the date of its execution.

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108. Every instrument of proxy whether for a specified meeting or otherwise shall, as nearly as circumstances will admit, be in any of the forms set out in Schedule IX of the Act

109. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the proxy or of any power of attorney under which such proxy was signed, or the transfer of the share in respect of which the vote is given, provided that no intimation in writing of the death or insanity revocation or transfer shall have been received at the office before the meeting.

110. No objection shall be made to the validity of any vote, except at any meeting or poll at which such vote shall be tendered, and every vote whether given personally or by proxy, not disallowed at such meeting or poll shall be deemed valid for all purposes of such meeting or poll whatsoever.

111. The Chairman of any meeting shall be the sole judge of the validity of every vote tendered at such meeting. The Chairman present at the taking of a poll shall be the sole judge of the validity of every vote tendered at such poll.

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X. OTHER INFORMATION

Material Contracts and Documents for Inspection

The Contracts referred to in para (A) below (not being contracts entered into in the ordinary course of the business carried on by the Company or entered into more than two years before the date of this Draft Letter of Offer) which are or may be deemed material, have been entered into by the Company. The contracts together with the documents referred to in paragraph (B) below, copies of all of which have been attached to the copy of this Letter of Offer may be inspected at the Registered Office of the Company between 11.00 a.m. - 4.00 p.m. on any working day from the date of this Draft Letter of Offer until the closing of the subscription list. A. Material Contracts 1. Copy of Memorandum of Understanding dated 17/05/2010 between the Company and SMC Capitals

Limited, Lead Manager to the Issue. 2. Copy of Memorandum of Understanding dated 18/05/2010 between the Company and Link Intime

India Pvt. Ltd., Registrar to the Issue. 3. Copy of tripartite agreement dated 13/03/2007 between the Company, National Securities

Depository Limited (NSDL) and Link Intime India Pvt. Ltd.. 4. Copy of tripartite agreement dated 27/10/2006 between the Company, Central Depository Services

(India) Limited (CDSL) and Link Intime India Pvt. Ltd. 5. Copy of Shareholder’s Agreement dated 06/09/2003. B. Documents for Inspection 1. Copy of Memorandum of Articles and Articles of Association of Rama Newsprint and papers

Limited. 2. Annual report of Rama Newsprint and papers Limited for the past five financial years. 3. Copy of the Board resolution dated 07/01/2010 recommending the rights issue of the Company. 4. Copy of certificate dated 29/05/2010 issued by Haribhakti & Co., Chartered Accountants & Statutory

Auditors of the Company reporting financials of the company in terms of part II schedule II of the Companies Act, 1956 and including capitalization statement, taxation statement, accounting ratios.

5. Copy of letter dated 29/05/2010 received from Haribhakti & Co., Chartered Accountant, regarding tax benefits accruing to the company and its shareholders.

6. Legal Due Deligence report dated 11/05/2010 from Paras Kuhad & Associates. 7. Copies of undertakings from Rama Newsprint and Papers Limited. 8. Copies of Consents from the Directors of the Company, Auditors of the Company, Legal Advisor to

the Issue, Registrar to the Issue, Lead Mangers to the Issue, Banker to the Company and Bankers to the Issue.

9. Copy of in-principle approvals received from BSE & NSE vide their letter no. [●] dated [●] & [●] dated [●] respectively.

10. Copy of SEBI observation letter No. [●] dated [●].

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Declaration No statement made in this Letter of Offer shall contravene any of the provisions of the Companies Act, 1956 and the rules made there under. All the legal requirements connected with the said issue as also the guidelines, instructions etc. issued by SEBI, Government and any other competent authority in this behalf have been duly complied with. We further certify that all the disclosures made in the Draft Letter of Offer are true and correct. Yours Faithfully For Rama Newsprint and Papers Limited Signed by all the Directors Sd/-

Sd/-

Shree Kumar Bangur Chairman

Virendra Bangur Vice Chairman

Sd/-

Sd/-

Kanhaiya Lal Chandak Director

Vaishnav Das Bajaj Executive Director

Sd/-

Sd/-

M.P.Taparia Director

Sudarshan Somani Director

Sd/-

Sd/-

Haigreve Khaitan Director

Janak Mehta Director

Sd/-

Sd/-

Lt. Gen Retd. Ashok Kapur Director

S Doreswamy Director

Place: Mumbai Date: June 7, 2010