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For Private Circulation Only

SBI FACTORS AND COMMERCIAL SERVICES

Registered Office: 61, Sakhar Bhavan, Nariman Point, MuCorporate office: 61, Sakhar Bhavan, Nariman Point, Mu

Tel No.: (022) 22877574-78 Fax No.: (022) 2287Issue of Subordinated Debt in the nature of Promissory Note

cash at par aggregating to Rs 20crores to be raised on awith an option to retain another 20 cr

ENERAL RISKS: Investors are advised to read the risk factors caecision in this offering. For taking an investment decision, the investors mhe Issuer and the Issue including the risks involved. The Bonds have noecurities and Exchange Board of India, nor does Securities and Exchccuracy or the adequacy of this document. Specific attention of investornformation Memorandum.

SSUER'S ABSOLUTE RESPONSIBILITY: The Issuer, having maesponsibility for, and confirms that this Information Memorandum contassuer and the Issue, which is material in the context of the Issue, thanformation Memorandum is true and correct in all material respects anespect, that the opinions and intentions expressed herein are honestly heldmission of which makes this document as a whole or any of such informpinions or intentions misleading in any material respect.

ISTING: The issuer has applied to and is in consultation with the Stock

REDIT RATING: ICRA: “LAAA” CARE: “AAA” he rating is not a recommendation to buy, sell or hold securities and Inveshe rating may be subject to revision or withdrawal at any time by the assew information. Each rating should be evaluated independently of any oth

RUSTEE: IDBI Trusteeship Services Limited have given their consent the 21st March 2005 for being appointed as Trustee for the Noteholders for

Arrangers to the Issue

SBI Capital Markets Limited 202, Maker Tower

Cuffe Parade , Mumbai –400 005 Tel:22189166-69 Fax:22152711

ID8th

Na M Te

Registrar to the Issue T

Computronics Financial Services (I) Ltd, 1, Mittal Chambers, Nariman Point, Mumbai 400 021 Tele: 22882972 Fax: 56351032

IDBI Trustees10th Floor, NarNariman PointMumbai 400 0Tele: 5631177

ISSUE OPENS: March 30, 2005 ISSUE C

Information Memorandu

PVT LIMITED mbai –400 021 mbai –400 021 7578 s of Rs 1,00,00,000/- each for private placement basis, ores

refully before taking an investment ust rely on their own examination of

t been recommended or approved by ange Board of India guarantee the is invited to the Risk Factors in the

de all reasonable inquiries, accepts ins all information with regard to the t the information contained in this d is not misleading in any material and that there are no other facts, the ation or the expression of any such

Exchange, Mumbai for listing

tors should take their own decisions. igning Rating Agency on the basis of er rating.

o the company vide their letter dated the present private placement.

BI Capital Market Services Ltd. Floor, Bakhtawar riman Point,

umbai 400 021 le: 56371212 Fax: 22885848

rustees to the Issue

hip Services Limited, iman Bhavan, , 21 1 Fax: 56311776

LOSES: March 31, 2005

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Abbreviations and Glossary of the Terms used

Act The Companies Act, 1956 as amended from time to time till date Application form Means the form in terms of which the investors shall apply for

the Subordinated Debt of the company Board Board of Directors of SBI Factors and Commercial Services

Private Limited BSE The Stock Exchange, Mumbai CBDT Central Board of Direct Taxes CDSL Central Depository Services (India) Limited CARE Credit Analysis & Research Limited DDA Deemed Date of Allotment EPS Earnings per share FIs Financial Institutions FIIs Foreign Institutional Investors FY Financial Year GOI Government of India ICRA ICRA Limited IT Act Income Tax Act, 1961 MFs Mutual Funds Memorandum Memorandum of Association Noteholder The holder of the Notes NRIs Non Resident Indians NSDL National Securities Depository Limited OCBs Overseas Corporate Bodies Offer / Issue Private Placement of Subordinated Debt of SBI Factors under

this Information Memorandum Offer document / IM The Information Memorandum filed with BSE under revised

Guidelines issued by SEBI vide its circular dated 30.09.2003 Promissory Notes / Notes Promissory Notes under this Information Memorandum RBI Reserve Bank of India Registrars to the issue Computronics Financial Services (I) Ltd SEBI Securities and Exchange Board of India The Company/Issuer SBI Factors and Commercial Services Limited Trustees IDBI Trusteeship Services Limited YTM Yield to Maturity

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RISK FACTORS AND MANAGEMENT PERCEPTIONS The investors should consider the following risk factors carefully for evaluating the Company and its business before making any investment decision. Unless the context requires otherwise, the risk factors described below apply to SBI Factors and Commercial Services Limited only. INTERNAL RISKS 1. Debenture Redemption Reserve No Debenture Redemption Reserve is being created for the present issue of bonds. MP: Being an NBFC, the issuer is not required to create a Debenture Redemption Reserve. A Trustee has been appointed to protect the interest of the investors. 2. Contingent Liabilities of the Company As on March 31, 2004, the contingent liabilities of the Company stood at Rs. 4,25,63,512. MP: The contingent liabilities have arisen in the normal course of business of the Company and are not likely to affect the operations and finances of the company. EXTERNAL RISKS 1. Competition Risks: The Company is primarily engaged in factoring – part of the

highly competitive financial services sector. Banks too are allowed to undertake factoring. Thus, the company competes for business not only with other factoring companies but also with banks. Because of deregulation, competition is likely to get more severe in future affecting business growth, profitability and asset quality.

MP: The Company is one of the pioneers of factoring in India. Promoted by State Bank Group, SIDBI and Union Bank, the Company has implemented strong systems and procedures and is well poised to face competition.

2. Factoring as part of total credit market is subject to economic cycles: Credit

market is subject to cyclicality. In boom times, assets and income of lenders grow, but with a down turn in economic growth, the asset quality deteriorates sharply affecting the profitability of operations.

MP: The Company has developed strong credit management skill, which would help avoid risky businesses. Moreover, its directors are very senior finance professionals, capable of guiding the Company through the economic upheavals.

3. Absence of legal framework: There is no factoring legislation in India. The

business thus does not have a proper legal framework.

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MP: While it is true that there is no specific legislation on factoring, the various elements of the country’s mercantile law, such as Contract Act, Transfer of Properties Act, Negotiable Instruments Act etc., adequately cover all aspects of the business.

4. High stamp duty on assignment of debts: Assignment of debts attract very high

stamp duty which renders purchase of debts prohibitively expensive.

MP: SBI Factors like other factoring companies in India is not providing full factoring facilities. The problem of high stamp duty is tackled by entering into “agreement to purchase debts” rather than “purchase agreements”

NOTES TO RISK FACTORS 1. The present private placement of the Company is for Unsecured Subordinated Debt

to be issued in the nature of Promissory Notes of Rs 1,00,00,000/- each for cash at par aggregating Rs 20 crores, with an option to retain another 20 crores.

2. The financial information as contained in the Auditor’s Report, including the notes

to accounts, significant accounting policies have been duly certified by the Auditors. As far as possible, the Audited numbers have been used for computation of or arriving at the other financial information contained in the Information Memorandum. However the data for 31-12-2004 is based on review and not on a complete audit. Other financial information contained in the Information Memorandum except as contained in the Auditor’s Report has been certified by the management of SBI Factors.

3. Investors are also advised to refer to the Notes to Accounts and the Auditor’s

Report appearing later in this Information Memorandum. 4. Interest of Promoters/Directors: The Company has been promoted by State bank

Group, SIDBI, and Union Bank of India. The directors of the Company are either employees of the promoters or independent professionals. None of the directors have any interest in the issue.

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TABLE OF CONTENTS RISK FACTORS AND MANAGEMENT PERCEPTIONS .......................................... 3 PART I ............................................................................................................................. 7 I. GENERAL INFORMATION.................................................................................. 7

Authority for the Present Issue .................................................................................... 7 Registration and Government Approvals..................................................................... 7 General Disclaimer ...................................................................................................... 7 Disclaimer from the Issuer........................................................................................... 8 Disclaimer Clause of the Stock Exchange ................................................................... 8 Disclaimer in respect of Jurisdiction............................................................................ 9 Cautionary Note ........................................................................................................... 9 Filing of Information Memorandum with the Stock Exchanges ................................. 9 Minimum Subscription ................................................................................................ 9 Credit Rating.............................................................................................................. 10 Underwriting .............................................................................................................. 10 Issue Programme........................................................................................................ 11 Issue Management Team ........................................................................................... 11 Compliance Officer and Company Secretary ............................................................ 11

II. CAPITAL STRUCTURE ...................................................................................... 12 III. TERMS OF THE PRESENT ISSUE................................................................. 14

Objects of the Issue.................................................................................................... 14 Instrument at a Glance ............................................................................................... 14 Nature of Instruments ................................................................................................ 14 Credit Rating.............................................................................................................. 15 Trustees to the Noteholders ....................................................................................... 15 Security ...................................................................................................................... 15 Issue of Notes............................................................................................................. 15 Who can apply ........................................................................................................... 16 Application under Power of Attorney........................................................................ 16 How to apply.............................................................................................................. 17 Deemed Date of Allotment ........................................................................................ 17 Record Date ............................................................................................................... 17 List of Beneficial owners ........................................................................................... 17 Register of Noteholders ............................................................................................. 17 Interest on application money.................................................................................... 17 Interest on the Notes .................................................................................................. 18 Effect of Holidays ...................................................................................................... 18 Payment of Interest .................................................................................................... 18 Debenture Redemption Reserve ................................................................................ 18 Payment on Redemption ............................................................................................ 19 Tax Deduction at Source............................................................................................ 19 Transferability of the Notes ....................................................................................... 19 Rights of Noteholders ................................................................................................ 19 Amendment to the Terms of the Notes ...................................................................... 20 Future Borrowings / Issues ........................................................................................ 20 Notices ....................................................................................................................... 20

IV. COMPANY AND MANAGEMENT................................................................ 21 Present business ......................................................................................................... 21 Products...................................................................................................................... 21

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Main Objects of the Company ................................................................................... 24 Subsidiary of the company......................................................................................... 27 Promoters ................................................................................................................... 27 Board of Directors...................................................................................................... 28 Key Managerial Personnel......................................................................................... 29 Changes in Key Managerial Personnel in the last 1 year........................................... 30 Stock Market Data ..................................................................................................... 30

V. PROMOTERS, GROUP COMPANIES, JOINT VENTURES AND ASSOCIATES AND THEIR FINANCIALS ................................................................ 31 VI. OPERATIONAL & FINANCIAL PERFORMANCE OF THE COMPANY FOR LAST THREE YEARS AND MANAGEMENT DISCUSSION...................... 36 VII. PROMISE vis-a-vis PERFORMANCE............................................................. 40 VIII. OUTSTANDING LITIGATION/CRIMINAL PROSECUTION, DEFAULTS AND MATERIAL DEVELOPMENTS ........................................................................ 41 IX. DISCLOSURE ON INVESTOR GRIEVANCES AND REDRESSAL SYSTEM........................................................................................................................ 42 PART II.......................................................................................................................... 43 I. GENERAL INFORMATION..................................................................................... 43

Consents..................................................................................................................... 43 Expert Opinion........................................................................................................... 43 Authority for the Present Issue .................................................................................. 44 Letters of Allotments/ Refunds.................................................................................. 44 Basis of Allotment ..................................................................................................... 44 Issue Management Team ........................................................................................... 45 Compliance Officer and Company Secretary ............................................................ 45

II. FINANCIAL INFORMATION ................................................................................ 46 Accounting Convention ................................................................................................. 50 Factoring Income ........................................................................................................... 50 Fixed Assets and Depreciation....................................................................................... 50 Factored Debts ............................................................................................................... 50 Deferred Taxation .......................................................................................................... 50 Employee and Retirement Benefits ............................................................................... 51 III. STATUTORY AND OTHER INFORMATION.................................................... 57

Minimum Subscription .............................................................................................. 57 Expenses of the Issue ................................................................................................. 57 Agency preparing the Information Memorandum ..................................................... 57 Underwriting Commission and Brokerage ................................................................ 57 Previous Public or rights issue, if any (during last five years) .................................. 57 Commission and brokerage on previous issue........................................................... 57 Purchase of Property .................................................................................................. 58 Revaluation of Assets, if any (during last five years)................................................ 58

IV. MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ......................... 59 PRIVATE COMPANY.................................................................................................. 59 V. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS.................................. 62 PART III .......................................................................................................................... 63 DECLARATION............................................................................................................... 63

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SBI FACTORS AND COMMERCIAL SERVICES LIMITED Registered Office: 61, 6th Floor, Sakhar Bhavan, Opp. Oberoi Hotel, Nariman Point, Mumbai – 400 021 Corporate office: 61, 6th Floor, Sakhar Bhavan, Opp. Oberoi Hotel, Nariman Point, Mumbai – 400 021

Tel No.(022) 22877573 Fax No.: (022) 22877578

PART I

I. GENERAL INFORMATION SBI Factors is seeking offer for subscription of Unsecured Subordinated Debt in the nature of Promissory Notes of Rs. 1,00,00,000/- each for cash at par aggregating Rs. 20 crores to be raised on a private placement basis. Authority for the Present Issue This present issue of Debt is being made pursuant to the Resolution of the Board of Directors of the Company, passed at its meeting held on January 15, 2005 and subject to the Memorandum and Articles of Association of the company. The Managing Director of the Company has been authorized to execute necessary documents in this regard. The aggregate value of bonds offered through this document is within the limits for the purpose of borrowing. Registration and Government Approvals The activities for which the funds are being raised through this issue are within the purview of the object clause of the Company’s Memorandum. No further approvals from any Government authority are required by the Company to undertake the proposed activities save and except those approvals, which may be required to be taken in the normal course of business from time to time. General Disclaimer This Information Memorandum is neither a Prospectus nor a statement in lieu of Prospectus. It does not constitute an offer or an invitation to the Public at large to subscribe to Unsecured Subordinated Debt in the nature of Promissory Notes to be issued by SBI Factors and Commercial Services Limited. This Information Memorandum is not intended for distribution and is for the consideration of the person to whom it is addressed and should not be reproduced by the recipient. It cannot be acted upon by any person other than to whom it has been specifically addressed. It is not intended to be offered to more than forty-nine investors. Multiple copies hereof given to the same entity shall be deemed to be offered to the same investor. Apart from this Information Memorandum, no other document has been prepared in connection with this Debt Issue and that no document in relation to the Issuer or this Debt Issue has been delivered for registration to any authority. This Information Memorandum has been prepared in accordance with Schedule II of the Companies Act 1956, Chapter VI of the SEBI (DIP) Guidelines to give information regarding SBI Factors to investors proposing to invest in this issue of Debts and it does not purport to contain all the information that any such party may require. The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to the Issuer, and the

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Issue, which is material in the context of the Issue, that the information contained in this Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document or any of such information or the expression of any such opinions or intentions misleading in any material respect. Potential investors are required to make their own independent valuation and judgment before making the investment and they are believed to be experienced in investing in debt markets and are able to bear the economic risk of investing in the issues of debts. It is the responsibility of potential investors to have obtained all consents, approvals or authorizations required by them to make an offer to subscribe for, and purchase of the Promissory Notes. Potential investors should also consult their own tax advisors on the tax implications of the acquisition, ownership, sale and redemption of Bonds and income arising thereon. The Lead Arranger does not take any responsibility either for the financial soundness of the Promissory Notes offered or for the correctness of the statement made in this Information Memorandum. The Lead Arranger has relied exclusively upon the information provided by SBI Factors and has neither verified independently, nor assumes responsibility for the accuracy and completeness of this Information Memorandum, or any other information or documents supplied or approved by SBI Factors. The Lead Arranger holds no responsibility for any misstatement in or omission of SBI Factors, publicly available information or any other information about SBI Factors available in the market. Neither the Lead Arranger nor any officer or employee of the Lead Arranger accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents. The filing of the Information Memorandum with BSE does not, however, absolve SBI Factors from any liabilities / or the requirement of obtaining such statutory or other clearances as may be required for the purpose of the proposed issue. BSE further reserves the right to take up, at any point of time, any irregularities or lapses in the Information Memorandum. Disclaimer from the Issuer The Issuer Company accepts no responsibility for statements made otherwise than in the Information Memorandum or any other material issued by or at the instance of the Issuer Company and anyone placing reliance on any other source of information would be doing so at his/her/their own risk. Disclaimer Clause of the Stock Exchange Application for initial listing approval has been made to The Stock Exchange, Mumbai (hereinafter referred to as BSE). As required, a copy of this Information Memorandum has been submitted to BSE. It is to be distinctly understood that the hosting of Information memorandums for privately placed debt instruments on BSE web site should not in any way be deemed or construed that the Information Memorandum has been cleared or approved by BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Information Memorandum, nor does it warrant that this Issuer's

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securities will be listed or will continue to be listed on the Exchange; nor does it take any responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claims against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. Disclaimer in respect of Jurisdiction This Issue is made in India to Investors as specified under clause “Who Can Apply” of this Information Memorandum, who shall be specifically approached by the Company This Information Memorandum does not, constitute an offer to sell or an invitation to subscribe to the Promissory Notes offered hereby to any person to whom it is not specifically addressed. Any disputes arising out of this Debt Issue will be subject to the exclusive jurisdiction of the courts of Mumbai, Maharashtra. Cautionary Note Though not applicable to the issue of debts, as a matter of abundant caution, attention of applicants is specially drawn to the provisions of sub-section (1) of Section 68A of the Act, 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, shall be punishable with imprisonment for a term which may extend to five years.” Filing of Information Memorandum with the Stock Exchanges In accordance with the revised guidelines issued by SEBI under its letter Dated 30.09.2003, a copy of this Information Memorandum has been filed with The Stock Exchange, at their office at Dalal Street, Mumbai

Applications have been made to the Stock Exchange, Mumbai for permission to deal in and for an official quotation of the Promissory Notes now being issued by the SBI Factors and offered in terms of this Information Memorandum. Minimum Subscription As the Issue of Debt is being made on private placement basis, the requirement of minimum subscription shall not be applicable. Allotment and Credit to Beneficiary Account The Company shall credit the allotted securities to the respective beneficiary account and dispatch Allotment Intimation/ Refund Orders/ Letters of Regret, as the case may be, by Registered Post or as per extant postal rules at the sole risk of the applicant to the applicant within ten weeks from the Date of Issue Closure. Further, SBI Factors agrees that:-

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a) As far as possible, allotment of securities offered shall be made within 30 days of the closure of the issue. b) Interest shall be paid as per the Companies Act /DIP Guidelines if the allotment has not been made and/or the refund orders have not been dispatched to the investors within 30 days from the date of the closure of the issue, for any delay beyond 30 days from the 31st day till the date of dispatch of the same. Credit Rating ICRA has assigned a “LAAA” rating to the Company’s long-term debt programme of Rs 40 crores (Rs. 20 crores, with an option to retain another 20 crores, being raised through this tranche). This rating indicates the highest safety and a fundamentally strong position. Risk factors are negligible. There may be circumstances adversely affecting the degree of safety but such circumstances, as may be visualized, are not likely to affect the timely payment of principal and interest as per terms. CARE has assigned a “CARE AAA” to the Company’s long-term debt programme of Rs 40 crores (Rs. 20 crores, with an option to retain another 20 crores, with an option to raise another 20 crores, being raised through this tranche). Instruments carrying this rating are considered to be of the best quality, carrying negligible investment risk. Debt service payments are protected by stable cash flows with good margin. While the underlying assumptions may change, such changes as can be visualised are most unlikely to impair the strong position of such instruments. Please note that, the rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The Rating agency has the right to suspend, withdraw the rating at any time on the basis of new information etc. Credit Ratings during Previous Three Years

Rating Date

Security Type

Amount (Rs.crores)

Credit Rating

28.01.2005 Short Terms Debt (including Commercial Paper)

120.00 A1+


60.00 A1+


60.00 A1+


60.00 A1+

Underwriting The present Issue of Promissory Notes on private placement basis has not been underwritten.

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Issue Programme Issue opens on : March 30, 2005 Issue closes on : March 31, 2005 Deemed date of allotment : March 31, 2005 (*) The company reserves the right to change all or any of the dates of the issue programme or withdraw the issue without prior notice.

Issue Management Team




IDBI Capital Market Services Ltd. 8th Floor, Bakhtawar

Nariman Point, Mumbai 400 021 Tele: 56371212 Fax: 22885848

Registrar to the Issue Trustees to the Issue


IDBI Trusteeship Services Limited, 10th Floor, Nariman Bhavan, Nariman Point, Mumbai 400 021 Tele: 56311771 Fax: 56311776

Compliance Officer and Company Secretary The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc. Compliance Officer and Company Secretary Name: Ms.Amita Joshi Address: SBI Factors and Commercial Services Pvt. Ltd., 61, 6th floor, Sakhar Bhavan, Nariman Point, Mumbai – 400 021. Phone: 22877573 Fax: 22877578 E-mail: [email protected]

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II. CAPITAL STRUCTURE (As on March 31st 2004)

Particulars (Rs. in lakhs) (A) Authorized Capital 25,00,00,000 (B) Issued, Subscribed & Paid up 25,00,00,000 (C)

Present Issue through this Information Memorandum Subordinated Debt in the nature of Promissory Notes 40,00,00,000

Notes: 1. The promoter holding after this issue would remain 100%. Further this being an

issue of debt lock-in provisions are not applicable. 2. The Promoters, Directors, Agency Preparing the Information Memorandum and

SBI Factors have not entered into buy back, standby or similar arrangements for these Notes.

3. SBI Factors has not raised any bridge loan or any other similar financial

arrangement, the amount of which would be repaid out of the proposed private placement of Bonds.

4. The list of top 5 shareholders of SBI Factors (owning jointly over 99.99% of

equity) as on:

i. The date of Stock Exchange filing and the number of shares held by them is as follows.

Sr. No.

Name Number of shares held

% share holding

1 State Bank of India 13,49,555 54%2 SIDBI 5,00,000 20%3 Union Bank of India 2,50,000 10%4 State Bank of Saurashtra 2,50,000 10%5 State Bank of Indore 1,50,000 6%

ii. 10 days prior to the date of Stock Exchange filing and the number of shares

held by them is as follows.

Sr. No.


% share holding


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iii. 2 years prior to the date of Stock Exchange filing and the number of shares

held by them is as follows.

Sr. No.


% share holding


5. SBI Factors has not made an initial public offering. 6. None of the Promoters or Directors or the nominees of the promoter has directly or

indirectly undertaken transactions in the securities of the Company during the last six months.

7. The Company has never made any revaluation of fixed assets.

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III. TERMS OF THE PRESENT ISSUE SBI Factors and Commercial Services Limited (hereinafter referred as ‘SBI Factors’/ ‘the Company’/ ‘the Issuer’) proposes to raise Rs.20 crores through the issue of Subordinated Debt in the nature of Promissory Notes of the face value of Rs. 1,00,00,000 each at par by way of private placement. The Notes being offered are subject, interalia, to the terms of this Information Memorandum, the application form, the Memorandum and Articles of Association of the Company, and the provisions of the Act. In addition, the Notes shall be subject to such other terms and conditions to be incorporated in the Promissory Note Trust Deed / Allotment Intimation and to the extent applicable, the provisions of the Depositories Act 1996, the relevant Statutory Guidelines and Regulations for allotment and listing of securities issued from time to time by the Government of India (GoI), SEBI and the Stock Exchange concerned. The Issue hereunder shall be made in India to Investors specified under clause “Who Can Apply” of this Information Memorandum, who shall be specifically approached by the Company. This Information Memorandum does not constitute an offer to sell or an invitation to subscribe to Notes offered hereby to any person to whom it is not specifically addressed. Objects of the Issue The money raised through the private placement of the promissory notes would be used to augment long-term working capital resources of the Company. Instrument at a Glance Issue Size Rs.20,00,00,000/- (with an option to raise another 20 crores) Instrument Subordinated Debt Paper in the nature of Promissory Notes Credit Rating LAAA by ICRA, AAA by CARE Face Value Rs. 1,00,00,000/- per Promissory Note Issue Price At par (Rs. 1,00,00,000/- per Bond) Minimum Application

One Note

Tenure Nine Years One Month Redemption/ Maturity

At par

Coupon Rate 7.35% p.a Interest Payment

Half Yearly

Listing Proposed on The Stock Exchange, Mumbai Interest on application money

6 % p.a

* Subject to deduction of tax at source, as applicable. Nature of Instruments The bond will be issue in the nature of Promissory Notes of Rs 1,00,00,000/- each.

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Credit Rating ICRA (Ref No.2004-05/439/1374 dated 25.01.2005) has assigned the “LAAA” to this long-term debt programme of Rs.40 crores (Rs. 20 crores, with an option to raise another 20 crores, being raised through this tranche). This rating indicates the highest safety and a fundamentally strong position. Risk factors are negligible. There may be circumstances adversely affecting the degree of safety but such circumstances, as may be visualized, are not likely to affect the timely payment of principal and interest as per terms. CARE (Ref letter dated 24.03.2005) has assigned the “AAA” to long-term debt programme of Rs.40 crores (Rs. 20 crores, with an option to raise another 20 crores, being raised through this tranche). Instruments carrying this rating are considered to be of the best quality, carrying negligible investment risk. Debt service payments are protected by stable cash flows with good margin. While the underlying assumptions may change, such changes as can be visualised are most unlikely to impair the strong position of such instruments. Trustees to the Noteholders IDBI Trusteeship Services Limited has given its consent to the Company vide their letter dated 21st march 2005 for being appointed as Trustee for the present private placement of Rs. 20 Crores of Subordinated Debt, with an option to place another 20 crores, being issued in the nature of Promissory Notes. By applying for the Notes, the Noteholders shall without further action or deed, be deemed to have irrevocably given their consent to and authorised the Trustees or any of their agents or authorised officials to do, inter alia, all acts, deeds, matters and things in respect of or relating to the Notes being offered in terms of this Document including the right to substitute or release any property charged in their favour and/or to create a charge on additional properties in their favour including the right of the Trustees to release, and/or substitute relevant title deeds in respect thereof. All the rights and remedies of the Noteholders shall vest in and shall be exercised by the Trustees without reference to the Noteholders. Any payment made by SBI Factors to the Trustees on behalf of the Noteholders shall discharge SBI Factors pro tanto to the Noteholders. No Noteholder shall be entitled to proceed directly against SBI Factors unless the Trustees, having become so bound to proceed, fail to do so. Security The debts being issued are unsecured and subordinated to the claims of other creditors. Issue of Notes SBI Factors shall issue Notes only in electronic form. The market lot would be of one Note. The investors will be governed as per the provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/CDSL from time to time and other applicable laws and rules notified in respect thereof. Investors should mention their Depository Participant’s name, DP-ID and Beneficiary Account Number in the appropriate place in the Application Form. The Company shall take reasonable steps to credit the beneficiary account of the allottee(s) with NSDL/CDSL’s Depository Participant(s) as mentioned in the application form with the number of Bonds allotted. In case of incorrect details provided by the investors and

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inability of the Company to credit the depository account, the Company shall not be held liable for any losses, if any, in delay on any such account to the investor. Initially on allotment, the company will credit the investor(s) Demat Account with the DP for the Notes allotted and send an Allotment Intimation for the same to the investor. This initial credit in the Demat Account of the investor would be akin to a Letter of Allotment (LOA). The Allotment Intimation, however, should not be construed as a Letter(s) of Allotment and hence it is non–transferable / non-transmittable and is not tradable. The initial credit akin to a Letter of Allotment in the Demat Account of the investor would be replaced with the Number of Notes on completion of the necessary formalities. Allottees will have the option to rematerialise the Notes so allotted, if they so desire, as per the provisions of the Companies Act and the Depositories Act. The Company has appointed Computronics Financial Services (India) Ltd. as Registrars and Transfer Agents for Notes issuance. SBI Factors has entered into depository arrangements with National Securities Depository Limited (NSDL). SBI Factors is also arranging to enter into an agreement with Central Depository Services Limited (CDSL). SBI Factors has signed a tripartite agreements viz. Tripartite Agreement dated 25 September 2000 between SBI Factors, National Securities Depository Limited (NSDL) and the Registrars Who can apply Only those persons, who are individually addressed through direct communication by the Company, are eligible to apply for the Notes. No other person may apply. The Company may address its offer to apply to potential Investors who may include:

1. Commercial Banks, Financial Institutions 2. Companies within the meaning of the Companies Act, 1956. 3. Regional Rural Banks 4. Co-operative Banks 5. Non Banking Finance Companies and Residuary Non-Banking Finance

Companies 6. Insurance Companies 7. Port Trusts 8. Provident Funds, Superannuation Funds and Gratuity Funds 9. Mutual Funds 10. Foreign Institutional Investors (Subject to existing regulations)

All investors are required to comply with the relevant regulations/ guidelines applicable to them for investing in the issue of Notes. Application under Power of Attorney In the case of applications made under Power of Attorney or by Limited Companies, Corporate Bodies etc. a certified true copy of the Power of Attorney or a copy of the approval of the relevant authority, as the case may be must be deposited along with the application form.

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How to apply This being a Private Placement Offer, Investors as specified under the head “who can apply ” and who have been addressed through this Communication directly by the Company, or on behalf of the Company, only are eligible to apply. The application should be accompanied with the Cheque/ Demand Draft (high value clearing) for the total amount of face value of Notes applied for subscription. Applications along with High Value Cheques/ Demand Drafts for the requisite amount & other necessary documents may be deposited with the Banker to the Issue at Mumbai by 10.00 am on the Pay in Date. For details please refer to the “instructions” detailed in the “Application Form”. Photocopy of Application Form duly filled in and signed to be faxed to the Company after deposit of application money. Cheque(s) /Demand Draft(s) should be made payable in favour of “SBI Factors and Commercial Services Limited” and crossed “Account Payee only”. Cheque(s) /Demand Draft (s) may be drawn on any bank and must be payable at Mumbai. Outstation Cheques, money orders or postal orders will NOT be accepted. No cash and stock invest will be accepted. Deemed Date of Allotment Interest on the Notes shall accrue to the Noteholder(s) from March 31, 2005, which shall be the Deemed Date of Allotment. The actual allotment of Notes may take place on a date other than the Deemed Date of Allotment. The Company reserves the right to keep multiple allotment date(s)/ deemed date(s) of allotment at its sole and absolute discretion without any notice. In case if the issue closing date is changed (pre-poned/ postponed), the Deemed Date of Allotment may also be changed (pre-poned/ postponed) by the Company at its sole and absolute discretion. Record Date Record date for the purpose of payment of interest and redemption on maturity would be 15 business days before the due date of payment of interest and principal repayment date. The persons acquiring the Notes by transfer should pay specific attention to the aforesaid Record date. List of Beneficial owners The Company shall request the Depository to provide a list of Beneficial Owners as at the end of day of the Record Date. This shall be the list, which shall be considered for payment of interest, repayment of principal amount, as the case may be. Register of Noteholders The Register of Noteholders containing necessary particulars will be maintained by SBI Factors, at such a place, as it may decide. Interest on application money In case the Deemed Date of Allotment is a date later than the date of realization of Cheque/ Demand Draft, SBI Factors shall pay interest (rounded off to the nearest Rupee and subject to deduction of Tax at Source at applicable rates) on application money at the rate of 6% from the date of realization of Cheque/Draft in the designated account of SBI Factors till one day before Deemed Date of Allotment as may be

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revised by SBI Factors. Further, interest on application money at 6% p.a. will be paid on refunds on account of non–allotment. Interest on the Notes The Notes shall carry interest at the rate specified in section “Instruments at a glance” (subject to deduction of tax at source at the rates prevailing from time to time under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof for which a certificate will be issued by the Company) from the Deemed Date of Allotment. Interest will be paid on the anniversary of the Deemed Date of Allotment, at the time of redemption of the bonds. (In case the Deemed Date of Allotment is revised (pre-poned/ postponed) then the above interest payment date may also be revised (pre-poned/ postponed) accordingly by the Company at its sole & absolute discretion). If any interest payment date falls on a day which is not a Business Day (‘Business Day’ being a day on which Commercial Banks are open for Business in the city of Mumbai) then payment of interest will be made on the next day that is a business day but without liability for making payment of interest for the intervening period. Effect of Holidays Should any of the dates defined above or elsewhere in the Information Memorandum, excepting the Deemed Date of Allotment, fall on a Sunday or a Holiday, the next working day shall be considered as the effective date(s). In case any Interest Payment Date(s) and/or the date of Redemption falls on a Holiday, interest/ redemption will be paid on the next working day (i.e. a day on which scheduled commercial banks are open for business in Mumbai). Payment of Interest Payment of interest on the Notes shall be made to those holder(s) of the Notes whose name appear in the register of Noteholder(s) as on the Record Date fixed by the Company for this purpose and /or list of beneficiaries provided by NSDL/CDSL to the Company who hold Notes on such Record Date, and are eligible to receive interest. Interest warrants/Cheques/ (net of any tax deducted at source, wherever applicable) will be mailed by registered post well before the relevant Interest Payment Date. In due course, efforts shall be made to remit the amount of interest and redemption proceeds through ECS / EFT. No Interest shall accrue after the Redemption Date. The Company’s liability shall extinguish upon dispatch of Interest Warrants by Registered Post and / or remitting the interest proceeds through ECS / EFT to the above said Beneficiaries. The Company shall not be responsible on account of postal delays, failure of bank’s systems, etc. Debenture Redemption Reserve Being an NBFC, the issuer is not required to create a Debenture Redemption Reserve

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Payment on Redemption Payment on redemption will be made in the Register of Noteholders or by cheque(s)/warrants(s) in the name of the Noteholder(s) whose name appears on the List of Beneficial Owners given by Depository to SBI Factors as on the Record Date. The Issuer’s liability to Noteholder(s) towards all their rights including payment of interest or otherwise shall cease and stand extinguished from the due date of redemption in all events. Further, the Issuer will not be liable to pay interest, income or compensation of any kind from the date of such redemption of the Notes. The Notes shall be taken as discharged on payment of the interest and redemption amount by the Company. Such payment will be a legal discharge of the liability of the Company towards the Noteholders. On such payment being made, the Company will inform NSDL/CDSL and accordingly the account of the Noteholders with NSDL/CDSL will be adjusted. The liability of the Company shall stand discharged on posting of redemption warrants by Registered Post and / or remitting the redemption proceeds through ECS / EFT to the above said Beneficiaries No claim, damages or penal interest in respect of delayed payment, etc. shall lie upon the Company in the event of non-receipt of the same by the addressee Noteholder. Tax Deduction at Source Tax applicable under the Income-Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source. Tax exemption certificate/ document, under section 193/197/197A of the Income Tax Act, 1961, if any, must be lodged at the office of the Issuer, at least fifteen (15) days prior to the interest payment date. The applicants must submit tax exemption certificate, if applicable, in respect of the interest on application money, if any, along with the application form as required under the Income Tax Act, 1961. In case of tax deducted at source, the Company will send the TDS certificate to the investors. Therefore, to ensure non-deduction/lower deduction of tax at source from interest on application money, the investors should submit Form 15H/15AA, authority letter from Assessing Officer for non-deduction of tax as may be applicable, with the Application Form, on or before the closure of the Issue. Regarding deduction of tax at source and the requisite declaration forms to be submitted prospective investor is advised to consult his tax advisor before investing in the Bonds to be issued by SBI Factors. Transferability of the Notes The initial credit to the Demat account of the investor, akin to a Letter of Allotment as well as the subsequent credit in the nature of Notes held in Electronic (Dematerialized) form shall be transferable subject to and in accordance with the rules/procedures as prescribed by the NSDL/CDSL / Depository Participant of the transferor/transferee and any other applicable laws and rules notified in respect thereof. Rights of Noteholders The Notes shall not, except as provided in the Act, confer upon the holders thereof any rights or privileges available to the Members of the Company including the right to

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receive notices or annual reports of, or to attend and/or vote, at the General Meeting of the Company. However, if any resolution affecting the rights attached to the Notes is to be placed before the Shareholders, the said resolution will first be placed before the registered Noteholders (and the beneficial owners of the Notes) for their consideration. In terms of Section 219(2) of the Act, holders of Notes shall be entitled to a copy of the Balance Sheet on a specific request made to the Company. The Notes comprising the present issue shall rank pari- passu inter-se without any preference to or priority of one over the other or others over them and shall also be subject to the other terms and conditions to be incorporated in the Agreement/Trust Deed(s) to be entered into by the Company with the Trustees. Amendment to the Terms of the Notes SBI Factors reserves the right to change the issue programme/ structure as indicated in the Information Memorandum. In the event of exercise of such a right, the investors will be intimated the revised schedule/ structure. Investors may note that in such an event, the dates and times mentioned will stand revised accordingly. SBI Factors may amend the terms of the Notes at any time by a resolution passed at a meeting of the Noteholders with the consent of the Noteholders holding in the aggregate more than 75% in nominal value of the Notes from those present and voting. Future Borrowings / Issues The Company will be entitled from time to time to borrow / raise loans or avail of financial assistance in whatever form as also further issue of Notes/Debentures/Bonds or other securities in any manner having such ranking in priority, pari passu or otherwise and change the capital structure, and / or avail further financial and / or guarantee facilities from financial institutions, banks and / or any other person(s) on security or otherwise of such properties as may be decided by the Company from time to time on such terms and conditions as may be agreed by the Company without further approval from Trustees and Noteholders. Notices The notices to the Noteholder(s) required to be given by SBI Factors shall be deemed to have been given if sent by ordinary post to the allottee/registered holder of the Notes or if any advertisement is given in a leading national newspaper. All notices to be given by the Noteholder (s) shall be sent by registered post or by hand delivery to SBI Factors or such persons at such address as may be notified by SBI Factors from time to time. Right to Accept or Reject any Application The Company can at its absolute discretion accept or reject any application, in full or in part, without assigning any reasons thereof. The application forms that are not complete in all respects are liable to be rejected. The full amount of the Notes has to be paid along with the Application Form on the Pay in Date.

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IV. COMPANY AND MANAGEMENT Brief History and Background Responding to the directives of RBI and recognising the importance and urgency of factoring services, SBI, the premier bank of the country in association with, State Bank of Saurashtra, State Bank of Indore, SIDBI and Union Bank of India established SBI Factors and Commercial Services Private Ltd., in February 1991. In March 1992 the Company became a deemed public company and its name was changed to SBI Factors & Commercial Services Limited. The name was again changed to SBI Factors and Commercial Services Private Limited in April 2001. SBI Factors has started commercial activity from April 1991. Its motto is `Progress with Prudence’. Its philosophy is to help small and medium scale industries and corporates. It has branches at Coimbatore, Chennai, Baroda, Delhi, Mumbai and Pune. It has representative offices at Hyderabad and Ludhiana, which will soon become full-fledged branches. The Company is actively considering opening more branches, in the coming months, at Banglore, Indore, Nagpur and Bhilwada. Today SBI Factors holds nearly 21% of the market share. The Company has extended factoring facilities to 280 clients with prepayment limits sanctioned at Rs.751 crores. Its clients are from diverse industry segments like Chemical and Fertilizers, Drugs and Pharmaceuticals, Electronic Components, Packaging, Auto Ancillaries, Consumer Products, Textiles, etc. Besides, the Company has been assisting clients engaged in trade and services. Its turnover has grown from Rs.29 crores in 1990-1991 to Rs.1063 crores in the 10 months period ending Jan.05. The Company has been assiduously wooing top rated clients with preferential rates to improve the asset quality. The management is confident of further improving the asset quality and profitability. During the current financial year the Company has so far sanctioned 138 new factoring facilities taking the sanctioned PP Limit to Rs.751 crores on 31st January 2005.

Present business SBI Factors is in the business of factoring. Factoring is a financial package that combines elements of working capital financing with accounts receivable bookkeeping, collection services and at times even credit risk protection. The entity offering the facility of factoring is called a factor. Factoring is offered under an agreement between the factor and a seller. Under the agreement, the factor purchases the seller's accounts receivable, with or without recourse. If without recourse, the factor assumes the responsibility for the debtor's financial ability to pay. Factoring can be of domestic sales as well as of export sales. SBI Factors has been active in domestic factoring since 1991. It has entered export factoring in 2004. Products The Company has three major products: Factoring Facility, Purchase Bill Factoring and Factoring of Bills under Letters of Credit. Each product is briefly described below: Factoring Facility: Open account credit sales (i.e. credit sales not accompanied with usance bills / not requiring any acceptance for delivery of goods) of the client are factored. At the time of factoring the client (i.e. seller of the goods or services) provides a copy of the invoice and a copy of the evidence of despatch of goods. The invoice carries a declaration to the effect that invoice has been assigned to SBI Factors and its

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payment is to be made to them only and that only such payment would constitute valid discharge of the debt owing to the seller by the buyer. Before accepting the invoices for factoring, the Company follows its due diligence procedure which examines the client’s financials and operations and also the repayment behaviours of the customers whose debts are to be factored. The Company usually selects a few of the client’s customers for factoring. Each client is assigned a limit up to which the debts owing to it can be factored and each customer is assigned a customer sub-limit up to which the debts owing by that customer can be factored. Factoring can be with or without recourse to the client. In case it is with recourse to the client, it is usually secured with a charge on the client’s assets and other such securities / guarantees as may be considered necessary on due diligence. In case it is without recourse to the client, the Company has recourse to the customers. At the time of factoring the Company makes pre-payment of the invoice value, less an agreed upon percentage, to the client. This is expected to be repaid from the proceeds of the invoice and the life of this debt is ordinarily expected to be co-terminus with the credit period extended by the client. As delays in payment are not uncommon, we are flexible to the extent of permitting a customer to make payment within a tolerance level – double the payment period or 150 days whichever is less. Ordinarily a grace period of one month from the due date is given. For pre-payments outstanding till the grace period, a finance charge is levied on the daily outstanding pre-payment balances on monthly intervals at contractual rate, for delays spilling beyond the grace period penal rate of interest- one or two percentage points higher than the contractual rate – is charged. Purchase Bill Factoring: In purchase bill factoring (PBF) the client’s purchase bills are factored as against its sales in the Factoring Facility described above. A client’s credit purchases are factored on presentation of a bill of exchange drawn on and accepted by it. In PBF finance charge is recovered up front. For PBF normally a charge is obtained on the current assets of the client. PBF does not have any grace period and a post-dated cheque for the value of the bill is obtained from the client at the time of factoring itself. If for any reason the factored bill is not paid on due date penal rate of interest is charged from the due date till it is paid. Factoring of Bills Drawn Under Letters of Credit: Bills drawn under a letter of credit of a domestic commercial bank / Indian branch of a foreign bank are factored after obtaining confirmation from the negotiating bank. The exposure is mainly on the LC issuing bank, however, as the holder in due course the Company enjoys recourse (under the Negotiable Instruments Act) against the drawer of the bill. Competition and Customers The Company faces competition from the factoring companies and from the commercial banks that undertake factoring. The Company also faces competition from commercial banks offering competing products viz. bill discounting or cash credit against receivables. The Company has clients from diverse sectors of the economy. Often the very large corporates find it cheaper to fund their working capital needs by borrowing from the

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Commercial Paper market or from the corporate debt market. Because of this the Company’s clientele largely consist of SMEs. New initiatives taken by SBI Factors The new initiatives can be broadly classified as qualitative and quantitative. Qualitative initiatives are aimed at improving the quality of assets and strengthening the internal systems. Other initiatives have the objectives of broadening the client base and improving the financial performance. Some of the new initiatives are:

Implementation of a new software solution system, which would permit the Company to account for all transactions on real time basis and also to offer structured products

Redesigning its processes for business origination and due diligence. The new processes are more effective and less time consuming

Developing new products in the related fields such as vendor / dealer finance which would interest large corporates

Trying new options of raising money to bring down its cost of funds Export factoring

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Main Objects of the Company Main objects as per the memorandum of Association are: A. MAIN OBJECTS OF THE COMPANY TO BE PURSUED BY THE

COMPANY ON ITS INCORPORATION 1. To carry on the business of factoring, both domestic and international, by purchasing (whether with or without recourse), selling, discounting, rediscounting or assignment of debts, receivables, decrees, actionable and other claims of any nature whatsoever, or by providing credit protection in the event of default or insolvency, bankruptcy or dissolution of customers or other buyers of goods and services or by factoring services including full factoring, maturity factoring, invoice discounting, both disclosed and undisclosed, collection and recovery of debts, receivables, bills, notes, cheques, pay orders, commercial papers and other money market and negotiable instruments, sales ledger maintenance and lending moneys or providing advance payment facility against purchase of debts and receivables. B. OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF MAIN OBJECT 2. To carry on the business of forfeiting and/or availing of notes, bills, commercial papers, money market instruments, actionable claims and other instruments and rights. 3. To carry on business of providing loans and other assistance by way of guaranteeing and/or co-accepting of notes, bills and other commercial papers and money market instruments including by issuing deferred payment and other guarantees and indemnities. 4. To carry on the business of market and credit and economic investigators, analysers and informants on macro or micro level basis including by undertaking the work of credit rating and evaluation or appraisal of any business or commercial organization or enterprise or of any region, state, province, country or any government or governmental agencies and analyzing market trends and economic commercial and industrial developments and conditions with respect to any such person, region, country or government. 5. To act as consultants; advisers and experts in factoring, credit investigation, credit rating and market investigation. 6. To receive money in any form, borrow or raise money or such terms and conditions as the company my consider expedient and secure and discharge any debt or obligation binding on the Company in such manner as may be thought fit, and in particular by mortgage of the undertakings and all or any of the immovable and movable property (present or future) and the uncalled capital of the Company, or by the creation and issue, on such terms debentures or debenture-stock, perpetual or otherwise, or other securities of any description. 7. To employ experts with or without payment to investigate and examine into the conditions, prospects, value, character and circumstances of any business, concern, undertaking, person or persons and generally of any assets, property or rights.

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8. To purchase, take on lease or licence or in exchange, hire or otherwise acquire any immovable or movable property, patent, licences, rights or privileges which the Company may think necessary or convenient for any business of the Company and to develop and turn to account and deal with the same and in particular any land, tenements, buildings and casements in such manner as may be thought expedient and to construct, maintain and alter any immovable or movable property or works necessary or convenient for the purpose of the Company, and to pay for the same either in cash or in shares or securities or otherwise dispose of or grant right over any movable or immovable property belonging to the Company if not immediately required for the business of the Company. 9. To purchase, or otherwise acquire, erect, maintain or reconstruct any buildings, offices, workshops, mills, plants, equipment or machinery, and other things found necessary or convenient for the purpose of the Company. 10. To manage land, building and other property both movable and immovable belonging to the Company and to collect rents and income and to supply to tenants, users and occupiers, attendants, servants, waiting rooms, reading rooms and other conveniences and other services as may be necessary. 11. To develop and turn into account any land acquired by the Company or in which it is interested and in particularly by laying on and preparing the same for building purposes, constructing, altering, pulling down, decording, maintaining, fitting and improving buildings and by planting, paving, draining, cultivating and letting building on lease and by advancing money to and entering into contracts and arrangements with and of all kind of builders and others. 12. To apply for, promote and obtain any order, directive, instructions, regulations, ordinance or other authorization or enactment of the Central or any State Government or any other authority for enabling the Company to put any of its objects to effect, or for effecting any modification or change in any of the Company’s business constitution; and to oppose any bills, proceedings or applications which may seem to prejudice the Company’s business or interests. 13. To draw, make, accept, endorse, discount, negotiate, execute and issue bills of exchange, promissory notes and other negotiable or transferable instruments. 14. To open current or other accounts with any banks or merchants, to pay money into and draw money from such accounts. 15. To invest the surplus funds of the Company from time to time in deposits, units, Government securities or in other securities including shares, bonds, and debentures as may from time to time be determined by the Directors, and from time to time sell or vary such investments and to execute all assignments, transfer, receipts and documents that may be necessary in that behalf. 16. To acquire, purchase, takeover and/or amalgamate business of companies, which under existing circumstances, from time to time, may conveniently or advantageously be combined with the business of the Company; to amalgamate or

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merge with companies whose business are so acquired, purchased or taken over and/or to enter into agreement with the object of acquisition of such undertaking and/or business. 17. To procure the registration, incorporation or recognition of the Company under laws or regulations of any other country. 18. To enter into any arrangements with any Government or Government departments or authorities that may seem conducive to the attainment of the Company’s main objects, and to obtain from any such Government or Government departments or authorities any rights, privileges, licences and concessions necessary or desirable to obtain and to carry out, exercise, use or comply with any such arrangements, rights, privileges or concessions. 19. To form, promote, subsidise, organize and assist or aid in forming, promoting, subsidizing, organizing or aiding, having similar object companies, or partnerships of all kinds for the purpose of accepting and undertaking any properties, assets, liabilities of this Company. 20. To distribute any of the Company’s property among the members subject to the provisions of the Companies Act in the event of winding up. 21. To provide for and furnish or secure to any members or customers of the company or to any subscribers to or purchasers or possessors of any publications of the Company or of any coupons or tickets, issued with any publications of the Company any conveniences, advantages, benefits or special privileges which may seem expedient or necessary either gratuitously or otherwise. 22. To sell, improve, manage, develop, exchange, lease, mortgage, dispose of, or transfer business, property and undertakings of the Company, or any part thereof without or with any consideration which the Company may deem fit to accept. 23. To acquire, construct, maintain and alter any buildings or works necessary or convenient for the purpose of the Company. 24. To provide for the welfare of the employees or ex-employees of the Company and wives, widows and families or the dependants of such persons by grant of money, pension, allowances, bonus or other payments or by creating and from time to time subscribing or contributing to provident funds and other associations, institutions, trusts and by providing or subscribing towards medical or other attendances and other assistance as the Company shall think fit and to subscribe to or to contribute to or otherwise assist charitable, benevolent, national and or other institutions or objects. 25. To pay all costs, charges and expenses incurred or sustained in or about the promotion, incorporation and establishment of the Company or which the Company shall consider to be preliminary, out of the funds of the Company. 26. To establish competition in respect of contribution or information suitable for insertion in any publications of the Company or otherwise for any of the purposes of

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the Company and to offer and grant prizes, rewards and premiums of such character and on such terms as may be expedient. 27. To refer to or agree to refer any claims, demands, dispute or any other question by or against the Company or in which the Company is interested or concerned, and whether between the Company and the member or members of the Company and/or his representatives, or between the Company and third parties, to arbitration and to observe and perform and do all acts, matters and things to carry out or enforce the awards. 28. To organize information cell and Data Bank relating to industrial, agricultural and other economic activities and to provide information for the development of industries and entrepreneurs. 29. To carry on the business in any way of the objects specified above, whether within or outside India and whether by itself or by forming any subsidiary wholly owned by itself or along with other/others in India or anywhere in the world. 30. To promote, organize, manage, acquire, purchase, hold, sell or dispose of shares or other securities including units of unit trusts and mutual funds, whatsoever whether of a fixed or variable character. 31. To enter into partnership or into any arrangements for joint working in business or for sharing profits or to amalgamate with any person, firm or company carrying similar business. 32. To form, promote, subsidise, organize, assist, maintain and conduct or aid in forming, promoting, subsidizing, organizing, assisting, maintaining research laboratories, experimental workshop or conducting studies research, tests and experiments on specific, technical, economic, commercial or any other subject and undertake all types of technical, economic and financial investigations and aid or assist or enter into partnership with any institutions, university, company, partnership firm or person or persons undertaking or conducting such research, study, and provide, subsidise, endow, assist, laboratories, workshops, libraries, meetings, lectures, and conferences and by providing for the remuneration of professors or teachers on by subject, and by providing for the award, exhibitions, scholarships, prizes and grants to students or otherwise and generally to encourage, promote and reward studies, researches, investigations experiments, tests, of any kind that may be considered to assist any of the business of the Company. Subsidiary of the company SBI Factors has no subsidiary. Promoters The Company has been promoted by State Bank of India, State Bank of Saurashtra, State Bank of Indore, Small Industrial Development Bank of India and Union Bank of India.

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Board of Directors The details of the Board of Directors as on the date of filing the Information Memorandum with stock exchange are given in the following table

Name of Director Occupation Directorship in other companies Shri.A.K. Purwar Chairman-State Bank of India 1. State Bank of India

2. State Bank of Bikaner & Jaipur 3. State Bank of Hyderabad 4. State bank of Indore 5. State Bank of Mysore 6. State Bank of Patiala 7. State Bank of Saurashtra 8. State Bank of Travancore 9. SBI DFHI 10. SBI Funds Management Pvt. Ltd. 11.SBI Capital Markets Ltd. 12.SBI Life Insurance Co. Ltd. 13.SBI Cards & Payment Services P.L. 14. State Bank of India (California) 15. GE Capital Business Process Mgmt. Services Pvt. Ltd. 16.Export Import Bank of India 17. Infrastructure Development Finance Corpn. 18. Indian Railway Finance Corpn. 19. General Insurance Corpn. Of India 20. Institute for Dev. & Res. In Banking Technology 21. Khadi and Village Industries Board 22. Indian Institute of Banking and Finance 23. Indian Bank’s Association 24.Bankers’ Training College, RBI 25. National Institute of Bank Management 26. Confederation of Indian Industry 27. National Institute of Bank management 28. Federation of Indian Chamber of

Commerce and Industry 29. Board of Governors of XLRI,

Jamshedpur 30.National Science and Technology

Enterpreneurship Dev. Board 31. General Council of the National Co-

op. Dev. Corpn. 32. Board of Governors of Indian

Institute of Management Society, Lucknow

Shri.S.K. Singh Managing Director, State Nil

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Bank of Saurashtra Shri.A.G. Kalmankar Dy. Managing Director & GE

(A&S), State Bank of India 1. State Bank of Bikaner & Jaipur 2. State Bank of Hyderabad 3. State bank of Indore 4. State Bank of Mysore 5. State Bank of Patiala 6. State Bank of Saurashtra 7. State Bank of Travancore 8. SBI Commercial & International Bank Ltd. 9. SBI Life Insurance Co. Ltd. 10. SBI Capital Markets Ltd. 11. SBI Home Finance Ltd. 12. SBI DFHI Ltd. 13. SBI Funds Management Pvt. Ltd. 14.Credit Information Bureau (India) Ltd.

Shri.B.K. Vatsaraj Chartered Accountant, Vatsaraj & Co.

Vatsaraj & CO. – Partner

Shri.R.Venkataramani General Manager, Union Bank of India

Nil

Shri.P. Rudran Chief General Manager, Small Industries Development Bank of India

1.SIDBI Venture Capital Ltd. 2. SIDBI Trustee Co. Ltd.

Shri.Niranjan Bardalai

Chief General Manager, State Bank of Indore

Shri.V.K. Gupta Chief General Manager, State Bank of India

Shri.D.K. Jain Managing Director & CEO, SBI Factors and Commercial Services Pvt. Ltd.

Nil

Key Managerial Personnel

Name

Designation

Qualifications

Details of Previous

Employment Shri D K Jain Managing

Director & CEO B Tech (IIT,K) PGBDM (IIM A)

General Manager (Corporate Banking), SBI, Bhopal Circle

Shri S B Bejalwar Sr VP & COO M Sc Dy General Manager, SBI, Inspection & Audit Department

Ms Amita Joshi Co secretary B Com, LlB, FCS State Bank of India

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Changes in Key Managerial Personnel in the last 1 year (Within 1 year prior to the date of filing Information Memorandum with stock exchange)

Name of Employee Designation Year of Appointment/ Resignation

Reason for Change

Shri S M Gijare Shri S B Bejalwar

Sr VP & COO Sr VP & COO

Nov 2004 Nov 2004

Deputation from State Bank ended Deputed from State bank of India

Stock Market Data This clause is not applicable as the Company is unlisted.

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V. PROMOTERS, GROUP COMPANIES, JOINT VENTURES AND ASSOCIATES AND THEIR FINANCIALS

Promoters and their Background State Bank of India The State Bank of India was constituted on 1st July 1955, pursuant to the State Bank of India Act, 1955 (the "SBI Act") for the purpose of creating a state-partnered and state-sponsored bank integrating the former Imperial Bank of India. In 1959, the State Bank of India (Subsidiary Banks) Act was passed, enabling the Bank to take over eight former state associated banks as its subsidiaries. The Bank is India's largest bank, with approximately 9,000 branches in India and 54 international offices. Its Associate Banks have a domestic network of around 4,600 branches, with strong regional ties. The Bank also has subsidiaries and joint ventures outside India, including Europe, the United States, Canada, Mauritius, Nigeria, Nepal, and Bhutan. The Bank has the largest retail banking customer base in India. The Bank is engaged in corporate banking for many of India's most significant corporates and institutions, including State-owned enterprises, as well as providing banking services to commercial, agricultural, industrial and retail customers throughout India. The Bank services its most important corporate customers, including certain state-owned enterprises, through its Corporate Banking Group, and its other customers, including other large corporations and State-owned enterprises, small scale industries, agriculture and personal banking customers through its National Banking Group. The National Banking Group also provides financial services to the Government and the state governments, including tax collection and payment services. The Bank is engaged in international banking and has foreign operations in 28 countries with a global network of 54 branches. The Bank has a presence in diverse segments of the Indian financial sector, including asset management, factoring and commercial services, insurance, credit cards and payment services. As at 31st March, 2004, calculated based on RBI data, the Bank's estimated market share in aggregate deposits of all scheduled commercial banks in India equalled 18.75 percent including India Millennium Deposits, a deposit scheme denominated in foreign currencies launched by the Bank for non-resident Indians. The Bank's estimated market share in domestic advances was 16.87 percent as on the last reporting Friday of March 2004, calculated based on RBI data for "All Scheduled Commercial Banks" ("ASCB") in India. As at 31st March 2004, the Bank had an estimated 35.63 percent share of the Indian foreign exchange market, calculated based on the trade data of DGCIS. The assets of the Bank are diversified across business segments, industries, and groups. The Bank's corporate headquarters ("Corporate Centre") is located at State Bank Bhavan, Madame Cama Road, Mumbai - 400 021. The bank is committed to using its effort to adopt technology to achieve efficiency in its business operations. The bank is moving towards centralised database using enhanced technology to credit it "CBS". The CBS will enable on time, real time transaction processing and provide live interface to a multitude of technology delivery channels.

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Associates Financials of Group Companies

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Subsidiaries, joint Ventures and Associates Outside India

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Associates Banks The following tables set out certain performance highlights of the Associate Banks as at 31st March 2004.

Non-Banking Subsidiaries and Joint Ventures of the Promoter: In addition to the Associate Banks, SBI also has a network of non-banking subsidiaries and joint ventures in India engaged in business other than commercial banking. At 31st March, 2004, total assets. In SBI's financial statements, investments in subsidiaries and joint ventures (both in India and abroad) are valued at historical cost after provisions, if any.

Regional Rural Banks promoted by State Bank of India SBI, along with the Government, including respective state governments, has promoted 30 Regional Rural Banks (“RRBs”) spread over 102 districts in 16 States with a network of approximately 2,350 branches. The aggregate deposits and advances of the sponsored RRBs stood at Rs.78,137.8 million and Rs.34,019.0 million respectively at 31st March, 2004. The net profit of the combined RRBs in fiscal year 2004 was Rs. 184.4 million. SBI had, as of March2004, contributed Rs.1,349.7 million for the recapitalisation of 29 RRBs which were in the process of financial restructuring

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Contingent Liabilities/Legal Proceedings/Disputes SBI and its Banking Subsidiaries have contingent liabilities, which pertain to their normal banking activities. A major portion of these contingent liabilities are a source of income for them. Most of these contingent liabilities are adequately covered through individual security mechanisms as also duly counted for maintaining Capital Adequacy in line with RBI guidelines. SBI and its Associates, Subsidiaries and Affiliates are also party to various legal proceedings / disputes in the ordinary course of business of banking / other business. However, none of such proceedings / disputes, even if determined adversely to SBI and its Associates, Subsidiaries and Affiliates would have, by law, any material adverse effect on the business or financial condition of SET since each subsidiary bank is a separate statutory corporation, constituted and governed by the SBI (SB) Act.

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VI. OPERATIONAL & FINANCIAL PERFORMANCE OF THE COMPANY FOR LAST THREE YEARS AND MANAGEMENT DISCUSSION

Financial Statements of SBI Factors and Commercial Services Limited are given below: Profit & Loss Account: Year ended March 31, 2004 2003 2002 31/12/2004 Particulars (Reviewed) (Audited) (Audited) (Audited) (Rs.) (Rs.) (Rs.) (Rs.)

Income 151,650,259 144,395,528 140,963,985 130,384,481

Finance Charges 135,164,700 122,129,841 110,358,619 114,434,967

Handling Charges 11,227,668 12,837,906 12,597,131 12,067,286

Other Charges 3,342,986 4,412,899 3,628,129 3,420,035

Total 149,735,354 139,380,646 126,583,879 129,922,288

Other Income 1,914,905 5,014,882 14,380,106 462,193

Expenditure 81,017,628 119,228,629 107,301,121 123,128,879

Interest & Finance Charges 52,998,226 33,719,401 39,743,090 43,474,856 Loss due to irrecoverable factored debts - 58,319,487 21,183,279 42,254,339

Staff Costs 9,746,870 11,196,613 10,322,977 10,664,127

Administrative Expenses 11,754,382 15,907,078 21,015,322 18,245,143

Depreciation 936,302 1,086,050 1,286,453 1,640,414 Provisions for Non Performing assets 5,581,848 (1,000,000) 13,750,000 6,850,000 Net Profit/(Loss) before tax & extraordinary items 70,632,631 25,166,899 33,662,864 7,255,602 Less: Extraordinary items (net of tax) - - - -

Less: Provision for Taxation 25,000,000 8,625,437 17,174,363 5,100,000

Add: Deferred Tax Assets (351,670) (668,904) 5,710,961 2,468,540

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Net Profit after Extraordinary items 45,280,961 15,872,558 22,199,462 4,624,142 Statement of Assets and Liabilities: Year ended March 31, 2004 2003 2002 31/12/2004 Particulars (Reviewed) (Audited) (Audited) (Audited) (Rs.) (Rs.) (Rs.) (Rs.) A. Fixed Assets: Gross Block 24,917,989.00 20,301,454.00 20,320,774.00 20,447,988.00 Less Depreciation 15,553,908.00 16,534,305.00 15,757,547.00 15,012,310.00 Net Block 9,364,081.00 3,767,149.00 4,563,227.00 5,435,678.00 Capital Work in Progress 3,808,498.00 - - - B. Current Assets, Loans and Advances 3,035,312,911.00 1,862,000,542.00 1,432,063,663.00 1,174,190,270.09 Cash and bank Balances 357,668.00 348,293.00 90,836.00 703,910.00 Loans and Advances 20,402,916.00 8,141,742.00 4,503,984.00 29,220,650.00 Other Current Assets Sundry Debtors-Debts Factored 3,014,552,327.00 1,853,510,507.00 1,427,468,843.00 1,144,265,710.09 Other Debts - - - - C. Liabilities & Provisions Secured Loans 1,647,792,485.00 962,416,616.00 668,528,686.00 61,672,365.00 Unsecured Loans 390,000,000.00 100,000,000.00 - 450,000,000.00 Current Liabilities & Provisions Due to clients on collection of factored debts 540,243,993.00 403,582,432.00 386,183,418.00 308,343,652.09 Sundry Creditors 23,022,525.00 8,264,582.00 7,560,829.00 1,744,475.00 Provision for Taxation 25,000,000.00 14,710,205.00 - - D. Networth 422,426,487.00 376,793,856.00 374,353,957.00 357,865,456.00 E. Represented By: 1. Share Capital 250,000,000.00 250,000,000.00 250,000,000.00 250,000,000.00 2. Reserves 184,934,213.00 139,653,252.00 137,882,257.00 115,682,795.00 Less: Revaluation Reserve - - - - Reserves(Net of Revaluation Reserves) 184,934,213.00 139,653,252.00 137,882,257.00 115,682,795.00 Less: Profit & Loss Account - - - - Deferred Tax Assets 12,507,726.00 12,859,396.00 13,528,300.00 7,817,339.00 Networth 422,426,487.00 376,793,856.00 374,353,957.00 357,865,456.00

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Management Discussion and Analysis Environment: The mid-term review of the economy presented to the Parliament indicates that there has been good growth in industry and services sector during first half of the current year, the overall outcome for the year being reasonably bright. However, the mid term review has scaled down growth forecast of RBI from 6.5% to 6% for 2004-05 and says that even at a relatively lower growth rate of 6% for current year, India will continue to be one of the fast growing economies of the world. As for GDP, the economy grew by 7.4% in the first quarter this year as against 5.3% during the corresponding period last year. The manufacturing sector has registered a growth of 8% and export in automobile sector has gone up by 35% during the last six months. Steel sector is doing very well now after a longish period of poor profits with increase in prices globally. The factoring business of this Company as measured by the P.P. Outstanding has clocked a growth of 132% till December 2004 over the December 2003 figures as against a growth of 10.49% during corresponding period of last year. However, the spreads are under strain due to surplus liquidity in the system. Business Performance: The Company has bettered the budgetary targets in respect of Turnover, Collections, Prepayment Outstanding, Factoring Income and Net Profit for the period ended December 2004. The Collections of Rs.771.84 crores were higher by 58.39% vis-à-vis the corresponding quarter of the last fiscal. The Prepayment outstanding and Factoring Income of Rs.253.48 crores and Rs.16.66 crores were higher by 146% and 59% respectively as compared to the corresponding period of the last year. Growth is expected, at least for some time to come, at a similar pace. We have sanctioned 124 new factoring facilities aggregating to Rs.454.43 crores till December 2004. This is 186.94% of the sanctions made during same period last fiscal. Growth in asset level too this year has been excellent, as planned. We are aiming at better quality clients/ customer to keep down incidence of fresh NPA’s to the bare minimum. Net Earnings: Factoring income this year till end-December at Rs.16.66 crores is higher by 58.81% as compared to corresponding period of the last fiscal of Rs.10.58 crores. During this quarter, the factoring income is Rs.6.43 crores, which is higher by 89.67% if compared to Rs.3.39 crores of the corresponding period of the last fiscal year. Total income is higher by 57.46% as compared to corresponding quarter of the last fiscal. Currently income every month has reached a level of Rs.2 crore and PBT of approx.Rs.1 crore p.m. Interest and Finance charges of Rs.5.29 crores for the period ended December 2004 are higher by Rs.2.87 crores this year, if compared to the corresponding period of last year, due to growth in asset level and cost of borrowings due to more drawals necessitated by higher asset levels. Further while interest received on assets has been brought down to be able to book better quality customers, the interest on borrowings has gone up recently by around 0.7% p.a. But for this our profits would have been higher.PBT is Rs.8.10 crores as against Rs.4.84 crores for the corresponding period of last fiscal. This shows a rise of 67.35%. Status of NPAs: As on March 31, 2004, the Company carried 8 NPAs with aggregate dues of Rs.5.96 crores; for which we have made a provision of Rs.4.57 crores (additional provision made this year so far – Rs.1 crore). Of these, one has since been liquidated and we have written off 2 accounts amounting to Rs.1.14 crores. NPA Management will continue to be a major thrust area driven by recovery through compromises as well as legal options. Total recoveries so far this year are small at

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Rs.23.15 lacs but we expect recoveries of around Rs.2.5 crores this year. The Gross NPA level is 1.89% (4% as on 31.03.2004) of the total Prepayment Outstandings as on 31.12.2004 and Net NPA level is 0.54% (1.61% as on 31.03.2004). General Remarks: Due to general upturn in the economy and industrial scenario, we are confident of improving our performance substantially in the current financial year. The opportunities are available and we are confident that going forward, the progress & growth will continue at a good pace. Export Factoring has been launched and a forex line of credit of $10 Mn. has been approved. Efforts are on to augment our staff. To expand our reach and asset base substantially, we are planning to open branches at Bangalore, Bhilwada, Indore and Ludhiana, new offices at Chennai & Hyderabad are already operational.

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VII. PROMISE vis-a-vis PERFORMANCE

A. The Company has not made any public issue of shares. Hence, these provisions are not applicable.

B. Moreover, the company has not made any issuance of Tier II bonds by way of private placement or of any other security through an offer document.

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VIII. OUTSTANDING LITIGATION/CRIMINAL PROSECUTION, DEFAULTS AND MATERIAL DEVELOPMENTS

I. Against SBI Factors There are no outstanding litigations, disputes, defaults, non payment of statutory dues including disputed tax liabilities of any nature, overdues to banks /financial institutions, defaults against banks / Financial institutions, defaults in dues towards instrument holders like Bond holders proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (1) of Part 1 of Schedule XIII of the Companies Act, 1956) against SBI Factors and Commercial Services Ltd. Other litigations No disciplinary action/ investigation has been taken by the Securities and Exchange Board of India/ Stock Exchange against the Company and its Directors. The Company and its Directors have not been prohibited from accessing the capital markets under any order or direction passed by SEBI. Other than those mentioned above, there are no litigations against SBI Factors or against any other Company whose outcome could have a materially adverse effect on the position of SBI Factors. Against the Directors: There are no outstanding litigations, disputes, defaults, non payment of statutory dues, overdues to banks/financial institutions, defaults against banks/financial institutions, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act, 1956) against the directors of SBI Factors. Against the Directors: There are no outstanding litigations, disputes, defaults, non payment of statutory dues, overdues to banks/financial institutions, defaults against banks/financial institutions, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act, 1956) against the directors of . Material Developments In the opinion of the Directors of the Bank, there have been no material developments after the date of the last financial statements as disclosed in the Information Memorandum, which would materially and adversely affect or are likely to affect the trading or profitability of the Bank or the value of its assets, or its ability to pay its liabilities within the next twelve months, other than what has been already set out elsewhere in this Information Memorandum.

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IX. DISCLOSURE ON INVESTOR GRIEVANCES AND REDRESSAL SYSTEM

To ensure that the Investor grievances are handled expeditiously and satisfactorily, the issuer has appointed a Registrar and Transfer agent. The Issuer has also appointed Ms Amita Joshi as the Compliance Officer to effectively deal with Investor Complaints. Compliance Officer and Company Secretary Name: Ms.Amita Joshi Address: SBI Factors and Commercial Services Pvt. Ltd., 61, 6th floor, Sakhar Bhavan, Nariman Point, Mumbai – 400 021. Phone: 22877573 Fax: 22877578 E-mail: [email protected]

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PART II I. GENERAL INFORMATION Consents Consents in writing from the Auditors, Tax Consultant, Agency preparing the Information Memorandum, Registrars, Bankers to the Company, Bankers to the Issue and Trustees to the Issue, Directors, Company Secretary, to act in their respective capacities have been obtained. The Auditors to the Company have given their written consent to the inclusion of their Report in the form and context in which it appears in the Information Memorandum. Expert Opinion No expert’s opinion has been obtained in respect of any matter relating to this Information Memorandum. Changes in Board of Directors in last three years:

Name of Director Date of Appointment Reason for change Mr.P.R. Das 28.05.02 – Resigned Transferred to Lucknow

due to his elevation. Mr.R.Sundararaman 31.05.02 – Resigned Retired Mr.K.S.V. Krishnamachari 05.08.02– Appointed Appointed in place of Mr.

R. Sundararaman Mr.V.K. Gupta 06.08.02– Appointed Appointed in place of Shri.

N. Gopalakrishnan Mr.N. Gopalakrishnan 05.08.02 – Resigned Repatriated back to SBI Mr.S. Prasada Rao 05.08.02 – Resigned Relinquished office due to

change of area of responsibility

Mr. R. Gopalan 05.08.02– Appointed Appointed in place of Mr.S. Prasada Rao

Mr.V.K. Srivastava 16.12.02 – Resigned Retired from service Mr.Janki Ballabh –Chairman 31.10.02 – Resigned Retired from service Mr.A.K. Purwar 13.11.02 – Appointed Appointed in place of

Mr.Janki Ballabh. Mr.A.R. Gandhi 16.12.02 – Resigned Completion of tenure Mr.B.K. Vatsaraj 16.12.02– Appointed Appointed in place of

Shri.A.R. Gandhi Mr.G.A. Nayak 25.02.03– Appointed Appointed in place of Shri.

P.R. Das Mr.P. Rudran 25.02.03– Appointed Appointed in place of Shri.

G.A. Nayak Mr.S.K. Singh 25.02.03– Appointed Appointed in place of

Mr.V.K. Srivastava Mr.A.P. Muthuswami 27.05.03– Appointed Appointed in place of

Mr.Dinesh Vyas Mr.Dinesh Vyas 27.05.03 – Resigned Completion of tenure

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Mr.K.S.V. Krishnamachari 31.07.03 – Resigned Retired from service Mr.C. Bhattacharya 08.10.03– Appointed Appointed in place of

Mr.K.S.V.Krishnamachari Mr.V.K. Gupta 13.12.03 – Resigned Repatriated back to SBI Mr.D.K. Jain 15.12.03– Appointed Appointed in place of

Mr.V.K. Gupta Mr.A.G. Kalmankar 31.05.04– Appointed Appointed as DMD & GE

(A&S) Mr.A.P. Muthuswami 28.10.04 – Resigned Resigned Mr.C. Bhattacharya 31.01.05 – Resigned Retired from service Mr.R. Gopalan 31.01.05 – Resigned Transferred to State Bank

of Mysore Mr.Niranjan Bardalai 05.02.05– Appointed Appointed in place of Mr.R.

Gopalan Mr.V.K. Gupta 10.02.05– Appointed Appointed in place of Mr.c.

Bhattacharya Changes in Auditors in last three years Year Name of the Audit Firm Reason for Change 2003-04 Chandabhoy & Jassoobhoy 2004-05 Shah Gupta & Co.

For better corporate governance, as the earlier auditors had been in appointment for 8 consecutive years.

Authority for the Present Issue This present issue of Bonds is being made pursuant to the Resolutions of the Board of Directors of the Company, passed at its meeting held on the 15th January 2005, The Managing Director has been authorized to execute necessary documents in this regard. The aggregate value of debts offered through this document is within the limits for the purpose of borrowing. Letters of Allotments/ Refunds The Company shall credit the allotted securities to the respective beneficiary account and dispatch Allotment Intimation/ Refund Orders/ Letters of Regret, as the case may be, by Registered Post or as per extant postal rules at the sole risk of the applicant to the applicant within ten weeks from the Date of Issue Closure. Further, SBI Factors agrees that:-

a) As far as possible, allotment of securities offered shall be made within 30 days of the closure of the issue. b) Interest shall be paid as per the Companies Act /DIP Guidelines if the allotment has not been made and/or the refund orders have not been dispatched to the investors within 30 days from the date of the closure of the issue, for any delay beyond 30 days from the 31st day till the date of dispatch of the same.

Basis of Allotment SBI Factors reserves the right to reject in full or partly any or all the offers received by them to invest in these Bonds without assigning any reason for such rejections.

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Issue Management Team




IDBI Capital Market Services Ltd. 8th Floor, Bakhtawar

Nariman Point, Mumbai 400 021 Tele: 56371212 Fax: 22885848

Registrar to the Issue Trustees to the Issue


IDBI Trusteeship Services Limited, 10th Floor, Nariman Bhavan, Nariman Point, Mumbai 400 021 Tele: 56311771 Fax: 56311776

Compliance Officer and Company Secretary The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc.

Compliance Officer and Company Secretary

Name: Ms.Amita Joshi Address: SBI Factors and Commercial Services Pvt. Ltd., 61, 6th floor, Sakhar Bhavan, Nariman Point, Mumbai – 400 021. Phone: 22877573 Fax: 22877578 E-mail: [email protected]

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II. FINANCIAL INFORMATION Following are the auditor reports by the auditors of the company, which should be read in conjunction with each other. The Board of Directors, SBI Factors and Commercial Services Pvt. Ltd. 601, Sakhara Bhavan, Nariman Point, Mumbai 400 021 Dear Sirs, We were engaged to report on the financial information of SBI Factors and Commercial Services Pvt. Ltd. (“the Company”) which is required to be prepared in accordance with the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 (“the Guidelines”) issued by the Securities and Exchange Board of India (“SEBI”) in pursuance of section 11 of the Securities and Exchange Board of India Act, 1992. The financial information is proposed to be included in the Information Memorandum of the Company in connection with the issue of Redeemable Non-Convertible Subordinate Debts aggregating to Rs. 20 crores (with an option to issue another 20 crores) on a private placement basis. We were engaged to report on the annexed statement of assets and liabilities of the Company as at 31st December, 2004, 31st March, 2004, 31st March, 2003, 31st March, 2002, 31st March, 2001 and 31st March, 2000 (“the summary statement”) and statement of profit and loss for each of the five consecutive financial years ended 31st March, 2004 alongwith reviewed Profit and Loss Statement for the nine months period ended on 31st December, 2004 (“the summary statement”). The summary statement has been extracted from financial statements drawn up in accordance with the provisions of the Companies Act, 1956, reviewed by us for the nine months period ended on 31st December, 2004 and audited by the other Auditors for the years ended on 31st March 2004, 31st March, 2003, 31st March, 2002, 31st March, 2001 and 31st March, 2000. The Company’s management is responsible for preparation of summary statement and the capitalization statement and our responsibility is to report based on the work done. We have performed such tests and procedures, which, in our opinion, were necessary for our reporting to you. These procedures include comparison of the annexed financial information with the Company’s audited financial statements. Based on our review of the financial statements for the nine months period ended on 31st December, 2004 and audited accounts by the other Auditors for the years ended on 31st March 2004, 31st March, 2003, 31st March, 2002, 31st March, 2001 and 31st March, 2000, we confirm that:

1. We have examined the audited financial statements of the Company for the five consecutive financial years ended on 31st March 2004 being the last date upto, which

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the accounts of the Company have been made up and audited by the Auditors of the Company of those respective years. Further we have reviewed the financial statement for the nine months period ended on 31st December, 2004.

2. a. The statement of Assets and Liabilities including the position of net worth as at the

respective year end are set out in Annexure I. The audited Profit and Loss statements of the Company for each of the five consecutive financial years ended 31st March, 2004 alongwith reviewed statement of Profit and Loss for the nine months period ended on 31st December, 2004 are set out in Annexure II. The notes and accounting policies of the Company for the nine months period ended on 31st December, 2004 are set out in Annexure III. These statement of Assets & Liabilities and Profit & Loss have been adjusted for changes in accounting policies and for adjustments relating to previous years as set out in Annexure IV. b. The aforesaid statement of Assets & Liabilities and Profit & Loss have been drawn up by the Company giving effect to adjustments and regroupings as and when considered appropriate.

3. The Company has declared dividend on Equity Shares at the rate of 5% for the Financial Year ended on 31st March 2004. The Company has not declared dividends during any other financial years covered in this report.

4. We have also examined the accompanying statement of Key Accounting Ratios set out

in Annexure V for the five consecutive previous financial years upto the year ended on 31st March, 2004 and for the nine months period ended on 31st December, 2004 and the Statement of Capitalisation as set out in Annexure VI which has been prepared based on audited information, approved by the Company and annexed to this report. We report that in our opinion, they have been correctly computed.

This report is intended solely for your information and for the Company to comply with the provisions of the Guidelines and may not be suitable for any other purpose. Yours sincerely, For Shah Gupta & Co. Chartered Accountants Vipul K. Choksi. (Partner) M. No. 37606. Place : Mumbai Date : 15th March 2005

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ANNEXURES Annexure I Statement Of Assets & Liabilities Rs in lacs Year ended March 31, 2004 2003 2002 2001 2000 31/12/2004 Particulars (Reviewed) (Audited) (Audited) (Audited) (Audited) (Audited) A. Fixed Assets: Gross Block 249 203 203 204 205 195 Less Depreciation 156 165 158 150 136 121 Net Block 94 38 46 54 69 73 Capital Work in Progress 38 - - - - - - - - - - - B. Current Assets, Loans and Advances 30,353 18,620 14,321 11,742 13,006 13,971 Cash and bank Balances 4 3 1 7 65 63 Loans and Advances 204 81 45 292 306 137 Other Current Assets - - - - - - Sundry Debtors-Debts Factored 30,146 18,535 14,275 11,443 12,636 13,772 Other Debts - - - - - - - - - - - - C. Liabilities & Provisions - - - - - - Secured Loans 16,478 9,624 6,685 617 941 908 Unsecured Loans 3,900 1,000 - 4,500 5,000 5,300 Current Liabilities & Provisions - - - - - - Due to clients on collection of factored debts 5,402 4,036 3,862 3,083 3,557 4,277 Sundry Creditors 230 83 76 17 20 33 Provision for Taxation 250 147 - - - - - - - - - - D. Networth 4,224 3,768 3,744 3,579 3,557 3,527 - - - - - - E. Represented By: - - - - - - 1. Share Capital 2,500 2,500 2,500 2,500 2,500 2,500 2. Reserves 1,849 1,397 1,379 1,157 1,057 1,027 Less: Revaluation Reserve - - - - - - Reserves(Net of Revaluation Reserves) 1,849 1,397 1,379 1,157 1,057 1,027 Less: Profit & Loss Account - - - - - - Deferred Tax Assets 125 129 135 78 - -Networth 4,224 3,768 3,744 3,579 3,557 3,527 - - - - - - - - - - - -

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Annexure - II Statement Of Profit & Loss Year ended March 31, 2004 2003 2002 2001 2000 31/12/2004 Particulars (Reviewed) (Audited) (Audited) (Audited) (Audited) (Audited) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) Income 1,517 1,444 1,410 1,304 1,350 1,397 - - - - - - Finance Charges 1,352 1,221 1,104 1,144 1,180 1,248 Handling Charges 112 128 126 121 114 128 Other Charges 33 44 36 34 30 20 - - - - - -

Total 1,497 1,394 1,266 1,299 1,325 1,396 - - - - - - Other Income 19 50 144 5 25 1 - - - - - - - - - - - - Expenditure 810 1,192 1,073 1,231 1,351 984 - - - - - - Interest & Finance Charges 530 337 397 435 526 526 Loss due to irrecoverable factored debts - 583 212 423 503 - Staff Costs 97 112 103 107 109 107 Administrative Expenses 118 159 210 182 198 Depreciation 9 11 13 16 22 24 Provisions for Non Performing assets 56 (10) 138 69 (21) 129 - - - - - - Net Profit/(Loss) before tax & - - - - - - extraordinary items 706 252 337 73 (1) 413 - - - - - - Less:Extraordinary items(net of tax) - - - - - - Less:Provision for Taxation 250 86 172 51 (31) 206 Add: Deferred Tax Assets (4) (7) 57 25 - - - - - - - - Net Profit after Extraordinary items 453 159 222 46 30 207

212

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Annexure-III SBI FACTORS AND COMMERCIAL SERVICES PVT. LTD.

SCHEDULE ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR THE NINE MONTHS

PERIOD ON DECEMBER 31, 2004

SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been applied in dealing with items which are considered material in relation to the Company’s accounts: - (a) Accounting Convention The accounts have been prepared under the historical cost convention. (b) Factoring Income Factoring Service Charges are accounted on accrual basis except in the case of non-

performing assets where income is accounted on realisation. (c) Fixed Assets and Depreciation Fixed assets are stated at cost less accumulated deprecation. The Company provides depreciation on assets on the written down value method on

pro-rata basis at the rates prescribed in Schedule XIV to the Companies Act, 1956. Assets having individual value of less than Rs.5,000/- are fully depreciated in the year of acquisition.

(d) Factored Debts (i) Debts purchased are included under Current Assets as Sundry Debtors. The unpaid

balance of the price of Debts factored and due to the clients on collection are included under Current Liabilities. In respect of NPA accounts only the funds in use is included under Current Assets as Sundry Debtors.

(ii)Factored debts are classified into ‘performing’ and ‘non-performing’ assets in terms of guidelines laid down by the Reserve Bank of India. Assets are also classified as standard, sub-standard, doubtful and loss assets.

(iii)Provision for factored debts is made in accordance with the guidelines laid down by Reserve Bank of India except for sub-standard assets where provision is made at 15% as against the statutory requirement of 10%.

(e) Deferred Taxation In accordance with Accounting Standard 22 – “Accounting for Taxes on Income” issued

by the Institute of Chartered Accountant of India, deferred tax is recognized on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

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Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that the assets can be realized in future.

(f) Employee and Retirement Benefits Company’s contribution to Provident Fund is accounted on accrual basis. Gratuity is

accounted based on the premium paid to the Life Insurance Corporation of India under the group gratuity scheme.

(g) Earnings Per Share In determining earnings per share, the Company considers the net profit after tax and

includes the post tax effect of any extra-ordinary items.

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Annexure IV SBI FACTORS & COMMERCIAL SERVICES PVT LTD. Adjustments resulting from Audit Qualifications, material amounts relating to adjustments for previous years and changes in Accounting Policies. (Rs in lacs)

For 9 months For the year ended March 31st ended 2004 2003 2002 2001 2000 31/12/2004 Particulars (Reviewed) (Audited) (Audited) (Audited) (Audited) (Audited) Net Profit/(Loss) as per Audited Accounts 452.81 158.73 221.99 46.24 30.36 207.04 Adjustments for: Change in Accounting Policies* - - - 42.65 53.04 53.42 Auditors Qualifications - - - - - - Adjusted Profit/(Loss) 452.81 158.73 221.99 3.59 (22.68) 153.62 Surplus brought forward from last year 211.94 226.23 124.24 118.00 127.63 40.59 Profit available for Appropriation 664.75 384.96 346.23 121.59 104.96 194.21 Appropriations Transfer to General Reserve - - 100.00 20.00 20.00 100.00 Reserve for Contigencies - - 20.00 20.00 20.00 20.00 Transfer for Reserve Fund - 32.00 - - - - Proposed Dividend - 125.00 - - - - Provision for Tax on Dividend - 16.02 - - - - Balance carried to Balance Sheet 664.75 211.94 226.23 81.59 64.96 74.21 Balance carried to Balance Sheet(as per Audited Accounts) 664.75 211.94 226.23 124.24 118.00 127.63 Difference* on account of - - - (42.65) (53.04) (53.42) Additional 5 % Provision created on Substandard Assets

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Annexure V SBI FACTORS & COMMERCIAL SERVICES PVT LTD. Accounting Ratios 31/12/2004 2004 2003 2002 2001 2000 (Reviewed) (Audited) (Audited) (Audited) (Audited) (Audited) Earning per share (EPS) (Rs) 18.11 6.35 8.88 1.85 1.21 8.28 Return on Net worth (%) 10.72% 4.21% 5.93% 1.29% 0.85% 5.87% Net Asset Value per Share (Rs) 168.97 150.72 149.74 143.15 142.28 141.07 Note: 1. EPS represents basic earnings per share calculated as Net Profit after Tax before extraordinary items(PAT) divided by number of equity shares at the end of the fiscal year. 2. Return on Networth is arrived at by dividing PAT by total shareholder's funds (Networth) at the end ofthe year . 3. Net Asset Value per share, computed as per net equity method, is arrived at as Equity net worth at the end of theyear as reduced by miscellaneous expense not written off and divided by the number of equity shares at the end of fiscal year.

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Annexure VI SBI FACTORS & COMMERCIAL SERVICES PVT LTD. Capitalisation Statement (Rs in lacs) Pre-issue as on Adjusted for the issue As on 31/12/2004 Short-term debt 20,377.92 20,377.92 Long-term debt - 4,000.00 Total Debt 20,377.92 24,377.92 Shareholders' funds Share Capital 2,500.00 2,500.00 Equity 2,500.00 2,500.00 Less: Unpaid allotment money (others) - - Less: Preference - - Share Premium - - Reserves & Surplus 1,849.34 1,849.34 Less: Miscellaneous Expenditure not written - - Less: Profit & Loss Account - - Total Shareholders Funds 4,349.34 4,349.34 Long-term Debt/Equity ratio (%) - 0.92 Debt/Equity ratio (%) 4.69 5.60

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SBI FACTORS AND COMMERCIAL SERVICES PVT. LTD.

SCHEDULE ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR THE NINE MONTHS

PERIOD ON DECEMBER 31, 2004 NOTES ON ACCOUNTS As as 31st

December 2004

As as 31st March 2004

(Nine Months)

(Twelve Months)

Rupees Rupees1. Contingent Liability/Claim not provided for -

a. Cheques purchased by the Bank -- 4,25,63,512 b. Income Tax for A.Y. 2002-2003 1,81,15,758 -- 2. Managerial Remuneration

(a) Salaries -- 3,64,891 (b) Contribution to Provident and Pension Funds -- 48,776 (c ) Perquisites -- 1,21,797 Total -- 5,35,464

(b) The computation of profits under section 349 of the Companies Act, 1956 has not been

given as no commission is payable to the Managing Director.

3. During the earlier year, the Company received from Income Tax Department, interest tax refund and interest on interest tax refund for earlier years. The Income Tax Department has preferred appeals in the Tribunal.

4. Information with regard to other matters specified in clauses 3, 4-C and 4-D of Part II of Schedule VI of the Companies Act, 1956 are either nil or not applicable to the Company for the nine months period ended on 31st December, 2004.

5. The Company has advanced money to its small scale industrial clients on factoring their debts. As at the balance sheet date, the Company owes Rs. 12,26,50,042/- to the said clients, only on realisation of factored debts due from customers. In view of the above, the management is of the view that Central Government notification no. 376(E) dated 22-5-2002 with respect to disclosing the names of small scale industrial undertakings to whom company owes any sum together with interest outstanding for more than thirty days, is not applicable to the Company.

6. Earnings per share is as follows:

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7. Particulars As at 31st December 2004 (nine months)

2003-2004

Profit after Tax (As per Profit and Loss Account) Rs. 3,84,92,074/- Rs.1,57,97,995/- Total Number of shares 25,00,000 25,00,000 Earnings Per Share (Basic and Diluted) (Face Value –

Rs. 100/- per share) Rs. 15.40 Rs. 6.32

Annualised Earnings Per Share (Basic and Diluted) (Face Value – Rs. 100/- per share)

Rs. 20.53 Rs. 6.32

8. As per the new criteria for applicability of Accounting Standards laid down by the Institute

of Chartered Accountants of India, the Company falls in the category of Level I Enterprise. Accordingly Accounting Standard 3 – “Cash Flow Statement”, Accounting Standard 18 – “Related Party Disclosures”, Accounting Standard 28 – “Impairment of Assets” and Accounting Standard 29 – “Provisions, Contingent Liabilities and Contingent Assets” are applicable to the company w.e.f. 01.04.2004. The management is of the opinion that the compliance and disclosure requirement for the said Accounting Standard is not to be included in the reviewed financial statements for the nine months period ended on 31st December, 2004. However, the same will be adequately included in audited financial statements for the year ended on 31st March,2005.

9. Previous year’s figures have been regrouped and rearranged wherever necessary.

For and on behalf of the Board of Directors

A.K. PURWAR

Chairman AMITA JOSHI

Company Secretary

D.K. JAIN Managing Director

Mumbai Dated: 15th March 2005

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III. STATUTORY AND OTHER INFORMATION Minimum Subscription The provisions as to minimum subscription are not applicable to the Issue. Expenses of the Issue The expenses of the issue payable by the company includes fees payable to the agency preparing the Information Memorandum, Auditors, Fees payable to Registrars, stamp duty, listing expenses and other miscellaneous expenses. Agency preparing the Information Memorandum The fees payable to the Agency preparing the Information Memorandum are as set out in the relevant appointment letters, copies of which are kept open for inspection at the Registered Office of the Company. Tax Consultant / Auditors The fees payable to the Tax Consultant / Auditors will be mutually agreed upon by the parties. Registrar to the Issue The fees payable to the will be mutually agreed upon by the parties. Trustees for the Bondholders The fees payable to the Trustees for the Bondholders will be mutually agreed upon by the parties. Other Expenses The other expenses include fees and reimbursement of expenses towards printing, listing fees, credit-rating fees etc. Underwriting Commission and Brokerage The issue is not underwritten and hence no underwriting commission is payable. Further since no brokers are being employed for placement, hence no brokerage payable is being envisaged. Previous Public or rights issue, if any (during last five years) The company has not made any public or rights issue during the last five years. Debentures and redeemable preference shares and other instruments issued by the company outstanding as on the date of the Information Memorandum The Company has not made issue of any debenture, preference share or other long-term debt instruments. Commission and brokerage on previous issue Not applicable. Issues for consideration other than for cash The Company has not issued or agreed to issue any equity shares or Bonds / Notes since its date of incorporation for consideration other than for cash.

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Option to Subscribe The investors shall hold the securities with the depositories. The Company has not entered nor does it propose to enter into any contract or arrangement whereby any option or preferential right of any kind has been or is proposed to be given to any person to subscribe for any Notes of the Company, now offered through private placement. SBI Factors has entered into depository arrangements with National Securities Depository Limited (NSDL) along with Computronics Financial services (India) Limited. Investors will hold the security in dematerialized form and deal with the same as per the provisions of Depositories Act, 1996 (as amended from time to time). SBI Factors has signed a tripartite agreements in this connection viz. Tripartite Agreement dated the 25th September 2000 between SBI Factors, Computronics Financial Services (India) Limited and National Securities Depository Limited (NSDL). Purchase of Property There is no property which the company has purchased or acquired or proposes to purchase or acquire which is to be paid for wholly or partly out of the proceeds of the present issue or the purchase or acquisition of which has not been completed on the date of issue of this Information Memorandum, other than property: a) The contracts for the purchase or acquisition whereof was entered into in the

ordinary course of the company’s business, the contract not being made in contemplation of the issue nor the issue in consequence of the contract; or

b) As respects which the amount of the purchase money is not material. The company has not purchased any property in which any of its Directors had or have any direct or indirect interest or in respect of any payment thereof. The Company has no plans, at present, to acquire any running business out of the proceeds of the issue. Revaluation of Assets, if any (during last five years) No revaluation of assets has been done in the last five years.

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IV. MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION 3. CAPITAL “The Authorised Share Capital of the Company is Rs.25,0000,000 (Rupees Twenty Five Crores Only) divided into 25,00,000 (Twenty Five Lakhs) Equity Shares of Rs.100/- each (Rupees One Hundred Only) with powers to the Company acting through its Directors to increase, reduce or modify its capital and to divide all or any of the shares in the capital of the Company, for the time being, classify and reclassify such shares from shares of one class into shares of other class or classes and to attach thereto respectively such preferential, deferred, qualified, or other special rights, privileges, conditions or restrictions as may be determined by the Company in accordance with the Articles of Association of the Company, and to vary, modify or abrogate any such rights, privileges, conditions or restrictions in such manner and by such persons as may, from the time being, be permitted under the provisions of the Articles of Association of the Company or legislative provisions, for the time being in force in that behalf.” PRIVATE COMPANY

4. The Company is to be private Company and accordingly :

(a) The number of members (exclusive of persons who are in the employment of the Company and of persons who having been formerly in the employment of the Company were members of the Company while in that employment and have continued to be Members while that employment ceased) shall not exceed fifty, but where two or more members hold one or more shares in the Company jointly they shall, for the purpose of this Articles be treated as a single member.

(b) Any invitation to the public to subscribe for any shares in or debentures of the Company is hereby prohibited.

(c) The right to transfer shares of the Company is restricted in the manner and to the extent hereinafter appearing in these Articles.

BORROWING POWERS 46. The Board may, from time to time at its discretion, by a resolution passed at a meeting of the Board, accept deposits from members either in advance of calls or otherwise and generally raise or borrow or secure the payment of any sum or sums of money for the Company. 47. The payment or repayment of the moneys borrowed as aforesaid may be secured in such manner and upon such terms and conditions in all respects as the Board may think fit and in particular by a resolution passed at a meeting of the Board (and not by circular resolution) by the issue of debentures or debenture-stock or bonds of the Company charged upon all or any part of the property of the Company (both present and future) including its uncalled capital for the time being and debentures, debenture-stock, bonds and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued. 48. Any debentures, debenture stock, bonds or other securities may be issued at a discount, premium or otherwise and subject to the provisions of the Act may be issued on condition that they shall be convertible into shares of any denomination and with

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any privilege or conditions as to redemption, surrender, drawing, allotment of shares and attending (but not voting) at General Meetings, appointment of directors and otherwise. Debentures with the right to conversion into or allotment of shares shall be issued only with the consent of the Company in General Meeting. POWERS OF THE BOARD 99. Subject to the provisions of the Act and subject to the directions as may be given by State Bank of India, from time to time, the control of the Company shall be vested in the Board who shall be entitled to exercise all such powers and to do all such acts and things as the Company is authorized to exercise and do provided that the Board shall not exercise any power or do any act or thing which is directed or required whether by the Act or in other statute or by the Memorandum of the Company or by these Articles or otherwise to be exercised or done by the Company in general meeting provided further that in exercising any such power or doing any such act or thing, the Board shall be subject to the provisions in that behalf contained in the Act or in any other Act or in the Memorandum of the Company or these Articles or any regulations not inconsistent therewith and duly made thereunder including regulations made by the Company in general meeting but not regulations made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if those regulations had not been made. MANAGING DIRECTOR 101. State Bank of India, may from time to time appoint Managing Director of the Company for such period as it shall think fit, and State Bank of India may also, from time to time (subject to the provisions of any agreement between such Director and State Bank of India) remove him from office, and appoint another in his place. 102. The Managing Director shall receive such remuneration and be subject to such terms and conditions of service as may from time to time be determined by State Bank of India. 103. Subject to the provisions of the Act and in particular to the prohibitions and restrictions contained in section 292 thereof the Board may from time to time entrust to and confer upon the Managing Director for the time being such of the powers exercisable under these presents by the Directors as they may think fit and may confer such powers for the time and to be exercised for such objects and purpose and upon such terms and conditions and with such restrictions as they think collaterally with, or to the exclusion of, and in substitution for all or any of the powers of the directors in that behalf and may from time to time revoke, withdraw, alter or vary all or any of such powers. INDEMINITY AND RESPONSIBILITY 136. Subject to the provisions of section 201 of the Act every Director, Manager, Officer or servant of the Company or any person (whether an officer of the Company or not) employed by the Company as auditor shall be indemnified out of the funds of the Company against all claims and it shall be the duty of the directors out of the funds of the Company to pay all costs, charges, losses and damages which any such person may incur or become liable to, by reason of any contract entered into or act or thing done, about the execution of discharge of his duties or supposed duties (except such if any, as he shall incur or sustain through or by his own willful act, neglect or default) including

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expenses and in particular and so as not to limit the generality of the foregoing provisions against all liabilities incurred by him as such director, manager, officer or auditor in defending any proceedings whether civil or criminal in which judgement is given in his favour or in which he is acquitted or in connection with any application under section 633 of the Act in which relief is granted to him by the Court. 137. Subject to the provisions of the Act, no director, auditor or other officer of the Company shall be liable for the act, receipts, neglects or defaults of any other director or for joining in any receipt or other act for conformity or for any loss or expenses happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the directors for or on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damages arising from the bankruptcy, insolvency or tortuous act of any person firm or company to or with whom any moneys, securities or effects shall be entrusted or deposited or for any other loss, damage or misfortune whatever which shall happen in relation to the execution of the duties of his office or in relation thereto unless the same shall happen through his own dishonesty. 138. No member shall be entitled to visit or inspect any works of the Company without the permission of the directors or to require discovery of or any information respecting any detail of the Company’s trading or any matter which is or may be in the nature of a trade secret, mystery of trade, secret process or any other matter which may relate to the conduct of the business of the Company and which in the opinion of the directors it would be inexpedient in the interests of the Company to disclose.

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V. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS 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 2 years before the date of the Information Memorandum) which are or may be deemed to be material have been entered into by the Company. Copies of these contracts together with the copies of documents referred to in Para B may be inspected at the Registered Office of the Company between 10 AM and 12 noon on any working day until the closing of the subscription list. A. Material Contracts 1. Letter appointing SBI Capital Markets Limited as Arrangers to the issue. 2. Letter appointing IDBI Capital Market Services Limited as Arrangers to the issue 3. Copies of letter appointing Registrar and Transfer Agents, debenture trustees

B. DOCUMENTS 1. Memorandum and Articles of Association of the Company. 2. Certificate of Incorporation 3. Copy of the Board Resolution dated the 15th January 2005 authorising the private

placement of Notes 4. Auditors Report dated the 15th march 2005 referred to in the Information

Memorandum 5. Annual Reports of the Company for Financial Years 1999-2000,2000-01,2001-

02,2002-03,2003-04. 6. Letters from ICRA regarding Credit rating and the rating rationale 7. Letters from CARE regarding Credit rating and the rating rationale 8. Tripartite Agreement dated the 25th September 2000 between SBI Factors, National

Securities Depository Limited (NSDL).

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PART III DECLARATION It is hereby declared that full disclosures, as applicable in Schedule II of the Companies Act 1956, Chapter VI of the SEBI (DIP) Guidelines, 2000 has been complied with. Further, it is certified that disclosures made in Information Memorandum are generally adequate, accurate and in conformity with Schedule II of the Companies Act 1956, Chapter VI of the SEBI (DIP) Guidelines, 2000. The issuer accepts no responsibility for the statement made otherwise than in the Information Memorandum or in the advertisement or any other material issued by or at the instance of the issuer and that any one placing reliance on any other source of information would be doing so at his own risk. Signed by Shri D K Jain, Managing Director, pursuant to the authority granted by the Board of Directors of the SBI Factors at their meeting held on the 15th March 2005 and subject to the Memorandum and Articles of Association of the company.

For and on behalf of the Board of Directors

Date: March 29, 2005 Sd/ Place: Mumbai D K Jain Managing Director

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