LETTER OF OFFERTHIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

This Letter of Offer constitutes an “offer” and not an “invitation to offer”. This Letter of Offer is being sent to you as a shareholder(s) of Rane (Madras)Limited (“RML” or the “Company”). If you require any clarifications about the action to be taken, you may consult your stock broker or investment consultant orthe Manager/ Registrar to the Offer. In case you have recently sold your shares in the Company, please hand over this Letter of Offer and the accompanyingForm of Acceptance cum Acknowledgement and Transfer Deed to the Member of the Stock Exchange through whom the said sale was effected.

MANAGER TO THE OFFERHSBC Securities and Capital Markets(India) Private Limited52/60 Mahatma Gandhi Road, FortMumbai – 400 001Tel: +91 22 2268 1284 / 85Fax: (022) 2263 1984Contact Person: Aarthi RamakrishnanE-mail: rane@hsbc.co.in

CASH OFFER AT Rs. 147/- PER EQUITY SHARE (“OFFER PRICE”)(pursuant to SEBI (Substantial Acquisition of Shares and Takeovers)

Regulations, 1997 and subsequent amendments thereof) (“Takeover Regulations”)TO ACQUIRE UP TO 1,626,274 FULLY PAID-UP EQUITY SHARES (“OFFER”)

representing 20% of the equity share capital (and 20% of the voting capital) ofRane (Madras) Limited (“RML”)

Registered Office: “Maithri”, 132 Cathedral Road, Chennai 600 086

Phone No: +91 44 28112472 Fax No +91 44 28112449 Email: rmlopenoffer@rane.co.in

BY

Mr. L Lakshman, No.17 Crescent Street, Off ABM Avenue, Chennai 600 028Mr. L Ganesh, No.2 George Avenue, Chennai 600018L Lakshman (HUF), No.17 Crescent Street, Off ABM Avenue, Chennai 600 028

L Ganesh (HUF) No.2 George Avenue, Chennai 600018 (jointly referred to as “Acquirers”)

along with

Mrs. Pushpa Lakshman, No.17 Crescent Street, Off ABM Avenue, Chennai 600 028Mr. Harish Lakshman, No.17 Crescent Street, Off ABM Avenue, Chennai 600 028Mr. Vinay Lakshman, No.17 Crescent Street, Off ABM Avenue, Chennai 600 028Mrs. Meenakshi Ganesh, No.2 George Avenue, Chennai 600018Ms. Aparna Ganesh, No.2 George Avenue, Chennai 600018Master Aditya Ganesh, No.2 George Avenue, Chennai 600018Mrs. T G Saraswathi, “No.17 Crescent Street, Off ABM Avenue, Chennai 600 028Mrs. Vanaja Aghoram, 802 Ideal Home Township, Kenchanahalli, Bangalore 560039Mrs. Shanthi Narayan, C 2/31, Bapa Nagar, Dr. Zakir Hussain Marg, New Delhi – 110003Mrs. Saroja Raman, 301 East, 22nd Street, Apart # 5D, New York NY 10010 USAMrs.Ranjini R Iyer, 305, Quincy Ct., Schaumburg, IL 60193, USAMrs. Geetha Raman Subramanyam, 301 East, 22nd Street, Apart # 5D, New York NY 10010 USAMrs. Rathika R Sundaresan, 16 Waters Edge, Sparta NJ 07871, USAMr. T G G Raman, 63 Orrington Ct, Schaumburg, IL 60173, USAMrs. Ramani Ramakrishnan, 5115 Beacon Ponte, Sugarland, Texas 77479, USAMr. Pravin Kumar, 4187, Hubbart Drive, Palo Alto CA 94306, USAMrs. T G Sundari. F 3 Anubhav Terrace, 7 Judge Jambulingam Road, Mylapore, Chennai 600 004

acting in concert with them (jointly “Persons Acting in Concert” or “PACs”)

All investor queries will be answered on Phone No +91 44 28112472 Fax No +91 44 28112449 by Mr. N. Krishnamoorthy who has beennominated by the Acquirers and PACs

Please Note:1. The Offer is subject to the approval of the Reserve Bank of India (“RBI”) under the Foreign Exchange Management Act, 1999. The application to the

RBI will be made at an appropriate time. Besides the above, to the best of the knowledge of the Acquirer, no other approvals are required toacquire shares tendered pursuant to this Offer. However the Offer will be subject to all statutory approvals as may be applicable. The shareholdersof RML have approved further issue of RML shares on May 11, 2004.

2. Should the Acquirers decide to revise the Offer Price upward, such upward revision will be made in terms of Regulation 26 of the TakeoverRegulations not later than December 2, 2004. If there is any upward revision in the Offer Price, the same would be notified by way of a publicannouncement in the same newspapers in which the Public Announcements appeared. Such revised offer price would be payable to all shareholderswho have accepted this Offer and tendered their shares at any time during the term of the Offer to the extent to which their acceptance andtenders have been found valid by the Acquirer.

3. The Acquirer may withdraw the Offer as per conditions specified in Regulation 27 of the Takeover Regulations. In the event of such withdrawal, thesame would be notified by way of a public announcement in the same newspapers where the Public Announcements appeared.

4. The procedure for acceptance of this Offer is set out in para 9 of this Letter of Offer. A Form of Acceptance-cum-Acknowledgement and transferdeed (where applicable) along with Form of Withdrawal are enclosed with this Letter of Offer.

5. The shareholders who have accepted the Offer by tendering the requisite documents in accordance with the procedures set forth in the PublicAnnouncements and this Letter of Offer can withdraw the same upto three working days prior to the date of closure of the Offer.

6. A copy of the Public Announcement and a copy of this Letter of Offer (including Form of Acceptance cum Acknowledgement) are available on SEBI’swebsite at http://www.sebi.gov.in. The Form of Acceptance-cum-Acknowledgement may be downloaded and used to accept the Offer only in jurisdictionswhere legally permissible. Persons outside India accessing these pages are required to inform themselves of and observe any relevant restrictions.

7. This document has not been filed, registered or approved in any jurisdiction outside India. Recipients of this document resident in jurisdictionsoutside India should inform themselves of and observe any applicable legal requirements.

8. If there is competitive bid, the public offers under all the subsisting bids shall close on the same date. As the offer price cannot be revised duringthe 7 (seven) working days prior to the closing date of the offers/bids, it would, therefore, be in the interest of shareholders to wait till thecommencement of that period to know the final offer price of each bid and tender their acceptance accordingly.

All future correspondence, if any, should be addressed to the Registrar to the Offer shown below:

OFFER OPENS ON : Thursday November 25, 2004 OFFER CLOSES ON : Tuesday December 14, 2004

REGISTRAR TO THE OFFER

Integrated Enterprises (India) Ltd.2nd Floor, “Kences Towers“, No.1Ramakrishna Street, North Usman Road,T Nagar, Chennai 600 017.Tel: +91 44 28140801/ +91 44 28140802Fax (044) 2814 0652Contact Person: Suresh Babu K.E-mail: sureshbabu@iepindia.com

HSBC

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SCHEDULE OF MAJOR ACTIVITIES RELATING TO THE OFFER :

Original Time Schedule Revised Time Schedule

Activity Date Day Date Day

First Public Announcement (“PA”) Date April 12, 2004 Tuesday April 12, 2004 Tuesday

Second Public Announcement (“PA”) Date November 18, 2004 Thursday November 18, 2004 Thursday

Specified Date (for the purpose of determining 16th April, 2004 Friday November 12, 2004 Fridaythe names of shareholders to whom the Letterof Offer would be sent)

Last date for a competitive bid 2nd May, 2004 Sunday May 2, 2004 Sunday

Date by which individual Letters of Offer will be 26th May, 2004 Wednesday November 20, 2004 Saturdaydispatched to the shareholders

Offer Opening Date 10th June, 2004 Thursday November 25, 2004 Thursday

Last date for revising the offer price/number of 30th June, 2004 Wednesday December 2, 2004 Thursdayequity shares

Last Date for withdrawal by shareholders 6th July, 2004 Tuesday December 8, 2004 Wednesday

Offer Closing Date 10th July, 2004 Saturday December 14, 2004 Tuesday

Date by which approval/ rejection would be 2nd August, 2004 Monday December 29, 2004 Wednesdayintimated and the corresponding payment forthe acquired equity shares and/or the sharecertificates for the rejected/withdrawn equityshares will be dispatched and/or credited tothe beneficiary account in case of dematerialisedequity shares

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RISK FACTORS

Pertaining to the Transaction:

1. The transaction is consequent to the Share Purchase Agreement between the Acquirers, PAC and RML, (Target Company). ThisOffer is being made consequent to the increase in holding by the Acquirers and PACs through allotment of shares in discharge ofconsideration as per the terms of the Share Purchase Agreement.

2. The Share Purchase Agreement envisages issue of further capital, shareholder of RML are required to note that further issue ofcapital and subsequent dilution of capital may affect the market price of RML shares.

3. The transaction is subject to completion risks as would be applicable to similar transactions.

Pertaining to the Acquirer, PACs

1. Post this Offer the Acquirer and the PACs will have significant equity ownership and control over the Target and the interest ofthe Acquirer may conflict with those of the other shareholders.

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TABLE OF CONTENTS

1. Disclaimer ................................................................................................................................................................................. 5

2. Background to the Offer: ..................................................................................................... .................................................. 5

3. Details of the Offer ................................................................................................................................................................. 7

4. Background of the Acquirers and PACs .............................................................................................................................. 7

5. Disclosure in terms of Regulation 21(3) ...................................................................................... ........................................ 9

6. Background of the Target - RML .......................................................................................................................................... 9

7. Offer Price and Financial Arrangements .............................................................................................................................. 17

8. Terms and Conditions of the Offer ....................................................................................................................................... 19

9. Procedure for Acceptance and Settlement .......................................................................................................................... 20

10. Documents for Inspection ...................................................................................................................................................... 22

11. Declaration by the Acquirers and the PACs ................................................................................... .................................... 22

Attached: Form of Acceptance-cum-Acknowledgement, Form of Withdrawal and transfer deed (where applicable)

DEFINITIONS/ABBREVIATIONS

Acquirers Mr. L Lakshman, Mr. L Ganesh, L Lakshman (HUF) and L Ganesh (HUF)

BSE The Stock Exchange, Mumbai

Company/RML Rane (Madras) Limited

CDSL Central Depository Services Limited

Depository Escrow Account The depository account opened by Integrated Enterprises (India) Ltd. with National SecuritiesDepository Limited (NSDL) account “Integrated Enterprises (India) Ltd. Escrow A/c – RML OpenOffer”. The DP ID is IN301313 and the beneficiary client ID is 20790148.

DP Depository Participant

FEMA Foreign Exchange Management Act, 1999

First Public Announcement The public announcement relating to the Offer as appeared in the newspapers on April 13, 2004

Manager to the Offer/ HSBC HSBC Securities and Capital Markets (India) Private Limited

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

Offer Cash offer being made by the Acquirers to the shareholders of RML on the terms contained inthis Letter of Offer

Offer Closing Date Tuesday, December 14, 2004

Offer Opening Date Thursday, November 25, 2004

Offer Price Rs. 147/- (Rupees One Hundred and Forty Seven only) per share

PACs Persons Acting in Concert

Public Announcements Collectively refer to the First Public Announcement and the Second Public Announcement

RBI Reserve Bank of India

RBL Rane Brake Linings Limited

RIL Rane Investments Limited

REVL Rane Engine Valves Limited

Registrar to the Offer / IEP Integrated Enterprises (India) Ltd.

SEBI Securities and Exchange Board of India

SEBI Act Securities and Exchange Board of India Act, 1992

Second Public Announcement The public announcement relating to the Offer as appeared in the newspapers on November 18,2004

Shares Fully paid-up equity shares of Rs. 10/- each of RML

Specified Date Date for the purpose of determining the names of shareholders, as appearing in the Register ofMembers of RML or the beneficial records of the relevant DPs, to whom the Letter of Offer willbe sent. This date has been determined as Friday, November 12, 2004.

Takeover Regulations/Regulations SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequentamendments thereto

CURRENCY OF PRESENTATION

Please note that all financial data contained in this Letter of Offer has been rounded off to the nearest million, except where statedotherwise. 1 million = Rs 10 lakhs

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This Letter of Offer is being issued by HSBC Securities and Capital Markets (India) Private Limited (“HSBC”), the Manager to the Offer,on behalf of the Acquirers and the PACs pursuant to Regulations 11 and other applicable provisions of the Takeover Regulations.

1. Disclaimer

IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE FILING OF THE DRAFT LETTER OF OFFER WITH SEBI SHOULD NOT,IN ANY WAY, BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED, VETTED OR APPROVED BY SEBI. THEDRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI FOR A LIMITED PURPOSE OF OVERSEEING WHETHER THEDISCLOSURES CONTAINED THEREIN ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE REGULATIONS.THIS REQUIREMENT IS TO FACILITATE THE SHAREHOLDERS OF RANE (MADRAS) LIMITED TO TAKE AN INFORMEDDECISION WITH REGARD TO THE OFFER. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIALSOUNDNESS OF THE ACQUIRERS, PACS OR OF THE COMPANY WHOSE SHARES/CONTROL ARE/IS PROPOSED TO BEACQUIRED OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OFOFFER. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT, WHILE THE ACQUIRERS ARE PRIMARILY RESPONSIBLE FORTHE CORRECTNESS, ADEQUACY, AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THIS LETTER OF OFFER, THEMANAGER TO THE OFFER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE ACQUIRERS DULYDISCHARGE THEIR RESPONSIBILITY ADEQUATELY. IN THIS BEHALF, AND TOWARDS THIS PURPOSE, HSBC SECURITIESAND CAPITAL MARKETS (INDIA) PRIVATE LIMITED, THE MANAGER TO THE OFFER HAS SUBMITTED A DUE DILIGENCECERTIFICATE DATED APRIL 27, 2004 TO SEBI IN ACCORDANCE WITH THE SEBI (SUBSTANTIAL ACQUISITION OF SHARESAND TAKEOVER) REGULATIONS 1997 AND SUBSEQUENT AMENDMENT(S) THEREOF. THE FILING OF THE LETTER OFOFFER DOES NOT, HOWEVER, ABSOLVE THE ACQUIRERS FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORYCLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE OFFER.

2. Background to the Offer:

2.1. The Rane Group (“the Group”) based in Chennai is engaged in the business of manufacture of auto components. TheGroup has three listed companies, viz. Rane (Madras) Ltd. (“RML”), Rane Engine Valves Ltd. (“REVL”) and Rane BrakeLinings Ltd. (“RBL”). The Acquirers and PACs hold shares in all the three companies. Each of these companies holds equityshares in the other two companies and is classified as a promoter of the other two companies as per the TakeoverRegulations. The Acquirers, the PACs and the Group have initiated a restructuring exercise involving a change in shareholdingand consolidation of ownership/equity. The restructuring envisages;

2.1.1. Consolidation of Group equity interests in economic ownership and voting control with RML which will be the principalgroup company

2.1.2. Migration of Acquirers and PACs’ equity interests to RML.

2.2. Share Purchase Agreement between Acquirers and PACs (the “Sellers”) on the one hand and RML, RBL and RaneInvestments Limited (“RIL”) on the other hand

2.2.1. In order to facilitate the restructuring, the Sellers have entered into a Share Purchase Agreement dated April 9, 2004(“the SPA”) divesting 960,056 equity shares constituting 19.05% of the equity share capital of REVL to RML, RBLand RIL (“the Transaction”).

2.2.2. Sellers have agreed to divest REVL equity shares at a price of Rs. 410/- (Rupees Four Hundred and Ten only) perequity share.

2.2.3. The consideration of Rs.410/- (Rupees Four Hundred and Ten only) for every 1 (one) REVL equity share acquiredby RML, RBL and RIL would be discharged as under;

(a) RML shall issue and allot to the Sellers 2 (two) equity shares of RML. Each RML equity share is priced atRs.146/- (Rupees One Hundred Forty Six only) comprising Rs.10/- (Rupees Ten only) face value and Rs.136/-(Rupees One Hundred Thirty six only) as share premium. (Please see para 3.1 of the Offer). The price perequity share of RML has been computed as prescribed under Chapter XI of the Securities and ExchangeBoard of India (Disclosure & Investor Protection) Guidelines, 2000.

(b) RML/RIL/RBL will pay to the Sellers a sum of Rs. 118/- (Rupees One Hundred Eighteen only) per equity sharein cash

2.2.4. Conditions Precedent:

(a) The Transaction is subject to the Sellers and RML/RBL/RIL complying with the Takeover Regulations and otherapplicable SEBI regulations. The equity shares of RML will be issued and allotted to the Acquirers and PACsonly after the obligations under this Offer are completed.

(b) Issuance of equity shares to the Sellers by RML is subject the approval of its shareholders and to suchstatutory, governmental and all other approvals whatsoever as may be required under any law for the timebeing in force. Such approval will be sought from the shareholders at general meeting to be held on WednesdayMay 16, 2004.

2.2.5. The consideration of the 960,056 equity shares of REVL at a price of Rs. 410/- (Rupees Four Hundred Ten only)aggregating Rs.393,622,960 (Rupees Three Hundred Ninety Three Million Six Hundred Twenty Two Thousand NineHundred Sixty only) would be discharged as under;

a. The Sellers would be issued/allotted 1,920,112 equity shares of RML at a price of Rs.146/- (Rupees OneHundred Forty Six only) per equity share aggregating Rs.280,336,352 (Rupees Two Hundred Eighty Million ThreeHundred Thirty Six Thousand Three Hundred Fifty Two only) and

b. Cash aggregating Rs.113,286,608 (Rupees One Hundred Thirteen Million Two Hundred Eighty Six Thousand SixHundred and Eight only)

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2.3. The new shares of RML proposed to be issued to the Acquirers and the PACs in consideration for the shares of REVLacquired by RML are tabulated as under;

Name of Shareholder Shares in REVL Shares in RML proposedto be issued in Consideration

Acquirers

1) L Lakshman 82,150 164,300

2) L Lakshman (HUF) 40,724 81,448

3) L Ganesh 95,409 190,8184) L Ganesh (HUF) 40,675 81,350

Persons Acting in Concert -

5) Mrs. Pushpa Lakshman 9,220 18,440

6) Harish Lakshman 3,408 6,8167) Vinay Lakshman 7,880 15,760

8) Mrs. Meenakshi Ganesh 22,040 44,080

9) Ms. Aparna Ganesh 2,480 4,96010) Master Aditya Ganesh 4,180 8,360

11) Mrs. T G Saraswathi 22,834 45,668

12) Mrs. Vanaja Aghoram 49,004 98,00813) Mrs. Shanthi Narayan 33,704 67,408

14) Mrs. Saroja Raman 93,900 187,800

15) Mrs. Ranjini R Iyer 52,610 105,22016) Mrs. Geetha Raman Subramanyam 46,580 93,160

17) Mrs. Rathika R Sundaresan 88,728 177,456

18) Mr. T G G Raman 252,780 505,56019) Mrs. T G Sundari 1,214 2,428

20) Mrs. Ramani Ramakrishnan 1,214 2,428

21) Pravin Kumar 9,322 18,644

960,056 1,920,112

2.4. The current equity holdings of the Acquirers and the PACs in RML are as follows

Name of Shareholder No of equity shares % of outstanding equity

Acquirers

1) L Lakshman 39,392 0.94%

2) L Lakshman (HUF) 9,468 0.23%

3) L Ganesh 50,628 1.21%4) L Ganesh (HUF) 2,400 0.06%

Persons Acting in Concert

5) Mrs. Pushpa Lakshman 12,849 0.31%

6) Harish Lakshman 9,439 0.22%7) Vinay Lakshman 4,000 0.10%

8) Mrs. Meenakshi Ganesh 14,660 0.35%

9) Ms. Aparna Ganesh 4,500 0.11%10) Master Aditya Ganesh 3,543 0.08%

11) Mrs. T G Saraswathi 26,868 0.64%

12) Mrs. Vanaja Aghoram 7,326 0.17%13) Mrs. Shanthi Narayan 2,496 0.06%

14) Mrs. Saroja Raman 47,870 1.14%

15) Mrs. Ranjini R Iyer 69,138 1.65%16) Mrs. Geetha Raman Subramanyam 76,064 1.81%

17) Mrs. Rathika R Sundaresan 119,098 2.84%

18) Mr. T G G Raman 155,540 3.71%19) Mrs. T G Sundari 40,056 0.95%

20) Mrs. Ramani Ramakrishnan 54,054 1.29%

21) Pravin Kumar Nil Nil

Total 749,389 17.87%

None of the Acquirers, RBL, RIL or RML has been prohibited by SEBI from dealing in securities, in terms of direction issuedunder Section 11B of the SEBI Act or under any of the regulations made thereunder.

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3. Details of the Offer

3.1. The issue of 1,920,112 equity shares in RML to the Acquirers and PACs pursuant to the SPA will constitute more than 5%of the equity share capital of RML. Hence, pursuant to Regulation 11 and other applicable provisions of Chapter III of theTakeover Regulations the Acquirers and PACs are making an open offer to the shareholders of RML to acquire up to1,626,274 fully paid up equity shares of Rs. 10/- each of RML representing 20% of the paid up equity share capital of RML(“the Offer”) after considering the equity shares proposed to be issued to the Sellers at Rs 147/- (Rupees One HundredForty Seven only) per equity share (“Offer Price”) to all shareholders who tender their equity shares and whose equityshares are acquired by the Acquirers and PACs.

3.2. The Offer Price will be payable in cash, subject to the terms and conditions mentioned in the Public Announcements andthis Letter of Offer.

3.3. L. Lakshman has acquired 6,000 equity shares of RML on 30th July 2003 and 11th August 2003 at an average price ofRs 68.52 and a highest price of Rs. 70.35. L. Ganesh has acquired 4,599 equity shares of RML on 30th July 2003 and11th August 2003 at an average price of Rs 68.89 and a highest price of Rs.70.35.

3.4. The equity shares of RML are listed on the Stock Exchange, Mumbai (BSE), the National Stock Exchange of India Limited(NSE) and the Madras Stock Exchange (MSE). Based on available information, the equity shares are not infrequently tradedon the BSE and NSE within the meaning of Regulation 20(5) of the Takeover Regulations. The equity shares are mostfrequently traded on the NSE.

3.5. The average of the weekly high and low of the closing price for the equity shares for the 26-week period preceding thedate of the First Public Announcement is Rs. 129.36 (Rupees One hundred and twenty Nine and thirty six paise only) onthe NSE where the equity shares are most frequently traded. The average of the daily high and low price during the twoweeks preceding the date of the First Public Announcement is Rs. 146.23 on the NSE where the equity shares are mostfrequently traded. The price calculated as per Chapter XIII of the SEBI (Disclosure and Investor Protection) Guidelines isRs. 145.24 (Rupees One hundred and forty five and twenty four paise only). Hence a price of Rs. 147/- per equity shareis being considered as the price for the Offer. This price is higher than the negotiated price as detailed in para 2.2.3 abovethus, the Offer Price is justified in accordance with Regulation 20 of the Takeover Regulations.

3.6. This Offer is not subject to any minimum level of acceptance.

3.7. The Public Announcements appeared on April 13, 2004 and November 18, 2004 in the following newspapers, in accordancewith Regulation 15 of the Takeover Regulations:

Newspapers Language Editions

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

Lokmat Marathi Mumbai

Jansatta Hindi Delhi, Kolkata

Makkal Kural Tamil Chennai, Madurai, Coimbatore

A copy of the Public Announcements are also available on SEBI’s website at http://www.sebi.gov.in

3.8. Further terms and conditions of the Offer are set out in para 8 of this Letter of Offer. The procedure for acceptance andsettlement is set out in para 9 of this Letter of Offer.

3.9. This Offer is made under Regulation 11(1), and other applicable provisions of Chapter III of the Takeover Regulations.

3.10. The Acquirers consider their divestiture of REVL equity shares to RML vide the SPA as the first step in a Group restructuringexercise. In part discharge of consideration, the Acquirers would be issued/allotted equity shares of RML. This allotment ofRML equity shares would increase Acquirers shareholding and voting rights without change in control or change inmanagement.

4. Background of the Acquirers and PACs

4.1. The names, addresses and net worth as on 31st December 2003 as certified by P. Ananthapadmanaban, Membership Number6472, Partner, Harsha Anantu & Sankar, Chartered Accountants, New No. 68, (Old No. 104) Ramanaicken Street, Nungambakkam,Chennai – 600 034 are as follows

4.1.1. Acquirers

Name Age Address Networth Occupation/ Qualifications(Rs. Crores) Experience

1. Mr. L. Lakshman 57 No.17 Crescent Street 5.4 Co. Director B.E.Off ABM Avenue, 33 yearsChennai 600 028Phone No +91 44 28112472

2. L. Lakshman (HUF) N.a -do- 2.3 N.a

3. Mr. L. Ganesh 50 No.2 George Avenue, 8.6 Co. Director B.Com, ACA, MBAChennai 600018 27 yearsPhone No +91 44 28112472

4. L. Ganesh (HUF) N.a. -do- 1.9 N.a.

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4.1.2. Persons Acting in Concert

Name Age Address Net worth Occupation/ Qualifications(Rs. Crores) Experience

5. Mrs. Pushpa Lakshman 52 No.17 Crescent Street 0.9 Housewife M.A., Ph.dOff ABM Avenue,Chennai 600 028Phone No +91 44 28112472

6. Mr.Harish Lakshman 30 No.17 Crescent Street 0.9 Housewife B. Tech., MSMOff ABM Avenue, 5 yearsChennai 600 028-do—Phone No +91 44 28112472

7. Mr. Vinay Lakshman 27 No.17 Crescent Street 0.8 Student M. Com.,Off ABM Avenue, NRI CA (Inter)Chennai 600 028Phone No +91 44 28112472

8. Mrs. Meenakshi Ganesh 41 No.2 George Avenue, 1.5 Housewife M.A.Chennai 600018Phone No +91 44 28112472

9. Ms. Aparna Ganesh 20 -do- 0.3 Student B.Com

10. Master Aditya Ganesh 16 -do- 0.2 Student XI Std.

11. Mrs. T G Saraswathi 80 No.17 Crescent Street 1.7 Housewife MatriculateOff ABM Avenue,Chennai 600 028Phone No +91 44 28112472

12. Mrs. Vanaja Aghoram 60 802 Ideal Home Township 3.1 Housewife GraduateKenchanahalliBangalore 560039Phone No +91 44 28112472

13. Mrs. Shanthi Narayan 43 C 2/31, Bapa Nagar, 1.4 Housewife GraduateDr. Zakir Hussain Marg,New Delhi – 110003Phone No +91 44 28112472

14. Mrs. Saroja Raman * 71 301 East, 22nd Street, 5.6 Housewife MetriculateApart # 5D,New York NY 10010 USAPhone No +91 44 28112472

15. Mrs.Ranjini R Iyer* 52 305, Quincy Ct., 3.5 Housewife GraduateSchaumburg, IL 60193, USAPhone No +91 44 28112472

16. Mrs.Geetha Raman 49 301 East, 22nd Street, 3.3 Housewife GraduateSubramanyam * Apart # 5D,

New York NY 10010 USAPhone No +91 44 28112472

17. Mrs. Rathika R. 47 16 Waters Edge 5.6 Housewife GraduateSundaresan * Sparta NJ 07871,

USAPhone No +91 44 28112472

18. Mr. T G G Raman * 41 63 Orrington Ct, 12.8 Co. Executive B.Sc., MBASchaumburg, IL 60173, USA 15 yearsPhone No +91 44 28112472

19. Mrs. T.G. Sundari 65 F 3 Anubhav Terrace, 0.6 Housewife Graduate7 Judge Jambulingam Road,Mylapore, Chennai 600 004Phone No +91 44 28112472

20. Mrs Ramani 58 5115 Beacon Ponte, Sugarland, 0.6 Housewife M.S.Ramakrishnan * Texas 77479, USA

Phone No +91 44 28112472

21. Mr. Pravin Kumar * 41 4187, Hubbart Drive, 0.4 Co. Executive MatriculatePalo Alto CA 94306, USAPhone No +91 44 28112472

* Non Resident Indian (“NRI”)

None of the Persons Acting in Concert is a relative of the Acquirers as defined under the Companies Act other than Mrs.T.G. Sundari and Mrs. Ramani Ramakrishnan who are sisters of Mrs. T.G. Saraswathi and Mrs. Saroja Raman who is Mrs.T G Saraswathi’s brother’s wife.

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4.2. Acquirers in consultation with the Board of Directors of RML, will work towards enhancement of shareholder value and thiscould entail a restructuring exercise including, sale, disposal of some assets. The restructuring may also involve rationalisationof assets, investments, liabilities and/or segregation of RML’s manufacturing and investment activities through a scheme ofdemerger. These steps would be subject to the approvals of Board of Directors and shareholders of RML and other relevantstatutory approvals.

4.3. Further, the Acquirers undertake not to sell, dispose of or otherwise encumber any substantial assets of RML, except withthe prior approval of the shareholders of RML in accordance with the Memorandum & Articles of Association of RML. It willbe the responsibility of the Board of Directors of RML to make appropriate decisions about these matters in accordancewith the requirements of its business. Such approvals and decisions will be governed by the provisions of the relevantregulations or any other applicable laws or legislation at the relevant time.

4.4. Directorship of the Acquirers in other listed companies

Acquirer Other Directorships

L Lakshman – Chairman and Managing Rane (Madras) Limited (Whole-time Director)Director (Whole-time Director), Rane (Madras) Rane Engine Valves LimitedLimited Premier Instruments and Controls Limited

Rane Brake Linings Limited – Managing Director (Whole-time Director)Kar Mobiles Limited

L Ganesh- Vice Chairman & Director, Rane (Madras) Limited Vice Chairman and DirectorRane (Madras) Limited Rane Engine Valves Limited – Managing Director (Whole-time Director)

Rane Brake Linings LimitedKar Mobiles LimitedEIH Associated Hotels Limited.

The Acquirers and PACs have complied with the provisions of Chapter II of the Takeover Regulations.

5. Disclosure in terms of Regulation 21(3)

If the Offer results in public shareholding being reduced to 10% or less of the voting capital of the Target the Acquirer wouldmake an offer to delist the shares of the Target Company as specified in the SEBI (Delisting of Securities) Guidelines, 2003.

6. Background of the Target - RML

6.1. RML was incorporated on 3rd March 1936 as a public limited company under the Indian Companies Act, 1913. The registeredoffice of RML is located at “Maithri”, 132 Cathedral Road, Chennai 600 086, Phone +91 44 2811 2472. RML is a part of theRane Group.

6.2. The Company is engaged in the manufacture of Steering and Suspension Linkages. The Company has three manufacturingfacilities as detailed below:

Ø “Ganapathi Buildings”, 154, Velachery Road, Chennai 600 042

Ø 79/84, Hootagalli Industrial Area Mysore – 571186

Ø 77, Thirubuvanai Main Road, Thirubuvanai Village, Pondicherry – 605 107

6.3. It has a paid up capital of Rs. 41,952,600 divided into 4,195,260 equity shares of nominal value of Rs. 10/- each. There ar eno partly paid up equity shares in RML.

6.4. The principal business of the RML is manufacture of manual steering systems, steering linkages and related automotivecomponents.

6.5. RIL, a Group investment company is 51% subsidiary of RML and has its registered office at “Maithri”, 132 Cathedral Road,Chennai 600 086. RIL is a part of the Rane Group. RIL is an unlisted company.

6.6. RML is listed on the BSE, NSE and the MSE.

6.7. Share Capital Structure of RML

6.7.1. The issued equity share capital of RML as on the date of the First Public Announcement was Rs. 41,952,600,comprising 4,195,260 equity shares which will increase to Rs. 81,313,720 comprising 8,131,372 equity shares aftercompletion of the allotment of equity shares to the Acquirers and to the shareholders of REVL who tender theirequity shares and whose equity shares are accepted by RML. Accordingly, the Offer is for up to 1,626,274 fullypaid-up equity shares of Rs. 10/- each representing 20% of the voting capital of RML.

6.7.2. The share capital structure of the Company as on the date of the First Public Announcement was:

Paid-up equity shares of the Company No of equity Shares/ % of equity Shares/voting rights voting rights

Fully paid-up equity shares 41,95,260 100%

Partly paid-up equity shares - -

Total paid-up equity shares 41,95,260 100%

Total voting rights in the Company 41,95,260 100%

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6.7.3. The resulting capital structure of RML after the allotment of shares pursuant to the SPA is as under;

Paid-up equity shares of the Company No of equity Shares/ % of equity Shares/voting rights voting rights

Fully paid-up equity shares 41,95,260 68.60%

Partly paid-up equity shares - -

Total paid-up equity shares 41,95,260 68.60%

Full paid up equity shares proposed to be issued to 19,20,112 31.40%Sellers on a preferential basis

Total voting rights in the Company 61,15,372 100%

6.7.4. The Share capital structure of RML since inception is as follows

Date of No of % of Cum. Paid- Mode of allotment Identity of Status ofallotment shares Shares up capital allottees (promoters/ compliance*

issued issued ex-promoters/others)

1936 1298 0.03% 124,800 Subscribers to Memorandum Subscribers Complied

1944 1298 0.03% 64,900 Reduction of capital by 50%

1947 500 0.01% 114,900 Further issue of capital Specified Individuals Complied

1950 1149 0.03% 229,800 Bonus issue 1:1 Existing shareholders Complied

1956 45960 1.10% 229,800 Reduction in face value toRs.5/- per share from Rs.100/-per share

1957 45960 1.10% 459,600 Bonus issue 1:1 Existing shareholders Complied

1958 91920 2.19% 919,200 Rights Issue 1:1 Existing shareholders Complied

1960 61280 1.46% 1,225,600 Rights Issue 1:3 Existing shareholders Complied

1965 122560 2.92% 1,800,007 Rights Issue 1:2 Existing shareholders Complied

1967 122560 2.92% 2,451,200 Bonus issue 1:3 Existing shareholders Complied

1969 245120 5.84% 3,676,800 Bonus issue 1:3 Existing shareholders Complied

1972 367680 8.76% 5,515,200 Bonus issue 1:2 Existing shareholders Complied

1980 621520 14.81% 8,622,800 Rights Issue Existing shareholders Complied

1980 140000 3.34% 9,322,800 Rights Issue Allotted to ICICI Ltd. on Compliedconversion of term loan

1982 932280 22.22% 13,984,200 Bonus issue 1:2 Existing shareholders Complied

1983 1398420 33.33% 13,984,200 Consolidation of equity sharesof Rs.5/- each into Rs.10/- each

1987 699210 16.67% 20,976,300 Bonus issue 1:2 Existing shareholders Complied

1995 2097630 50.00% 41,952,600 Bonus issue 1:1 Existing shareholders Compliedwhich includes promotersand others

* The applicable Regulation at the time of each such allotments complied with.

6.7.5. On April 12, 2004, RML has made a voluntary open offer to acquire 1,008,000 equity shares of REVL of face valueRs.10/- each (comprising 20% of the voting share capital of REVL) from the public shareholders of REVL at thesame terms as have been offered to the Acquirers and Persons Acting in Concert. The terms under the First PublicAnnouncement dated April 12, 2004 is detailed as under;

(a) The shareholders of REVL whose tender of equity shares under the Offer is accepted will receive a considerationof Rs. 410/- (Rupees Four Hundred Ten only) for every 1 (one) REVL equity share which would be dischargedas under:

Ø RML shall issue and allot 2 (two) equity shares of RML. Each RML equity share is priced at Rs.146/-(Rupees One Hundred Forty Six only) comprising Rs.10/- (Rupees Ten only) face value and Rs. 136/-(Rupees One Hundred Thirty Six only) as share premium. The price per equity share of RML is incompliance with the pricing prescribed under Chapter XIII of the Securities and Exchange Board of India(Disclosure & Investor Protection) Guidelines, 2000 and is in compliance with Regulation 20(2) of theTakeover Regulation.

Ø The shares being offered under this Offer are ordinary Equity Shares of Rane (Madras) Limited andrank pari passu with the existing shares in all respects for and from the financial year of allotment.

Ø RML/RIL/RBL will pay a sum of Rs. 118/- (Rupees One Hundred Eighteen only) in cash

(b) In consideration for the 1,008,000 share of REVL proposed to be acquired through this Offer at a price of Rs.410/- (Rupees Four Hundred Ten only) aggregating Rs.413,280,000 (Rupee Four Hundred and Thirteen MillionTwo Hundred and Eighty Thousand only), the total value of 2,016,000 equity shares to be issued by RML atRs.146/- (Rupees One Hundred Forty Six only) per equity share is Rs.294,336,000 (Rupees Two Hundred andNinety Four Million Three Hundred and Thirty Six Thousand only) and the cash to be paid by the Acquirer/ the

11

PACs at Rs.118/- per equity share is Rs.118,944,000 (Rupees One Hundred and Eighteen Million Nine Hundredand Forty Four Thousand only), assuming full acceptance of the Offer.

(c) SEBI has vide its letter dated August 9, 2004 observed that since the issuance of further shares in RML couldresult in issue of shares to more than 50 shareholders of REVL, the proposal of RML to issue its shares to50 or more shareholders may amount to a ‘public issue’ in terms of the first proviso to Section 67 (3) of theCompanies Act, 1956. HSBC was advised to offer comments regarding the extent of compliance with the SEBI(Disclosure and Investor Protection) Guidelines, 2000 and the Companies Act, 1956. HSBC has filed a reviseddraft of the Letter of Offer with SEBI incorporating there in certain changes in accordance with the provisionsof the SEBI (Disclosure and Investor Protection) Guidelines, 2000 and the Companies Act, 1956.

6.7.6. The capital structure of the RML after issue of shares to the Acquirers, PACs and REVL shareholders under thisOffer (assuming a 100% acceptance is tabulated as under);

Paid-up equity shares of the No of equity Shares/ % of equity Shares/Company voting rights voting rights

Fully paid-up equity shares 41,95,260 51.59%

Partly paid-up equity shares - -

Total paid-up equity shares 41,95,260 51.59%

Full paid up equity shares proposed to be 19,20,112 23.61%issued to Promoters and Persons Acting inConcert on a preferential basis

Full paid up equity shares proposed to be 20,16,000 24.79%issued to shareholders of REVL

Total voting rights in the Company post 81,31,372 100.00%preferential and post current Offer

6.7.7. There are no outstanding convertible instruments (warrants/fully convertible debentures/partly convertibledebentures) of the Company.

6.8. The Board of Directors of the Company

6.8.1. The Board of Directors of the Company as on the date of the First Public Announcement comprised:

Name Designation Date of Appointment Experience/Qualifications

L Lakshman* Chairman and Managing Director 26.6.1986 34 years/ B.E.

L Ganesh* Vice-Chairman 12.11.1976 25 years/ ACA

V Narayanan Director 11.6.1998 41 years/ M.Sc.

D K Parikh Director 25.6.1992 46 years/ M.Sc.

P N Vencatesan Director 24.9.1984 51 years/ ACA

Krishnan S Waran Director 26.6.1998 35 years/ M Com, Dipin Mktg. Mgt., MFM,ICWAI Inter

*Acquirers who are on the Board of Directors of RML

6.9. The Acquirers are the promoters of RML. They have not made any earlier acquisition in RML through an Open Offer.

6.10. The Company has confirmed that none of the Directors of the Company have been prohibited from dealing in securities interms of Section 11B of the SEBI Act or under any of the regulations made under the SEBI Act.

6.11. The Company has complied with the listing requirements of BSE, NSE and MSE and no penal action has been takenagainst the Company by any Stock Exchange.

6.12. RML and the promoters (who are also the major shareholders) have complied with the provisions of Chapter II of theTakeover Regulations. There has been a delay in compliance by RML in the years 1997-2000 but the disclosures for theseyears have been made in March 2003 under the SEBI Regularisation Scheme.

6.13. Summarised financial statements of the Company

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Profit & Loss statement 31-Mar-02 31-Mar-03 31-Mar-04 30-Sep-04(Rs. Thousands) 12 months 12 months 12 months 6 months

Income from Operations 1,376,149 1,461,005 2,020,748 1,245,170

Other income 36,391 35,654 47,148 11,320

Total Income 1,412,540 1,496,659 2,067,896 1,256,490

Total expenditure 1,287,309 1,362,639 1,866,247 1,602,390

Profit before interest, depreciation & tax 125,231 134,020 201,649 124,800

Depreciation 64,657 63,810 67,903 38,500

Interest 115,133 108,650 84,590 36,520

Profit before tax (54,559) (38,440) 49,156 49,780

Provision for taxation- Current - 1,000 3,020

Provision for taxation- Deferred 5,386 (13,590) (23,860) 14,070

Profit after tax excl. exceptional items (59,945) (24,850) 72,016 32,690

Profit after tax incl. exceptional items (28,032) 1,004 72,016 32,690

Balance Sheet

Balance Sheet 31-Mar-02 31-Mar-03 31-Mar-04 30-Sep-04(Rs. Thousands)

Source of Funds

Paid-up share capital 41,953 41,953 41,953 61,154

Reserves and Surplus (excluding revaluation reserves) 224,673 244,922 215,784 509,626

Net worth 266,626 286,875 257,737 570,780

Preference share capital 100,000 80,000 80,000 80,000

Secured loans 591,168 535,549 512,758 468,954

Unsecured loans 51,151 62,486 70,246 177,365

Deferred tax liability 36,838 - - -

Total 1,045,783 964,910 920,741 1,297,099

Use of Funds

Net Fixed assets 512,537 494,396 522,427 517,053

Investments 96,780 79,582 76,912 357,748

Net current assets 311,763 279,512 289,212 404,180

Total miscellaneous expenditure not written off 124,703 103,090 - -

Deferred tax asset 8,330 32,190 18,118

Total Assets 1,045,783 964,910 920,741 1,297,099

Other Financial Data

31-Mar-02 31-Mar-03 31-Mar-04 30-Sep-04

Earnings per share (Rs.) (6.7) 0.2 17.17 5.54

Dividend (%) 0% 0% 10% -

Return on net worth (%) -22% -9% 26% 5.7%

Book value per share (Rs.) 63.6 68.4 61.43 93.34

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Consolidated Profit & Loss Statement of RML

Profit & Loss statement 31-Mar-02 31-Mar-03 31-Mar-04(Rs. Thousands)

12 months 12 months 12 months

Income from Operations 1,376,152 1,461,005 2,020,748

Other income 61,359 59,196 112,101

Share in Associates - 25,507 -

Total Income 1,437,511 1,545,708 2,132,849

Total expenditure 1,287,459 1,364,144 1,867,135

Profit before interest, depreciation & tax 150,052 181,564 265,714

Depreciation 64,752 63,810 67,903

Interest 115,564 118,118 95,090

Profit before tax (30,264) (364) 102,721

Provision for taxation- Current 500 2,630 1,020

Provision for taxation- Deferred 5,386 (13,590) (23,860)

Profit after tax- excluding exceptional items (36,150) 10,596 125,561

Profit after tax- including exceptional items (4,236) 35,023

Consolidated Balance Sheet of RML

Balance Sheet 31-Mar-02 31-Mar-03 31-Mar-04(Rs. Thousands)

Source of Funds

Paid-up share capital 41,953 41,953 41,953

Reserves and Surplus (excluding revaluation reserves) 239,583 282,042 254,533

Net worth 281,536 323,995 296,486

Preference share capital 100,000 80,000 80,000

Secured loans 591,168 535,549 512,785

Unsecured loans 101,151 162,486 170,246

Deferred tax liability 36,838 - -

Minority interest 58,959 77,010 79,122

Total 1,169,652 1,179,040 1,138,639

Use of Funds

Net Fixed assets 512,537 494,396 522,427

Goodwill 4,618 3,755 3,755

Investments 299,169 282,242 288,388

Net current assets 228,625 285,227 291,879

Total miscellaneous expenditure not written off 124,703 103,090 -

Deferred tax asset 8,330 32,190

Total Assets 1,169,652 1,179,040 1,138,639

Other Financial Data based on Consolidated accounts

31-Mar-02 31-Mar-03 31-Mar-04

Earnings per share (Rs.) (4.3) 5.3 20.12

Dividend (%) 14% 0% 10%

Return on net worth (%) -2% 11% 42.30%

Book value per share (Rs.) 67.1 77.2 70.68

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The consolidated financial statements have been prepared by the Company in accordance with the requirementsof Accounting Standard (AS-21) on Consolidated Financial Statements, issued by the Institute of CharteredAccountants of India and on the basis of the separate audited financial statements of Rane (Madras) Limited andits subsidiary, Rane Investments Limited, included in the consolidated financial statements.

6.14. Reasons for rise/ fall in Income and PAT

6.14.1. The total income for 2001-02 was almost the same as in the previous year due to the declining trend in the Indianautomobile industry. However, as a result of various management initiatives, the operating losses were reduced bynearly Rs.40 million. Together with increased dividend and other income, the company was able to bring down theoverall loss considerably.

6.14.2. Sales grew by 6% in 2002-03 despite poor performance of tractor industry. Operational efficiencies also improved,and together with dividend and other income, the company earned marginal profit for the year.

6.15. Details of acquisitions by the Acquirers and the PACs in the Company

Name of Shareholder 2004 2003 2002

No of equity % of No of % of No of % ofshares outstanding equity outstanding equity outstanding

equity shares eq uity shares equity

Acquirers

1) Mr. L Lakshman 39,392 0.94% 33,392 0.80% 27,042 0.64%

2) L Lakshman (HUF) 9,468 0.23% 9,468 0.23% 9,468 0.23%

3) Mr. L Ganesh 50,628 1.21% 46,029 1.10% 44,642 1.06%

4) L Ganesh (HUF) 2,400 0.06% 2,400 0.06% 2,400 0.06%

Persons Acting in Concert

5) Mrs. Pushpa Lakshman 12,849 0.31% 12,849 0.31% 12,849 0.31%

6) Mr. Harish Lakshman 9,439 0.22% 9,439 0.22% 9,439 0.22%

7) Mr. Vinay Lakshman 4,000 0.10% 4,000 0.10% 4,000 0.10%

8) Mrs. Meenakshi Ganesh 14,660 0.35% 14,660 0.35% 14,660 0.35%

9) Ms. Aparna Ganesh 4,500 0.11% 4,500 0.11% 4,500 0.11%

10) Master Aditya Ganesh 3,543 0.08% 3,543 0.08% 3,543 0.08%

11) Mrs. T G Saraswathi 26,868 0.64% 26,868 0.64% 26,868 0.64%

12) Mrs. Vanaja Aghoram 7,326 0.17% 7,326 0.17% 7,326 0.17%

13) Mrs. Shanthi Narayan 2,496 0.06% 2,496 0.06% 2,496 0.06%

14) Mrs. Saroja Raman 47,870 1.14% 47,870 1.14% 47,870 1.14%

15) Mrs. Ranjini R Iyer 69,138 1.65% 69,138 1.65% 69,138 1.65%

16) Mrs. Geetha Raman 76,064 1.81% 76,064 1.81% 76,064 1.81%Subramanyam

17) Mrs. Rathika R Sundaresan 119,098 2.84% 119,098 2.84% 119,098 2.84%

18) Mr. T G G Raman 155,540 3.71% 155,540 3.71% 155,540 3.71%

19) Mrs. T G Sundari 40,056 0.95% 40,056 0.95% 40,056 0.95%

20) Mrs. Ramani Ramakrishnan 54,054 1.29% 54,054 1.29% 54,054 1.29%

21) Mr. Pravin Kumar 0 0.00% 0 0.00% 0 0.00%

Total 749,389 17.86 738,790 17.61 731,053 17.43

Change N.A N.A 10,599 25% 7,737 18%

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Name of Shareholder 2001 2000 1999

No of % of No of % of No of % ofequity outstanding equity outstanding equity outstandingshares equity shares equity shares equity

Acquirers

1) Mr. L Lakshman 22,042 0.53% 14,210 0.34% 14,210 0.34%2) L Lakshman (HUF) 9,468 0.23% 9,468 0.23% 9,468 0.23%3) Mr. L Ganesh 39,642 0.94% 31,810 0.76% 31,810 0.76%4) L Ganesh (HUF) 2,400 0.06% 2,400 0.06% 2,400 0.06%

Persons Acting in Concert

5) Mrs. Pushpa Lakshman 12,849 0.31% 12,849 0.31% 12,849 0.31%6) Mr. Harish Lakshman 9,439 0.22% 9,439 0.22% 9,439 0.22%7) Mr. Vinay Lakshman 4,000 0.10% 4,000 0.10% 4,000 0.10%8) Mrs. Meenakshi Ganesh 14,660 0.35% 14,660 0.35% 14,660 0.35%9) Ms. Aparna Ganesh 4,500 0.11% 4,500 0.11% 4,500 0.11%10) Master Aditya Ganesh 3,543 0.08% 3,543 0.08% 3,543 0.08%11) Mrs. T G Saraswathi 26,868 0.64% 26,868 0.64% 26,868 0.64%12) Mrs. Vanaja Aghoram 7,326 0.17% 7,326 0.17% 7,326 0.17%13) Mrs. Shanthi Narayan 2,496 0.06% 2,496 0.06% 2,496 0.06%14) Mrs. Saroja Raman 47,870 1.14% 47,870 1.14% 47,870 1.14%15) Mrs. Ranjini R Iyer 69,138 1.65% 69,138 1.65% 69,138 1.65%16) Mrs. Geetha Raman 76,064 1.81% 76,064 1.81% 76,064 1.81%

Subramanyam17) Mrs. Rathika R Sundaresan 119,098 2.84% 119,098 2.84% 119,098 2.84%18) Mr. T G G Raman 155,540 3.71% 155,540 3.71% 155,540 3.71%19) Mrs. T G Sundari 40,056 0.95% 40,056 0.95% 40,056 0.95%20) Mrs. Ramani Ramakrishnan 54,054 1.29% 54,054 1.29% 54,054 1.29%21) Mr. Pravin Kumar 0 0.00% 0 0.00% 0 0.00%

Total 721,053 17.19 705,389 16.81 705,389 16.81

Change 10,000 24% 15,664 37% 0 0%

Name of Shareholder 1998 1997

No of % of No of % ofequity outstanding equity outstandingshares equity shares equity

Acquirers

1) Mr. L Lakshman 14,210 0.34% 14,210 0.34%2) L Lakshman (HUF) 9,468 0.23% 9,468 0.23%3) Mr. L Ganesh 31,810 0.76% 31,810 0.76%4) L Ganesh (HUF) 2,400 0.06% 2,400 0.06%

Persons Acting in Concert

5) Mrs. Pushpa Lakshman 2,849 0.31% 12,849 0.31%6) Mr. Harish Lakshman 9,439 0.22% 9,439 0.22%7) Mr. Vinay Lakshman 4,000 0.10% 4,000 0.10%8) Mrs. Meenakshi Ganesh 14,660 0.35% 14,660 0.35%9) Ms. Aparna Ganesh 4,500 0.11% 4,500 0.11%10) Master Aditya Ganesh 3,543 0.08% 3,543 0.08%11) Mrs. T G Saraswathi 26,868 0.64% 26,868 0.64%12) Mrs. Vanaja Aghoram 7,326 0.17% 7,326 0.17%13) Mrs. Shanthi Narayan 2,496 0.06% 2,496 0.06%14) Mrs. Saroja Raman 47,870 1.14% 47,870 1.14%15) Mrs. Ranjini R Iyer 69,138 1.65% 69,138 1.65%16) Mrs. Geetha Raman Subramanyam 76,064 1.81% 76,064 1.81%17) Mrs. Rathika R Sundaresan 119,098 2.84% 119,098 2.84%18) Mr. T G G Raman 155,540 3.71% 155,540 3.71%19) Mrs. T G Sundari 40,056 0.95% 40,056 0.95%20) Mrs. Ramani Ramakrishnan 54,054 1.29% 54,054 1.29%21) Mr. Pravin Kumar 0 0.00% 0 0.00%

Total 705,389 16.81 705,389 16.81Change 0 0% 0 0%

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Applicable provisions of the Takeover Regulations have been complied with.

6.16. Details of changes in the shareholding of promoters in RML

Year No. of shares % of shares Change

No. of shares % of shares

1997 1,374,349 32.76 N.A

1998 1,375,199 32.78 850 0.02

1999 1,444,996 34.44 69797 1.66

2000 1,588,081 37.85 143085 3.41

2001 1,806,241 43.05 218160 5.20

2002 1,816,242 43.29 10001 0.24

2003 1,833,067 43.69 16825 0.40

2004 1,894,900 45.17 61833 1.47

Applicable provisions of the Takeover Regulations have been complied with.

6.17. Status of Corporate Governance

The Board of Directors comprises 2 members who represent the promoter group and 4 members who are independentnon-executive directors.

RML has instituted the following committees of the Board

(a) Audit Committee: Comprising of 4 Directors with a scope of reference which covers review of auditor with statutoryauditors and internal auditors. Review of internal control systems and review of annual financial statements withmanagement and auditors

(b) Remuneration to Directors: No Remuneration committee has been constituted under the provisions of the ScheduleXII to the Companies Act, 1956 as the company does not pay any remuneration to its Managing Director.

(c) Share Transfer/Investors Service Committee has been constituted to approve transfers and transmissions of sharesand look into grievances of shareholders.

RML also makes requisite disclosures relating to financial results, share price data, dematerialisation of shares, listing andliquidity of shares and distribution of shareholding as on the last day of the financial year.

6.18. Compliance officer is Mr. K Srivatsan, Secretary, Rane (Madras) Ltd., “Maithri”,132, Cathedral Road, Chennai 600 086.

6.19. There has been no merger/ demerger, spin-off during the last three years involving the company. There has been nochange in name

6.20. Status of pending litigation in RML is as follows

Sl.no Nature of litigation Status of litigation as on date

1. Labour cases: The case is yet to be heard.

The company had transferred 8 employees of the Ambattur factoryon its closure to its Gurgaon Plant. This has been challenged by theworkmen.

2. The company moved to the Court to initiate proceedings against The case is posted for further15 employees who did not report at the Gurgaon plant upon their hearing.transfer. The company has filed a counter affidavit against theInterim Allowance petition filed by the workmen.

3. Civil case:

An ex-employee who started a jewellery shop had lent money to The case is posted for hearing.the employees at the Chennai Plant. On their failure to pay themoney, the ex-employee filed a suit against the company claimingthe amount from the VRS Settlement.

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6.21. Pre and post-Offer shareholding pattern of the Company

Shareholder Category Shareholding/ Shares/Voting Shares/Voting Shareholder/VotingVoting rights prior to rights agreed to rights to be rights after theagreement/acquisition be acquired which acquired in the acquisition and

and Offer triggered off Offer (assuming Offer(as on Date) Takeover Regulations full acceptances)

(A) (B) (C) (A+B+C)

No. of % No. of % No. of % No. of %Shares Shares Shares Shares

1. Promoter Group

(a) Acquirers and Persons 749,389 17..9% 1,920,112 31.4% 1,626,274 20.0% 3,892,576 47.9%Acting in Concert

(b) Promoters other than (a) above 1,145,511 27.3% 1,145,511 14.1%

Total (1)(a+b) 1,894,900 45.2% 1,920,112 31.4% 5,038,087 62.0%

2. Acquirers*

(a) Main Acquirer 101,888 2.5%

(b) PACs 647,501 15.4%

Total 2 (a+b) * 749,389 17.9% 1,920,112 31.4% 1,626,274 20.0% 3,892,576 47.9%

3. Parties to the agreement other 1,145,511 27..3%than (1) (a) and (2) above*

4. Public (other than parties to 2,300,360 54.8% (1,626,274) (20.0%) 3,093,285 38.0%agreement and acquirers) 2,016,000 24.8%

(a) Parties other than 1(a) and (2)

(b) FIs/MFs/FIIs/Banks/SFIs 426,603 10.1%(including UTI, LIC, Bank of Baroda)

(c) Others 1,873,757 44.7%

No of public shareholders: 3,114

TOTAL (1 to 4)* 4,195,260 100.0% 1,920,112 31.4% 8,131,372 100.0%

* Since promoters in this case are also acquirers, these shares are not being counted twice in calculating the total

Note:

(1) RML in its First Public Announcement dated April 12, 2004 has indicated that RML could issue an additional 2,016,000equity shares of Rs.10/- to shareholders of REVL as part consideration. This would result in an enhancement of equity ofRML and a consequent dilution of the Acquirers and Persons Acting in Concert’s holding.

(2) Promoters other than Acquirers and Persons Acting in Concert i.e. REVL and RBL are free to participate in this Offer.

7. Offer Price and Financial Arrangements

7.1. Justification of Offer Price

7.1.1. The equity shares are listed on BSE, NSE and MSE.

7.1.2. Based on available information, the equity shares are not infrequently traded on BSE and on NSE within the meaningof Regulation 20(5) of the Takeover Regulations. The equity shares are infrequently traded on the MSE.

7.1.3. The annualized trading turnover during the preceding 6 months prior to the month in which the PA was made on theStock Exchanges is as follows:

Name of Stock Total No. of equity total No. of Listed Annualised tradingExchange shares traded during the equity shares turnover (as % to

6 calendar months prior total listed equityto the month in which the PA shares)

was made

BSE 232,537 4,195,260 11.1%

NSE 929,962 4,195,260 44.3%

MSE 50,000 4,195,260 2.4%

(Source: Derived from data available from the official website of BSE – www.bseindia.com and NSE – www.nse-india.com, and letter from the MSE)

7.1.4. The annualised trading turnover during the preceding six months ending April 2004 on NSE, being the exchangewhere the equity shares are most frequently traded, was greater than 5% of the total number of equity shares.

7.1.5. The weekly high and low of the closing prices of the equity shares on NSE, during the 26-week period ending 12th

April , 2004 (being the last trading day prior to 13th April, 2004), are given below:

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26 weeks High/Low of Closing Price

Week No Week Ending Volume High Low High/Low Avg

1 Mon, 20-Oct-03 94,094 101.25 95.80 98.53

2 Mon, 27-Oct-03 30,313 99.10 93.50 96.30

3 Mon, 3-Nov-03 67,885 103.75 96.15 99.95

4 Mon, 10-Nov-03 20,031 104.70 101.75 103.23

5 Mon, 17-Nov-03 38,920 106.80 104.50 105.65

6 Mon, 24-Nov-03 33,587 106.35 104.90 105.63

7 Mon, 1-Dec-03 49,084 111.75 105.10 108.43

8 Mon, 8-Dec-03 47,571 142.05 122.95 132.50

9 Mon, 15-Dec-03 31,294 139.40 132.25 135.83

10 Mon, 22-Dec-03 42,574 157.80 137.20 147.50

11 Mon, 29-Dec-03 26,572 166.50 154.85 160.68

12 Mon, 5-Jan-04 34,603 151.60 148.00 149.80

13 Mon, 12-Jan-04 28,519 155.60 143.10 149.35

14 Mon, 19-Jan-04 24,733 153.25 145.15 149.20

15 Mon, 26-Jan-04 27,401 151.60 127.40 139.50

16 Mon, 2-Feb-04 14,481 143.70 134.40 139.05

17 Mon, 9-Feb-04 26,544 128.75 124.25 126.50

18 Mon, 16-Feb-04 25,712 135.80 125.75 130.78

19 Mon, 23-Feb-04 7,296 134.70 129.00 131.85

20 Mon, 1-Mar-04 25,364 135.75 129.85 132.80

21 Mon, 8-Mar-04 7,627 137.95 133.70 135.83

22 Mon, 15-Mar-04 9,983 135.00 132.85 133.93

23 Mon, 22-Mar-04 5,279 130.65 128.75 129.70

24 Mon, 29-Mar-04 20,925 135.80 118.70 127.25

25 Mon, 5-Apr-04 31,837 152.05 143.00 147.53

26 Mon, 12-Apr-04 6,345 152.05 143.20 147.63

Average of 26 weeks: 129.36

(Source: Derived from data available from the official website of NSE – www.nse-india.com)

7.1.6. The daily high and low of the prices of the equity shares on NSE, during the 2-week period ending April 12, 2004(being the last trading day prior to the date of the PA), are given below:

2 weeks Daily High/Low

Day No. Date Open High Low Close Volume

1 Tue, 30-Mar-04 136 146.3 136 143 7,513

2 Wed, 31-Mar-04 144.75 148 141.25 145 15,750

3 Thu, 1-Apr-04 147 153 145 152.05 3,508

4 Fri, 2-Apr-04 154 155 138.55 148 4,436

5 Mon, 5-Apr-04 146 149.9 146 149.9 630

6 Tue, 6-Apr-04 145 149.5 145 145.05 1,277

7 Wed, 7-Apr-04 145.2 145.2 143 143.2 411

8 Thu, 8-Apr-04 144 148 143 143.9 1,117

9 Mon, 12-Apr-04 149.8 153 146.5 152.05 3,540

Average of two weeks 146.23

(Source : Derived from data available from the official website of NSE – www.nse-india.com)

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7.1.7. As per Clause 20 of the Takeover Regulations, the following facts were taken into account in determining the OfferPrice:

A. Negotiated price under any share purchase agreement 146/-

B. Highest price paid by the Acquirers for acquisition including public or rights issues orpreferential issue in the 26 weeks prior to the First Public Announcement -

C. Average of weekly high and low in terms of regulation 20 (4) (c) 146.23/-

D. Price paid for preferential allotment any time during the 12-month period up to the date of closure of the Offer -

E. Other Parameters: -

Period ended March 2004(Audited)

12 months

Return on Net Worth (%) 26%

Book Value per Share (Rs.) Rs. 61.43

Earning per Share (Rs.) 17.17/-

Price to Earnings Ratio (based on the Offer Price) 8.56x

Auto Components Industry Price Earning Multiple * 16.5x

(* Source: Capital Market Volume XIX April 12 – 25, 2004)

7.1.8. In view of the above, the Offer Price in terms of Regulation 20 of the Takeover Regulations is justified.

7.1.9. If the Acquirers acquire equity shares after the date of the First Public Announcement and up to seven working daysprior to the closure of the Offer at a price higher than the Offer Price, then the highest price paid for such acquisitionsshall be payable for all acceptances received under this Offer as per Regulation 20(7) of the Takeover Regulations.

7.1.10. There are no non compete agreements.

7.2. Financial Arrangements

7.2.1. The Acquirers have made firm financial arrangements to meet their obligations in full under the Offer. For this purposethe Acquirers intend to utilise their own resources.

7.2.2. The total fund requirement for the Offer is estimated at 239,062,278 (Rupees Two Hundred Thirty Nine million SixtyTwo Thousand Two Hundred Seventy Eight only) assuming full acceptance of the Offer. As per Regulation 28 of theTakeover Regulations the Acquirers have created an escrow in the form of bank guarantee for Rs. 59.77 mn issuedby The Hongkong Shanghai Banking Corporation Limited valid until January 5, 2005. Further, the Acquirers havedeposited a sum of Rs 2.4 mn with The Hong Kong Banking Corporation Limted, Chennai Branch, which amount is inexcess of 1% of the total consideration. The Acquirers have marked a lien thereon in favour of the Manager to theOffer.

7.2.3. The Acquirers have empowered the Manager to the Offer to realize the value in the account maintained with TheHongkong and Shanghai Banking Corporation Limited, Chennai Branch

7.2.4. . The Acquirers have vide their letter dated April 8, 2004 given an undertaking to meet their financial obligations underthe offer to the Managers to Offer.

7.2.5. P. Ananthapadmanaban, Membership Number 6472, Partner, Harsha Anantu & Sankar, Chartered Accountants, NewNo. 68, (Old No. 104) Ramanaicken Street, Nungambakkam, Chennai – 600 034 Phone no 044 28278389, has certifiedthe adequacy of financial resources of the Acquirers for fulfilling the obligations under the Offer.

7.2.6. The Manager to the Offer has satisfied itself about the Acquirers’ ability to implement the Offer in accordance withthe Takeover Regulations.

8. Terms and Conditions of the Offer

This Offer is being made to all remaining shareholders except the Acquirers and PACs. Shareholders who wish to accept theOffer should tender their equity shares and should submit documents in accordance with the procedure specified in Para 9 of thisLetter of Offer and in the Form of Acceptance cum Acknowledgement.

8.1. Shareholders who can accept the Offer

The Letter of Offer together with a Form of Acceptance-cum-Acknowledgement will be mailed on or before Saturday,November 20, 2004 to all shareholders of the Company whose names appear in the Register of Members of RML, and tothe beneficial owners of the equity shares whose names appear on the records of the respective DPs, in each case at theclose of business hours on Friday, November 12, 2004 (the “Specified Date”). REVL and RBL are eligible to participate inthis Offer. Those persons who own the equity shares at any time prior to the closure of the Offer but are not registeredshareholders can also accept the Offer. Accidental omission to dispatch this Letter of Offer, non-receipt or delayed receiptof this Letter of Offer will not invalidate the Offer in any way.

8.2. Statutory Approvals

8.2.1. The Offer is subject to the Acquirers obtaining the approvals from the Reserve Bank of India (“RBI”), if any, underthe Foreign Exchange Management Act, 1999 (“FEMA”). The Acquirers will make applications for the requisite approvalsfrom the RBI, if any, at an appropriate time.

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8.2.2. As at the date of the Public Announcement, to the best of the knowledge of the Acquirers, no other approvals arerequired to acquire the equity shares tendered pursuant to this Offer. However, the Offer will be subject to all statutoryapprovals that may be applicable.

8.2.3. The Acquirers will have a right to withdraw the Offer in terms of Regulation 27 of the Takeover Regulations in theevent the statutory approvals indicated above are refused.

8.2.4. Subject to the receipt of statutory approvals, the Acquirers shall complete all procedures relating to the Offer includingpayment of consideration within a period of 15 days from the Offer Closing Date (as defined in paragraph 9.2 below)to those shareholders whose share certificates and/or other documents are found valid and in order and are approvedfor acquisition by the Acquirers. In case of delay due to the non-receipt of statutory approvals, as per Regulation22(12) of the Takeover Regulations, SEBI may, if satisfied that the non-receipt of approvals was not due to the willfuldefault or negligence of the Acquirers or failure of the Acquirers to diligently pursue the applications for such approvals,grant an extension for the purpose of completion of this Offer, subject to the Acquirers paying to the shareholdersinterest as may be specified by SEBI for any delay beyond 15 days.

9. Procedure for Acceptance and Settlement

9.1. The Letter of Offer together with a Form of Acceptance-cum-Acknowledgement will be mailed on or before Saturday,November 20, 2004 to all shareholders of RML whose names appear in the Register of Members of RML and the beneficialowners of the equity shares, whose names appear on the beneficial records of the respective depositories, in each case atthe close of business hours on Friday, April 16, 2004 (the “Specified Date”).

9.2. The Offer shall open on Thursday, November 25, 2004 (the “Offer Opening Date”) and will remain open until Tuesday,December 14, 2004 (the “Offer Closing Date”).

9.3. Shareholders holding equity shares in physical form:

Shareholders holding equity shares in physical form who wish to accept this Offer and tender their equity shares will berequired to send the Form of Acceptance-cum-Acknowledgement, original share certificate(s) and duly signed transfer deed(s)to the Registrar to the Offer, Integrated Enterprises (India) Limited, in accordance with the procedure which will be specifiedin the Letter of Offer and the Form of Acceptance-cum-Acknowledgement.

9.4. Shareholders holding equity shares in dematerialised form:

Beneficial owners who wish to accept this Offer and tender their equity shares will be required to send their Form ofAcceptance-cum-Acknowledgement to the Registrar to the Offer in accordance with the instructions specified in the Letterof Offer and the Form of Acceptance-cum-Acknowledgement, along with a photocopy of the delivery instructions in “Off–market” mode or counterfoil of the delivery instructions in “Off-market” mode, in favour of the special depository accountduly acknowledged by their respective depository participant (the “DP”). Shareholders having their beneficiary account inCDSL will in addition have to use an inter–depository delivery instruction slip.

9.5. The Registrar to the Offer has opened a special depository account with HSBC called ” Integrated Enterprises (India) Ltd.Escrow A/c – RML Open Offer”. The DP ID is IN301313and the beneficiary client ID is 20790148.

9.6. The Form of Acceptance-cum-Acknowledgement and the relevant documents can be submitted at the following centreseither by hand delivery (between 10.00 a.m. and 3 p.m. on all working days) or by registered post, as specified below, onor before the Offer Closing Date:

Details of Collection Centres:

Collection Address Mode of Delivery Phone Fax Nos. Contact Person/ Email idCentres

Chennai Integrated Enterprises (India) Ltd. Regd Post/ Phone : (044) 28140801/ Suresh Babu K2nd Floor, “Kences Towers” Hand Delivery 28140802 sureshbabu@iepindia.comNo.1 Ramakrishna Street, Fax : 28143378North usman Road,T Nagar, Chennai 600 017

Bangalore 30 & 31-1, Ramana Residency, Regd Post/ Phone : (080) 23561425 K S Krishna4th Cross, Bangalore –560 003 Hand Delivery Fax 23561071 sureshbabu@iepindia.com

Cochin Seema Building, Near Abad Metro, Regd Post/ Phone : (0484) 2371494 Shaji Joseph V41/427,Rajaji Road, Ernakulam - 682035 Hand Delivery Fax : 2384735 sureshbabu@iepindia.com

Mumbai 59, Sonawala Building, Gr.Floor, Regd Post/ Phone : (022) 22662825 Mariya Kruz RajanBombay Samachar Marg, Fort, Mumbai 400 023. Hand Delivery Fax : 22664503 sureshbabu@iepindia.com

Ahmedabad 21, “NIRMAN”, Gr.Flr, Regd Post/ Phone : (079) 26443289 G R BalajiBhd. Navrangpura Bus Stop, Hand Delivery Fax : 26568122 sureshbabu@iepindia.comNavrangpura, Ahmedabad –380 009

Hyderabad 1-2-64/1/A, Ground Floor, Vikram Chambers, Regd Post/ Phone : (040) 27845805 SubramaniyamParklane, Secunderabad –500 003. Hand Delivery sureshbabu@iepindia.com

Kolkata Trikut, Flat No.1-B, 4C Lansdowne Place, Regd Post/ Phone : (033) 24746400 R ManoharOpp Road of Ramakrishna Mission Hospital, Hand Delivery Fax : 24767131 sureshbabu@iepindia.comKolkata 700029

New Delhi 18/5, Arya Samaj Road, Amar Chambers Regd Post/ Phone : (011) 25716824 L Sudhakar(II Floor) W.E.A.Karol Bagh, New Delhi –110005 Hand Delivery Fax : 25720559 sureshbabu@iepindia.com

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9.7. This Offer is open to all remaining shareholders (except the Acquirers and PACs) whose names appeared in the Registerof Shareholders on Friday November 12, 2004. Persons who own equity shares but whose names do not appear on theRegister of Members of RML on the Specified Date are also eligible to participate in this Offer. Such unregistered ownerscan send their acceptance in writing to the Registrar to the Offer on plain paper stating the name, address, number ofequity shares held, number of equity shares tendered, distinctive numbers, folio number, together with the original sharecertificate(s), valid transfer deeds and the original contract note/s issued by the broker through whom they acquired theseequity shares. No indemnity is required from unregistered owners.

9.8. In the event of non-receipt of the Letter of Offer, shareholders may obtain a copy of the same by writing to the Registrarto the Offer at any of the collection centres stated above clearly marking the envelope “RML – Open Offer”. Alternatively,the shareholders may send their acceptances on plain paper to the Registrar to the Offer stating their name, address, folionumber, distinctive number, number of equity shares held, number of equity shares tendered duly signed by all the holdersalong with the documents mentioned above to the Registrar to the Offer on or before the Offer Closing Date.

9.9. In the event of non-receipt of the Letter of Offer by beneficial owners, such beneficial owners can make an application tothe Registrar to the Offer on plain paper stating their name, address, number of equity shares held, number of equityshares tendered, bank particulars, DP name, DP ID, beneficiary account number duly signed by all the holders and sendthe same along with a photocopy of the delivery instructions in “Off-market” mode or counterfoil of the delivery instructionsin “Off-market” mode in favour of the special depository account, to the Registrar to the Offer on or before the OfferClosing Date. All beneficial holders maintaining an account with CDSL are requested to obtain, complete and submit anadditional inter-depository slip together with the instructions to their respective DPs.

9.10. Shareholders can download the Form of Acceptance cum Acknowledgement placed on the SEBI web site http://www.sebi.gov.inand send in their acceptance by filling the same.

9.11. While tendering equity shares under the Offer, NRIs/OCBs/Foreign shareholders will be required to submit the RBI approval,(specific or general) that they would have obtained for acquiring the equity shares of RML and a no objection certificate/taxclearance certificate from the Income Tax authorities indicating the amount of tax to be deducted under the Income Tax Act1961, by the Acquirers before remitting the consideration. In case the RBI approvals are not submitted, the Acquirers reservethe right to reject the equity shares or arrange to deduct the tax at the maximum marginal rate of taxation as may beapplicable to the category of shareholder on the entire consideration payable to such a shareholder.

9.12. Payment to those shareholders whose share certificates and/or other documents are found valid and in order and areapproved by the Acquirers will be by way of a crossed account payee cheque/ demand draft/ pay order. The decisionregarding the acquisition (in part or full), or rejection of, the equity shares tendered pursuant to this Offer and (i) anycorresponding payment for the acquired equity shares and/or (ii) share certificates for any rejected equity shares or equityshares withdrawn, will be dispatched to the shareholders by registered post or by ordinary post as the case may be (*), atthe shareholder’s sole risk. Equity shares held in dematerialised form to the extent not acquired or equity shares withdrawnwill be credited back to the respective beneficiary account with their respective DPs as per the details furnished by thebeneficial owners in the Form of Acceptance-cum-Acknowledgement.

(*) Dispatches involving payment of a value in excess of Rs.1,500/- will be made by registered post at the shareholder’ssole risk. All other dispatches will be made by ordinary post at the shareholder’s sole risk.

9.13. All cheques/demand drafts will be drawn in the name of the first holder, in case of joint holder(s). In case of unregisteredowners of equity shares, payment will be made in the name of the person stated in the contract note. It will be desirable ifthe shareholders provide bank account details in the Form of Acceptance-cum-Acknowledgement for incorporation in thecheque/ demand draft.

9.14. The Registrar to the Offer will hold in trust the equity shares/share certificates, equity shares lying in credit of the specialdepository account and the transfer form(s), until the Acquirers complete their obligations under the Offer in accordancewith the Takeover Regulations.

9.15. In accordance with Regulation 22(5A) of the Takeover Regulations, shareholders who have accepted the offer by tenderingthe requisite documents in terms of the Public Announcement and Letter of Offer can withdraw the same up to threeworking days prior to the Offer Closing Date. The withdrawal option can be exercised by submitting the documents as perthe instructions below, so as to reach the Registrar to the Offer at any of the collection centres mentioned above as perthe mode of delivery indicated therein on or before Wednesday, December 8, 2004.

9.16. The withdrawal option can be exercised on submitting the form of withdrawal (which will be sent to shareholders along withthe Letter of Offer) and the copy of the acknowledgement received from the Registrar to the Offer while tendering theacceptance together with :

Ø In respect of physical shares: names, address, distinctive numbers, folio number, number of equity shares tendered.

Ø In respect of dematerialised shares: name, address, number of equity shares tendered, DP name, DP ID, beneficiaryaccount number, photocopy of the delivery instructions in “Off Market” mode duly acknowledged by the DP.

9.17. In case of non receipt of the form of withdrawal the above application can be made on plain paper.

9.18. The Acquirers reserve the right to withdraw the Offer pursuant to Regulation 27 of the Takeover Regulations. Any suchwithdrawal will be notified in the form of a public announcement in the same newspapers in which the First and SecondPublic Announcements have appeared.

9.19. The equity shares and other relevant documents should not be sent to the Acquirers, PACs, the Target or the Manager tothe Offer.

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9.20. In case the number of equity shares tendered for sale by the shareholders are more than the equity shares agreed to beacquired under the Offer, the Acquirers shall accept the offers received from the shareholders on a proportional basis asper Regulation 21 (6) of the Takeover Regulations in consultation with the Merchant Banker, taking care to ensure that thebasis of acceptance is decided in a fair and equitable manner.

9.21. The marketable lot of the shares of RML is one share.

10. Documents for Inspection

The following documents are regarded as material documents and are available for inspection at the office of HSBC Securitiesand Capital Markets (India) Private Limited, 52/60 Mahatma Gandhi Road, Fort, Mumbai 400 001 from 10.30 am to 3.00 pm onany day except Saturdays, Sundays, and Public/Bank Holidays until the Offer Closing Date:

10.1. Certificate of Incorporation and Memorandum & Articles of Association of the Acquirers.

10.2. Copy of the Share Purchase Agreement dated April 9, 2004

10.3. Certificate from P. Ananthapadmanaban, Membership Number 6472, Partner, Harsha Anantu & Sankar, Chartered Accountants,New No. 68, (Old No. 104) Ramanaicken Street, Nungambakkam, Chennai – 600 034 certifying the net worth of the Acquirersand the PACs

10.4. Certificate from P. Ananthapadmanaban, Membership Number 6472, Partner, Harsha Anantu & Sankar, Chartered Accountants,New No. 68, (Old No. 104) Ramanaicken Street, Nungambakkam, Chennai – 600 034 certifying the adequacy of financialresources of the acquirers to fulfill open offer obligations

10.5. Audited annual reports of RML for the years ending 31st March 2001, 2002 and 2003

10.6. Copy of the Escrow Agreement dated April 12, 2004 and letter dated November 17, 2004 from HSBC Bank, Chennaiconfirming the amount kept in the escrow account and the lien in favour of the Manager to the Offer.

10.7. Copy of the Bank Guarantee #FNGMDR 040097 dated November 17, 2004 for Rs. 59.77 million issued by The Hongkongand Shanghai Banking Corporation Limited favouring the Manager to the Offer.

10.8. Copy of the First Public Announcement dated April 12, 2004 and the Second Public Announcement dated Thursday November18, 2004

10.9. Copy of the letter dated November 10, 2004 from SEBI in terms of proviso to Regulation 18(2) of the Takeover Regulations.

10.10. Copies of the applications made to the RBI and, in case the approval from RBI is received prior to the Offer Closing Date,the approvals.

10.11. Copy of the agreement between the Acquirers and Integrated Enterprises (India) Limited as the Depository Participant foropening the Depository Escrow Account for the purpose of the Offer.

10.12. Copy of the public announcement dated April 12, 2004 as made by Rane (Madras) Limited, in concert with Rane InvestmentsLimited and Rane Brake Linings Limited

11. Declaration by the Acquirers and the PACs

The Acquirers and the PACs accept full responsibility for the information contained in this Letter of Offer. Each of the Acquirersand the PACs would jointly and severally liable for ensuring compliance with Takeover Regulations.

Place: Chennai

Date: November 19, 2004

The persons signing the Letter of Offer are duly and legally authorised by the Acquirers and PACs to sign the Letter of Offer.

Attached : Form of Acceptance cum Acknowledgement