mawana sugars limited · for private circulation to the equity shareholders of the company only...

For Private Circulation to the EquityShareholders of the Company only

MAWANA SUGARS LIMITED(Incorporated on 26th December, 2002 under the Companies Act, 1956 as Siel Sugar Limited and then renamed as Mawana Sugars Limited w.e.f.16th June, 2004. The Sugar business of Siel Limited vested with the Company retrospectively w.e.f. 1st October, 2002 pursuant to the Scheme ofArrangement approved by Hon’ble High Court of Delhi vide Order dated 26th August, 2003 under Sec. 391/394 of the Companies Act, 1956)

Regd. Office: 6th Floor, Kirti Mahal, 19, Rajendra Place, New Delhi-110008Tel. : (011) 25739103 Fax: (011) 25743659

Email: [email protected] Website : sielsugar.com

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

Allianz Securities Limited MAS Services Private Ltd.(UIN-100001008) AB-4, Safdarjung Enclave,2nd Floor, 3 Scindia House, Janpath, New Delhi – 110029New Delhi-110 001 Phone: 011 - 26104142, 26104326Tel: 011 – 51514666 Fax : 011- 26181081Fax: 011 - 51514665 E-Mail: [email protected]: [email protected] E-Ma

ISSUE PROGRAMME

ISSUE OPENS ON LAST DATE FOR RECEIVING ISSUE CLOSES ONREQUESTS FOR SPLIT FORMS

27TH AUGUST, 2004 11TH SEPTEMBER, 2004 27TH SEPTEMBER, 2004

GENERAL RISKS

Investments in equity and equity related securities involve a degree of risk and investors should not invest anyfunds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to readthe Risk Factors carefully before taking an investment decision in this Issue. For taking an investment decision,investors must rely on their own examination of the Issuer and the Issue including the risks involved. The Securitieshave not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBIguarantee the accuracy or adequacy of this document.NOTE: The attention of the investors is drawn to the statement of Risk Factors appearing on Page no. i of theLetter of Offer.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offercontains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that theinformation contained in this Letter of Offer is true and correct in all material aspects and is not misleading in anymaterial respect, that the opinions and intentions expressed herein are honestly held and that there are no otherfacts, the omission of which make this document as a whole or any of such information or the expression of anysuch opinions or intentions misleading in any material respect.

LISTING

The existing equity shares of the company are listed on The Stock Exchange, Mumbai (BSE). The Company hasmade an application to the Stock Exchange, Mumbai for its permission to deal in Equity Shares arising from theIssue. In-principle approval from BSE has been received vide its letter dated 2nd July, 2004.

LETTER OF OFFERISSUE OF 84,98,976 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT PAR AGGREGATING TO RS. 8,49,89,760ON RIGHTS BASIS TO THE EQUITY SHAREHOLDERS IN THE RATIO OF ONE EQUITY SHARE FOR EVERYFOUR EQUITY SHARES HELD (1:4) AS ON 13th AUGUST, 2004 (I.E. THE RECORD DATE)

TABLE OF CONTENTS

S.NO. TOPIC Page No.

GLOSSARY OF TERMS/ABBREVIATIONS

RISK FACTORS & MANAGEMENT PERCEPTIONS THEREOF i

I. GENERAL INFORMATION 1

II. CAPITAL STRUCTURE 8

III. TERMS OF THE PRESENT ISSUE 12

IV. TAX BENEFITS 19

V. PARTICULARS OF THE ISSUE 21

VI. COMPANY & MANAGEMENT 22

VII. INDUSTRY, MARKET AND COMPETITIVE ENVIRONMENT 41

VIII. FINANCIAL PERFORMANCE OF THE COMPANY 42

IX. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL INFORMATION 59

X. OUTSTANDING LITIGATIONS & DEFAULTS 61

XI. PROMISES VS PERFORMANCE 88

XII. BASIS OF ISSUE PRICE 90

XIII. STOCK MARKET DATA 90

XIV. DETAILS REGARDING LISTED COMPANIES UNDER THE SAME MANAGEMENT

WHICH HAVE MADE CAPITAL ISSUES DURING THE LAST 3 YEARS. 91

XV. NAMES OF THE SMALL SCALE UNDERTAKINGS TO WHOM THE COMPANY OWES

A SUM EXCEEDING RS.1 LAKH WHICH IS OUTSTANDING FOR MORE THAN 30 DAYS 91

XVI. UNAUDITED WORKING RESULTS FOR THE LATEST PERIOD 91

XVII. MECHANISM EVOLVED BY THE COMPANY FOR THE REDRESSAL OF INVESTOR

GREIVANCES 92

XVIII. DETAILS OF ADVERSE EVENTS AFFECTING THE COMPANY SINCE THE LAST

AUDITED FINANCIAL STATEMENTS 93

XIX. EXPERT OPINION 93

XX. OPTION TO SUBSCRIBE 93

XXI. STATUTORY AND OTHER INFORMATION 104

XXII. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS 105

XXIII. DECLARATION 106

GLOSSARY OF TERMS / ABBREVIATIONS

Act / The Act The Companies Act, 1956 and subsequent amendments thereto

Articles/AOA Articles of Association of the Company

AS Accounting Standard

AY Assessment Year

Board / BOD Board of Directors of MSL

BSE The Stock Exchange, Mumbai

BIFR Board for Industrial & Financial Reconstruction

CAF Composite Application Form

CDR Corporate Debt Restructuring

CDSL Central Depository Services (India) Limited

CC Criminal Complaint

CIT Commissioner of Income Tax

CESTAT Customs, Excise & Service Tax Appellate Tribunal

CENVAT Central Value Added Tax

CJM Chief Judicial Magistrate

CMP Current Market Price

Demat Dematerialized (Electronic/Depository – as the context may be)

Depositories NSDL and CDSL

DGI&R Director General (Investigation & Research)

DICGC Deposit Insurance and Credit Guarantee Corporation

DLC District Labour Commissioner

DP Depository Participant

DRT Debt Recovery Tribunal

ECGC Export Credit Guarantee Corporation

EGM Extra-ordinary General Meeting

Employees Employees of the Company

EPCG Export Promotion Capital Goods Scheme

EPS Earnings Per Share

Equity Shareholders Equity Shareholders whose names appear as• beneficial owners as per the list to be furnished by the depositories in respect of the

shares held in the electronic form and

• on the Register of Members of the Company in respect of the shares held in physicalform at the close of business hours on the Record Date i.e., 13th August, 2004, andto whom this issue is being made.

Equity Shares 84,98,976 Equity Shares of Rs.10/- each offered through this Letter of Offer

FCNR Foreign Currency (Non-Resident) Account

FEDAI Foreign Exchange Dealers Association of India

FEMA Foreign Exchange Management Act, 1999

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

FIPB Foreign Investment Promotion Board

FY Financial Year

GoI Government of India

Gsm Grams per square meter

ICAI Institute of Chartered Accountants of India

ID Act Industrial Disputes Act, 1947

IDBI Industrial Development Bank of India

Issue / Rights Issue Issue of 84,98,976 Equity Shares of Rs.10/- each for cash at par on rights basis to theexisting Equity Shareholders of the Company in the ratio of 1:4 held as on Record Date

IT Act Income Tax Act, 1961

ITAT Income Tax Appellate Tribunal

ISMA Indian Sugar Mills Association

Ktpa Kilo (thousand) tons per annum

Lead Managers Allianz Securities Limited

LOO/Offer Document Letter of Offer circulated to the Equity Shareholders of the Company

MSL Mawana Sugars Limited

Members/Shareholders Holders of the equity shares of the Company whose names appear in the Register ofMembers or Register of Beneficial Shareholders as on the Record Date

Memorandum Memorandum & Articles of Association of the Company

MOU Memorandum of Understanding

MSW Mawana Sugar Works

MRTP Monopolies & Restrictive Trade Practices

Mn Million

MT Metric Ton

MW Mega Watt

MODVAT Modified Value Added Tax

NBFC Non-Banking Financial Company

NAV Net Asset Value

NI Act The Negotiable Instruments Act, 1881

NPA(s) Non Performing Asset(s)

NRE A/c. Non-Resident (External) Rupee Account

NRI(s) Non-Resident Indian(s)

NRO Non-Resident Ordinary Rupee Account

NSDL National Securities Depository Limited

OCBs Overseas Corporate Bodies

PAN Permanent Account Number

PAT Profit After Tax

PBIT Profit Before Interest and Tax

RBI Reserve Bank of India

Record Date The relevant date which is reckoned for determining the Rights entitlement to theMembers which is 13th August, 2004

Registrars Registrars to the Issue MAS Services Private LimitedRepatriation “Investment on repatriation basis” means an investment the sale proceeds of which

are, net of taxes, eligible to be repatriated out of India, and the expression‘Investment on non- repatriation basis’, shall be construed accordingly.

RONW Return on Net Worth

SFFI Siel Foods and Fertilizer Industries

SRI Shriram Refrigeration Industries

SSL Siel Sugar Limited

SEBI / The Board Securities and Exchange Board of India

Securities Equity Shares issued through this Letter of Offer

SLR Statutory Liquidity Ratio

The Company / Issuer / MSL Mawana Sugars Limited

TSC Titawi Sugar Complex

Tpa Tons per annum

Tpd Tons per day

UTI Unit Trust of India

WDV Written Down Value

In this Letter of Offer, all references to “Rs.” refers to Rupees, the lawful currency of India, “USD” or “US$” refers to the UnitedStates Dollar, the lawful currency of the United States of America. References to the singular also refer to the plural and onegender also refers to any other gender wherever applicable.

RISK FACTORS AND MANAGEMENT PERCEPTION THEREOF

The investors should consider the following risk factors together with all other information included in this Letter of Offercarefully, in evaluating the Company and its business before making any investment decision. Any projections, forecasts andestimates contained herein are forward looking statements and are based on certain assumptions that the Company considersreasonable. This Letter of Offer contains forward-looking statements that involve risks and uncertainties. Such statements useforward looking terminology like “may”, “believes”, “will”, “expect”, “anticipate”, “estimate”, “continue”, “plan”, “likely” or suchsimilar words. The Company’s actual results could differ from those anticipated in these forward-looking statements as a resultof certain factors including those, which are set forth in the “Risk factors” and elsewhere in this Letter of Offer and generaleconomic and business conditions, our ability to successfully implement our strategy, growth and expansion plans, andincreasing competition in sugar industry. Neither the Company nor the Lead Manager or their respective affiliates has anyobligation to update, or otherwise revise, any statements, including revisions, if any, to reflect changes in economic conditionsor other circumstances arising after the date hereof or to reflect the occurrence of unanticipated events, even if the underlyingassumptions do not come to fruition.This Letter of Offer also includes statistical and other data regarding the Sugar Industry. This data was obtained from industrypublications, reports and other sources that the Company and the Lead Manager believe to be reliable. Neither the Companynor the Lead Manager has independently verified such data.

INTERNAL RISK FACTORS1. Criminal Cases filed against the Company / Promoter Group Companies

a. Against the Company viz. Mawana Sugars Ltd.Fourteen (14) Criminal cases are pending in various Courts / Authorities by Suppliers / Employees / Clients. Fordetails, investors please refer to “Outstanding Litigations/Defaults” appearing on page no. 61 to 66 of the Letterof Offer.

b. Against Directors & Promoter Group Companies(i) 4 petitions u/s 482 of Cr. P.C. filed by the Company challenging the prosecution cases lodged against one

Director of the Company.(ii) Siel Ltd. – One criminal case is pending u/s 420 of IPC by Supplier of the Company.For details, investors please refer to “Outstanding Litigations/defaults” appearing on pages no. 66 to 87 of theLetter of Offer.

c. Against Promoters of the Company - Mr. Krishna Shriram

Authority Particulars of Status Amount Opposite Allegations/Chargesthe matter Party

Supreme Contempt petitionCourt has been filed

against the companyand Shri KrishnaShriram, Mr. A. K.Mehra and Mr. P. K.Bhalla.

Management PerceptionThe cases against one of the Directors of the Company arise on account of the allegation that he was the Occupier of Factorypremises. The case against Siel Ltd. relates to a contractual dispute between a supplier of the Company and his supplier.The Company has been impleaded as a respondant in this case.

2. The Company is not raising funds to finance any specific project and the funds raised from this Rights Issue are beingused for making an equity investment in Siel Limited as part of CDR approved package and for meeting shortfall in longterm working capital requirements.

Management PerceptionThe Company is making the rights issue of Rs. 849.90 lakhs pursuant to the CDR approved package, which requires theCompany to invest Rs. 800 lakhs in three trenches of Rs. 250 lakhs, Rs. 250 lakhs and Rs. 300 lakhs by September, 2005. Thefunds therefore, so raised are proposed to be utilized mainly to invest in Siel Ltd. i.e. to the extent of more than 94% of issuesize and the balance around 6% (Rs. 49.90 lakhs) would be utilized for meeting shortfall in long term working capitalrequirements. ICICI Bank Ltd. has been appointed by CDR Cell as the monitoring agency to oversee the implementation ofthe restructuring package.

SankyutKamgarMorcha

The company had agreed with the oppo-site party to pay compensation to the con-tract workers and out of the said compen-sation 10% was to be given to the Oppo-site Party. However, the Opposite Party didnot bring forth all the workers. The com-pany only paid 10% to the Opposite Partyfor the workers actually brought by theOpposite Party. Due to this, the oppositeparty has filed the contempt petition.

Pending. But the com-pany has deposited thedisputed amount withthe Labour Court. An-other union which alsobrought forward work-ers has filed an interimapplication for 10% ofthe amount paid tothose workers.

Rs.8.56lakhs

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3. Siel Ltd., in which the Company is proposing to invest the proceeds of this Issue, has incurred loss to the extent of Rs. 3751.87lakhs for F.Y. 2003-04. Siel Ltd. also incurred losses in the previous years on account of which it had approached restructuringof its business and debts and its name was in the RBI’s defaulter list.

Management PerceptionDue to losses, Company’s name appeared in RBI’s defaulters list and the Compay in turn approached CDR for restructuring.Consequent upon restructuring of Siel Ltd., as approved by the High Court and with the investment of funds by MSL whichwould be utilized for increase in the capacity of its Chemical business, performance of Siel Ltd. would improve and its namenow doesn’t appear in RBI’s defaulters list.

4. In the final restructuring package approved by CDR Cell, it was not clearly stated that Mawana Sugars Ltd. (erstwhile SielSugar Ltd.) should invest in equity of Siel Ltd. to the extent of Rs. 800 lakhs for which this Rights Issue is being planned.However, it was mentioned only in the financial projections submitted to the CDR Cell, who had then considered andapproved it alongwith the entire package.

Management PerceptionICICI Bank Ltd., the Lead Institution, submitted detailed proposal for restructuring alongwith the future projections, whichwere accepted and then approved by CDR Cell. CDR Cell on behalf of all the Lenders, except UTI who had not become amember in the CDR, had given their consent for raising equity by the Company through Rights Issue to the extent of Rs. 850lakhs vide their letter dated 16th July, 2004. ICICI Bank Ltd., the Monitoring Agency appointed by the CDR Cell had also giventheir consent to the same vide their letter dated 11th May, 2004.

5. As per the Restructuring package approved by CDR, Mawana Sugars Ltd. has to bear term liabilities of Rs. 9675 lakhs, whichconstitutes Rs. 7390 lakhs of Term Loan and Rs. 2285 lakhs of Zero Coupon Debentures. In addition, the Company requiresto make an equity investment into Siel Ltd. to the extent of Rs. 800 lakhs according to the projections submitted and approvedby CDR Cell.

Management PerceptionThe term liabilities allocated to Mawana Sugars Ltd. is based upon the debt servicing capacity of the Sugar business asassessed and approved by the Lenders / CDR Cell.

6. The company has accumulated losses of Rs. 417.45 Lakhs for the period from 1st April, 2003 to 29th February, 2004.

Management PerceptionThe carry over losses were because of losses incurred during the period October 1, 2002 to March 31, 2003 by erstwhile SielLtd. in its sugar business. The Company however during the period 1st April, 2003 to 29th February, 2004 (11 months) earneda net profit after tax of Rs. 283.49 lakhs.

7. The Company has not declared any dividend during the periods ended 29th February, 2004 and ended 31st March, 2003

Management PerceptionThe Company was incorporated on 26th December, 2002 and has losses for the financial period ended 31st March, 2003. Thefinancial statements for the period 1st April, 2003 to 29th February, 2004 are for the purposes of this issue and have not beenplaced before the members of the Company.

8. As per CDR terms, out of total investment of Rs.800 Lakhs, Rs. 300 lakhs has to be invested in Siel Ltd. by September, 2005,but the Company is making the issue for the entire requirement of Rs. 800 lakhs.

Management PerceptionAs per restructuring package, Rs. 250 lakhs each has to be invested by September 2003 and September 2004 and thebalance Rs. 300 Lakhs to be invested by September 2005. The Company is raising Rs. 849.89 lakhs through this Rights Issueand out of this, Rs. 552.43 lakhs in the form of application money and the balance amount of Rs. 297.46 lakhs to be raisedthrough Calls by September, 2005 keeping in view the CDR requirements.

9. No comparable performance data for the previous years are available for comparing the financial performance of theMawana Sugars Ltd.

Management PerceptionAs the sugar business of the company has been vested from 1st October, 2002 through a Scheme of Arrangement of Siel Ltd.which became effective from September 5, 2003, comparable performance data for the previous years are not available.

10. Unit Trust of India, one of the lender of erstwhile Siel Ltd., issued a recall notice due to non-payment of instalments due tothem in November, 2002 and later did not consent to the CDR Package or Scheme of Arrangement, approved by the Hon’bleHigh Court at Delhi in August, 2003 and has filed an appeal against the order of High Court, approving the Scheme, in theDivision Bench of Hon’ble High Court. Any adverse decision could have an impact on the financial ability of the Company.

Management PerceptionThe Appeal of the UTI has not been admitted by the High Court and there are no restraints on implementation of the Schemeand the same has already been implemented by erstwhile Siel Ltd. The Scheme having been approved by majority of theCreditors and Shareholders and subsequently approved by the High Court is binding on all the Creditors, Shareholders andthe Company in terms of Section 391(2) of the Companies Act, 1956. Presently, the other Lenders of Siel Ltd. have agreedto pay sum upto Rs. 1173 lakhs to UTI to be paid out of the surplus realization from the Special Purpose Vehicle viz.

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Shivajimarg Properties Ltd., in which the land of erstwhile Siel Ltd. located at 15, Shivaji Marg, New Delhi has vested pursuantto the Scheme. Siel Ltd. has also filed an application u/s 392 of the Companies Act, seeking a direction from Hon’ble HighCourt to restrain UTI from creating any impediment and UTI be directed to take all steps to issue necessary no objectionrequired for sale of non-operating assets, as required in terms of the Scheme. The Court has directed UTI to consider the OneTime Settlement proposal of the Company and report to the Court so that effective order could be passed by the Court.

11. The Company has not taken any specific approval from each of the Lenders for the said Rights Issue. UTI having notassented to the CDR, may in the worst possible scenario, object against the said Rights Issue.

Management PerceptionThis being a Rights Issue offered to the Shareholders, approval from Shareholders has been taken in their Extra OrdinaryGeneral Meeting held on 8th May, 2004. Consequently, no separate approval from any Lender, including UTI, is required forthe Rights Issue. Further, this Issue is being made in compliance with the projections submitted to CDR Cell which formedthe basis of approval of restructuring package, therefore, CDR Cell on behalf of all its Members/Lenders (except UTI, whichis not a member of CDR) has given their specific no objection for the Rights issue vide their letter dated 16th July, 2004.

12. As per the CDR package, the Company shall not declare any dividend if it fails to meet its obligations to pay interest and / orinstallments and / or other moneys payable to the Lenders, so long as it is in such default.

Management PerceptionThis clause is usually stipulated by the CDR Cell to monitor cash outflows in the event of default.

13. One of the terms of CDR package is that the lenders reserve the right to recompense for the sacrifices undertaken by themto the extent of debt transferred under the Scheme of Arrangement. The total debt transferred to the Company under theScheme of Arrangement were Rs. 9675 lakhs. In the event of exercise of such right, the financial position of the company willbe affected to that extent.

Management PerceptionThis clause is usually stipulated by the CDR Cell / Lenders in all restructuring. The financial liability, if any, will be determinedonly if this right is exercised. The Company, however, has not made any arrangement for this liability as this liability, if any,would be ascertained only after the payment of all the existing debts.

14. According to CDR terms, the Lenders may require the Company to prepay the Loan, without a pre-payment premium, ondates earlier than the stipulated repayment schedule.

Management PerceptionAs per the CDR terms, lenders may require the Company to prepay the loan, only if the profitability, cash flow and othercircumstances so warrant.

15. According to CDR terms, the Lenders reserves the right to review the interest rate on the remaining debt to be serviced bythe Company.

Management PerceptionLenders will exercise this right only if cash-flows and the circumstances so warrant.

16. As per the CDR terms, the Company shall not undertake any new project or expansion or make any investment or acquireany assets on lease / hire-purchase or enter into any joint venture agreement, Merger & Acquisition deal, sale of investments,hiving off of division, etc. without prior approval of the lenders.

Management PerceptionThis clause is usually stipulated by the CDR Cell to monitor cash outflows.

17. As per the CDR approved package, the Company has to make an investment in Siel Ltd. to the extent of Rs. 800 lakhs bySeptember, 2005. In case of failure to bring the equity in the present rights issue, company’s cash flows would be affected tothat extent.

Management PerceptionThe Promoters have undertaken for meeting any shortfall in the total subscription in the issue.

18. The Company needs RBI’s specific approval before making issue & allotment of Shares to OCBs, which is still awaited.

Management PerceptionThe Company has applied to Reserve Bank of India vide their letter dated 19th July, 2004 in respect of taking its approval forissue and allotment of Shares to OCBs. The Company has received approval in respect of three OCBs out of total 4 OCBsand the approval in respect of fourth OCB, will be received after furnishing necessary information by them as required by RBI.The Company will make offer and allotment to that OCB only after receipt of specific approval from RBI.

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19. Risk of attrition of key personnel and ability to attract and retain talented professionals.

Management PerceptionThe Company has identified development of human resources as a critical activity for growth. The Company believes that itsHuman Resources initiatives will enable it to retain existing talent and attract new talent into its system.

20. Promise v/s Performancea) For the Company – Mawana Sugars Ltd.

There was no public / rights issue of securities made by the Company in the last 3 years as the Company came intoexistence only in December, 2002.

b) Promise v/s Performance of Group / Associate CompaniesThere was no public / rights issue of securities made by any listed companies under the Promoter Group / AssociateCompanies in the last 3 years. However, shortfall in the Promise v/s Performance regarding the last issue made by them,is given in detail on pages no. 88 to 89.

21. The Company has following contingent liabilities, which are not provided for as on 30th June, 2004:

Sr. No. Particulars Amount(Rs. lakhs)

1. Claims against the Company not acknowledged as debts 407.41

2. On partly paid shares (# Rs.20) #

3.

22. The Crushing license at Titawi Unit is still in the name of Siel Ltd. and the Company is yet to get the approval for changingthe same in the name of Mawana Sugars Ltd. The Crushing license at Mawana Unit is still in the name of Mawana SugarWorks (which was earlier unit of DCM Ltd.) and the Company is yet to get the approval for changing the same in the nameof Mawana Sugars Ltd

Management PerceptionThe Company applied to the concerned authorities on 18th October, 2003 and 17th December, 2003 in case of Titawi &Mawana Units respectively for change in name to Siel Sugar Ltd. and had been expecting approval for the same shortly, butin the meantime, Company got its name changed from Siel Sugar Ltd. to Mawana Sugars Ltd. The Company has nowapplied for getting the license changed in the name of Mawana Sugars Ltd. vide their letter dated 6th July, 2004 for MawanaUnit but does not foresee any problem in getting converted. Also, the company has intimated the change of name to theauthorities in case of Titawi Unit.

23. The Company’s License for wholesale trader (FPS), Mill Factory (Firewood) & Retail Trader (FPS) under UP Krishi UtpadanMandi Samiti Adhiniyam, 1964 for its Mawana Unit is pending for renewal from the Secretary, Krishi Utpadan Mandi Samiti,Mawana. Another Registration Certificate for packing of sugar and Registration under Central Excise Act is also pendingfor change in name from Siel Sugar Ltd. to Mawana Sugars Ltd.

Management PerceptionThe Company has already made an application to the concerned authority vide their letter dated 22nd June, 2004, whereasfor change in name to Mawana Sugars Ltd., the Company has applied vide their letter dated 22nd July, 2004. The Companydoes not foresee any problem in getting the required approvals.

24. The Company’s Licences for sale of insecticides at Babri Store, Lalu Kheri Store and Charthawal and Licence for sale offertilizers at Baghra Store at Titawi Unit are pending for change of name from Siel Sugar Limited to Mawana Sugars Limited.Further, a registration certificate obtained under Central Excise Rules, 1975 is also in the name of Siel Sugar Limited.

Management PerceptionThe Company has already made an application to the concerned authorities and does not foresee any problem in gettingthe required approvals.

In respect of a guarantee to be given by the Company to lenders of a subsidiary company for the minimumrealisation of principal amount of debts amounting to Rs.3075 lacs transferred to the subsidiary company as on30.9.2002. The guarantee will come into force after 30.9.2004 in the event of shortfall, if any, in the realisation ofthe assets of the subsidiary company amounting to Rs.3075 lacs and will be limited to the amounts remainingunpaid. The guarantee will lapse on payment of entire amount of Rs.3075 lacs to lenders of the subsidiarycompany. During the period, out of the above, the subsidiary has already repaid an amount of Rs.2290.65 lacs(previous period Rs Nil) and the outstanding amount as at June 30, 2004 is Rs.784.35 lacs (As at March 31,2003 Rs. 3075 lacs).

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25. Out of total land at Mawana, the Company is to surrender 6.251 hectares of land to the State. In addition, State Administra-tion is seeking that 9.815 hectares of land to be reverted back to the State being not actively used by the Company.

Management PerceptionThe land admeasuring 6.251 hectares at Barhni is not in direct and active use for more than 50 years and as ordered byHon’ble Allahabad High Court, the Company is in the process of surrendering the land. In regard to 9.815 hectares of landlocated at Mawana Mandi, the Company is contesting the State Administration decision in the Courts of CompetentJurisdiction. However, the said land was not used by the Company for their manufacturing activities.

26. The Company’s Land at Mawana & Titawi Units as well as Lands held at other places like Nanglamal and Gurgaon isnot in Company’s name i.e. Mawana Sugars Limited.

Management PreceptionOut of total land of 64.739 hectares at Mawana, 46.282 hectares of land has already been mutated in the name of SielSugar Ltd. and 3.158 hectares are in the process of changing from Shriram Industrial Enterprises Ltd. to Siel Sugar Ltd. TheCompany’s land at Barhni admeasuring 6.251 hectares is to be surrendered to the Government and the balance land of9.048 hectares is under litigation, details of which are mentioned under the head “Land” appearing on page no. 24 & 25.The entire land in Titawi Unit admeasuring 29.076 hectares has been mutated in the name of Siel Sugar Ltd. In regard toland at Nanglamal, 36.427 hectares has already been mutated in the name of Siel Sugar Ltd. and the balance is underprocess of changing its name to Siel Sugar Ltd. Gurgaon Land is still in the name of Siel Ltd. As the Company’s name hasrecently been changed from Siel Sugar Ltd. to Mawana Sugars Ltd., the Company will accordingly get the revenue recordsmodified.

27. Sugar cane constitutes around 70% of cost of production for manufacture of sugar and the cane purchase is highlyregulated by State / Central Government. Any upward revision in the prices of sugar cane affects the total cost of productionand therefore profitability.

Management PerceptionAny increase in the price of sugar cane is expected to be offset by way of increase in sugar prices.

28. Sugar production is dependent on the availability and quality of cane and any drastic changes in climatic conditions mayimpact sugarcane crop and hence sugar production.

Management PerceptionTo some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. The Companyhas sufficient availability of cane in its command area and does not foresee any material adverse impact on the sugarproduction in the normal circumstances.

29. Distant location of mills from the ports increases the cost of transportation for exports.

Management PerceptionConsidering the present demand-supply scenario in the Sugar Industry, the Country will not be in a position to export sugar.

30. The Company has given a guarantee to the lenders of Siel Holdings Ltd. (SHL - a Subsidiary Company), for the minimumrealization of principal amount of debt amounting to Rs. 3075 lakhs.

Management PerceptionSiel Holdings Ltd. has already repaid the principal amount of debts amounting to Rs. 2291 lakhs out of Rs. 3075 lakhs. Thebalance amount of the debt will be repaid out of the sale proceeds of the investments held by SHL. The company does notforesee any liability crystalising on account of the above guarantee.

31. Nine out of 10 (ten) promoter companies have made losses during F.Y. 2002-03 (last available audited results exceptmentioned in case of Siel Ltd.).- Siel Ltd - Rs. 3751.87 lakhs (F.Y. 2003-04)- Busneda Commercial Pvt. Ltd. - Rs. 21.34 lakhs- Sandvik Inv. & Leasing Pvt. Ltd. - Rs. 6.94 lakhs- Greenfields Comm. Pvt. Ltd. - Rs. 16.14 lakhs- Minos Trading (I) Pvt. Ltd. - Rs. 11.20 lakhs- CSR J & K Investments Pvt. Ltd. - Rs. 3.27 lakhs- SFSL Securities Pvt. Ltd. - Rs. 0.57 lakhs- Perennial Investments Ltd. - Rs. 91.22 lakhs- Doab Foods & Gen. Industries Ltd. - Rs. 3.88 lakhs

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Management PerceptionThe losses of the Promoter Company in no way impact the profitability of the Company except in case of Siel Limited inwhich the proceeds of this issue are proposed to be invested in terms of CDR package. In Siel Limited, the companyexpects improved performance on account of its debt restructuring & reduction in its interest liability.

32. Seven Promoter Group Companies of Mawana Sugars Ltd. viz. Busneda Commercial Pvt. Ltd., Chhaya J&K InvestmentsPvt. Ltd., Gaiety J&K Investments Pvt. Ltd., KSR J&K Investments Pvt. Ltd., CSR J&K Investments Pvt. Ltd., GreenfieldsCommercial Pvt. Ltd. & Krishna J&K Investments Pvt. Ltd. had incurred losses and have applied for reduction of capital.

33. Three Promoter Group Companies viz. Busneda Commercial Pvt. Ltd., Greenfields Commercial Pvt. Ltd. and Minos TradingIndia Pvt. Ltd. entered into the Scheme of Arrangement with its Creditors.

Management PerceptionAs a part of consolidation exercise to avail synergies, these Companies have entered into Scheme of Arrangement withtheir Creditors.

34. Four group companies on account of losses, have accumulated arrears of dividend on Cumulative Preference Shares viz.Jay Engineering Works Ltd., Siel Financial Services Ltd., Siel Ltd. and Transiel India Ltd.

35. Twelve Group Companies, due to accumulated losses, have negative networth as per last available Audited results i.e.during the F.Y. 2002-03 or F.Y. 2003-04, as case may be.

36. One of the Promoter Group Company viz. Jay Engineering Works Ltd. (subsidiary of Siel Holdings Ltd., which is a subsidiaryof Mawana Sugars Ltd.) became sick and got registered with the Board of Industrial & Financial Reconstruction (BIFR) inthe year 1994. The Company’s name was also in the RBI’s defaulter list. The rehabilitation scheme once sanctioned inNovember, 1997 was revised due to non-implementation.

Management PerceptionBIFR declared the Company as sick in its hearing held on 8th April, 1994 and appointed IDBI as the Operating Agency forsubmitting a revival scheme. BIFR sanctioned a rehabilitation scheme vide its order dated 21st November, 1997. The saidscheme did not work satisfactorily and BIFR revised the earlier sanctioned scheme vide its order dated 8th April, 2003. IDBIcontinues as the Operating Agency for revised rehabilitation scheme which is under implementaion.

37. In case of Three (3) Promoter Group Companies viz. Perennial Investments Limited, Doab Foods & General IndustriesLimited and M.S.R. Enterprises Limited, penalty of Rs. 50,000/- has been imposed by SEBI for violation of SEBI(SubstantialAcquisition of Shares & Takeover) Regulations, 1997 in the year 2000-01.

Further, in case of another Group Company viz. SFSL Investments Limited, penalty of Rs. 5,000/- has been imposed byCompany Law Board for contravention of Sec. 383A of the Companies Act, 1956.

Management PerceptionThe defaults were in as much as the disclosures in the Notice for the preferential allotment of shares of Usha InternationalLtd. were not found adequate by SEBI. After detailed hearing, a fine of Rs. 50,000/- was imposed on these Companies,which subscribed to preferential allotment. The penalty has already been paid by all these companies.

38. One of the promoters Group Company viz. Siel Financial Services Limited has made the default in the payment of listingfees at Madhya Pradesh Stock Exchange for the F.Y. 2001-02 & 2003-04, at Calcutta Stock Exchange from the financial year1999-2000 and at Ahmedabad Stock Exchange from the Financial Year 2001-02.

39. The pending litigations / disputes by & against the Company and its Directors are as under:

Cases against Mawana Sugars Ltd.

Civil Criminal Excise Related IT Related OthersNo. of Cases 58 26 37 — 151Amount Rs. 310.41 lakhs Rs. 8.51 lakhs in Rs. 137.39 lakhs — Rs. 134.88 lakhs + Interestinvolved + interest in 24 11 cases. However, in 7 cases. In addition amount is not

cases. However, amount is not ascertainable in 143 cases.amount is not ascertainable inascertainable balance 15 cases.in remaining 34cases.

vi

I. (A) Against the Company - Mawana Sugars Ltd.

a) Criminal Cases

S.No Authority Accused Particulars of the matter / Charges Amount Status

1.

2.

3.

4.

5.

6.

7.

8.

9.

Judicial Magis-trate, Saharanpur

Judicial Magis-trate, Mawana

Chief JudicialM a g i s t r a t eMuzaffarnagar

S c h e d u l e dCastes & Sched-uled Tribes Com-mission,Lucknow

Human RightsC o m m i s s i o n /SDM, Mawana


Chief JudicialM a g i s t r a t e ,Chandigarh

Judicial Magis-trates, Mawana,Meerut andMuzaffarnagar


Sh. BhupinderSingh andMr. H.S. MalikM a n a g e r(Cane)

Sh. Santar Pal,Cane Supervi-sor and Mr. D.K.Sinha, DeputyM a n a g e r(Cane) & Ors.

Mr. HarbansSingh

Smt. ChandraKanta

Smt. ChandraKanta

Shri A.K.Aggarwal, ShriJoy Mukherjee,Shri SharadKrishna, ShriRajeev Mishra& Ors.

Mr. TajinderKumar, Dealerand the com-pany

Mr. SatyapalSh. Satyavir Sh.Ramesh ChandSh. NarendraSh. Satyapal

M/s. Sumit Asso-ciates & its part-ners Mr. SumitJain & Mr. AnujJain.

A case has been filed under Section 406 of theIndian Penal Code alleging that in 1990 the sug-arcane was purchased without issuing receiptsand thus the seller could not obtain payment. ]

Case under Sections 323/427/506 of the IndianPenal Code for causing hurt, mischief and crimi-nal intimidation has been registered against em-ployees for actions taken during the course of theirduties.

The erstwhile General Manager prosecuted fornot opening a new sugarcane purchase center.

A complaint has been filed against the companyalleging discrimination and harassment.

A complaint has been filed against the companyalleging discrimination and harassment

8 cases under section 268/ 285/ 237/337/338 IPCand 34 of Police Act have been filed against theemployees of the Company and three contractorsalleging that the company dumped burnt fly asharound the factory area.

A case against the Company for not having thesuperscription on the package “Best before date”.

The company has lodged 5 FIR/complaints against5 workmen for misappropriation of cane.

The company has filed 6 cases under Section 138of the Negotiable Instruments Act. Cases Nos. 699to 704 of 2002. The company had delivered sugarto accused for which it issued cheques which weredishonored

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

Rs. 2.90lakhs

Rs.5.61lakhs

The case ispending forhearing.


T h eprosecut ionhas beenstayed byA l l a h a b a dHigh Court.

T h einvestigationhas beenstayed by theL u c k n o wBench of theA l l a h a b a dHigh Court inWrit PetitionNo.5935 of2000.

On directionsof the DistrictMagistrate, theSDM Mawanais inquiringinto the matter.

The case arefixed for trial.


Cases arepending

Non-BailableW a r r a n t sissued againstthe accused.

vii

Sr. No.

1.

2.

Name of the Authority

Workmen’s CompensationCommissioner, Meerut/ DeputyLabour Commissioner, Meerut/Labour Court, Meerut

Claim Amount

Rs. 8.64 lakhs +Interest

Matter / Status

5 Cases are filed against the Company for compensation/ gratuity / permanency and payment of HRA.1 case filed by an employee claiming that he wasprematurely retired, as his actual date of birth was later.

127 cases of temporary/regular workmen for reinstatement and/or compensation, dismissal & extra allowance. Thecases are pending at Allahabad High Court/Labour Court/Ind. Tribunal, Meerut / Saharanpur. The amount is notascertainable in all these cases.

b) Labour Cases

Authority

AllahabadHighCourt

Name of the Disputing Party

Assistant Director of Factories

Particulars of the matter

The Company has filed four criminal writ petitions onthe ground that Mr. Siddharth Shriram, Chairman &Managing Director, was not the occupier as definedin the Factories Act. (Case No.- Crl. WP Nos.5131 to5134 of 1993).

Status

Stay hasbeengranted.

Amount

NotAscertainable

c) Under The Factories Act.

Particulars of the Matter

A Special Leave Petition has been filed by the state of U.P.challenging the order of the Allahabad High Court quashingthe circular of the State of U. P. whereby the exemption onpurchase of high speed diesel within UP was withdrawn.Company is also a party in this matter.

The company has filed a writ petition against the order dated25.8.2000 given by the Commissioner, UP Trade Tax pertain-ing to the period of deferment of Trade Tax.

Status

The matter is pendingfor further order.


d) Under Trade Tax

Amount

Rs. 14 Lakhs

Rs. 112.23Lakhs

Authority

Supreme Court

Allahabad HighCourt

e) Excise related Cases

Authority

CESTAT, New Delhi

Deputy CommissionerMuzaffarnagar/Commis-sioner Appeal Ghaziabad

CESTAT, New Delhi/Commissioner Appeal,Ghaziabad]

Assistant Commissioner,.Division, Muzaffarnagr / Dy.Commissioner,Muzaffarnagar

Commissioner centralexcise Meerut

Addl. Commissioner,Meerut-1


9 appeals filed by the Company against theorder passed by Commissioner Appeals,Meerut for wrongful availment of MODVATCredit.

13 Appeals allowing CENVAT Credit. Caseshave been remanded for fact verification tothe Adjudicating officer.

6 appeals filed by the company for Demandof excise duty due to shortage/removal ofsugar/molasses grading of molasses byconsumer.

The company has received seven showcause notices for shortage of molasses /sugar.

Application filed by the company for remis-sion in excise duties.

Show cause notice issued to the companydemanding excise duty on sale of Bagasse.

Status

Pendinghearing.

Pendingdeterminationof facts

Pendinghearing

AssessmentPending

The applica-tion ispending

Adjudication

Pending Liability Amt.

Rs. 39.49 lakhs

Rs. 29.16 lakhs

Rs. 8.49 lakhs

Rs. 6.78 lakhs

Rs.5.64 lakhs

Rs. 47.83 lakhs

S.No

1.

2.

3.

4.

5.

6.

viii

f) Under Uttar Pradesh Sugarcane (Regulation of Supply And Purchase) Act, 1953

S. No.

1.

2.

3.

Authority

Allahabad High Court

Civil Judge (Sr. Div.)Muzaffarnagar



4 Writ Petitions filed by the companychallenging the tagging order for the seasons2002-03 & 2003-04.

The company has filed a case challengingthe vires of the arbitration proceedingsbefore Deputy Cane Commissioner,Saharanpur.

7 Writ Petitions were filed by the Company/against the Company for past seasonsregarding reservation of cane purchasecentres.

Status

The High Court stayedthe order of the DM andmodified the taggingpercentage at 76% &78% respectively.

Final arguments are tobe advanced. Theamount involved is Rs.2.06 Lakhs.

Interim Orders infavour of theCompany.

Opposite Party

C o l l e c t o r ,Muzaffarnagar &Meerut

Cooperative CaneDev. Society Ltd.,Muzaffarnagar andOrs.

The matters areinfructuous now sincethey related to past sea-sons & will have no im-plication for future.

g) Civil Cases

S. No.

1.

2.

3.

4.

5.

6.

7.

Authority

Tehsildar (Judicial)S a d a r ,Muzaffarnagar,T e h s i l d a r(Mawana)

Addl. Distt. Judge-VII, Meerut

XIII Addl. Dist.Judge, Meerut

Delhi High Court

Civil Judge (Jr.Div.)Mawana

Board of Revenueat Allahabad

Allahabad Highcourt


10 Cases filed against the company forencroachment on Gaon Sabha Land.

A revision petition has been filed by a LandOwner against the order of the Civil Judgedated 18.5.1998 dismissing his suit filedagainst the company for encroachment onhis land at Village Nanglamal.

Some Land Owners have filed an appealagainst the dismissal of the suit filed forinjunction restraining the company not todisturb them.

The Union of India has filed a letter PatentAppeal against the company and threeother sugar factories regardingencashment of bank guarantees for differ-ential levy sugar price.

Suit for injunction filed against the companyregarding school building in MawanaMandi.

The company has filed a revision againstan order by which a demand of Rs.26,925/- was imposed on it on account of addi-tional stamp duty in relation to land pur-chased by the company. A penalty ofRs.1,26,925/- has also been imposed.

3 writ petitions filed by the company forgrant of release order for sale of free salesugar without any restrictions

Status

Pending. But in 1 Case thematter has been sent backto the Tahsildar for recon-sideration by the AllahabadHigh Court which hasstayed the recovery of dam-ages and demolition of theboundary wall. ]

For arguments.

Final arguments

The matter is pending forfurther order.

The Municipal Board hassought impleadment in thematter

The revision was dis-missed in default. However,the application for restora-tion is pending.

Interim orders passed infavour of the company.

Amt.

Rs. 13.93 Lakhs

The amountinvolved is notascertainable.




Rs.1.54 lakhs.


ix

g) Civil Cases

S. No.

8.

9.

10.

11.

Authority

Allahabad HighCourt

District ConsumerF o r u m ,Muzaffarnagar

Delhi High Court

Addl. Civil Judge,Sr.Div. Meerut/ CivilJudge, (Jr.Div.)Mawana, CivilJudge Merrut


A Writ petition was filed by the companyagainst the collection of toll tax by the PWDauthorities at newly constructed bridge, asthere was no notification by the State Govt.

Complaints against non-refund of the se-curity deposit for the electrical connection.

Three writ petitions filed by the Companythrough West Central and East UPSMA &ISMA challenging SMP of cane for season2002-03 & 2003-04.

3 Civil suit filed by company for permanentinjunction regarding encroachment onMawana Mandi and Nanglamal property.

Status

The High Court has passedan order whereby the tolltax charged from the com-pany would be kept in aseparate account subject tothe final order of the HighCourt.

For Reply



Amt.


Rs.1.48 lakhs



12.

13.

14.

15.

16.

17.

18.

19.

Vth Addl Civiljudge Meerut, IIIAddl. Civil judgeMeerut,VII AddlCivil Judge Meerut

Civil judge (Jr.Div.)Meerut, Civiljudge (Sr.Div)Meerut, CivilJudge, Dehradun

Supreme Court

Allahabad HighCourt

Allahabad HighCourt

Allahabad HighCourt

Allahabad HighCourt

Allahabad HighCourt

3 suits of recovery of amount from an em-ployee and two suppliers have been filedby the company

3 execution petitions filed by the company

Two SLPs filed on behalf of the Industrythrough WUPSMA challenging Cane priceand Society Commission.

The company and some others challengedthe acquisition of land by the State of U.P.Stay was granted. However, during the pen-dency of the petition, the Govt. authoritiestook possession of the acquired land and acontempt petition has been filed.

The company has filed a writ petition chal-lenging the extension of municipal limits toinclude MSW.

The company has filed a writ petition chal-lenging the demand of the Cane Commis-sioner, Uttar Pradesh for payment of moneyon account of differential transport rebateon cane purchased during the season1989-90.

The company has filed a writ petition chal-lenging demand of interest on electricityduty.

The company has filed a petition challeng-ing demand of parking fee from trucks com-ing from rural area of MSW.






The company has depos-ited the demanded amountof Rs.20.00 lakhs and plansto withdraw the case.

The company’s writ hasbeen connected with an-other writ petition and ispending hearing.


Rs. 6.87 Lakhs +interest.




Rs. 100 Lakhs(approx.)


Rs.42.90 Lakhs


x

S. No.

20.

21.

22.

23.

Authority

Allahabad Highcourt48159/2002

Allahabad HighCourt

Allahabad HighCourt

Delhi High Court


Writ petition filed on behalf of the companythrough West, central & East UPSMA fordirections to be given to state not to fix caneprice for corporate and co-operative facto-ries.

Two Writ petitions filed on behalf of thecompany through West UPSMA challeng-ing levy price for 1999-2000 & 2000-2001.

The company has filed a petition challengingthe order of the District Magistrate, Meerut req-uisitioning its guest house to use it as tempo-rary jail

The State Trading Corporation of India hasfiled an appeal against an order of the Sin-gle Judge of the Delhi High Court whereinan arbitral award in favour of the companywas made rule of court.

Status

The matter is pending forfinal disposal.


Stay order granted. The pe-tition is pending.

As per the orders of theDelhi High Court, the StateTrading Corporation hasdeposited a sum of Rs.7.27lakhs and the company hasbeen permitted to withdrawthe said amount by furnish-ing a bank guarantee of anequivalent amount.

Amt.




Rs.7.27 Lakhs

24.

25.

26.

27.

28.

29.

Delhi High Court

National Con-sumer DisputesRedressal Forum,Delhi

The company has filed a writ petition againstthe Food Corporation of India deducting onaccount of shortages in the quantity of sugarpurchased from the company.

The Mawana Sugar Works Employees Provi-dent Fund Trust had deposited funds with abank under a scheme wherein it was to bepaid interest @ 12% per annum. However, thebank paid interest only @ 4.5% per annum.

The petition is listed for fi-nal disposal in August,2004.


Rs. 57 lakhs approx.

Rs.25.18 Lakhs

3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of Addl. Collector (E),Meerut imposing damages for allegedly encroaching on land belonging to the Gram Sabhas involving an amount ofRs.4.06 Lakhs.

3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of the Board ofRevenues wherein the company has been ordered to pay additional stamp duty in connection with land bought bythe company. The amount involved in 2 of these petitions is Rs. 45.47 Lakhs.

A writ petition has been filed by the company in Allahabad High Court challenging the order of Dy. Director ofConsolidation wherein he has set aside an order by which the company had been given 4 bighas and 14 biswas ofland. The amount involved is not ascertainable.

5 cases have been filed against the company before Addl. Civil Judges of Muzffarnagar, Meerut and Pathankotdemanding injunction. The amount involved in the case with Pathankot Judge is Rs. 3.56 Lakhs though in remainingcases, amount involved is not ascertainable.

xi

I. (B) Cases filed by the Company – Labour

Authority



Additional LabourCommissioner,Kanpur



Allahabad HighCourt, WorkmanCompensationCommissioner,Meerut


13 Writ Petitions filed by the companyagainst the Awards whereby temporaryworkmen were reinstated with backwages.

2 Writ Petitions filed by the Companyagainst the order requiring the manage-ment to lead evidence though the onuswas on workmen.

An appeal filed by the company againstan order under the payment of GratuityAct, 1972 for giving gratuity to a teacher.

Writ Petition filed by the Company chal-lenging the order passed by the Com-missioner under the Workmen’s Com-pensation Act, 1973 granting compen-sation to the widow of a employee whohad not met with an accident during thecourse of employment.

Writ Petition filed by the Company challeng-ing the order of the Labour Court regardingreinstatement of a temporary workman.

M/s New India Assurance Company hasfiled an appeal against the award underthe Workmen’s Compensation Act, 1923whereby a sum of Rs.1.76 lakhs hasbeen awarded to the wife of the deceased.The company has filed application forReview of the award as the company hasbeen ordered to pay interest upon thecompensation amount.

Amount

Rs.29.51 lakhs

Not Ascertainable

Rs.1.98 lakhs +interest

Rs.2.22 lakhs

Not Ascertainable

Rs.1.76 lakhs +interest

Status

The workmen were awarded reinstate-ment by the labour court/Industrial Tri-bunal and the Company has chal-lenged the decision.

The company has challenged theinterim orders of the Labour Court.

The lower Court ruled in favour ofthe Opposite Party.

In pursuance of an interim order passedby the High Court the Company haspaid Rs.1 lakh to the wife of the de-ceased and the remaining amount ofRs.1.22 lacs has been deposited in theNationalised Bank in the joint name ofthe Commissioner and the wife of thedeceased. The appeal is still pending.

Further proceedings before the La-bour Court have been stayed andthe writ petition is pending.

Judgement has been reserved onthe review application.

II. Against the Directors of the Company

a) Mr. Siddharth Shriram - Under Factories Act

Authority

Chief JudicialMagistrateMeerut

Allahabad HighCourt


4 criminal complaints filedagainst Sh. SiddharthShriram & B.K.Agarwal

4 petitions under section482 Cr.PC filed by thecompany.

Status

Proceedings arestayed by order ofthe AllahabadHigh Court

Stay order in fa-vour of the com-pany

Amount



Allegations/Charges

The Charges in the complaints relate toviolation of provisions of Factories Actlike Leave book not given to the work-ers, Fire extinguishing appratus notplaced in CO2 pump room, only onedoor for exit, belt not provided on driveguard etc.

Challenging the prosecution caseslodged against the Director.

xii

b) Mr. Siddharth Shriram - Criminal Cases

Authority

Judicial Magis-trate First Class,Indore.


Ruchi Soya Industries has fileda case against a supplier of thecompany under Section 138 ofthe Negotiable Instruments Actand Section 420 of the IndianPenal Code. Case No.2828/1999

Status

The company hasmoved an applica-tion for discharge ofitself and its officials.

Amount

Rs.40.83 Lakhs

Allegations/Charges

The company and its officialsincluding Mr. Siddharth Shriramhave conspired with SwarnimaOil Industries to cheat theOpposite party.

Status

Pending. But thecompany has de-posited the dis-puted amount withthe Labour Court.Another unionwhich also broughtforward workershas filed an in-terim applicationfor 10% of theamount paid tothose workers.


Contempt petition hasbeen filed against the com-pany and Shri KrishnaShriram, Mr. A. K. Mehraand Mr. P. K. Bhalla.

Amount

Rs. 8.56lakhs

Opposite Party

Sankyut KamgarMorcha

Allegations/Charges

The company had agreed withthe opposite party to pay com-pensation to the contract workersand out of the said compensation10% was to be given to the Op-posite Party. However, the Oppo-site Party did not bring forth allthe workers. The company onlypaid 10% to the Opposite Partyfor the workers actually broughtby the Opposite Party. Due to this,the opposite party has filed thecontempt petition.

Authority

SupremeCourt

III. Against Promoters of the Company - Mr. Krishna Shriram

40. Outstanding Litigations / disputes, etc. against the Promoter Group Companies

For details, please refer to para “Outstanding Litigations & Disputes” on pages no. 66 to 87.

Management Perception

The operations of the Company as also the financial performance are not likely to materially adversely affect in any manner on

account of the defaults / litigations of the Promoter Group Companies / Associate Companies / JV Companies since the

operations of the Company are not dependent on any of the said companies.

EXTERNAL RISK FACTORS

1. Sugar Industry is a controlled industry and the Government controls the sugar cane prices through Statutory Minimum Price

Mechanism and State Advised Price Mechanism and also the quantity of sugar to be sold in free markets by release

mechanism. As such, the performance of the companies in the Sugar Industry is dependent on Government Policies.

2. The recent judgement pronounced by the Constitution Bench of Hon’ble Supreme Court has upheld the rights of State Govt.

to fix the state advised prices. This judgement could result into some demands for the past periods.

3. Availability of Sugar cane, the major raw material, amongst other factors, depends on the monsoon conditions, which

affects the production and recovery. To some extent, sugar cane is a weather resistant crop and is unaffected by moderately

high or low rainfall. However, any drastic changes in climatic conditions may impact sugarcane yield and hence sugar

production.

4. Poor monsoon conditions in North India in the Current Season may affect the Cane production, which would affect the

availability of the cane to the sugar mills.

5. Competition from existing established companies and future entrants into the Industry.

6. The performance of the Company may be affected by a number of factors beyond its control including political and

economic developments both in India and worldwide. Terrorist attacks and other acts of violence or war may negatively

affect the domestic as well as the overseas markets. These acts may also result in a loss of business confidence and make

other services more difficult and ultimately affect the Company’s business, financial conditions and results of operations.

xiii

7. Purchase of sugar cane and payment of cane prices is through Co-operative Cane Societies causing inefficiencies in the

System.

8. Cane diversion to Khandsari and Gur Manufacturers who are not governed by the government regulations.

9. The business of the Company is subject to the regulations of Government of India and State Govt. A change in the

Government’s economic liberalization and deregulation policies could affect business and economic conditions in India

and the business of the Company in particular.

10. Import of raw sugar as the international price is comparatively lower.

11. Tight liquidity position of the Industry as a whole due to lower margins and high inventory holding period.

Management Perception

These external risk factors are beyond the control of Management.

Notes to the Risk Factors:

1. Net Worth of the Company as on 29th February 2004 is Rs. 7119.86 lakhs (net of miscellaneous expenditure written off) and

the size of the current issue is Rs. 849.90 lakhs.

2. The adjusted net asset value per share as on 29th February 2004 is Rs. 24.21 per share.

3. The cost per share to the Promoter is Rs. 10/-.

4. The promoters of the Company / other companies in the promoter group, apart from normal commercial transactions and

their shareholding in the Company, have no other interests in the Company either by itself or through their interests in other

companies in the promoter group. The directors of the company, apart from reimbursement of expenses incurred, sitting fees

and directors commission and in case of Managing Director, remuneration payable in accordance with the provisions of the

Companies Act, 1956 and their shareholding in the company if any, in the normal course of business have no other interest

in the company except for the commercial transaction between the company and the companies/firms in which directors are

interested.

These commercial transactions are fully disclosed in the register maintained under section 301 of the Act. These transac-

tions are certified by the statutory auditors as being transacted at a price, which are reasonable, having regard to the

prevailing market prices of the goods, material or services involved.

5. The related party transactions as per Accounting Standard 18 issued by Institute of Chartered Accountants of India as

on 29th February 2004 are as follows:

(i) Names of related parties and description of relationships

Holding company: None (Previous period Siel Limited)

Subsidiaries: Siel Holdings Limited

The Jay Engineering Works Limited (Subsidiary of Siel Holdings Limited).

Key Management Personnel and their relatives:

For full period - Mr. Siddharth Shriram, Mr. Krishna Shriram (relative of Mr. Siddharth Shriram).

For part of the period:

a) From September 15, 2003: Mr. P.K. Bhalla, Mrs Asha Bhalla, (relative of Mr. P.K. Bhalla), Mr A.K. Mehra, Mrs Binu Mehra,

(relative of Mr. A.K. Mehra)

b) From December 16, 2003: Mr. Rajendra Khanna, Mrs Rajni Khanna (relative of Mr Rajendra Khanna)

c) Upto September 15, 2003: Mr. Deepak Banerjee and

d) Upto September 5, 2003 : Mr Satyendra Gupta.

xiv

Enterprise over which key management personnel have significant influence : Siel Limited(Rs. in Lacs)

Subsidiary Companies Key Management Enterprise Over which TotalPersonnel and their key management

Relatives personnel haveSignificant Influence *

Period Period Period Period Period Period Period Periodended ended ended ended ended ended ended endedFebruary March February March February March February March29,2004 31,2003 29,2004 31,2003 29,2004 31,2003 29,2004 31,2003

Professional Fee - 4.90 - 4.90

Allotment of equityshares 300.00 - 300.00 -

Management feereceived 20.00 - 34.00 - 54.00 -

Remuneration to keymanagement personnel 72.70 18.02 72.70 18.02

Commission Paid 38.24 22.91 38.24 22.91

Expenses recovered 81.81 - 81.81 -

Expenses reimbursed 41.11 - 41.11 -

Advances given 0.01 0.77 13.43 - 3.00 1492.56 16.44 1493.33

Guarantees given onbehalf of the Company 12347.12 - 12347.12 -

Balance outstanding asat the year end:

- Receivables 0.78 - 13.10 - 1570.26 1492.56 1584.14 1492.56

- Guarantees givenon behalf of theCompany 12347.12 - 12347.12 -

* Do not include assets, liabilities vested in the Company pursuant to the Scheme and the assets, liabilities, incomes accruedand expenses incurred prior to incorporation when the undertakings were run and managed by Siel Limited in trust for theCompany (also refer to note 3 under Notes to Financial Statements appearing on Page No. 45)

6. Outstanding Loans and advances to Key Managerial Personnel as on 29th Feb., 2004 are as follows:

Name Designation Amount (in Rs.)

Mr. Siddharth Shriram Chairman & Managing Director Nil

Mr. P.K. Bhalla Executive Director & Company Secretary 6,98,894

Mr. A.K. Mehra Executive Director (Operations) 2,60,200

Mr. Rajendra Khanna Executive Director (A/cs & Fins.) 3,51,400

xv

1

MAWANA SUGARS LIMITED(Incorporated on 26th December, 2002 under the Companies Act, 1956, as Siel Sugar Limited and then renamed as Mawana Sugars Limited

w.e.f. 16th June 2004. The Sugar business of Siel Limited vested with the Company retrospectively w.e.f. 1st October , 2002 pursuant to theScheme of Arrangement approved by Hon’ble High Court of Delhi vide its Order dated 26th August, 2003 under Sec. 391/394 of the

Companies Act, 1956)

Regd. Office: 6th Floor, Kirti Mahal, 19, Rajendra Place, New Delhi-110008Tel. : (011) 25739103 Fax: (011) 25743659

Email: [email protected] Website : sielsugar.com

Issue Listed : The Stock Exchange, MumbaiOpening Date of the Issue : 27th August, 2004

Closing Date of the Issue : 27th September, 2004

Name & Address of the Lead Manager : Allianz Securities Ltd. (UIN-100001008)2nd Floor, 3 Scindia House, Janpath, New Delhi – 110 001

Ph.-(011)-51514666, Fax-(011)51514665, [email protected]

Dear Equity Shareholder(s),

Pursuant to the resolutions passed by the Board of Directors of the Company at its meeting held on April 5, 2004 and adopted by Shareholders underprovisions of Section 81 of the Act at the Extra-ordinary General Meeting held on May 8, 2004, it has been decided to make the following offer to theOrdinary Equity Shareholders of the Company.

Issue of 84,98,976 Equity Shares of Rs. 10/- each for cash at par aggregating to Rs. 8,49, 89,760/- to the existing Equity Shareholderson rights basis in the ratio of One Equity Share for every Four equity shares held as on 13th August, 2004 (i.e. the Record Date).

I. GENERAL INFORMATION

IMPORTANT

• This Offer is applicable to those Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by thedepositories in respect of the shares held in the electronic form and on the Register of Members of the Company at the close of business hourson the record date i.e. 13th August, 2004.

• Your attention is drawn to the section on “RISK FACTORS” appearing on page no. (i) of this Letter of Offer.

• Please ensure that you have received the CAF(s) with this Letter of Offer.

• Please read this Letter of Offer (LOO) and the instructions contained herein and in the Composite Application Form (CAF) carefully before fillingin the CAF. The instructions contained in the CAF are an integral part of this LOO and must be carefully followed. Application is liable to berejected for any non-compliance with the terms of the LOO or the CAF.

• All enquiries in connection with this LOO or CAF should be addressed to the Regisrs to the Issue, MAS Services Private Limited quoting theRegistered Folio number/ Depository Participant (DP) Number, Client ID number and the CAF numbers as mentioned in the CAF.

ELIGIBILITY FOR THE ISSUEMawana Sugars Ltd. is an existing company listed on The Stock Exchange, Mumbai. This issue, being a rights issue, is exempt from the eligibilitynorms in terms of Clause 2.4(iv) of the SEBI (DIP) Guidelines, 2000.

PROHIBITION BY SEBIThe Company, its Promoters, its Directors or any of the Company’s associates or group companies and companies with which the Directors of theCompany are associated as directors or promoters, or directors of the Promoters or promoter group companies have not been prohibited fromaccessing the capital market under any order or direction passed by SEBI or any other regulatory authority.

CHANGE OF NAME OF THE COMPANYThe Company was incorporated on 26th December, 2002 under the Companies Act, 1956, as Siel Sugar Limited to take over the sugar business ofSiel Ltd. pursuant to the Scheme of Arrangement approved by Hon’ble High Court of Delhi passed on 26th August, 2003 under Sec. 391/394 of theCompanies Act, 1956.

As the sugar business of Siel Ltd. started from the factory ‘Mawana Sugar Works’ which today is the mother unit of the Company and “MAWANA”brand is established in the market. The Company, therefore, in its Extra Ordinary General Meeting held on 8th May, 2004 approved the change ofname of the Company from Siel Sugar Ltd. to Mawana Sugars Ltd. Subsequently, the Registrar of Companies, Delhi & Haryana vide fresh Certificateof Incorporation dated 16th June, 2004 has approved the same.

GOVERNMENT APPROVALSThe Company has received all the necessary permissions and approvals from the Government and various Government agencies for the existingactivities.

No further approvals from any Government authority/Reserve Bank of India (RBI) are required by the Company to undertake the existing activities,save and except those approvals, which may be required to be taken in the normal course of business from time to time.

As per Notification No. FEMA 20/2000-RB dated 3rd May 2000 and FEMA/76/2002-RB dated 12th November, 2002, the RBI has given its

2

DETAILS OF LICENCES FOR MAWANA SUGAR WORKS

Sr. No. Licence No. & Date Authority Purpose Validity Remarks

1.

2.

3.

4.

5.

6 .

7 .

8 .

9 .

10.

Lic. No.27 dt. 1.4.98

Regn. No. MRT-47 dt26-3-2004

Lic. No. 6/IIdt 11/11/2003

Lic. No. MRT/MWN/M-148/ 03-04 dt 15/3/03, MRT/MWN/R-149/03-04 dt 15/3/03,MRT/MWN/M-150/03-04 dt 19/3/04

Lic. No. 1067, 1099,1101 dt 19/11/2003

Lic. No. 333991dt 10/1/2003

Lic. No. P-12(17)550/UP-2150 dt 9/4/2001

Regn. No. 458 dt 19/3/2002

Lic. No. 033/MRT/2002(V) MAWANA dt31/10/2002- 038 Jani,036 Asmabad, 034Parikshitgarh, 43Pilona, 042 ChotaMawana, 041 Incholi,40 Khajuri, 55Hastinapur

Regn. No. 805/79580dt 25/4/01 MAWANA,13451 Hastinapur,13448, Parikshitgarh,13446 Asmabad,72363 Khajuri, 72364Pilona, 72362Behsuma, 79577Incholi, 7958 Jani

Sugar Commissioner, UP

Dy. Director of Factories,U.P

Collector/ Distt Magis-trate, Meerut

Chief Medical Officer,Meerut

Secretary, Krishi UtpadanMandi Samiti, Mawana

Adhyaksha, ZilaPanchayat, Meerut

Joint Chief ExplosiveController, Agra

Controller of Wts. & Mea-sures, Office of Legal &Metrology Deptt,Lucknow

Plant Protection Officer,U.P

District Agricultural Of-ficer, Meerut

Crushing License under the UPVacuum Pan Sugar FactoriesLicensing Order, 1966

License under Factories Act, 1948

Storage of sulphur

License under UP Prevention ofFood Adulteration Adhiniyam,1976 for – Manufacture & sale ofsugar & molasses, Retail sale inCanteen, Retail sale in FPS

License for wholesale trader(FPS), Mill factory(Firewood) & retail trader (FPS)under UP Krishi Utpadan MandiSamiti Adhiniyam, 1964

Mfg. Of sugar in Mawana dehat

Storage of diesel, furnace oil &petroleum under Petroleum Act,1934

Regn. Certificate for packing ofsugar

License to sell, stock exhibit forsale or distribution of insecticides

License for sale and storage offertilizer

One time

31-12-2004

31/12/2004

31/3/2005

30/6/2004

30/9/2004

31/12/2006

One time

31/12/2005

31/3/2007

Applied for change of namefrom Siel Sugar Ltd. to MawanaSugars Limited vide letter dt.06.07.2004

Intimation about the namechange of Company sent toAuthority.



Applied for renewal on22.06.2004


Licence renewed uptil 31/12/2006. Intimation about thename change of Companysent to Authority.

Applied for change of namefrom Siel Sugar Ltd. to MawanaSugars Limited vide letter dt.22.07.2004



general permission to Indian Companies to issue rights/bonus shares to Non-resident Indians including additional Shares. Hence, theCompany does not need an in-principle approval from RBI for the issue of shares to Non-resident Indians, within the sectoral cap prescribedunder FEMA, 1999.

The Company has applied to Reserve Bank of India vide their letter dated 19th July, 2004 in respect of taking its specific approval for issue andallotment of Shares to OCBs pursuant to its para 6.1 of Master Circular No. 6/2004-05 dated 1st July, 2004. The Company has receivedapproval in respect of three OCBs out of total 4 OCBs and the approval in respect of fourth OCB, will be received only after furnishingnecessary information by them to RBI. The Company will make offer and allotment to that OCB only after receipt of specific approval from RBI.

The Central Government / RBI accepts no responsibility for the financial soundness or correctness of the statements made in the Letter ofOffer.

The major approvals / permissions / consents / NOCs from Government and other agencies for conducting its present manufacturingactivities at both its plants viz. Titawi and Mawana are as under:

3

CONSENTS/APPROVALS FOR MAWANA SUGAR WORKS


1

2

3

4

5.

6.

7.

8.

9.

10.

11

80C-3/04 dt 27/2/2004

7263/04 dt 27/2/2004

G18393/H92/MR-64/02

Regn. No.28/MR-Cont.

Lic. No. P-09/1-24+15Bdt. 27/01/2004

Lic. No. A-87432 dt.31/03/1997Lic. No. 46/mawana dt.26/03/1987Lic. No. 47/mawana dt.26/03/1987Lic. No. 48/mawana dt.26/03/1987

Consent No. UPERC/CAP?264/RKG/02-670dated 16/17-05-2002

U.P.T.T.No.MW0029277w.e.f.5/9/2003

S.T. No. MW5009369w.e.f. 5.9.2003

Regn. No.:-- AAHCS4120RXM001- AAHC4120RXM002- AAHC4120RXM005- AAHC4120RXM006- AAHC4120RXM007- AAHC4120RXM008- AAHC4120RXM009- AAHC4120RXM0010

I.E.C. No. 0503041718dated 26.09.03.

Member Secretary, UPPollution Control Board,Lucknow

-do-

-do-

Dy Labour Commis-sioner, Meerut

Engineer, Wireless underIndian Telegraph Act

Distt. Magistratre, Merut

Secy., U.P. ElectricityRegulatory Commission,Lucknow

Asst. Commissioner,Sales Tax (Mawana)

Asst. Commissioner,Sales Tax (Mawana)

Asst. Commissioner,Customs & CentralExcise

Assitant DirectorGeneral of Foreign Trade

Consent for disposal of water

Consent for emission of smoke

Authorisation under Rule-5 ofHazardous Wastes Rules, 1989

Regn. Under Contract Labour(Regulation & Abolition) Act

Licence for operating wirelessunder Indian Telegraph Act

Revolver

Gun

Gun

Gun

Consent for 4.256 MW Captive/Co-Generation Capacity underU.P. Electricity

Registration under UP Trade Tax

Registration under CentralSales Tax

Registration under CentralExcise Act

Certificate of Importer ExporterCode

31/12/2004

-do-

24/2/2007

One time

31/12/2004

31/05/2005

-do-

-do-

-do-

15/16-05-2012

One time

Wholetime

Onetime

One time








Name changed in theRegistration Cer tificate toMawana Sugars Ltd.

Name changed in theRegistration Cer tificate toMawana Sugars Ltd.

Applied for name change toMawana Sugars Ltd.

Intimation about the namechange of Company sent toAuthority

4

DETAILS OF LICENCES FOR TITAWI SUGAR COMPLEX


1

2

3

4

5.

6.

7.

MZR-757 dated23.09.92

Licence No. 223/93dt. 16.12.92

Cane CrushingLicenceNo. 29 dt. 17.02.93

Licence No. U.P. 5752dt. 10.10.2002.

Licence No. 1085/MNR/TA (N)164

Licence No. 633/MNR/SR dt. 01.01.99

Licence No. 693/MNR/CH (N)271 dt.25.09.99

Dy. Director of Factories,U.P. Meerut Region,

District Magistrate,Muzaffarnagar

Secretary, SugarIndustry Deptt. U.P.Government

Chief Controller ofExplosive, Govt. of India,Agra.

Licensing Authority,Muzaffarnagar, underInsecticide Act, 1968.



Licence to work factory

Storage of Sulphur

To crush sugarcane formanufacturing of sugar

For storage of HSD

For sale of insecticides at BabriStore.

For sale of insecticides at LaluKheri Store.

For sale of insecticides atCharthawal.

31.12.2004

31.12.2004

One Time

31.12.2005

31.12.2005

31.12.2004

31.12.2004



Applied for change of name fromSiel Ltd. To Siel Sugar Limitedvide application dated 18/10/2003. Intimation about the namechange of Company sent toAuthority


Applied for Change of Name toMawna Sugars Limited



CONSENTS/APPROVALS FOR TITAWI SUGAR COMPLEX


1

2

3

4

5

F28538/C-3/VayuPradushan/ 208/2004dt. 05.03.2004

F28539/C3/Jal/256/04 dated 05.03.2004

F17364/C3/Hazardous/MR-23/03dt. 23.06.2003

UPERC/CAP/202/RKG/02 – 616 dt.08.05.2002

Registration ofCertificate No. DL912/93 dt. 18.06.93.

U.P. Pollution ControlBoard, Lucknow, underAir (Prevention & Controlof Pollution) Act, 1981

U.P. Pollution ControlBoard, Lucknow, underWater (Prevention &Control of Pollution) Act,1974

U.P. Pollution ControlBoard, Lucknow, underHazardous wasteManagement Rules1989.

U.P. ElectricityRegulatory Commission,under U.P. ElectricityReform Act, 1999.

Director of LegalMetrology, Deptt. Of CivilSupplies, Govt. of India,under the Standard ofWeights and Measures(PackagedCommodities) Rules1977.

Emission consent for ventingtreated waste air.

Consent for discharge of treatedwater in to drain.

Authorisation for Collection,Reception Treatment, Storageand Disposal of hazardouswaste.

Consent for generating electricityfor the captive unit.

Packing of sugar

31.12.2004

31.12.2004

19.06.2008

07.05.2012

One time






5

CONSENTS/APPROVALS FOR TITAWI SUGAR COMPLEX


6

7

8

9

10

11

12

13

14

15

Registration ofCertificate No. 2327/MZN, dt. 24.06.94

Registration ofCertificate No.AAACS4902QXM004dt. 09.09.2003.

Apeda No. 151966 dt.10.01.2003

MW0029277 dt.05.09.2003

CSTMW5009369 dt.08.09.03

Registration No. 4043dt. 20.02.2004




I.E.C. No.0503041718 dated26.09.03.

Asstt. LabourCommissioner,Muzaffarnagar, under theU.P. Contract Labour(Regulation & Abolition)Rules 1975.

Dy. Commissioner,Central Excise,Muzaffarnagar, underCentral Excise Rules2002.

Agricultural & ProcessedFood Products ExportDevelopment Authority.

Asstt. Commissioner,Trade Tax, MawanaCircle, Meerut.

Asstt. Commissioner,Trade Tax, MawanaCircle, Meerut.

Distt. Agriculture Officer,Muzaffarnagar, underFertilizer Control Order1985.




Joint Director General ofForeign Trade, Ministryof Commerce, Govt. ofIndia.

For engagement of Contractorlabour.

Statutory requirement

For export of sugar

To carry business in U.P as perstatutory requirement

To carry business in U.P as perstatutory requirement

For sale of fertilizer at BabriStore.

For sale of fertilizer at Lalu KheriStore

For sale of fertilizer atCharthawal Store.

For sale of fertilizer at BaghraStore.

Licence to import and export.

One time

One time

31.03.2005

31.03.2005

31.03.2005

19.02.2007

19.02.2007

19.02.2007

03.12.2004

One time


Applied for Change of Name toMawana Sugars Limited


Name changed to MawanaSugars Limited





Applied for Change of Name toMawana Sugars Limited


DISCLAIMER CLAUSEAS REQUIRED, A COPY OF THIS LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THESUBMISSION OF LETTER OF OFFER TO SECURITIES & EXCHANGE BOARD OF INDIA (SEBI) SHOULD NOT IN ANY WAY BE DEEMED ORCONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHERFOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FORTHE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER. THE LEAD MANAGER TO THEISSUE, ALLIANZ SECURITIES LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE LETTER OF OFFER ARE GENERALLYADEQUATE AND ARE IN CONFORMITY WITH THE SEBI GUIDELINES FOR DISCLOSURE AND INVESTOR PROTECTION IN FORCE FORTHE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT INTHE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPON-SIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE LETTER OF OFFER, THELEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITYADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER, M/S ALLIANZ SECURITIES LIMITED HAS FUR-NISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 15TH JUNE, 2004 WHICH READS AS FOLLOWS:“1. We have examined various documents including those relating to litigation like commercial disputes, patent disputes, disputes with

collaborators etc. and other material in connection with the finalization of the Letter of Offer pertaining to the said Issue.2. On the basis of such examination and discussions with the Company, its directors and other officers, other agencies, independent

6

verification of statement concerning the objects of the Issue, projected profitability, price justification and the contents of thedocuments mentioned in the Annexure and other papers furnished by the Company;

WE CONFIRM THAT:a. The Letter of Offer forwarded to SEBI is in conformity with the documents, materials and papers relevant to the Issue;b. All the legal requirements connected with the said Issue as also the guidelines, instructions etc., issued by SEBI, the

Government and any other competent authority in this behalf have been duly complied with; andc. The disclosures made in the Letter of Offer are true, fair and adequate to enable the investors to make a well-informed

decision as to the investment in the proposed Issue.d. We confirm that besides ourselves, all the intermediaries named in the Letter of Offer are registered with SEBI and till date

such registration is valid.e. If underwritten, we shall satisfy ourselves about the worth of the underwriters to fulfill their underwriting commitments”The filing of the Letter of Offer does not, however, absolve the Company from any liabilities under section 63 or 68 of the Companies Act, 1956or from the requirement of obtaining such statutory or other clearance as may be required for the purpose of the proposed issue. SEBI furtherreserves the right to take up, at any point of time, with the Lead Manager any irregularities or lapses in the Letter of Offer.

CAUTIONThe Company and the Lead Managers accept no responsibility for statements made otherwise than in this Letter of Offer or in any advertise-ment or other material issued by the Company or by any other persons at the instance of the Company and that anyone placing reliance on anyother source of information would be doing so at his/her/their own risk.

All information shall be made available by the Lead Managers and the Issuer to the Shareholders and no selective or additional informationwould be available for a section of the Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. afterfiling of the Letter of Offer with SEBI.

DISCLAIMER IN RESPECT OF JURISDICTIONThis Offer of Equity shares is made in India to the persons resident in India and NRIs/FIIs and OCBs subject to requisite approvals. This Letterof Offer does not, however, constitute an offer to sell or invitation to subscribe to equity shares offered hereby in any other jurisdiction to anyperson to whom it is unlawful to make an offer or invitation in such jurisdiction.

Any person into whose possession this Letter of Offer comes is required to inform himself/herself about and to observe any such restrictions.Any disputes arising out of this issue will be subject to the jurisdiction of the appropriate courts in Delhi, India only.

The Letter of Offer has been filed with SEBI, Rajendra Bhawan, Rajendra Place, New Delhi – 110 008 for its observations. The Letter of Offerhas been filed with the “The Stock Exchange, Mumbai”, Designated Stock Exchange as per the requirement of the Law.

DISCLAIMER CLAUSE OF THE STOCK EXCHANGESDisclaimer Clause of The Stock Exchange, Mumbai (Designated Stock Exchange)“The Stock Exchange, Mumbai (“the Exchange”) has given vide its letter dated 2nd July, 2004 permission to this Company to use theExchanges ’s name in this Letter of Offer as one of the Stock Exchanges on which the company’s securities are proposed to be listed. TheExchange has scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to theCompany. The Exchange does not in any manner:-i) warrant, certify or endorse the correctness or completeness of any of the contents of this Letter of Offer ; orii) warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; oriii) take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of

this Company.

And it should not for any reason be deemed or construed that this Letter Of Offer has been cleared or approved by the Exchange. Every personwho desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation andanalysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such personconsequent to or in connection with such subscription / acquisition whether by reason of anything stated or omitted to be stated herein or forany other reason whatsoever.”

IMPERSONATIONAs a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection (1) of Section 68Aof the Companies Act, 1956 which is reproduced below:

“Any person who-i. makes in a fictitious name an application to a Company for acquiring or subscribing for any shares therein, orii. 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.”

MINIMUM SUBSCRIPTIONIf the Company does not receive minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants withinforty-two days from the Date of Closure of the Issue.

If there is delay in the refund of subscription by more than 8 days after the Company becomes liable to pay the subscription amount (i.e. fortytwo days after Closure of the Issue), the Company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A)of Section 73 of the Companies Act, 1956.

LISTINGThe existing equity shares of the Company are listed on the BSE. The Company has paid the current annual listing fees to the stock exchangewhere its equity shares are listed. Application has been made to the BSE for permission to deal in and for an official quotation in respect of thesecurities being offered in terms of this Letter of Offer. The “in-principle” approval for listing from BSE has been received on 2nd July, 2004

7

If the permission to deal in and for an official quotation of the securities is not granted by the Stock Exchange mentioned above, the Companyshall forthwith repay, without interest, all monies received from applicants in pursuance of this Letter of Offer. If such money is not paid withineight days after the Company becomes liable to repay it, then the Company and every Director of the Company who is an officer in default shall,on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under sections (2) and (2A) ofSection 73 of the Act.

COMPULSORY DEMATERIALISED DEALINGThe equity shares of the Company have been under compulsorily dematerialized trading for all investors with effect from December 17,2003(the date of listing of the equity shares with BSE). The Company has an agreement with National Securities Depository Ltd. (NSDL) and CentralDepository Services (India) Ltd. (CDSL) and its equity shares bear the ISIN No. INE 255G01019.

ALLOTMENT AND REFUNDThe Company will issue and dispatch letters of allotment/ securities certificates and/ or letters of regret along with refund order, or credit theallotted securities to the respective beneficiary accounts, if any within a period of six weeks from the Date of Closure of the Issue. If such moneyis not repaid within 8 days from the day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulatedunder Section 73 of the Act.

Letters of allotment/ securities certificates/ refund orders above the value of Rs.1,500/- will be dispatched by Registered Post/ Speed Post tothe sole/ first applicant’s registered address. However, refund orders for value not exceeding Rs.1500/- shall be sent to the applicants underPostal Certificate. Such cheques or pay orders will be payable at par at all the centers where the applications were originally accepted and willbe marked “A/c payee” and would be drawn in the name of the sole/ first applicant. Adequate funds would be made available to the Registrarsto the Issue for dispatch of the Letters of allotment/Share Certificates/ refund orders.

In case the Company issues Letters of allotment, the corresponding Share Certificates will be kept ready within three months from the date ofallotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Companies Act, 1956 orother applicable provisions, if any. Allottees are requested to preserve such Letters of Allotment, which would be exchanged later for the shareCertificates.

ISSUE PROGRAMMEThe subscription will open at the commencement of the banking hours and will close upon the close of banking hours on the dates mentionedbelow or on such extended date (subject to a maximum of 60 days) as may be determined by the Board, subject to necessary approval:

ISSUE OPENS ON LAST DATE FOR REQUEST FOR ISSUE CLOSES ONSPLIT APPLICATION FORMS

27TH AUGUST, 2004 11TH SEPTEMBER, 2004 27TH SEPTEMBER, 2004

Note : The investors are advised to contact the Registrars to the Issue/Compliance Officer in case of any Pre-issue/ Post-issue related problemssuch as non-receipt of Letter of Offer/ Letter of Allotment/ share certificates/ Refund orders etc.

Bankers to the Company

State Bank of IndiaIndustrial Finance Branch14th Floor, Jawahar Vyapar Bhawan.1, Tolstoy Marg, New Delhi –110001

Punjab National BankMuzzaffarnagar, Uttar Pradesh

Bankers to the Issue

State Bank of IndiaMain BranchPost Bag No. 5.11, Sansad Marg, New Delhi –110001

Punjab National BankShare DivisionSansad Marg, New Delhi –110001

Company Secretary & Compliance Officer

Mr. P.K. BhallaExecutive Director & Company SecretaryMawana Sugars Limited6th Floor, Kirti Mahal,19, Rajendra Place,New Delhi-110008Telephone : 011 – 25739103Fax : 011 – 25743823Email –[email protected]

Lead Manager to the Issue

Allianz Securities Limited (UIN-100001008)2nd Floor, 3 Scindia House, Janpath,New Delhi-110 001Tel: 011 – 51514666Fax: 011 – 51514665E-mail: [email protected]

Registrars to the Issue

MAS Services Private Ltd.SEBI REGN NO : INR000000049AB-4, Safdurjung Enclave,New Delhi – 110 029Phone: 011 – 26104142, 26104326Fax : 011 – 26181081E-Mail:[email protected]

Auditors to the Company

M/s A.F. Ferguson & Co.Chartered AccountantsScindia House,New Delhi – 110001

Legal Advisor to the Issue

M/s Dutt & Menon ,AdvocatesG-24 , Ist Floor,Jangpura Extension,New Delhi – 110014

8

CREDIT RATINGThis being an issue of Equity Shares, no credit rating or appointment of a debenture trustee is required.

UNDERWRITING / STANDBY ARRANGEMENTSThe present issue is not underwritten with any agency registered with SEBI. However, the promoters of the company have undertaken to subscribeto unsubscribed portion.

UTILIZATION OF ISSUE PROCEEDS

The Board of Directors declare that:

· The funds received against this Issue will be transferred to a separate bank account other than the bank account referred to sub-section(3) of Section 73 of the Act.

· Details of all moneys utilized out of the Issue shall be disclosed under an appropriate separate head in the balance sheet of the Companyindicating the purpose for which such moneys has been utilized.

· Details of all such unutilized moneys out of the Issue, if any, shall be disclosed under an appropriate separate head in the balance sheet of theCompany indicating the form in which such un utilized moneys have been invested.

The funds received against this Rights Issue will be kept in a separate bank account and the Company will not have any access to such fundsunless it satisfies The Stock Exchange, Mumbai with suitable documentary evidence that the minimum subscription of 90% of the Issue has beenreceived by the Company.

II. CAPITAL STRUCTURE OF THE COMPANY

Amount (Rs.)

Face Value Issue Size

Authorized Share Capital

5,00,00,000 Equity shares of Rs.10/- each 50,00,00,000

Issued Capital


Subscribed and Paid-up capital


Present issue being offered to the Equity Shareholders through this Letter of Offer

84,98,976 Equity Shares of Rs.10/- each at par 8,49,89,760 8,49,89,760

Paid up capital after the Issue


Share Premium Account

Existing Share Premium Account 30,80,09,028

Addition to Share Premium Account on allotment of Equity Shares in this Issue -

Share Premium Account after the Present Issue 30,80,09,028

NOTES FORMING PART OF THE CAPITAL STRUCTURE:1. The Company was incorporated under the Companies Act, 1956 on 26th December 2002 as Siel Sugar Limited (renamed as Mawana Sugars

Limited w.e.f.16th June, 2004) to take over the sugar business of Siel Ltd. Siel Ltd., which was earlier in the business of Chlor Alkali & Sugarwas bifurcated pursuant to a Scheme of Arrangement approved by the Hon’ble High Court of Delhi vide its order dated 26th August 2003. Thepaid up equity capital of Rs. 41,26,12,060/- of erstwhile Siel Limited was bifurcated in the ratio of 1:3 between Siel Limited and Mawana SugarsLimited i.e. shareholders holding 4 equity shares in Siel Limited on Record date got 1 equity share of Siel Ltd. and 3 equity shares of MawanaSugars Ltd.(formerly known as Siel Sugar Limited) The total paid up capital of 412,61,206 Equity Shares of Rs. 10/- each fully paid up wasdivided into 1,03,15,302 equity shares of Rs. 10/- each fully paid up aggregating to Rs. 1031.53 lakhs (for Siel Limited) and 3,09,45,904 equityshares of Rs. 10/- each fully paid up aggregating to Rs. 3094.59 lakhs (For Mawana Sugars Ltd. ).

2. Capital History of Mawana Sugars Limited (Capital build up w.e.f. 10th January, 2003)

No. of shares Date of allotment Face Value Issue Price Nature of Issue & payment Cumulativeallotted (Rs.) (Rs.) no. of shares

50,000 10th January 2003 10/- 10/- Subscription to Memorandum of Association 50,000

30,00,000 27th October 2003 10/- 10/- Preferential allotment to Mr. Krishna Shrirampursuant to Scheme of Arrangement 30,50,000

3,09,45,904 30th October 2003 10/- 10/- Allotted pursuant to the Scheme of Arrangement 3,39,95,904

3. This being a Rights Issue in accordance with clause 4.10.1(c) of the SEBI guidelines, the requirements of promoters’ contribution do not apply.As a consequence none of the equity shares are locked in.

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4. Shareholding pattern before and after the issue is as under:

Existing (As on 05/08/2004) After the Present Issue*Category No. of equity % of pre- No. of shares Percentage

shares held issue capital

Promoters**Indian Promoters 11051337 32.51 13814171 32.51Foreign Promoters - - - -Persons Acting in Concert# 3375134 9.93 4218918 9.93

Sub-Total 14426471 42.44 18033089 42.44

Non PromotersMutual Funds and UTI 1360508 4.00 1700635 4.00Banks, Financial Institutions & Insurance Cos. 2907129 8.55 3633911 8.55Foreign Institutional Investors 49999 0.15 62499 0.15

Sub-Total 4317636 12.70 5397045 12.70

Private Corporate Bodies 3862536 11.36 4828170 11.36Non-resident Indians/ Overseas Corporate Bodies 167690 0.49 209612 0.49(Including 77566 shares held by Pakistanis)General Public 6867656 20.20 8584570 20.20Any Other (GDRs Shares) 4353915 12.81 5442394 12.81

Sub-Total 15251797 44.86 19064746 44.86

Grand Total 33995904 100.00 42494880 100.00

* assuming that all the applicants exercise their Rights Entitlement in full.

** As defined in Regulation 2(h) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The promoters group-Individual orBody Corporates.

# 1. As defined in Regulation 2(e)(1) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

2. Persons Acting in concert includes 2 OCBs holding 2249730 shares constituting 6.62% of totally share capital of the company.

5. Details of Shareholding of the Promoters and Promoter Group in the company as on 5th August, 2004 is as follows:

Name No. of shares Percentage (%) Share under Lock-in

Individual Promoters

Krishna Shriram 3000000 8.82 Till 16th Dec. 2006

Siddharth Shriram 70184 0.21 -

Companies Promoted by Promoters

Busneda Commercial Pvt. Ltd. 3413834 10.04 2689287(i.e. 7.91%) shares till 16th Dec. 2006

Sandvik Investments & Leasing Pvt. Ltd. 1602089 4.71 -

Greenfields Commercial Pvt. Ltd. 909495 2.68 -

Minos Trading (I) Pvt. Ltd. 321385 0.95 -

C S R J & K Investments Pvt. Ltd. 138896 0.41 -

SFSL Securities Pvt. Ltd. 297439 0.88 -

Perennial Investments Limited 28515 0.08 -

Doab Foods & General Industries Ltd. 609750 1.79 Till 16th Dec. 2006

M S R Enterprises Ltd. 609750 1.79 Till 16th Dec. 2006

Siel Ltd. 50000 0.15 -

Other Promoters (Persons acting in concert)*

(includes friends, relatives, etc.) 3375134 9.93 -

TOTAL 14426471 42.44 -

* As defined in Regulation 2(e)(1) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

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6. Build up of the shareholding of Promoters & Promoter Group in the company upto 5th August, 2004:-

Name No. of Date of Acquisition/ Price Consideration Reasons forShares Allotment Allotment

Siel Ltd. 50000 10.01.2003 10/- Cash Subscribers to theMemorandum

Krishna Shriram 3000000 27.10.2003 10/- Cash Pursuant to Scheme ofArrangement (Preferential)

Busneda Commercial Pvt. Ltd. 3413834 30.10.2003 10/- Consideration Pursuant to Scheme ofother than cash Arrangement

Sandvik Investments & 1602089 30.10.2003 10/- Consideration other Pursuant to Scheme ofLeasing Pvt. Ltd. than cash Arrangement

Greenfields Commercial Pvt. Ltd. 909495 30.10.2003 10/- Consideration other Pursuant to Scheme ofthan cash Arrangement

Minos Trading (I) Pvt. Ltd. 321385 30.10.2003 10/- Consideration Pursuant to Scheme ofother than cash Arrangement

C S R J & K Investments Pvt. Ltd. 138896 30.10.2003 10/- Consideration Pursuant to Scheme ofother than cash Arrangement

SFSL Securities Pvt. Ltd. 297439 30.10.2003 10/- Consideration Pursuant to Scheme ofother than cash Arrangement

Doab Foods & General Industries Ltd. 609750 30.10.2003 10/- Consideration Pursuant to Scheme ofother than cash Arrangement

M S R Enterprises Ltd. 609750 30.10.2003 10/- Consideration Pursuant to Scheme ofother than cash Arrangement

Perennial Investments Limited 28515 30.10.2003 10/- Consideration Pursuant to Scheme ofother than cash Arrangement

Siddharth Shriram 70184 30.10.2003 10/- Consideration Pursuant to Scheme ofother than cash Arrangement

Other Promoters 3375134 30.10.2003 10/- Consideration Pursuant to Scheme ofother than cash Arrangement

7. Shareholding of the Directors of the Promoter Companies in the Company as on 5th August, 2004:

Name of the Promoter Company Name of the Director Shares held in the CompanySiel Limited Siddharth Shriram 70184

P.K. Bhalla 456A.K. Mehra 4818K.P. Singh NilProf. Dinesh Mohan NilDaviinder Gupta NilR.K. Ahooja NilSubrata Lahiri Nil

Busneda Commercial Pvt. Ltd. Chhaya Shriram NilA.K. Gupta Nil

Sandvik Investments & Leasing Pvt. Ltd. Chhaya Shriram NilA.K. Gupta Nil

Greenfields Commercial Pvt. Ltd. Chhaya Shriram NilA.K. Gupta Nil

Minos Trading (I) Pvt. Ltd. Chhaya Shriram NilA.K. Gupta Nil

C S R J & K Investments Pvt. Ltd. Chhaya Shriram NilA.K. Gupta Nil

SFSL Securities Pvt. Ltd. Siddharth Shriram 70184Krishna Shriram 3000000

*Perennial Investments Limited Siddharth Shriram 70184A. K. Gupta Nil

*Doab Foods & General Industries Ltd. Siddharth Shriram 70184A. K. Gupta Nil

*M S R Enterprises Ltd. Siddharth Shriram 70184A. K. Gupta Nil

* These companies are in the process of converting their status from Public Limited companies to Private Limited Companies.

8. The Promoter Group including Directors and their Associates hold 14427326 Equity Shares of face value of Rs. 10/- each as on 5th August,2004 which constitutes 42.44 % of the aggregate Equity Share Capital of the Company.

9. There has been no purchase/Sale of the shares of the Company by the present promoters in the last 6 months.

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10. The directors of the Company have not purchased or sold any Equity Shares of the Company during the last six months. The shareholdingof the directors of the Company and their relatives in the Company is as under:

Name of the Director No. of Shares held as on 5th August, 2004 of the Company % holdingMr. Siddharth Shriram 70184 0.21

Mr. Deepak Banerjee NIL -Mr. Ravi Vira Gupta NIL -

Mr. S Lahiri NIL -

Mr. N.K. Goila 855 0.00

Name of the Relative No. of Shares held as on 5th August, 2004 of the Company % holdingMr. Krishna Shriram 3000000 8.82

Ms Gauri S. Keeling 1756 0.01

Ms. Roula Shriram 858 0.00Mr. Deepak C. Shriram 2700 0.01

11. Details regarding Major ShareholdersThe details of top 10 shareholders of the Company and the number of shares held by them are as under:

i. As on date of Letter of Offer i.e. on 5th August, 2004 :

Sr. No. Name of Shareholders No. of shares % age1. The Bank Of New York (GDR Shares) 4353915 12.812. Busneda Commercial Pvt Ltd 3413834 10.04

3. Krishna Shriram 3000000 8.82

4. Lindon Investments Ltd. 1639980 4.82

5. Sandvik Investments and Leasing Pvt.Ltd. 1602089 4.71

6. Life Insurance Corporation of India 1538715 4.537. Manodeal Investment & Finance Pvt. Ltd 1527780 4.49

8. Unit Trust Of India 1333413 3.92

9. Pradeep Vira as Trustee of Enterprise Trust 1082037 3.18

10. Greenfields Commercial Pvt. Ltd. 909495 2.68

ii. 10 days prior to the date of Letter of Offer i.e. as on 26th July, 2004

Sr. No. Name of Shareholders No. of shares % age1. The Bank Of New York (GDR Shares) 4353915 12.81

2. Busneda Commercial Pvt Ltd 3413834 10.04

3. Krishna Shriram 3000000 8.82

4. Lindon Investments Ltd. 1639980 4.825. Sandvik Investments and Leasing Pvt.Ltd. 1602089 4.71

6. Life Insurance Corporation of India 1538715 4.53

7. Manodeal Investment & Finance Pvt. Ltd 1527780 4.49

8. Unit Trust of India 1333413 3.929. Pradeep Vira as Trustee of Enterprise Trust 1082037 3.18

10. Greenfields Commercial Pvt. Ltd. 909495 2.68

iii. Two years prior to the date of Letter of Offer – As the Company was incorporated on 26th December, 2002, the details oftop ten shareholders as on 26th December, 2002 was as under :

Sr. No. Name of Shareholders No. of shares %age1. Siel Limited 49994 99.99

2. Siddharth Shriram (Nominees of Siel Limited) 1 0.002

3. Krishna Shriram (Nominees of Siel Limited) 1 0.0024. P.K. Bhalla (Nominees of Siel Limited) 1 0.002

5. A.K. Mehra (Nominees of Siel Limited) 1 0.002

6. Sunil Malhotra (Nominees of Siel Limited) 1 0.002

7. K.P. Singh (Nominees of Siel Limited) 1 0.002

12. There are no partly paid up Equity Shares as on 5th August, 2004.

13. There are no outstanding warrants, securities convertible into shares, other instruments with a right to convert into shares or outstandingemployee stock options.

14. Two Promoter Companies viz. Busneda Commercial Pvt. Ltd and Sandvik Investments & Leasing Pvt. Ltd. and one Individual Promoter viz. Mr.Siddharth Shriram have pledged / agreed to pledge their shareholding by way of colateral security to secure the financial assistance availedfrom Financial Institutions from time to time. This pledge conforms to the CDR restructuring package.

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15. No shares have been allotted on firm basis or through private placement in the last two years nor has the Company bought back its equityshares in the last six months. However, preferential allotment was made to Mr. Krishna Shriram for 30 Lakhs equity shares of Rs. 10/- eachfully paid up for cash at par through Private Placement pursuant to the Scheme of Arrangement on 27th October, 2003.

16. No further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any other manner will be made bythe Company during the period commencing from submission of the LOO with SEBI till the equity shares referred to in this LOO have been fullypaid up and shares are listed or application money is refunded in case of failure of the Issue.

17. The Company presently does not have any intention or proposal to alter its capital structure within a period of six months from the date ofopening of the Issue, by way of split/consolidation of the denominations of shares or further issue of shares whether preferential or otherwise.

18. The Company has 59,455 Equity Shareholders as on 5th August, 2004.

19. At any given point of time there shall be only one denomination for the Equity Shares of the Company and the Issuer shall comply with suchdisclosure and accounting norms as may be prescribed by SEBI.

20. The Company has not raised any bridge loan against the proceeds of this Issue.

21. Shares offered through this Issue shall be made fully paid up within 12 months from the date of its allotment.

22. The Company has not entered into any buy-back or standby or similar arrangements for the purchase of securities by the Promoters, Directorsor the Lead Manager.

23. Promoters have undertaken that they will subscribe to their Rights Entitlement in full and in addition undertaken to apply for additional sharesto the extent the issue is under subscribed. As a result of this subscription and consequent allotment, the promoter may acquire shares overand above their entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with therights entitlement under the present offer. This subscription and acquisition of additional shares by Promoters, if any, will not result in changeof control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the SEBI (SubstantialAcquisition of Shares and Takeover) Regulations, 1997 and will be exempt from the applicability of regulation 11 and 12 of SEBI (SubstantialAcquisition of Shares and Takeover) Regulations, 1997. This disclosure is made in terms of the requirement of Regulation 3(1)(b) of the SEBI(Substantial Acquisition of Shares and Takeover) Regulations, 1997.

24. As such, other than meeting the requirements indicated in Utilisation of funds, there is no other intention / purpose for this issue, including anyintention to delist the Company, even if, as a result of allotments to Promoter, in this Issue, the Promoter shareholding in the Company exceedshis current shareholding. However, the Promoters have confirmed that in case the Rights Issue of the Company is completed with the Promotersubscribing to equity shares over and above their entitlement and as a result, if the public shareholding of the Company after the Rights Issuefalls below the “permissible minimum level” as specified in the listing condition or listing agreement, they will either individually or jointly withother persons or companies acting in concert either (a) buy out the remaining shareholders or (b) make an offer for sale of his holdings so thatthe public shareholding is raised to the “permissible minimum level” within a period of 3 months from the date of allotment in the ProposedIssue, as per the requirements of Securities & Exchange Board of India (Delisting of Securities) Guidelines, 2003 or as per any amendmentthereto or any other period as may be directed by SEBI or any appropriate authority.

25. Renunciation by non-resident shareholders of the Company in favour of other non-resident shareholder(s) is permitted under Regulation 9(2)(i)of the Foreign Exchange (Transfer or Issue of Security by a Person Residing outside India) Regulations, 2000 for this Rights Issue.

Regulation 6 of the Foreign Exchange (Transfer or Issue of Security by a Person Residing outside India) Regulations, 2000 (the “Regulations”)permits an Indian Company to offer to a person resident outside India, equity shares on right basis subject to following conditions:

(i) The offer on right basis does not result in increase in the percentage of foreign equity already approved, or permissible under theForeign Direct Investment Scheme in terms of the Regulations.

(ii) The existing shares against which shares are issued by the company on the right basis were acquired and are held by the personresident outside India in accordance with the Regulations.

(iii) The offer on rights basis to the persons resident outside India is at a price which is not lower than that at which the offer is made toresident shareholders.

Any issue of equity shares to non-resident shareholders and additional equity shares to the existing non-resident shareholders shall be subject toForeign Investment Promotion Board (FIPB) / Reserve Bank of India (RBI) approval.

III. TERMS OF THE PRESENT ISSUEAuthority for the present issueThe Rights Issue is being made pursuant to the Board Resolutions dated April 5,2004 and the approval of shareholders in their Extra-ordinaryGeneral Meeting held on May 8, 2004.

Basis of offerThe Equity Shares are being offered for subscription for cash at par to those existing Equity Shareholders whose names appear as beneficial ownersas per the list to be furnished by the depositories in respect of the shares held in the electronic form and on the Register of Members of the Companyin respect of shares held in the physical form at the close of business hours on the Record Date i.e. 13th August, 2004 fixed in consultation with theStock Exchange, Mumbai.

The Equity Shares are being offered for subscription in the ratio of One Equity Share for every Four equity shares held by the Equity Shareholders.

Principal Terms of the IssueThe Equity Shares, now being issued, are subject to the terms and conditions of this Letter of Offer, the enclosed Composite Application Form(“CAF(s)”), the Memorandum & Articles of Association of the Company, the approvals from the GoI, FIPB and RBI, as applicable, the provisions of theCompanies Act, 1956, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued

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by Government of India and/ or other statutory authorities and bodies from time to time, terms and conditions as stipulated in the allotmentadvise or letter of allotment or share certificate, or any other legislative enactments and rules as may be applicable and introduced from timeto time by SEBI, Government of India, RBI and or other authorities.

Rights EntitlementAs an Equity Shareholder of the Company on the Record Date i.e. 13th August, 2004 you are entitled to this Rights Issue as shown in part A ofthe enclosed Composite Application Form. The new Equity Shares are offered in the ratio of One Equity Share for every four equity shares heldby the existing Equity Shareholders. Shareholders holding only 1 (one) equity share will be offered one new equity share.

Fractional entitlementThe entitlements if fractional, will be rounded off to the next higher integer. The Equity Shares needed for fractional entitlement in case ofrounding off and for offering one new share for existing one share will be adjusted first out of the entitlement of shareholders not applying forshares and then from the Promoters’ entitlement at the time of allotment.

Principal Terms and Conditions of the Issue of Equity Shares

1. Face valueEach Equity Share shall have the face value of Rs. 10/-.

2. Issue priceEach Equity Share is being offered at a price of Rs. 10/- per share.

3. Entitlement RatioThe Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the ratio of One Equity Share forevery four Equity Shares held. All fractional entitlement will be rounded off to the next higher integer. All shareholders holding one share shallalso be offered one new Equity Share.

4. Market lotThe market lot for Equity Shares held in dematerialized mode is one. In case of physical certificates, the Company would issue onecertificate for the Equity Shares allotted to one person (“Consolidated Certificate”). In respect of the Consolidated Certificate, the Companywill, only upon receipt of a request from the Equity Shareholder, split such Consolidated Certificate into smaller denomination within sevendays time from the receipt of the request from the equity shareholders. No fee would be charged by the Company for splitting theConsolidated Certificate, but stamp duty payable if any will be borne by the Equity Shareholder.

5. Terms of paymentThe amount of Rs. 6.50 per Equity Share shall be payable along with the application and the balance of Rs. 3.50 per share shall be payableas may be decided by the Board in such a manner that the shares are fully paid up in within 12 months from the date of allotment of newshares.

6. Ranking of the Equity SharesThe Equity Shares shall be subject to the Memorandum and Articles of Association of the Company and shall rank pari passu in all respectswith the existing equity shares of the Company including in respect of dividend, if any, declared by the Company, for the financial year, inwhich these Equity Shares are allotted.

NominationThe sole equity share holder or first equity share holder, along with other joint equity share holders (being individual(s)) may nominate anyperson who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the equity shares.Person, being a nominee, becoming entitled to the equity shares by reason of the death of the original equity share holder(s), shall be entitledto the same advantages to which he would be entitled if he were the registered holder of the equity share. Where the nominee is a minor, theequity share holder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the equity shareholder(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of theequity shares by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. When the equity shareis held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. Freshnominations can be made only in the prescribed form available on request at the Registered Office of the Company or such other person atsuch addresses as may be notified by the Company. Applicant can make the nomination by filling in the relevant portion in the CAF.

Acceptance of OfferYou may accept the Offer and apply for Equity Shares offered, either in full or in part by filling Block III of Part “A” of the enclosed CAF(s) andsubmit the same along with the application money payable to the “Bankers to the Issue” or any of the branches as mentioned on the reverseof the CAF(s) before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by theBoard or a Committee thereof in this regard.

Applicants at Centres not covered by the branches of collecting banks can send their CAF(s) together with the cheque drawn on a local bankat New Delhi/ demand draft for the full application amount (net of demand draft and postal charges) payable at New Delhi to the Registrars tothe Issue by registered post. Such applications sent to anyone other than the Registrars to the Issue are liable to be rejected.

ADDITIONAL EQUITY SHARESYou are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to, provided you apply for allthe Equity Shares to which you are entitled without renouncing them, in whole or in part, in favour of any other person(s). The Board reservesthe sole and absolute right to reject any such application for additional equity shares without assigning any reasons thereof. If you desire toapply for additional Equity Shares, please indicate your requirement in Block IV of Part ‘A’ of the CAF.

RENUNCIATIONThis Issue shall be deemed to include a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favourof any other person or persons subject to the approval of the Board. Such renouncees can only be Indian Nationals (including minor through

14

their natural/legal guardian)/limited companies incorporated under and governed by the Act, statutory Corporations/institutions, trusts (regis-tered under the Indian Trust Act), societies (registered under the Societies Registration Act, 1860 or any other applicable laws) provided thatsuch trust/society is authorised under its constitution/bye laws to hold equity shares in a company and cannot be a partnership firm, foreignnationals or nominees of any of them (unless approved by RBI or other relevant authorities) or to any person situated or having jurisdictionwhere the offering in terms of this LOO could be illegal or require compliance with securities laws of such jurisdiction or any other persons notapproved by the Board.

Any renunciation from Resident Indian Shareholder(s) to Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to ResidentIndian(s) is subject to the renouncer(s)/renouncee(s) obtaining the necessary permission of the RBI under the Foreign Exchange Manage-ment Act, 1999 (FEMA) and other applicable laws and such permissions should be attached to the CAF. Applications not accompanied by theaforesaid approval are liable to be rejected.

Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. Submission of the enclosed CAFto the Bankers to the Issue / collection centres specified on the reverse of the CAF with the Form of Renunciation (Part B of the CAF) duly filled inshall be conclusive evidence for the Company of the person(s) applying for Equity Shares in Part ‘C’ to receive allotment of such Equity Shares.Renouncee(s) will have the right to apply for additional Equity Shares. Renouncee(s) will have no further right to renounce any Equity Shares infavour of any other person.

PROCEDURE FOR RENUNCIATION(a) To renounce the whole offer:

If you wish to renounce this offer in whole, please complete Part B of the CAF. In case of joint holders, all joint holders must sign this part ofthe CAF. The person in whose favour renunciation has been made should complete and sign Part C of the CAF. In case of joint renouncees, alljoint renouncees must sign this part of the CAF.

(b) To renounce in part:If you wish to either accept this offer in part and renounce the balance or renounce the entire offer in favour of two or more renouncees, the CAFmust be first split by applying to the Registrar to the Issue. Please indicate your requirement for Split Forms in the space provided for thispurpose in Part D of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hourson 11th September, 2004. On receipt of the required number of split forms from the Registrar, the procedure as mentioned in para (a) above shallhave to be followed. All the shareholders shall sign the Part “D” of the “CAF”.

(c) Change and/or introduction of additional holders:If you wish to apply for Equity Shares jointly with any other person, or persons, not more than 3, who is/are not already joint holders with you, itshall amount to renunciation and the procedure as stated above shall have to be followed. Even a change in the sequence of the joint holdersshall amount to renunciation and the procedure, as stated above shall have to be followed.All the Promoters & Promoter Companies have undertaken that it will subscribe to its Rights Entitlement in full and have further under taken tosubscribe to unsubscribed portion.

SPLITTING OF COMPOSITE APPLICATION FORMSRequest for Split Forms should be sent to the Registrar to the Issue namely MAS Services Private Ltd.,AB-4, Safdarjung Enclave, New Delhi –110029 before the closure of business hours on or before 11th September, 2004 by filling in Part ‘D’ of the CAF along with entire CAF. Split Formscannot be re-split. The renouncee(s) shall not be entitled to Split Form(s).

OPTION

A.

B.

C.

D.

E.

F.

OPTION

Accept your entitlement to all the Equity Shares offered to you

Accept your entitlement to all the Equity Shares offeredto you and apply for additional Shares

Accept only a part of your entitlement of the Equity Sharesoffered to you (without renouncing the balance)

Renounce your full entitlement of the Equity Shares offeredto you to one person (Renouncee) (Joint Renounceesnot exceeding three are considered as one Renouncee)

Accept a part of your entitlement of the Equity Sharesoffered to you and then renounce the balance to oneRenouncee

Renounce your entitlement of the Equity Shares offeredto you, to more than one Renouncee.

ACTION REQUIRED

Fill and sign ‘Part A’ of the CAF

Fill and sign ‘Part A’ of the CAF afterindicating in Block IV the number of additional Equity Shares applied for

Fill and sign ‘Part A’ of the CAF

Fill and sign Part ‘B’ of the CAF indicating the number of Equity Sharesrenounced. The renouncee must fill and sign Part ‘C’ of the CAF

Fill and sign ‘Part D’ of the CAF for Split Forms after indicating therequired number of Split Application Forms and take action as indicatedbelow:(i) For the Equity Shares, if any, which you want to accept, fill in and

sign ‘Part A’ of one Split Composite Application Form.(ii) For the Equity Shares you want to renounce, fill in and sign ‘Part B’

in the required number of Split Composite Application Formsindicating the number of Equity Shares renounced to eachRenouncee.

(iii) Each of the renouncee should then fill in and sign ‘Part C’ of therespective Split Composite Application Form for the Equity Sharesaccepted by the renouncee.

Follow the procedures stated in (E) above for obtaining the requirednumber of Split Composite Application Forms and on receipt of SplitComposite Application Forms follow the procedure as stated in (E) (ii)and (iii) above.

HOW TO APPLY FOR EQUITY SHARESYou may exercise any of the following options with regard to the Equity Shares offered to you, using the enclosed CAF.

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Applications for Equity Shares should be made only on the CAF, which are provided by the Company. The CAF should be completed in all respectsas explained under the head “INSTRUCTIONS” indicated on the reverse of the CAF before submission to the Bankers to the Issue at their collectioncenters mentioned on the reverse of the CAF on or before the closure of the subscription list. Non-Resident Shareholders/Renouncee should forwardtheir applications to Bankers to the Issue as mentioned in the CAF for Non Resident Equity Shareholders. No part of the CAF should be detachedunder any circumstances.

For applicants residing at places other than designated Bank Collection Centres.Applicants residing at places other than the cities where the bank collection centers have been opened should send their completed CAF byregistered post to MAS Services Pvt. Limited, AB-4, Safdarjung Enclave,New Delhi – 110029 (Registrar to the issue) alongwith bank drafts (net ofbank charges and registered post charges) payable at New Delhi in favour of “MSL- Rights Issue” and crossed “A/c Payee only”.

The Company will not be liable for any postal delays and applications received through mail after the closure of the Issue, are liable to be rejectedand returned to the applicants. Applications by mail should not be sent in any other manner except as mentioned above.

The CAF alongwith application money must not be sent to the Company or the Lead Managers to the Issue or the Registrar to the Issueexcept as mentioned above. The applicants are requested to strictly adhere to these instructions.

In case the CAF is misplaced or is not received by the applicant, the applicant may request the Registrar to the Issue, MAS Services Pvt. LimitedAB-4, Safdarjung Enclave,New Delhi – 110029 for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client IDNumber and their full name and address. In case the original and duplicate CAFs are lodged for subscription, allotment will be made on the basis ofthe duplicate CAF and the original CAF will be ignored.

APPLICATION ON PLAIN PAPERShareholder who has neither received the original CAF(s) nor is in a position to obtain the duplicate CAF(s) may make an application to subscribe tothe Rights Issue on plain paper, along with an Account Payee Cheque / demand draft payable at New Delhi to be drawn in favour of “MSL – RightsIssue” and send the same by Registered Post directly to the Registrar to the Issue, MAS Services Pvt. Limited AB-4, Safdarjung Enclave,New Delhi– 110029 so as to reach them on or before the closure of the Issue. The envelope should be superscribed “MSL – Rights”.

The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Companyshould contain the following particulars:

1. Name of the shareholder including joint-holders

2. Address of sole / first holder

3. Folio No./DP ID Number and Client ID Number

4. Number of shares held as on 13th August, 2004 (Record Date)

5. Certificate numbers and Distinctive numbers, if held in physical form

6. Number of shares to which entitled

7. Number of shares applied for, out of entitlement

8. Number of additional shares applied for, if any

9. Total number of shares applied for

10. Amount payable on application

11. Particulars of Cheque/Draft enclosed

12. Savings/Current Account Number and Name and Address of the Bank

13. PAN/GIR number and Income tax Circle/ward/District of the sole/all the joint applicants where the application is for shares of a value ofRs.50,000/- or more.

14. In case of Non-Resident shareholders, NRE/FCNR/NRO Account No., name and address of the bank and branch.

15. Signature of shareholders in the same order as appearing in the records of the Company.

Please note that those who are making the application on plain paper shall not be entitled to renounce their rights and should not utilise the CAF forany purpose including renunciation even if it is received subsequently. If the applicant violates any of these requirements, he/she shall face the riskof rejection of both the applications. The Company shall refund such application amount to the applicant without any interest thereon.

MODE OF PAYMENTFor Resident Indian Shareholders and Non-Resident Shareholders on Non-Repatriation basis

Payment should be made in cash or by cheque/bank draft drawn on any bank (including a co-operative bank) which is situated at and is a member ora sub-member of the bankers clearing house located at the centre where the CAF is submitted and which is participating in the clearing at the timeof submission of the application. Outstation cheques/money orders/postal orders will not be accepted and CAFs accompanied by suchcheques/money orders/postal orders are liable to be rejected.

For NRIs holding shares on non-repatriation basisPayment may also be made by way of cheque drawn on Non-Resident Ordinary (NRO) Account maintained in New Delhi or Rupee Draft purchasedout of NRO Account maintained elsewhere in India but payable at New Delhi. In such cases, the allotment of shares will be on non-repatriation basis.If the payment is made by a draft purchased from an NRO account, an Account Debit Certificate from the bank issuing the draft, confirming that thedraft has been issued by debiting the NRO account, should be enclosed with the CAF. In the absence of the above, the application shall be consideredincomplete and is liable to be rejected.

All cheques/bank drafts accompanying the CAFs should be crossed “A/c Payee Only” and made payable to “MSL – Rights Issue”. The CAF dulycompleted together with the amount payable on application must be deposited with the collecting bank/collection centers, indicated on the reverse of

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the CAF on or before the close of banking hours on or before the Issue closing date. A separate cheque or bank draft must accompany each CAF.Reference number of CAF should be mentioned on the reverse of the Cheque/Draft.

For Non-Resident Shareholders on repatriation basisPayment by NRIs/OCBs/FIIs/Foreign Investors must be made by demand draft/cheque payable at New Delhi or funds remitted from abroad in anyof the following ways:

i. By Indian Rupee drafts purchased from abroad and payable at New Delhi or funds remitted from abroad; OR

ii. By cheque/draft on a Non-Resident External (NRE) Account or FCNR Account maintained in New Delhi; OR

iii. Rupee draft purchased by debit to NRE/FCNR Account maintained elsewhere in India and payable in New Delhi; OR

iv. FIIs registered with SEBI must remit funds from special non-resident rupee deposit accounts.

All cheque/drafts submitted by NRIs/OCBs/FIIs/Foreign Shareholders should be drawn in favour of “MSL – Rights Issue NR”. The CAF for non-residents applying on repatriation basis duly completed together with the amount payable on application must be deposited with the collecting bank/collection centers, indicated on the reverse of the CAF on or before the close of banking hours on or before the Issue closing date. A separatecheque or bank draft must accompany each application form.

Applicants may note that where payment is made by drafts purchased from NRE/FCNR accounts as the case may be, an Account Debit Certificatefrom the bank issuing the draft confirming that the draft has been issued by debiting the NRE/FCNR account should be enclosed with the CAF. In theabsence of the above the application shall be considered incomplete and is liable to be rejected.

In case where repatriation benefit is available, dividend and sales proceeds derived from the investment in shares can be remitted outside India,subject to tax, as applicable according to the Income-tax Act, 1961 and subject to the permission of the RBI, if required.

In the case of NR who remit their application money from funds held in FCNR/NRE Accounts, refunds and other disbursements, if any shall becredited to such account details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their applicationmoney through Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in US Dollars at the rate of exchangeprevailing at such time subject to the permission of RBI. The Company will not be liable for any loss on account of exchange fluctuation for convertingthe Rupee amount into US Dollars or for collection charges charged by the applicant’s Bankers.

STOCKINVESTSReserve Bank of India vide its Notification No. DBOD NO.FSC.BC.42/24.47.001/2003-04 dated 5th November, 2003 has withdrawn the Stockinvestscheme. The investors are therefore not allowed to apply through stockinvest.

GENERAL1. Please read the instructions printed on the enclosed CAF carefully

2. Application should be made on the printed CAF, provided by the Company except as mentioned under the head ‘Application on Plain Paper’ inthe LOO and should be complete in all respects.

3. A CAF found incomplete with regard to any of the particulars required to be given therein, and/or which is not completed in conformity with theterms of this LOO is liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction ofbank commission and other charges, if any.

4. The CAF must be filled in English and the names of all the applicants, details of occupation, address, father’s/husband’s name must be filledin block letters.

5. Signatures should be either in English or Hindi or the languages specified in the 8th Schedule to the Constitution of India. Signatures other thanin the aforesaid languages or thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/her officialseal.

6. In case of an application under Power of Attorney or by a body corporate or by a society, a certified true copy of the relevant Power of Attorneyor relevant resolution or authority to make investment and sign the application along with the copy of the memorandum and articles ofassociation and/or bye laws must be lodged with the Registrars to the Issue giving reference of the serial number of the CAF. In case the abovereferred documents are already registered with the Company, the same need not be furnished again. However, the serial number of registrationor reference of the letter, vide which these papers were lodged with the Company/Registrar must be mentioned just below the signature(s) onthe application. In no case should these papers be attached to the application submitted to the Bankers to the Issue.

7. The shareholders must sign the CAF as per the specimen signature recorded with the Company. In case of joint holders, all joint holders mustsign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with the Company. Further, in case of jointapplicants who are renounces, the number of applicants should not exceed three.

8. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the firstapplicant at the address given in the CAF.

9. As per Notifiocation No. FEMA 20/2000-RB dated 3rd May, 2000 and FEMA/76/2002-RB dated 12th November, 2002, the RBI has given itsgeneral permission to Indian Companies to issue rights/bonus shares to Non-resident Indians (including Pakistanis) including additional Shares.Hence, the Company does not need an in-principle approval from RBI for the issue of shares to Non-resident Indians, within the sectoral capprescribed under FEMA, 1999. However, the Company vide their letter no. MSL/RBI dated July 03, 2004 applied to Reserve Bank of India inrespect of allotment of equity shares in the issue to non-residents. RBI vide letter no.FE.DEL.FID/362/06.04.3645/2004-05 dated July 12,2004advised as above in respect of allotment to non-residents.

10. In case of Overseas Corporate Bodies (OCB s), RBI vide its Notification No. FEMA 101/2003-RB dated 3rd October, 2003 and Press Releaseissued by RBI on 18th September, 2003, overseas entities owned by NRIs can enjoy ll the facilities available to foreign investors includingautomatic route for foreign Direct Investment and accordingly investment by such entities in rights issue would be considered as investmentby foreign investors/non-residents. Further, RBI vide its Master Circular No. 6/2004-05 dated 1st July, 2004 para 6.1 clarified that issuingcompanies would have to seek specific permission from RBI, Central Office, Mumbai for issue of shares on rights basis to erstwhile OCBs. The

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Company has, therefore, applied to RBI vide their letter No. MSL/RBI dated 19th July, 2004 for taking specific approval for issue of shares toOCBs and approval from RBI. RBI vide its letter no. FE.CO.FID/898/11.01.20(VI)/2004-05 dated 5th August, 2004 has given approval in respectof three OCBs out of total four OCBs. The approval in respect of forth OCB will be received only after furnishing necessary information to RBIby the fourth OCB. Accordingly, the Company will allot shares to the fourth OCB subject to RBI’s specific approval in this regard.

11. Bank Account Details: It is mandatory for the applicant to mention the applicant’s savings bank/current account number and the name of thebank with whom such account is held in the space provided in the CAF, to enable the Registrars to the Issue, to print the said details in therefund orders after the name of the payees. Such applications not containing the above details are liable to be rejected.

12. PAN/GIR Number: Where an application for allotment of shares individually is for a total value of Rs. 50,000/- or more i.e. the total number ofshares applied for multiplied by the issue price is Rs. 50,000/- or more, the applicant or in case of applications in joint names, each of theapplicants, should mention the applicants Permanent Account Number (PAN) allotted under the Income-Tax Act, 1961 or where the same hasnot been allotted, the GIR number under the Income tax Circle/Ward/District. In case where neither the PAN nor the GIR number has beenallotted, the fact of non-allotment should be mentioned in the CAF. CAF without this information will be considered incomplete and will be liableto be rejected.

13. Payment by cash: Pursuant to Section 269SS of the Income Tax Act, 1961, the payment against the share application should not be effectedin cash if the amount to be paid is Rs. 20,000/- or more. In case payment is effected in contravention of this, the application will be deemedinvalid and the application money will be refunded and no interest will be paid thereon.

14. All communication in connection with application for the shares, including any change in address of the shareholders should be addressed tothe Registrars viz. MAS Services Pvt. Limited AB-4, Safdarjung Enclave, New Delhi – 110029 to the Issue quoting the name of the first/soleapplicant shareholder, folio number and CAF number.

15. Split Forms cannot be re-split.

16. Only the person or persons to whom shares have been offered and not renouncee(s) shall be entitled to obtain Split Forms.

17. As per section 109A of the Act, the sole applicant / joint applicants may nominate, in the prescribed manner, a person to whom his share in theCompany shall vest in the event of his death.

OPTION TO RECEIVE THE RIGHT EQUITY SHARES IN DEMATERIALISED FORMThe Equity Shares of the Company have been under compulsorily Dematerialised trading for all investors, by SEBI, with effect from December 17,2003 (being the date of listing of equity shares of the Company at BSE). Hence, the equity shareholders who wish to trade on the stock exchangesare advised to opt for receiving these equity shares in D-mat form.

The company has depository arrangements with NSDL and CDSL for issue and holding of the equity shares in D-mat form. In this context;

a. Two tripartite agreements have been signed dated

• December 8, 2003 between MSL, MAS Services Pvt. Limited (Registrar) and NSDL for offering depository option to the investors and

• October 30,2003 between MSL, MAS Services Pvt. Limited (Registrar) and CDSL for offering depository option to the investors.

The Company will apply to NSDL and CDSL, for approval to admit the Equity Shares offered in terms of this Letter of Offer into their depositorysystem and for completion of other formalities.

b. An applicant has the option to seek allotment of Equity Shares in electronic or physical mode, or partly in demat and physical form, in the sameapplication, in the space provide.

c. No separate applications for demat and physical shares are to be made. If such application is made, the applications for physical shares willbe treated as multiple applications and rejected accordingly. In case of partial allotment, allotment will be first done in demat form, and thebalance, if any, will be allotted in physical form.

d. An applicant who wishes to apply for Equity Shares in the electronic form must have at least one beneficiary account with any of the DepositoryParticipants (DPs) of NSDL or CDSL prior to making the application.

e. The applicant seeking allotment of Equity Shares in the electronic form must necessarily fill in the details (including the beneficiary accountnumber or client ID number) appearing in the CAF under the heading ‘Request for Shares in Electronic Form’.

f. Applicants must indicate in the CAF, the number of Equity Shares they wish to receive in electronic form out of the total number of EquityShares applied for. In case of partial allotment, Equity Shares will first be allotted in electronic form and the balance Equity Shares, if any, willbe allotted in physical form.

g. Equity Shares allotted to an applicant in the electronic account form will be credited directly to the applicant’s respective beneficiary account(s)with DP.

h. Applicants should ensure that the names of the applicants and the order in which they appear in the CAF should be the same as registered withthe applicant’s Depository Participant.

i. Non-transferable allotment advice/refund orders will be directly sent to the applicant by the Registrar to this Issue.

j. If incomplete/incorrect details are given under the heading ‘Request for Shares in Electronic Form’ in the CAF, it will be deemed to be anapplication for Equity Shares in physical form

k. The applicant is responsible for the correctness of their beneficiary account details given in the CAF vis-à-vis those with their DP. In case theinformation is incorrect or insufficient, the Issuer would not be liable for losses, if any.

l. Renouncees can also exercise the option to receive Equity Shares in the demat form by indicating in the relevant block and providing thenecessary details about their beneficiary account.

m. It may be noted that Equity Shares arising out of this Issue can be received in demat form even if the Existing Equity Shares are held inphysical form. Nonetheless, it should be ensured that the DP Account is in the name of the applicant(s) in the same order as per specimensignatures appearing in the records of the DP/Company.

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n. It may be noted that shares in electronic form can be traded only on the Stock Exchanges having electronic connectivity with NSDL or CDSL.

o. Dividend or other benefits with respect to the shares held in D-mat form would be paid to those equity shares holders whose names appearin the list of beneficial owners given by the DP to MSL as on Record date.

LAST DATE FOR SUBMISSION OF COMPOSITE APPLICATION FORMThe last date for receipt of the CAF, by the Bankers to the Issue at their Collection Centers, together with the amount payable, is on the close ofbanking hours, on 27th September, 2004. If the CAF together with the amount payable is not received by the Bankers to the Issue at their CollectionCenters on or before the close of banking hours on or before 27th September, 2004 the offer contained in this LOO shall be deemed to have beendeclined, and the Board shall utilise this entitlement for allotting the Equity Shares as mentioned below under the heading “Basis of Allotment”.

No separate receipt will be issued for the application money. However, all the Bankers to the Issue/collection centers receiving the application willacknowledge its receipt by stamping and returning the perforated acknowledgement slip at the bottom of each CAF.

BASIS OF ALLOTMENTThe basis of allotment shall be finalised by the Board in consultation with The Stock Exchange, Mumbai (Designated Stock Exchange). The Boardwill proceed to allot the Equity Shares in the following order of priority:

1. Allotment to Shareholders of their fractional entitlements will be rounded off to the next higher integer. Shareholders holding 1 equity share willbe offered one new equity share. The Equity Shares needed for such shares will be adjusted first out of the entitlement of shareholders notapplying for shares and then from the Promoters’ entitlement at the time of allotment.

2. Full allotment to the Equity Shareholders who have applied for their Rights Entitlement either in full or in part and also to the renouncees whohave applied in full or in part for the Equity Shares renounced in their favour.

3. Allotment to the Equity Shareholders who having applied for their full Rights Entitlement of Equity Shares, have applied for additional EquityShares, provided there is surplus after making full allotment under 2 above. The allotment of such additional Equity Shares shall be made as faras possible on equitable basis with reference to number of Equity Shares held on 13th August, 2004, i.e. Record Date, within the overall size ofRights Issue at the sole and absolute discretion of the Board in consultation with The Stock Exchange, Mumbai.

4. Allotment to renouncees who having applied for all the Equity Shares renounced in their favour have applied for additional shares, providedthere is a surplus remaining after 2 and 3 above.

The Company shall retain no oversubscirption.

The issue will become undersubscribed after considering the number of shares applied as per entitlement plus additional shares, theundersubscribed portion shall be applied for only after the close of the issue. The promoters shall subscribe to such undersubscribed portionas per relevant provisions of the law. If the promoters of the company desires to subscribe to such undersubscribed portion and if disclosureis made pursuant to SEBI (Substantial Acquisition of Share and Takeover) Regulations, 1997, such allotment of the undersubscribed portionwill be governed by the provisions of SEBI (SAST) Regulations, 1997.

The unsubscribed portion, if any of the equity shares offered to the shareholders, after considering the applications for Rights/ Renunciationand additional equity shares, as above, shall be disposed off by the board or committee of Directors of the Company authorized in this behalfby the Board of Directors of the Company, in such manner as they think most beneficial to the company and the decision of the Board orCommittee of Directors of the company in this regard shall be final and binding. In the event of over subscription, allotment will be made onlywithin the overall size of the Rights Issue.

The allotment to the promoters of any unsubscribed portion, over and above their entitlement, would be done in compliance with clause 40A ofthe Listing Agreement.

The Company expects to complete the allotment of Equity Share within a period of 42 days from the date of closure of the Issue in accordancewith the listing agreement with BSE.

DISPOSAL OF APPLICATION AND APPLICATION MONEYThe Board reserves the right to reject applications in case the application is not made in terms of this LOO. In case an application is rejected in fullthe whole of the application money received will be refunded to the first named applicant and where an application is rejected in part, the excessapplication money will be refunded to the first named applicant within 6 weeks from the date of closure of the subscription list in accordance withSection 73 of the Act. If there is delay of refund of application money by more than 8 days after the Company becomes liable to pay (i.e. forty twodays after the closure of Issue), the Company will pay interest for the delayed period at the rate prescribed under sub-section (2) and (2A) of Section73 of the Act.

The subscription monies received in respect of this Issue will be kept in a separate bank account and the Company will not have access to norappropriate the funds until it has satisfied The Stock Exchange, Mumbai with suitable documentary evidence that minimum subscription of 90% of theapplication money for the Issue has been received.

ALLOTMENT / REFUNDThe Company will complete allotment of equity shares and issue and credit the allotted Equity Shares to the respective beneficiary account and/ordispatch the letter of allotment/Equity Shares certificate and/or letter of regret, alongwith the refund order, if any within a period of six weeks from thedate of closure of Issue. If such monies are not repaid within eight days from the day the company becomes liable to pay it, the Company shall, paysuch monies with interest rate as prescribed under sub-section (2) and (2A) of section 73 of the Act. The letter of allotment/ Equity Share certificates/refund orders exceeding Rs 1,500/- would be dispatched by registered post/ speed post at the sole/first named applicant’s address within six weeksfrom the date of the closing of the subscription list. Refund orders upto Rs 1,500/- will be dispatched under the Certificate of Posting.

Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked account payeeonly and would be drawn in favour of the sole/first applicant. Adequate funds would be made available to the Registrars to the Issue for this purpose.In case the Company issues letters of allotment, the corresponding share certificates will be issued within three months from the date of allotmentthereof or such extended time as may be approved by the Company Law Board under Section 113 of the Act or other applicable provisions, if any.Allottees are requested to preserve such letters of allotment which would be exchanged for the share certificates.

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In case of those shareholders who have opted to receive their Right Entitlement Shares in D-mat form by using electronic credit under thedepository system, an advice regarding the credit of the Equity Shares shall be given separately.

Refunds will be made by cheques or pay orders drawn on the bank(s) appointed by the Company as refund bankers. Such instruments will bepayable at par at the places where applications are accepted.

Bank charges, if any, for encashing such cheques or pay orders will be borne by the applicants. Allotment of Equity Shares to non-residents and theissue of letters of allotment/share certificates to Non-residents shall be subject to the approval received from RBI, as mentioned elsewhere in the LOO.

For Non Resident Applicants, refunds, if any, will be made as under:

1) Where applications are accompanied by Indian Rupee Drafts purchased abroad and payable at New Delhi, refunds will be made in convertibleforeign exchange equivalent to Indian Rupees to be refunded. Indian Rupees will be converted into foreign exchange at the rate of exchange,which is prevailing on the date of refund. The exchange risk on such refunds shall be borne by the concerned applicant and the Company shallnot bear any part of the risk.

2) Where the applications made are accompanied by NRE/FCNR/NRO cheques, refunds will be credited to NRE/FCNR/NRO accounts respec-tively, on which such cheques are drawn and details of which are provided in the CAF.

INTEREST IN CASE OF DELAY IN DESPATCH OF ALLOTMENT LETTERS/REFUND ORDERS• The Company agrees that as far as possible allotment of securities offered to the shareholders shall be made within 7 weeks from the date of

closure of the issue.

• The Company further agrees that it shall pay interest @ 15% per annum for the delayed period if the allotment has been made and/or allotmentletters/the refunds orders have not been dispatched to the applicants within 7 weeks form the date of closure of the issue.

DECLARATION BY THE COMPANY

The Company undertakes that:

a) The complaints received in respect of the Issue shall be attended to by the Company expeditiously and satisfactorily;

b) All steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities areto be listed shall be taken within 7 working days of finalisation of Basis of Allotment;

c) Funds required for dispatch of refund orders/allotment letters/certificates by registered post shall be made available to the Registrars to theIssue by the Company;

d) Certificates of the securities/refund orders to the Non-Resident Indians shall be dispatched within the specified time subject to receipt ofapproval from RBI;

e) No further issue of shares shall be made till the shares offered through this LOO are listed or till the application moneys are refunded onaccount of non-listing, under-subscription, etc.

IV. TAX BENEFITSThe Company has been advised by the Chartered Accountants M/s A.F.Ferguson & Co., Statutory Auditors vide their letter dated 8th June, 2004 thatunder the existing provisions of the Income Tax, 1961 for the time being inforce, the following tax benefits and deductions will be available to theCompany and its members subject to the fulfillment of requirements of the relevant provisions.

A. TAX BENEFITS AVAILABLE TO THE COMPANYUNDER THE INCOME-TAX ACT, 1961 (THE ACT)1. Under section 32 of the Act, the company is entitled to depreciation on (i) tangible fixed assets, being building, machinery, plant and furniture,

and (ii) intangible assets, being know-how, patents, copy rights, trade mark, licences, franchises of other business and rights of similar natureacquired on or after the 1st day of April, 1998 for the use thereof in the company’s business.

2. Under section 35 of the Act and subject to the provision therein, the company would be entitled to deduction in respect of expenditure laid outor expended on scientific research relating to the business.

3. Under section 10(34) of the Act, dividend income referred to in section 115-O are exempt from tax in the hands of the company.

4. Under section 112 and other relevant provisions of the Act, the long term capital gains arising on transfer of long term capital assets shall betaxed at the rate of 20% (plus applicable surcharge) after indexation as provided in the second proviso to section 48. However, in case of listedsecurities, the long term capital gain can be taxed at 10% (plus surcharge) without indexation, at the option of shareholder.

UNDER THE WEALTH ACT, 1957The company is eligible to pay wealth tax as per the provisions of Wealth tax Act, 1957 at the rate of 1% in respect of certain assets owned bythe company subject to the basic exemption of Rs. 15 lacs.

B. TAX BENEFITS AVAILABLE TO THE MEMBERSUNDER THE INCOME-TAX ACT, 1961 (THE ACT)

TO RESIDENT MEMBERS:1. Under section 10(34) of the Act, dividend income referred to in section 115-O of the Act, are exempt from tax in the hands of the shareholders.

2. Under section 10(23D) of the Act, all Mutual Funds set up by Public Sector Banks or Public Financial Institutions or Mutual Funds registeredunder the Securities and Exchange Board of India or authorised by the Reserve Bank of India, subject to the conditions specified therein, areeligible for exemption from income-tax on all their income, including income from investment in the shares of the company.

3. Under section 112 and other relevant provisions of the Act, the long term capital gains arising on transfer of long term capital assets shall betaxed at the rate of 20% (plus applicable surcharge) after indexation as provided in the second proviso to section 48. However, in case of listedsecurities, the long term capital gain can be taxed at 10% (plus surcharge) without indexation, at the option of shareholder.

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4. In accordance with section 54EC of the Act and subject to the conditions specified therein, long term capital gains arising on the transferof shares of the company will be exempt from capital gains tax if the entire capital gains are invested within a period of six months afterthe date of such transfer for a period of 3 years in specified bonds mentioned under the section.

5. In accordance with section 54ED of the Act and subject to the conditions specified therein, long term capital gains arising on transfer ofthe shares of the company shall be exempt from tax if the entire capital gains are invested within six months from the date of transfer, inthe acquisition of specified equity shares mentioned under the section.

6. In accordance with section 54F of the Act and subject to the conditions therein, long term capital gains arising on transfer of shares of thecompany held by an individual or HUF shall be exempt from tax if the net sale consideration is utilised within a period of one year beforeor two years after the date of transfer for purchase of a new residential house, or for constructions of a residential house within a periodof three years from the date of transfer.

7. In terms of Section 10(32) of the IT Act, any income of minor children clubbed in the total income of the parent under section 64(1A), shallbe exempt to the extent such income does not exceed Rs.1500 in respect of each such child, in accordance with, and subject to theprovision of the respective sections.

TO NON-RESIDENTS MEMBERS:1. Under section 10(34) of the Act, dividend income referred to in section 115-O of the Act is exempt from tax in the hands of the

shareholders.2. As per the provisions of section 115A of the Act, in the case of a non resident or a foreign company, the tax payable on dividends other

than dividends referred to in section 115-O shall be 20% (plus surcharge as applicable) of such income. It shall not be necessary for suchassessee to furnish the Return of Income if their only source of income is investment income and tax has been deducted at source fromsuch income under the provisions of chapter XVII B of the Act.

3. Under the first proviso to section 48 of the Act, in case of a non-resident, in computing the capital gains arising from transfer of shares ofthe company acquired in convertible foreign exchange (as per exchange control regulations) protection is provided from fluctuation in thevalue of rupee in terms of foreign currency in which the original investment was made. Cost indexation benefits will not be available in sucha case. However, the capital gain will be taxed at the rate of 10% under section 112 of the Act.

4. In accordance with section 54EC of the Act and subject to the conditions specified therein, long term capital gains arising on the transferof shares of the company will be exempt from capital gains tax if the entire capital gains are invested within a period of six months afterthe date of such transfer for a period of 3 years in specified bonds mentioned under the section.

5. In accordance with section 54ED of the Act and subject to the conditions specified therein, long term capital gains arising on transfer ofthe shares of the company shall be exempt from tax if the entire capital gains are invested within six months from the date of transfer, inthe acquisition of specified equity shares mentioned under the section.

6. In accordance with section 54F of the Act and subject to the conditions therein, long term capital gains arising on transfer of shares of thecompany held by an individual or HUF shall be exempt from tax if the net sale consideration is utilised within a period of one year beforeor two years after the date of transfer for purchase of a new residential house, or for constructions of a residential house within a periodof three years from the date of transfer.

7. SPECIAL PROVISIONS FOR NON-RESIDENT INDIAN MEMBERS:

A Non-Resident Indian (i.e. individual being a citizen of India or person of Indian origin) has the option to be governed by the specialprovisions of chapter XII-A of the Act, according to which:

7.1. Under section 115E of the Act, where shares in a company are acquired in convertible foreign exchange by a non-resident Indianthen income from long term capital gains on transfer of shares shall be charged to tax at the rate 10% (plus surcharge as applicable)without aggregating any other income earned in India which is taxed separately.

7.2. Under section 115F of the Act, the long term capital gains arising from the transfer of shares, where these are acquired in convertibleforeign exchange, shall be exempt from tax entirely/proportionately, provided that the net consideration is invested in any specifiedasset within six months from the date of transfer of the asset. The amount so exempt from tax shall, however, be chargeable to tax,if the new asset is transferred or converted into money within three years from the date of acquisition of the specified new asset.

7.3. Under section 115G of the Act, a non-resident Indian is not obliged to file a Return of Income under section 139(1) of the Act, if histotal income consists only of income from investments and/or long term capital gains earned on transfer of such investments and taxhas been deducted at source from such income under the provisions of chapter XVII B of the Act.

7.4. Under section 115H of the Act, where a non-resident Indian, becomes assessable to tax in India in relation to any previous year, asa resident in India in respect of his total income of any subsequent year, he may furnish to the assessing officer a declaration inwriting along with his return of income under section 139 for the assessment year for which he is so assessable, to the effect thatthe provisions of chapter XII-A shall continue to apply to him in relation to the investment income derived from any foreign exchangeasset, being an asset of the nature referred to in sub clause (ii) to sub clause (v) of clause (f) of section 115C of the Act, in whichcase the provisions of chapter XII-A shall continue to apply to him in relation to such income for that assessment year and for everysubsequent assessment year until the transfer or conversion (otherwise than by transfer) into money of such assets.

7.5. Under section 115 I of the Act, a non-resident Indian has the option of not being governed by the provisions of chapter XII-A for anyassessment year by furnishing his return of income under section 139 of the Act declaring therein that the provision of this chaptershall not apply to him for that assessment year.

8. SPECIAL PROVISIONS FOR FOREIGN INSTITUTIONAL INVESTORS:Under section 115AD of the Act Foreign Institutional Investors (FIIs) will be charged to tax at 20% (plus surcharge as applicable) onincome other than income by way of dividend referred to in section 115-O from shares (other than units referred to in section 115AB ofthe Act); at 10% (plus surcharge as applicable) on the long term capital gains arising from transfer of such shares and at 30% (plussurcharge as applicable) on the short term capital gains arising from the transfer of such shares, such income being computed in themanner set out in the said section.

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TO VENTURE CAPITAL COMPANIES/FUNDS:In terms of section 10(23FB) of the IT Act, all Venture capital companies/funds registered with Securities and Exchange Board of India, subject to theconditions specified, are eligible for exemption from income tax on all their income, including income from sale of shares of the company.

UNDER WEALTH TAX ACT, 1957 AND GIFT TAX1. Shares are outside the scope of the word ‘Assets’ defined under section 2(ea) of the Wealth Tax Act, 1957 and accordingly are not liable to

wealth tax.

2. Gift tax is not leviable in respect of any gift made on or after first day of October 1998. Therefore any gift of the shares will not attract gift tax.

Notes:1. All the above benefits are as per the current tax law as amended by the Finance Act, 2004 and will be available only to the sole/first named

holder in case the shares are held by joint holders.

2. In respect of non-resident, the tax rate and the consequent taxation mentioned above shall be further subject to any benefits available underthe double taxation avoidance agreement, if any, between India and the country in which the non-resident has fiscal domicile.

3. In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisor with respect to specific taxconsequences of his/her participation in the scheme.

This is a summary only and not a complete analysis or listing of all potential tax consequences of the purchase, ownership anddisposal of convertible debentures or ordinary shares. The statements made above are based on the laws in force and as interpretedby the relevant taxation authorities as of date. Investors are advised to consult their tax advisors with respect to the tax consequencesof their holdings based on their residential status and the relevant double taxation conventions.For further instruction, please read the Composite Application Form carefully.

Important1. Please read this Letter of Offer carefully before taking any action. The instructions contained in the accompanying Composite Application Form

(CAF(s)) are an integral part of the conditions of this Letter of Offer and must be carefully followed; otherwise the application is liable to berejected.

2. All inquiries in connection with this Letter of Offer or accompanying Composite Application Form and requests for Split Application Forms mustbe addressed (quoting the Registered Folio Number/ DP and Client ID no., the CAF(s) number and the name of the first Equity Shareholder asmentioned on the CAF(s) and superscribed “MSL – Rights Issue” on the envelope) to the Registrars to the Issue at the following address:

MAS Services Private Ltd.AB-4, Safdarjung Enclave,New Delhi -110029

3. It is to be specifically noted that this Issue of Equity Shares is subject to Risk Factors appearing on pages no. i to xv of this Letter of Offer.

4. The Rights Issue will not be kept open for more than 30 days unless extended, in which case it will be kept open for a maximum 60 days.

V. PARTICULARS OF THE ISSUEOBJECTS OF THE ISSUEThe present Rights Issue of Equity Shares aggregating to Rs. 849.90 Lakhs is part of the overall Financial Restructuring of the Company asapproved by the “Corporate Debt Restructuring Cell”, which is a forum initiated by the Reserve Bank of India and set up by the leading Banks andFinancial Institutions.

UTILISATION OF ISSUE PROCEEDSAs per the Corporate Debt Restructuring Scheme approved by the “Corporate Debt Restructuring Cell”, the Company is required to raise fresh equityinto the Company at the rate of Rs.250 lakhs each for the year ending September 2003 and September 2004 and Rs. 300 lakhs for the year endingSeptember 2005. The CDR approved package also indicates investment by the Company into equity of Siel Limited in the same order. The firsttranche of Rs. 250 lakhs of equity could not be raised before September 2003 because of late receipt of order of High Court sanctioning the Scheme.

In order to raise the entire amount of equity as per the CDR approved package and the Scheme in single tranche so as to save and economize onthe expenses, it is proposed to offer this rights issue. The entire investment is to be made in the form of equity.

NOTE: The Size of Rights Issue is Rs. 849.90 Lakhs as against the Rs. 800 lakhs as envisaged in the package, for the purpose of rounding off theRatio for the Rights Issue.

The Funds proposed to be raised through this Rights Issue would be utilized as per the plan submitted to ICICI Bank Ltd., the monitoring agency ofCDR Cell, wherein Rs. 800 lakhs (constituting 94.13% of issue size) would be utilized for making an investment in Siel Ltd. and the balance Rs. 49.90lakhs (constituting 5.87% of issue size) would be utilized for meeting the shortfall in long term working capital requirements. The entire issueexpenses are to be borne by the Company.

CDR Cell has appointed ICICI Bank as the Monitoring Agency to oversee the implementation of the entire restructuring package approved by CDREmpowered Group vide their letter no. CDR(KS)/623 dated 5th March, 2003.

No part of the issue proceeds is to be paid as consideration to Promoters, Directors, Key Managerial Personnel, Associate or Group Companies.

NEED FOR RESTRUCTURINGSiel Ltd., which was carrying on the business of Chlor Caustic, Edible Oils and Sugar suffered financial problems on account of closure of all itsmanufacturing business in Delhi pursuant to the Orders of Hon’ble Supreme Court passed in a public interest litigation whereby major and hazardousindustries were ordered to be closed and relocated outside Delhi. The closure of Siel factory in Delhi resulted into defaults by Siel Ltd. in the paymentof its debt and interest thereon to Banks / Financial Institutions.

In view of the above circumstances, the Board of Siel Ltd. in consultation with its lenders embarked upon to restructure its debts andbusinesses so as to protect the interest of the stakeholders including shareholders and creditors.

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Accordingly, the Scheme of Arrangement was formulated whereby the businesses of Siel Ltd. were restructured into two separate Companiesand the non-operating assets were transferred to Special Purpose Vehicles (SPVs) for realizing their values to pay off the debts of the lendersas under:

• Sugar business vested with Mawana Sugars Ltd. (earlier named as Siel Sugar Ltd.) with term liabilities of Rs. 9675 lakhs.• Land at Delhi vested into Shivajimarg Properties Ltd. with liabilities of Rs. 1042 lakhs of Siel Ltd. and Rs. 5453 lakhs of the Lenders.• Surplus investments vested into Siel Holdings Ltd. with liabilities of Rs. 420 lakhs of Siel Ltd. and Rs. 3075 lakhs of the Lenders.• The Chlor Caustic and Edible Oils business retained in Siel Ltd. with liabilities of the Lenders of Rs. 1537 lakhs.

The above restructuring of debts and businesses of the Company were approved by Corporate Debt Restructuring (CDR) Cell of the FinancialInstitutions vide their letter no. CDR(KS)/623 dated 5th March, 2003.

Mawana Sugars Ltd. (earlier named as Siel Sugar Ltd. in the restructuring package) has emerged out of restructuring of Siel Ltd. through aScheme of Arrangement approved by Hon’ble High Court of Delhi pursuant to which the sugar business of Siel Ltd. alongwith all the properties,rights and power has been vested into the Company.

Detailed Terms of CDR as applicable to Mawana Sugars Ltd. (referred to Siel Sugar Ltd. (SSL) in the CDR as the Company hasrecently changed its name from Siel Sugar Ltd. to Mawana Sugars Ltd. w.e.f. 16th June 2004)

Quote :1. The term debt allocated to SSL, aggregating to Rs.7390 lacs will carry interest @ ICICI Bank LTPLR-0.5% with effect from October 1,

2002 and will be repayable within seven years from the Cut-off Date (2004-05 – 4%, 2005-06 – 7%, 2006-07 – 25%, 2007-08 – 33% and2008-09 – 31%). ICICI Bank LTPLR as on date is 12.5% p.a. payable quarterly.

2. The interest on the above term debt, between October 1, 2002 and September 30, 2003, aggregating to Rs. 887 lacs would be fundedand converted into a zero coupon FITL. The FITL would be repaid in 2 annual installments in 2008-09 (30%) and 2009-10 (70%).

3. The ZCDs allocated to as SSL, aggregating to Rs.2285 lacs, will be repayable in four years from the cutoff date (2003-04 –15%, 2004-05 –25%, and 2005-06 – 60%).

4. The loans allocated in SSL by the secured term lenders and the FITL, as detailed above, would be secured by first pari passu charge onfixed assets of SSL only. It will additionally be secured by a second charge on the current assets of SSL only.

5. Working Capital Providers to provide working capital facilities to SSL based on its drawing power. The interest on normal working capitallimits shall be agreed between SSL and Working Capital Providers which shall not be higher than the interest payable to term Lenders.

6. The above working capital facility would be secured by first pari passu charge on current assets (book debts and inventories) of SSLonly. It will additionally be secured by a second charge on the fixed assets of SSL only.

7. SSL shall not enter into any joint venture agreement, M&A deal, sale of investments, hiving off of divisions or substantial parts of its normalbusinesses or any such deals of a similar nature without prior written intimation and approval from the lenders.

8. SSL shall undertake that during the currency of the loans, it shall not declare any dividend if it fails to meet its obligations to pay interestand/or installments and/or other moneys payable to the Lenders, so long as it is in such default.

9. SSL shall undertake in the form required by the Lenders whereby it shall take the responsibility for making arrangements satisfactory tothe Lenders for meeting the shortfall, if any, in the resources of the company for capital expenditure/working capital. The funds broughtin to meet the shortfall in the resources of the company for capital expenditure/working capital shall be in such form and manner and onsuch terms as may be required by the lenders.

10. If the lenders find that the profitability of SSL, the cash flow and other circumstances so warrant, the Lenders may require SSL to prepaythe Loan, without a pre-payment premium, on dates earlier than the stipulated repayment schedule.

11. SSL shall not undertake any new project or expansion or make any investment or acquire any assets on lease/hire-purchase without theprior approval of the lenders during the currency of the assistance, except those considered for projecting the future cash flows of SSLin the scheme.

12. The Lenders shall have the right to appoint nominee directors on the Board of SSL.

13. If the cashflows of SSL and the circumstances so warrant, then the Lenders reserve the right to review the interest rate on the remainingdebt to be serviced by the company.

14. The Lenders also reserve the right to recompense for the sacrifices undertaken by them. However, the sacrifices considered will onlybe on account of the debt transferred under the current scheme to SSL.

Unquote :Pursuant to the Scheme, Mawana Sugars Ltd. has allotted 3 equity shares of Rs. 10/- each fully paid up for every 4 equity shares of Rs. 10/- each fully paid up aggregating to 3,09,45,904 equity shares held by the shareholders of Siel Ltd. as on 30th October, 2003 – the record datefixed for this purpose.

VI. COMPANY & MANAGEMENTHistory, Background & Present Activities of The CompanyShriram Industrial Enterprises Ltd. (Siel Ltd.) formerly known as Shriram Refrigeration Industries Ltd. and was incorporated on 27th March,1961. As per the Scheme of Amalgamation approved by Hon’ble High Court of Delhi vide its Order dated 10th April, 1992, with transfer datebeing 1st April, 1990, Shriram Industrial Enterprises Ltd. had taken over the business of some of the units of erstwhile DCM Ltd. ShriramIndustrial Enterprises Ltd. was then engaged in the manufacture and sale of Vanaspati, Refined Oil, Sugar, Caustic Soda, Soap, HermaticCompressors, Water Coolers, etc.

Pursuant to the Hon’ble Supreme Court Order in November, 1996 for relocation of plants from Delhi, Siel’s financial problem started andincurred heavy losses which resulted into large debt burden. This forced the Company to restructure its business.

Pursuant to the Scheme of Arrangement (Scheme) under section 391 and 394 of the Companies Act, 1956 of undivided Siel Limited, approved

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by the High Court of Delhi vide its Order dated August 26, 2003 which became effective on September 5, 2003 on filing of the certified copy ofthe Order of the High Court of Delhi with the Registrar of Companies, Delhi and Haryana, the sugar business of Siel Ltd. consisting of theundertakings of undivided Siel Limited comprising of Mawana Sugar Works (MSW) and Titawi Sugar Complex (TSC), together with allproperties, assets both movable and immovable and liabilities including contingent liabilities have been transferred to and vested in theCompany with effect from the appointed date i.e. October 1, 2002.

Consequent to the effectuation of the said scheme, MSL allotted three equity shares of Rs.10 each as fully paid up to the shareholders ofundivided Siel Limited for every four equity shares of Rs.10 each fully paid up held by them in undivided Siel Limited.

The company was incorporated under the Companies Act, 1956 on 26th December 2002 as Siel Sugar Ltd.(SSL) and now being renamed asMawana Sugars Ltd. (MS) vide fresh Certificate of Incorporation dated 16th June, 2004.

THE MAIN OBJECTS OF THE COMPANY ARE SET OUT IN ITS MEMORANDUM & ARTICLES OF ASSOCIATION:Quote1. To carry on the business of producing, acquiring and trading in sugarcane and other sugar producing materials and producing all grades

and type of sugar and related products from sugarcane and from any other raw material and packing the same in different sizes andforms.

2. To act as consultants for the businesses as referred in the above sub clause 1.

UnquoteThe main Objects Clause of the Memorandum of Association and Objects incidental or ancillary to attainment of the above main objects enablethe Company to undertake the activities for which the funds are being raised from the present Issue and also the activities which the Companyhas been carrying till date.

MANUFACTURING FACILITIESPresent BusinessThe Company has at present two Sugar divisions / units / undertakings viz. (i) at Mawana Sugar Works (MSW) at Mawana, Distt. Meerut and(ii) Titawi Sugar Complex (TSC) at Titawi, Distt. Muzaffarnagar, both in Uttar Pradesh. Both the units are engaged in the business ofmanufacture and sale of sugar.

The Details of the Licensed & Installed capacity and its utilization is given under:-

At Mawana Unit

Period ended on Capacity Production Capacity SalesLicensed Installed Utilisation

TCD TCD MT TCD % Lacs in Rs.30.09.2001 (12 months) 10000 9000 154059 90.50% 19365.1931.03.2003 (18 Months) 10000 9000 262659 86.21% 34343.25

29.02.2004 (11 months) 10000 10000 151645 84.7% 17819.07

At Titawi Unit

Period ended on Capacity Production Capacity SalesLicensed Installed Utilisation

TCD TCD MT TCD % Lacs in Rs.30.09.2001 (12 months) 5000 5000 93822 93.00% 13969.62

31.03.2003 (18 Months) 5000 5000 156912 97.00% 21215.35

29.02.2004 (11 months) 5000 6000 88749 82.9% 9570.56

DETAILS OF FUTURE CAPACITY UTILISATION FOR NEXT 3 YEARS

MAWANA SUGAR WORKS

Plantation White Sugar

Year Installed Capacity Capacity UtilisationTCD TCD

2004-05 11000 90%

2005-06 11000 90%2006-07 11000 90%

Co-generation

Year Installed Capacity Capacity UtilisationMW MW

2004-05 2.5 90%2005-06 5.0 90%

2006-07 5.0 90%

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TITAWI SUGAR COMPLEX

Plantation White Sugar

Year Installed Capacity Capacity UtilisationTCD TCD

2004-05 6000 90%

2005-06 8500 90%

2006-07 8500 90%

Ethanol

Year Installed Capacity Capacity UtilisationKL KL

2004-05 - -

2005-06 - -

2006-07 60 90%

Assumption : The above estimation about the capacities both at Mawana & Titawi are done by the Company keeping in view the past trackrecord, increase in capacity in forthcoming years and assuming 180 days of crushing season.

PRODUCTSStatement showing the principle raw materials and end users for the Company’s products:

Product Principal Raw Material Principal End UsersPlantation White Sugar Sugarcane • Consumers

• Institutional manufacturing buyers like Nestle (India) Ltd., Heinz India Private Ltd.,Dabur India Ltd., Hamdard Waqf Laboratories, Perfetti India Ltd. etc.

Molasses By-product of sugar • Distilleries• Chemical Units.

MANUFACTURING PROCESSThe manufacturing of sugar begins with receiving harvested sugar cane at the factory. The prompt dispatch of cane to factory is an importantdeterminant of the yield – the shorter the time between harvesting to crushing, the higher the yield and vice versa. The cane is weighed at thefactory gate on platform type weighbridges. This has the weight recording arrangement linked to a computer system, which records the grossand net weights as well as the price payable to the farmer(s). Cart cane is unloaded directly into the cane carrier and tractor trolley whereastruck cane is unloaded with the help of overhead travelling cranes.

The sugarcane is uniformly fed to cane preparing devices so that prepared cane is fed to mills for efficient milling. The prepared cane is thenpassed through the four / five milling tandem for the initial grinding. The juice extracted is strained and the crushed cane separated from the juiceis returned to the mill tandem. Bagasse from the last mill is conveyed to the boilers as fuel by means of a carrier system.

The mixed juice from the milling plant is mechanically screened, and then heated to about 70 degrees centigrade in rapid flow vertical juiceheater to maintain good co-efficient of heat transfer. The heated juice is limed and sulphised in a continuous juice sulphiter and then heated to105 degree centigrade and passed through a flash tank for the removal of gas and air before letting it into continuous clarifier, where the settlingof mud floc takes place. Accumulated mud from the mud boot is separately withdrawn by gravity flow. Clear juice is withdrawn from the upperregions through the overflow box for further treatment.

Clarified juice from the clarifier is further heated to around 15 degree centigrade in a plate heat exchange, before being pumped for thickening.Vapour from the 2nd effect is used to heat the pans. A quintuple effect evaporator is used for the final thickening of the juice into syrup. The syrupat 60-65 degree centigrade is further bleached by passing it through a continuous syrup sulphitation vessel and pumped to pan supply tanksat the pan floor.

Intensive exhaustion takes place in the pans before crystallization. Air-cooled crystallisers are used for proper crystalisation. After the motherliquor in the massecuite is exhausted to the optimum limit i.e maximum sugar from the mother liquor has been transferred to sugar crystals, thetwo constituents are separated in the centrifuges. The sugar is washed thoroughly with super heated wash in stages within the centrifugalbaskets.

The sugar discharged from the centrifuges is conveyed, dried and cooled by multi tray hoppers. The sugar is then screened in a grader so asto separate fine and lumps. Sugar is thereafter sack filled, stitched and conveyed to sugar warehouses.

TECHNOLOGYWhite crystal sugar is manufactured by Double Sulphitation process with integrated Clarification System (ICS) for juice, syrup and melt.Refined sugar is manufactured by melting sugar with Integrated Clarification System for the sugar melt.

LANDThe Company has 64.7349 hectares of freehold land in its Mawana unit and 29.076 hectares of freehold land in Titawi Unit. Out of 64.7349hectares in Mawana, 6.251 hectares of land located at Barhni, Distt. Sidharthnagar, U.P., is to be surrendred as per Allahabad High CourtOrder. In addition, 9.048 hectares of land located at Mawana Mandi has not been in direct and active use by the Company because of whichState Adminstration seeks to revert this land back to State. This issue is pending with Courts of Competent Jurisdiction.

Out of total 64.73 hectares of land in Mawana, 46.282 hectares of land has already been mutated in the name of Siel Sugar Ltd. and 3.158hentares of land is at present in the name of M/s Shriram Industrial Enterprises Ltd. in the revenue records (application for name change to SielSugar Limited pending).

The entire land of 29.076 hectares at Titawai has been mutated in the name of Siel Sugar Ltd.

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Other Land The Company has 38.03 hectares of land at Nanglamal out of which 1.603 hectares of land is at present in the name of M/s Siel Ltd. in therevenue records (application for name change pending). Further, the application for change of land use from agricultural to industrial filed on2nd June 2004 is pending for filing of report by the Tehsildar, Meerut.

The Company also has 8343.75 sq. mtr of Institutional plot in Sector –32, Gurgaon. The land is at present in the name of Siel Limited. TheCompany has filed an application for change of name from Siel Limited to Siel Sugar Limited.

As the Company has recently changed its name from Siel Sugar Ltd. to Mawana Sugars Ltd., it is taking steps to get the revenue recordsmodified.

RAW MATERIALSSugar cane is the principal raw material for manufacture of sugar. In the present regulated system each sugar mill has a command area, whichpresently is the area covered by a radius of 15 KM from the factory. Each sugar mill is required to procure the sugar cane from its command area,which is allocated by the Cane Commissioner, Government of Uttar Pradesh. Sugar cane procured from farmers is supplied to factories in two ways:• At gate: farmers deliver sugar cane at the gate of sugar mill• At Cane Procurement Centers: Sugarcane is delivered by farmers at Cane Procurement Centers set up by the sugar mills. The cane is received

by the mills as per their crushing capacity. Balance cane is sold by the farmers for production of Gur / Khandsari.The Company has not foreseen any problem in procurement of sugar cane at both its plants for the last so many years.

POWER, FUEL & UTILITIESPOWERPower is used in the plant in the process of manufacture of sugar, street-lighting and for domestic consumption in residential colony in the factorycampus. Power requirement is met by captive power generation at both the plants i.e. 15.20 MW (6 Nos. TG Set) at Mawana and 8 MW (3 turbines)at Titawi.

WATERWater is used in the plant for processing, (maceration) industrial cooling and drinking purposes in the factory & colony. Water requirement at Mawanaand Titawi is met through tubewells installed at respective plants.

STEAMSteam is generated in boilers and bagasse is used as fuel. Bagasse is produced during crushing of sugarcane as residue of cane after juiceextraction at the mills. To meet the process steam requirement, 6 boilers with total steam generation capacity of 230 MT/hour at Mawana and 3boilers with steam generation capacity of 141 TPH at Titawi have been installed.

EFFLUENT TREATMENT FACILITIES

SOLID EFFLUENTThe press mud is continuously got removed from the factory through dumpers dumped on the land of the factory / Contractor. The press mud is alsoused as manure and sold to local farmers. The Boiler fly ash is cooled and sold for briquitte manufacturing or burnt under strict supervision.

Gaseous Emission

Boilers are fitted with wet scrubber system for controlling dust concentration in the flue gases as per the norms prescribed by Uttar Pradesh PollutionControl Board. Hence, there is no gaseous effluent.

Liquid Effluent

The liquid effluent treatment plants are being operated and maintained in a manner that the treated discharge effluent is conforming to the norms ofUttar Pradesh Pollution Control Board.

HUMAN RESOURCESThe total employee strength of the Company as on 5th August, 2004 is 1537, details of which are as follows:

Function/Department Employee strength Total Employee strengthMSW TSC

Operations 546 228 774

Marketing 4 - 4

Materials 18 10 28

Operation Maintenance / Mechanicals / Electrical/ Other Technical 352 154 506Other Administrative & Finance Functions 169 56 225

TOTAL 1089 448 1537

SWOTStrength• Established factories with economies of scale.

• Strong relationship with farmers ensuring continuous cane supply.• ‘Mawana’ brand is established and popular brand in the Sugar Industry.

• 50% of total turnover of Company sold to Institutional Buyers, exports and consumer brand, who prefer quality sugar.

• Over 50 years of experience of manufacturing sugar.

• Experienced and skilled manpower

• Long term cane development strategies resulting in high yielding and high sugar crop variety.

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Weaknesses:• Cane purchase is highly regulated by State / Centre Governments which may affect the cost of sugar cane.• Distant location of mills from the ports which increases the cost of transportation for exports• Purchase of sugar cane and payment of cane prices is through Co-operative Cane Societies causing inefficiencies in the system.• Cane diversion to Khandsari and Gur Manufacturers who are not governed by the government regulations.

Opportunities:• Scope of improvement in cane yields / quality• Expansion of existing capacities and diversification into Co-generation and ethanol.• Liberalisation of Sugar Industry will help in improving the financial performance of the Company.

Threats:• Impact on Cane cost due to political interference in prices of sugar cane• Import of raw sugar as the international price is comparatively lower• Tight liquidity position of the Industry as a whole• High turnover of skilled manpower• Abrupt reduction in import duty• Competition from other mills expanding / modernizing / diversifying at a fast pace.

INSURANCEThe Company has insured its assets, the details of which are as under : Rs. in Lakhs

Particulars

MSWFixed Assets

Stocks

TSCFixed Assets

Stocks

Total

Gross value of assetsas on 29/02/2004

10480.79

14100.53

9100.09

9096.86

46516.57

Value for which Insurancecover has been taken

12479.17

19210.00

9435.24

12935.00

54059.41

Name and address of the InsuranceCompany

a) National Insurance Company Limited,New Delhi

b) ICICI LombardGeneral Insurance Company Limited,New Delhi

c) New India Assurance Co. Ltd.,UP

a) National Insurance Company Limited,New Delhi

b) ICICI LombardGeneral Insurance Company Limited,New Delhi

c) National Insurance CompanyLimited,UP

Type of risk covered

Standard Fire & specialPerilsStandard Fire & specialPerils

Standard Fire & specialPerilsStandard Fire & specialPerils

PROMOTERS AND THEIR BACKGROUNDThe Company was incorporated on 26th December, 2002 as Siel Sugar Ltd. (renamed as Mawana Sugars Ltd.) by Siel Ltd. to eventually acquire theSugar Division of Siel Ltd.

There are two core Individual Promoters, in addition to various Promoter Companies. Details of Individual Promoters are as under :

Mr. Siddharth Shriram

Voter ID : Not AvailableDriving License No. : 02009200115643

Mr. Siddharth Shriram aged 59 years is the Chairman & Managing Director of the Company. He has a Bachelor of Arts (Hons.) degree from St.Stephens College, Delhi University and a M.Sc. (Management) degree from the Massachusetts Institute of Technology, U.S.A.

He has been on the Board of Directors of one or the other Company of the Group since 1973 and is at present Chairman and Managing Director of SielLimited and Chairman of Shivajimarg Properties Ltd., Siel Holdings Ltd., SFSL Securities Pvt. Ltd., Honda Siel Power Products Limited, Ceratizit IndiaPvt. Ltd., Honda Siel Cars India Ltd., The Jay Engineering Works Ltd., Usha International Ltd. and Daikin Shriram Airconditioning Pvt. Ltd.

Mr. Krishna ShriramVoter ID : Not AvailableDriving License No. : P02022000111653Mr. Krishna Shriram aged 34 years has a Bachelor of Arts (Hons.Eng.) Degree from Delhi University. He is the son of Mr. Siddharth Shriram. Formore than five years he has been handling the sugar business of Siel Ltd., which has now been vested in Mawana Sugars Ltd. pursuant to theScheme. He also held the position of Whole Time Director and incharge of sugar business of Siel Ltd.

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DisclosureThe Company hereby confirms that the Permanent Account Number, Bank Account Number and Passport Number of the promoters have beensubmitted to the Stock Exchanges on which securities are proposed to be listed, at the time of filing of the draft offer document to them.

PROMOTER COMPANIESi. Siel Ltd.ii. Busneda Commercial Pvt. Ltd.iii. Sandvik Investments & Leasing Pvt. Ltd.iv. Greenfields Commercial Pvt. Ltd.v. Minos Trading (I) Pvt. Ltd.vi. C S R J & K Investments Pvt. Ltd.vii. SFSL Securities Pvt. Ltd.viii. Perennial Investments Limitedix. Doab Foods & General Industries Ltd.x. M S R Enterprises Ltd.

There is no conflict of interest amongst the above Promoter Companies, which are engaged in the activities of loans and investments.The details of Promoter Companies are disclosed on page no. 31 to 40 of the Letter of Offer.

BOARD OF DIRECTORS OF MAWANA SUGARS LTD.

S. No. Name of the Director Executive/Non-Executive Independent/others Representing/Nominee1. Mr. Siddharth Shriram Executive Non-Independent -2. Mr. Deepak Banerjee Non-Executive Independent -3. Mr. Ravi Vira Gupta Non-Executive Independent -4. Mr. S. Lahiri Non-Executive Independent Nominee of IFCI5. Mr. N.K. Goila Non-Executive Independent -

Details of other Directorships of Board of Directors

Name, Designation and Address of the Director Age (years) Other Directorships

Siddharth Shriram 59 CHAIRMAN & MANAGING DIRECTORChairman & Managing Director, 1. Siel Ltd.

CHAIRMAN1. Honda Siel Power Products Limited2. Ceratizit India Pvt. Ltd.3. Honda Siel Cars India Ltd.4. The Jay Engineering Works Ltd.5. Usha International Ltd.6. Daikin Shriram Airconditioning Pvt. Ltd.7. Shivajimarg Properties Ltd.8. Siel Holdings Ltd.9. SFSL Securities Private Limited

DIRECTOR1. Hongo India Pvt. Ltd.2. Madan Shree Enterprises Ltd.3. M.S.R. Enterprises Ltd.4. Doab Foods & General Industries Ltd.5. Perennial Investments Limited6. Covrad Heat Transfers Ltd.(U.K.)7. Sietal Ltd. (U.K.)8. Siel SA (Pty) Ltd., South Africa9. Cyprus Drive (Pty.) Ltd., South Africa10. Crisp Air (Pty.) Ltd., South Africa11. Shriram Fuel Injection Industries Ltd.12. Nanglamal Sugar Ltd.

Mr. Deepak Banerjee 52 DIRECTORDirector 1. Siel Industrial Estate Ltd.D-430, Defence Colony, 2. Siel Holdings Ltd.New Delhi-110024

Mr. Ravi Vira Gupta 66 DIRECTORDirector 1. Goodyear India Ltd.9-B, Anand Lok, 2. SAIL Ltd.New Delhi-110049 3. Spic Ltd.

4. IDBI Ltd.5. DCM Precision Engineering Ltd.6. Delhi Safe deposits Co. Ltd.7. Sesharaya Paper & Board Ltd.

3A, The Green,Opp. Air Force Station,Rajokari,New Delhi-110038

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Mr. N.K. Goila 56 WHOLE TIME DIRECTORDirector 1. Honda Siel Cars India Ltd.

DIRECTOR1. Usha International Ltd.2. Shriram Fuel Injection Industries Ltd.3. The Jay Engineering Works Ltd.4. Avro Sales Pvt Ltd.5. Siel Holdings Ltd.6. Shivajimarg Properties Ltd.7. Nanglamal Sugar Ltd.

Mr. Subrata Lahiri 54 DIRECTORDirector 1. Shivalik Global Ltd.D-503, IFCI Staff Colony, 2. Siel Ltd.Paschim Vihar,New Delhi-110063

Name, Designation and Address of the Director Age (years) Other Directorships

A-65/1, DDA SFS Flats,Saket,New Delhi-110017

The day-to-day affairs of the Company are being looked after by Mr. Siddharth Shriram, the Managing Director of the Company. Mr. SiddharthShriram has over 35 years of experience in this industry.

All the Directors have confirmed that there are no pending litigation / disputes or criminal / civil prosecution against them, except for those mentionedunder litigations on pages no. 61 and 87.

DETAILS OF MANAGING DIRECTOR’S COMPENSATION AND TERMMSL has appointed Mr. Siddharth Shriram as the Managing Director of the company in accordance with the provisions of the Companies Act, 1956for the period of five years w.e.f. 1st October 2003. His appointment has been approved by the Board of Directors in its meeting held on 17th September2003, by the remuneration committee in its meeting held on 29th September 2003 and by the Shareholders in their meeting held on 30th September2003. Though his remuneration was approved for a period of three years, the same has been revised w.e.f 1st June 2004 for his remaining tenure bythe Shareholders in their Extra ordinary Meeting held on 8th May 2004.

A. Salary

a) Basic Salary : Rs. 3,00,000/- p.m.

b) Commission : 1% of the net profits of the company, calculated in accordance with Sec. 349 & 350 of the Compa-nies Act, 1956.

c) Minimum Salary : In the event of inadequacy or absence of profits,

Mr. Siddharth Shriram shall be entitled to the Salary and perquisites as stated here as minimumsalary.

B. Perquisites

Category ‘A’a) Housing : The expenditure on leasing unfurnished accommodation upto Rs. 1,00,000/- per month or House

Rent Allowance of Rs. 1,00,000 per month in lieu thereof.

b) Gas/Electricity/Water : Actual

c) Medical Expenses : Expenses incurred for self and family subject to the ceiling of one and half month’s basic salary in ayear or upto four & half months basic salary in a block of 3(three) years.

d) Leave Travel : One month’s basic salary in a year as per rules of the company.

e) Club Fees : Membership of two Clubs. Entry fee & monthly subscription to be borne by the Company.

f) Personal Accident Insurance : Premium not exceeding Rs. 10,000/- per annum.

g) Entertainment Expenses : Reimbursement of actual entertainment expenses incurred for the business purposes.

Category ‘B’

a) Car : Facility of Company car for which all running and maintenance expenses including driver’s salaryshall be borne by the Company. A sum of Rs. 1000/- per month will be recovered from Mr. SiddharthShriram for personal use of car.

b) Telephone : Actual Expenses for Telephones at Residence and Mobile Phone. All personal long distance callsshall be paid for by Mr. Siddharth Shriram.

Category ‘C’

a) Provident Fund : As per the rules of the Company.

b) Superannuation : As per the rules of the Company.

c) Gratuity : As per the rules of the Company.

d) Earned Leave : One month’s leave for every completed year of service. Encashment of leave accumulated but notavailed of Subject to maximum of 90 days will be allowed and governed as per Income Tax Rules,1962.

29

CORPORATE GOVERNANCE INITIATIVESThe Company has complied with SEBI Guidelines in respect of Corporate Governance as applicable to specially with respect to constitutingthe committees such as Audit Committee, Shareholder/Investor grievance Committee, Remuneration Committee etc. The Details of majorinitiatives undertaken by each are given below:-

Board Of Directors: The Board, comprising five directors, functions either as a full Board or through Committees. The Composition of theBoard of Directors is in conformity with the Listing Agreement with stock exchange.25 meetings of the Board of directors were held sinceincorporation.In compliance of the Corporate Governance norms, the Company has set up three Committees.

1. The Audit Committee, set up on 5th September 2003 and which presently comprises of Mr. Ravi Vira Gupta (Chairman), Mr. SubrataLahiri (IFCI Nominee), Mr. Deepak Banerjee and Mr. N.K. Goila. Its activities include overseeing of the Company’s financial reportingprocess and disclosure of its financial information, recommending the appointment and removal of external auditor, fixation of audit fee andreviewing the annual financial statements with the management before submission to the Board.

2. The Remuneration Committee set up on 5th September 2003 and which presently consists of Mr. Ravi Vira Gupta (Chairman), Mr. N.K.Goila and Mr. Subrata Lahiri. It is authorized to determine the Company’s policy on remuneration of Directors including pension rights,compensation payment and other related issues.

3. The Shareholders / Investors’ Grievance/ Share Transfer Committee, formed by the Board of Directors on 5th September 2003 andwhich presently comprises of Mr. N. K. Goila (Chairman) and Mr. Siddharth Shriram, looks into investor-related issues including transferof shares, non-receipt of Balance Sheet, non-receipt of dividends, issues relating to Fixed Deposits, etc.

Interest of DirectorsNo Director is interested in the appointment of the Lead Manager or Registrar or any such intermediary registered with SEBI.

The Directors of the company, apart from re-imbursement of expenses incurred and normal remuneration/sitting fee from the company andtheir shareholding in the company, if any, have no other interest in the Company.

The Directors are not interested in any loans or advances given by the Company to any person(s)/Companies nor is any beneficiary of suchloans or advances related to any of the directors of the company, except as stated under para Related Parties Transactions’ under Notes toAuditors Report at pages no.46 & 55 and at point no. 5 under ‘Notes to Risk factor’ appearing on page no. xiv & xv of the Letter of Offer.

Changes in the DirectorsThe changes in the Board of Directors since incorporation i.e. 26th December 2002 are as below:

Name of Director Date of Date of retirement/ ReasonAppointment resignation

Mr. Siddharth Shriram 26.12.2002 & 1.10.2003* - Appointed as first Director and then as Managing Director

Mr. Deepak Banerjee 26.12.2002 - Appointed as First Director

Mr. Satyendra Gupta 26.12.2002 5.09.2003 Appointed as First DirectorCeased to be a Director- Due to Resignation

Mr. N.K. Goila 5.09.2003 25.09.2003 Appointed as Additional Director. Tenure Expired on27.09.2003 25.09.2003(The Date of AGM)

Again Appointed as Additional Director on 27th September 2003

Mr. Ravi Vira Gupta 15.09.2003 25.09.2003 Appointed as Additional Director. Tenure Expired on27.09.2003 25.09.2003 (The Date of AGM)

Again Appointed as Additional Director on 27th September 2003

Mr. N.S. Vishwanathan 26.12.2003 05.04.2004 Appointed as Nominee Director by IFCI. Nomination withdrawnon 5th April 2004.

Mr. Subrata Lahiri 05.04.2004 - Appointed as Nominee Director by IFCI

* Appointed as Managing Director w.e.f. 1st October 2003.

Details of Service contract including compensation of Directors, date of appointment and expiration of current terms are asfollows :

Name of Director Date of expiry of the current term of office

Mr. Siddharth Shriram Liable to Retire by Rotation in the 2nd AGM

Mr. Deepak Banerjee Liable to Retire by Rotation in the 2nd AGM

Mr. N.K. Goila Tenure expires in the 2nd AGM

Mr. Ravi Vira Gupta Tenure expires in the 2nd AGM

Mr. Subrata Lahiri Non-rotational as nominee of IFCI

30

Name Age Designation Qualifications Total Date of Previous Compensationexperience joining employment Payable

(Rs. in Lakhsper month)

Mr. Siddharth Shriram 59 Chairman & BA(Hons), 36 01.10.2003 Managing Director, 1.78*Managing MSc(Mgt.), Siel Ltd.Director MIT (USA)

Mr. P.K. Bhalla 52 Executive BSc., LLB., 27 15.09.2003 Whole Time Director, 3.83Director & FCS Siel Ltd.CompanySecretary

Mr. A.K. Mehra 54 Executive MSC. 31 15.09.2003 Whole 3.83Director (Chem. Engg.) Time Director,(Operations) Siel Ltd.

Mr. Rajendra Khanna 49 Executive B.Com.(Hons.), 23 16.12.2003 Vice President 2.55Director CA (Finance)-(A/Cs & Fins.) Birla Home

Finance Ltd.

None of the key managerial personnel are relatives of each other. As on 5th August, 2004 all the employees named above were on the rolls of theCompany as permanent employees.

* Revised w.e.f. 1st June 2004 to be Rs. 6.06 Lakhs per month.

Shareholding of Key Managerial Personnel:The aggregate shareholding of the key managerial personnel of the Company as on 5th August, 2004 is as follows :

Name Number of sharesMr. Siddharth Shriram 70184

Mr. P.K. Bhalla 456

Mr. A.K. Mehra 4818

Mr. Rajendra Khanna Nil

The Company does not have any bonus or profit sharing plan for the Key Managerial Personnel except payment of commission to Mr. SiddharthShriram as per his revised terms of appointment.

Key Managerial PersonnelThe key managerial personnel of the Company as on 5th August, 2004 were as follows:

Changes in Key Managerial Personnel during the last three years (other than Superannuation) – since incorporation

Sr. No. Name of key managerial personnel Designation Date of change Reason1. Mr. Siddharth Shriram Managing Director 01/10/2003 Transferred from Group Company3. Mr. P.K. Bhalla Executive Director (Legal & Sectl.) 15/09/2003 Transferred from Group Company

4. Mr. A.K. Mehra Executive Director (Operations) 15/09/2003 Transferred from Group Company

5. Mr. Rajendra Khanna Executive Director 16/12/2003 Appointment(Accounts & Finance)

Note : Mr. D. Banerjee ceased to be a key managerial personnel but continues to be a Non-Executive Director of the Company. Similarly, Mr.Satyendra Gupta earlier Director of the Company resigned from Directorship w.e.f. 5th September, 2003.

31

Details of Subsidiaries /Promoter Companies and Promoter Group Companies of MSL /Other Business Ventures of Promoters

DETAILS OF SUBSIDIARY COMPANIES1. Siel Holdings Ltd. Siel Holdings Ltd. is a 100% subsidiary of MSL

Date of Incorporation 28th January 2003

Nature of Activity To invest, acquire, buy, hold, sell, transfer, hypothecate, deal in and dispose of shares,stocks, bonds, debenture-stock of the Companies; securities, bonds, certificates issued orguaranteed by any government or local authorities by original subscription, purchase, ex-change or otherwise.

Financial Information (Rs. in lakhs except per share data)

For the year ended on 31/03/2003

Total Income -

Profit/(Loss) after tax (0.71)

Share Capital 5.0

Reserves (excluding revaluation reserve) -

Earning per Share (Rs.) (1.42)

Book Value per share (Rs.) 8.57

Share Price High/ Low during last six months NA

Details of Public/ Rights issue in past three years NA

2. Nanglamal Sugar LimitedNanglamal Sugar Limited has been incorporated on 13th May 2004 as a wholly owned subsidiary of Mawana Sugars Ltd. to carry on the businessof manufacturing and trading in sugar.

ORGANISATIONAL CHART

CHAIRMAN

(SIDDHARTH SHRIRAM)

BOARD OF DIRECTGORS

ED & CO.SECY (PK BHALLA)

ED (OPERATIONS) (AK MEHRA)

ED (A/CS & FIN) (RAJENDRA KHANNA)

GROUP RESOURCES OFFICERS-3

ADVISOR-2

A/CS & FIN HEAD (VIJAY SAJJANHAR)

DGM (A/CS & FIN)

CONTROL & CO-ORDN

OFFICERS -4 OFFICERS-4

LEGAL HEAD (BK AGARWAL)

GM (LEGAL) SUGAR SALES HEAD(SATISH KANSAL) ADVISOR (SALES)

PR & LIAISON HEAD (RK LAWANIA)

MANAGER

HRD,IR & ADMN.HEAD (SHARAD KRISHNA)

GM(HR)

R&D HEAD (DR SS SRIVATSA)

DGM (R&D)

MATERIALS HEAD (SN PANIGRAHI)

ASSTT GM (MTLS)

(YK SETHI) ADVISOR

OFFICER-1 UNIT-MSW

UNIT-TSC

UNIT-HEAD (KARAN SINGH)

GENERAL MANAGERTECHNICAL

CANE HEAD (DP SHARMA) SR MGR (CANE)

OFFICER-12 SUPRS -9 STAFF –212 W/MEN -93

QC HEAD (DR SS SRIVATSA)


ENGG. HEAD (S GANAPATHY) ADDD GM (ENGG)

-UNIT-I HEAD (OP MISHRA) CHIEF ENGR.


-UNIT- II HEAD (KS ANAND) ASST.GM (ENGG).


MFG HEAD (SD BHATNAGAR) DGM (PROD)

-UNIT-I HEAD (Y K CHAUHAN) CHIEF CHEMIST


-UNIT- II HEAD (AJAY PANDEY) DY CHIEF CHEMIST


PROJECT HEAD (R BHARGAVA) DGM (PROJ)

NON-TECHNICAL

COMMERCIAL#


# Includes A/cs & Fin, IT, HRD, Godown & Excise, Legal, Materials, Security & Sanitation, Safety and Environment & Welfare

UNIT-HEAD (OP SHARMA)

SR.GM

TECHNICAL NON-TECHNICAL

CANE HEAD (RK KATHURIA) GM (CANE)


ENGG HEAD (P KUMAR) AGM (ENGG)


LAB HEAD (SK YADAV) DM (QC)


MFG HEAD (AK ARYA) DM (QC)


COMMERCIAL*


* Includes A/cs & Fin, IT, HRD, Godown & Excise, Legal, Materials, Security & Sanitation, Safety and Environment & Welfare

NB : The Group Resources Executives have matrix reporting relationship with both the Unit Heads. Unit personnel of the departments shown in Group Rresources are reporting functionally to their respective funcctional head at Group Resource level (excepting Legal & HR. The manpower strength includes only executives and Permanent Seasonal employees.

SECRETARIAT

BOARD OF DIRECTORS

32

3. Jay Engineering Works Ltd.Jay Engineering Works Ltd. is a subsidiary of Siel Holdings Ltd., thereby making it the subsidiary of Mawana Sugars Ltd.

Date of Incorporation 8th November 1935

Nature of Activity Manufacturing of fans, sewing machine & fuel injection equipments

Financial Information (Rs. in lakhs except per share data)For the year ended 31/03/2002 30/09/2003 31/03/2004

(for 18 months) (for 6 months)*Total Income 15030.99 18704.63 6833.70

Profit/(Loss) after tax (822.07) 6586.65 2329.32

Share Capital 2079.39 2079.39 2079.39

Reserves (excluding revaluation reserve) - - -Earning per Share (Rs.) (6.18) 49.55 17.52

Book Value per share (Rs.) (76.82) (26.73) (9.31)

Share Price High/ Low during last six months Shares are infreqeuntly traded and no transactions were reported during the last 6 months.

Details of Public/ Rights issue in past three years Nil

* These are Audited Results which are yet to be adopted by the Shareholders of the Company at the proposed AGM on 28/8/2004.Note : a) The Share capital includes Preference share capital also.

4. Shriram Fuel Injection Industries Ltd.Shriram Fuel Injection Industries Ltd. is a subsidiary of Jay Engineering Works Ltd., thereby making it the subsidiary of MSL. Shriram FuelInjection Industries Ltd. has been incorporated on 22nd October 2003 to acquire and take over fuel injection business of its holding company viz.Jay Engineering Works Ltd. carried on at Hyderabad Unit as a going concern as per the scheme sanctioned by Hon’ble BIFR vide its order dt.8th April 2003. The Company has Share Capital Reserve of Rs. 500 Lakhs as per audited Balance Sheet as on 31st March, 2004 and no profitand loss figures are available this being the first year of the company after incorporation.

DETAILS OF PROMOTER COMPANIES1. Siel Ltd.

Siel Ltd. is the Promoter Company of MSL

Date of Incorporation 27th March, 1961Nature of Activity Manufacture and sale of Caustic Soda, Chlorine, Stable Bleaching Powder and

trading of vanaspati and refined oilsFinancial Information (Rs. in lakhs except per share data)

For the year ended 30/09/2001 31/03/2003(for 18 Months) 31/03/2004(for 12 Months)*

Total Income 52898.43 79571.86 16438.37

Profit/(Loss) after tax (192.42) (10217.18) (3751.87)

Share Capital 5328.73 5389.81 1917.80Reserves (excluding revaluation reserve) 17754.56 16639.42 16716.78

Earning per Share (Rs.) (0.63) (25.53) (36.37)

Book Value per share (Rs.) 53.51 27.57 136.99

Share Price High/ Low during last six months Highest – Rs. 14.95 as on 3rd February, 2004 Lowest – Rs. 6.86 as on 31st March, 2004Details of Public/ Rights issue in past three years Nil

* These are Audited Results which are yet to be adopted by the Shareholders of the Company at the proposed AGM on 20/8/2004.

Note:- a) The company was having the partly paid-up equity share capital in the year 1999-2000. So, in calculating the EPS and Book value pershare, the number of shares has been considered prorata (i.e. to the extent paid-up) b) The Share capital includes Preference share capital also.

2. Busneda Commercial Pvt. Ltd.Busneda Commercial Pvt. Ltd. is a Promoter Company of MSL

Date of Incorporation 26th March 1985

Nature of Activity Loans, Investments and Business Consultancy


For the year ended 31/03/2001 31/03/2002 31/03/2003Total Income 257.71 166.26 121.55


Share Capital 2061 2061 2061

Reserves (excluding revaluation reserve) - - 3018.86Earning per Share (Rs.) (0.51) (0.19) (0.14)

Book Value per share (Rs.) (8.95) (9.14) 10.69

Share Price High/ Low during last six months Not Applicable

Details of Public/ Rights issue in past three years Not Applicable

Note: a) The Share Capital includes Preference share capital also.

33

3. Sandvik Investments & Leasing Pvt. Ltd.

Sandvik Investments & Leasing Pvt. Ltd. is a 100% subsidiary of Busneda Commercial Pvt. Ltd. thereby making it a Promoter Group Companyof MSL


Nature of Activity Loans and Investments


Total Income 24.38 19.50 13.17


Share Capital 151.01 151.01 279.81Reserves (excluding revaluation reserve) - - -





Note: a.) The Share Capital includes Preference share capital also.

4. Greenfields Commercial Pvt. Ltd.Greenfields Commercial Pvt. Ltd. is a 100% subsidiary of Busneda Commercial Pvt. Ltd. thereby making it a Promoter Group Company of MSL

Date of Incorporation 2nd June 1984Nature of Activity Loans and Investments


For the year ended 31/03/2001 31/03/2002 31/03/2003

Total Income 61.29 49.13 33.67Profit/(Loss) after tax (61.16) (12.67) (16.14)

Share Capital 361.10 361.10 431.35

Reserves (excluding revaluation reserve) - - 414.68


Book Value per share (Rs.) (1049.78) (1074.58) (66.19)Share Price High/ Low during last six months Not Applicable



5. Minos Trading (I) Pvt. Ltd.Minos Trading (I) Pvt. Ltd. is a subsidiary of KSR J & K Investments Ltd. thereby making it a subsidiary of Busneda Commercial Pvt. Ltd. andin turn a Promoter Group Company of MSL

Date of Incorporation 14th February 1967

Nature of Activity Loans and InvestmentsFinancial Information (Rs. in lakhs except per share data)


Total Income 43.86 32.36 22.90


Share Capital 90.02 90.02 206.94Reserves (excluding revaluation reserve) - - 151.08



Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years. Not Applicable


34

6. CSR J&K Investments Pvt. Ltd.CSR J&K Investments Pvt. Ltd. is a Promoter Company of MSL.

Date of Incorporation 7th June 1991





Share Capital 692.50 692.50 692.50

Reserves (excluding revaluation reserve) - - -Earning per Share (Rs.) (7.74) (6.29) (0.77)



Details of Public/ Rights issue in past three years. Not Applicable

Note:- a.) The company is having the partly paid-up equity share capital. So, in calculating the EPS and Book value per share, the number ofshares has been considered prorata (i.e. to the extent paid-up).

b) The Share Capital includes Preference share capital also.

7. SFSL Securities Pvt. Ltd.SFSL Securities Pvt. Ltd.is a Promoter Company of MSL.Date of Incorporation 20th March 1995




Profit/(Loss) after tax 16.72 (0.04) (0.57)

Share Capital 125.00 125.00 125.00

Reserves (excluding revaluation reserve) 31.24 31.20 30.63

Earning per Share (Rs.) 1.34 (0.00) (0.05)Book Value per share (Rs.) 12.45 12.46 12.43



8. Perennial Investments LimitedPerennial Investments Pvt. Ltd.is a Promoter Company of MSL

Date of Incorporation 11th April 1989

Nature of Activity Loans and InvestmentsFinancial Information (Rs. in lakhs except per share data)


Total Income 36.37 36.11 33.05

Profit/(Loss) after tax 30.95 35.93 (91.22)Share Capital 44.04 44.04 44.04

Reserves (excluding revaluation reserve) 110.25 146.18 -

Earning per Share (Rs.) 69.70 80.92 (205.00)



9. Doab Foods & General Industries Ltd.Doab Foods & General Industries Ltd. is a Promoter Company of MSL.




Total Income 8.79 8.79 5.27

Profit/(Loss) after tax 8.24 (66.29) (3.88)

Share Capital 25.00 25.00 25.00

Reserves (excluding revaluation reserve) 26.96 - -Earning per Share (Rs.) 32.94 (265.15) (15.52)

Book Value per share (Rs.) 207.82 (57.33) (72.85)



35

10. M. S. R Enterprises Ltd. M. S. R Enterprises Ltd.is a Promoter Company of MSL




Total Income 12.84 12.85 7.78

Profit/(Loss) after tax 11.66 (62.22) 1.55

Share Capital 10.00 10.00 10.00Reserves (excluding revaluation reserve) - - -

Earning per Share (Rs.) 116.57 (622.23) 15.47

Book Value per share (Rs.) 492.44 (129.79) (114.32)



DETAILS OF PROMOTER GROUP COMPANIES1. KSR J&K Investments Ltd.

KSR J&K Investments Ltd. is a 100% subsidiary of Busneda Commercial Pvt. Ltd. thereby making it a Promoter Group Company of MSL

Date of Incorporation 7th June 1991Nature of Activity Loans and Investments


For the year ended on 31/03/2001 31/03/2002 31/03/2003


Profit/(Loss) after tax (0.06) (0.10) (0.06)Share Capital 693.00 693.00 701.97

Reserves (excluding revaluation reserve) - - -


Book Value per share (Rs.) 6.35 6.32 6.95Share Price High/ Low during last six months Not Applicable



2. Manak Promoters Pvt. Ltd.Manak Promoters Pvt. Ltd. is a 100% subsidiary of Busneda Commercial Pvt. Ltd. thereby making it a Promoter Group Company of MSL


Nature of Activity Investments in real estate and granting loans and advances


For the year ended on 31/03/2001 31/03/2002 31/03/2003

Total Income 24.10 24.85 20.40Profit/(Loss) after tax 12.00 12.49 5.22

Share Capital 12.05 12.05 12.05

Reserves (excluding revaluation reserve) 37.85 50.34 65.07

Earning per Share (Rs.) 9.97 10.37 4.34Book Value per share (Rs.) 41.42 51.79 64.02



3. Shivajimarg Properties Ltd. Shivajimarg Properties Ltd. is a 100% subsidiary of Siel Ltd. thereby making it a Promoter Group Company of MSL

Date of Incorporation 26th Dec. 2002

Nature of Activity To own, sell, manage, build, erect, construct, develop and to deal with all types ofimmovable properties including residential and commercial properties.


For the year ended 31/03/2003Total Income -

Profit/(Loss) after tax (0.26)

Share Capital 5.0

Reserves (excluding revaluation reserve) -

Earning per Share (Rs.) (0.53)Book Value per share (Rs.) 9.47



36

4. Transiel India Ltd.Transiel India Ltd. is a 100% subsidiary of Siel Ltd. thereby making it a Promoter Group Company of MSL

Date of Incorporation 23rd Aug. 1994Nature of Activity To establish, carry on and act as merchants, traders, commission agents, buying agents,

selling agents, contractors, importers, exporters of all types of goods, merchandise,commodities, articles and equipments, whether in raw or finished form and whether tobe used for industrial, commercial or household purpose, in India and Abroad.

Financial Information (Rs. in lakhs except per share data)For the year ended 30/09/2002 31/03/2003(for 6 Months) 31/03/2004Total Income - 8.25 3.63Profit/(Loss) after tax (3.49) 0.70 0.94Share Capital 1500.00 1500.00 1500.00Reserves (excluding revaluation reserve) - - -Earning per Share (Rs.) (0.07) 0.01 (0.02)Book Value per share (Rs.) (17.13) (17.11) (17.13)Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years Not Applicable

Note: a.) The Share capital includes the preference share capital also.

5. Siel Industrial Estate Ltd. Siel Industrial Estate Ltd. is a 100% subsidiary of Siel Ltd. thereby making it a Promoter Group Company of MSL

Date of Incorporation 11th Feb. 1994Nature of Activity To conceive, design, promote, develop, construct, establish, sell, manage, and maintain,

the integrated Industrial Estates, Science Parks, Business Parks, Technology Centres,Research and Development Centres, Commercial-Complexes in India and abroad.

Financial Information (Rs. in lakhs except per share data)For the year ended 31/03/2002(for 9 Months) 31/03/2003 31/03/2004Total Income 12.74 57.03 5.79Profit/(Loss) after tax (41.54) 1.08 (503.40)Share Capital 2000.00 2000.00 2000.00Reserves (excluding revaluation reserve) - - -Earning per Share (Rs.) (0.21) 0.005 (2.51)Book Value per share (Rs.) 9.49 9.51 7.00Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years Not Applicable

6. Siel Financial Services Ltd. Siel Financial Services Ltd. is subsidiary of Siel thereby making it a Promoter Group Company of MSL

Date of Incorporation 12th December 1990Nature of Activity Corporate Finance, Lease & hire Purchase, Investment BankingFinancial Information (Rs. in lakhs except per share data)For the year ended 31/03/2002 31/03/2003 31/03/2004*Total Income 181.36 117.90 229.13Profit/(Loss) after tax 93.59 28.46 143.60Share Capital 1862.30 1862.30 1862.30Reserves (excluding revaluation reserve) 10.31 16.00 44.72Earning per Share (Rs.) 0.47 (0.07) 0.90Book Value per share (Rs.) (9.31) (9.06) (7.84)Share Price High/ Low during last six months Shares are infrequently traded and there has been no trading during the last 6 monthsDetails of Public/ Rights issue in past three years Nil

* These are Audited Results which are yet to be adopted by the Shareholders of the Company at the proposed AGM on 13/8/2004.

7. SFSL Investments Ltd. SFSL Investments Ltd. is a 100% subsidiary of Siel Ltd. thereby making it a Promoter Group Company of MSL

Date of Incorporation 25th May, 1993Nature of Activity Loans and Investments and dealing in sharesFinancial Information (Rs. in lakhs except per share data)For the year ended 30/09/2002 31/03/2003(6 months) 31/03/2004Total Income 153.62 144.04 43.36Profit/(Loss) after tax (89.91) (199.55) 39.88Share Capital 1500.01 1500.01 1500.01Reserves (excluding revaluation reserve) - - -Earning per Share (Rs.) (0.60) (1.33) 0.26Book Value per share (Rs.) (5.74) (7.07) (6.80)Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years. Not Applicable

37

8 Usha International LimitedTwo of the Promoter Companies of MSL hold in excess of 10% of Usha International Limited’s equity capital, making this a Promoter Group-Company.

Date of Incorporation 3rd April 1954Nature of Activity Trading of home appliancesFinancial Information (Rs. in lakhs except per share data)For the year ended 31/03/2002 31/03/2003 31/03/2004Total Income 27553.66 28967.52 32547.93Profit/(Loss) after tax 337.77 468.03 582.12Share Capital 227.60 227.60 227.60Reserves (excluding revaluation reserve) 3876.74 4267.74 4579.12Earning per Share (Rs.) 14.80 20.6 25.58Book Value per share (Rs.) 185.90 202.80 211.20Share Price High/ Low during last six months Highest – Rs. 119.20 as on 11th May, 2004. Lowest – Rs. 57.00 as on 24th March, 2004Details of Public/ Rights issue in past three years. Not Applicable

9. Chhaya J&K Investments (P) Ltd.Chhaya J&K Investments (P) Ltd. is holding more than 10% of the share capital of one of the Promoter Companies of MSL thereby making it aPromoter Group Company of MSL.

Date of Incorporation 7th June 1991Nature of Activity Loans & InvestmentsFinancial Information (Rs. in lakhs except per share data)For the year ended 31/03/2001 31/03/2002 31/03/2003Total Income 0.00 0.00 0.00Profit/(Loss) after tax (0.06) (0.05) (0.15)Share Capital 604.01 604.01 604.01Reserves (excluding revaluation reserve) - - -Earning per Share (Rs.) (413.18) (401.99) (0.38)Book Value per share (Rs.) (4085.33) (4134.68) (288.22)Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years. Not Applicable

Note: a.) The share capital includes preference share capital also.

10. Krishna J&K Investments (P) Ltd.Krishna J&K Investments (P) Ltd. is holding more than 10% of the share capital of one of the Promoter Companies of MSL thereby making it aPromoter Group Company of MSL.Date of Incorporation 7th June 1991Nature of Activity Loans & InvestmentsFinancial Information (Rs. in lakhs except per share data)For the year ended 31/03/2001 31/03/2002 31/03/2003Total Income 0.00 0.00 0.00Profit/(Loss) after tax (0.06) (0.05) (0.16)Share Capital 604.01 604.01 604.01Reserves (excluding revaluation reserve) - - -Earning per Share (Rs.) (413.18) (392.84) (0.39)Book Value per share (Rs.) (4091.80) (4141.15) (298.91)Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years. Not Applicable

Note: a.) The share capital includes preference share capital also.11. Gaiety J&K Investments (P) Ltd.

Gaiety J&K Investments (P) Ltd. is holding more than 10% of the share capital of one of the Promoter Companies of MSL thereby making it aPromoter Group Company of MSL.Date of Incorporation 7th June 1991Nature of Activity Loans & InvestmentsFinancial Information (Rs. in lakhs except per share data)For the year ended 31/03/2001 31/03/2002 31/03/2003Total Income 0.00 0.00 0.00Profit/(Loss) after tax (0.06) (0.04) (0.17)Share Capital 604.01 604.01 604.01Reserves (excluding revaluation reserve) - - -Earning per Share (Rs.) (413.18) (392.84) (0.42)Book Value per share (Rs.) (4088.14) (4128.34) (296.05)Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years. Not Applicable

Note: a.) The share capital includes preference share capital also.

38

12. Madan Shree Enterprises Ltd.Madan Shree Enterprises Ltd. is holding more than 10% of the share capital of one of the Promoter Companies of MSL thereby making it aPromoter Group Company of MSL.





Profit/(Loss) after tax 5.38 (0.05) 1.92

Share Capital 62.00 62.00 62.00

Reserves (excluding revaluation reserve) - - 0.60Earning per Share (Rs.) 8.68 (0.08) 3.10




13. Hurrykrishna Venture Pvt. Ltd. Hurrykrishna Venture Pvt. Ltd. is a Company promoted by Mr. Krishna Shriram.

Date of Incorporation 2nd March 1990

Nature of Activity Venture BusinessFinancial Information (Rs. in lakhs except per share data)



Profit/(Loss) after tax (0.05) (0.16) (0.10)Share Capital 15.00 15.00 15.00





14. India Infrastructure Publishing Pvt. Ltd.India Infrastructure Publishing Pvt. Ltd. is a Company promoted by Mr. Krishna Shriram.


Nature of Activity Media PublishingFinancial Information (Rs. in lakhs except per share data)


Total Income 361.05 333.46 336.93

Profit/(Loss) after tax (22.37) (18.79) 15.20Share Capital 0.10 0.10 3.18


Earning per Share (Rs.) (2193.14) (1842.16) 47.83



DETAILS OF COMPANIES PROMOTED BY PROMOTERS

1. Company promoted by Siel Limited-Shivajimarg Properties Limited

Shivajimarg Properties Limited is a company promoted by Siel Limited the details of which are given at point no.3 on page no. 35 under thehead “Details of Promoter Group Companies”as it is also a subsidiary of Siel Limited.

DETAILS OF COMPANIES UNDER THE SAME MANAGEMENT

1. Siel Limited-Details are given at point no.1 on page no.32 under the head “Details of Promoter Companies”

2. Siel Holdings Limited-Details are given at point no.1 on page no.31 under the head “Detials of Subsidiary Companies”.

3. Shivajimarg Properties Limited-Details are given at point no.3 on page no.35 under the head “Details of Promoter Group Companes”.

4. Transiel India Limited-Details are given at point no.4 on page no.36 under the head “Details of Promoter Group Companies”.

5. Siel Industrial Estate Limited-Details are given at point no.5 on page no.36 under the head “Details of Promoter Group Companies”.

6. Siel Financial Services Limited-Details are given at point no.6 on page no.36 under the head “Details of Promoter Group Companies”.

7. SFSL Investments Limited-Details are given at point no. 7 on page no.36 under the head “Details of Promoter Group Companies”.

8. Jay Engineering Works Limited-Details are given at point no.3 on page no.32 under the head “Details of Suusidiary Companies”.

39

DETAILS OF OTHER JOINT VENTURE COMAPNIES1. Honda Siel Power Products Limited

Honda Siel Power Products Limited is a Joint Venture of one of the Promoter Companies.

Date of Incorporation 19th September 1985Nature of Activity Manufacturing & marketing of portable gensets, general purpose engines and water

pumping sets.Financial Information (Rs. in lakhs except per share data)For the year ended 31/03/2002 31/03/2003 31/03/2004*Total Income 19007.03 18764.44 18510.80Profit/(Loss) after tax 2322.38 2044.07 1031.15Share Capital 1014.31 1014.31 1014.31Reserves (excluding revaluation reserve) 11319 12499.46 13073.12Earning per Share (Rs.) 22.90 20.15 10.17Book Value per share (Rs.) 122 133 138.89Share Price High/ Low during last six months Highest - Rs. 126.95 (as on 3rd February, 2004) and Lowest – Rs. 86.00 (12th July, 2004)Details of Public/ Rights issue in past three years. Nil

* These are Audited Results which are yet to be adopted by the Shareholders of the Company at the proposed AGM on 29/9/2004.Note:- The Company has made applications for delisting from Calcutta and Chennai Stock Exchanges and the same is pending.

2. Honda Siel Cars India LimitedHonda Siel Cars India Limited is a Joint Venture of one of the Promoter Companies.

Date of Incorporation 5th December 1995Nature of Activity Manufacturing and marketing of Motor CarsFinancial Information (Rs. in lakhs except per share data)For the year ended 31/03/2002 31/03/2003 31/03/2004Total Income 84874.89 98539.29 13183.51Profit/(Loss) after tax 2648.12 3295.40 7888.05Share Capital 36000.00 36000.00 36000Reserves (excluding revaluation reserve) - - 2503.69Earning per Share (Rs.) 0.74 0.92 2.14Book Value per share (Rs.) 6.54 7.45 10.69Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years. Not Applicable

3. Hongo India Pvt. LimitedHongo India Pvt. Limited is a Joint Venture of one of the Promoter Companies.

Date of Incorporation 17th December 1997Nature of Activity Manufacturing and repairing etc. of body building, chassis, parts, spares, accessories,

fittings, tools etc. of automobiles and other vehicles and conveyances.Financial Information (Rs. in lakhs except per share data)For the year ended 31/03/2002 31/03/2003 31/03/2004*Total Income 5208 5755 7008.88Profit/(Loss) after tax 408 415 (454.49)Share Capital 2350 2350 2771.85Reserves (excluding revaluation reserve) 119 482 17.28Earning per Share (Rs.) 1.74 1.77 (1.74)Book Value per share (Rs.) 10.51 12.05 10.04Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years. Not Applicable

* These are Audited Results which are yet to be adopted by the Shareholders of the Company at its forthcoming AGM.4. Ceratizit India Pvt. Ltd.

Ceratizit India Pvt. Ltd. is a Joint Venture of one of the Promoter Companies.Date of Incorporation 22nd January 1996Nature of Activity Manufacturing & Trading of Tungsten Carbide Tips, Tools and InsertsFinancial Information (Rs. in lakhs except per share data)For the year ended 28/02/2002 28/02/2003 29/02/2004Total Income 1210.40 1561.53 1815.79Profit/(Loss) after tax (705.23) (197.08) 20.36Share Capital 2300.00 3500.00 3500.00Reserves (excluding revaluation reserve) - -Earning per Share (Rs.) (1.53) (0.43) 0.04Book Value per share (Rs.) 2.17 1.75 1.79Share Price High/ Low during last six months Not ApplicableDetails of Public/ Rights issue in past three years. Not Applicable

Note:- a) The face value of the shares has been reduced from Rs. 10/- per share to Rs. 5/- per share in the year 2001-02 b) The Share Capital includes Preference share capital also for the year 2002-03.

40

5. Daikin Shriram Airconditioning Pvt. Ltd.Daikin Shriram Airconditioning Pvt. Ltd. is a Joint Venture of one of the Promoter Companies.

Date of Incorporation 4th April 2000

Nature of Activity Manufacturing & marketing of Airconditioning, Refrigeration equipments



Profit/(Loss) after tax (354.70) 43.50 (1189.28)

Share Capital 1950.00 1950.00 1950.00

Reserves (excluding revaluation reserve) - - -Earning per Share (Rs.) (25.09) 1.69 (41.30)

Book Value per share (Rs.) 74.80 59.69 (19.64)



OTHERS VENTURES

Name of the Promoter Particulars of Business Ventures InterestMr. Siddharth Shriram Business of owning and maintenance of race horses Sole Proprietor

Mr. Siddharth Shriram/ Enterprises Trust-Discretionary Benefit Trust The entire interest is held by Mr. Siddharth Shriram,Mr. Krishna Shriram Mr. Krishna Shriram and Ms. Chhaya Shriram (daughter of

Mr. Siddharth Shriram and sister of Mr. Krishna Shriram)Mr. Siddharth Shriram Chinar Trust-A Private Business Trust The following interest is held by the promoter and his relatives:

Mr. Siddharth Shriram-10%Mrs. Roula Shriram-5%Ms. Chayya Shriram-15%Dr. Charat Ram-10%Mr. Deepak Shriram-5%

Mrs. Roula Shriram Running a bookshop Sole Proprietor

Details of Companies of The Same Group Referred to BIFR / Under Winding Up / Having Negative Networth

Following twelve group companies have negative networth for the year ended 31st March 2003 (except for few companies were last auditedavailable results are for the year 2003-04 as mentioned below:

Sr. No. Name of the Company Networth (Rs. in lakhs)F.Y. 2002-03

1. Siel Financial Services Ltd. (154.04) (F.Y. 2003-04)

2. SFSL Investments Ltd. (1020.23) (F.Y. 2003-04)

3. Sandvik Investments & Leasing Pvt. Ltd. (54.90)

4. Greenfields Commercial Pvt. Ltd. (80.32)

5. CSR J&K Investments Pvt. Ltd. (13.71)6. Doab Foods & General Industries Ltd. (18.21)

7. MSR Enterprises Ltd. (11.43)

8. Chhaya J&K Investments Pvt. Ltd. (0.29)

9. Krishna J&K Investments Pvt. Ltd. (0.30)10. Gaiety J&K Investments Pvt. Ltd. (0.30)

11. Jay Engineering Works Ltd. (123.47) (F.Y. 2003-04)

12. Diakin Shriram Airconditioning Pvt. Ltd. (382.95)

Out of the above, one Company viz. Jay Engineering Works Ltd. became sick and got registered with the Board of Industrial & Financial Reconstruc-tion (BIFR) in January, 1994. BIFR declared the Company as sick in its hearing held on 8th April, 1994 and appointed IDBI as the Operating Agencyfor submitting a revival scheme. BIFR sanctioned a rehabilitation scheme vide its order dated 21st November, 1997. The said scheme was declaredas failed in its meeting held on 12th July, 2001 due to non-implementation of the scheme and appointed IDBI as Operating Agency for formulation ofrevised rehabilitation scheme. The revised rehabilitation scheme was sanctioned by BIFR on 8th April, 2003.

Companies belonging to the Promoter Group, whose name has been struck off from the Registrar of Companies

There are no companies belonging to the Promoter Group, whose name has been struck off from the Registrar of Companies.

Companies from which the Promoters disassociated in the last three years:

There are no companies from which the Promoters disassociated themselves in the last 3 years.

Changes in Auditors since incorporation

There has been no change in statutory auditors since incorporation.

41

VII. INDUSTRY, MARKET AND COMPETITIVE ENVIRONMENT

Sugar is amongst the largest agro processing industries in India and comprises of 507 established sugar factories. 45 Millionfarmers and their families besides a large mass of agricultural labour are involved in sugar cane cultivation and its harvestingoperations. Over 5 lakhs workmen are directly employed. The industry thus caters to over 7.5 % of rural population. By way ofsugar cane price about Rs.16,00,000 lakhs are disbursed amongst farmers directly. Besides, its annual contribution to theCentral State exchequers by way of taxes is around Rs.180,000 lakhs. The industry is largely fragmented and total productionof 202 lakhs tones was achieved by 453 sugar units in 2002-2003 with a combined installed capacity of 185 lakh tons.

The industry does not depend on fossil fuel but generates its own renewable sources of energy. It also generates surplus powerthrough co-generation for use by consumers in interior rural areas. It has the potential to generate 5000 MW surplus power andreduce import bill of petroleum products by 5% by manufacture of ethanol. As against this, the industry has a combined installedcapacity of 750 MW of cogenerated power. The power is required to be sold to the state grid and tariffs are also fixed by the StateGovernments.

The Indian sugar industry has been highly regulated by both the Central and State Governments, who control the price of sugarcane,distribution and pricing of sugar and also the by-products (molasses). However, during the last few years there has been a gradualreduction in the regulations and it is expected that the regulations would be further eased in the coming years. In August 1998, thesugar industry was delicensed but it was stipulated that the distance between two sugar mills should be maintained at 15 kms. Thus,the sugar mills are now free to expand their capacities. The Central Government before the onset of crushing season declares aminimum cane price known as the Statutory Minimum Cane Price (SMP) based on estimated cost of production as recommended byCommission on Agricultural Costs and Prices (CACP). In addition, the State Governments announce a State Advisory Price (SAP),which has generally been higher than the SMP. As per current practice the Government has been increasing the SMP and the SAPin every season. The recent judgement pronounced by the Constitution Bench of Supreme Court has upheld the rights of State Govt.to fix the state advised prices.

As regards the sale of sugar there exists a dual pricing system whereby a certain percentage of the sugar produced by the sugarmills, known as ‘levy sugar’, is procured by the Government for the Public Distribution System (PDS) at a subsidized price called the‘levy price’ and the balance sugar production is allowed for free sale in the open market and is known as ‘free sale sugar’. FromFebruary 2001 the levy requirement was reduced by the Government to 15% (from 30%) and the levy price increased to Rs.11,357/- per tonne (from Rs.11,110/- per tonne). In March 2002 the levy was reduced to 10% and the levy price was fixed at Rs.12,131/- pertonne. The present levy price is Rs. 12599/- per tonne. While the price for the free sale sugar is dependent on market forces, the sugarfactories can sell sugar in open market in quantities released by the Government every month for each factory and sometimes alsopursuant to the orders issued by the Courts. The total offtake of sugar in domestic as well as export markets during last 3 years wasas follows:

Lac Tonnes

Period 1st October – 30th September, 2000-2001 2001-02 2002-03

Domestic Market 162.45 165.21 183.43

Export Market 12.44 10.53 15.00

Source: ISMA website and Statement on production, Dispatches and stock and ISMA Handbook of Sugar Statistics, July 2003.

MARKET AND MARKETING ARRANGEMENTSTransportation cost plays an important role to determine the markets in which sugar from a particular production unit can be sold. TheCompany sells sugar through a network of agents, who in turn sell to whole sellers. Trade settlements are usually on cash basis. Thecompany sells its sugar in Delhi, Uttar Pradesh, Haryana, Punjab, Rajasthan, Himachal Pradesh, Jammu & Kashmir andChandigarh. Sugar is sold as per monthly quotas released by the Sugar Directorate, Ministry of Consumer Affairs, Food &Public Distribution and Government of India. The Company sells sugar in consumer pack under the brand name “Mawana”.TheCompany’s application for registering the brand name is accepted for publication in the Trade Mark Journal under Trade &Merchandising Act and final approval for registration of brand name is awaited. None of the Promoter / Promoter GroupCompany/ (ies) have any interest in the same.

Levy component of sugar [10% of sugar production] is procured by Government Agencies at levy price.

EXPORTSExport of sugar depends on production, international price and domestic demand. The exports of sugar by the Company duringprevious few years were to the tune of Rs. 3326.79 lakhs. However, there is no export obligation on the part of the Company.

42

VIII. FINANCIAL PERFORMANCE OF THE COMPANY

AUDITOR’S REPORT

The Board of DirectorsSiel Sugar Limited6th Floor, Kirti Mahal,19, Rajendra Place,New Delhi -110 008

Dear Sirs,

1. We have examined the accompanying Statement of Adjusted Profits and Losses of Siel Sugar Limited (the Company) for the financial periodsApril 1, 2003 to February 29, 2004 and December 26, 2002 to March 31, 2003 (Anexure-I) and the accompanying Statement of Adjusted Assetsand Liabilities of the Company as at February 29, 2004 and March 31, 2003 (Annexure-II). These statements, prepared by the Company, reflectthe profits and losses and assets and liabilities for each of the relevant periods as extracted from the profit and loss accounts and balance sheetsfor those periods audited by us after making therein the disclosures and adjustments required to be made in accordance with the provisions ofparagraph 6.18.7 of the Securities and Exchange Board of India (Disclosure & Investor Protection) Guidelines 2000.

2. We have also examined the accompanying Statements of Adjusted Profits and Losses of Siel Holdings Limited, a subsidiary of the Company,for the financial periods April 1, 2003 to February 29, 2004 and January 28, 2003 to March 31, 2003 (Annexure – III (a)) and the accompanyingStatement of Adjusted Assets and Liabilities as at February 29, 2004 and March 31, 2003 (Annexure-III(b)). These statements, prepared by theCompany, reflect the profits and losses and assets and liabilities of the subsidiary for each of the relevant periods as extracted, from the profitand loss accounts and balance sheets for those periods as audited by V. Sahai & Co., auditors of the subsidiary, after making therein thedisclosures and adjustments required to be made in accordance with the provisions of paragraph 6.18.7 of the Securities and Exchange Boardof India (Disclosure & Investor Protection) Guidelines 2000.

3. We have also examined the accompanying Consolidated Statement of Adjusted Profits and Losses of Siel Sugar Limited (the Company) and itssubsidiary, Siel Holdings Limited for the financial periods April 1, 2003 to February 29, 2004 and December 26, 2002 to March 31, 2003 (Anexure-IV(a)) and the accompanying Consolidated Statement of Adjusted Assets and Liabilities of the Company and its subsidiary as at February 29,2004 and March 31, 2003(Annexure-IV(b)). These statements, prepared by the Company, reflect the consolidated profits and losses and consoli-dated assets and liabilities for each of the relevant periods as extracted from the consolidated profit and loss accounts and consolidated balancesheets for those periods audited by us after considering the separate audit reports on individual audited financial statements of the Companyand its subsidiary and after making therein the disclosures and adjustments required to be made in accordance with the provisions of paragraph6.18.7 of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000.

4. We did not audit the financial statements of the subsidiary Siel Holdings Limited, the financial statements of which have been audited by V. Sahai& Co., auditors of the subsidiary, whose reports have been furnished to us, and our examination so far as it relates to the amounts included inrespect of this subsidiary is based on the report of the other auditor.

5. We further report that as per the books and records produced to us, no dividend has been paid by the Company in respect of each of thefinancial periods April 1, 2003 to February 29, 2004 and December 26, 2002 to March 31, 2003 on the equity shares of the Company and theCompany had no other class of shares during these periods.

6. We have examined the accompanying Statement of Accounting Ratios of the Company for the periods April 1, 2003 to February 29, 2004 andDecember 26, 2002 to March 31, 2003 (Annexure-V) and report that they have been correctly computed by the Company from the figures asstated in the Statements of Adjusted Profits and Losses and Adjusted Assets and Liabilities of the Company referred to in paragraph 1 above.

7. We have also examined the accompanying Statement of Capitalisation as at February 29, 2004 (Pre issue) and as adjusted for this issue (PostIssue) as prepared by the Company (Annexure-VI) and report that it has been correctly computed by the Company from the figures as stated inthe Statements of Adjusted Profits and Losses and Adjusted Assets and Liabilities of the Company referred to in paragraph 1 above subject toreliance being placed on management representation in respect of post issue figures contained in the statement of capitalisation.

Date : 8th June, 2004 For A.F.Ferguson & Co.Place : New Delhi Sd/-

Chartered Accountants

43

ANNEXURE : I - STATEMENT OF ADJUSTED PROFITS AND LOSSES (Rs in Lacs)

PARTICULARS PERIOD FROM PERIOD FROM DATE OF1-04-2003 TO 29-02-2004 INCORPORATION

i.e. 26/12/2002 to 31/3/2003IncomeSalesProducts manufactured by the Company 27,389.63 18,286.05Less : Excise Duty 1,964.60 1,301.26Net Sales 25,425.03 16,984.79Other income (refer note 7) 744.44 189.01Increase/(decrease) in inventories 6,455.40 2,465.83

Total 32,624.87 19,639.63

Expenditure:Raw materials consumed 22,833.37 15,577.69Stores, Spares and Components 2,500.34 1,177.84Staff costs 2,089.85 1,113.02Other Manufacturing Expenses 1,081.77 792.65Administrative Expenses 909.35 471.41Selling and Distribution Expenses 160.05 186.96Interest 1,865.38 902.59Depreciation 813.57 444.31

Total Expenditure 32,253.68 20,666.47

Profit before tax 371.19 (1,026.84)Provision for taxation (As per tax statement annexed)Current tax - -Deferred tax charge / (benefit) (refer note 12) 87.70 (325.90)

Profit after Tax 283.49 (700.94)Brought forward from previous period (700.94) -Balance carried to Statement of Adjusted Assets and Liabiltites (417.45) (700.94)Major accounting policies and notes annexed.

ANNEXURE – II : STATEMENT OF ADJUSTED ASSETS AND LIABILITIES (Rs. In lacs)

PARTICULARS AS AT 29.02.2004 AS AT 31.03.2003

Application of FundsA. Fixed Assets

Gross Block 19,580.88 19,531.01Less: Depreciation 8,513.12 7,707.10

Net Block 11,067.76 11,823.91Capital work in progress 271.82 66.98

Total 11,339.58 11,890.89

B. Investments 5.00 5.00C. Deferred tax assets 238.20 325.90

D. Current assets, Loans and advancesInventories 23,197.40 16,676.19Sundry Debtors 906.67 1,247.48Cash and Bank Balances 124.52 235.81Loans and Advances 2,636.45 2,032.30

Total 26,865.04 20,191.78

E. Liabilities and ProvisionsSecured Loans 23,672.40 19,875.93Unsecured Loans 252.72 290.20Current Liabilities 7,361.17 5,687.31Provisions 41.67 43.53

Total 31,327.96 25,896.97

F. Net Worth - Total (A + B +C + D - E) 7,119.86 6,516.60

G. Represented ByShareholders’ FundEquity Capital 3,399.59 5.00Capital Suspense (refer note 3) - 3,094.59Reserves and Surplus 4,222.59 4,273.38

Total 7,622.18 7,372.97Less: Miscellaneous Expenditure to the extent not written off or adjusted 84.87 155.43 : Debit balance of profit and loss account 417.45 700.94Net Worth 7,119.86 6,516.60Major accounting policies and notes annexed.

44

MAJOR ACCOUNTING POLICIES AND NOTES1. MAJOR ACCOUNTING POLICIES

(a) Fixed assets:Fixed assets are stated at cost of acquisition/ construction less accumulated depreciation. The cost includes all pre-operative expensesrelating to construction period in the case of new projects and expansion of existing factories.

(b) Depreciation:(i) The Company follows the straight-line method of depreciation (SLM).(ii) The rates of depreciation charged on all fixed assets are those specified in Schedule XIV to the Companies Act, 1956.(iii) On assets sold/discarded during the year, depreciation is not provided to the date of sale/ discard.(iv) Depreciation is calculated on a pro-rata basis from the month of acquisition/ installation of the asset and in case of assets costing

upto Rs.5,000 each such asset is fully depreciated in the year of purchase.

(c) Investments:Investments are stated at cost.

(d) Inventories:Stores and spares are valued at cost or under.

Raw materials, components, work-in-progress and finished goods are valued at lower of cost and net realisable value.

Cost of inventory is generally ascertained on the ‘weighted average’ basis. Further, in respect of the manufactured inventories, i.e.process stocks and finished goods, an appropriate share of manufacturing expenses is included on absorption costing basis includingexcise duty.

(e) Revenue recognition:Sale of goods is recognised at the point of despatch of finished goods to customers. Sales are inclusive of excise duty and exclusive ofsales tax.

(f) Customs duty:Customs duty payable on raw materials, components, stores and spares and machinery is accounted for on clearance of goods from thecustoms warehouses.

(g) Research and development expenditure:Revenue expenditure on research and development is expensed out under the respective heads of account in the year in which it isincurred.

(h) Retirement benefits:Pursuant to the Scheme of Arrangement, the Company has presently continued with the various schemes of retirement benefits ofundivided Siel Limited such as provident fund, superannuation fund, gratuity fund and leave encashment. The Company’s contribution tothese funds recognised by the income-tax authorities and provision for employees’ leave encashment determined on an actuarial basis atthe year-end are charged against revenue every year. Contributions to provident fund, superannuation fund and gratuity fund have beenmade to the trusts of undivided Siel Limited except that contribution to the gratuity fund of Rs 224.90 lacs relating to employees of theCompany upto March 31, 2003 and Rs. 123.03 lacs for the eleven months period ended February 29, 2004 though provided for in thebooks of account have not yet been funded by undivided Siel Limited and the Company respectively.

(i) Income-tax:Income-tax is ascertained in accordance with the provisions of the Income-tax Act, 1961.

Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the differences between taxable incomeand accounting income that originate in one period and are capable of being reversed in one or more subsequent periods (Refer also tonote 12)

(j) Foreign exchange transactions:Transactions in foreign currency are recorded at the exchange rates prevailing at the time of the transaction.

In the case of liabilities incurred for the acquisition of fixed assets, the loss or gain on conversion (at the rates prevailing at the year endor at the forward cover rates, where forward cover has been taken) is included in the carrying amount of the related fixed assets.

Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency are stated atthe exchange rate prevailing at the time of the transaction.

Current assets and current liabilities (other than those related to fixed assets) are restated at the rates prevailing at the year end or at theforward cover rates, where forward cover has been taken, and the difference between the forward rate/ year end rate and the exchangerate at the date of the transaction is recognised as income or expense in the profit and loss account.

(k) Write-off of miscellaneous expenditure:Deferred revenue expenditure representing amounts paid to employees under voluntary retirement scheme is written off over a period ofthree years.

(l) Preliminary expensesPreliminary expenses have been charged to the profit and loss account in accordance with the Accounting Standard (AS) 26 – ‘IntangibleAssets’ issued by The Institute of Chartered Accountants of India.

(m) Share issue expenses are written off against share premium account.

NOTES2. The Statement of Adjusted Profits and Losses for the period April 1, 2003 to February 29, 2004 and for the period December 26, 2002 to March

31, 2003 and the Statement of Adjusted Assets and Liabilities as at February 29, 2004 and as at March 31, 2003 reflect the profits and lossesand assets and liabilities for each of the relevant periods indicated above. These statements have been prepared by extracting from the profitand loss account and balance sheet for the aforesaid periods after making therein the disclosures and adjustments required to be made inaccordance with the provisions of paragraph 6.18.7 of the Securities and Exchange Board of India (Disclosure & Investor Protection) Guide-lines 2000.

45

3. a) Pursuant to the Scheme of Arrangement (Scheme) under section 391 and 394 of the Companies Act, 1956 of undivided Siel Limited,approved by the High Court of Delhi vide its Order dated August 26, 2003 which became effective on September 5, 2003 on filing of thecertified copy of the Order of the High Court of Delhi with the Registrar of Companies, Delhi and Haryana, the undertakings of undivided SielLimited comprising of Mawana Sugar Works (MSW) and Titawi Sugar Complex (TSC), together with all properties, assets both movable andimmovable and liabilities including contingent liabilities have been transferred to and vested in the Company at their respective book valueswith effect from the appointed date i.e. October 1, 2002.

b) For giving effect to the Scheme, the following accounting treatment has been followed in the Statement of Adjusted Assets andLiabilities and Statement of Adjusted Profits and Losses for the period December 26, 2002 to March 31, 2003: -

i) the assets and liabilities as at October 1, 2002, as detailed below, have been incorporated in these accounts:Rs./Lacs

Assets As at1.10. 02

Fixed assets- Gross block 19519.11- Less : Accumulated Depreciation upto 31.3.02 6859.75Depreciation for the period 1.4.02 to 30.9.02 (per contra) 417.00 7276.75 12242.36

Capital work in progress 72.98- Miscellaneous expenditure (to the extent not written off or adjusted) 79.86

12395.20

Current assets, loans and advances- Inventories 14113.46- Sundry debtors 756.25- Cash and bank balances 340.33- Loans and advances 264.07

Total assets 27869.31Liabilities- Reserves and surplus 4679.32Less: Depreciation (per contra) 417.00 4262.32- Loan funds

- Secured 18004.56- Unsecured 254.84

- Current liabilities and provisions- Current liabilities 2258.66- Provisions 40.16

Total liabilities 24820.54

Net assets 3048.77

ii) The transactions including income and expenses for the period October 1, 2002 to March 31, 2003 resulting in a loss of Rs.1026.84 lacsin respect of the aforesaid Undertakings, [including for the period October 1, 2002 to December 26, 2002 (the date of incorporation of theCompany), when the Undertakings were being run and managed by undivided Siel Limited] have been incorporated.

c) Consequent to the effectuation of the said Scheme, the Company has allotted three equity shares of Rs.10 each aggregating 3,09,45,904equity shares amounting to Rs 3094.59 lacs (including Rs 45.82 lacs being amount received on calls in arrears by undivided Siel Limitedduring the period ended March 31, 2003) as fully paid up to the shareholders of undivided Siel Limited for every four equity shares of Rs.10each fully paid up held by them in undivided Siel Limited on the record date of October 30, 2003, fixed by the Board of Directors. However,since the equity shares had not been allotted till March 31, 2003, the aggregate nominal value of such shares amounting to Rs 3094.59 lacshas been included under ‘capital suspense’ under the head ‘shareholders’ funds’ in the Statement of Adjusted Assets and Liabilities as atMarch 31, 2003. Further, the Company on October 27, 2003, also allotted 3,000,000 equity shares of Rs.10 each for cash at par onpreferential basis to its promoters in terms of the Scheme.

As at As at29.02.2004 31.03.2003

Rs. Lacs Rs. Lacs

4. Capital commitments (net of advances) 98.10 23.27

5. Contingent liabilities :

(a) Claims against the Company not acknowledged as debts 622.58 444.69

(b) On partly paid shares (# Rs.20) # #

(c) In respect of a guarantee to be given by the Company to lenders of a subsidiary company for the minimum realisation of principal amountof debts amounting to Rs.3075 lacs transferred to the subsidiary company as on 30.9.2002. The guarantee will come into force after30.9.2004 in the event of shortfall, if any, in the realisation of the assets of the subsidiary company amounting to Rs.3075 lacs and will belimited to the amounts remaining unpaid. The guarantee will lapse on payment of entire amount of Rs.3075 lacs to lenders of the subsidiarycompany. During the period, out of the above, the subsidiary has repaid an amount of Rs.2290.65 lacs (previous period Rs Nil) and theoutstanding amount as at February 29, 2004 is Rs.784.35 lacs (As at March 31, 2003 Rs. 3075 lacs).

46

6. Analysis of outstanding unsecured loans taken by the Company

Description Amount outstanding Amount outstanding Interest rate % p.a. Repaymentas at February 29, 2004 as at March 31, 2003 Schedule(Rs. Lacs) (Rs. Lacs)

Deposits from dealers, 151.85 153.94 Varied On completion ofcontractors etc. contracts

Other loans and advances 100.87 136.26 Nil By April 2006

7. Item included in other income which is in excess of 20 % of the Profit after Tax is export benefits of Rs 227.05 lacs (previous period Rs 25.73lacs) provided by the Government of India for encouraging exports of sugar. It is of recurring nature and has arisen on account of normalbusiness activity.

8. Research and development expenses amounting to Rs. 21.60 lacs (previous period Rs.11.41 lacs) have been charged to the respectiverevenue accounts.

9. Sales are net of commission of Rs. 98.00 lacs. (previous period Rs.69.90 lacs)

10. The price of levy sugar sold during the season 1982-83 by one of the unit vested in the Company pursuant to the Scheme of Arrangement isa subject of court cases. Pending decision, interest accrued of Rs. 183.57 lacs (previous period Rs. 183.57 lacs) in terms of Court Orders isincluded under “sundry creditors”.

11. Related party disclosures under Accounting Standard 18

Name of related party and nature of related party relationship







a) From September 15, 2003 : Mr. P.K. Bhalla, Mrs Asha Bhalla, (relative of Mr. P.K. Bhalla), Mr A.K. Mehra, Mrs Binu Mehra, (relative of Mr.A.K. Mehra)

b) From December 16, 2003 : Mr. Rajendra Khanna, Mrs Rajni Khanna (relative of Mr Rajendra Khanna)

c) Upto September 15, 2003 : Mr. Deepak Banerjee and


Rs. in Lacs

Subsidiary Key Management Enterprise Over whichCompanies Personnel and their key management

Relatives personnel haveSignificant Influence * Total

Period Period Period Period Period Period Period Periodended ended ended ended ended ended ended ended

February March February March February March February March29, 2004 31, 2003 29, 2004 31, 2003 29, 2004 31, 2003 29, 2004 31, 2003

Professional Fee – 4.90 – 4.90

Allotment of equity shares 300.00 - 300.00 -

Management fee received 20.00 - 34.00 - 54.00 -

Remuneration to key management personnel 72.70 18.02 72.70 18.02

Commission Paid 38.24 22.91 38.24 22.91



Advances given 0.01 0.77 13.43 - 3.00 1492.56 16.44 1493.33

Guarantees given on behalf of the Company 12347.12 - 12347.12 -

Balance outstanding as at the year end:

- Receivables 0.78 - 13.10 - 1570.26 1492.56 1584.14 1492.56

- Guarantees given on behalf of the Company 12347.12 - 12347.12 -

* Do not include assets, liabilities vested in the Company pursuant to the Scheme and the assets, liabilities, incomes accrued and expensesincurred prior to incorporation when the undertakings were run and managed by Siel Limited in trust for the Company (also refer to note 3above)

Enterprise over which key management personnel have significant influence : Siel Limited

47

12. The net deferred tax charge of Rs 87.70 lacs for the period April 1, 2003 to February 29, 2004 and net deferred tax benefit of Rs 325.90lacs for the period October 1, 2002 to March 31, 2003 have been recognized in the Statement of Adjusted Profits and Losses.

However, the Company has not recognized the deferred tax benefits in respect of brought forward losses and unabsorbed depreciationas at March 31, 2002, allocated to the Company under section 72A (4) (b) of the Income-tax Act, 1961, from erstwhile undivided SielLimited, as in the opinion of the management, the virtual certainty of realisation of the aforesaid benefits cannot be determined at this stage.Details of the deferred tax assets / liabilities are given below:

Rs. in Lacs

As at February 29, 2004 As at March 31, 2003

Deferred tax assets:

Unabsorbed depreciation 587.55 398.57

Business loss carried forward 140.35 133.73

Accrued expenses deductible on payment basis 191.79 70.76

Others 14.38 1.77

Sub-total 934.07 604.83

Deferred tax liabilities:

Accumulated depreciation 695.87 278.93

Sub-total 695.87 278.93

Net deferred tax asset 238.20 325.90

13. The Company had entered into lease agreements for hiring of plant and machinery and office equipments. As at the end of the period, theCompany has commitments under lease agreements of Rs 0.20 lac (previous period Rs 16.46 lacs). Lease rent charged to the profit and lossduring the period Rs 16.26 lacs (previous period Rs.11.06 lacs).

14. AGEWISE ANALYSIS OF SUNDRY DEBTORS Rs in lacs

Description Amount outstanding Amount outstandingas on February 29, 2004 as on March 31, 2003

Upto 180 days 832.49 1158.37

More than 180 days 84.23 89.55

Less: Provision for doubtful debts 10.05 0.44

Total 906.67 1247.48

15. ANALYSIS OF LOANS AND ADVANCES Rs Lacs

Description Amount outstanding Amount outstandingas on February 29, 2004 as on March 31, 2003

Advance to Siel Limited 1570.26 1492.56*

Advance to key managerial persons 13.10 -

Advance to subsidiary 0.78 0.78

Claims receivable 617.06 265.53

Prepaid expenses 95.30 63.55

Deposits with Government bodies 86.09 91.63

Advance to employees 44.46 12.31

Advance tax 9.99 -

Others 199.41 105.94

Total 2636.45 2032.30

* Represents amounts arising consequent to the Scheme of Arrangement (refer note 3)

16. The Company has not declared any dividend during the periods ended February 29, 2004 and ended March 31, 2003.

17. The current financial period is for a period of eleven months from April 1, 2003 to February 29, 2004, whereas the previous period wasfor a period from December 26, 2002 (the date of incorporation of the Company) to March 31, 2003. Therefore, the figures of the currentperiod are not comparable with those of the previous period.

18. Previous period’s figures have been regrouped wherever necessary.

48

ANNEXURE – III -Financial Performance of Siel Holdings Ltd., a subsidiary of Siel Sugars Ltd. (to be renamed as Mawana Sugars Ltd.)

III (a) STATEMENT OF ADJUSTED PROFITS AND LOSSES Rs in lacs


i.e. 28/1/2003 to 31/3/2003

IncomeSalesProducts manufactured by the Company - -Less: Excise Duty - -

Net Sales - -Profit on sale of long term non-trade investments 123.60 -Dividend on long term non-trade investments 4.06 -Increase/(decrease) in inventories - -

Total 127.66 -

Expenditure:Administrative Expenses 0.13 0.71

Total Expenditure 0.13 0.71

Profit before tax 127.53 (0.71)TaxationCurrent 12.75 -Deferred tax ( charge)/benefit - -

Profit after Tax 114.78 (0.71)

Brought forward from previous period (0.71) -

Balance carried to Statement of Assets and Liabilities 114.07 (0.71)

Extent of Shareholding % 100.00 100.00Profits / (Losses) after Tax so far it concerns the members of the Company 114.78 (0.71)Major accounting policies and notes annexed.

III. (b) STATEMENT OF ADJUSTED ASSETS AND LIABILITIES(Rs in Lacs)



Gross Block - -Less: depreciation - -

Net Block - -Capital work in progress - -

Total - -B. Investments 1,382.95 3,550.00

C. Current assets, Loans and advancesCash and Bank Balances 4.94 5.09

Total 4.94 5.09D. Liabilities and Provisions

Secured Loans 784.35 3,075.00Unsecured Loans 421.72 425.77Current Liabilities - 0.03Provisions (refer note 4) 62.75 50.00

Total 1,268.82 3,550.80E. Net Worth - Total ( A +B + C - D) 119.07 4.29

F. Represented ByShareholders’ FundEquity Capital 5.00 5.00Reserves and Surplus 114.07 -

Total 119.07 5.00Less : Debit balance of profit and loss account - 0.71

Net Worth 119.07 4.29

Extent of Shareholding % 100.00 100.00Net Worth so far it concerns the members of the Company 119.07 4.29

Major accounting policies and notes annexed.

49

MAJOR ACCOUNTING POLICIES AND NOTES

1. MAJOR ACCOUNTING POLICIES

a) Investments

Investments vesting in the Company from undivided Siel Ltd. , pursuant to the Scheme of Arrangement have been stated at which theyhave been transferred and have been grossed up for the expenses to be incurred on their sale, as estimated by the management.

b) Revenue recognition

Income from investments is recognised on an accrual basis.

c) Preliminary expenses

Preliminary expenses have been charged to the Profit and Loss account in accordance with the Accounting Standard (AS) 26- ‘IntangibleAssets’ issued by the Institute of Chartered Accountants of India.

d) Income-tax

Income-tax is ascertained in accordance with the provisions of the Income Tax Act, 1961.

NOTES

2. The Statement of Profits and Losses for the period April 1, 2003 to February 29, 2004 and for the period January 28, 2003 to March 31, 2003and the Statement of Assets and Liabilities as at February 29, 2004 and as at March 31, 2003 reflect the profits and losses and assets andliabilities for each of relevant periods indicated above. These Statements have been prepared by extracting from the profit and loss accountsand balance sheets for the aforesaid periods after making therein the disclosures and adjustments required to be made in accordance with theprovisions of paragraph 6.18.7 of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000.

3. a) Pursuant to the Scheme under sections 391 and 394 of the Companies Act, 1956, of the undivided Siel Limited approved by Hon’ble HighCourt of Delhi vide its Order dated August 26, 2003, which became effective on September 5, 2003 on filing of the certified copy of theOrder of the High Court of Delhi with the Registrar of Companies, Delhi and Haryana, certain specified investments of undivided Siel Limitedalongwith all rights, privileges, benefits, properties, assets and liabilities comprised therein, term loan liabilities and other liabilities ofundivided Siel Limited have been transferred to and vested in the Company with effect from the appointed date i.e. October 1, 2002.

b) For giving effect to the Scheme, the assets, liabilities and expenses etc. as at October 1, 2002 , as detailed below, have been incorporatedin the Statement of Assets and Liabilties as at March 31, 2003:

Loans Amount ( Rs.)

Secured 307,500,000

Unsecured 42,500,000

Investments 350,000,000

c) Pursuant to the Scheme, as indicated above, the investments in Jay Engineering Works Limited(JEW) have been vested in the Companyalongwith the guarantee of Rs.1391 lacs given by the undivided Siel Limited to the bankers of JEW towards the repayment of financialfacilities provided by them to JEW.

4. Provisions include provision for contingencies of Rs. 50 lakhs representing expenses to be incurred on the sale of investments, as estimatedby the management.

5. Contingent liabilities:Rs. In Lakhs

As at February 29,2004 As at March 31,2003

In respect of guarantee vested in the Company pursuant to the Scheme of 1235 1391Arrangement for repayment of financial facilities provided by undividedSiel Limited to the Bankers of JEW (refer note 3(c) above)

6. The current financial period is for a period of eleven months from April 1, 2003 to February 29, 2004, whereas the previous period was for aperiod from January 28, 2003 (the date of incorporation of the Company) to March 31, 2003. Therefore, the figures of the current period are notcomparable with those of the previous period.


50

ANNEXURE IV – CONSOLIDATED FINANCIAL STATEMENTSIV. (a) CONSOLIDATED STATEMENT OF ADJUSTED PROFITS AND LOSSES (Rs. in lacs)


i.e. 26/12/2002 to 31/3/2003

IncomeSalesProducts manufactured by the Company 27,389.63 18,286.05Less: Excise Duty 1,964.60 1,301.26

Net Sales 25,425.03 16,984.79Other income (refer note 8) 744.44 189.01Profit on sale of long term non-trade investments 123.60 -Dividend on long term non-trade investments 4.06 -Increase/(decrease) in inventories 6,455.40 2,465.83Total 32,752.53 19,639.63Expenditure:Raw materials consumed 22,833.37 15,577.69Stores, Spares and Components 2,500.34 1,177.84Staff costs 2,089.85 1,113.02Other Manufacturing Expenses 1,081.77 792.65Administrative Expenses 909.48 472.12Selling and Distribution Expenses 160.05 186.96Interest 1,865.38 902.59Depreciation 813.57 444.31Total Expenditure 32,253.81 20,667.18Profit before tax 498.72 (1,027.55)Provision for taxationCurrent tax 12.75 -Deferred tax charge/(benefit )( Refer note 15) 87.70 (325.90)Profit after Tax 398.27 (701.65)Brought forward from previous period (701.65) -Balance carried to Consolidated Statement of Adjusted Assets and Liabilities (303.38) (701.65)Major accounting policies and notes annexed.

IV. (b) CONSOLIDATED STATEMENT OF ADJUSTED ASSETS & LIABILITIES (Rs. In lacs)



Gross Block 19,580.88 19,531.01Less: depreciation 8,513.12 7,707.10Net Block 11,067.76 11,823.91Capital work in progress 271.82 66.98Total 11,339.58 11,890.89

B. Investments 1,382.95 3,550.00C. Deferred tax assets 238.20 325.90D. Current assets, Loans and advances

Inventories 23,197.40 16,676.19Sundry Debtors 906.67 1,247.48Cash and Bank Balances 129.46 240.90Loans and Advances 2,635.68 2,031.53Total 26,869.21 20,196.10

E. Liabilities and ProvisionsSecured Loans 24,456.75 22,950.93Unsecured Loans 673.67 715.20Current Liabilities 7,361.17 5,687.34Provisions (refer note 16) 104.42 93.53

Total 32,596.01 29,447.00

F. Net Worth - Total ( A +B + C + D - E) 7,233.93 6,515.89G. Represented By

Shareholders’ FundEquity Capital 3,399.59 5.00Capital suspense (refer note 4) - 3,094.59Reserves and Surplus 4,222.59 4,273.38

Total 7,622.18 7,372.97Less : Miscellaneous Expenditure to the extent not written off 84.87 155.43Less: : Debit balance of profit and loss account 303.38 701.65

Net Worth 7,233.93 6,515.89Major accounting policies and notes annexed.

51

MAJOR ACCOUNTING POLICIES AND NOTES

1. BASIS OF CONSOLIDATIONAccounting treatment of Investment in subsidiaries / Joint Ventures

The Consolidated Statements of Adjusted Assets and Liabilities and Adjusted Profits and Losses have been prepared in accordance withAccounting Standard (AS) 21 “Consolidated Financial Statement“ and AS 27 “Financial Reporting of Interests in Joint Ventures” issued by theInstitute of Chartered Accountants of India.

The subsidiary (which along with Siel Sugar Limited, the Parent Company, constitute the Group) considered in the preparation of theseconsolidated financial statements is:

Name Country of Incorporation Percentage of voting power,

As at February 29, 2004 As at March 31, 2003

Siel Holdings Limited (SHL) India 100 100

These consolidated financial statements are based, in so far they relate to amounts included in respect of the subsidiary, on the auditedfinancial statements prepared for consolidation in accordance with the requirements of AS 21.

Further, the financial statements of The Jay Engineering Works Limited (JEW), a subsidiary company of SHL, and Diakin Shriram AirconditioningPrivate Limited (DSAPL), a jointly controlled entity of SHL as per Accounting Standard (AS) 27 have not been considered in preparation ofthese Consolidated Statements for the reasons stated in note 12 below.

2. MAJOR ACCOUNTING POLICIES

(a) Fixed assets:Fixed assets are stated at cost of acquisition/ construction less accumulated depreciation. The cost includes all pre-operative expensesrelating to construction period in the case of new projects and expansion of existing factories.

(b) Depreciation:i. The Group follows the straight-line method of depreciation (SLM).

ii. The rates of depreciation charged on all fixed assets are those specified in Schedule XIV to the Companies Act, 1956.

iii. On assets sold/discarded during the year, depreciation is not provided to the date of sale/ discard.

iv. Depreciation is calculated on a pro-rata basis from the month of acquisition/ installation of the asset and in case of assets costing uptoRs.5,000 each such asset is fully depreciated in the year of purchase.

(c) Investments:Investments are stated at cost.In case of SHL, investments vested in the Company from undivided Siel Limited, pursuant to the Scheme of Arrangement, have beenstated at cost at which they have been transferred and have been grossed up for the expenses to be incurred on their sale, as estimated bythe management.

(d) Inventories:Stores and spares are valued at cost or under.Raw materials, components, work-in-progress and finished goods are valued at lower of cost and net realisable value.Cost of inventory is generally ascertained on the ‘weighted average’ basis. Further, in respect of the manufactured inventories, i.e. processstocks and finished goods, an appropriate share of manufacturing expenses is included on absorption costing basis including excise duty.

(e) Revenue recognition:Sale of goods is recognised at the point of despatch of finished goods to customers. Sales are inclusive of excise duty and exclusive ofsales tax.

Income from investments is recognised on an accrual basis.

(f) Customs duty:Customs duty payable on raw materials, components, stores and spares and machinery is accounted for on clearance of goods from thecustoms warehouses.

(g) Research and development expenditure:Revenue expenditure on research and development is expensed out under the respective heads of account in the year in which it isincurred.

52

(h)Retirement benefits:Pursuant to the Scheme of Arrangement, the Group has presently continued with the various schemes of retirement benefits of undividedSiel Limited such as provident fund, superannuation fund, gratuity fund and leave encashment. The Group’s contribution to these fundsrecognised by the income-tax authorities and provision for employees’ leave encashment determined on an actuarial basis at the year-endare charged against revenue every year. Contributions to provident fund, superannuation fund and gratuity fund have been made to thetrusts of undivided Siel Limited except that contribution to the gratuity fund of Rs 224.90 lacs relating to employees of the Group up toMarch 31, 2003 and Rs. 123.03 lacs for the eleven months period ended February 29, 2004 though provided for in the books of account havenot yet been funded by undivided Siel Limited and the Parent Company respectively.

(i) Income-tax:Income-tax is ascertained in accordance with the provisions of the Income-tax Act, 1961.Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the differences between taxable incomeand accounting income that originate in one period and are capable of being reversed in one or more subsequent periods. (Refer also to note15 below )

(j) Foreign exchange transactions:Transactions in foreign currency are recorded at the exchange rates prevailing at the time of the transaction.

In the case of liabilities incurred for the acquisition of fixed assets, the loss or gain on conversion (at the rates prevailing at the year end orat the forward cover rates, where forward cover has been taken) is included in the carrying amount of the related fixed assets.

Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency are stated at theexchange rate prevailing at the time of the transaction.

Current assets and current liabilities (other than those related to fixed assets) are restated at the rates prevailing at the year end or at theforward cover rates, where forward cover has been taken, and the difference between the forward rate/ year end rate and the exchange rateat the date of the transaction is recognised as income or expense in the consolidated profit and loss account.

(k) Write-off of miscellaneous expenditure:Deferred revenue expenditure representing amounts paid to employees under voluntary retirement scheme is written off over a period ofthree years.

(l) Preliminary expensesPreliminary expenses have been charged to the profit and loss account in accordance with the Accounting Standard (AS) 26 – ‘IntangibleAssets’ issued by The Institute of Chartered Accountants of India.

(m) Share issue expenses are written off against share premium account.

NOTES

3. The Consolidated Statement of Adjusted Profits and Losses for the period April 1, 2003 to February 29, 2004 and for the period December 26,2003 to March 31, 2003 and the Consolidated Statement of Assets and Liabilities as at February 29, 2004 and as at March 31, 2003 reflect theprofit and losses and assets and liabilities for each of the relevant periods indicated above. These statements have been prepared by extractingfrom the profit and loss accounts and balance sheets of the Group for the aforesaid periods after making therein the disclosures andadjustments required to be made in accordance with the provisions of paragraph 6.18.7 of the Securities and Exchange Board of India(Disclosure & Investor Protection) Guidelines 2000.

4. a) Pursuant to the Scheme of Arrangement (Scheme) under section 391 and 394 of the Companies Act, 1956 of undivided Siel Limited,approved by the High Court of Delhi vide its Order dated August 26, 2003 which became effective on September 5, 2003 on filing of thecertified copy of the Order of the High Court of Delhi with the Registrar of Companies, Delhi and Haryana.

i) the undertakings of undivided Siel Limited comprising of Mawana Sugar Works (MSW) and Titawi Sugar Complex (TSC), together withall properties, assets both movable and immovable and liabilities including contingent liabilities have been transferred to and vestedin the Parent Company at their respective book values with effect from the appointed date i.e. October 1, 2002,

ii) a) certain specified investments of undivided Siel Limited along with all rights, privileges, benefits, properties, assets andliabilities comprised therein, term loan liabilities and other liabilities of undivided Siel Limited have been transferred to and vestedin SHL with effect from the appointed date i.e. October 1, 2002

b) Pursuant to the Scheme the investments in Jay Engineering Works Limited (JEW) have been vested in SHL along with theguarantee of Rs. 1391 lacs given by the undivided Siel Limited to the bankers of JEW towards the repayment of financial facilitiesprovided by them to JEW.

b) For giving effect to the Scheme, the following accounting treatment has been followed in the Consolidated Statement of Adjusted Assetsand Liabilities and Adjusted Profits and Losses for the period December 26, 2002 to March 31, 2003:

53

(i) the assets and liabilities as at October 1, 2002, as detailed below, have been incorporated in the accounts of the Parent Company: Rs./Lacs

Assets As at1.10. 02

Fixed assets- Gross block 19519.11Less : Accumulated Depreciation upto 31.3.02 6859.75Depreciation for the period 1.4.02 to 30.9.02 (per contra) 417.00 7276.75 12242.36Capital work in progress 72.98- Miscellaneous expenditure (to the extent not written off or adjusted) 79.86

12395.20Current assets, loans and advances- Inventories 14113.46- Sundry debtors 756.25- Cash and bank balances 340.33- Loans and advances 264.07

Total assets 27869.31

Liabilities- Reserves and surplus 4679.32Less: Depreciation (per contra) 417.00 4262.32

- Loans Funds

- Secured 18004.56- Unsecured 254.84

- Current liabilities and provisions- Current liabilities 2258.66- Provisions 40.16

Total liabilities 24820.54

Net assets 3048.77

(ii) The assets and liabilities as at October 1, 2002, as detailed below, have been incorporated in the accounts of SHL:

Loans Amount (Rs. lacs)Secured 3075.00Unsecured 425.00Investments 3500.00

iii) The transactions including income and expenses for the period October 1, 2002 to March 31, 2003 resulting in a loss of Rs.1026.84 lacsin respect of the aforesaid Undertakings, referred to in note 4 (i) above, [including for the period October 1, 2002 to December 26, 2002(the date of incorporation of the Parent Company), when the Undertakings were being run and managed by undivided Siel Limited] havebeen incorporated in the accounts of the Parent Company.

c) Consequent to the effectuation of the said Scheme, the Parent Company has allotted three equity shares of Rs.10 each aggregating3,09,45,904 equity shares amounting to Rs 3094.59 lacs (including Rs 45.82 lacs being amount received on calls in arrears by undividedSiel Limited during the period ended March 31, 2003) as fully paid up to the shareholders of undivided Siel Limited for every four equityshares of Rs.10 each fully paid up held by them in undivided Siel Limited on the record date of October 30, 2003, fixed by the Board ofDirectors. However, since the equity shares had not been allotted till March 31, 2003, the aggregate nominal value of such sharesamounting to Rs 3094.59 lacs has been included under ‘capital suspense’ under the head ‘shareholders’ funds’ in the ConsolidatedStatement of Adjusted Assets and Liabilities as at March 31, 2003. Further, the Parent Company on October 27, 2003, also allotted3,000,000 equity shares of Rs.10 each for cash at par on preferential basis to its promoters in terms of the Scheme.

As at As at29.02.2004 31.03.2003

Rs. Lacs Rs. Lacs

5. Capital commitments (net of advances) 98.10 23.27

6. Contingent liabilities :a) Claims against the Parent Company not 622.58 444.69

acknowledged as debtsb) On partly paid shares (# Rs.20) # #

(c) In respect of a guarantee to be given by the Parent Company to the lenders of SHL for the minimum realisation of principal amountof debts amounting to Rs.3075 lacs transferred to SHL as on 30.9.2002. The guarantee will come into force after 30.9.2004 in theevent of shortfall, if any, in the realisation of the assets of SHL amounting to Rs.3075 lacs and will be limited to the amounts remainingunpaid. The guarantee will lapse on payment of entire amount of Rs.3075 lacs to lenders of SHL. During the period, out of the above,SHL has repaid an amount of Rs.2290.65 lacs (previous period Rs Nil) and the outstanding amount as at February 29, 2004 isRs.784.35 lacs (As at March 31, 2003 Rs 3075 lacs).

(d) Pursuant to the Scheme, as referred to in note 4 above, investments in JEW have been vested in SHL along with the guarantee ofRs. 1235 lacs (previous period Rs 1391 lacs) given by the undivided Siel Limited to the bankers of JEW towards the repayment offinancial facilities provided by them to JEW.

54

7. Analysis of outstanding unsecured loans taken by the Group

Description Amount Amount Interest rate Repaymentoutstanding as outstanding % p.a. Scheduleat February as at March29, 2004 31, 2003(Rs. Lacs) (Rs. Lacs)

Due to Siel Limited 420.95 425.00 Nil

Deposits from dealers, contractors etc. 151.85 153.94 Varied On completion of contracts

Other loans and advances 100.87 136.26 Nil By April 2006

8. Item included in other income which is in excess of 20 % of the Profit after Tax is export benefits of Rs 227.05 lacs (previous period Rs 25.73lacs) provided by the Government of India for encouraging exports of sugar. It is of recurring nature and has arisen on account of normalbusiness activity.

9. Research and development expenses amounting to Rs. 21.60 lacs (previous period Rs. 11.41 lacs) have been charged to the respectiverevenue accounts.

10. Sales are net of commission of Rs. 98.00 lacs. (previous period Rs.69.90 lacs)

11. The price of levy sugar sold during the season 1982-83 by one of the unit vested in the Parent Company pursuant to the Scheme ofArrangement is a subject of court cases. Pending decision, interest accrued of Rs. 183.57 lacs (previous period Rs 183.57 lacs) in terms ofCourt Orders is included under “sundry creditors”.

12. SHL has an investment of Rs. 716.45 lacs comprising of 91,00,000 equity shares of Rs. 10 each amounting to Rs 404.95 lacs and 7,00,000preference shares of Rs. 311.50 lacs, representing equity shareholding of 68.45 % in JEW, a subsidiary company and investment in 3,90,000equity shares of Rs 100 each amounting to Rs.190 lacs in equity shares of DSAPL, a jointly controlled entity, representing equity shareholdingof 20 %.

On implementation of the Scheme as referred to in note 4 above, the aforesaid investments in JEW and DSAPL, had with effect from theappointed date i.e. October 1,2002 vested in SHL. As per the Scheme, SHL is a special purpose vehicle to leverage investments and to settlethe liabilities of lenders vested in SHL. In view of the above, the present control / interest of SHL on JEW and DSAPL respectively is intendedto be temporary only. Therefore, the financial statements of JEW and DSAPL for the periods ended February 29,2004 and March 31, 2003 havenot been considered by the management while preparing the Consolidated Statement of Adjusted Assets and Liabilities and Adjusted Profitsand Losses.

13. Segment reporting

A. Business segments:

Based on the guiding principles given in Accounting Standard AS-17 “Segment Reporting” issued by the Institute of Chartered Accoun-tants of India, the Group business segments include: Sugar and others (investment activities of SHL )

B. Geographical segments:

Since the Group activities/operations are primarily within the country and considering the nature of product it deals in, the risk and returnsare same and as such there is only one geographical segment.

C. Segment accounting policies:

In addition to the significant accounting policies applicable to the business segments as set out in notes above, the accounting policiesin relation to segment accounting are as under:

a) Segment revenue and expenses:

Segment revenue and expenses are directly attributable to the segments.

b) Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories andfixed assets, net of allowances and provisions which are reported as direct offsets in the balance sheet. Segment liabilities includeall operating liabilities and consist principally of creditors and accrued liabilities.

c) Inter segment revenues:

Inter segment revenues between operating segments are accounted for at market price. These transactions areeliminated in consolidation.

55

D. Information about business segments

PARTICULARS Sugar Others Unallocated Total

Current Previous Current Previous Current Previous Current PreviousPeriod Period Period Period Period Period Period Period

SEGMENT REVENUE External sales (net) * 25,425.03 16,984.79 - - 25,425.03 16,984.79Other income 482.55 115.75 127.66 - 610.21 115.75

Total revenue 25,907.58 17,100.54 127.66 - 26,035.24 17,100.54

RESULTSSegment results 1,974.68 (197.51) 127.53 (0.71) 2,102.21 (198.22)

Operating profit 1,974.68 (197.51) 127.53 (0.71) 2,102.21 (198.22)

Interest expense (1,865.38) (902.59) (1,865.38) (902.59)Interest income 261.89 73.26 261.89 73.26Income -tax:Current tax (12.75) - (12.75) -Deffered tax (87.70) 325.90 (87.70) 325.90

Net Profit (Loss) 1,974.68 (197.51) 127.53 (0.71) (1,703.94) (503.43) 398.27 (701.65)

OTHER INFORMATIONA. ASSETSSegment assets 38,193.86 32,081.90 1,387.89 5.09 39,581.75 32,086.99Profit and loss account 303.38 701.65 303.38 701.65Unallocated assets 333.06 4,310.26 333.06 4,310.26

Total assets 38,193.86 32,081.90 1,387.89 5.09 636.44 5,011.91 40,218.19 37,098.90

B. LIABILITIESSegment liabilities 7,402.84 5,730.84 50.00 50.03 7,452.84 5,780.87Share capital and reserves 7,622.18 7,372.97 7,622.18 7,372.97Secured and unsecured loans 25,130.42 23,666.13 25,130.42 23,666.13Unallocated liabilities 12.75 278.93 12.75 278.93

Total liabilities 7,402.84 5,730.84 50.00 50.03 32,765.35 31,318.03 40,218.19 37,098.90

C. OTHERSCapital expenditure-Addition 64.71 30.52 - --WIP 271.82 66.98 - -Depreciation 813.57 444.31 - -Miscellaneous expenditure written off 71.72 34.39 - -

* net of excise duty.

14. Related party disclosures under Accounting Standard 18

Name of related party and nature of related party relationship

Subsidiaries : The Jay Engineering Works Limited (Subsidiary of Siel Holdings Limited which is a wholly owned subsidiary of Siel SugarLimited). (Refer Note 12 above ).


For full period - Mr. Siddharth Shriram, Mr. Krishna Shriram, (relative of Mr Siddharth Shriram).


a) From September 15, 2003: Mr. P.K. Bhalla, Mrs Asha Bhalla, (relative of Mr. P.K. Bhalla), Mr A.K. Mehra, Mrs Binu Mehra, (relativeof Mr. A.K. Mehra)

b) From December 16, 2003 : Mr. Rajendra Khanna, Mrs Rajni Khanna (relative of Mr Rajendra Khanna)

c) Upto September 15, 2003 : Mr. Deepak Banerjee and

d) Upto September 5, 2003 : Mr Satyendra Gupta

e) Upto January 28, 2003 : Dr Charat Ram (relative of Mr. Siddharth Shriram)

56

15. The net deferred tax charge of Rs 87.70 lacs for the period April 1, 2003 to February 29, 2004 and net deferred tax benefit of Rs 325.90lacs for the period October 1, 2002 to March 31, 2003 have been recognized in the Consolidated Statement of Adjusted Profits and Losses.

However, the Parent Company has not recognized the deferred tax benefits in respect of brought forward losses and unabsorbed depreciationas at March 31 2002, allocated to the Parent Company under section 72A (4)(b) of the Income-tax Act, 1961, from erstwhile undivided SielLimited, as in the opinion of the management, the virtual certainty with respect to the aforesaid benefits cannot be determined at this stage.Details of the deferred tax assets / liabilities are given below:

Rs. in Lakhs

As at February 29, 2004 As at March 31, 2003Deferred tax assets:Unabsorbed depreciation 587.55 398.57

Business loss carried forward 140.35 133.73

Accrued expenses deductible on payment basis 191.79 70.76Others 14.38 1.77

Sub-total 934.07 604.83Deferred tax liabilities:Accumulated depreciation 695.87 278.93

Sub-total 695.87 278.93Net deferred tax asset 238.20 325.90

16. Provisions include provision for contingencies of Rs 50 lacs representing expenses to be incurred on the sale of investments, as estimated bythe management.

17. The Parent Company had entered into lease agreements for hiring of plant and machinery and office equipments. As at February 29, 2004, theParent Company has commitments under lease agreements of Rs. 0.20 Lac (previous period Rs 16.46 lacs). Lease rent charged to the profitand loss during the period Rs 16.26 Lacs (previous period Rs 11.06 lacs).

18. AGEWISE ANALYSIS OF SUNDRY DEBTORSRs lacs

Description Amount outstanding as on Amount outstanding as onFebruary 29, 2004 March 31, 2003

Upto 180 days 832.49 1158.37

More than 180 days 84.23 89.55

Less: Provision for doubtful debts 10.05 0.44Total 906.67 1247.48

Rs. in Lakhs

Subsidiary Key Management Enterprise Over whichCompanies Personnel and their key management

Relatives personnel haveSignificant Influence * Total



Professional Fee - 4.90 - 4.90


Management fee received 20.00 - 34.00 - 54.00 -Remuneration to key management personnel 72.70 18.02 72.70 18.02

Commission Paid 38.24 22.91 38.24 22.91


Expenses reimbursed 41.11 - 41.11 -Advances given 13.43 - 3.00 1492.56 16.43 1492.56

Advance received - 1.11 - 1.11

Guarantees given on behalf of the Company 12347.12 - 12347.12 -

Balance outstanding as at the period end

- Receivables 13.10 - 1570.26 1492.56 1583.36 1492.56- Sundry Creditors - 1.11 - 1.11

-Guarantees given on behalf of the Company 12347.12 - 12347.12 -

* Do not include assets, liabilities vested in the Parent Company pursuant to the Scheme and the assets, liabilities, incomes accrued andexpenses incurred prior to incorporation when the undertakings were run and managed by Siel Limited in trust for the Parent Company (alsorefer to note 4 above)

Enterprise over which key management personnel have significant influence : Siel Limited

57

19. ANALYSIS OF LOANS AND ADVANCESRs Lacs

Description Amount outstanding as on Amount outstanding asFebruary 29, 2004 on March 31, 2003

Advance to Siel Limited 1570.26 1492.56*

Advance to key managerial personnel 13.10 -

Claims receivable 617.06 265.53

Prepaid expenses 95.30 63.55

Deposits with Government bodies 86.09 91.63

Advance to employees 44.46 12.31

Advance tax 9.99 -

Others 199.42 105.95

Total 2635.68 2031.53

* Represents amounts arising consequent to the Scheme of Arrangement (refer note 3).

20. The Group has not declared any dividend during the periods ended February 29, 2004 and March 31, 2003.

21. The current financial period is for a period of eleven months from April 1, 2003 to February 29, 2004, whereas the previous period wasa period from December 26, 2002 (the date of incorporation of the Parent Company) to March 31, 2003. Therefore, the figures of thecurrent period are not comparable with those of the previous period.


ANNEXURE – V ACCOUNTING RATIOS

Particulars PERIOD FROM APRIL 1, 2003 FROM DATE OF INCORPORATIONTO FEBRUARY 29,2004 PERIOD i.e. 26/12/2002* to 31/3/2003

Earnings per share (Rs.) 0.96 (2.26)

Nominal value of a share 10 10

Nat Asset Value per Share (Rs.) 24.21 21.04

Return on Net Worth (%) 3.98 (10.76)

NOTES:-a) Figures for aforesaid periods have not been annualised.b) Definition of ratios

Earnings per Share = Adjusted Profit / (loss) after tax as per Statement of Adjusted Profits and Losses /Weighted average number of Equity Shares *

Net Asset Value = Net total Assets as per Statement of Adjusted Assets and Liabilities /Weighted average number of Equity Shares

Return on Net Worth = Profit / (loss) after tax as per Statement of Adjusted Profits and Losses / Net Worth

* For computing weighted average number of equity shares for the period ended March 31, 2003 ‘Capital Suspense’ of Rs. 3094.59 lacs,representing 30,945,904 equity shares of Rs. 10 each, though allotted subsequent to March 31, 2003, has also been considered (refer note3)

ANNEXURE – VI - CAPITALISATION STATEMENTRs. in lacs

Pre-Issue as at February 29, 2004 As Adjusted for the IssueA. Debts

Short term Debt 12,599.84 12,599.84

Long Term Debt 11,325.28 11,325.28

Total Debt 23,925.12 23.925.12B. Shareholders’ Funds

Share Capital 3,399.59 4,249.49

Reserves & Surplus 4,222.59 4,222.59

7,622.18 8,472.08

Less:Miscellaneous Expenditure to the extent not written off 84.87 84.87

Profit & Loss Account 417.45 417.45

Total Shareholders funds 7,119.86 7,969.76

C. Total Capitalisation (A+B) 31,044.98 31,894.88

Long term debt / Equity Ratio 1.59 1.42

58

TAX SHELTER STATEMENT OF ADJUSTED PROFIT AND LOSSES (Rs. In lacs)

Particulars PERIOD FROM APRIL 1, 2003 PERIOD FROM DECMBERTO FEBRUARY 29,2004 26, 2002 TO MARCH 31, 2003

Net Profit Before Tax 371.19 (1,026.84)Tax Rate 35.875% 35.875%Tax at actual rates on profits 133.17 (368.38)Less:Timing Difference-Deferred revenue expenditure (35.15) (4.95)- Gratuity (138.29) --Accrued expenses deductible on payment basis (199.07) (197.23)-Difference in book and tax depreciation 1,162.16 777.52-Other (refer note b) (916.37) (456.92)Total of Adjustments (126.72) 118.42Tax Savings thereon (45.47) 42.48Total Tax on adjusted profits* 87.70 (325.90)* Comprising ofCurrent Tax - -Deferred Tax Charge / (benefit) 87.70 (325.90)

Note:-a) Pursuant to the Sheme of Arrangement, the brought forward losses and unabsorbed depreciation of undivided Siel Limited have been allocated

to the Company, (refer note 12), and as such there are no assessable profits under the Income Tax Act, 1961. However, the Company has notrecognized the benefits in respect of aforesaid losses / unabsorbed depreciation as, in the opinion of the management, the certainity of therealisation of the aforesaid benefits can be determined only after the completion of the assessment by the tax authorities.

b) Others include the timing differences on account of business losses and unabsorbed depreciation computed under the relevant provisions of the Income-tax Act, 1961 which are allowed to be carried forward and set off against the business profits in the subsequent years within the specified period.

Outstanding Loans and advances to Key Managerial Personnel as on 29th Febraury, 2004 are as follows:

Name Designation Amount (in Rs.)Mr. Siddharth Shriram Chairman & Managing Director NilMr. P.K. Bhalla Company Secretary & Executive Director 6,98,894Mr. A.K. Mehra Executive Director(Operations) 2,60,200Mr. Rajendra Khanna Executive Director (A/cs & Finance) 3,51,400

PRINCIPLE TERMS OF LOANS AND ASSETS CHARGED AS SECURITY

Description

Secured Debentures

Zero Coupon Debentures(ZCDs) of Rs. 100/- each

Term Loans-Financial Institutions

Amount o/s ason 29/02/2004(Rs. in lakhs)

2285.00

7390.00

Repayment schedule

Three Annual instalments15%, 25% & 60% at theend of 2nd, 3rd and 4th yearfrom 30th September, 2002.

Twenty quaterlyinstalments as per detailsbelow:-Oct. 04 to Sept. 05-4%-Oct. 05 to Sept. 06-7%-Oct. 06 to Sept. 07-25%-Oct. 07 to Sept. 08-33%-Oct. 08 to Sept. 09-31%

Interest(p.a.)

0.00%

12.00%

Security offered

First pari-passu charge on the fixed as-sets and second charge on the currentassets of the Company. The Lenders ofSiel Holdings Ltd. (SHL), a Subsidiaryof Mawana Sugars Ltd.(formerly knownas Siel sugar Ltd.), would have firstcharge on pari-passu basis on the fixedassets of the Company till the repaymentof debts transferred to SHL. The ZCDswill be further secured by the personalguarantee of Mr. Siddharth Shriram andpledge of equity shares of the Companyheld by promoters.

First pari-passu charge on fixed assetsand second charge on the current as-sets of the Company. The Lenders of SielHoldings Ltd. (SHL), a Subsidiary ofMawana Sugars Ltd., would have firstcharge on pari-passu basis on the fixedassets of the Company till the repaymentof debts transferred to SHL. The loanswill be further secured by the personalguarantee of Mr. Siddharth Shriram andpledge of equity shares of the Companyheld by promoters.

59

Description

Funded Interest TermLoan

Sugar DevelopmentFund

WORKING CAPITAL

Working Capitaldemand loans from SBI& PNB

Cash Credit / Over-drafts from SBI & PNB

Amount o/s ason 29/02/2004(Rs. in lakhs)

886.80

763.48

300.00

12047.12

Repayment schedule

Two annual instalments asper details given below-Oct. 08 to Sept. 09-30%-Oct. 09 to Sept. 10-70%

Repayable in 5 yearlyinstalments commencingfrom September 2010

Interest(p.a.)

0%

6%

12%

12%

Security offered

First pari-passu charge on fixed assetsand second charge on the current as-sets of the Company. The Lenders of SielHoldings Ltd. (SHL), a Subsidiary ofMawana Sugars Limted, would have firstcharge on pari-passu basis on the fixedassets of the Company till the repaymentof debts transferred to SHL. The FILT willbe further secured by the personal guar-antee of Mr. Siddharth Shriram andpledge of equity shares of the Companyheld by promoters.

Secured / to be secured by an exclusivesecond charge on all immovable prop-erties of the Company situated atMawana Distt. Meerut in the State ofUttar Pradesh together with all buildingsand structures thereon and all plant andmachinery attached to the earth or per-manently fastened to anything attachedto earth, both present and future.

First pari-passu charge on current as-sets and second charge / third chargeon the fixed assets of the Company. Thesame is further secured by the PersonalGaurantee of Mr. Siddharth Shriram.

First pari-passu charge on current as-sets and second charge / third chargeon the fixed assets of the Company. Thesame will be further secured by the per-sonal guarantee of Mr. SiddharthShriram.

IX. MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITIONSFinancial Information1. The current financial period is for a period of eleven months from April 1, 2003 to February 29, 2004. The previous period was for a period from

December 26, 2002 (the date of incorporation of the Company) to March 31, 2003. However, the previous period includes figures w.e.f.1.10.2002 to 31.3.2003 (Refer Note 3(b)(i) and 3(b)(ii) to the Notes to Financial Information).Thus data of Current Financial period and previous period is not comparable.

However, Comparable financial figures of the Sugar business of Siel Ltd., as extracted from the Accounts of Siel Ltd. are as under:

Units September, September, September, September, September,1998 1999 2000 2001 2002

Production – Sugar MT 205318 197362 204523 248167 249446

Sales Qty – Sugar MT 205733 215409 176875 225869 256516

Sales Value Rs./lakhs 29480 31380 26945 33335 37058

Profit Before Depeciation, Interest & Tax Rs./lakhs 5971 5203 4394 5013 4022

Profit Before Tax Rs./lakhs 1794 1264 762 1239 277

Debts – Secured Rs./lakhs 19455 16227 17767 18977 18005

2. The sales figures during the 6 months ended 31st March, 2003 at Rs. 18286 lakhs (Rs. 36572 lakhs on an annualized basis) were higher ascompared to the sales of Rs. 27390 lakhs during the 11 months period ended 29th February, 2004 (Rs. 29880 lakhs on an annualized basis) dueto higher sales quantities of sugar sold during 6 months ended 31st March, 2003, pursuant to the Court Order obtained by the Company to selladditional sugar in the free market. The quantity of sugar sold during 6 months ended 31st March, 2003 was 140353 MT as against 196814 MTin the 11 months ended February, 2004.

60

3. The details of Other Income are as under :

Sr. No. Particulars Amount (As on 29/2/2004) Amount (As on 31/3/2003) Recurring or Non-recurring(Rs. in Lakhs) (Rs. in lakhs)

1. Rent Received 10.48 9.60 Non-Recurring2. Export Benefit 218.49 22.73 Non-recurring

3. Scrap Sale 158.91 24.00 Non-recurring

4. Interest received 261.87 73.27 Recurring

5. Management Consultancy Fees 261.87 Nil Recurring

6. Excess Provision / Liabilitiesno longer required Nil 41.27 Non-recurring

7. Others 42.79 15.14 -TOTAL 744.41 189.01

4. Taxation – CurrentNo provision has been made in the books due to brought forward business losses/ unabsorbed depreciation. Further, as the Company is havinga book loss under the provision of 115JB of Income Tax Act 1961, there is no Minimum Alternate Tax Liability.

Deferred TaxDuring the period, the Company has implemented Accounting Standard-22 “Accounting for Taxes on Income” issues by the Institute ofChartered Accountants of India.

The Company has not recognized the deferred tax benefits in respect of brought forward losses and unabsorbed depreciation as at March 31,2002, allocated to the Company under section 72A (4) (b) of the Income-tax Act, 1961, from erstwhile undivided Siel Limited, as in the opinionof the management the virtual certainty with respect to the aforesaid benefits cannot be determined at this stage.The net deferred tax charge of Rs.87.70 lacs for the period April 1, 2003 to February 29, 2004 and net deferred tax benefit of Rs.325.90 lacs forthe period October 1, 2002 to March 31, 2003 have been recognized in the profit and loss account.

5. InventoriesSugar being a seasonal industry, the sugar inventory is produced during the period November to April and the sales are made throughout theyear. February being middle of the season the inventories are higher.

6. Equity CapitalCompany has allotted 30,00,000 equity shares of Rs.10 each for cash at par on preferential basis to its promoters in terms of Scheme ofArrangement duly approved by High Court vide its order dated August 26, 2003.

7. Lease AgreementsThe Company has entered into a lease agreement for purchase of Static Convertor used under manufacturing process with Tata Finance Ltd.for an aggregate value of Rs. 7.52 lakhs, comprising of 0.0004% of the total value of plant & machinery. The tenure of lease is 60 monthscommencing from 8th April, 1999 and the last payment of lease rental paid on 8th March 2004..

Economic Environment and Company Performance

Industry AnalysisSugar Industry is controlled to a large extent by both the Central and State governments. The government controls the capacity of mills, the price ofsugarcane, distribution and pricing of sugar and also the by-products (molasses). However, during the last few years there has been a gradualreduction in the regulations and it is expected that the regulations would be further eased in the coming years. In September 1998, the sugarindustry was delicensed. Progressive de-regulation has resulted in the ratio of levy to free sugar to 10:90 as against 40:60 a few years ago.Thus, the production of sugar increased from 182 lac tonnes in 1999-2000 to around 202 lac tonnes in 2002-03. As against this, consumptionincreased from 155 lac MT in 1999-2000 to 184 lac MT in 2002-03. The demand-supply gap resulted in fall in sugar prices from Rs.1268 per quintalin 2001-2002 to Rs.1119 per quintal during 2002-03.

Sugarcane

Cane generally constitutes around 65-70% of the total cost of the manufacture of sugar. The price of cane is related to recovery and stateadministered prices (which vary from state to state). The procurement price of cane by mills is controlled by the Central Government notification onthe Statutory Minimum Price (SMP), which is based on minimum recovery of 8.5% with proportionate increase in the prices for higher recovery. Forthis purpose, the Country is divided in 17 geographical zones. The Central government before the onset of crushing season declares the SMP. Inaddition, the State Governments announce State Advisory Price (SAP), which has generally been higher than the SMP. As per current practice thegovernment has been increasing the SMP and the SAP in every season. For season 2002-03, SMP was initially fixed at Rs.64.50 per quintal butrevised to Rs.69.50 per quintal. SMP for the season 2003-04 has been fixed at Rs.73 per quintal. The area under sugar cane cultivation hasincreased over last few years due to increase in SAP fixed by State Governments over the period and sugarcane production has increasedaccordingly.

In case of Mawana Sugar Works and Titawi Sugar Complex, SMP was fixed as under:-

Factory(Rs.Qtl) Season 2003-04(Rs.Qtl) Season 2002-03(Rs.Qtl)Mawana Sugar Works 87.45 83.44Titawi Sugar Complex 90.00 87.54

61

Sugar SalesAs regards the sale of sugar there exists a dual pricing system whereby a certain percentage of the sugar (at present 10%) produced by the sugarmills, known as ‘levy sugar’, is procured by the Government for the Public Distribution System (PDS) at a subsidized price called the ‘levy price’ andthe balance sugar production is allowed to be sold in the open market and is known as ‘free sale sugar’. While the price for the free sale sugar isdependent on market factors, the Government releases ‘free sale quota’ every month to be sold by the mills in open market.

In May 2004, the Hon’ble Supreme Court of India has passed a judgement in the case between West U.P. Sugar Mills Association and U.P. Co-operative Cane Unions Federation that the State Government had the power to fix cane price for the farmers supplying cane to the sugar factorieswithin the State. Since both our factories are situated in the State of U.P., the raw material cost is likely to be higher. However, no major impact isexpected on the operating results of the Company because of the present demand and supply gap.

For the past years there are no liability on the Company since no cane price was fixed by the State of U.P.

Industry ex-factory free sale sugar realization (net of excise duty) are as follows:

Year (Sugar Season) Average Price (Rs./Quintal)1998-1999 13201999-2000 13382000-2001 13162001-2002 12682002-2003 1119(Source : ISMA)

The decrease in overall realization levels has resulted in a lower profitability of the Company in the past.

Unusual or Infrequent event or TransactionsThere have been no unusual or infrequent transactions in the period ended 29 February 2004.

Significant Economic ChangesThe management does not foresee any significant economic changes concerning the sugar industry in the immediate future, which might have animpact on the profitability or operations of the Company, other than the changes in government policies , changes in demand/ supply of sugarcaneand such other changes which are in usual course of business.

Known Trends or UncertaintiesSugar is a cyclical business and is dependent to a large extent on the availability of sugarcane. Also, the output of sugar, an agro-based product isinfluenced by climatic conditions. The Company has consistently increased its crushing capacity.

Future Relationship between Costs and RevenuesIn sugar industry, costs depend upon sugar cane prices, which account for upto70% of the costs. The revenue depends on Government policiesrelating to sugarcane pricing as well as free sale quotas, international markets, and availability of sugar. The Company’s future sale prices will bedetermined by the demand-supply situation, government policies and sugarcane availability and prices.

Seasonality of the businessSugar production is dependent on the availability and quality of cane. To some extent, sugar cane is a weather resistant crop and is unaffected bymoderately high or low rainfall. However, any drastic changes in climatic conditions may impact sugarcane crop and hence sugar production.

Competitive conditionsMSL is one of the lowest cost producers of sugar in India and is one of the most profitable players in the sugar industry. The company is notdependent on a single or few suppliers or customers.

Statement by the DirectorsThere are no material developments after the date of the latest balance sheet that are likely to materially affect the performance and the prospects ofthe Company except the recent judgement pronounced by the Constitution bench of Hon’ble Supreme Court which has upheld the rights of StateGovt. to fix the state advised prices. This judgement could result into some demands for the past periods which cannot be determined as of now. TheIndustry is however, proposing to file a review petition against the said judgement before Hon’ble Supreme Court.

The Company has neither discontinued any of its existing business nor commenced any new business.

X. OUTSTANDING LITIGATIONS / DISPUTESI. (A) Against the Company - Mawana Sugars Ltd.


Civil Criminal Excise Related IT Related Others

No. of Cases 58 26 37 - 151

Amount involved Rs. 310.41 lakhs + Rs. 8.51 lakhs in Rs. 137.39 lakhs - Rs. 134.88 lakhs +interest in 24 cases. 11 cases. However, Interest in 7 cases.However, amount is amount is not In addition amount isnot ascertainable in ascertainable in not ascertainable in 143 cases.remaining 34 cases. balance 15 cases.

62

a) Criminal Cases

S.No

1.

2.

3.

4.

5.

6.

7.

8.

9.

Authority

Judicial Magistrate,Saharanpur

Judicial Magistrate,Mawana

Chief Judicial MagistrateMuzaffarnagar

Scheduled Castes &Scheduled TribesCommission,Lucknow

Human RightsCommission/ SDM,Mawana


Chief Judicial Magistrate,Chandigarh

Judicial Magistrates,Mawana, Meerut andMuzaffarnagar


Accused

Sh. Bhupinder Singh andMr. H.S. Malik Manager(Cane)

Sh. Santar Pal, CaneSupervisor and Mr. D.K.Sinha, Deputy Manager(Cane) & Ors.

Mr. Harbans Singh

Smt. Chandra Kanta

Smt. Chandra Kanta

Shri A.K.Aggarwal, Shri JoyMukherjee, Shri SharadKrishna, Shri RajeevMishra & Ors.

Mr. Tajinder Kumar,Dealer and the company

Mr. SatyapalSh. SatyavirSh. Ramesh ChandSh. Narendra Sh. Satyapal

M/s. Sumit Associates &its partners Mr. SumitJain & Mr. Anuj Jain.

Particulars of the matter / Charges

A case has been filed under Section 406of the Indian Penal Code alleging that in1990 the sugarcane was purchased with-out issuing receipts and thus the sellercould not obtain payment.

Case under Sections 323/427/506 of theIndian Penal Code for causing hurt, mis-chief and criminal intimidation has beenregistered against employees for actionstaken during the course of their duties.

The erstwhile General Manager pros-ecuted for not opening a new sugarcanepurchase center.

A complaint has been filed against thecompany alleging discrimination and ha-rassment.

A complaint has been filed against thecompany alleging discrimination and ha-rassment

8 cases under section 268/ 285/ 237/337/338 IPC and 34 of Police Act have beenfiled against the employees of the Com-pany and three contractors alleging thatthe company dumped burnt fly asharound the factory area.

A case against the Company for not hav-ing the superscription on the package“Best before date”.

The company has lodged 5 FIR/com-plaints against 5 workmen for misappro-priation of cane.

The company has filed 6 cases underSection 138 of the Negotiable Instru-ments Act. Cases Nos. 699 to 704 of2002. The company had delivered sugarto accused for which it issued chequeswhich were dishonored

Amount

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

Rs. 2.90lakhs

Rs.5.61lakhs

Status

The case ispending for hearing.


The prosecutionhas been stayed byAllahabad HighCourt.

The investigationhas been stayed bythe Lucknow Benchof the AllahabadHigh Court in WritPetition No.5935 of2000.

On directions of theDistrict Magistrate,the SDM Mawanais inquiring into thematter.

The case are fixedfor trial.


Cases are pending

N o n - B a i l a b l eWarrants issuedagainst theaccused.

b) Labour Cases

Sr. No. Name of the Authority Claim Amount Matter / Status1. Workmen’s Compensation Commissioner, Meerut/ Rs. 8.64 lakhs + 5 Cases are filed against the Company for compensation /

Deputy Labour Commissioner, Meerut/ Interest gratuity / permanency and payment of HRA.Labour Court, Meerut 1 case filed by an employee claiming that he was

prematurely retired, as his actual date of birth was later.

2. 127 cases of temporary/regular workmen for reinstatement and/or compensation, dismissal & extra allowance. The cases arepending at Allahabad High Court/Labour Court/Ind. Tribunal, Meerut / Saharanpur. The amount is not ascertainable in all these cases.

63


Authority





The Company has filed four criminal writ peti-tions on the ground that Mr. Siddharth Shriram,Chairman & Managing Director, was not theoccupier as defined in the Factories Act. (CaseNo.- Crl. WP Nos.5131 to 5134 of 1993).

Status

Stay has beengranted.

Amount

Not Ascertainable

d) Under Trade Tax

Authority

Supreme Court




The company has filed a writ petition against the order dated25.8.2000 given by the Commissioner, UP Trade Tax per-taining to the period of deferment of Trade Tax.

Status

The matter is pending for further order.


Amount

Rs. 14 Lakhs

Rs. 112.23 Lakhs


S.No

1.

2.

3.

4.

5.

6.

Authority

CESTAT, New Delhi

Deputy CommissionerMuzaffarnagar/Commissioner AppealGhaziabad

CESTAT, New Delhi/Commissioner Appeal,Ghaziabad





9 appeals filed by the Company against the or-der passed by Commissioner Appeals, Meerutfor wrongful availment of MODVAT Credit.

13 Appeals allowing CENVAT Credit. Caseshave been remanded for fact verification to theAdjudicating officer.

6 appeals filed by the company for Demand ofexcise duty due to shortage/removal of sugar/molasses grading of molasses by consumer.

The company has received seven show causenotices for shortage of molasses / sugar.

Application filed by the company for remissionin excise duties.


Status

Pending hearing.

Pending determination offacts

Pending hearing

Assessment Pending

The application is pending

Adjudication


Rs. 39.49 lakhs

Rs. 29.16 lakhs

Rs. 8.49 lakhs

Rs. 6.78 lakhs

Rs.5.64 lakhs

Rs.47.83 lakhs


S.No

1.

2.

3.

Authority





4 Writ Petitions filed by the company challeng-ing the tagging order for the seasons 2002-03& 2003-04.

The company has filed a case challenging thevires of the arbitration proceedings beforeDeputy Cane Commissioner, Saharanpur.

7 Writ Petitions were filed by the Company/against the Company for past seasons regardingreservation of cane purchase centres.

Status

The High Court stayed theorder of the DM and modi-fied the tagging percentageat 76% & 78% respectively.

Final arguments are to beadvanced. The amount in-volved is Rs. 2.06 Lakhs.

Interim Orders in favour ofthe Company.

Opposite Party

Collector,Muzaffarnagar &Meerut

Cooperative CaneDev. Society Ltd.,Muzaffarnagar and Ors.

The matters areinfructuous now sincethey related to pastseasons & will haveno implication forfuture.

64

g) Civil Cases

S.No.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

Authority

Tehsildar (Judicial) Sadar,Muzaffarnagar,Tehsildar (Mawana)

Addl. Distt. Judge-VII,Meerut

XIII Addl. Dist. Judge,Meerut

Delhi High Court


Board of Revenue atAllahabad

Allahabad High court


District Consumer Forum,Muzaffarnagar

Delhi High Court

Addl. Civil Judge, Sr.Div.Meerut/ Civil Judge,(Jr.Div.) Mawana, CivilJudge Merut

Vth Addl Civil judge Meerut,III Addl. Civil judgeMeerut,VII Addl Civil JudgeMeerut

Civil judge (Jr. Div.)Meerut,Civil judge (Sr. Div)Meerut,Civil Judge, Dehradun

Supreme Court





The Union of India has filed a letter PatentAppeal against the company and three othersugar factories regarding encashment ofbank guarantees for differential levy sugarprice.

Suit for injunction filed against the companyregarding school building in Mawana Mandi.

The company has filed a revision against anorder by which a demand of Rs.26,925/- wasimposed on it on account of additional stampduty in relation to land purchased by the com-pany. A penalty of Rs.1,26,925/- has alsobeen imposed.

3 writ petitions filed by the company for grantof release order for sale of free sale sugarwithout any restrictions


Complaints against non-refund of the securitydeposit for the electrical connection.



3 suits of recovery of amount from anemployee and two suppliers have been filedby the company



Status

Pending. But in 1 Case thematter has been sent back to theTahsildar for reconsideration bythe Allahabad High Court whichhas stayed the recovery ofdamages and demolition of theboundary wall.

For arguments.

Final arguments

The matter is pending for furtherorder.

The Municipal Board has soughtimpleadment in the matter

The revision was dismissed indefault. However, the applicationfor restoration is pending.

Interim orders passed in favourof the company.

The High Court has passed anorder whereby the toll taxcharged from the companywould be kept in a separate ac-count subject to the final orderof the High Court.

For Reply






Amt.

Rs. 13.93 Lakhs

The amount involved isnot ascertainable.




Rs.1.54 lakhs.



Rs.1.48 lakhs






65

g) Civil Cases

S.No.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

Authority






Allahabad High court48159/2002



Delhi High Court

Delhi High Court

National ConsumerDisputes Redressal Forum,Delhi




The company has filed a writ petition chal-lenging the demand of the Cane Commis-sioner, Uttar Pradesh for payment of moneyon account of differential transport rebate oncane purchased during the season 1989-90.

The company has filed a writ petition chal-lenging demand of interest on electricity duty.


Writ petition filed on behalf of the companythrough West, central & East UPSMA fordirections to be given to state not to fix caneprice for corporate and co-operative factories.

Two Writ petitions filed on behalf of the com-pany through West UPSMA challenging levyprice for 1999-2000 & 2000-2001.

The company has filed a petition challengingthe order of the District Magistrate, Meerutrequisitioning its guest house to use it astemporary jail

The State Trading Corporation of India hasfiled an appeal against an order of the SingleJudge of the Delhi High Court wherein anarbitral award in favour of the company wasmade rule of court.



Status



The company has deposited thedemanded amount of Rs.20.00lakhs and plans to withdraw thecase.

The company’s writ has beenconnected with another writpetition and is pending hearing.


The matter is pending for finaldisposal.


Stay order granted. The petitionis pending.

As per the orders of the DelhiHigh Court, the State TradingCorporation has deposited asum of Rs.7.27 lakhs and thecompany has been permitted towithdraw the said amount byfurnishing a bank guarantee ofan equivalent amount.

The petition is listed for finaldisposal in August 2004.


Amt.


Rs. 100 Lakhs (approx.)


Rs.42.90 Lakhs





Rs.7.27 Lakhs


Rs.25.18 Lakhs

3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of Addl. Collector (E), Meerut imposingdamages for allegedly encroaching on land belonging to the Gram Sabhas involving an amount of Rs.4.06 Lakhs.

3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of the Board of Revenues wherein thecompany has been ordered to pay additional stamp duty in connection with land bought by the company. The amount involved in 2 of thesepetitions is Rs. 45.47 Lakhs.

A writ petition has been filed by the company in Allahabad High Court challenging the order of Dy. Director of Consolidation wherein he hasset aside an order by which the company had been given 4 bighas and 14 biswas of land. The amount involved is not ascertainable.

5 cases have been filed against the company before Addl. Civil Judges of Muzffarnagar, Merut and Pathankot demanding injunction. Theamount involved in the case with Pathankot Judge is Rs. 3.56 Lakhs though in remaining cases, amount involved is not ascertainable.

66

II. Litigations relating to Promoter/Group/Subsidiary/Associate Companies1. Siel Limited(A) Cases Against Siel Ltd.a) Excise Cases

Authority

CEAST, Delhi

Commissioner, CentralExcise, Chandigarh

Dy. Commissioner,Central Excise, Patiala

Adl. Commissioner,Central Excise,Chandigarh


The Department had filed an appeal against an orderwherein a case relating to the company not followingproper procedures while availing of modvat crediton capital goods was decided in favour of thecompany.

A show cause notice dated 6.11.2001 was issuedto the company for non-inclusion of Freight chargesin the assessable value.

A show cause notice (SCN) dated 6.11.2001 wasissued to the company for wrongly availing thecenvat credit by the company on water pipeline laiddown outside the factory. Though the amount wasalready reversed before the issuance of SCN.

A Show Cause Notice (SCN) has been received on22.4.2004 alleging that the cylinder discountsallowed to the buyer are not as per the provisions ofthe Central Excise Act and as such the value paidcan not be construed to be transaction value/normalprice.

Status

The appeal has been decided and while thecompany’s right to use the cenvat credit hasnot been disputed, a penalty of Rs.50 lakhshas been imposed on the company forprocedural lapses. In an appeal before theTribunal, stay has been granted and the casehas been remanded back to Commissioner(Appeal) Chandigarh for reconsideration ofthe matter requested for by the respondentin the Cross objections.

The case is pending for adjudication.

The reply to the SCN filed and hearing iscompleted.Decision is awaited.

A suitable reply to the SCN is being filed inconsultation with the Company’s Advocate.

Amt. (in Rs.)

Rs.50.00 lakhs

Rs.28.14 lakhs

Nil

Rs.5.73 lacs


Authority



Additional LabourCommissioner, Kanpur



Allahabad High Court,Workman CompensationCommissioner, Meerut


13 Writ Petitions filed by the company againstthe Awards whereby temporary workmen werereinstated with back wages.

2 Writ Petitions filed by the Company against theorder requiring the management to leadevidence though the onus was on workmen.

An appeal filed by the company against an orderunder the payment of Gratuity Act, 1972 for givinggratuity to a teacher.

Writ Petition filed by the Company challengingthe order passed by the Commissioner under theWorkmen’s Compensation Act, 1973 grantingcompensation to the widow of an employeewho had not met with an accident during thecourse of employment.

Writ Petition filed by the Company challengingthe order of the Labour Cour t regardingreinstatement of a temporary workman.

M/s New India Assurance Company has filed anappeal against the award under the Workmen’sCompensation Act, 1923 whereby a sum ofRs.1.76 lakhs has been awarded to the wife ofthe deceased. The company has filed applicationfor Review of the award as the company has beenordered to pay interest upon the compensationamount.

Amount

Rs.29.51 lakhs

Not Ascertainable

Rs.1.98 lakhs + interest

Rs.2.22 lakhs

Not Ascertainable


Status

The workmen were awardedreinstatement by the labour court/Industrial Tribunal and the Company haschallenged the decision.

The company has challenged the interimorders of the Labour Court.

The lower Court ruled in favour of theOpposite Party.

In pursuance of an interim order passedby the High Court the Company has paidRs.1 lakh to the wife of the deceased andthe remaining amount of Rs.1.22 lacs hasbeen deposited in the Nationalised Bankin the joint name of the Commissionerand the wife of the deceased. The appealis still pending.

Further proceedings before the LabourCourt have been stayed and the writpetition is pending.

Judgement has been reserved on thereview application.

67

b) Criminal Cases

Authority

Metropolitan MagistrateDelhi

Judicial Magistrate FirstClass, Indore.


Prosecution against company’s three officers regardingOleum gas leak.

The Opposite Party has filed a case against a supplierof the company under Section 138 of the NegotiableInstruments Act and Section 420 of the Indian Penal Codealleging that the company and its officials have connivedwith a third party to cheat the Opposite party.

Status

Fixed for framing the charge.

The company has moved anapplication for discharge of itselfand its officials.

Amount

The amount is notascertainable.

Rs.40.83 Lakhs

c) Under Prevention of Food Adulteration Act, 1954The company is facing prosecution in 28 cases under the act on the allegation that samples of Sunflower oil; Mustard Oil and Vanaspati were foundto be adulterated. These cases are pending in the Courts of Chandigarh (1), Indore (1), Barbil (1), Allahabad High Court (3), Balaghat MadhyaPradesh (1), Delhi (9), Jaipur (3), Jammu (1), Udaipur(1), Bikaner (1), Bhilwara (1), Jodhpur (1), Nainital (1), Neem Ka Thana (1), Feerozpur (1) andChandrapur (1).

d) Under Essential Commodities Act

Authority

AllahabadHigh Court(Lucknow Bench)

Patna High Court


The Company has challenged the prosecution for allegedinfringement of the Essential Commodities Act, VOPcontrol Order issued by State Government regardinglicencing of wholesalers.

The company has filed an appeal against an order bywhich the Trial court refused to drop proceeding inconnection with a raid where stock was found in excessof the amount notified.

Status

The case is pending and the trial Court proceeding havebeen stayed

The case is pending for further order.

e) Labour Cases

Authority

Delhi High Court

Delhi High Court

Delhi High Court

Controlling AuthorityGratuity KarampuraDelhi

Labour Court Delhi

Supreme Court

Labour Court Delhi

Presiding Officer,Labour Court Patiala

Civil Judge, Rajpura

Patna High Court

Labour Court,Faridabad


The Company has filed two writ petitionschallenging the award of reinstatement/referenceof dispute to labour courts.

An appeal filed by the Company against orders ofthe E.I. Court upholding demand of ESI towardsarrears of contribution for the years 1968-1979.

Two writ petitions filed against the company by theRegional Provident Fund Commission against theorder of the Employees Provident Fund AppellateTribunal.

A claim of balance gratuity & interest filed againstthe company by a workman

12 Cases filed against the Company by workmenalleging illegal terminations.

Case against the company by SFFI KrantikariMajdoor Union.

3 cases against the company by workmen claimingwage increase and other benefits.

Case under Section 33 (C)(2) of the IndustrialDisputes Act, 1947 have been filed by workers forpayment of bonus @ 20% as against 8.33% givenby the Company.

The union has filed a case against State of Punjab,the company and others.

Appeal by the company against award of labourcourt, Purnea dated 30.4.2003.

An ex-employee of the company has filed a casefor his re-instatement with full back wages andcontinuity of service at Siel Aircon.

Status

Writs have been admitted and orders oflower courts stayed.

Appeal listed for admission hearing on9.11.2004. Stay of recovery granted subjectto Bank Guarantee of Rs.10 lacs.

Petitions have been fixed for final hearing.

Filing of documents by both parties.

Cases are pending for further proceedings.

Amount has been deposited with the LabourCommissioner.

The cases pending before labour court.

The case is fixed for applicant’s evidenceon 18.1.2005.

The case is fixed for further proceedings on28/8/2004.

The case is pending for further order.

Admission/ denial of the documents is to becarried out by the company.

Amount(Rs.)

Not ascertainable

Rs.58.65 lacs + interest

Rs.13.97 Lakhs

Not Ascertainable

Not Ascertainable

Nil

Not Ascertainable

Not Ascertainable

Not Ascertainable

Rs. 1.8 Lakhs

The amount is notascertainable.

68

f) Civil/Others Cases

Authority

City Civil Court,Ahemdabad

Madras High Court

Arbitrator appointed byICA.

Delhi High Court

Civil Court Delhi

Civil Court, Delhi.

High Court of Delhi.

High Court of Delhi.

District Court, Delhi

Distt. Court, Delhi


Case for recovery of amount towardscost of arbitration filed against company.

Suit for infringement/passing off by M/sA.V.Thomas, Madras regardingTrademark.

Case for recovery on account of non-lifting of material against a contract filedagainst the company.

Appeal against the company fordamages caused due to oleum gas leak.

Suit filed against the company seekinginjunction restraining it from appointingstockist for Gandhinagar and frompermitting any other person to supply theproduct in the area.

A suit has been filed against thecompany for declaration and injunctionagainst a settlement already reachedwith opposite party.

Three suits for recovery filed against thecompany.

A suit for recovery against the companyfor recovery of amounts on account ofwork done in 1984.

6 Suits against the company for recoveryof possession, arrears of rent and mesneprofits.

5 cases have been filed against thecompany for arrears of maintenancecharges.

Status

The case is pending for furtherorder.

The suit was stayed In themeanwhile the matter was settledand the party gave undertakingbefore the High Court of Delhi thatthey will not use that mark. Thecase before the High Court ofMadras will come up in duecourse.

The case is fixed for finalarguments before the arbitrator.

The appeal is pending for furtherorder.

The suit is pending for furtherorder.

Fixed for plaintiff’s evidence

Unconditional Leave to defend hasbeen granted to the company.

The suit is pending for furtherorder.

Pending. In one case thecompany has surrendered thepossession.

The cases are pending for furtherorder.

Amount

Rs.1.62 lacs

The amount involved is notascertainable.

Rs. 681.13 Lakhs

Rs.2.0 lacs



Rs. 60.23 lacsThe company has already depositedRs. 16.40 lakhs

Rs.29.35 lakhs (including principalamount of Rs. 5,47,296/-)


Rs. 5.5 Lakhs

g) Under Monopolies and Restrictive Trade Practices Act, 1969

Authority

Adjudicating Authority,MRTP Commission.


Subsequent to preliminary investigation conducted bythe Director General of Investigation and Registration, anotice of enquiry dated 1/12/94 was issued by the Com-mission to various manufacturers of Chlorine & HCL in-cluding the company.

Status

The Commission vide its order dated 1.3.2002 held that thenotice of enquiry was not maintainable in respect of charge ofcartelisation. It directed modification of charge and continuationof proceedings in respect of charge pertaining to manipulationof conditions of delivery or price. The company has filed itsreply to the amended notice.

h) Under Companies Act, 1956

Authority

Regional Director, (NR)Kanpur


Application filed by Company for Compouding u/s. 209,211& 217 of the Companies Act, 1956

Status

The matter is pendingfor hearing.

Amount (in Rs.)

The amount involvedis not ascertainable.

i) Arrears on Preference Shares

As on 31st March 2004, the company has arrears of unpaid dividend on 13% Preference Shares for the years ended September 30 1998, 1999,

2000,2001 and for eighteen months ended March 31 2003 and year ended March 2004 amounting to Rs. 0.08 Lakhs.

j) Case by Unit Trust of India (UTI)

Unit Trust of India, one of the lender, issued recall / winding up notice in November, 2002 to the erstwhile Siel Ltd. on having defaulted on interest

payment / principal repayment. In the meantime, the Company approached CDR Cell for restructuring and they approved restructuring

package in March, 2003. The restructuring package was then approved by Hon’ble High Court vide its Order dated 26th August, 2003. UTI had

69

not conveyed its consent for the restructuring package and filed an appeal against the order of High Court, approving the aforesaid Scheme,

in the Division Bench of Hon’ble High Court. The Appeal of the UTI has not been admitted by the High Court and there are no restraints on

implementation of the Scheme and the same has already been implemented by erstwhile Siel Ltd. Presently, the other Lenders of Siel Ltd. have

agreed to pay sum upto Rs. 1173 lakhs to UTI against the sum of Rs. 300 lakhs awarded by the High Court to be paid out of the surplus

realization from the Special Purpose Vehicle viz. Shivajimarg Properties Ltd., in which the land of erstwhile Siel Ltd. located at 15, Shivaji Marg,

New Delhi has vested pursuant to the Scheme. The Company has also filed an application u/s 392 of the Companies Act, seeking a direction

from Hon’ble High Court to restrain UTI from creating any impediment and UTI be directed to take all steps to issue necessary no objection

required for sale of non-operating assets, as required in terms of the Scheme. The Court has directed UTI to consider the One Time Settlement

proposal of the Company and report to the Court so that effective order could be passed by the Court.

(B) Cases By Siel Ltd.a) Excise Cases

At Hyderabad Unit (M/s. Tecumseh Products India Ltd. has taken over the unit, but the company continues to be liable for the period prior

to 31.3.1997.)

Authority

CESTAT,Bangalore

CESTAT,Bangalore

Commissioner (Appeals)Hyderabad

Dy. Commissioner,Hyderabad

Asstt. Refund CommissionerHyderabad

Asstt. Commissioner Excise

Dy. Excise and TaxationCommissioner (Appeals)Patiala


The company has filed two appeals againstthe order of the Commissioner onclassification of lamination bundles.

The company has filed an appeal in theTribunal against the order of theCommissioner on allowability of marketingand sales expanses.

The matter of inclusion of handling chargesin assessable value had been remandedback by the Tribunal, second time.

2 cases for refund filed by the company.

As per order of the Commissioner Appealsthe case was sent back for verification ofcertain records.

The company has filed an appeal againstdelivery of goods by Sales Tax Authoritieson the ground that these are notaccompanied by documents.

Status

Demand stayed on deposit Rs.10.00 lakhsand Rs.60,000/-

Unconditional stay of demand has beengranted and case tagged with anotherappeal of MRF Ltd. for the same issue.

The case has been decided against thecompany and the company has filed anappeal before the Commissioner (Appeals).

Processing of Company’s refund claims arebeing done by the Department.

Appeal filed before the Commissioner(Appeals) was allowed subject toverification of certain records. The recordswere got verified long ago. However, noformal orders have been passed by theAssistant Commissioner.

Goods released after submitting a bankguarantee.

Pending Liability

Rs.72.12 lacs

Rs.54.05 lacs

Rs.41.58 Lakhs

Rs.14.86 Lakhs

Rs.50 Lakhs

Rs.12.00 Lakhs

b) Custom Cases

Adjudicating Authority

Commissioner of Appeals,Bombay

Commissioner of Appeals,Bombay


The company has filed three appeals on theissue whether the refund granted in company’sfavour should be given to it or credited to theConsumer Welfare Fund.

The company has filed a refund claim for con-signment imported in the year 1980.

Status

The appeals are pending for furtherorders.

The case is pending for further or-der.

Amount

Rs.1.56 Lakhs

Rs. 2.49 Lakhs

70

c) Civil/Others Cases

Authority

New Delhi MunicipalCorporation

Civil Judge, Delhi

Delhi High Court

Board Level ReviewCommittee

Supreme Court

Punjab & Haryana HighCourt


Reassessment of property tax on Company’simmovable property.

Suit filed by the company for recovery of amountdue against supplies.

Claim filed by the Company against the Railwaysfor charging excess freight.

Appeal has been filed by the Company againstan order by which penalty was imposed for havingexcess installed load.

SLP has been filed by Punjab State ElectricityBoard against the order of High Court by whichthe company’s appeal against the tariff increasedfor the year 2002-2003 was accepted.

The company has filed an appeal against thedecision of the Regulatory Commission toincrease the tariff for the year 2003-2004.

Status

The matter is pending for further order..The case was remanded back to theAssessment Officer, by the District Judge.

Suits stayed because the opposite partyhas become sick and made a referenceto the BIFR.

Appeal admitted on 24.1.2004. Will comeup for hearing in due course.

The appeal is pending for further order.

The hearing before the RegulatoryCommission has been stayed.

The opposite party has objected to themaintainability of the appeal in the HighCourt.

Amount

Rs.18 Lakhs

Rs.4.79 lacs + Interest

Rs.16.0 lacs + Interest

Rs.51.32 Lakhs

Rs.409.6 Lakhs(Already paid)

Rs.355 Lakhs(Already paid)

d) Criminal Cases

Authority

Chief Judicial Magistrate,Faridabad/Rajpura


11 criminal complaints u/s 138 of the Negotiable Instruments Act have beenfiled by the Company for dishonouring of the cheques issued by the partiesin payment of their dues towards the cost of material.

Status

Pending

Amount

Rs.120 lakhs

e) Sales Tax Cases

Court

Additional Commissioner (Amnesty)Commercial Tax, Kolkata

Appellate Tribunal, Mumbai

Dy. Commissioner, (Appeals) Kolkata

Commissioner of Sales Tax, Delhi.Dy. Commissioner, DelhiAddl. Commissioner, Delhi


Applications filed to reinstate the earlier request filedby the Company for settlement under AmnestyScheme.

The company has filed an appeal against levy ofinterest on account of delay in deposit of local salestax.

The company has filed an appeal against theassessment order.

The company has filed eight appeals against thedemands of sales tax raised by the Assessing Officerfor various assessment years on account of non-submission of Forms

Status

The applications are pendingfor further orders.

The appeal is pending forfurther order and conditionalstay granted.

The appeal is pending forfurther order.

The appeals are pending forfurther order.

Pending Liability

Rs.21.98 lacs

Rs.32.02 lacs

Rs.1.46 Lakhs

Rs.594.80 lacs

The Company has filed appeals against the order of the Assessment Officer levying full sales tax on sale of air conditioners and water coolers toGovt. Deptt. Against Form “D” for the Assessment years 1995-96 & 1996-97 The pending liability amounts to Rs.17.21 Lakhs & an amount ofRs.5.96 Lakhs has been paid under the appeals.

High Court of Gujarat, Ahemdabad

Sales Tax Tribunal, Ahemdabad

Tamil Nadu Taxation SpecialTribunal, Chennai/Bhubaneshwar

Deputy Commissioner (A)Commercial Taxes, Jaipur

Sales Tax levied on repair charges of Compressors forthe assessment years 1995-96, 1996-97 upto Aug 96

Higher rate of Tax levied by Assessing Officer for as-sessment year 1995-96

Four appeals filed by the company in relation to taxlevied on repair charges.

4 appeals filed by the company for the assessmentyears1990-91 to 1993-94 & 1994-95.

The case is pending forfurther order.

The case is pending forfurther order.


The Assessing Officer raiseda demand on replacement ofdefective compressor fromfloating stock of the company.However the Rajasthan TaxBoard in their order dated02.05.02 has given decisionthat such transaction cannotbe treated as sale.

Rs. 83.00 Lakhs

Rs.1.60 Lakhs

Rs.525.96Lakhs

Rs.11.83 lacs

71

Deputy Commissioner (Appeal),Commercial Taxes, Jaipur

Addl. Commissioner (A) Sales Tax,New Delhi

Assessing Authority, New Delhi

Assessing Authority, Sales Tax,New Delhi

Assessing Authority, Sales Tax,New Delhi

The company has filed an appeal. Demand raised bythe Assessing Officer on account of variation in stockand treated as sales turnover.

The company has filed an appeal against an orderwherein a demand has mainly been raised on accountof tax on fixed assets transferred as per the Schemeof Arrangement approved by Hon’ble High Court forthe assessment year 1989-90.

Demand had been raised due to non-submission offorms but the matter has now been remanded. Thecompany has forms covering demand of Rs.7.42 lakhsfor the assessment year 1991-92

The case has been remanded. The demand has beenraised for non-submission of forms for the year 1996-97

The Assessing Officer has passed an order againstthe company. Non-submission of forms for the A.Y.2002-03.



The demand has beenstayed.

The demand has beenstayed.

The company received theorder on 26.4.2004 and isgoing to file an appeal.

Rs.1.13 lakhs

Rs. 1115 Lakhs

Rs.6.40 lakhs +Rs.6.30 lakhs(interest)


Rs.4.09 lakhs.

Court Particulars of the Matter Status Pending Liability

Note-The company has assessment pending for Chandigarh for the assessment years 1997-98, 1998-99, 1999-2000 and 2000-2001, for Jallandhar for theassessment years 1997-98, 1998-99, 1999-2000 and 2000-2001, for Pondicherry for the assessment years 1999-2000 and 2000-2001 and forSilvassa for the assessment years 1999-2000 and 2000-2001.

f) Trade Tax Cases

Authority

Trade Tax Tribunal, Meerut

Assessing Authority, TradeTax, Meerut


SRI has filed two appeals under the U.P.Trade Tax Act.

The Assessing Authority has passed anorder against the company.

Status

The appeals are pending for furtherorder.

The order was received on23.4.2004 and the company is goingto file an appeal.

Amt. (in Rs.)

Rs.34.00 Lakhsapprox.


g) Income Tax Cases

Authority

Income Tax AppellateTribunal


Commissioner ofIncome Tax (A)


The company as well as the Income TaxDepartment have filed appeals against the order ofCommissioner of Income Tax (A) dated 14.6.1999confirming part of the disallowance of Rs.18,34,072/- made by the Assessment Officer on account offorfeiture of security deposit and repair expensesand double addition of Income.

The company has filed an appeal against the orderof Commissioner of Income Tax (A) dated 30.3.2004allowing the addition of Rs.198 lakhs on accountof commission paid to Usha International Limitedfor the A.Y. 2000-01.

The company has filed an appeal against the orderof the Assessment Officer for the demand raisedunder Section 234B & 234D of the Income Tax Actfor the A.Y. 2001-02

Status


Appeal is pending for furtherorder.

Appeal is pending for furtherorder. The company has alsofiled an application before theAssessment Officer to stay thedemand till disposal of theappeal. Another application hasalso been filed for effecting theorder of the Commissioner ofIncome Tax (A) allowingadditional loss in his order forassessment year 2000-01.

Amount (in Rs.)

The amount has already been setoff against the company’s lossesand so the result of the appeal willhave no direct financialconsequences. However, thecompany may incur liabilitybecause of penalty proceedingsinitiated under Section 271(1)(c) ofthe Income Tax Act.

The amount has already been setoff against the company’s lossesand so the result of the appeal willhave no direct financialconsequences. However, thecompany may incur liabilitybecause of penalty proceedingsinitiated under Section 271(1)(c) ofthe Income Tax Act

Rs.41.84 lakhs(The company may incur higherliability because of penaltyproceedings initiated under Section271(1)(c) of the Income Tax Act).

72

g) Income Tax Cases

Authority

Andhra Pradesh HighCourt

Commissioner ofIncome Tax (A),Hyderabad

Income Tax AppellateTribunal (ITAT)

Commissioner ofIncome Tax (Appeals)

Income Tax Tribunal(ITAT)


The company has filed a petition against thedemand on account of disallowance of interest onroyalty for the A.Y. 1994-95.

The company has filed two appeals against thedemand of tax raised on account of non-deductionof TDS on interest for the assessment years 1996-97 & 1997-98.

The company has filed appeals for various yearsagainst disallowances which inter-alia include noncompete fee considered as business incomeexpenses on entertainment, foreign travel, technicalknow-how fee, Interest on disputed cane price, newproject expenses Compensation claim(OleumGas), interest on investment/advances toSubsidiaries Premium on redemption ofdebentures, provision for warranty expenses, profiton cancellation of Debentures etc.

The company has filed appeals againstdisallowances which is mainly due to interest oninvestments/Advances to subsidiaries,Depreciation, Provision for leave encashment,Capital Loss on sale of shares/ Trade Mark, Losson surrender of Land to DDA.

Income Tax Department has filed appeals againstrelief allowed by CIT (Appeals) relating to Expensesof Foreign Travel, Issue of NCD, VRS, MolassesStorage fund, interest on excess levy price of Sugar,Provision for leave encashment.

Status






Amount (in Rs.)

The pending liability amounts toRs.3.00 Lakhs.

The pending liability amounts toRs.8.01 Lakhs.

The disputed amount is Rs.11973.73 Lakhs.

The disputed amount is Rs.15838.39 Lakhs.

The disputed amount is Rs. 585.20Lakhs.

2. Siel Financial Services Ltd.(A) Appeals Against Siel Financial Services Ltda) Income Tax Cases

Authority

Income Tax AppellateTribunal, Indore

Income Tax AppellateTribunal, Indore


The Assessing Officer has filed an appeal (No. 316/Indore/2001)against the order of Commissioner of Income Tax (Appeal), Bhopalwhereby a direction was given to the Assessing Officer to computeinterest under Section 234B of the Income Tax Act for A.Y. 1996-97.

The Assessing Officer has filed an appeal (934/Indore) for A.Y. 1998-99 against the order of Commissioner of Income Tax (Appeal), Bhopaldeleting the addition of Rs.548.51 lakhs made under Section 68 ofthe Income Tax Act on account of public deposits held by theCompany.

Status

The Appeal is Pending for further Order. TheAssessing Officer has not granted any relief tothe company and the company has taken up thisissue also before the Appellate Tribunal in its ownappeal for this assessment year. Thus, there willbe no further liability even if this appeal is decidedagainst the company.

The appeal is pending for further order.If the appeal is decided against the company,Rs. 64.87 Lakhs of demand will be payable.

b) Excise Cases

Authority

CESTAT, Delhi


The Excise Department has filed an appeal against thecompany against the order of Commissioner (Appeals),Bhopal. To be listed.

Status


Amount (in Rs.)

Rs.10.34 Lakhs

73

c) Civil/ Criminal Cases

Authority

Delhi High Court

Addl. Distt. Judge,Gondia

Third Addl. DistrictJudge, Indore


Prakash Industries Limited, which failed to make paymentsof lease rentals, has filed an appeal for stay of arbitrationproceedings under Section 22(1) of Sick Industrial Compa-nies (Special Provisions) Act.

An appeal has been filed against an order by which the suitfiled by Rukmani Solvent Pvt. Ltd. has been dismissed.

The company has filed objections under Section 34 of Arbi-tration and Conciliation Act, 1996 against the award madeexparte against the company in the matter wherein com-pany contended that there was no contract between it andM/s. R. Veljee & Sons. according to which it had to pay bro-kerage to the opposite party viz. M/s. R. Veljee & Sons.

Status

An interim order has been grantedstaying the arbitration proceedingsand the case has been adjournedsine die as a similar matter isbefore the Supreme Court.



Amount (in Rs.)

The opposite party hasclaimed Rs.387.00lakhs and thecompany has filed acounter claim ofRs.89.25 lakhs.

Rs. 0.92 Lakhs

Rs. 1.00 Lakh

(B) Appeals By Siel Financial Services Ltd

a) Income Tax Cases

Authority

Income TaxAppellate Tribunal,Indore

Income TaxAppellate Tribunal,Indore and Delhi

Commissioner ofIncome Tax(Appeals) Bhopal.

Commissioner ofIncome Tax(Appeals) Bhopal.


The company has filed two appeals againstorders disallowing printing and stationeryexpenses of Rs. 11.62 lakhs and disallowanceof freight payable of Rs.33.15 lakhs. Theserelates to A.Y. 1993-94 & 1998-99

The company has filed two appeals againstorders disallowing depreciation on sale andlease back transaction for the A.Y. 1994-95and 1996-97.

The company has filed an appeal against As-sessing Officer’s order under Interest Tax, Act(for A.Y. 1996-97) for addition on account ofinterest on transactions not considered as saleand lease back transaction.

The company has filed three appeals againstAssessing Officer’s orders disallowing loss anddepreciation amounting to Rs. 631.44 lakhs forthe assessment year 1996-97 depreciation forthe year 1997-98 and interest paid on TermLoan to ICICI, preliminary expenses, deprecia-tion and Sundry creditors amounting toRs.31.38 lakhs for the A.Y. 2000-01.

Status


The appeals are pending for furtherorder. In the Delhi case, thecompany has filed an application fortransfer of the case to ITAT, Indoreand in the Indore case the companyhas also filed a rectificationapplication before the CIT(A),Bhopal.



Pending Liability

The company has no direct liabilities, asthe Company’s losses were higher.However, the company may incur liabilitybecause of penalty proceedings initiatedunder Section 271(1)(c) of the IncomeTax Act.

Out of total pending liability of Rs. 155.56lakhs, Rs. 99.67 lakhs have alreadybeen paid & Rs. 55.89 lakhs is stillpending (which has been stayed till31.7.2004).However, the company may incur liabilitybecause of penalty proceedings initiatedunder Section 271(1)(c) of the IncomeTax Act

Rs.5.41 lakhs However, the companymay incur liability because of penaltyproceedings initiated under Section 13of the Interest Tax Act

The company has no direct liabilities asthe Company’s income was found to beNil (1996-97) or higher than Rs.31.38lakhs (2000-2001).However, the company may incur liabilitybecause of penalty proceedings initiatedunder Section 271(1)(c) of the IncomeTax Act. The Company has already paida sum of Rs. 2.55 lakhs (A.Y. 1997-98).

b) Arrears on Cumulative Preference SharesAs on 31st March 2004, there are arrears of dividend amounting to Rs. 226.70 Lakhs on 7% Cumulative Preference Shares held by its holdingCompany viz. Siel Limited.

3. SFSL Investments Ltd.Under Companies Act, 1956

Authority

Company Law Board

Date of Penalty imposed

19/12/2003

Amount

Rs. 5,000/-

Status

Contravention of Section 383-A of the Companies Act,1956 since the Company was not having any WholeTime Company Secretary.

74

4. Siel Industrial Estate Ltd.a) Land Acquisition CasesThe Company is facing litigation in regard to enhancement of compensation of the land acquired. The cases are pending in the court of AdditionalDistrict Judge, Patiala. The case is now fixed for evidence of the Company.

b) Income TaxThe company has filed an appeal before Income Tax Tribunal in respect of penalty levied u/sec. 271(1)(c) of the Income Tax Act, on interest on fundsinvested with other companies and reduced from Pre-operative expenditure pending commencement of commercial production but treated as incomeby the Assessing Officer for the assessment years 1998-99 to 2000-01. The disputed amount is Rs. 40.52 Lakhs.

5. Transiel India Ltd.

Authority

Income Tax Appellate Tribunal,Delhi

Commissioner of Income Tax(Appeals)

Sales Tax Appellate Tribunal,Patna

Justice Mr. Satpal (Retired),Sole arbitrator

High Court of Delhi

Additional District Judge, NewDelhi


The company and the Income Tax Departmenthave filed appeals against the order of theCommissioner of Income Tax upholding theaddition made by Assessing Officer on A/c ofC&F provision. & short recovery of debts.

The company has filed an appeal before CIT(A)against the order of the Assessing Officer makingthe addition of Bad Debts written off and initiatingpenalty proceeding under section 271(1)(c).

The company has filed an appeal against ademand raised on account of non submission ofForm IX-C for Tax paid purchases in Bihar.

Arbitration claim filed by the company againstthe opposite party for breach of contract.

Suit filed by the company for the recovery of saleprice, which the opposite party defaulted to paytowards the material, supplied to them.

Criminal complaint filed by the company underSection 138 of the Negotiable Instruments Actin respect of bouncing of cheque.

Status



The appeal is pending forfurther order. However thecompany has now submittedthe forms.

The opposite party has beenwound up and the assetshave been taken over by theOfficial Liquidator.

The suit is pending forfurther order.

Statement of Complainant tobe recorded.

Amount (in Rs.)

The company may incurliability because of penaltyproceedings initiated underSection 271(1)(c) of theIncome Tax Act.

The company may incurliability because of penaltyproceedings initiated underSection 271(1)(c) of theIncome Tax Act.

Rs.23.60 lacs

Rs. 52.64 Lakhs + interest

Rs.39.22 Lakhs + interest

Rs.25.89 Lakhs

Arrears on Preference SharesAs on 31st March 2004, there are arrears of dividend amounting to Rs. 11.30 Lakhs on 15% Cumulative Preference Shares.

6. Busneda Commercial Pvt. Ltd.Income Tax Cases

Authority

Commissioner of IncomeTax (Appeal), Jammu


The company has filed an appeal against theAssessing Officer’s order disallowing the lossincurred by the company (A.Y. 1995-96) because thecompany had treated the loss incurred on purchase& sale of Non Convertible Debentures as deferredrevenue expenditure. The loss of the company wasreduced from Rs. 591.82 lacs to Rs. 317.56 lakhs.

Status

The appeal ispending forfurther order.

Pending Liability (in Rs.)

The company has no Income Tax liabilityas the assessed income remains a loss.However, the company may incur liabilitybecause of penalty proceedings initiatedunder Section 271(1)(c) of the IncomeTax Act

7. Sandvik Investments & Leasing Pvt. Ltd.Income Tax Cases

Authority

Commissioner of IncomeTax (Appeals), Delhi


The company has filed an appeal against the As-sessing Officer’s order for the assessment year1996-97 disallowing the carry over of loss of Rs.55.12 lakhs incurred by the company.

Status



The income was found to be Nil.However, the company may incur liabilitybecause of penalty proceedings initiatedunder Section 271(1)(c) of the IncomeTax Act

75

8. Greenfields Commercial Pvt. Ltd.Income Tax Cases

Authority

High Court of Jammu &Kashmir


The Income Tax Department has filed an appeal againstthe order of the Income Tax Appellate Tribunal (ITAT)dismissing the order of the commissioner of Income taxpassed u/s.263 of the Income tax Act for A.Y.1995-96because the company had treated the loss incurred onpurchase and sale of non convertible debentures asdeferred revenue expenditure.

Status



The company has no income tax liabilityas its assessed income remains a loss.

9. Minos Trading (I) Pvt. Ltd.Income Tax Cases

Authority

Delhi High Court.

Income Tax AppellateTribunal, Delhi.


The Income Tax Department has filed an appeal againstthe order of the Income Tax Appellate Tribunal reversingthe order of the Commissioner of Income Tax (Appeal)who disallowed depreciation on the compressors leasedout to M/s. Shriram Refrigeration Industries Ltd. for A.Y.1990-91.

The company has filed two appeals against the order ofCommissioner of Income Tax (Appeal) confirming theorder of the Assessing Officer disallowing interest ex-penses for A.Y. 1998-99 and 2001-02.

Status


The appealsare pendingfor furtherorder.


Rs. 70.05 Lakhs

The company has no direct liabilities asthe Company was still in a loss. However,the company may incur liability becauseof penalty proceedings initiated underSection 271(1)(c) of the Income Tax Act

Authority

Assessing Officer, Delhi

Commissioner of IncomeTax (Appeal), Delhi


The Commissioner of Income Tax (Appeal) has re-manded the matter back to the Assessing Officer to passa speaking order as to whether income from interest onloan given by the company constitutes income from fi-nancial business as money lender (A.Y. 1996-97)

The company has filed an appeal against the Assess-ing Officer’s order raising a demand against the com-pany. (A.Y. 2001-02)

Status

The matter is pending forfurther Order.The demand of Rs. 0.62 lakhshas been fully paid.



Nil

Rs.3.14 Lakhs

10. SFSL Securities Pvt. Ltd.Income Tax Cases

11. Perennial Investments Limited

Authority

SEBI


13/2/2001

Amount

Rs. 50,000/-

Status

SEBI under SEBI(Substantial Acquisition of Shares & Takeover) Regulations, 1997imposed the penalty in relation to a preferential allotment of another company fornon-adequate disclosure. Penalty already paid and the case is closed.

12. Doab Foods & General Industries Ltd.

Authority

SEBI


13/2/2001

Amount

Rs. 50,000/-

Status

SEBI under SEBI (Substantial Acquisition of Shares & Takeover) Regulations, 1997imposed the penalty in relation to a preferential allotment of another company fornon-adequate disclosure. Penalty already paid and the case is closed.

13. M. S. R Enterprises Ltd.

Authority

SEBI


13/2/2001

Amount

Rs. 50,000/-

Status

SEBI under SEBI (Substantial Acquisition of Shares & Takeover) Regulations, 1997imposed the penalty in relation to a preferential allotment of another company fornon-adequate disclosure. Penalty already paid and the case is closed.

14. Manak Promoters (P) Ltd.Income Tax Case

Authority

AssistantCommissioner ofIncome Tax


Assessing Officer has initiated penalty proceedings under Section 271 (1) (c) of theIncome Tax Act for the Assessment Year 2001-02 on addition made to the income declaredby the Company

Status

Penalty proceedings are pending.

76

15. Jay Engineering Works Ltd.(A) Cases against Jay Engineering Works Ltd.a) Civil/Other Cases

Authority

III Additional City Civil Judge,Secundrabad & II AdditionalDistrict Judge, R R District.

Andhra Pradesh FacilitationCouncil, Hyderabad

II Senior Civil Judge RR DistrictCourt Hyderabad.

II Senior Civil Judge RR Districtcourt,Hyderabad,

I ADJ, Alipore,High Court Kolkatta,

5th Asst. Distt. Judge, Alipore.

Ist Munsif Alipore / 13th CivilCourt.

Andhra Pradesh High Court.

Principal, Sub JudgeR.R.District Court, Hyderabad

First Munsif Alipore

Ninth Bench City Civil Court

High Court, Kolkata


3 Cases filed against the company forrecovery as the interest on delayedpayments and supplies were not paid for.

5 Arbitration claims filed against the companyfor recovery under the Interest of DelayedPayments for the supplies made to thecompany to Small Scale and AncillaryIndustrial Undertakings Act,1993.

4 suits filed against the company for recoveryas the payment has not been made for theservices provided or goods delivered.

2 appeals filed against orders whereineviction proceedings against the companywere dismissed.

8 Eviction suits filed against the company.

2 Cases for Agreement entered for sale ofland by the party did not fulfill the condition.

2 Cases seeking injunction filed against thecompany.

Appeal filed by an ex-officer for damages forIllegal termination.

Execution petition filed by the opposite partyfor damages for losses..

Suit for declaration filed against the company.In this case dealership was cancelled but theopposite party has prayed for reinstatement.

Suit for injunction filed against the companyfor restraining the company from assigning,transferring and or par ting with thepossession of the showroom in the groundfloor by way of sub-letting and making anyaddition alteration and structural change.

One of the party supply components haveprayed for appointment of arbitrator foradjudication of disputes.

Status

Proceedings have been stayedunder Section 22 of the SickIndustrial Companies (SpecialProvisions) Act.

The claims are pending for furtherorder.

The company has filed applicationsfor stay of proceedings underSection 22 of the Sick IndustrialCompanies (Special Provisions) Act


The Company has been orderedto maintain status quo.

Company has filed appeal for stayU/S 22.

Interim injunction has been grantedagainst the company.


Petition under section 22 of SICAfiled by the company

The suit is pending for further order.

The suit is pending for further order.

Arbitrator has heard both the partiesand the order is pending.

Amount

Rs. 29.61 Lakhs

Rs. 167 Lakhs

Rs.58.94 Lakhs

—-

Rs. 96.80 lakhs

——-

Rs.0.95 Lakhs

Rs.14,700 + 12%interest from 01.10.1985and 6% from 28.08.1995

———

——-

Rs. 31.11 Lakhs

b) Labour Cases

Authority

Industrial Tribunal, Agra, LabourCourt Agra, Additional LabourCourt Hyderabad

Andhra Pradesh High Court.

Industrial Tribunal

Second Industrial Tribunal

High Court Internal Tribunal,Kolkata.


7 Cases filed against the company by theworkmen for reinstatement and otherbenefits.

3 Writ petitions filed against the companyby workmen wherein workmen haveappealed against the lower court decisionto not reinstate them or grant back wages.

Case has been filed by an ex-employee ofthe company for reinstatement and servicerelated benefits.

Case for compensation in respect of illegallay-off.

10 Cases filed against the company by theworkmen.

Status

Pending further hearing

Pending hearing

The case was dismissed ex-parte and the application forsetting aside the dismissal orderis pending.

——

Hearing under progress

Amount (in Rs.)

Not Ascertainable

Not Ascertainable

Rs.0.27 Lakhs

——

Not ascertainable.

77

c) Sales Tax Cases

Authority

Deputy Commissioner, Agra /Appellate Tribunal, Agra

Appellate Tribunal, Agra


2 cases remanded for Joint Commr.

Appeal filed by the Department on stocktransfers being treated as sales.

Status

——-

The appeal has been accepted by theTribunal and company is in process ofchallenging the order of Tribunal.

Amount (in Rs.)

Rs. 22.28 Lakhs

Rs.1.42 Lakhs

d) Excise Cases

Authority

Dy. Commissioner CentralExcise, Agra

Supreme Court Appeal


Show cause notice issued to the company allegingirregular availment of proforma credit

The department has filed an appeal on the issuerelating to manufacturing expenses

Status

Order is reserved.


Amount (in Rs.)

Rs.0.49 Lakhs

Rs.711.00 Lakhs

e) Income Tax Cases

Authority


High Court, Delhi

Particular of the matter

Appeal filed against the company forallowance of Rs.219.14 lakhs.

Appeals filed against the company forallowance of Rs.362.26 Lakhs

Status



Amount (in Rs)

No demand has been raised against the companydue to huge brought forward losses andunabsorbed depreciation. However, further liabilitymay arise because of penalty proceedings undersection 271 (1)(c) which have been initiatedagainst the company.

——-

(B) Cases by Jay Engineering Works Ltd.a) Civil/Other Cases

Authority

Junior Civil Judge, R.R.DistrictCourt, Hyderabad

Pr. Distt.Judge,Ranga ReddyDistt. CourtAt Hyderabad

High Court, Kolkata

Metro Rail Tribunal, Kolkata

ADGFT, New Delhi.


Execution petition filed by the company to execute injunctionorder against the opposite party.

Five separate arbitration claims for recovery of money. Thecase was filed under the Interest of Delayed Payments toSmall Scale & Ancillary Industrial Undertakings Act, 1993and was awarded against the company. The company hasfiled Petitions (O.P.) U/sec 34 of Arbitration and Concilia-tion Act, 1996 before IRR. Distt. Court for setting aside theAwards of IFC in above 5 cases.

Writ Petition filed by the Company against summons issuedby Calcutta Municipal Corporation for alleged violation onissue of health license.

Metro Rail has acquired 2 acres of land at Kolkata.

Stay petition filed for imposition of penalty for duty onimports.

Status

The petition is pending forfurther order. The Company ispaying at the old rate.

Pending hearing

Pending

Competent authority haspassed an award for Rs. 167lakhs, for which company haspreferred an appeal for awardbeing on lower side.

Pending.

Amonut

Rs. 25.11 Lakhs

Rs. 4.61 Lakhs

NotAscertainable

Rs. 167 Lakhs

Rs. 4.66 Lakhs

78

b) Labour Cases

Authority

Andhra Pradesh High Court

Andhra Pradesh High Court


EPF Appellate Tribunal, NewDelhi

High Court, Kolkata


Writ petition filed by the company.

Writ petition filed by company.

The company has filed an appeal against theorder of the Single Judge setting aside theclosure permission granted by the StateGovernment.

Appeal filed by the company against the orderdated 31.5.2002 determining the providentfund dues of an employee of the company.

A writ petition was filed by the companyagainst Employee State Insurance Authority.

Status

Interim stay has been granted subjectto payment of Rs.1,397/- per month.

Stay against the retrospectiveoperation.



Stay order was obtained restraining ESIfrom proceeding for inclusion of itinerantlabour under purview of ESI Act

Amount (in Rs.)




Rs.0.27 Lakhs

Not Ascertainable

c) Sales Tax Cases

Authority

Appellate Tribunal/Joint Commissioner,(Appeals), Agra

Sales Tax Appellate Tribunal (STAT)/Commercial Tax Officer/ AppellateDeputy Commissioner, R. R. Distt.,Hyderabad

Dy. Commissioner Sales Tax, Appeals- VII/XI/XII, Mumbai.

Asst. Commissioner AssessmentSpecial Circle III, Ernakulam.

Sales Tax Appellate Tribunal,Ernakulam.



Dy. Commissioner Appeals II, Jaipur.

ACTO Ward II, Jaipur.

Jt. Commissioner of Commercial Taxes,Appeals, Patna.

The Dy. Commissioner of TaxesAppeals, Guwahati.

Asst. Commissioner, Sales Tax, Delhi.

Dy. Commissioner of Sales Tax, BikriKar Bhavan, New Delhi.


3 appeals filed by the company for nonsubmission of Form 3 D and other Formsin time.

Non-submission of C/D Forms

Penalty / interest charged due to delay inpayments/ Disallowance of claims due tonon-submission of details/ non-submissionof F forms.

Sales Returns, repaired motors, differencein Sales Tax for sale of sewing machinescrap, disallowance of concessional rate -KGST - 1993 – 94.

The single C form exceeds the monetarybenefit.CST - 1993-94.

Company filed Rectification petition filedbefore the Assessing Authority.KGST -1994-95.

Stock Transfer to Bombay Warehousewithout CST Certificate.CST - 1994 - 95.

Non-submission of C Forms/ Consignmentdespatched without road permit.

Consignment despatched without filing ofdetails on the Road Permit.

Non-submission of Customs Certificate/declarations/other documents.

Demand for additional tax @10% onturnover and interest charged/ non-availability of signatures and stamps on theC forms.

A demand was raised for Interest for theyear 1986 - 87.

The demand represents credit not given fortax deposited, credit for sales return notconsidered, levied of tax on sale of scrapand interest thereon/ Tax on turnover notcovered with C & F Forms.

Status

Pending but for theassessment year 1995-96 theTribunal has confirmed theorder of D.C. Appeal but thecompany will file an appeal.

Pending for further hearing/Order.

Pending for hearing.

The matter is pending forhearing.

Appeal is pending for hearing.


Remanded back to AssessingAuthority for verification.


Order is in our favour. Appliedfor refund.



Appeal filed, the matter ispending for hearing.

Appeal filed, the matter ispending for hearing.

Amount (in Rs.)

Rs.2.14 Lakhs

Rs.5.98 Lakhs

Rs.14.29 Lakhs

Rs. 2.86 Lakhs

Rs. 0.38 Lakhs

Rs. 1.88 Lakhs

Rs. 1.67 Lakhs

Rs.1.30 Lakhs

Rs.2.37 Lakhs

Rs.22.64 Lakhs

Rs.10.15 Lakhs

Rs. 0.25 Lakhs

Rs.15.51 Lakhs

79

c) Sales Tax Cases

Authority

The Commissioner of CommercialTaxes, Cuttack.

The Dy. Commissioner of CommercialTaxes, Bhopal.

The Superintendent of Taxes, Dimapur.

Supreme Court

Andhra Pradesh high court

Appellate, STAT, Asst. / Dy. Commr.Commercial Taxes, Kolkata


The demand was raised for defects in waybill 1994 - 95.

The demand represents on stock transferstaken into local sales tax/ Non-submissionof F forms/ Non-acceptance of credit noteson replacements.

The demand wrongly raised/ raised withoutdetails.

Special leave filed against the order of theAndhra Pradesh High Court Charging ofsales tax for branch transfers made duringthe year 1981-82

Revision petition filed by the company onrejection of C Forms

Appeal filed for 10 cases by the Company.

Status



Pending for hearing/ revisedOrder .



Hearing date to be finalized.

Amount (in Rs.)

Rs. 0.27 Lakhks

Rs.6.21 Lakhs

Rs.3.39 Lakhs

Rs. 79 Lakhs

CST AY 1991-92, Rs.5.09Lakhs.CST 1992-93 Rs.3.04Lakhs

Rs. 56.73 lakhs.

d) Excise Cases

Authority

Commissioner (Appeals) CentralExcise Kanpur

Commissioner (Appeals) CentralExcise Kanpur

The Commissioner of CentralExcise.

The Commissioner of CentralExcise.

CEGAT, Kolkata

CEGAT/Commr. / Dy. Commr.,Kolkata


Two appeals filed by the company onMODAVT taken on invoice copy.

Appeal file by the company.

For availing MODVAT credit depreciationon capital goods.

Penalty for shortages of Stators & Rotorsat the time of physical verification.

Appeal filed against Duty imposed on PigIron captively used for Sewing Machine.

9 Cases Modvat Credit disallowed.

Status

Order reserved.

Order is reserved.



Appeal under Progress

Appeal under Progress

Amount

Rs.1.25 Lakhs

Rs.0.05 Lakhs

Rs. 1.00 Lakhs

Rs. 0.10 Lakhs

Rs. 81.84 Lakhs

Rs. 12.20 Lakhs

e) Income Tax Cases

Authority

Income Tax Appellate Tribunal andCommissioner of Income Tax(Appeals)

High Court, Delhi


The company has filed an appealagainst non-allowance of Rs.213.34Lakhs and Rs.604.43 Lakhs.

Appeals filed against the orders of theIncome Tax Appellate Tribunal disallow-ing Rs.811.71 Lakhs

Status

Tha appeal is pending forfurther order.

The appeals are pendingfor further order.

Amount (in Rs)

No demand has been raisedagainst the company due to hugebrought forward losses andunabsorbed depreciation.However, further liability mayarise because of penaltyproceedings under section 271(1)(c) which have been initiatedagainst the company.

Not Ascertainable

f) Municipal Tax cases

Authority

Municipal Authority, KukatpallyMunicipality.

CMC, Tribunal Kolkata.


Arbitrarily enhanced the property withoutfurnishing the basis (HEI/SFI).

Two cases, Company has filed appeal.

Status

The matter is pending for hearing.

The matter pending for hearing.

Amount

Rs. 26.71 Lakhs

Rs. 465 lakhs

g) Unpaid Dividend on Cumulative Preference SharesAs on 31st March 2004, the company has arrears of preference dividend not paid since 1987-89 amounting to Rs. 488.11 Lakhs.

80

16. Honda Siel Power Products Limited(A) Cases against Honda Siel Power Products Limiteda) Under Consumer protection Act

Authority

Distt./State CommissionDelhi/Kolhapur/Prabhani


Three complaints / appeals have been filed byCustomers against Company.

Status

The complaints/ appeals are pending forfurther order

Amount(in Rs.)

Rs.1.51 lacs

b) Labour Cases

S.No.

1

2

3

4

5

Particulars Of The Matter

Writ petition filed by Abdul Rashid against the de-cision of Board of Revenue, Lucknow regarding –- 0.16 Acres Khasara No. 488/2/2- 1.56 Acres Khasara No. 487/2

The contract labour case filed in Allahabad HighCourt now transferred to Nainital High Court.The case is pending for admission and counter af-fidavit of the Govt.

- Zila Parishad, Udham Singh Nagar has sent thenotice of demand to deposit the license fee Rs.1.13 Lakhs for the period 1.4.96 to 31.3.2000.

- Zila Parishad, Udham Singh Nagar has againsent the letter No. 344 dated 22.9.99 for depos-iting license fees.

- All our surrounding factories are paying the Li-cense Fee.

- The application for releasing the material frompolice custody was filed on 26.9.97. As per de-cision of Mr D K Jain, got the application re-jected by the court on 10.11.97. Now the timeof appeal against the order dated 10.11.97 hasalso expired.

- Material got released on Superdari on 24thJanuary 2001.

Theft case – Carburetor, Drain Cock etc.

- Carburetor, Drain Cock etc. were stolen fromthe factory.

- FIR was lodged by Company.- One accused was caught by police.- Summons were issued by court to two more

accused.- Material got released on Superdari on 24th

January 2001.

Authority

High Court,Lucknow

High Court, Nainital

High Court, Nainital

CJM, Udham SinghNagar.

District Court, UdhamSingh Nagar.

Status

The restoration application filed bythe petitioner (Abdul Rashid) ispending for disposal in the case.

Stay order has been obtained infavour of the Company.

- The case is pending for admis-sion at High Court, Allahabad.

- The commissioner, Nainital hasstayed the proceeding ofrealisation of license fee duringthe pendency of writ petition atAllahabad.

- The case is pending before CJM,Udham Singh Nagar.

- The next date has been fixed for16.08.2004.

- Non-bailable warrant has beenissued against non-appearanceof accused and notice againstsurety has been issued by thecourt.

- The next date has been fixed for23.08.2004

Amount

Not ascertainable

Not ascertainable

About Rs. 4 Lakhs

Not ascertainable

Not ascertainable

(B) Cases by Honda Siel Power Products Limiteda) Under Consumer protection Act

Authority

State CommissionDelhi/Mumbai/Lucknow/Patna


The Company has filed Five appeals against theorder of various Consumer Forums in thecomplaint filed by customers.

Status

The appeals are pendingfor further orders.

Amount (in Rs.)

- Rs.3 lacs- Cost of Generator+ Rs.1000

81

b) Income Tax Cases

S. No.

1

2

3

4

5

6

Court

ITAT

High Court

ITAT

ITAT

ITAT

CIT (Appeals)


Demand raised as additional tax under Section 143(1A) of I T Act.Demand confirmed by CIT (Appeals). The Company has filed sec-ond appeal before ITAT.( A.Y. 1990-91).

Demand raised as additional tax under section 143(1A) of I T Act.Writ petition filed by the Company.( A.Y. 1992-93).

Demand is consequent upon the disposal of ITAT order dated 2.4.2002for A.Y. 1990-91 & 1991-92, effect order for which is awaited. TheCompany has filed appeal. (A.Y. 1995-96).

Demand is after disposal of appeal by CIT (Appeals). The companyhas filed second appeal before ITAT. ( A.Y. 1996-97).

Demand raised in regular assessment under section 143(3) of I.T.Act. The company’s appeal before the CIT (Appeals) was disposedof. The company has filed second appeal to ITAT.(A.Y. 2000-01)

Demand raised in regular assessment under section 143(3) of I.T.Act. The company has filed second appeal before CIT (Appeals)(A.Y.2001-02)

Status

Pending for disposal

Claim allowed in one case



Effect Order pending


Amount (Rs. in lacs)

9.76

12.58

3.79

50.58

3.11

16.29

c) Excise Cases

Authority

A s s i s t a n tC o m m i s s i o n e r ,Central ExciseRampur.

Commissioner OfCentral Excise,Meerut-II

Particulars Of The Matter

1) Modvat Credit taken on barrel received fromjob worker after sixty days.

2) Modvat Credit taken on inputs received fromjob worker after sixty days.

3) Modvat Credit taken on inputs received fromjob worker after sixty days.

4) Seizure of 22 nos gensets

5) Duty is paid on sale value of pump set clearedalong with Mahindra Pump from factory & dutyis paid @4% alongwith reversal of Cenvat amt.paid at the time of Clearance Department hasdisputed the procedure and contended that dutyhas to be paid on the value of I.C.Engine @16%because no manufacturing activity is takingplace on I.E.C Engine cleared along with boughtout Pump. (Period April 2002 to Feb. 2003 )

6) Seizure of 100 gensets cleared for export

Status

- Appeal pending before CEGAT NewDelhi.

- CEGAT instructed for partial paymentof penalty of Rs.15000/-

- Commissioner (Appeals) grantedinterim order in stay

- Payment of par tial penalty ofRs.35000/-

- Commissioner (Appeals) grantedinterim order in stay

- Payment of par tial penalty ofRs.26000/-

Appeal filed before Commissioner(Appeals), Ghaziabad.

- Order received from the office ofCommissioner, Central Excise,Meerut-II.

Order confirmed by Cestat, New Delhi

Amount (Rs. in Lakhs)

Duty 0.38

Penalty 0.38

Duty 0.66Penalty 0.66

Duty 0.5Penalty 0.5

Duty 0.25Redemption Fine 0.5

3.61

0.35

82

d) Detail of Sales Tax Cases

Authority

Asstt. Commissioner-V,Delhi

High Cour t of Kerala,Ernakulam

Trade Tax Tribunal,Ghaziabad

Asstt. Commissioner,Commercial Taxes, SouthCircle, Kolkatta

Joint Commissioner,Commercial Taxes(Appeal),Central Div., Patna




During the Assessment for 1995-96, deptt has raiseddemand on sale of Furnishing Items . Deptt. has also treatedGenset as Electrical Item upto 24/05/95 & raised demandfor differential tax @ 5 %.

Demand raised due to dispute in Sales Tax Rate applicableon Gensets. ( 8 % or 12 % ). Stay granted by High Court forThree months on 15/3/2003

Material held at Kulesra Check Post by Sales Tax Authoritiesdue to amendments done in Stock Transfer Papers. DemandRaised.

Demand raised due to enhancement of Turnover onestimated basis & Imposing Purchase Tax on materialreceived through Branch Transfer during Sales TaxAssessment year 2000-01.

Demand raised due to enhancement of Turnover onestimated basis & disallowance of Stock Transfer during theAssessment year 2000-01.

Demand raised due to enhancement of Turnover onestimated basis & disallowance of other claims during theAssessment year 1999-2000.

Demand raised due to enhancement of Turnover onestimated basis & disallowance of other claims during theAssessment year 2001-02.

Status

The case is pending fordecision.

The case has beenadjourned till fur therorders.

Fixed for hearing in3.09.2004

The matter is pending withthe depar tment fordecision.




Amount (Rs. in Lakh)

0.72

21.19

2.81

21.12

5.23

7.52

1.74

17. Honda Siel Cars India LimitedAgainst Honda Siel Cars India Limited

a) Labour Cases3 cases are pending for further order with Labour Court II, Ghaziabad relating to illegal termination. In all these cases, the amount involved is notascertainable.

b) Under Consumer protection Act

Authority

Consumer ForumAhmedabad

Dist. Consumer forum, Dadar

Distt. Consumer Forum,Hyderabad

State Consumer CommissionRajasthan, Jaipur

State ConsumerCommission, Delhi


Consumer case filed against the companyrelating to defect in the car purchased bythe opposite party. .

Consumer case filed against the company.

Consumer case filed against Mita Cars andthe company for refund of money given toMita Cars.

Consumer case against the company.

An appeal filed by the consumer againstthe order of the Dist. Forum. The OPwanted a Euro – II certificate

Status

The case is pending for further or-der.

The case is pending for furtherorder

The case is pending for furtherorder

At the stage Evidence

The appeal is pending for furtherorder. The opposite party also fileda criminal complaint and thecompany filed a petition underS.482 Cr.PC. The matter has nowbeen settled.

Amount

Rs.7.51 Lakhs

Replacement of Engine andRs. 15,000 p.m.from 4.3.2000to date of delivery of car plusRs.5095 as deficiency inservice.

Rs. 1 Lakh towards mentalagony + amount due

Rs.10 Lakhs


11 complaints are pending for further order against the company relating to manufacturing defects before various Dist Consumer forums. Out ofthese 11 complaints, in 7 complaints amount involved amounts to Rs. 38.03 Lakhs. However, in the remaining complaints, the amount involved isnot ascertainable.

83

c) Civil Cases

Authority

Civil judge Pune

Civil Judge Gautam BudhNagar.

Civil Courts Buland Sahar

Tehsildar, Gautam Budh Nagar


City Civil Court, Secundarbad

City Civil Court, Secundarbad


Suit seeking compensation filed against thecompany relating to Defective Car.

2 cases involving land matters.

NA

Notice issued to the company alleging illegalpossession of four plots of land belonging to GramSabha, Kasna.

Writ petition filed by the company for Stay ofrecovery proceedings and directing the collectorto hear the stay application.

Recovery suit filed against Mita Cars and thecompany for refund of money given to Mita Cars.,the company is a proforma party.

Recovery suit against Mita Cars and companyfor refund of money given to Mita Cars, thecompany is a proforma party .

Status



NA

———

Proceedings stayed beforeTehsildar till revision petition de-cided.

Framing of issues


Amount (in Rs.)

Rs.0.80 Lakhs


Order reversed

Rs.120 Lakhs


Rs. 3.58 Lakhs

R s.0.70 Lakhs

d) Custom Cases

Authority

Delhi High Court

SettlementCommissioner,New Delhi


Writ petition filed by the Customs challenging thefinal order of the Settlement commission passedin favour of the Company, whereby it has been heldthat the liability of the company is Rs.32.63 lacsinstead of the amount of Rs.77.4 lacs. Thecompany and directors have been grantedimmunity from prosecution, imposition of interestand penalty.

Application filed by the company against the orderof the Commissioner of customs imposing apenalty of Rs112 million

Status

The petition is pending forfurther order.

Allowed. The company anddirectors have been grantedimmunity from prosecutionand penalty.

Pending LiabilityAmount (in Rs.)

——-

Rs.45 Lakhs as simpleinterest.

Paid

Rs.32.63 Lakhs

Rs. 84 Lakhs

e) Tax Related CasesAuthority

AssistantCommissioner Excise

Assistant Commis-sioner

Commissioner ofIncome Tax (Appeals),Ghaziabad

Assessment Officer

Allahabad High Court.

Assessing Officer

Allahabad High Court.

Supreme Court


The company has filed an appeal against levy of duty. The companyshort-paid the duty and got the car cleared under the guise of trialproduction car.

A notice issued for the levy of service tax on account of paymentmade to Honda towards royalty, lumpsum fees, technical guidancefee during 16.8.2002 to 15.12.2002

The company has filed an appeal against the assessment order.The Assessment Officer treated the grant received from GNA asrevenue receipt and hi-pack software as capital expenditure andland scapping work as capital expenditure. A.Y. 1999-2000

The Joint Commissioner (Appeals), Trade Tax, Noida remandedthe matter back to the Assessing Officer for recalculation.

The company has filed an appeal.

A show cause notice has been issued to the company for theA.Y. 1999-2000 & 2000-2001

The company has filed an appeal against the sales tax exemptionpartially disallowed by the GNA/Tribunal

The U. P. Government has filed an appeal against the order of theHigh Court wherein the High Court granted stay on the levy ofentry tax on purchase of machinery.

Status


The matter is pending for fur-ther order.

The matter is pending for fur-ther order.

The matter is pending for furtherorder, but the appellate tribunalhas given an order in favour of thecompany on the legal issues.

The appeal is pending for fur-ther order. However, stay hasbeen granted by the High Court.

Reply has been filed.

The appeal is pending for fur-ther order.

The appeal is pending for fur-ther order.

Amount (in Rs.)

Rs.1.00 Lakhs

Rs. 576.30 Lakhs

Rs. 612.40 Lakhs

Rs. 238 lakhs

Not ascertainable.

Rs.5588.00 Lakhs

Rs.47.80 Lakhs

84

f) MRTP Cases

Court

MRTP Commission


An investigation under Section 11 of the Act has been instituted bythe Director General against various automobile manufacturersincluding the company.

Status


Amount (in Rs.)


18. Hongo India Pvt. Limited1. 2 cases have been filed in the District Court against the company relating to Labour Disputes involving an amount of Rs. 10 Lakhs.2. One show cause notice has been issued to the Company by the Service Tax Deptt. involving an amount of Rs 51.07 Lakhs. A reply has been

filed by the company to the Dy. Commissioner.3. An appeal has been filed by the company to the Add. Comm, Income Tax involving an amount of Rs. 101.52 Lakhs.

19. Daikin Shriram Airconditioning Pvt. Ltd.(A)Against Daikin Shriram Airconditioning Pvt. Ltd.1. One civil case is pending against the company before Additional District & Sessions Judge, Tis Hazari, Delhi involving an amount of

Rs.87,852.2. One Labour case is pending before Labour Commissioner, New Delhi by personal driver of Managing Director for reinstatement as Com-

pany employee.

(B) By Daikin Shriram Airconditioning Pvt. Ltd.1. 6 Criminal cases have been filed by the company under Sec. 138 of the Negotiable instruments Act, and Sec. 420 of IPC in relation to

bouncing back of the cheques involving an amount of Rs. 8.56 lakhs.2. An appeal has been filed by the company in The Custom, Excise and Service Tax Appellant Tribunal, New Delhi against the order wherein

it has been held that the Technology Transfer Fee of US$ 300,000 and Royalty @ 4% on the air conditioners produced and sold is to be addedto the assessable value of imported goods.

20. Usha International LimitedAgainst Usha International Limiteda) Cases of Eviction of Rented premises

3 suits have been filed against the company before various authorities on various grounds viz. Sub-tenancy, non payment of rent etc. and thesame have been fixed for evidence/written arguments. The amount involved is not ascertainable.2 eviction petitions have been filed against the company before various authorities on the grounds of bonafide need.

b) Money Recovery Cases

Authority

Distt. Judge, Bhopal

Civil Judge, Kanpur

Civil Judge, Lucknow

Distt. Judge, Kanpur

Distt. Judge, Malegaon,Maharashtra

High Court, Delhi


A matter relating to Claim of security deposit with Interest.

A Suit for claim of extra credit by Bank.

A Suit for refund of area security deposit.

A Suit for recovery of sale advance.

A Suit for claim of debit notes.

Claim of decreed amount withdrawn by UIL pursuant to CourtOrder in its favour

Status

Being settled

Fixed for evidence

Fixed for reply

Fixed for substitution of oneof the defendants

Fixed for evidence

Pending for arguments

Amount (Rs in Lacs)

0.10

3.84

0.22

0.34

3.00

26.00

c) Labour Cases

Authority Particulars of the matter Status Amount (Rs. In Lacs)Labour Court, Bhopal A Petition for reinstatement. Fixed for reply -Distt. Judge, Jaipur A matter relating to Claim of Provident fund on Fixed for final arguments 3.00

commission earned.Labour Court, Jaipur Various claims related to services rendered Fixed for filing of documents 6.00

PF Commissioner, A matter relating to Claim of PF amount Fixed for disposal 0.38Lucknow

Labour Court, Ranchi A matter relating to Claim for Reinstatement Fixed for evidence -High Court,

Andhra Pradesh A Petition for Reinstatement. Pending for hearing 0.40

d) Consumer Protection Act

Authority Particulars of the matter Status Amount (Rs. In Lacs)Consumer Forum,Lucknow Claim for refund of security deposit. Being settled 0.05

2 Complaints alleging defect in Sewing Machines are pending with State Commission, Delhi and Jaipur respectively and are fixed for arguments.The amount involved is Rs.0.20 Lakhs.

2 Complaints alleging defect in Diesel Engines are pending with Consumer Forum, Lucknow and are fixed for arguments. The amount involvedis Rs. 0.60 Lakhs.

2 suits have been filed against the company for recovery of sales advances before the District Judges of Cuttack and Ludhiana and bothare fixed for Rejoinder. The amount involved is Rs. 115 lacs.

85

E) Under the Income Tax Act, Sales Tax Laws, FERA, SEBI and Companies Act

Authority

Sh. Narender SinghACITCC VIII

Sh.Gopal Mukherjee ITO-CC VIII

Sh. K.N. Sinha(Deputy Director)

Mr.V.P.Singhal,Department of CompanyAffairs

Company Law Board/ HighCourt, Delhi

Various Sales Tax Authorities

Particulars of theMatter

Criminal Complaint filed by IT Deptt. u/s 276C of the I.T. Actalleging attempt to evade tax against the then Directors andOfficers of the Company. (Case No.5158 of 1989)

Criminal complaint filed by IT Deptt. u/s 276C of the I.T. Actalleging attempt to evade tax against the then Directors andOfficers of the Company. (Case No.199 of 1986)

Proceedings against the then Directors and Officersof the Company alleging writing off bad debts of foreignbranches over 3 assessment years without general/special permission of RBI under the provisions ofFERA Act, 1973 (Case no. T-4/29-D/90)

Proceedings against the Company under Section 297of The Companies Act for not obtaining prior approvalfor renewing of Agreement.

Proceedings against the Company under Section 111Aof The Companies Act for refusal of registration ofshares (24/111 of 1999)

Sales Tax Demands under Appeal

Status

Applied for compounding


Penalty orders stayed


The matter is pending forfurther orders.


Pending Liability Amount(Rs./Lacs)

13.65

6.65

Penalty of Rs.5 lac levied onCompany and 50,000 each on6 the then Directors of theCompany

-

-

144.54

21. Shriram Fuel Injection Industries Limited

a) Labour Cases

Authority

High Court, Hyderabad


Industrial Tribunal Hydearbad

High Court, Hyderabad and AdditionalLabour Court, Hyderabad

Additional Labour Court, Hyderabad



Two Writ petitions filed by the companyagainst the order of the Labour Court wherebythe company was directed to pay Rs.4520/-in one case and awarding the workman backwages for 3 years in other case

Writ petition filed by the company Challengingthe order of the Industrial Tribunal, wherebythe Company was directed to reinstate 14casual labor along with back wages.

Petition filed by the Labour Union claiming 20%ex gratia for the year 2001-2002.

The company has filed a petition challengingan award wherein a workman was awardedback benefits. Later on he has filed anadditional claim U/ Section 33-C(2) of ID Act.

Claims under the ID Act filed against thecompany by workmen claiming reinstatementwith back wages and attendant benefits

Writ petition filed by the company challengingthe order of the labour court awardingcompensation in lieu of back wages and otherterminal benefits to the workman.

Status

Orders of the Labour Court has beenstayed.

Pending but the company hasdeposited half of the decretal amountand is depositing Rs. 11,794/- p.m.

The company to file counter.

The matter has been stayed



Amount

Rs.1.09 Lakhs

Rs.5.01 Lakhs

—-

Rs.7130/-

—

——

b) Excise CasesAuthority

CEGAT Bangalore

Commissioner OfCentral Excise

Commissioner OfCentral Excise(A)Hyderabad

Andhra PradeshHigh court


Appeal filed by the company challenging penalty imposed on thecompany for availing Modvat credit

Excise appeal filed by the company against alleged avoidance ofexcise duty.

Excise appeal filed by the company against alleged nonmaintainence of separate account in respect of common inputs usedin dutiable as well as duty exempted products.

Appeal filed by the company against the order of the CEGAT Madrasalleging Availing more credit than prescribed under MODVAT rule.

Status

Fixed for orders

Pending

Pending

Fixed for orders

Amount

Rs. 2.50 Lakhs which hasalready been reversed by thecompany. A penalty of Rs.40,000/- has also been imposed.

Rs. 3.65 Lakhs

Rs. 3.50 Lakhs which hasalready been reversed by thecompany. A penalty of Rs. 3.60lacs has also been imposed.

Rs.1.56 Lakhs

86

c) Civil Cases

Court

X Asst. Judge C.C.C./ Prl. Sub JudgeR. R District/ II Additional Sub-JudgeR.R. District, Hyderabad.


Four Suits filed by the company for recoveryagainst Availing more credit than prescribedunder MODVAT rule.

Status

Fixed for execution ofdecree

Amount

Rs.4.24 Lakhs + interest

22. Shivajimarg Properties limitedThere are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

23. Siel Holdings LimitedThere are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

24. Nanglamal Sugar LimitedThere are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overdues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

25. CSR J&K Investments Pvt. Ltd.There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

26. KSR J&K Investments Pvt. Ltd.There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

27. Madan Shree Enterprises LimitedThere are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

28. Chhaya J&K Investments Pvt. LimitedThere are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

29. Krishna J&K Investments Pvt. LimitedThere are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

30. Gaiety J&K Investments Pvt. LimitedThere are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

31. Hurrykrishna Venture Pvt. Ltd.There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

32. India Infrastructure Publishing Pvt. Ltd.There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

33. Ceratizit India Pvt. Ltd.There are no contingent liabilities not provided for and no outstanding litigation, disputes, non payment of statutory dues, overedues to Banks /Financial Institutions, defaults against Banks / Financial Institutions, defaults in dues towards instrument holders like debenture holders, fixed depos-its, and arrears on cumulative preference shares issued by the Company, defaults in creation of full security as per terms of issue / other liabilities,proceedings initiated for economic / civil / any other offences against the Company.

87

III. OUTSTANDING LITIGATIONS RELATING TO INDIVIDUAL PROMOTERS / DIRECTORS OF THE COMPANY

A. Against the Directors and Promoters of the Company

i) Mr. Siddharth Shriram - Under Factories Act

Authority

Chief Judicial MagistrateMeerut



4 criminal complaints filedagainst Sh. SiddharthShriram & B.K.Agarwal

4 petitions under section 482Cr.PC filed by the company.

Status

Proceedings arestayed by order of theAllahabad High Court

Stay order in favour ofthe company

Amount



Allegations/Charges

The Chareges in the complaints relateto violation of provisions of FactoriesAct like Leave book not given to theworkers, Fire extinguishing appratusnot placed in CO2 pump room, onlyone door for exit, belt not provided ondrive guard etc.

Challenging the prosecution caseslodged against the Director.

ii) Mr. Siddharth Shriram - Criminal Cases

Authority

Judicial Magistrate FirstClass, Indore.


Ruchi Soya Industries has fileda case against a supplier of thecompany under Section 138 ofthe Negotiable Instruments Actand Section 420 of the IndianPenal Code. Case No.2828/1999

Status

The company has movedan application fordischarge of itself and itsofficials.

Amount

Rs.40.83 Lakhs

Allegations/Charges

The company and its officialsincluding Mr. Siddharth Shriramhave conspired with SwarnimaOil Industries to cheat the Op-posite party.

iii) Against the Promoter - Mr. Krishna Shriram

Authority

Supreme Court


Contempt petition has beenfiled against the companyand Shri Krishna Shriram, Mr.A. K. Mehra and Mr. P. K.Bhalla.

Status

Pending. But the company hasdeposited the disputedamount with the Labour Court.Another union which alsobrought forward workers hasfiled an interim application for10% of the amount paid tothose workers.

Amount

Rs.8.56 lakhs

Opposite Party


Allegations/Charges

The company had agreedwith the opposite party to paycompensation to the contractworkers and out of the saidcompensation 10% was to begiven to the Opposite Party.However, the Opposite Partydid not bring forth all theworkers. The company onlypaid 10% to the OppositeParty for the workers actuallybrought by the OppositeParty. Due to this, theopposite party has filed thecontempt petition.

B. Litigation by the Directors of the Company

i) Income Tax Cases

Authority

ITAT, New Delhi


The assesses has filed an appeal against anorder by which an addition was made of shortterm capital gain and carry forward loss was notallowed

Accounting Year

1995-96

Status


Paid (in Rs.)

Rs. 0.59 Lakhs

ii) Under Foreign Exchange Regulation Act (FERA)

Authority

Appellate Tribunal forForeign Exchange,New Delhi


Appeal has been filed against the order ofDeputy Director of Enforcement, FERA

Status

Impugned order stayed

Penalty

Penalty of Rs.5 lac levied on Company and50,000 each on 6 the then Directors, includingMr. Siddharth Shriram, of the Company.

88

• There are no pending litigations other than those mentioned above in which the company/ promoters of the company are involved.

• There are no pending litigations, disputes, defaults, non-payment of statutory dues, overdues to Financial Institutions/Banks, dues towardsinstrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares by the promoters/promoter companies,companies promoted by the promoters, and the companies/firms co-promoted by the Company and the Companies under the same manage-ment, except those mentioned on pages no. 66 to 87 of the offer document.

• There are no cases of litigation pending other than those mentioned above against the Company or against any other Company associatedwith the Company or its promoters whose outcome could have a materially adverse effect on the financial position of the company.

• There are no pending litigation other than those mentioned above against the promoters or directors in their personal capacities and alsoinvolving violation of statutory regulations or criminal offences as per the declarations received from them.

• There are no pending proceedings initiated for economic other than those mentioned above against the directors, Promoters, Companies pro-moted by promoters, Companies or firms co-promoted by the Company and the Companies under the same management.

• There are no Contingent liabilities not provided for and no outstanding litigations, disputes, proceedings initiated for economic offences/Civil/anyother offences (including the past cases where penalties may or may not have been awarded and irrespective of whether they are specified underparagraph (I) of Part 1 of Schedule XIII of the Companies Act, 1956) other than those mentioned above.

• The Company, its promoters and other companies with which promoters are associated have neither been suspended by SEBI nor any disciplin-ary action has been taken by SEBI except those mentioned above.

• There is no prosecution launched by Income Tax Authorities other than those mentioned above and no liability compounded by the promoters/company/companies/ventures with which the promoters are associated is subsisting.

• There are no cases of pending litigation/defaults in respect of the firms/companies with which the promoters were associated in the past but areno longer associated.

• The Company, its Promoters, group Companies/associate companies are not detained as willful defaulters by RBI/Government authoritiesand there have been no violations of securities laws committed by them in the past or pending against them except those mentioned above.

XI. PROMISES VERSUS PERFORMANCE(A) LAST THREE ISSUES MADE BY MAWANA SUGARS LIMITED

The Company has not made any Public or Rights Issues since Incorporation.

(B) PROMISE V/S PERFORMANCE FOR LISTED VENTURES OF PROMOTER GROUP FOR THE LAST ISSUE(1) Siel Financial Services Ltd. (formerly Shriram Agro-Tech Industries Ltd.)

The Company came out with a Public Issue of 26,75,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 10/- per share aggregating toRs. 535 lakhs in February, 1993. The object of the issue is to part finance the project for processing of 500 tonnes per day (TPD) of soyabean oilseeds or 600 TDP of rapeseed oil cakes at Chhota Malsapura, Distt. Dewas, Madhya Pradesh. The actual performance achieved by the Companyagainst the projections mentioned in the Prospectus are as under:

(Rs.in Lacs)

Year ending 31st March 1993 (3 Months) 1994 1995 1996 1997

Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual31.03.93 (1.04.93 12 months (1.7.93 to 31.03.95 (1.10.94- 31.3.96 F.Y. 31.03.1997 (1.10.95

to 30.6.93) 31.03.94 30.9.94) for 12 30.9.95) for 12 (Extended for 12 to15 Months Months 12 Months months to 31.03.97 months 31.3.97)

for 18Months)

Installed Capacity 500 500 500 500 500 500 500 500 500

Production (tpd) 300 60 375 76 425 33 425 425 -

Capacity Utilisation (%) 60 12 75 15 85 7 85 85 -

Total Income 2607 1361 8289 7504 9394 1596 9394 9394 12Profit before Interest &Depreciation 275 161 754 (162) 858 (107) 858 858 (60)Interest 83 90 366 307 391 214 360 317 211

Depreciation 34 41 137 79 137 63 137 137 165

Profit before tax 158 30 252 (548) 331 (384) 362 405 (436)

Tax 14 - 10 - 33 - 45 58 -Profit After Tax 144 30 242 (548) 298 (384) 317 347 (436)

Cash Profit 178 71 378 (469) 435 (321) 453 484 (271)

Dividend - - 108 - 108 - 135 135 -

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

Equity Share Capital 538 528 538 535 538 535 538 538 535Reserves & Surplus 682 557 816 517 1005 503 1188 1400 481

Net Worth 1220 1014 1354 481 1544 97 1726 1938 (603)

Earning Per Share (Rs.) 2.7 0.56 4.5 (10.20) 5.5 (7.14) 5.9 6.4 (8.11)

Net Asset Value (Rs.) 22.7 18.87 25.2 8.95 28.7 1.81 32.1 36.0 (11.22)

Note:- The above figures are not comparable as after the said issue the company has changed its Financial Year thrice.

89

(2) Siel Ltd.( Shriram Industrial Enterprises Ltd.)The Company came out with a Rights Issue of 94,32,237 – 13% Non Convertible Debentures of Rs. 100/- each for cash at par with detachablewarrants to the equity shareholders aggregating to Rs. 9432.24 lakhs in August, 1994. The object of the issue is to part finance the expansion planof production capacities from 5000 to 7000 tonnes canes crush per day at Mawana and setting up sugar refinery, distillery at Titawi & new chlor-alkaliplant at Rajpura, Punjab. The actual performance achieved by the Company against the projections mentioned in the Letter of Offer are as under:

(Rs. In Lac)

Year ending 31st March 1995 1996 1997

Projected Year Actual year Projected Year Actual 18 months Projected year Actual 12 monthsEnded 31.03.95 ended 31.03.95 ended 31.03.96 ending 30.09.96 ended 31.3.97 31.09.97

Sales (Net of excise) 78175 77795 87540 114299 96749 42989

Other Income 992 1307 1099 1819 1226 773

Total Income 79167 79102 88639 116118 97975 43762

Operating Profit 8184 6854 10161 5679 13369 10212Interest on Working Capital 377 352 96 1708 96 1489

Interest on Term Loan / Debentures 1586 1620 1744 4570 1954 3125

Gross Profit/(Loss) 6221 4882 8321 (599) 11319 (845)

Depreciation 709 705 1119 1739 1535 1049Profit Before Tax 5512 * 4177 7202 (2338) 9784 # 4549

Provision for Tax 1600 500 2700 - 3070 820

Profit After Tax 3912 3677 4502 (2338) 6714 3759

Dividend 889 659 1016 - 1016 1191

Retained Profit 3023 3018 3486 (2338) 5689 2568Earning Per Share Anualised (Rs.) 12.99 16.76 13.30 (8.64) 19.82 13.89

* Includes extra ordinary income of Rs.673 lacs comprising of amount realized alongwith interest on the price levy sugar sold after Feb 21, 1974, onthe basis of Supreme Court Order.# This includes Extra ordinary income of Rs.6442 lakhs on account of Non-competent fee under agreements for restrictive trade covenant in respectof the compressor business The company and Mr. Siddharth Shriram, Chairman and Managing Director of the company have entered in Non-Compete Agreements whereby the company and Mr.Siddharth Shriram and his family have inter alia agreed not to engage, directly or indirectly, in themanufacturing, selling or repairing of the Compressors and parts thereof as would compete with Tecumseh Products Company, TPC MauritiusHoldings, Tecumseh India Private limited and Siel Compressors Limited, in any country of the world for a period of 15 years from the date ofAgreements for an aggregate consideration of US $ 18 million i.e. Rs. 6442 lakhs to the company. This has been considered as income of theCompany and reflected in the profit and loss account as an “extraordinary item”.Note:- The above figures are not comparable as after the said issue the company has changed its Financial Year.

(3) Usha International Ltd. (UIL)The Company came out with a Public Issue of 3,75,200 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 10/- per share aggregating to Rs.75.04 lakhs in August, 1985 for augmenting long term resources of the Company. The promised future performance of the Company was not presentedin the Letter of Offer and hence a comparison of the Company’s actual performance vis-à-vis the projections made in the Letter of Offer is not possible.

(4) Shriram Honda Power Equipment Limited (Honda Siel Power Product Limited)The Company came out with a Right Issue of 26,44,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 15/- per share aggregating to Rs.661 lakhs in the ratio of 1:4 in December, 1993 for augmenting long term resources for working capital requirement and for normal capital expenditure.The actual performance achieved by the Company against the projections mentioned in the Letter of Offer are as under:-

Rs. in Lakhs

Year ending 31st March 1994 1995 1996

Projected Actual Projected Actual Projected ActualYear Ended Year Ended Year Ended Year Ended Year Ended Year Ended31.03.1994 31.03.1994 31.03.1995 31.03.1995 31.03.1996 31.03.1996

Share capital 1014 1014 1014 1014 1014 1014Free Reserves 441 401 724 1162 1026 2225

Share Premium 397 396 397 396 397 396

Net Worth 1838 1824 2124 2587 2429 3654

Net Assets Value per share (Rs.) 18.12 17.99 20.95 25.51 23.95 36.04

Total Income (Gross Sales & other Income) 7329 8007 7854 10339 8432 13650PBDIT 1001 1083 1019 1805 1043 2141

Depreciation 286 351 295 424 306 324

Interest 330 327 238 122 156 104

PBT 385 $ 405 486 1259 581 1713PAT 385 405 486 1064 581 1418

EPS 3.80 3.99 4.80 12.42 4.98 13.98

Dividend (%) 15% 20% 20% 30% 20% 35%

$ Includes additional depreciation for earlier years aggregation to Rs. 137.43 consequent to technical evaluation of the estimated useful lives of pressdies. Die castings, dies and lamination dies.

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XII. BASIS OF ISSUE PRICEAs the Company has been incorporated on 26th December, 2002, the financial results are available only for the period from 26th December, 2002 to31st March, 2003 (3 months) and for the period 1st April, 2003 to 29th February, 2004 (11 months).

Quantitative Factors (figures (not annualized) for the period 1st April, 2003 to 29th February, 2004 – 11 months)i. Earnings per share - Rs. 0.96ii. Net Asset Value Per Share - Rs. 24.21iii. Net Asset Value per Share after the Issue - Rs. 16.75iv. Return on Networth - 3.98%v. Industry P/E*

Highest – 16.5Lowest - 1.9Average – 8.5

*Source Capital Market (August 2-15, 2004)

vi. Minimum Return on increased networth required to maintain pre-issue EPS is 5.12%.vii. Issue Price - Rs. 10/-viii. The Face Value of the Shares is Rs. 10/- and the issue price is 1-Time of the face value being issued at par.ix. Comparison of accounting ratios of the Peer Group Companies are as under :

Name of the Company E.P.S. (Rs.) P/E N.A.V. (Rs.) Year endedBajaj Hindustan 3.3 8.7 14.0 September, 2003Dhampur Sugar - 9.4 22.7 September, 2003

KCP Sugar & Industries 16.9 3.4 67.8 March, 2004

Oudh Sugar - 3.8 40.5 June, 2003

Sakthi Sugars - - 113.9 June, 2003

Upper Gang. Sugar - 3.0 78.9 June, 2003

*Source Capital Market (August 2-15, 2004)

Qualitative Factors• Established factories with economies of scale.• Strong relationship with farmers ensuring continuous cane supply.• ‘Mawana’ brand is established and popular brand in the Sugar Industry.• 50% of total turnover of Company sold to Institutional Buyers, exports and consumer brand, who prefer quality sugar.• Over 50 years of experience of manufacturing sugar.• Experienced and skilled manpower• Long term cane development strategies resulting in high yielding and high sugar crop variety

XIII. STOCK MARKET DATAThe Equity Shares of the Company are listed on The Stock Exchange, Mumbai since 17th December 2003. The trading permission from BSEreceived vide their letter dated 17th December, 2003.

The details of the share prices on the Stock Exchange, Mumbai during the last 3 years are as follows:

Not Applicable since the company is listed on the Stock exchange since 17th December 2003

The details of the share prices on the Stock Exchange during last 6 months (listed on 17th December 2003) are as follows:

Month High (Rs.) Date of High Volume on Low Date of Volume on Total Volume Averagedate of High (Rs.) Low date of Low in the Month Price in

the Month*

February 2004 24.60 25.02.2004 197552 15.00 04.02.2004 20625 1602637 19.54

March 2004 25.00 10.03.2004 59125 19.50 18.03.2004 22710 1417514 21.75

April 2004 39.80 23.04.2004 125377 20.90 01.04.2004 10508 2483556 30.89May 2004 40.55 05.05.2004 777749 18.30 18.05.2004 61885 2841991 26.55

June, 2004 21.90 03.06.2004 37713 15.60 24.06.2004 14213 890063 17.88

July, 2004 26.20 30.07.2004 163611 17.60 28.07.2004 4425 767290 20.83

(Source: bseindia.com)

The closing share price on 6th April 2004 on the Stock Exchange, Mumbai being the first day of trading after the Board Meeting approving the RightsIssue was Rs. 24.15.

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XIV. Details of Issues made by other Listed Group Companies During The Last 3 Years

1. Companies under the same management as per the Companies Act 1956 under section 370 (1B)

Following companies are under the same management of Mawana Sugars Ltd.and are listed on Stock Exchanges:

Name of the Company Stock Exchanges on which listed

Siel Limited The Stock Exchange, MumbaiThe Hyderabad Stock Exchange Limited

Siel Financial Services Limited Madhya Pradesh Stock ExchangeCalcutta Stock ExchangeThe Stock Exchange, MumbaiAhemdabad Stock ExchangeDelhi Stock Exchange

2. Issues made by other listed group / promoter companies in the past three years

There are no such companies which came out with the issue during the past three years

XV. NAMES OF THE SMALL SCALE UNDERTAKING TO WHOM THE COMPANY OWES A SUM EXCEEDING RS.1 LAKH WICH IS OUT-STANDING MORE THAN 30 DAYS1) Chemical System, 2) Atul Electro Formers Pvt. Ltd., 3)Jord Engineers India Ltd. 4) Tube Sales Private Ltd., 5) Waltech India, 6) SpicePressure Controls, 7) Technocraft Engineers.

XVI. INFORMATION AS REQUIRED BY GOVERNMENT OF INDIA, MINISTRY OF FINANCE CIRCULAR NO. F2/5/SC/76 DATED FEBRURARY5, 1997 AS AMENDED VIDE CIRCULAR OF EVEN NO DATED MARCH 8, 1997

1. The working results(unaudited-provisional) of the Company for the period 1st April 2003 to 30th June, 2004(15 months) is as under:-

Particulars (Rs. in lakhs)Total sales 46360Other Income 880

Total Income 47240

Total Expenditure 41094

Profit Before Interst, Depriciation and Tax 6146Interest 2569

Depriciation 1114

Profit after interest and Depreciation but before Taxes 2463

Provision for Tax

(a) Current 155(b) Deferred 840

Profit after Tax 1468

Profit and Loss account for the period 1.10.2002 to 31.03.2003(refer to the Note) (1027)

Deferred tax benefits upto to March 31, 2003 326

Net Profit after above adjustments 767

Note:-a) Pursuant to the Scheme of Arrangement (Scheme) under section 391 and 394 of the Companies Act, 1956 of undivided Siel Limited, approved by the

High Court of Delhi vide its Order dated August 26, 2003 which became effective on September 5, 2003 on filing of the certified copy of the Order ofthe High Court of Delhi with the Registrar of Companies, Delhi and Haryana, the undertakings of undivided Siel Limited comprising of Mawana SugarWorks (MSW) and Titawi Sugar Complex (TSC), together with all properties, assets both movable and immovable and liabilities including contingentliabilities have been transferred to and vested in the Company at their respective book values with effect from the appointed date i.e. October 1, 2002.The figures for the three months and fifteen months ended June 30, 2004 have been determined after giving effect of SOA.

b) Upon effectuation of the SOA, assets and liabilities as at October 1, 2002 and the transactions including the income and expenses of Undertak-ings comprising of MSW and TSC for the period October 1, 2002 to March 31, 2003(including for the priod October 1, 2002 to December 26, 2002,the date of Incorporation of the Company, when the undertakings were being run and managed by undivided Siel Limited) has also been trans-ferred to and vested in the Company. Accordingly, loss of the aforesaid Undertakings amounting to Rs. 1027 Lakhs for the six months ended June30, 2004 have been determined after giving effect of SOA.

2. Save as stated elsewhere in the Letter of Offer, there are no material changes and commitments likely to affect the financial position of theCompany since 29th Febraury 2004 i.e. the last date upto which audited information is incorporated in the Letter of Offer.

3. a) Week end prices of Equity Shares of the Company for the last four weeks on The Stock Exchange, Mumbai is as below :

Week ending on Price Per Share(Rs.)

09/07/2004 18.5516/07/2004 18.90

23/07/2004 21.30

30/07/2004 26.15


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b) Closing Ex-rights Market Price of Equity Shares of face value of Rs.10/- of the Company on the Stock Exchange, Mumbai as on 5th August,2004 was Rs. 28.30 (Ex-Right).

c) Highest and Lowest Price of the Equity Share of the Company of face value of Rs.10/- each on the Stock Exchange, Mumbai during theperiod 17th Decmber 2003 to 31st July 2004(for the last year):

Price (Rs.) Date as onHighest Price 90.00 17.12.2003Lowest Price 13.00 23.12.2003


XVII. MECHANISM INVOLVED FOR REDRESSAL OF INVESTOR GRIEVANCESa) In case of Mawana Sugars LimitedThe Company’s name has not appeared in Press Releases issued by SEBI regarding maximum number of complaints received from the investorsStatus of complaints received from SEBI

As on date, there are no complaints pending with SEBI.

Overall status of Investor Grievances

The Company has not received any complaints since its listing with the Stock Exchange i.e 17th December 2003.

The transfer and other related work is handled by MAS Services Pvt. Ltd., Registrar and Share Transfer agent. The secretarial department of theCompany actively interacts with the Registrar for expeditious redressal of investor grievances and takes care of complaints received from statutorybodies such as SEBI, Stock Exchanges, Department of Company Affairs, etc. The name of the Company has never appeared in fortnightly pressrelease on investor complaints of SEBI The average time taken by the Registrars for attending to routine grievances will be 15 days from the date ofreceipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavor of the Registrars to attend to themas expeditiously as possible. The Company undertakes to resolve its investor grievances in time bound manner.

The Company’s investor grievances arising out of the Rights Issue will be handled by MAS Services Pvt. Ltd, Registrars to the Issue.

Investor grievances are settled expeditiously and satisfactorily by the Company. The agreement between the Company and the Registrars willprovide for retention of records with the Registrars for a period of at least one year from the last date of dispatch of Letter of allotments/sharecertificate/refund order to enable the Registrars to redress grievances of investors.

All grievances relating to the Issue may be addressed to the Registrars to the Issue giving full details such as Folio No., name and address of the firstapplicant, number of shares applied for, Application Form serial number, amount paid on application and the Bank Branch Form serial number wherethe application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the renouncee shouldbe furnished.

The Company has also appointed a Compliance Officer who may be contacted in case of any preissue/ post issue related problems.

b) In case of listed Group Companies1. Siel LimitedStatus of Investor Grievances

Complaints from

S.No. Duration SEBI Stock Exchanges & Investors Total Complaints Total complaints PendingOthers resolved received as on

1. 1.4.2003 to 31.3.2004 Nil 2 Nil 2 2 Nil

2. 1.4.2004 to till date 9 1 Nil 10 10 Nil

Manner of resolvingThe transfer and other related work is handled by MAS Services Pvt. Ltd., Registrar and Share Transfer agent. The secretarial department of theCompany actively interacts with the Registrar for expeditious redressal of investor grievances and takes care of complaints received from statutorybodies such as SEBI, Stock Exchanges, Department of Company Affairs, etc. The name of the Company has never appeared in fortnightly pressrelease on investor complaints of SEBI The average time taken by the Registrars for attending to routine grievances will be 15 days from the date ofreceipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavor of the Registrars to attend to themas expeditiously as possible. The Company undertakes to resolve its investor grievances in time bound manner.

2. Siel Financial Services limitedStatus of Investor Grievances

Complaints from


1. 1.4.2003 to 31.3.2004 1 1 Nil 2 2 Nil2. 1.4.2004 to till date Nil Nil Nil Nil Nil Nil


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3. Usha International LimitedStatus of Investor Grievances

Complaints from


1. 1.4.2003 to 31.3.2004 Nil Nil 8 8 8 Nil

2. 1.4.2004 to till date 1 Nil 8 9 9 Nil


4. Jay Engineering Works LimitedStatus of Investor GrievancesThe Company has not received any complaints since 1st April 2003.

Manner of resolvingThe transfer and other related work is handled inhouse by the legal & Secretarial Department of the Company for expeditious redressal of investorgrievances and to take care of complaints received from statutory bodies such as SEBI, Stock Exchanges, Department of Company Affairs, etc. TheCompany further undertakes to resolve its investor grievances in time bound manner.

5. Honda Siel Power Products LimitedStatus of Investor Grievances

Complaints from


1. 1.4.2003 to 31.3.2004 Nil Nil 108 108 107 1 (as ondate resolved)

2. 1.4.2004 to till date 3 1(ROC) 11 15 16 Nil


XVIII. DETAILS OF ADVERSE EVENTS / MATERIAL DEVELOPMENTS AFFECTING THE COMPANY SINCE THE LAST FINANCIAL STATEMENTNo circumstances have arisen and no material developments have taken place since the date of the last financial statement that materially oradversely affects or is likely to affect the trading or profitability of the Company or the value of its assets or its ability to pay its liabilities within the next12 months except the recent judgement pronounced by the Constitution bench of Hon’ble Supreme Court which has upheld the rights of State Govt.to fix the state advised prices. This judgement could result into some demands for the past periods which cannot be determined as of now. TheIndustry is however, proposing to file a review petition against the said judgement before Hon’ble Supreme Court

XIX. EXPERT OPINIONSave and except as stated elsewhere in this Letter of Offer, the Company has not obtained any expert opinions.

XX. OPTION TO SUBSCRIBESave as otherwise stated elsewhere in this Letter of Offer, the Company has not given any option to subscribe for any shares of the Company.

RISK FACTORS AND MANAGEMENT PERCEPTIONS THEREOFINTERNAL RISK FACTORS1. Criminal Cases filed against the Company / Promoter Group Companies

a. Against the Company viz. Mawana Sugars Ltd.Fourteen (14) Criminal cases are pending in various Courts / Authorities by Suppliers / Employees / Clients. For details,investors please refer to “Outstanding Litigations/Defaults” appearing on page no. 61 to 66 of the Letter of Offer.

b. Against Directors & Promoter Group Companies(i) 4 petitions u/s 482 of Cr. P.C. filed by the Company challenging the prosecution cases lodged against one Director of the

Company.(ii) Siel Ltd. – One criminal case is pending u/s 420 of IPC by Supplier of the Company.For details, investors please refer to “Outstanding Litigations/defaults” appearing on pages no. 66 to 87 of the Letter ofOffer.

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c. Against Promoters of the Company - Mr. Krishna Shriram

Authority

SupremeCourt


Contempt petition has beenfiled against the companyand Shri Krishna Shriram,Mr. A. K. Mehra and Mr. P.K. Bhalla.

Status

Pending. But the companyhas deposited the disputedamount with the LabourCourt. Another union whichalso brought forwardworkers has filed an interimapplication for 10% of theamount paid to thoseworkers.

Amount

Rs.8.56 lakhs

Opposite Party


Allegations/Charges

The company had agreed with theopposite party to pay compensation tothe contract workers and out of the saidcompensation 10% was to be given tothe Opposite Party. However, the OppositeParty did not bring forth all the workers.The company only paid 10% to theOpposite Party for the workers actuallybrought by the Opposite Party. Due to this,the opposite party has filed the contemptpetition.

Management PerceptionThe cases against one of the Directors of the Company arise on account of the allegation that he was the Occupier of Factory premises. Thecase against Siel Ltd. relates to a contractual dispute between a supplier of the Company and his supplier. The Company has been impleadedas a respondant in this case.

2. The Company is not raising funds to finance any specific project and the funds raised from this Rights Issue are being used for makingan equity investment in Siel Limited as part of CDR approved package and for meeting shortfall in long term working capital require-ments.

Management PerceptionThe Company is making the rights issue of Rs. 849.90 lakhs pursuant to the CDR approved package, which requires the Company to invest Rs.800 lakhs in three trenches of Rs. 250 lakhs, Rs. 250 lakhs and Rs. 300 lakhs by September, 2005. The funds therefore, so raised are proposedto be utilized mainly to invest in Siel Ltd. i.e. to the extent of more than 94% of issue size and the balance around 6% (Rs. 49.90 lakhs) would beutilized for meeting shortfall in long term working capital requirements. ICICI Bank Ltd. has been appointed by CDR Cell as the monitoringagency to oversee the implementation of the restructuring package.

3. Siel Ltd., in which the Company is proposing to invest the proceeds of this Issue, has incurred loss to the extent of Rs. 3751.87 lakhs for F.Y.2003-04. Siel Ltd. also incurred losses in the previous years on account of which it had approached restructuring of its business and debts andits name was in the RBI’s defaulter list.

Management PerceptionDue to losses, Company’s name appeared in RBI’s defaulters list and the Compay in turn approached CDR for restructuring. Consequent uponrestructuring of Siel Ltd., as approved by the High Court and with the investment of funds by MSL which would be utilized for increase in thecapacity of its Chemical business, performance of Siel Ltd. would improve and its name now doesn’t appear in RBI’s defaulters list.

4. In the final restructuring package approved by CDR Cell, it was not clearly stated that Mawana Sugars Ltd. (erstwhile Siel Sugar Ltd.) shouldinvest in equity of Siel Ltd. to the extent of Rs. 800 lakhs for which this Rights Issue is being planned. However, it was mentioned only in thefinancial projections submitted to the CDR Cell, who had then considered and approved it alongwith the entire package.

Management PerceptionICICI Bank Ltd., the Lead Institution, submitted detailed proposal for restructuring alongwith the future projections, which were accepted and thenapproved by CDR Cell. CDR Cell on behalf of all the Lenders, except UTI who had not become a member in the CDR, had given their consentfor raising equity by the Company through Rights Issue to the extent of Rs. 850 lakhs vide their letter dated 16th July, 2004. ICICI Bank Ltd., theMonitoring Agency appointed by the CDR Cell had also given their consent to the same vide their letter dated 11th May, 2004.

5. As per the Restructuring package approved by CDR, Mawana Sugars Ltd. has to bear term liabilities of Rs. 9675 lakhs, which constitutes Rs.7390 lakhs of Term Loan and Rs. 2285 lakhs of Zero Coupon Debentures. In addition, the Company requires to make an equity investment intoSiel Ltd. to the extent of Rs. 800 lakhs according to the projections submitted and approved by CDR Cell.

Management PerceptionThe term liabilities allocated to Mawana Sugars Ltd. is based upon the debt servicing capacity of the Sugar business as assessed and approvedby the Lenders / CDR Cell.

6. The company has accumulated losses of Rs. 417.45 Lakhs for the period from 1st April, 2003 to 29th February, 2004.

Management PerceptionThe carry over losses were because of losses incurred during the period October 1, 2002 to March 31, 2003 by erstwhile Siel Ltd. in its sugarbusiness. The Company however during the period 1st April, 2003 to 29th February, 2004 (11 months) earned a net profit after tax of Rs. 283.49lakhs.

7. The Company has not declared any dividend during the periods ended 29th February, 2004 and ended 31st March, 2003

Management PerceptionThe Company was incorporated on 26th December, 2002 and has losses for the financial period ended 31st March, 2003. The financial statementsfor the period 1st April, 2003 to 29th February, 2004 are for the purposes of this issue and have not been placed before the members of theCompany.

8. As per CDR terms, out of total investment of Rs.800 Lakhs, Rs. 300 lakhs has to be invested in Siel Ltd. by September, 2005, but the Companyis making the issue for the entire requirement of Rs. 800 lakhs.

Management PerceptionAs per restructuring package, Rs. 250 lakhs each has to be invested by September 2003 and September 2004 and the balance Rs. 300 Lakhsto be invested by September 2005. The Company is raising Rs. 849.89 lakhs through this Rights Issue and out of this, Rs. 552.43 lakhs in theform of application money and the balance amount of Rs. 297.46 lakhs to be raised through Calls by September, 2005 keeping in view the CDRrequirements.

9. No comparable performance data for the previous years are available for comparing the financial performance of the Mawana Sugars Ltd.

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Management PerceptionAs the sugar business of the company has been vested from 1st October, 2002 through a Scheme of Arrangement of Siel Ltd. which becameeffective from September 5, 2003, comparable performance data for the previous years are not available.

10. Unit Trust of India, one of the lender of erstwhile Siel Ltd., issued a recall notice due to non-payment of instalments due to them in November,2002 and later did not consent to the CDR Package or Scheme of Arrangement, approved by the Hon’ble High Court at Delhi in August, 2003 andhas filed an appeal against the order of High Court, approving the Scheme, in the Division Bench of Hon’ble High Court. Any adverse decisioncould have an impact on the financial ability of the Company.

Management PerceptionThe Appeal of the UTI has not been admitted by the High Court and there are no restraints on implementation of the Scheme and the same hasalready been implemented by erstwhile Siel Ltd. The Scheme having been approved by majority of the Creditors and Shareholders and subse-quently approved by the High Court is binding on all the Creditors, Shareholders and the Company in terms of Section 391(2) of the CompaniesAct, 1956. Presently, the other Lenders of Siel Ltd. have agreed to pay sum upto Rs. 1173 lakhs to UTI to be paid out of the surplus realizationfrom the Special Purpose Vehicle viz. Shivajimarg Properties Ltd., in which the land of erstwhile Siel Ltd. located at 15, Shivaji Marg, New Delhihas vested pursuant to the Scheme. Siel Ltd. has also filed an application u/s 392 of the Companies Act, seeking a direction from Hon’ble HighCourt to restrain UTI from creating any impediment and UTI be directed to take all steps to issue necessary no objection required for sale of non-operating assets, as required in terms of the Scheme. The Court has directed UTI to consider the One Time Settlement proposal of the Companyand report to the Court so that effective order could be passed by the Court.

11. The Company has not taken any specific approval from each of the Lenders for the said Rights Issue. UTI having not assented to the CDR, mayin the worst possible scenario, object against the said Rights Issue.

Management PerceptionThis being a Rights Issue offered to the Shareholders, approval from Shareholders has been taken in their Extra Ordinary General Meeting heldon 8th May, 2004. Consequently, no separate approval from any Lender, including UTI, is required for the Rights Issue. Further, this Issue isbeing made in compliance with the projections submitted to CDR Cell which formed the basis of approval of restructuring package, therefore,CDR Cell on behalf of all its Members/Lenders (except UTI, which is not a member of CDR) has given their specific no objection for the Rightsissue vide their letter dated 16th July, 2004.

12. As per the CDR package, the Company shall not declare any dividend if it fails to meet its obligations to pay interest and / or installments and/ or other moneys payable to the Lenders, so long as it is in such default.

Management PerceptionThis clause is usually stipulated by the CDR Cell to monitor cash outflows in the event of default.

13. One of the terms of CDR package is that the lenders reserve the right to recompense for the sacrifices undertaken by them to the extent of debttransferred under the Scheme of Arrangement. The total debt transferred to the Company under the Scheme of Arrangement were Rs. 9675 lakhs.In the event of exercise of such right, the financial position of the company will be affected to that extent.

Management PerceptionThis clause is usually stipulated by the CDR Cell / Lenders in all restructuring. The financial liability, if any, will be determined only if this right isexercised. The Company, however, has not made any arrangement for this liability as this liability, if any, would be ascertained only after thepayment of all the existing debts.

14. According to CDR terms, the Lenders may require the Company to prepay the Loan, without a pre-payment premium, on dates earlier than thestipulated repayment schedule.

Management PerceptionAs per the CDR terms, lenders may require the Company to prepay the loan, only if the profitability, cash flow and other circumstances sowarrant.

15. According to CDR terms, the Lenders reserves the right to review the interest rate on the remaining debt to be serviced by the Company.

Management PerceptionLenders will exercise this right only if cash-flows and the circumstances so warrant.

16. As per the CDR terms, the Company shall not undertake any new project or expansion or make any investment or acquire any assets on lease/ hire-purchase or enter into any joint venture agreement, Merger & Acquisition deal, sale of investments, hiving off of division, etc. without priorapproval of the lenders.

Management PerceptionThis clause is usually stipulated by the CDR Cell to monitor cash outflows.

17. As per the CDR approved package, the Company has to make an investment in Siel Ltd. to the extent of Rs. 800 lakhs by September, 2005. Incase of failure to bring the equity in the present rights issue, company’s cash flows would be affected to that extent.

Management PerceptionThe Promoters have undertaken for meeting any shortfall in the total subscription in the issue.

18. The Company needs RBI’s specific approval before making issue & allotment of Shares to OCBs, which is still awaited.

Management PerceptionThe Company has applied to Reserve Bank of India vide their letter dated 19th July, 2004 in respect of taking its approval for issue and allotmentof Shares to OCBs. The Company has received approval in respect of three OCBs out of total 4 OCBs and the approval in respect of fourthOCB, will be received after furnishing necessary information by them as required by RBI. The Company will make offer and allotment to that OCBonly after receipt of specific approval from RBI.

19. Risk of attrition of key personnel and ability to attract and retain talented professionals.

Management PerceptionThe Company has identified development of human resources as a critical activity for growth. The Company believes that its Human Resourcesinitiatives will enable it to retain existing talent and attract new talent into its system.

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20. Promise v/s Performancea) For the Company – Mawana Sugars Ltd.

There was no public / rights issue of securities made by the Company in the last 3 years as the Company came into existence only inDecember, 2002.

b) Promise v/s Performance of Group / Associate CompaniesThere was no public / rights issue of securities made by any listed companies under the Promoter Group / Associate Companies in the last3 years. However, shortfall in the Promise v/s Performance regarding the last issue made by them, is given in detail on pages no. 88and 89.

21. The Company has following contingent liabilities, which are not provided for as on 30th June, 2004:

Sr. No.

1.

2.

3.

Particulars

Claims against the Company not acknowledged as debts

On partly paid shares (# Rs.20)

Amount (Rs. lakhs)

407.41

#

In respect of a guarantee to be given by the Company to lenders of a subsidiary company for the minimum realisation of principalamount of debts amounting to Rs.3075 lacs transferred to the subsidiary company as on 30.9.2002. The guarantee will come intoforce after 30.9.2004 in the event of shortfall, if any, in the realisation of the assets of the subsidiary company amounting to Rs.3075lacs and will be limited to the amounts remaining unpaid. The guarantee will lapse on payment of entire amount of Rs.3075 lacs tolenders of the subsidiary company. During the period, out of the above, the subsidiary has already repaid an amount of Rs.2290.65lacs (previous period Rs Nil) and the outstanding amount as at June 30, 2004 is Rs.784.35 lacs (As at March 31, 2003 Rs. 3075 lacs).

22. The Crushing license at Titawi Unit is still in the name of Siel Ltd. and the Company is yet to get the approval for changing the same in the nameof Mawana Sugars Ltd. The Crushing license at Mawana Unit is still in the name of Mawana Sugar Works (which was earlier unit of DCM Ltd.)and the Company is yet to get the approval for changing the same in the name of Mawana Sugars Ltd

Management PerceptionThe Company applied to the concerned authorities on 18th October, 2003 and 17th December, 2003 in case of Titawi & Mawana Units respec-tively for change in name to Siel Sugar Ltd. and had been expecting approval for the same shortly, but in the meantime, Company got its namechanged from Siel Sugar Ltd. to Mawana Sugars Ltd. The Company has now applied for getting the license changed in the name of MawanaSugars Ltd. vide their letter dated 6th July, 2004 for Mawana Unit but does not foresee any problem in getting converted. Also, the company hasintimated the change of name to the authorities in case of Titawi Unit.

23. The Company’s License for wholesale trader (FPS), Mill Factory (Firewood) & Retail Trader (FPS) under UP Krishi Utpadan Mandi SamitiAdhiniyam, 1964 for its Mawana Unit is pending for renewal from the Secretary, Krishi Utpadan Mandi Samiti, Mawana. Another RegistrationCertificate for packing of sugar and Registration under Central Excise Act is also pending for change in name from Siel Sugar Ltd. to MawanaSugars Ltd.

Management PerceptionThe Company has already made an application to the concerned authority vide their letter dated 22nd June, 2004, whereas for change in nameto Mawana Sugars Ltd., the Company has applied vide their letter dated 22nd July, 2004. The Company does not foresee any problem in gettingthe required approvals.

24. The Company’s Licences for sale of insecticides at Babri Store, Lalu Kheri Store and Charthawal and Licence for sale of fertilizers at BaghraStore at Titawi Unit are pending for change of name from Siel Sugar Limited to Mawana Sugars Limited. Further, a registration certificateobtained under Central Excise Rules, 1975 is also in the name of Siel Sugar Limited.

Management PerceptionThe Company has already made an application to the concerned authorities and does not foresee any problem in getting the required approvals.

25. Out of total land at Mawana, the Company is to surrender 6.251 hectares of land to the State. In addition, State Administration is seeking that9.815 hectares of land to be reverted back to the State being not actively used by the Company.

Management PerceptionThe land admeasuring 6.251 hectares at Barhni is not in direct and active use for more than 50 years and as ordered by Hon’ble Allahabad HighCourt, the Company is in the process of surrendering the land. In regard to 9.815 hectares of land located at Mawana Mandi, the Company iscontesting the State Administration decision in the Courts of Competent Jurisdiction. However, the said land was not used by the Company fortheir manufacturing activities.

26. The Company’s Land at Mawana & Titawi Units as well as Lands held at other places like Nanglamal and Gurgaon is not in Company’sname i.e. Mawana Sugars Limited.

Management PreceptionOut of total land of 64.739 hectares at Mawana, 46.282 hectares of land has already been mutated in the name of Siel Sugar Ltd. and 3.158hectares are in the process of changing from Shriram Industrial Enterprises Ltd. to Siel Sugar Ltd. The Company’s land at Barhni admeasuring6.251 hectares is to be surrendered to the Government and the balance land of 9.048 hectares is under litigation, details of which are mentionedunder the head “Land” appearing on page no. 24 & 25. The entire land in Titawi Unit admeasuring 29.076 hectares has been mutated inthe name of Siel Sugar Ltd. In regard to land at Nanglamal, 36.427 hectares has already been mutated in the name of Siel Sugar Ltd. andthe balance is under process of changing its name to Siel Sugar Ltd. Gurgaon Land is still in the name of Siel Ltd. As the Company’s namehas recently been changed from Siel Sugar Ltd. to Mawana Sugars Ltd., the Company will accordingly get the revenue records modified.

27. Sugar cane constitutes around 70% of cost of production for manufacture of sugar and the cane purchase is highly regulated by State /Central Government. Any upward revision in the prices of sugar cane affects the total cost of production and therefore profitability.

Management PerceptionAny increase in the price of sugar cane is expected to be offset by way of increase in sugar prices.

97

28. Sugar production is dependent on the availability and quality of cane and any drastic changes in climatic conditions may impact sugarcanecrop and hence sugar production.

Management PerceptionTo some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall. The Company has sufficientavailability of cane in its command area and does not foresee any material adverse impact on the sugar production in the normal circum-stances.

29. Distant location of mills from the ports increases the cost of transportation for exports.

Management PerceptionConsidering the present demand-supply scenario in the Sugar Industry, the Country will not be in a position to export sugar.

30. The Company has given a guarantee to the lenders of Siel Holdings Ltd. (SHL - a Subsidiary Company), for the minimum realization of principalamount of debt amounting to Rs. 3075 lakhs.

Management PerceptionSiel Holdings Ltd. has already repaid the principal amount of debts amounting to Rs. 2291 lakhs out of Rs. 3075 lakhs. The balance amountof the debt will be repaid out of the sale proceeds of the investments held by SHL. The company does not foresee any liability crystalising onaccount of the above guarantee.

31. Nine out of 10 (ten) promoter companies have made losses during F.Y. 2002-03 (last available audited results except mentioned incase of Siel Ltd.).- Siel Ltd - Rs. 3751.87 lakhs (F.Y. 2003-04)- Busneda Commercial Pvt. Ltd. - Rs. 21.34 lakhs- Sandvik Inv. & Leasing Pvt. Ltd. - Rs. 6.94 lakhs- Greenfields Comm. Pvt. Ltd. - Rs. 16.14 lakhs- Minos Trading (I) Pvt. Ltd. - Rs. 11.20 lakhs- CSR J & K Investments Pvt. Ltd. - Rs. 3.27 lakhs- SFSL Securities Pvt. Ltd. - Rs. 0.57 lakhs- Perennial Investments Ltd. - Rs. 91.22 lakhs- Doab Foods & Gen. Industries Ltd. - Rs. 3.88lakhs

Management PerceptionThe losses of the Promoter Company in no way impact the profitability of the Company except in case of Siel Limited in which the proceeds ofthis issue are proposed to be invested in terms of CDR package. In Siel Limited, the company expects improved performance on account of itsdebt restructuring & reduction in its interest liability.

32. Seven Promoter Group Companies of Mawana Sugars Ltd. viz. Busneda Commercial Pvt. Ltd., Chhaya J&K Investments Pvt. Ltd., Gaiety J&KInvestments Pvt. Ltd., KSR J&K Investments Pvt. Ltd., CSR J&K Investments Pvt. Ltd., Greenfields Commercial Pvt. Ltd. & Krishna J&KInvestments Pvt. Ltd. had incurred losses and have applied for reduction of capital.

33. Three Promoter Group Companies viz. Busneda Commercial Pvt. Ltd., Greenfields Commercial Pvt. Ltd. and Minos Trading India Pvt. Ltd.entered into the Scheme of Arrangement with its Creditors.

Management PerceptionAs a part of consolidation exercise to avail synergies, these Companies have entered into Scheme of Arrangement with their Creditors.

34. Four group companies on account of losses, have accumulated arrears of dividend on Cumulative Preference Shares viz. Jay EngineeringWorks Ltd., Siel Financial Services Ltd., Siel Ltd. and Transiel India Ltd.

35. Twelve Group Companies, due to accumulated losses, have negative networth as per last available Audited results i.e. during the F.Y.2002-03 or F.Y. 2003-04, as case may be.

36. One of the Promoter Group Company viz. Jay Engineering Works Ltd. (subsidiary of Siel Holdings Ltd., which is a subsidiary of MawanaSugars Ltd.) became sick and got registered with the Board of Industrial & Financial Reconstruction (BIFR) in the year 1994. TheCompany’s name was also in the RBI’s defaulter list. The rehabilitation scheme once sanctioned in November, 1997 was revised due tonon-implementation.

Management PerceptionBIFR declared the Company as sick in its hearing held on 8th April, 1994 and appointed IDBI as the Operating Agency for submitting a revivalscheme. BIFR sanctioned a rehabilitation scheme vide its order dated 21st November, 1997. The said scheme did not work satisfactorily andBIFR revised the earlier sanctioned scheme vide its order dated 8th April, 2003. IDBI continues as the Operating Agency for revised rehabili-tation scheme which is under implementaion.

37. In case of Three (3) Promoter Group Companies viz. Perennial Investments Limited, Doab Foods & General Industries Limited and M.S.R.Enterprises Limited, penalty of Rs. 50,000/- has been imposed by SEBI for violation of SEBI(Substantial Acquisition of Shares & Takeover)Regulations, 1997 in the year 2000-01.

Further, in case of another Group Company viz. SFSL Investments Limited, penalty of Rs. 5,000/- has been imposed by Company Law Boardfor contravention of Sec. 383A of the Companies Act, 1956.

Management PerceptionThe defaults were in as much as the disclosures in the Notice for the preferential allotment of shares of Usha International Ltd. were not foundadequate by SEBI. After detailed hearing, a fine of Rs. 50,000/- was imposed on these Companies, which subscribed to preferential allotment.The penalty has already been paid by all these companies.

38. One of the promoters Group Company viz. Siel Financial Services Limited has made the default in the payment of listing fees at MadhyaPradesh Stock Exchange for the F.Y. 2001-02 & 2003-04, at Calcutta Stock Exchange from the financial year 1999-2000 and at AhmedabadStock Exchange from the Financial Year 2001-02.

98

a) Criminal Cases

S. No

1.

2.

3.

4.

5.

6.

7.

8.

9.

Authority

Judicial Magistrate,Saharanpur


Chief Judicial MagistrateMuzaffarnagar

Scheduled Castes &Scheduled TribesCommission,Lucknow

Human RightsCommission/ SDM,Mawana


Chief Judicial Magistrate,Chandigarh

Judicial Magistrates,Mawana, Meerut andMuzaffarnagar


Accused

Sh. Bhupinder Singh andMr. H.S. Malik Manager(Cane)

Sh. Santar Pal, CaneSupervisor and Mr. D.K.Sinha, Deputy Manager(Cane) & Ors.

Mr. Harbans Singh

Smt. Chandra Kanta

Smt. Chandra Kanta

Shri A.K.Aggarwal, Shri JoyMukherjee, Shri SharadKrishna, Shri RajeevMishra & Ors.

Mr. Tajinder Kumar,Dealer and the company

Mr. SatyapalSh. SatyavirSh. Ramesh ChandSh. Narendra Sh. Satyapal

M/s. Sumit Associates &its partners Mr. SumitJain & Mr. Anuj Jain.

Particulars of the matter / Charges

A case has been filed under Section 406of the Indian Penal Code alleging that in1990 the sugarcane was purchased with-out issuing receipts and thus the sellercould not obtain payment.

Case under Sections 323/427/506 of theIndian Penal Code for causing hurt, mis-chief and criminal intimidation has beenregistered against employees for actionstaken during the course of their duties.

The erstwhile General Manager pros-ecuted for not opening a new sugarcanepurchase center.

A complaint has been filed against thecompany alleging discrimination and ha-rassment.

A complaint has been filed against thecompany alleging discrimination and ha-rassment

8 cases under section 268/ 285/ 237/337/338 IPC and 34 of Police Act have beenfiled against the employees of the Com-pany and three contractors alleging thatthe company dumped burnt fly asharound the factory area.

A case against the Company for not hav-ing the superscription on the package“Best before date”.

The company has lodged 5 FIR/com-plaints against 5 workmen for misappro-priation of cane.

The company has filed 6 cases underSection 138 of the Negotiable Instru-ments Act. Cases Nos. 699 to 704 of2002. The company had delivered sugarto accused for which it issued chequeswhich were dishonored

Amount

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

NotAscertainable

Rs. 2.90lakhs

Rs.5.61lakhs

Status



The prosecutionhas been stayed byAllahabad HighCourt.

The investigationhas been stayed bythe Lucknow Benchof the AllahabadHigh Court in WritPetition No.5935 of2000.

On directions of theDistrict Magistrate,the SDM Mawanais inquiring into thematter.

The case are fixedfor trial.


Cases are pending

N o n - B a i l a b l eWarrants issuedagainst theaccused.

I. (A) Against the Company-Mawana Sugars Ltd.


Civil Criminal Excise Related IT Related OthersNo. of Cases 58 26 37 - 151

Amount involved Rs. 310.41 lakhs + Rs. 8.51 lakhs in Rs. 137.39 lakhs - Rs. 134.88 lakhs +interest in 24 cases. 11 cases. However, Interest in 7 cases.However, amount is amount is not In addition amount isnot ascertainable in ascertainable in not ascertainable inremaining 34 cases. balance 15 cases. - 143 cases.

39. The pending litigations / disputes by & against the Company and its Directors are as under:

99


Authority





The Company has filed four criminal writ peti-tions on the ground that Mr. Siddharth Shriram,Chairman & Managing Director, was not theoccupier as defined in the Factories Act. (CaseNo.- Crl. WP Nos.5131 to 5134 of 1993).

Status

Stay has beengranted.

Amount

Not Ascertainable

d) Under Trade Tax

Authority

Supreme Court




The company has filed a writ petition against the order dated25.8.2000 given by the Commissioner, UP Trade Tax per-taining to the period of deferment of Trade Tax.

Status



Amount

Rs. 14 Lakhs

Rs. 112.23 Lakhs


S.No

1.

2.

3.

4.

5.

6.

Authority

CESTAT, New Delhi

Deputy CommissionerMuzaffarnagar/Commissioner AppealGhaziabad

CESTAT, New Delhi/Commissioner Appeal,Ghaziabad





9 appeals filed by the Company against the or-der passed by Commissioner Appeals, Meerutfor wrongful availment of MODVAT Credit.

13 Appeals allowing CENVAT Credit. Caseshave been remanded for fact verification to theAdjudicating officer.

6 appeals filed by the company for Demand ofexcise duty due to shortage/removal of sugar/molasses grading of molasses by consumer.

The company has received seven show causenotices for shortage of molasses / sugar.

Application filed by the company for remissionin excise duties.


Status

Pending hearing.

Pending determination offacts

Pending hearing

Assessment Pending

The application is pending

Adjudication


Rs. 39.49 lakhs

Rs. 29.16 lakhs

Rs. 8.49 lakhs

Rs. 6.78 lakhs

Rs.5.64 lakhs

Rs.47.83 lakhs


S.No

1.

2.

3.

Authority

AuthorityAllahabad High Court




4 Writ Petitions filed by the company challeng-ing the tagging order for the seasons 2002-03 & 2003-04.

The company has filed a case challenging thevires of the arbitration proceedings beforeDeputy Cane Commissioner, Saharanpur.

7 Writ Petitions were filed by the Company/against the Company for past seasons regardingreservation of cane purchase centres.

Status

The High Court stayed theorder of the DM and modi-fied the tagging percentageat 76% & 78% respectively.

Final arguments are to beadvanced. The amount in-volved is Rs. 2.06 Lakhs.

Interim Orders in favour ofthe Company.

Opposite Party

Collector,Muzaffarnagar &Meerut

Cooperative CaneDev. Society Ltd.,Muzaffarnagar and Ors.

The matters areinfructuous now sincethey related to pastseasons & will haveno implication forfuture.

b) Labour Cases

Sr. No. Name of the Authority Claim Amount Matter / Status1. Workmen’s Compensation Commissioner, Meerut/ Rs. 8.64 lakhs + 5 Cases are filed against the Company for compensation /

Deputy Labour Commissioner, Meerut/ Interest gratuity / permanency and payment of HRA.Labour Court, Meerut 1 case filed by an employee claiming that he was

prematurely retired, as his actual date of birth was later.

2. 127 cases of temporary/regular workmen for reinstatement and/or compensation, dismissal & extra allowance. The cases arepending at Allahabad High Court/Labour Court/Ind. Tribunal, Meerut / Saharanpur. The amount is not ascertainable in all these cases.

100

g) Civil Cases

S.No.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

Authority

Tehsildar (Judicial) Sadar,Muzaffarnagar,Tehsildar (Mawana)

Addl. Distt. Judge-VII,Meerut

XIII Addl. Dist. Judge,Meerut

Delhi High Court


Board of Revenue atAllahabad

Allahabad High court


District Consumer Forum,Muzaffarnagar

Delhi High Court

Addl. Civil Judge, Sr.Div.Meerut/ Civil Judge,(Jr.Div.) Mawana, CivilJudge Merut

Vth Addl Civil judge Meerut,III Addl. Civil judgeMeerut,VII Addl Civil JudgeMeerut

Civil judge (Jr. Div.)Meerut,Civil judge (Sr. Div)Meerut,Civil Judge, Dehradun

Supreme Court





The Union of India has filed a letter PatentAppeal against the company and three othersugar factories regarding encashment ofbank guarantees for differential levy sugarprice.

Suit for injunction filed against the companyregarding school building in Mawana Mandi.

The company has filed a revision against anorder by which a demand of Rs.26,925/- wasimposed on it on account of additional stampduty in relation to land purchased by the com-pany. A penalty of Rs.1,26,925/- has alsobeen imposed.

3 writ petitions filed by the company for grantof release order for sale of free sale sugarwithout any restrictions


Complaints against non-refund of the securitydeposit for the electrical connection.



3 suits of recovery of amount from anemployee and two suppliers have been filedby the company



Status

Pending. But in 1 Case thematter has been sent back to theTahsildar for reconsideration bythe Allahabad High Court whichhas stayed the recovery ofdamages and demolition of theboundary wall.

For arguments.

Final arguments


The Municipal Board has soughtimpleadment in the matter

The revision was dismissed indefault. However, the applicationfor restoration is pending.

Interim orders passed in favourof the company.

The High Court has passed anorder whereby the toll taxcharged from the companywould be kept in a separate ac-count subject to the final orderof the High Court.

For Reply






Amt.

Rs. 13.93 Lakhs





Rs.1.54 lakhs.



Rs.1.48 lakhs






101

g) Civil Cases

S.No.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

Authority






Allahabad High court48159/2002



Delhi High Court

Delhi High Court

National ConsumerDisputes Redressal Forum,Delhi




The company has filed a writ petition chal-lenging the demand of the Cane Commis-sioner, Uttar Pradesh for payment of moneyon account of differential transport rebate oncane purchased during the season 1989-90.

The company has filed a writ petition chal-lenging demand of interest on electricity duty.


Writ petition filed on behalf of the companythrough West, central & East UPSMA fordirections to be given to state not to fix caneprice for corporate and co-operative factories.

Two Writ petitions filed on behalf of the com-pany through West UPSMA challenging levyprice for 1999-2000 & 2000-2001.

The company has filed a petition challengingthe order of the District Magistrate, Meerutrequisitioning its guest house to use it astemporary jail

The State Trading Corporation of India hasfiled an appeal against an order of the SingleJudge of the Delhi High Court wherein anarbitral award in favour of the company wasmade rule of court.



Status



The company has deposited thedemanded amount of Rs.20.00lakhs and plans to withdraw thecase.

The company’s writ has beenconnected with another writpetition and is pending hearing.


The matter is pending for finaldisposal.


Stay order granted. The petitionis pending.

As per the orders of the DelhiHigh Court, the State TradingCorporation has deposited asum of Rs.7.27 lakhs and thecompany has been permitted towithdraw the said amount by fur-nishing a bank guarantee of anequivalent amount.

The petition is listed for finaldisposal in August 2004.


Amt.


Rs. 100 Lakhs (approx.)


Rs.42.90 Lakhs





Rs.7.27 Lakhs


Rs.25.18 Lakhs

3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of Addl. Collector (E), Meerut imposingdamages for allegedly encroaching on land belonging to the Gram Sabhas involving an amount of Rs.4.06 Lakhs.

3 writ petitions have been filed by the company in Allahabad High Court challenging the orders of the Board of Revenues wherein thecompany has been ordered to pay additional stamp duty in connection with land bought by the company. The amount involved in 2 of thesepetitions is Rs. 45.47 Lakhs.

A writ petition has been filed by the company in Allahabad High Court challenging the order of Dy. Director of Consolidation wherein he hasset aside an order by which the company had been given 4 bighas and 14 biswas of land. The amount involved is not ascertainable.

5 cases have been filed against the company before Addl. Civil Judges of Muzffarnagar, Meerut and Pathankot demandinginjunction. The amount involved in the case with Pathankot Judge is Rs. 3.56 Lakhs though in remaining cases, amount involved isnot ascertainable.

102


Authority



Additional LabourCommissioner, Kanpur



Allahabad High Court,Workman CompensationCommissioner, Meerut


13 Writ Petitions filed by the company againstthe Awards whereby temporary workmen werereinstated with back wages.

2 Writ Petitions filed by the Company against theorder requiring the management to leadevidence though the onus was on workmen.

An appeal filed by the company against an orderunder the payment of Gratuity Act, 1972 for givinggratuity to a teacher.

Writ Petition filed by the Company challengingthe order passed by the Commissioner under theWorkmen’s Compensation Act, 1973 grantingcompensation to the widow of a employee whohad not met with an accident during the courseof employment.

Writ Petition filed by the Company challengingthe order of the Labour Court regardingreinstatement of a temporary workman.

M/s New India Assurance Company has filedan appeal against the award under theWorkmen’s Compensation Act, 1923 wherebya sum of Rs.1.76 lakhs has been awarded tothe wife of the deceased. The company hasfiled application for Review of the award asthe company has been ordered to pay interestupon the compensation amount.

Amount

Rs.29.51 lakhs

Not Ascertainable


Rs.2.22 lakhs

Not Ascertainable


Status

The workmen were awardedreinstatement by the labour court/Industrial Tribunal and the Company haschallenged the decision.

The company has challenged the interimorders of the Labour Court.

The lower Court ruled in favour of theOpposite Party.

In pursuance of an interim order passedby the High Court the Company haspaid Rs.1 lakh to the wife of thedeceased and the remaining amount ofRs.1.22 lacs has been deposited in theNationalised Bank in the joint name ofthe Commissioner and the wife of thedeceased. The appeal is still pending.

Further proceedings before the LabourCourt have been stayed and the writpetition is pending.

Judgement has been reserved on thereview application.

II. Against the Directors of the Companya) Mr. Siddharth Shriram - Under Factories Act

Authority

Chief JudicialMagistrateMeerut

Allahabad HighCourt


4 criminal complaints filedagainst Sh. Siddharth Shriram &B.K.Agarwal

4 petitions under section 482Cr.PC filed by the company.

Status

Proceedings arestayed by order ofthe Allahabad HighCourt

Stay order in favourof the company

Amount



Allegations/Charges

The Charges in the complaints relate toviolation of provisions of Factories Act likeLeave book not given to the workers, Fireextinguishing appratus not placed in CO2pump room, only one door for exit, belt notprovided on drive guard etc.

Challenging the prosecution cases lodgedagainst the Director.

b) Mr. Siddharth Shriram - Criminal CasesAuthorityJudicial MagistrateFirst Class, Indore.

Status

Pending. But thecompany has depositedthe disputed amountwith the Labour Court.Another union whichalso brought forwardworkers has filed aninterim application for10% of the amount paidto those workers.

Particulars of the matterRuchi Soya Industries has filed acase against a supplier of thecompany under Section 138 of theNegotiable Instruments Act andSection 420 of the Indian PenalCode. Case No.2828/1999

StatusThe company hasmoved anapplication fordischarge of itselfand its officials.

AmountRs.40.83 Lakhs

Allegations/ChargesThe company and its officials includingMr. Siddharth Shriram have conspiredwith Swarnima Oil Industries to cheatthe Opposite party.


Contempt petition has beenfiled against the companyand Shri Krishna Shriram,Mr. A. K. Mehra and Mr. P.K. Bhalla.

Amount

Rs.8.56 lakhs

Opposite Party

S a n k y u tKamgar Morcha

Allegations/Charges

The company had agreed with theopposite party to pay compensationto the contract workers and out ofthe said compensation 10% wasto be given to the Opposite Party.However, the Opposite Party didnot bring forth all the workers. Thecompany only paid 10% to theOpposite Party for the workersactually brought by the OppositeParty. Due to this, the oppositeparty has filed the contempt petition.

Authority

Supreme Court

III. Against Promoters of the Company - Mr. Krishna Shriram

103

40. Outstanding Litigations / disputes, etc. against the Promoter Group CompaniesFor details, please refer to para “Outstanding Litigations & Disputes” on pages no. 66 to 87.

Management PerceptionThe operations of the Company as also the financial performance are not likely to materially adversely affect in any manner on account of thedefaults / litigations of the Promoter Group Companies / Associate Companies / JV Companies since the operations of the Company are notdependent on any of the said companies.

EXTERNAL RISK FACTORS1. Sugar Industry is a controlled industry and the Government controls the sugar cane prices through Statutory Minimum Price Mechanism

and State Advised Price Mechanism and also the quantity of sugar to be sold in free markets by release mechanism. As such, theperformance of the companies in the Sugar Industry is dependent on Government Policies.

2. The recent judgement pronounced by the Constitution Bench of Hon’ble Supreme Court has upheld the rights of State Govt. to fix the stateadvised prices. This judgement could result into some demands for the past periods.

3. Availability of Sugar cane, the major raw material, amongst other factors, depends on the monsoon conditions, which affects theproduction and recovery. To some extent, sugar cane is a weather resistant crop and is unaffected by moderately high or low rainfall.However, any drastic changes in climatic conditions may impact sugarcane yield and hence sugar production.

4. Poor monsoon conditions in North India in the Current Season may affect the Cane production, which would affect the availability of thecane to the sugar mills.

5. Competition from existing established companies and future entrants into the Industry.

6. The performance of the Company may be affected by a number of factors beyond its control including political and economic develop-ments both in India and worldwide. Terrorist attacks and other acts of violence or war may negatively affect the domestic as well as theoverseas markets. These acts may also result in a loss of business confidence and make other services more difficult and ultimatelyaffect the Company’s business, financial conditions and results of operations.

7. Purchase of sugar cane and payment of cane prices is through Co-operative Cane Societies causing inefficiencies in the System.

8. Cane diversion to Khandsari and Gur Manufacturers who are not governed by the government regulations.

9. The business of the Company is subject to the regulations of Government of India and State Govt. A change in the Government’seconomic liberalization and deregulation policies could affect business and economic conditions in India and the business of the Companyin particular.

10. Import of raw sugar as the international price is comparatively lower.

11. Tight liquidity position of the Industry as a whole due to lower margins and high inventory holding period.

Management PerceptionThese external risk factors are beyond the control of Management. Notes to the Risk Factors:1. Net Worth of the Company as on 29th February 2004 is Rs. 7119.86 lakhs (net of miscellaneous expenditure written off) and the size of the current

issue is Rs. 849.90 lakhs.

2. The adjusted net asset value per share as on 29th February 2004 is Rs. 24.21 per share.

3. The cost per share to the Promoter is Rs. 10/-.

4. The promoters of the Company / other companies in the promoter group, apart from normal commercial transactions and their shareholding in theCompany, have no other interests in the Company either by itself or through their interests in other companies in the promoter group. Thedirectors of the company, apart from reimbursement of expenses incurred, sitting fees and directors commission and in case of ManagingDirector, remuneration payable in accordance with the provisions of the Companies Act, 1956 and their shareholding in the company if any, in thenormal course of business have no other interest in the company except for the commercial transaction between the company and the compa-nies/firms in which directors are interested.

These commercial transactions are fully disclosed in the register maintained under section 301 of the Act. These transactions are certified bythe statutory auditors as being transacted at a price, which are reasonable, having regard to the prevailing market prices of the goods, materialor services involved.

5. The related party transactions as per Accounting Standard 18 issued by Institute of Chartered Accountants of India as on 29th

February 2004 are as follows:

(i) Names of related parties and description of relationships







a) From September 15, 2003: Mr. P.K. Bhalla, Mrs Asha Bhalla, (relative of Mr. P.K. Bhalla), Mr A.K. Mehra, Mrs Binu Mehra, (relative of Mr. A.K.Mehra)

b) From December 16, 2003: Mr. Rajendra Khanna, Mrs Rajni Khanna (relative of Mr Rajendra Khanna)

c) Upto September 15, 2003: Mr. Deepak Banerjee and


104

Rs. in Lakhs

Subsidiary Key Management Enterprise Over which TotalCompanies Personnel and their key management

Relatives personnel haveSignificant Influence *



Professional Fee – 4.90 – 4.90


Management fee received 20.00 - 34.00 - 54.00 -Remuneration to key management personnel 72.70 18.02 72.70 18.02

Commission Paid 38.24 22.91 38.24 22.91



Advances given 0.01 0.77 13.43 - 3.00 1492.56 16.44 1493.33Guarantees given on behalf of the Company 12347.12 - 12347.12 -

Balance outstanding as at the year end:

- Receivables 0.78 - 13.10 - 1570.26 1492.56 1584.14 1492.56

- Guarantees given on behalf of the Company 12347.12 - 12347.12 -

** Do not include assets, liabilities vested in the Company pursuant to the Scheme and the assets, liabilities, incomes accrued and ex-penses incurred prior to incorporation when the undertakings were run and managed by Siel Limited in trust for the Company (also referto note 3 above)

Enterprise over which key management personnel have significant influence: Siel Limited

6. Outstanding Loans and advances to Key Managerial Personnel as on 29th Feb., 2004 are as follows:

Name Designation Amount (in Rs.)Mr. Siddharth Shriram Chairman & Managing Director NilMr. P.K. Bhalla Executive Director & Company Secretary 6,98,894

Mr. A.K. Mehra Executive Director (Operations) 2,60,200

Mr. Rajendra Khanna Executive Director (A/cs & Fins.) 3,51,400

XXI. STATUTORY AND OTHER INFORMATIONMinimum SubscriptionIf the Company does not receive minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants within forty-twodays from the Date of Closure of the Issue. If there is delay in the refund of subscription by more than 8 days after the Company becomes liable to paythe subscription amount (i.e. forty two days after Closure of the Issue), the Company will pay interest for the delayed period, at rates prescribed undersub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.

Expenses of the IssueThe expenses of the Issue payable by the Company are estimated to be around Rs. 85 lakhs (10% of the Issue Size) and include fees to the LeadManagers, Legal Advisors & Solicitors and Auditors to the Issue – around 2%, Registrars to the Issue – 0.60%, Printing & Dispatch – 6%, Advertise-ment & Publicity – 0.60% and and Other Expenses & Contingencies – 0.80%. The entire issue expenses will be borne by the Company.

UnderwritingSince the Issue is not being underwritten, no underwriting commission is payable.

Previous Issues for CashFor details of all previous issues for cash, investors may refer to Capital Build-up appearing on page no.10 of the Letter of Offer.

Previous Public/Rights Issues by the CompanyThe Company has not made any public or rights issue during last five years.

Commission or brokerage on previous issueAs the Company has not made any public or rights issue, no commission or brokerage was paid.

Issues For Consideration Other Than For CashThe Company has not made any issue for consideration other than cash or out of revaluation reserves except issue of shares made pursuant to theScheme of Arrangement details of which are given on page no. 12 at point 15 under Notes to Capital Structureof the Letter of Offer.

Debentures and redeemable preference shares and other instruments issued by the Company outstandingThere are no outstanding redeemable preference shares and Debentures issued by the Company except for the Zero Coupon Debentures (ZCDs)non-convertible of Rs. 100/- each which are to be redeemed in three annual instalments of 15%, 25% and 60% at the end of 2nd, 3rd and 4th year from30th September, 2002. The total amount outstanding on these debentures as on 29th February, 2004 is Rs. 2285 lakhs.

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Option to SubscribeOption To Receive The Rights Equity Shares In Dematerialised FormApplicants have the option to hold the equity shares in electronic form under the depository system. The Company has signed an agreementwith National Securities Depository Limited (NSDL) on 8th December 2003 and with Central Depository Services (India) Ltd. (CDSL) on 30th

October, 2003, which enables an investor to hold and trade in securities in a dematerialised (electronic/demat) form, instead of holding equityshares in the form of physical certificates. Equity shares being offered through this Rights Issue will be admitted to NSDL and CDSL, whenallotted.Applicants may note that they have the option to subscribe to the Rights equity shares in demat or physical form, or partly in demat and physicalform, in the same application, in the space provided. No separate applications for demat and physical shares are to be made. If such applicationis made, the applications for physical shares will be treated as multiple applications and rejected accordingly. In case of partial allotment,allotment will be first done in demat form, and the balance, if any, will be allotted in physical form. The equity shares of the Company have beenincluded in the Compulsory Demat trading with effect from December 17, 2003b (the date of listing of the equity shares with BSE) for all classesof investors. Hence, investors may note that the equity shares of the Company can be traded on the stock exchanges only in dematform.

Purchase of PropertyThere is no property which the Company has purchased or acquired or proposes to purchase or acquire, which is to be paid for, wholly orpartly, 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 OfferDocument, other than:a) the contracts for the purchase or acquisition whereof were entered into, or may be entered into, in the ordinary course of the Company’s

business, such contracts not being made in contemplation of the Issue or in consequence of the contract; orb) property in respect of which the amount of the purchase consideration 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 anypayment thereof. The Company has no plans, at present, to acquire any running business out of the proceeds of the Issue.

Terms of Appointment of Managing DirectorThe Company has appointed Mr. Siddharth Shriram as the Managing Director of the company in accordance with the provions of theCompanies Act, 1956 for the period of five years w.e.f 1st October 2003. The details of his compensation are given on pages no. 28 of the Letterof Offer.

Payment or Benefit to the Directors and Officers of the CompanyNo amount or benefit has been paid or given or is intended to be paid or given to any Director or Officer of the Company except their normalremuneration and/or reimbursement for the services rendered to the Company to which they are entitled or may become entitled to under theprovisions of the Companies Act or otherwise in accordance with the Law.

Rights of the Equity Shareholdersa) Right to receive dividend, if declaredb) Right to attend general meetings and exercise voting powers, unless prohibited by lawc) Right to vote either personally or by proxyThe details regarding lien on shares, process of modification of rights, forfeiture of shares and transfer of shares are contained in theMemorandum and Articles of Association a copy of which is included in material documents open for inspection.

Capitalisation of Reserves or ProfitsThe Company has not capitalised the reserves or profits since its inception.

Revaluation of AssetsThe Company has not revalued its assets since inception.

XXII. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTSThe following contracts (not being contracts entered into in the ordinary course of business or entered into more than two years before dateof this Letter of Offer), which are or may be deemed material have been entered or are to be entered into by the Company. These contractsand also documents for inspection referred to hereunder, may be inspected at the registered office of the company at New Delhi from 11.00am to 2.00 pm from the date of this Letter of Offer until the date of closure of this Issue.

A) MATERIAL CONTRACTS

1. Mandate dated 7th April 2004 of the Company appointing Allianz Securities Ltd. to act as the Lead Manager to the Issue.

2. Memorandum of Understanding dated 12th May 2004 entered into with the Allianz Securities Ltd., Lead Manager to the Issue.3. Memorandum of Understanding dated 12th May, 2004 entered into with MAS Services Pvt. Ltd., as Registrars to the Issue.

4. Consent Letter dated 26th April, 2004 and 11th May, 2004 of State Bank of India and Punjab National Bank respectively to act as Bankerto the Issue.

B) MATERIAL DOCUMENTS

1. Copy of letter dated 6th April, 2004 from the Registrar of Companies, Delhi & Haryana confirming the availability of the new name ‘MawanaSugars Limited’.

2. Memorandum and Articles of Association of the Mawana Sugars Ltd. and the Group Companies.

3. Listing Agreement dated 04.12.2003 with The Stock Exchange, Mumbai for listing of the existing shares.4. Copy of Agreement with National Securities Depository Ltd. (NSDL) dated December 8, 2003.

5. Copy of Agreement with Central Depository Services (India) Ltd. (CDSL) dated October 30, 2003.

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6. Certified True Copy of the minutes of the Extra Ordinary General Meeting held on 8th May, 2004 approving the Rights Issue.

7. Copies of Form 24AA from the Directors for particulars of Directorship held by them.8. Copy of Certificate dated 8th June, 2004 from Auditors in respect of Tax benefits.

9. Copies of Annual Reports of Mawana Sugars Ltd. for the period ended 31st March 2003.

10. Copy of Adjusted Balance Sheet and Profit and Loss Accounts for the period ended 31st March 2003 and for the period ended 29th Feb,2004.

11. Copy of Annual Reports of Promoter Group Companies and other Group Companies for the last three years i.e. 2000-01, 2001-02, 2002-03.

12. Copies of Consent letters from Auditors, Legal Advisors, Lead Managers, Registrars, Company Secretary and Bankers to the Issue.

13. Copy of approval of CDR Cell vide letter no. CDR (KS)/623 dated 5th March, 2003 approving the ‘scheme of arrangement’.

14. Copy of Letter dated 11.05.2004 from ICICI Bank Ltd., New Delhi, the Monitoring Agency about the approval of Rights Issue.15. Copy of the Letter of CDR Cell dated 16th July 2004 giving no objection to the Rights Issue.

16. Copies of letters / confirmations received from Promoters in respect of their intention to subscribe to their rights entitlement.

17. Copy of Undertaking from the promoters in respect of meeting any shortfall in the subscription to the Issue.

18. Copies of consent / approvals / licences / NOCs received for Sugar manufacturing plants of the company situated at Mawana & Titawi.19. Copies of the last offer documents for public/rights issue of Equity Shares/Debentures by Promoter Group Companies viz, Shriram

Industrial Enterprises Ltd. (now Siel Ltd.), Usha International Ltd, Shriram Honda Power Equipment Ltd. (now Honda Siel Power ProductLtd.) and Shriram Agro-Tech Industries Ltd.(Siel Financial Services Ltd.)

20. Copy of Certificates for water and Air Pollution for Mawana and Titawi plants.21. Copy of letter dated 9th June, 2004 by the legal advisor to the Company giving details of the litigations, court cases, disputes, litigations

and criminal proceedings against the company and those filed by the company as appearing in the offer document.22. Copy of the letter by the concerned authority approving the change of name from Siel Limited to Siel Sugar Limited in the revenue records

in relation to the land at Mawana and Titawi Units.23. Letter no. MSL/RBI dated 3rd July 2004 to Reserve Bank of India in respect of allotment of shares to Non-resident Indians and Overseas

Body Corporates Letter no. FE.DEL.FID/362/06.04.3645/2004-05 dt. 12th July, 2004 issued by Reserve Bank of India in respect ofallotment of shares to Non-resident Indians. Company’s letter No. MSL/RBI dated 19th July, 2004 in respect of specific approval of RBIfor issue and allotment to OCBs. RBI’s letter No. FE.CO.FID/898/11.01.20(V()/2004-05 dated 5th August, 2004.

24. Copies of letter filed for in-principle approval from the Stock Exchange, Mumbai and the letter no. Dcs/smg/sdm/sg/vm/04 dated 2nd July2004 granting the in-principle approval.

XXIII. DECLARATION

NO STATEMENT MADE IN THIS LETTER OF OFFER SHALL CONTRAVENE ANY OF THE PROVISIONS OF THE COMPANIES ACT 1956 ANDTHE RULES MADE THEREUNDER. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE GUIDELINES,INSTRUCTIONS, ETC, ISSUED BY SEBI, GOVERNMENT OR ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULYCOMPLIED WITH.

Your FaithfullyBy the order of the Board of Directors of MAWANA SUGARS LIMITED

Mr Siddharth Shriram Mr. Deepak BanerjeeChairman & Managing Director Director

Mr. Ravi Vira Gupta Mr. Subrata LahiriDirector Director

Mr. N.K. GoilaDirector

Place : New DelhiDate : 5th August, 2004

Encl : Composite Application Form

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