DRAFT RED HERRING PROSPECTUS

Dated [z], 2006

The Draft Red Herring Prospectus will be updated and become Red Herring Prospectus upon RoC filing
Please read Section 60B of the Companies Act, 1956
100% Book Building Issue

SUNSTAR OVERSEAS LIMITED

(The Company was incorporated on 06th January 1995 as Sunstar Overseas Limited, under the Companies Act, 1956, and received its
Certificate for Commencement of Business on 31st January 1995.)
Registered Office: 4119/7, 1st Floor, Naya Bazaar, Delhi - 110 006.
Tel No: (011) 2393 0560; Fax No: (011) 2392 3233
Corporate Office: 24B, Alipur Road, Civil Lines, New Delhi - 110 054.
Tel No: (011) 2399 4383-87; Fax No: (011) 2399 4326
Website: www.sunstaroverseas.com; Email: [email protected]
Contact Person: Ms. Kiranpreet Gill, Company Secretary and Compliance Officer
Public Issue of 56,00,000 Equity Shares of Rs. 10/- each for cash at a price of Rs. [z z] per Equity Share aggregating Rs. [z z ] lacs by
Sunstar Overseas Limited ("Sunstar" or the "Company" or the "Issuer"). The Issue comprises of reservation of 2,80,000 Equity
Shares aggregating Rs. [z z ] lacs for permanent employees (Employee Reservation Portion) on a competitive basis and the "Net
Issue To Public" of 53,20,000 Equity Shares aggregating Rs. [z z] lacs. The Issue would constitute 34.96% of the fully diluted Post
Issue Paid-up Capital of the Company.
Price Band: Rs. [z z ] To Rs. [z
z ] Per Equity Share of Face Value of Rs. 10 each.
The Issue Price is [z z ] times of the Face Value at the Lower End of the Price Band and [z z] times
of the Face Value at the Higher End of the Price Band
In case of revision in the Price Band, the Bidding Period shall be extended for three additional working days after such revision, subject to the
Bidding Period not exceeding 10 working days. Any revision in the Price Band, and the revised Bidding Period, if applicable, shall be widely
disseminated by notification to the Bombay Stock Exchange Limited and The National Stock Exchange of India Limited, by issuing a press
release and by indicating the change on the websites of the Book Running Lead Managers ("BRLMs") and the terminals of the member of the
Syndicate.
This Issue is being made through a 100% Book Building Process wherein up to 50% of the Net Issue shall be allocated on a proportionate
basis to Qualified Institutional Buyers, of which 5% shall be reserved for Mutual Funds. Further, not less than 15% of the Net Issue shall be
available for allocation on a proportionate basis to Non Institutional Bidders and not less than 35% of the Net Issue shall be available for
allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price.
RISK IN RELATION TO THE FIRST ISSUE
This being the first issue of the Equity Shares of Sunstar Overseas Limited (the "Company"), there has been no formal market for the Equity
Shares of the Company. The face value of shares is Rs. 10/- and the issue price of Rs. [z
z ]/- per share is [z
z] times of the face value. The Issue
Price (as has been determined and justified by the Book Running Lead Manager and Sunstar Overseas Limited as stated herein under the
paragraph on the Basis for issue price) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares
are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares of the Company or regarding the price
at which the Equity Shares will be traded after listing.
GENERAL RISK
Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they
can afford to take the risk of losing their investment. Investors are advised to read the 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
risk involved. The Equity Shares issued in the Issue have not been recommended or approved by the Securities and Exchange Board of India
(SEBI) nor does the SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the statement
of Risk Factors beginning on Page [z z] of this Draft Red Herring Prospectus.
ISSUER'S ABSOLUTE RESPONSIBILITY
Sunstar Overseas Limited, having made all reasonable enquiries, accepts responsibility for, and confirms that this Draft Red Herring
Prospectus contains all information with regard to the Company and the Issue, which is material in the context of the Issue; that the
information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material
respect; that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes
this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
LISTING
The Equity Shares issued through this Draft Red Herring Prospectus are proposed to be listed on the Bombay Stock Exchange Limited (BSE),
also the designated stock exchange and on the National Stock Exchange of India Limited (NSE). The in-principle approval has been received
from BSE and NSE for the listing of the Equity Shares vide its letter dated [z
z ] and [z
z ] respectively.
BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE

UTI Securities Limited Intime Spectrum Registry Limited

1st Floor, Dheeraj Arma C-13, Pannalal Silk Mills Compound
Anant Kanekar Marg, Station Road L.B.S. Marg, Bhandup (west)
Bandra (East), Mumbai - 400 051. Mumbai - 400 078.
Tel: (022) 5551 5999/5888 Tel No: (022) 5555 5491-94
Fax: (022) 5502 3194 Fax No: (022) 5555 5499
Website: www.utisel.com Website: www.intimespectrum.com
Email: [email protected] Email: [email protected]
Contact Person: Mr. Abhijit Diwan Contact person: Mr. Vishwas Attawar
ISSUE PROGRAMME
ISSUE OPENS ON: __________________ ISSUE CLOSES ON: __________________
 TABLE OF CONTENTS

Section I – Definitions and Abbreviations

Definitions
Issue Related Terms
Company and Industry Terms
Conventional/General Terms
Abbreviations
Section II – General
Certain Conventions; Use of Market Data
Forward Looking Statements
Section III – Risk Factors
Section IV – Introduction
Summary
The Issue
Summary of Financial Information
General Information
Capital Structure
Section V – Objects of the Issue
Objects of the Issue
Basis for Issue Price
Statement of Tax Benefits
Section VI – About Us
Industry Overview
Our Business
Key Industry Regulations and Policies
Our History and Certain Corporate Matters
Our Management
Our Promoters
Currency of Presentation
Dividend Policy
Section VII – Financial Information
Financial Statements
Management Discussion and Analysis
Section VIII – Legal and other Regulatory Information
Outstanding Litigations
Statutory Approvals and Licenses
Material Developments
Other Regulatory and Statutory Disclosures
Section IX – Issue Related Information
Terms of the Issue
Issue Structure
Issue Procedure
Restrictions on Foreign Ownership of Indian Securities
Section X – Description of Equity Shares and Terms of the Articles of Association
Main Provisions of Articles of Association
Section XI – Other Information
Material Contracts and Documents for Inspection
Section XII – Declaration
 SECTION I - DEFINITIONS AND ABBREVIATIONS

DEFINITIONS

Term Description
“Issuer” or Sunstar Overseas Limited, a public limited company incorporated under
“Company” or the Companies Act, 1956
“SOL” or “Sunstar”
or “Sunstar
Overseas Limited”

“We” or “us” or Unless otherwise specified, these references mean Sunstar Overseas
“our” Limited

ISSUE RELATED TERMS

Term Description
Issue of Equity Shares pursuant to the Issue to the successful bidders as
Allotment
the context requires
The successful bidder to whom the Equity Shares are being/have been
Allottee
issued
Banker(s) to this [•]
Issue/Escrow
collection bank
An indication to make an offer made during the Bidding Period by a
prospective investor to subscribe to the Equity Shares of the Company at a
Bid
price within the Price Band, including all revisions and modifications
thereto
The amount equal to highest value of the optional Bids indicated in the
Bid Amount/Bid
Bid cum Application Form and payable by the Bidder on submission of
Price
the Bid for this Issue
Bid/ Issue Opening The date on which the members of the Syndicate shall start accepting Bids
Date for this Issue, which shall be notified in widely circulated English national
newspaper, a Hindi national newspaper where the registered office of the
Company is situated
The date after which the members of the Syndicate will not accept any
Bid/ Issue Closing Bids for this Issue, which shall be notified in widely circulated English
Date national newspaper, a Hindi national newspaper in the same place where
the registered office of the Company is situated
Bid-cum-Application The form in terms of which the Bidder shall make an offer to purchase the
Form Equity Shares of the Company and which will be considered as the
application for allotment of the Equity Shares in terms of this Draft Red
Herring Prospectus
Bidder Any prospective investor who makes a Bid pursuant to the terms of this
Draft Red Herring Prospectus
Bidding/ Issue The period between the Bid/Issue Opening Date and the Bid/Issue
Period Closing Date inclusive of both days and during which prospective
Bidders can submit their Bids
Book Building Guidelines on book building as explained under Chapter XI of the SEBI
Process Guidelines
BRLM Book Running Lead Manager to this Issue, in this case being UTI
Securities Limited
CAN/ Confirmation The note or advice or intimation of allocation of Equity Shares sent to the
of Allocation Note Bidders who have been allocated Equity Shares in the Book Building
Process

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 Term Description
Cap Price The highest end of the Price Band, above which the Issue Price will not be
finalized and above which no Bids will be accepted
Cut-off/Cut-off price This refers to any price within the price band. A bid submitted at cut-off is
a valid bid at all price levels within the price band
Designated Stock The Bombay Stock Exchange Limited
Exchange
Designated Date The date on which the funds are transferred from the Escrow Account of
the Company to the Public Issue Account after the Prospectus is filed with
the RoC, following which the Board of Directors shall allot Equity Shares
to successful bidders
Escrow Account Account opened with the Escrow Collection Bank(s) and in whose favour
the Bidder will issue cheques or drafts in respect of the Bid Amount
Escrow Agreement Agreement entered into amongst the Company, the Registrar to this Issue,
the Escrow Collection Bank(s), and the BRLM for collection of the Bid
amounts and refunds (if any) of the amounts collected, to the Bidders
First Bidder The Bidder whose name appears first in the Bid cum Application Form or
Revision Form
Floor Price The lowest end of the Price Band, below which the Issue Price will not be
finalized and below which no Bids will be accepted
Issue/Public Public Issue of 56,00,000 Equity Shares of Rs. 10/- each for cash at a price
Issue/IPO/Offer of Rs. [•] per Equity Share aggregating Rs. [●] lacs by Sunstar Overseas
Limited (“Sunstar” or the “Company” or the “Issuer”). The Issue
comprises of reservation of 2,80,000 Equity Shares aggregating Rs. [●] lacs
for permanent employees (Employee Reservation Portion) on a
competitive basis and the “Net Issue To Public” of 53,20,000 Equity Shares
aggregating Rs. [●] lacs. The Issue would constitute 34.96% of the fully
diluted Post Issue Paid-up Capital of the Company.
Issue Price The final price at which Equity Shares will be issued and allotted in terms
of this Draft Red Herring Prospectus, as determined by the Company in
consultation with the BRLM, on the Pricing Date
Margin Amount The amount paid by the Bidder at the time of submission of Bid, being 0%
to 100% of the Bid Amount
Minimum [•] Equity Shares and in multiples of [•] Equity Shares thereof
Bid/allotment lot
Net Offer to public 53,20,000 Equity Shares of Rs. 10/- each, aggregating Rs. [●] lacs.
Non Institutional All Bidders that are not Qualified Institutional Buyers or Retail Individual
Bidders Bidders and who have Bid for Equity Shares for an amount more than
Rs.1, 00,000/-
Non Institutional The portion of the Issue being not less than 15% of this Net Issue i.e.
Portion 7,98,000 Equity Shares of Rs.10/- each available for allocation to Non
Institutional Bidders
Pay-in Date The last date specified in the CAN sent to Bidders
Pay-in-Period This term means with respect to Bidders whose Margin Amount is 100%
of the Bid Amount, the period commencing on the Bid/Issue Opening
Date and extending until the Bid/Issue Closing Date, and with respect to
Bidders whose Margin Amount is less than 100% of the Bid Amount, the
period commencing on the Bid/Issue Opening Date and extending until
the closure of the Pay-in Date
Price Band Being the price band of a minimum price (Floor Price) of Rs. [•] and the
maximum price (Cap Price) of Rs. [•] and includes revisions thereof
Pricing Date The date on which the Company in consultation with the BRLM finalizes
the Issue Price
Promoters Following mentioned below are the Promoters for the Company

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 Term Description
ƒ Mr. Naresh Aggarwal
ƒ Mr. Rakesh Aggarwal
ƒ Mr. Man Mohan Sarup Aggarwal
ƒ Mr. Kapil Aggarwal
ƒ Mrs. Rama Rani
ƒ Mrs. Navita Aggarwal
ƒ Mrs. Sadhna Aggarwal
Prospectus The Prospectus, filed with the RoC containing, inter alia, the Issue Price
that is determined at the end of the Book Building Process, the number of
Equity shares being issued through this Issue and certain other
information
Public Issue Account In accordance with section 73 of the Companies Act, 1956, an account
opened with the Banker(s) to this Issue to receive monies from the Escrow
account for this Issue on the Designated Date
Qualified Public financial institutions as specified in Section 4A of the Companies
Institutional Buyers Act, FIIs registered with SEBI, Scheduled Commercial banks, Mutual
or QIBs Funds registered with SEBI, Multilateral and Bilateral Development
Financial Institutions, Indian Venture Capital Funds registered with SEBI,
Foreign Venture Capital Investors registered with SEBI, State Industrial
Development Corporations, Insurance Companies registered with
Insurance Regulatory and Development Authority (IRDA), Provident
Funds with minimum corpus of Rs. 25 crores and Pension Funds with
minimum corpus of Rs. 25 crores
QIB Portion The portion of this Issue being up to 50% of the Net Issue, i.e., 26,60,000
Equity Shares of Rs.10 each available for allocation on proportionate basis
to QIB’s of which 5% shall be proportionately allocated to Mutual Funds
registered with SEBI
Draft Red Herring This Draft Red Herring Prospectus issued in accordance with Section 60B
Prospectus/Draft of the Companies Act, which does not have complete particulars on the
Offer Document price at which the Equity Shares are being issued and number of Equity
shares being issued through this Issue. It carries the same obligations as
are applicable in case of a Prospectus and will be filed with the RoC at
least three days before the opening of this Issue. It will become a
Prospectus after filing with the RoC after the pricing and allocation
Registrar/Registrars Intime Spectrum Registry Limited
to the issue
Retail Individual Individual Bidders (including HUFs) who have not Bid for an amount in
Bidders excess of Rs. 1,00,000/- in any of the bidding options in this Issue
Retail Portion The portion of this Issue being not less than 35% of this Net Issue i.e.
18,62,000 Equity Shares of Rs. 10 each available for allocation to Retail
Individual Bidder(s)
Revision Form The form used by the Bidders to modify the quantity of Equity Shares or
the Bid Price in any of their Bid cum Application Forms or any previous
Revision Form(s)
Syndicate/Members BRLM and the Syndicate Members collectively
of the Syndicate
Syndicate The agreement to be entered into among the Company and the members
Agreement of the Syndicate, in relation to the collection of Bids in this Issue
Syndicate Member Intermediaries registered with SEBI and Stock Exchanges and eligible to
act as underwriters. Syndicate Member is appointed by the BRLM
TRS or Transaction The slip or document issued by the Syndicate Members to the Bidder as a
Registration Slip proof of registration of the Bid on the online system of BSE/NSE
Underwriters Members of the Syndicate who are signatories to the Underwriting
agreement

5
 Term Description
Underwriting The Agreement among the Underwriters and the Company to be entered
Agreement into on or after the Pricing Date

CONVENTIONAL / GENERAL TERMS

Term Description
Act or Companies The Companies Act, 1956, as amended from time to time
Act
Articles/Articles of Articles of Association of Sunstar Overseas Limited
Association/AoA
DP/Depository A depository participant as defined under the Depositories Act, 1996
Participant
A depository registered with SEBI under the SEBI (Depositories and
Depository Participant) Regulations, 1996, as amended from time to time being
NSDL and CDSL
Depository Act Depositories Act, 1996 as amended from time to time
Foreign Exchange Management Act, 1999, as amended from time to time
FEMA
and the rules and regulations framed there under
FIIs Foreign Institutional Investors as defined under SEBI (Foreign
Institutional Investors) Regulations, 1995 and registered with SEBI and as
required under FEMA (Transfer or Issue of Security by a person resident
outside India) Regulations, 2000 and under other applicable laws in India.
F.Y. / FY / Fiscal / Period of twelve months ended March 31 of that particular year unless
Financial Year otherwise specified in the context thereof
FIPB Foreign Investment Promotion Board
Government/GOI Government of India
Indian GAAP Generally Accepted Accounting Policies in India
IT Act/Income Tax The Income Tax Act, 1961, as amended from time to time
Act
Memorandum/ The Memorandum of Association of Sunstar Overseas Limited
Memorandum of
Association/MOA
A person resident outside India, as defined under FEMA and who is a
NRI/ Non-Resident
citizen of India or a Person of Indian Origin under FEMA (Transfer or
Indian
Issue of Security by a Person Resident Outside India) Regulations, 2000
Non Resident A person who is not an NRI, an FII and is not a person resident in India
Registrar of Companies, NCT of Delhi & Haryana having its office at: B-
RoC Block, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi – 110
003
Securities and Exchange Board of India Act, 1992 as amended from time
SEBI Act
to time.
SEBI (Disclosure and Investor Protection) Guidelines 2000, as amended
SEBI Guidelines
from time to time
Stock Exchanges BSE and NSE referred to collectively

COMPANY/ INDUSTRY-RELATED TERMS

Term Description
Auditors The Statutory Auditors of the Company namely, M/s. R.K. Gulati & Co.,
Chartered Accountants
Articles/ Articles of The Articles of Association of Sunstar Overseas Limited
Association
Board / Board of Board of Directors of Sunstar Overseas Limited unless otherwise
Directors specified

6
Term Description
Project The issue proceeds will be utilized for the following purposes:
ƒ Setting up of facilities for Organic rice
ƒ Setting up of a packaging plant at Bahalgarh, Haryana
ƒ Setting up of Power Plant for Captive Consumption
ƒ The automation & modernization of the existing facilities at
Bahalgarh, Haryana
ƒ Office Block at factory at Bahalgarh, Haryana
ƒ Adding new storage facility at Bahalgarh, Haryana
ƒ To meet the additional working capital requirement
ƒ To list the shares offered through this issue on BSE and NSE
Registered Office of 4119/7, 1st Floor, Naya Bazaar, Delhi – 110 006
the Company

ABBREVIATIONS

Term Description
AGM Annual General Meeting of the Company
A.Y./ AY Assessment Year
BSE Bombay Stock Exchange Limited
CAGR Compounded Annual Growth Rate
CFT Cubic Feet
CLB Company Law Board
CDSL Central Depository Services (India) Limited
DCA Department of Company Affairs
DP Depository Participant
EBITDA Earning Before Interest Taxation Depreciation and Amortisation
EBRD Export base rediscounting scheme
EGM Extra-ordinary General Meeting of the Company
EXIM Export Import Policy, 2002-2007
EM Equitable mortgage
EOU Export Oriented Unit
EPCG Export Promotion Capital Goods
EPS Earnings Per Share
ETP Effluent treatment
FEMA Foreign Exchange Management Act, 1999, as amended from time to time
and the rules and regulations framed there under.
FIIs Foreign Institutional Investors as defined under SEBI (Foreign
Institutional Investors) Regulations, 1995 and registered with SEBI and as
required under FEMA (Transfer or Issue of Security by a person resident
outside India) Regulations, 2000 and under other applicable laws in India.
FVCI Foreign Venture Capital Investor registered with SEBI under the SEBI
(Foreign Venture Capital Investor) Regulations, 2000
FIPB Foreign Investment Promotion Board, Ministry of Finance, Government of
India
FI Financial Institution
F.Y. / FY / Fiscal / Period of Twelve Months ending on 31st March of the respective year
Financial Year
GOI Government of India
HACCP hazardous analysis critical control point
HUF Hindu Undivided Family
IPO Initial Public Offer
ISO International Standards Organization
KVA Kilo Volt –Amperes

7
Term Description
KW Kilo Watt
L/C Letter of Credit
LAN Local Area Network
MAT Minimum Alternate Tax
MF Mutual Fund
MMI Man-Machine Interface
NAV Net Asset Value
NCAER National Council For Applied Research
NRIs Non Resident Indians as defined under FEMA
NSDL National Securities Depository Limited.
NSE National Stock Exchange of India Limited
PAN Permanent Account Number
PAT Profit After Tax
PBT Profit Before Tax
PBDIT Profit Before Depreciation, Interest and Tax
PBIT Profit Before Interest and Tax
PCFC Packing Credit In Foreign Currency
PLC Power Line Communication
RBI Reserve Bank of India
RONW Return on Net Worth
SCADA Supervisory Control and Data Acquisition
SEBI The Securities and Exchange Board of India
TPH Tons per hour
TNW Total Net Worth
USD United States Dollar
VR Valuer Report
WDV Written down Value

8
 SECTION II - GENERAL

CERTAIN CONVENTIONS; USE OF MARKET DATA

In this Draft Red Herring Prospectus, the terms “we”, “us”, “our”, the “Company”, “our
Company”, “Sunstar Overseas Limited”, “Sunstar” unless the context otherwise indicates or
implies, refers to Sunstar Overseas Limited. In this Draft Red Herring Prospectus, unless the
context otherwise requires, all references to one gender also refers to another gender and the
word “Lac” means “one hundred thousand”, the word “million (million)” means “ten lac”, the
word “Crore” means “ten million” and the word “billion (bn)” means “one hundred crore”. In
this Draft Red Herring Prospectus, any discrepancies in any table between total and the sum of
the amounts listed are due to rounding-off. Throughout this Red Herring Prospectus, all figures
have been expressed in lacs.

Unless indicated otherwise, the financial data in this Draft Red Herring Prospectus is derived
from our restated unconsolidated financial statements prepared in accordance with Indian GAAP
and included in this Draft Red Herring Prospectus. Unless indicated otherwise, the operational
data in this Draft Red Herring Prospectus is presented on an unconsolidated basis and refers to
the operations of our Company. Our fiscal year commences on 01st April and ends on 31st March
so all references to a particular fiscal year are to the twelve-month period ended 31st March of
that year. In this Draft Red Herring Prospectus, any discrepancies in any table between the total
and the sums of the amounts listed are due to rounding off.

There are significant differences between Indian GAAP and U.S. GAAP; accordingly, the degree
to which the Indian GAAP financial statements included in this Draft Red Herring Prospectus
will provide meaningful information is entirely dependent on the reader’s level of familiarity
with Indian accounting practice and Indian GAAP. Any reliance by persons not familiar with
Indian accounting practices on the financial disclosures presented in this Draft Red Herring
Prospectus should accordingly be limited. We have not attempted to explain those differences or
quantify their impact on the financial data included herein, and we urge you to consult your own
advisors regarding such differences and their impact on our financial data.

For additional definitions used in this Draft Red Herring Prospectus, see the section Definitions
and Abbreviations on page [•] of this Draft Red Herring Prospectus. In the section entitled “Main
Provisions of Articles of Association”, defined terms have the meaning given to such terms in the
Articles of Association of our Company.

Market Data

Unless stated otherwise, market data used throughout this Draft Red Herring Prospectus was
obtained from internal Company reports, data, websites and industry publications. Industry
publication data and Website data generally state that the information contained therein has been
obtained from sources believed to be reliable, but that their accuracy and completeness and
underlying assumptions are not guaranteed and their reliability cannot be assured. Although, we
believe market data used in this Draft Red Herring Prospectus is reliable, it has not been
independently verified. Similarly, internal Company reports and data, while believed by us to be
reliable, have not been verified by any independent source.

9
 FORWARD LOOKING STATEMENTS

This Draft Red Herring Prospectus contains certain forward-looking statements. These forward-
looking statements generally can be identified by words or phrases like “will”, “aim”, “will likely
result”, “believe”, “expect”, “will continue”, “anticipate”, estimate”, “intend”, “plan”,
“contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and
similar expressions or variations of such expressions, that are “forward looking statements”.
Similarly, the statements that describe our objectives, plans or goals are also forward-looking
statements.

Actual results may differ materially from those suggested by the forward looking statements due
to risks or uncertainties associated with our expectations with respect to, but not limited to,
regulatory changes pertaining to the food processing industry in India and our ability to respond
to them, our ability to successfully implement our strategy, our growth and expansion,
technological changes, our exposure to market risks, general economic and political conditions in
India and our overseas markets which have an impact on our business activities or investments,
the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest
rates, foreign exchange rates, equity prices or other rates or prices, the performance of the
financial markets in India and globally, changes in domestic and foreign laws, regulations and
taxes and changes in competition in our industry.

For further discussion of factors that could cause our actual results to differ, see “Risk Factors”
beginning on page [●] of this Draft Red Herring Prospectus. By their nature, certain market risk
disclosures are only estimates and could be materially different from what actually occurs in the
future. As a result, actual future gains or losses could materially differ from those that have been
estimated. Neither our Company nor the BRLM, nor any of their respective affiliates have any
obligation to update or otherwise revise any statements reflecting circumstances arising after the
date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions
do not come to fruition. In accordance with SEBI requirements, our Company and the BRLM will
ensure that investors in India are informed of material developments until such time as the grant
of trading permission by the Stock Exchange for the Equity Shares allotted pursuant to the Issue.

10
 SECTION III - RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all
of the information in this Red Herring Prospectus, including the risks and uncertainties described
below, before making an investment in our Equity Shares. If any of the following risks actually
occur, our business, profitability and financial condition could suffer, the trading price of our
Equity Shares could decline, and you may lose all or part of your investment.

Note: Unless specified or quantified in the relevant risk factors below, we are not in a position
to quantify the financial or other implication of any risks mentioned herein under:

A) Risks Internal to the Company

1. Risk relating to litigation

Our Company, its promoters and directors, group companies are party to various litigations.
A summary of the litigations, in which we are involved, is mentioned herein below. For
further details on these litigation cases please refer to the chapter ‘Legal and other regulatory
information’ on page [●] of this Draft Red Herring Prospectus.

Litigation involving the Promoters/Directors

Criminal Laws:

(a) The case titled as State vs Rakesh Aggarwal, pertains to injury/death to a labourer while
plastering the wall in the premises of the Company.

(b) In the case titled as Rakesh Aggarwal vs. State of U.P. and another at Allahabad High
Court for recovery of Rs. 21,13,939/-. The petitioner namely Mr. Rakesh Aggarwal has
approached Honourable high Court of Allahabad against FIR u/s 420 and 406 of the
Indian Penal Code lodged by an employee of Wajid Sons Pvt. Ltd., Muradabad. In the
FIR it is alleged that Mr. Rakesh Aggarwal has cheated M/s. Wajid Sons Pvt. Ltd. in
connection with a transaction involving purchase of rice by M/s. Star Overseas From
M/s Wajid Sons Pvt. Ltd. The Honourable Allahabad High Court has stayed the arrest of
Shri Rakesh Aggarwal and the matter is pending. The case was last listed on 09th July
2004 and the next hearing is awaited.

Civil Laws:

(a) In the case involving Prem Chand Sharma and Rakesh Aggarwal, the plaintiff Shri Prem
Chand Sharma is seeking restraint order to the effect that he should not be dispossessed
forcibly without due process of law from the property bearing No. LP 27 C, First floor,
Pitam Pura, Delhi.

(b) In the case involving Prem Chand Sharma and Rakesh Aggarwal, Shri Prem Chand
Sharma alleged himself to be the tenant under Sh. Rakesh Aggarwal in respect of the
property bearing No. LP 27C, First Floor, Pitam Pura, Delhi.

(c) The case titled Vijender Singh Solanki vs. Rakesh Aggarwal, pertains to Toyota Corolla
car bearing No.DL2FCE-0088, which was handed over to Shri Vijender Singh Solanki for
sale and as he did not return the car nor sold the same a police station complaint was
made against him by the Company. Shri Vijender Singh Solanki has filed a civil suit by
alleging that he had purchased the car from the company and paid Rs. 4,80,000/- in cash
and the remaining amount was to paid at the time of transfer of registration certificate.
The court has granted ex-parte ad interim stay restraining Shri Rakesh Aggarwal from

11
 interfering in the lawful possession of the car. The written statement and reply to the stay
application have been filed by Shri Rakesh Aggarwal.

Litigation filed against our Company

Civil Laws:

(a) The case titled Manoj Gaur vs. Sunstar Overseas Limited is a civil suit filed by the
plaintiff for the recovery of Rs. 13,00,000/- with interest and damages on account of
issuance of cheque to Mr. Manoj Gaur by Sunstar Overseas Limited & stop payment of
the same.

(b) The case titled Thai Airways vs. Sunstar Overseas Ltd & another is for recovery of freight
charges along with interests and damages. The matter pertains to the delay in carrying
the consignment from Delhi to Los Angles, due to which the Company suffered losses.
The amount of involved is Rs. 3,41,788/-.

Labour Laws:

There are 3 labour related cases involving our Company and pertaining to claiming illegal
dismissal of services from our Company and claiming reinstatement/back wages. The
estimated liability on account of these cases is Rs. 80,000/-.

Consumer Laws:

(a) The case titled Mr. Labh Singh vs. M. D. Punjab Food Grains Corporation Ltd. & others,
our Company is a co-defendant and the charge involved is for recovery of amount
claimed Rs. 92,972/-. In this case the Company entered into contract farming for a
particular quality of paddy at a certain minimum price which was not sown by the
complainant and the Company refused to purchase that quality at the decided price for
which the complainant has filed the case for the recovery of the difference amount.

Sales Tax:

For the assessment year 2002-03, Sales Tax assessment under Central Sales Tax Act, 1956 has
been computed up to financial year 2002-03. Original demand raised was Rs. 8,57,663/-. In
this case amount of Rs. 1,30,661/- was deposited and for the balance amount, statutory forms
which were pending at that time has been deposited. Now no amount is outstanding for the
assessment year 2002-2003.

Income Tax:

For the assessment year 2001-02 and 2002-03, assessment under section 143 (3) Income Tax
Act, 1961, reopened for ascertaining the justification of claim by the Company U/s 80 IB of I.
T. Act, 1961. Objections against the notice have been filed and the proceedings are in process
at Delhi.

Provident Fund:

The case titled as Regional Provident Fund Commissioner v/s Sunstar Overseas Ltd., in
which one contractor ’Divine Manpower and Security Services”, providing security
personnel to the Company, had not deposited the contribution with PF authorities. The
Provident Fund Commissioner has alleged that the Company being the Principal employer is
responsible for payment of provident fund dues. The total (approx) financial implication
involved in the case is Rs. 7,00,000/-

12
 Cases involving group Companies

I. Ved Kiran Steel Industries Private Limited

Labour cases:

Ved Kiran Steel Industries Private Limited, previously known as Precision SG Iron and
Foundry Works Private Limited was running its manufacturing activities in Kossi (Uttar
Pradesh). Due to Power and Labour problems the company closed its operations at the Kossi
unit. After the closure of the unit services of all the workers and employees were terminated
and against this decision some of the workers filed 30 cases under the labour laws, details of
which are mentioned under the chapter ‘Legal and other regulatory information’

For detailed information on these cases please refer to the chapter ‘Legal and other regulatory
information’ on page [●] of this Draft Red Herring Prospectus.

2. The Company is promoted by first generation entrepreneurs and the investors will be
subjected to all consequential risk associated with such ventures.

Mr. Rakesh Aggarwal and Mr. Naresh Aggarwal have been managing the Company
successfully for over a decade. Further the Company has young and qualified directors like
Mr. Rohit Aggarwal and Mr. Sumit Aggarwal, who have brought in the modern
management techniques and dynamism in the functioning of our Company. The directors are
ably assisted by professionals in key areas of Production, Procurement, Marketing, and
Finance.

3. Plant and Machinery orders not placed

The Company has not yet placed orders for the Plant and Machinery required for
proposed projects for which an amount aggregating Rs. 1554.20 lacs has been included in
the cost of project.

The Company has already received quotations from the proposed suppliers and the orders
shall be placed in due course of time. Since the vendors have existing relations with our
Company and have been supplying equipments to our Company in the past, we do not
envisage any difficulty in obtaining the delivery for plant and machinery in time. In this
regard we have already paid Rs. 82.60 lacs to the vendors as advances for the plant and
machinery to be purchased on the basis of the quotations received.

4. Dependence on availability of paddy

Our operations are dependent on the availability of paddy, which in turn is dependent on
a number of factors, like rain water availability, irrigational facilities, insect manifestation,
change in crop pattern adopted by the paddy farmers , on all of which the Company has no
control. Occurrence/non occurrence of any of these factors may adversely affect the
availability of paddy, thereby affecting our financial performance.

5. Risk related to procurement of paddy

Substantial part of paddy requirement for the whole year is procured in the 10-12 weeks
starting from mid October. Any consequent fall of demand/prices in the international
market to the extent of procurement not backed by firm orders, may adversely affect our
financial performance.

As a matter of practice, during the course of procurement, we try to book the orders/make
supply arrangements with our customers for the entire season after mutual discussions for

13
 their requirements, based on average procurement prices in the season. This way we
minimize the uncertainties/loss we may incur on procurement not backed by firm orders.

6. Risk from improper processing, storage and handling

In case there is any improper handling/storage of paddy we may incur significant

damages, which may affect our profitability. Also we may face significant losses in
processing, due to faulty setting of machines, resulting in damaged/broken rice grains.

Our Company has proper storage facilities in place for storing the paddy and we ensure that
the storage area is well covered to take care of external factors like pests, vagaries of nature
etc. Also our sophisticated machines are manned by experts, so as to limit the process losses.
Besides, our stocks are adequately insured for any eventualities that may occur.

7. We also have to ensure that our product meet the stringent norms laid down for food items
by various countries, to which we export. In case of any deviation on that front, we may
face the risk of our entire consignment being rejected, or quality claims being lodged by
our customers.

Our Company has world class processes conforming to various standards specified by
international certifying agencies duly monitored through periodical audits. We have various
quality certificates for ensuring set standards, details of which are given on page [●] of this
Draft Red Herring Prospectus. Moreover our finished products are subject to physical and
laboratory testing by independent agencies, designated by customers before shipment.

8. Stringent delivery schedules

In our line of business, timely delivery of consignments is the essence. There may be
possible delays on account of lack of transportation, non availability of containers and
congestion at the ports, due to which we may incur unforeseen financial losses and loss of
further orders also from these customers / countries.

9. If our Company fails to comply with environmental laws and regulations or becomes
subject to environmental litigation within the country or in the international markets that
it caters to, the profitability may be adversely affected.

The products of the Company have, till date, not been subject to any environmental or other
litigation. However, in the event that the Company is faced with litigation in any of the
markets that it caters to, the Company may have to bear damages, which may impact the
profitability of the Company.

10. Risks of retention of manpower

Our sustained growth depends on our ability to attract and retain skilled manpower as
research and development is a key component of our business model. Failure to attract and
retain skilled manpower could adversely affect our growth strategy. Any significant
changes in the key managerial personnel, may affect the performance of the Company.

Our success depends on the continued services and performance of the members of the
senior management team and other key employees. Competition for senior and experienced
personnel in the industry is intense at present. The loss of the services of our senior
management or other key personnel could seriously impair our ability to continue to manage
and expand our business which may adversely affect our financial condition. We do not
maintain any ‘key man” life insurance for our management team or other key personnel.

14
11. Risks due to competition

The Company may face growing/new competition from existing players and new entrants.
The performance of the Company and profitability may be adversely affected.

12. Loss making group companies

The following group companies/ventures promoted by the promoters are loss making:
(Rs lacs)
Sr. No Name of the Company Loss for the Loss for the Loss for the
year ended year ended year ended
31st March 31st March 31st March
2005 2004 2003
1. Digvijay Steels Private Limited 32.70 - -
2. Digvijay Systems and Services 0.29 0.18 0.21
Private Limited
3. Star Track Fasteners Private 0.23 1.34 -
Limited
4. Maa Sarda Rail Nirman Private - - 3.16
Limited
5. VAE VKN Industries Private 507.38 256.55 -
Limited
6. Sunstar Exim Limited 0.18 0.13 0.14

13. Contingent Liabilities

The Contingent liabilities of our Company as on 30th September 2005, as certified by our
statutory auditors are as under:

ƒ Letter of credit for purchase of capital assets 52.00

ƒ Estimated amount of contracts remaining to be executed on 352.33
Capital Account and not provided for (Net of advances)
ƒ Bills discounted with Banks 4472.10
ƒ Claims against the Company, not acknowledged as debts 26.00

14. Pending government approvals

The Company is yet to obtain the following renewals for our existing as business

Sr. Approval / Consent Authority Status

No.
1. Factory Licence, Bahalgarh Chief Inspector of Factories Renewal applied for
2. Factory Licence, Amritsar Chief Inspector of Factories Renewal applied for
3. Contractors licence Office of Labour Commissioner, Renewal applied for
Haryana and the licensing officer
4. Various Trademark approvals Trademark Registry Officer As enumerated on
page [●] of this
DRHP
5. Such other licenses/approvals as Central government/State Application for the
may be required by any government/municipal authorities same shall be made in
central/state authorities the due course of
time.
The above permissions are in the usual course of business and we do not envisage any
difficulty in obtaining the same from the respective authorities.

15
15. Risks associated with Companies/firms in the same line of business.

Our Managing Director, Mr. Rakesh Aggarwal, is a partner in M/s. Star International, in
which he has a 60% profit sharing ratio. One of the objects of Star International is trading
and exporting of rice, which may create conflict of business interest.

Although the objects of the partnership firm, states that they deal in rice and exports of rice,
the objects of the firm were modified to include other trading items like steel and timber. The
firm has not been dealing in rice and exports of rice, and is concentrating on trading in other
commodities. Hence there is clear differentiation in the activities of our Company and the
firm, and hence there is no scope for any conflict of interest.

16. Pending utilization in the project, the proceeds of the issue will be invested in non-
productive assets such as government securities and short term bank deposits. This
deployment may not result in adequate returns for our Company.

17. In case our Company is not able to fulfil its export obligation, there may be penalties/
strictures imposed on our Company.

Our Company has an export obligation of Rs. 2268 lacs as per the EPCG (Export Promotion
Capital Goods) licence scheme. As per the scheme, our Company has to fulfil export
obligations to the tune of Rs. 2268 lacs with a time period of 8 years from the date of issuance
of the EPCG licence. Our Company has already fulfilled its export obligations, and only the
documents for redemption of LUT (Legal Undertaking) are to be submitted for completing
the export obligation formalities.

18. Risk associated with implementing the project on time

The proposed project is currently in initial stages of implementation. Inability to complete

the project as per the stated schedule of implementation may lead to cost/time overruns
and may impact future profitability of the Company.

The promoters/directors of the Company have established the current manufacturing

facilities within the time parameters as set for implementation and have adequate experience
in setting up and running of such projects. Professionals in key areas have also been
employed to oversee the setting up of the proposed project. Consequently, the Company
does not envisage any difficulty in meeting the implementation schedule. Moreover we have
provided Rs. 100 lacs as contingencies, in case there is any delay in implementing the project.

19. The project has not been appraised by any Bank/Financial Institution. Further, there will
not be any monitoring of the project by any Bank/Financial Institution.

The funds requirement and funding plans are as per our own estimates, and have not been
appraised by any bank/financial institution. The deployment of funds in the project is
entirely at our own discretion and the same will not be monitored by any external agency.
Our promoters and directors have experience in this line of business and we do not envisage
any difficulty in meeting the implementation schedule and do not envisage any cost
overruns.

B) Risks External to the Company

1. Increasing employee compensation in India may erode some of our competitive advantage
and may reduce our profit margins.

Employee compensation in India has historically been significantly lower than employee
compensation in the United States and Western Europe for comparably skilled professionals,

16
 which has been one of our competitive strengths. However, compensation increases in India
may erode some of this competitive advantage and may negatively affect our profit margins.
Employee compensation in India is increasing at a faster rate than in the United States and
Western Europe, which could result in increased costs relating to scientists and engineers,
managers and other mid-level professionals. We may need to continue to increase the levels
of our employee compensation to remain competitive and manage attrition. Compensation
increases may have a material adverse effect on our business, results of operation and
financial condition.

2. Increasing global competition

We operate in a globally competitive business environment. Growing competition may force

us to reduce the prices of its products and services, which may reduce revenues and margins
and/or decrease market share, either of which could have a materially adverse effect on our
business, financial condition and results of operations.

We aim to keep abreast with the dynamic business scenario and has broad-based its product
mix. We, as part of its continuous R&D activities, have been achieving developments in areas
of better process technology, improved process yield, sourcing of raw material at competitive
price and development of new products/processes.

3. Any change in regulatory environment in relation to manufacturing within the country or

for marketing our products within and outside the country will significantly impact our
business. If we fail to comply with environmental laws and regulations or face
environmental litigation, our results of operation may be adversely affected.

We keep ourselves abreast of the various developments in relation to the regulatory

environment and gear ourselves in order to comply with such regulatory changes.

4. Non-availability gradual elimination of income tax benefits on exports will increase our
future tax liabilities and decrease profits that we might have in future.

We currently benefit from the various income-tax exemptions and deductions in terms of the
Income Tax Act, which are applicable for companies having export income. The Government
of India has announced the gradual elimination of some of these benefits. Non-availability of
these tax exemptions will increase our future tax liabilities and decrease profits that we might
have in future.

5. Terrorist attacks and other acts of violence or war involving India, the United States, and
other countries could adversely affect the financial markets, result in a loss of business
confidence and adversely affect our business, results of operations and financial
condition.

Terrorist attacks and other acts of violence or war, including those involving India, the
United States or other countries, may adversely affect Indian and worldwide financial
markets. These acts may also result in a loss of business confidence and have other
consequences that could adversely affect our business, results of operations and financial
condition. Increased volatility in the financial markets can have an adverse impact on the
economies of India and other countries, including economic recession.

6. Our performance is linked to the stability of policies and political situation in India as
well as the countries with which we have business relations.

The role of the Indian central and state governments in the Indian economy on producers,
consumers and regulators has remained significant over the years. Since 1991, the
Government of India has pursued policies of economic liberalization, including significantly

17
 relaxing restrictions on the private sector. The most recent Government of India, which was
formed in June 2004, has continued policies and taken initiatives that support the continued
economic liberalization policies that had been pursued by the previous governments. We
cannot assure you that these liberalization policies will continue in the future. Protests
against privatization could slowdown the pace of liberalization and deregulation. The rate of
economic liberalization could change, and specific laws and policies affecting technology
companies, foreign investment, currency exchange rates and other matters affecting
investment in our securities could change as well. A significant change in India’s economic
liberalization and deregulation policies could disrupt business and economic conditions in
India and thereby affect our business.

7. Any volatility in the exchange rate of any foreign currency vis-à-vis the Indian Rupee may
affect our profitability. Moreover, of the total project cost, plant and machinery worth Rs.
466 lacs shall be paid in foreign currency, outgo of which may be volatile depending on
the foreign exchange rate.

Exports constitute approx 85% of our total sales; hence we would be significantly affected
foreign exchange fluctuations. To some extent this volatility is taken care by the fact that we
enter into contracts with banks for hedging against foreign exchange fluctuations.

8. Changes in trade policies may impact us.

Any change in policies by the countries, in terms of tariff and non-tariff barriers, from which
we import raw material and/or countries to which we export our products, may have an
impact on our profitability. EU grants certain concessions to millers, who import brown rice
from India. Any change in this policy may affect the export of brown rice from India.

9. Risks arising from changes in taxation policies, statutory taxes and other levies affect the
cost of production and prices of our products. Any increase in any of these taxes or levies
in the future, may have a material adverse impact on our business, results of operations
and financial condition.

10. No public market for the shares of our Company

There has been no public market for the Equity Shares of our Company and the prices of the
Equity Shares may fluctuate. There can be no assurance that an active trading market for the
Equity Shares will develop or be sustained after this Issue or that the prices at which the
Equity Shares are sold in this Issue will correspond to the prices at which the Equity Shares
will trade in the market subsequent to this Issue.

11. The Issue price of our Equity Shares may not be indicative of the market price of our
Equity Shares after the Issue.

The Issue Price of our Equity Shares will be determined by the Book Building Process. This
price will be based on numerous factors (discussed in the section “Basis of Issue Price” on
page [•] of this Draft Red Herring Prospectus) and may not be indicative of the market price
of our Equity Shares after the Issue. The market price of our Equity Shares could be subject to
significant fluctuations after the Issue, and may decline below the Issue Price. We cannot
assure you that you will be able to resell your Equity Shares at or above the Issue Price.
Among the factors that could affect our share price are:

a) Quarterly variations in the rate of growth of our financial indicators, such as earnings per
share, net income and revenues;
b) Changes in revenue or earnings estimates or publication of research reports by analysts;
c) Speculation in the press or investment community;
d) General market conditions; and

18
 e) Domestic and international economic, legal and regulatory factors unrelated to our
performance.

Notes to Risk Factors:

1. Pre-Issue Net Worth of our Company as on 31st March 2005 is Rs. 7,037.58 lacs and as on 30th
September 2005 is Rs. 7,515.13 lacs.

2. Size of the present issue – Public Issue of 56,00,000 Equity Shares of Rs. 10/- each issued at a
premium of Rs. [●] for cash, aggregating Rs. [●] lacs. The face value of the Equity Shares is
Rs. 10/- and the issue price is [●] times the face value. The issue would constitute 34.96% of
the fully diluted post issue paid up capital of our Company.

3. The average cost of acquisition of Equity Shares of the promoters is given below

Sr. No Name of our Promoters Average cost of acquisition of shares

(Rs.)
1. Mr. Naresh Aggarwal 2.86/-
2. Mr. Rakesh Aggarwal 2.86/-
3. Mr. Kapil Aggarwal 2.86/-
4. Mrs. Rama Rani 2.86/-
5. Mr. Man Mohan Sarup Aggarwal 2.86/-
6. Mrs. Navita Aggarwal 2.86/-
7. Mrs. Sadhna Aggarwal 2.86/-

4. Book value of the Equity Shares of our Company as on 31st March 2005 and as on 30th
September 2005 is Rs. 118.23 and Rs. 126.25 per share respectively.

5. The Company has issued 74,40,670 Equity Shares of Rs. 10/- each as bonus shares by
capitalization of free reserves, details of which are mentioned in the notes to Capital
Structure.

6. Investors may please note that in the event of over-subscription, allotment shall be made on a
proportionate basis in consultation with BSE, the Designated Stock Exchange.

7. Investors may contact the BRLM or the Compliance officer for any
compliant/clarification/information pertaining to the issue. For contact details of the BRLM
please refer to the front cover page.

8. All information shall be made available by the Company and the BRLM to the public and
investors at large and no selective or additional information would be available for a section
of the investors in any manner whatsoever.

9. There are no contingent liabilities as on 30th September 2005, except as mentioned in the
Auditor’s report.

10. Investors are advised to refer to the paragraph ‘Basis for issue price’ on page [●] of this
DRHP before making an investment in this issue.

11. Bidders should note that on the basis of name of the Bidders, Depository Participant’s name,
Depository Participant-Identification number and Beneficiary Account Number provided by
them in the Bid cum Application Form, the Registrar to the Issue will obtain from the
Depository demographic details of the Bidders such as address, bank account details for
printing on refund orders and occupation. Hence, Bidders should carefully fill in their

19
 Depository Account details in the Bid-cum-Application Form and also update their
demographic details with their respective depositary participant.

12. For details of liens and encumbrances on the properties and assets of the Company please see
Section on Financial Statements on page [●] of this Prospectus.

13. For details of related party transactions, please refer to the Auditors Report on page [●] of
this Draft Red Herring Prospectus.

20
 SECTION IV - INTRODUCTION

SUMMARY

Industry and Business of our Company

You should read the following summary together with the risk factors and the more detailed information
about us and our financial data included in this Prospectus.

Note: Unless otherwise indicated, all financial and statistical data relating to the industry in
the following discussion is derived from internal Company reports & data, industry
publication and estimates and websites. This data has been reclassified in certain
respects for purposes of presentation. For more information, see “Forward Looking
Statements and Market Data” on page no. [●] in this DRHP.

Industry and Business of our Company

Among the largest industries of India, rice is one of them having an estimated size of US $25bn.
After China, India is the second largest producer of rice and the largest exporter of Basmati rice.
India broke the barrier of 1 million tonne of Basmati Rice exports during the financial year 2004-
05. Infact it touched 11.2 lacs tonne, which in terms of value comes to Rs. 2741.94 crores, i.e. US $
612 million. Non-basmati rice exports of the country touched 36.4 lac tonne which in terms of
value comes to Rs. 3,899.73 crores i.e. US$ 870 million. Thus India’s total exports of rice amounted
to 47.6 lacs tonnes, which is behind Thailand but ahead of Vietnam. India can definitely continue
maintaining this tempo in respect of rice exports both for basmati & non-basmati rice. The
exporters with their grit determination, hard work and entrepreneurship have been able to
expand the existing market as well as entered some new markets.

Structure of the Rice Industry

The industry in India has a complex structure marked by presence of both large-scale production
units as well as small-scale units. The rice industry in India is broadly divided into two segments,
basmati and non-basmati. Unorganised sector and regional players in the market dominate the
non-basmati segment. The non-basmati market is largely unbranded. India produces 86m tonnes
of non-basmati rice annually. The total market is estimated at Rs 1,000 billion. Of this, a small
fraction of around 5% is exported and the remaining is consumed domestically. It is very difficult
to create differentiation and brands hence it is not very lucrative in terms of profitability.

Competition

Globally, we face stiff competition from manufacturers in Pakistan, Vietnam & Thailand. After
India, Pakistan is the only country, which produces Basmati Rice as both have similar climate.
Hence, India faces strong competition from Pakistan. Vietnam and Thailand are the largest
producer of Non-basmati Rice, but whenever in India there is a bumper crop the producers are
able to handle the competition from these countries also as our cost of raw material is lowered
down. While producers in India have managed to move up the value chain in terms of quality
and branded products, growth of the industry in Pakistan has been relatively muted. As a result,
India remains the key basmati supplier to the world.

Markets

Basmati rice is considered as one of the premium product that makes it extremely sensitive to
quality. This has created a scope for branding. Also, the structural changes in the market are
partly responsible for the emergence of brands. Industry estimates suggest that branded players
have a 30% share in the domestic market while the unorganized segment controls 70% of the
market.

21
The export market for basmati rice is estimated to be around Rs. 21 billion. The largest export
market has traditionally been the Middle East with a 65% share of India’s exports. The UK and
US account for 20% of the exports. A large part of the exports is unbranded, wherein buyers sell
basmati rice under local brands. However, major players are now shifting focus to selling under
their own brands.

Growth Prospects

The domestic market is estimated to be growing at 6% for basmati rice and at 3-4% for non-
basmati rice. With a growing consuming class and increasing disposable incomes, demand for
premium products is on the rise. Going forward, we expect not just an increase in penetration but
also an increase in per capita consumption.

Our Business

Our Company is currently engaged in the manufacturing and processing of rice. We are into
manufacturing and processing of Basmati and Non Basmati varieties of rice, with focused on
Basmati variety. Currently we are also engaged in the trading of pulses, timber, sesame, cane
sugar, cashews, almonds, paddy seed and granite.

Our Company uses the best and the latest technology available in the market. We have imported
machines from Satake (Japan), Buhler (Germany) and Sortex from England, to name a few. We
also propose to purchase several more automated machines for expansion and modernization of
our existing capacities.

Our Company is exporting rice to countries like Germany, Spain, Italy, Australia, U.K., U.S.A.
Saudi Arabia, Dubai and others. At present, our exports are restricted to around 22 countries only
which, leaves scope for our Company to develop new markets and to increase our presence
accordingly. Accordingly, we are planning to explore new markets. In future we plan to make a
mark on the domestic market also. Currently out of total production we are selling around 10-
15% of our produce in the domestic market.

Reasons for Shift towards Basmati are given as follows:

ƒ Rising percentage of young population

ƒ Increase in income levels
ƒ Changing spending patterns
ƒ Increase in number of working urban
ƒ Rising aspiration levels
ƒ Rise in Shopping Malls

Our Company is engaged into the processing of paddy/rice. The different varieties of rice
processed by our Company are:

Parboiled Rice
ƒ Golden
ƒ Light Golden Steam Rice
ƒ Creamy ƒ Pusa
ƒ Light Creamy ƒ Sharbati

Raw Milled Rice

ƒ Basmati
ƒ Pusa Raw Brown Rice
ƒ Sharbati ƒ Basmati
ƒ Parmal ƒ Pusa

22
 ƒ Sharbati
ƒ Parmal
Organic Basmati Rice

Our association with Fairtrade

We have tied up with Fairtrade since the year 2001, and have taken pro-active steps towards this
end. Our Company has assisted local rice growers to convert to organic production and then
helped them set up a farmers’ federation so that the group was eligible for Fairtrade certification.

Our Company is keen to improve the position of its farmer partners and has identified Fairtrade
as a means of achieving this. We liaison with Fairtrade as the farmers’ Promoting Body and have
been instrumental in supporting the transformation of this unorganised network of farmers into a
coherent organisation. Twenty-three village-level farmers’ clubs with a total of 520 rice farmers
have been organised into the federation structure required for Fairtrade certification.

There is great potential for Fairtrade to bring the farmers together and strengthen their ability to
negotiate higher, stable prices with buyers, and also contribute new resources to the socio-
economic development of the area, and our Company, as a part of its Corporate Social
Responsibility is proud to be a part of this association. For further details on this aspect, you may
please refer to www.fairtrade.org.uk

23
 THE ISSUE

Equity Shares offered:

Fresh Issue by the Company 56,00,000 Equity Shares

Issue Price Rs. [●] per Equity Share

Less: Reservation for Employees 2,80,000 Equity Shares

Net Issue to the Public 53,20,000 Equity Shares

Of which:
(A) Qualified Institutional Buyers 26,60,000 Equity Shares
portion (QIBs) (Allocation on a proportionate basis)

Of the 26,60,000 Equity Shares, 1,33,000 shall be

available for allocation to Mutual Funds

The balance 25,27,000 Equity Shares shall be available

to all QIBs, including Mutual Funds

(B) Non-Institutional Portion 7,98,000 Equity Shares

(Allocation on a proportionate basis)

(C) Retail Portion 18,62,000 Equity Shares

(Allocation on a proportionate basis)

Note: Under-subscription, if any, in any of the categories would be allowed to be met with spill
over from the other categories, at the sole discretion of the Company and the BRLM.

Equity Shares outstanding prior to 1,04,16,938 Equity Shares of face value of Rs.10/- each
the Issue

Equity Shares outstanding after the 1,60,16,938 Equity Shares of face value of Rs.10/- each
Issue

Use of Issue proceeds Please see section titled “Objects of the Issue” on page
no. [•] of this Draft Red Herring Prospectus for
additional information.

24
 SUMMARY OF FINANCIAL INFORMATION

The following summary financial data has been prepared in accordance with Indian GAAP, the
Companies Act and the SEBI Guidelines and restated as described in the Auditor’s Report of
M/s. R.K. Gulati & Associates, Chartered Accountants dated 09th January 2006 in the section
titled “Financial Information”. You should read this financial data in conjunction with our
financial statements for each of Fiscal 2001, 2002, 2003, 2004 and 2005 and the 6 month period
ending 30th September 2005 including the Notes thereto and the Reports thereon, which appears
under the paragraph on “Financial Information” in this Draft Red Herring Prospectus, and
“Management Discussion and Analysis of” on page [•] of this Draft Red Herring Prospectus.

STATEMENT OF PROFIT AND LOSSES ACCOUNT- AS RESTATED

(Rs. In Lacs)
PARTICULARS FOR THE YEAR ENDED ON
30.9.2005 31.3.2005 31.3.2004 31.3.2003 31.3.2002 31.3.2001
(6 months) (12 months) (12 months) (12 months) (12 months) (12 months)
INCOME

Sales
Of Products manufactured by the 11,061.05 20,853.69 19,422.31 22,556.39 14,879.95 11,278.81
Company
Of Products traded by the Company 1,858.51 5,381.93 1,029.51 26.00 116.90 572.93
Total 12,919.56 26,235.62 20,451.82 22,582.39 14,996.85 11,851.74
Other Income 212.16 651.46 354.96 423.70 142.02 101.58
Increase (Decrease) in Inventories 960.14 2,162.68 1,249.41 (419.94) 958.46 578.03

Total 14,091.86 29,049.76 22,056.19 22,586.15 16,097.33 12,531.35

EXPENDITURES
Cost of sales 1,230.34 3,644.92 845.81 22.67 104.53 490.00
Raw Material Consumed 9,212.20 17,748.81 15,908.35 17,272.57 11,755.35 8,332.45
Staff Cost 140.84 266.57 214.48 176.73 105.40 89.84
Other Manufacturing expenses 392.44 811.64 677.73 644.04 498.78 461.12
Administration Expenses , 1,709.53 4,048.04 2,629.01 2,665.71 1,476.62 1,427.77
Selling and Distribution Expenses
Other Expenses 38.10 152.00 132.03 122.93 33.88 31.77

Total 12,723.45 26,671.98 20,407.41 20,904.65 13,974.56 10,832.95

Profit Before Interest, Depreciation 1,368.41 2,377.78 1,648.78 1,681.50 2,122.77 1,698.40
and Income Tax
Interest 550.65 1,042.15 719.03 439.07 488.71 402.92
Depreciation 184.78 423.54 354.90 237.02 201.03 197.19
Net Profit before taxes 632.98 912.09 574.85 1,005.41 1,433.03 1,098.29
Taxation
Current tax 148.85 230.19 150.13 86.18 61.36 30.88
Fringe benefits tax 5.09
Deferred tax (1.18) 0.92 10.87 17.45 94.04 0
Net Profit after taxes 480.22 680.98 413.85 901.78 1,277.63 1,067.41

25
 STATEMENT OF ASSETS AND LIABILITIES - AS RESTATED

(Rs. In Lacs)
For the year ended on
Particulars 30.09.2005 31.3.2005 31.3.2004 31.3.2003 31.3.2002 31.3.2001
(6 months) (12 months) (12 months) (12 months) (12 months) (12
months)
A. Fixed Assets:
Gross Block 4,691.44 4,593.85 3,935.60 3,045.59 2,329.52 2,052.23
Less : Depreciation 1,938.82 1,765.26 1,386.67 1,061.08 845.38 688.57
Net Block 2,752.62 2,828.59 2,548.93 1,984.51 1,484.14 1,363.66
Less: Revaluation Reserve 0 0 0 0 0 0
Capital Work in Progress 130.68 87.71 40.87 277.51 111.66 37.73
Total (A) 2,883.30 2,916.30 2,589.80 2,262.02 1,595.80 1,401.39

B. Investments (B) 69.65 392.06 335.50 241.98 7.42 57.16

C. Current Assets, Loans & Advances

Inventories 9,862.30 12,540.47 12,930.24 8,317.90 6,663.96 5,641.26
Sundry Debtors 5,617.89 4,988.58 5,204.40 3,540.60 3,918.74 1,907.65
Cash and Bank Balances 1,779.46 1,023.96 1,223.24 908.67 321.72 102.47
Loans and Advances 2,995.32 1,560.67 924.97 597.67 650.29 406.64
Other Current Assets 353.19 348.10 315.59 111.16 42.54 29.54

Total (C) 20,608.16 20,461.78 20,598.44 13,476.00 11,597.25 8,087.56

D. Liabilities & Provisions

Secured Loans 13,315.17 15,800.69 15,250.14 9,219.79 7,302.64 5,118.99

Unsecured Loans 0 0 0 0 26.95 0
Current Liabilities and Provisions 2,354.14 639.37 1,680.99 595.28 595.58 362.78
Provision for taxes 182.97 102.10 0.90 0.30 30.74 64.89
Fringe benefits tax 4.50
Deferred Tax Liabilities 122.10 123.29 122.37 111.50 94.04 0
Proposed Dividend 67.10 67.11 33.48 0 0 0
Total (D) 16,045.98 16,732.56 17,087.88 9,926.87 8,049.95 5,546.66

E. Net Worth (A+B+C-D ) 7,515.13 7,037.58 6,435.86 6,053.13 5,150.52 3,999.45

F. Represented by
Share Capital 595.25 595.25 595.25 595.25 595.25 595.25
Share Application Money 0 0 13.00 11.50 11.50 40.51
Reserves and Surplus 6,926.74 6,446.51 5,832.64 5,452.27 4,550.51 3,371.28
Less: Revaluation Reserves
Reserves (Net of Revaluation 0 0 0 0 0 0
Reserves)
Miscellaneous Expenditure 4.18 4.18 5.03 5.89 6.74 7.59
Share issue expenses 2.68 0 0 0 0 0
Net Worth 7,515.13 7,037.58 6,435.86 6,053.13 5,150.52 3,999.45

26
 GENERAL INFORMATION

SUNSTAR OVERSEAS LIMITED

(The Company was incorporated on 06th January 1995 as Sunstar Overseas Limited, under the
Companies Act, 1956, and received its Certificate for Commencement of Business on 31st January
1995.)

Registered Office: 4119/7, First Floor, Naya Bazaar, Delhi- 1100 06

Tel: (011) 2393 0560; Fax: (011) 2392 3233

Corporate Office: 24B Alipur Road, Civil Lines, New Delhi-1100 54

Tel: (011) 2399 4327, (011) 2399 4383-387 Fax: (011) 2399 4326

Website: www.sunstaroverseas.com Email: [email protected]

Contact person: Ms. Kiranpreet Gill, Company Secretary and Compliance Officer
Company Registration No.: 55-64140

Our Company is registered with the Registrar of Companies, NCT of Delhi & Haryana at: B-Block,
Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi – 110 003.

Our Board of Directors

Name of Director Designation

Mr. Naresh Aggarwal Chairman
Mr. Rakesh Aggarwal Managing Director
Mr. Rohit Aggarwal Joint Managing Director
Mr. Sumit Aggarwal Director
Mr. Ravinder Kumar Passi Director
Mr. Kishore Asthana Director

For detailed profile of our Directors please refer to the section titled ‘Our Management’ on page
[●] of this Draft Red Herring Prospectus.

Issue Management Team

Book Running Lead Manager to the Issue

UTI Securities Limited

1st Floor, Dheeraj Arma,
Anant Kanekar Marg, Station Road,
Bandra (East), Mumbai – 400 051.
Tel No: (022) 5551 5999/5888
Fax No: (022) 5502 3194
Website: www.utisel.com
Email: [email protected]
Contact Person: Mr. Abhijit Diwan

27
Registrar to the Issue

Intime Spectrum Registry Limited

C-13, Pannalal Silk Mills Compound,
L.B.S. Marg, Bhandup (west),
Mumbai – 400 078.
Tel No: (022) 5555 5491-94
Fax No: (022) 5555 5499
Website: www.intimespectrum.com
Email: [email protected]
Contact person: Mr. Vishwas Attawar

Statutory Auditors to the Company

M/s. R.K. Gulati & Associates
Chartered Accountants
304, B.D. Chambers,
10/54, Desh Bandhu Gupta Road,
Karol Bagh, New Delhi – 110 005.
Tel No: (011) 2367 8795, 2367 5720
Fax No: (011) 2367 8795
Email: [email protected]
Contact person: Mr. Rakesh Gulati

Legal Advisor to the Issue

Luthra & Luthra, Law Offices
103, Ashoka Estate,
Barakhamba Road,
New Delhi – 110 001.
Tel No: (011) 5121 5100
Fax No: (011) 2372 3909
Website: www.luthra.com
Email: [email protected]
Contact Person: Mr. Pankaj Agarwal

Bankers to the Company

The Karur Vysya Bank Limited
XVI/2645, Poonam Chambers,
Bank Street, Karol Bagh,
New Delhi - 110 005.
Tel No: (011) 25712029, 2576 7746
Fax No: (011) 25729079
Website: www.kvb.co.in
Email: [email protected]
Contact Person: Mr. Giridharan

Karnataka Bank Limited

Overseas Branch
No. 2, Chaudhary Building,
K Block, Connaught Circus,
New Delhi – 110 001.
Tel No: (011) 2341 7720, 2341 7721
Fax No: (011) 2341 3452
Website: www.karnatakabank.com
Email: [email protected]
Contact Person: Mr. Prakash

28
City Union Bank Limited
18/7, Keltron Chambers,
Arya Samaj Road, Karol Bagh,
New Delhi -110 005.
Tel No: (011) 2578 8696, 2581 4243
Fax No: (011) 2581 4242
Email: [email protected]
Website: www.cityunionbank.com
Contact Person: Mrs. Jyoti Babbar

Bankers to the Issue and Escrow Collection Banks

[●] The Bankers to the Issue and Escrow Collection Banks shall be finalized before filing the
RHP with RoC.

Syndicate Member(s)

[●] The Syndicate member(s) shall be finalized before filing the RHP with RoC.

Company Secretary and Compliance Officer

Ms. Kiranpreet Gill

Sunstar Overseas Limited
24B, Alipur Road, Civil Lines,
New Delhi – 110 054.
Tel No: (011) 2399 4383–87
Fax No: (011) 2399 4326
Website: www.sunstaroverseas.com
Email: [email protected]

Investors can contact the Compliance Officer or the Registrar in case of any pre-issue or post-
issue related problems, such as non-receipt of letters of allocation, credit of allotted Equity Shares
in the respective beneficiary accounts or refund orders etc.

Inter-se allocation of responsibilities of the Book Running Lead Manager (BRLM)

Since UTI Securities is the sole BRLM for this Issue, they will be responsible for all the following
activities:

ƒ Capital structuring with the relative components and formalities

ƒ Due diligence of the Company’s operations / management / business plans/legal
documents etc.
ƒ Drafting and Design of Issue Document and of statutory advertisement including
memorandum containing salient features of the Prospectus. Compliance with stipulated
requirements and completion of prescribed formalities with Stock Exchange, Registrar of
Companies and SEBI
ƒ Drafting and approval of all publicity material other than statutory advertisement as
mentioned above including corporate advertisement, brochure, etc.
ƒ Appointment of Registrar, Bankers, Printer and Advertising agency
ƒ Institutional Marketing Strategy – Finalisation of the list of investors for one to one meetings
in consultation with the Company
ƒ Retail /Non-Institutional Marketing Strategy – Finalise centres for holding conference for
brokers etc, Finalise media, marketing and PR strategy, Follow up on distribution of publicity

29
 and issue materials including form, prospectus and deciding on the quantum of the Issue
material, Finalise Collection orders.
ƒ Managing the Book and Co-ordination with Stock Exchanges
ƒ Pricing
ƒ The post bidding activities including management of escrow accounts, co-ordination of
allocation, intimation of allocation and despatch of refunds to bidders
ƒ The post Issue activities of the Issue will involve essential follow up steps, which must
include finalisation of listing of instruments and despatch of certificates and refunds, with
the various agencies connected with the work such as Registrar to the Issue, Bankers to the
Issue and the bank handling refund business. BRLM shall be responsible for ensuring that
these agencies fulfil their functions and enable him to discharge this responsibility through
suitable agreements with the Issuer Company.

The selection of various agencies like Registrar to the Issue, Bankers to the Issue, Bank Collection
Centres, Legal Advisor to the Issue, Underwriters to the Issue, Advertising Agencies, Public
relations agencies etc. will be or have been finalised by the Company in consultation with
UTISEL.

Credit Rating

This being an issue of Equity Shares, credit rating is not required.

Trustees

This being an issue of Equity Shares, appointment of trustees is not required.

Project Appraisal and Monitoring Agency

The project is not appraised by any Bank/Financial Institution/Merchant Banker and there is no
monitoring agency appointed to monitor the use of proceeds of the Issue.

Withdrawal of the Issue

Our Company, in consultation with the BRLM, reserves the right not to proceed with the Issue
anytime after the Bid/Issue Opening Date without assigning any reason therefore.

In the event of withdrawal of the Issue anytime after the Bid/Issue Opening Date, our Company
will forthwith repay, without interest, all monies received from the applicants in pursuance of
this Draft Red Herring Prospectus. If such money is not repaid within 8 days after our Company
become liable to repay it, i.e. from the date of withdrawal, then our Company, and every Director
of our Company who is an officer in default shall, on and from such expiry of 8 days, be liable to
repay the money, with interest at the rate of 15% per annum on application money.

Book Building Process

Book building refers to the collection of Bids from investors, which is based on the Price Band,
with the Issue Price being finalised after the Bid/Issue Closing Date. The principal parties
involved in the Book Building Process are:

1. The Company
2. The Book Running Lead Manager; and
3. The Syndicate Members who are intermediaries registered with SEBI or registered as brokers
with the Stock Exchange(s) and eligible to act as underwriters. The BRLM appoints the
Syndicate Members.

30
The SEBI DIP Guidelines has permitted an issue of securities to the public through the 100% Book
Building Process, wherein up to 50% of the Issue shall be available for allocation to QIBs on a
proportionate basis out of which 5% shall be available for allocation on a proportionate basis to
Mutual Funds only, and the remainder of the Qualified Institutional Buyers Portion shall be
available for allocation on a proportionate basis to all Qualified Institutional Buyers, including
Mutual Funds, subject to valid Bids being received at or above Issue price. Further, not less than
15% of the Issue shall be available for allotment to Non Institutional Bidders and not less than
35% of the Issue shall be available for allotment to Retail Individual Bidders on a proportionate
basis, subject to valid Bids being received at or above the Issue Price. We will comply with the
SEBI DIP Guidelines for this Issue. In this regard, we have appointed the BRLM to procure
subscriptions to the Issue.

The process of book building, under SEBI DIP Guidelines, is relatively new and the investors are
advised to make their own judgment about investment through this process prior to making a
Bid in the Issue. Pursuant to recent amendments to SEBI DIP Guidelines, QIBs are not allowed to
withdraw their Bid after the Bid/Issue Closing Date. Please refer to the section entitled “Terms of
the Issue” on page [●] of this Draft Red Herring Prospectus for more details.

Steps to be taken by the Bidders for bidding:

9 Check whether he/she is eligible for bidding;

9 Bidder necessarily needs to have a demat account; and
9 Ensure that the Bid cum Application Form is duly completed as per instructions given in this
Red Herring Prospectus and in the Bid cum Application Form.

Bid/Issue Programme

Issue opens on: __________________ Issue closes on: __________________

Bids and any revision in Bids shall be accepted only between 1000 hrs and 1700 hrs (Indian
Standard Time) during the Bidding Period as mentioned above at the bidding centres mentioned
on the Bid cum Application Form except that on the Bid/Issue Closing Date, the Bids shall be
accepted only between 1000 hrs and 1500 hrs (Indian Standard Time) and uploaded till such
time as permitted by the BSE and the NSE on the Bid/Issue Closing Date.

The Price Band will be decided by us in consultation with the BRLM(s). The announcement on
the Price Band shall also be made available on the websites of the BRLM(s) and at the terminals
of the Syndicate.

We reserve the right to revise the Price Band during the Bidding Period in accordance with SEBI
Guidelines. The cap on the Price Band should not be more than 20% of the floor of the Price Band.
Subject to compliance with the immediately preceding sentence, the floor of the Price and can
move up or down to the extent of 20%.

In case of revision in the Price Band, the Bidding/Issue Period will be extended for three
additional days after revision of Price Band subject to the Bidding/Issue Period not exceeding 10
working days. Any revision in the Price Band and the revised Bidding/Issue Period, if
applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a press
release, and also by indicating the change on the web sites of the BRLM, the Co- BRLM(s) and at
the terminals of the Syndicate.

31
Underwriting Agreement

After the determination of the Issue Price and prior to filing of the Prospectus with RoC, we will
enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to
be issued through the Issue. It is proposed that pursuant to the terms of the Underwriting
Agreement, the BRLM shall be responsible for bringing in the amount devolved in the event that
the Syndicate Members do not fulfil their underwriting obligations.

The Underwriters have indicated their intention to underwrite the following number of Equity
Shares:

(This portion has been intentionally left blank and will be completed prior to filing of the Prospectus with
RoC)

Sr. No Name and Address of the Underwriters Indicative Number Amount

of Equity shares to Underwritten
be Underwritten (Rupees In Lacs)
1. UTI Securities Limited [•] [•]
1st Floor, Dheeraj Arma,
Anant Kanekar Marg,
Station Road, Bandra (East),
Mumbai – 400 051.
Tel: (022) 5551 5999/5888
Fax: (022) 5502 3194
Contact person: Mr. Abhijit Diwan
Email: [email protected]
2. [•] [•]
3. [•] [•]
Total [•] [•]

The above-mentioned amount is indicative underwriting and would be finalized after pricing
and actual allocation. The above Underwriting Agreement is dated [•].

In the opinion of our Board of Directors and the BRLM (based on a certificate given by the
Underwriters), the resources of all the above mentioned Underwriters are sufficient to enable
them to discharge their respective underwriting obligations in full. All the above-mentioned
Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered as
brokers with the stock exchange(s).

Allocation among Underwriters may not necessarily be in proportion to their underwriting

commitments. Notwithstanding the above table, the BRLM and the Syndicate Member(s) shall be
responsible for ensuring payment with respect to Equity Shares allocated to investors procured
by them. In the event of any default in payment, the respective Underwriter, in addition to other
obligations defined in the Underwriting Agreement, will also be required to procure/subscribe to
the extent of the defaulted amount as specified in the Underwriting Agreement.

32
 CAPITAL STRUCTURE

The share capital of our Company as on the date of filing of this Draft Red Herring Prospectus
with SEBI is as set forth below:

No. of Shares Nominal Value Aggregate Value

(Rs.) (Rs.)
A. AUTHORISED CAPITAL
2,00,00,000 Equity Shares of Rs. 10/- each 20,00,00,000 20,00,00,000

B. ISSUED, SUBSCRIBED AND PAID-UP

CAPITAL
1,04,16,938 Equity shares of Rs. 10/- each 10,41,69,380 10,41,69,380

C. PRESENT ISSUE – PUBLIC ISSUE OF

56,00,000 Equity Shares of Rs. 10/- each at a 5,60,00,000 [●]
premium of Rs. [●]/- per share

D. RESERVATION FOR EMPLOYEES

2,80,000 Equity Shares of Rs. 10/- each at a 28,00,000 [●]
premium of Rs. [●]/- per share

E. NET OFFER TO THE PUBLIC THROUGH

THIS PROSPECTUS
53,20,000 Equity Shares of Rs. 10/- each at a 5,32,00,000 [●]
premium of Rs. [●]/- per share

F. PAID UP CAPITAL AFTER THE PRESENT

ISSUE
1,60,16,938 Equity shares of Rs. 10/- each 16,01,69,380

G. SHARE PREMIUM ACCOUNT

Before the issue Nil
After the issue [●]

Details of Increase in Authorized Capital

Sr. No Particulars Of Increase Date of Meeting AGM / EGM

1. Rs. 4 crores Incorporation --
2. Rs. 4 crores to Rs. 5 crores 08-01-1996 AGM
3. Rs. 5 crores to Rs. 10 crores 30-09-1996 AGM
4. Rs. 10 crores to Rs. 20 crores 29-09-2005 AGM

33
Notes to the Capital Structure:

1. Capital Build-up: Our existing Equity Share capital has been subscribed and allotted as
under:

Date on Number of Cumulative Face Issue Nature of Reason of Share Cumulati

which Equity Shares Value Price payment of allotment premium ve Share
Equity Shares (In (In considerati (In Rs.) Premium
Shares Rs.) Rs.) on
were
allotted/
made fully
paid-up
06-01-1995 700 700 10 10 Cash Subscribers -- --
to the MOA
28-02-1995 18,69,400 18,70,100 10 10 Other @ -- --
than
Cash
01-12-1995 11,06,168 29,76,268 10 10 Cash Further -- --
allotment
06-11-1996 29,76,268 59,52,536 10 -- Bonus Bonus in the -- --
ratio of 1:1
08-11-2005 44,64,402 1,04,16,938 10 -- Bonus Bonus in the -- --
ratio of 3:4
Total 1,04,16,938 10
@ 18,69,400 shares were issued to the partners of the erstwhile M/s. Star Overseas for
consideration of Rs. 186.94 lacs, the net worth of the partnership firm, which was taken over by
Sunstar Overseas Limited as a going concern.

2. Shares issued for consideration other than cash

We have not issued any shares for consideration, other than cash except as mentioned in the
table above.

3. Promoters’ Contribution and Lock-in details in respect of Promoters, whose names figure
in the Draft Red Herring Prospectus as Promoters in the paragraph on “Promoters and
their Background” is as under:

Capital built up of the promoters is detailed below:

Sr Name of Date of Considerati No. of Face Issue / % of post Lock in

. Promoter / allotment/ on Shares Value Transfer issue paid period
N Person in Transfer and (Rs.) Price up capital
o Promoter made Fully (Rs.)
Group paid-up
1. Mr. 06-01-1995 Cash 100 10 10 #
Naresh 06-11-1996 Bonus 100 10 -- #
Aggarwal 08-11-2005 Bonus 150 10 -- #
Total (A) 350 0.0022

2. Mr. 06-01-1995 Cash 100 10 10 #

Rakesh 06-11-1996 Bonus 100 10 -- #
Aggarwal 10 -- #
08-11-2005 Bonus 150
Total (B) 350 0.0022

34
 Sr Name of Date of Considerati No. of Face Issue / % of post Lock in
. Promoter / allotment/ on Shares Value Transfer issue paid period
N Person in Transfer and (Rs.) Price up capital
o Promoter made Fully (Rs.)
Group paid-up

3. Mr. 06-01-1995 Cash 100 10 10 #

Kapil 06-11-1996 Bonus 100 10 -- #
Aggarwal 08-11-2005 Bonus 150 10 -- #
Total (C) 350 0.0022

4. Mrs. 06-01-1995 Cash 100 10 10 #

Rama 28-02-1995 Cash 2,17,670 10 10 #
Rani 01-12-1995 Cash 1,88,800 10 10 #
01-11-1996 Transfer (+)2 10 10 #
06-11-1996 Bonus 4,06,568 10 -- #
08-11-2005 Bonus 6,09,855 10 -- #
Total (D) 14,22,995 8.8843

5. Mr. 06-01-1995 Cash 100 10 10 #

Man 28-02-1995 Cash 3,99,500 10 10 #
Mohan 01-12-1995 Cash 1,89,800 10 10 #
Sarup 06-11-1996 Bonus 5,89,400 10 -- #
08-11-2005 Bonus 8,84,100 10 -- #
Total (E) 20,62,900 12.8795

6. Mrs. 06-01-1995 Cash 100 10 10 #

Navita 28-02-1995 Cash 4,11,290 10 10 #
Aggarwal 01-12-1995 Cash 1,53,850 10 10 #
06-11-1996 Bonus 5,65,240 10 -- #
08-11-2005 Bonus 8,47,860 10 -- #
Total (F) 19,78,340 12.3515

7. Mrs. 06-01-1995 Cash 100 10 10 #

Sadhna 28-02-1995 Cash 8,40,940 10 10 #
Aggarwal 01-12-1995 Cash 5,73,718 10 10 #
01-11-1996 Transfer (-)2 10 10 #
06-11-1996 Bonus 14,14,760 10 -- #
08-11-2005 Bonus 21,22,137 10 -- #
Total (G) 49,51,653 30.9151
Grand Total (A+B+C+D+E+F+G) 1,04,16,938

# As per clause 4.1.1 of the SEBI DIP guidelines, the core promoters have ensured at least 20% of
the post issue capital is held by them. The below mentioned shares, held by the core promoters
shall be locked in on LIFO basis (i.e. shares which have been issued last shall be locked-in first)
for a period of 3 years from the date of allotment.

Post Issue no. of shares 1,60,16,938

20% of the post issue no. of shares 32,03,388

35
 Sr. No Name of the Promoter No of shares to be locked in for 3 years

1. Mrs. Rama Rani 3,20,340

2. Mr. Man Mohan Sarup Aggarwal 6,40,680
3. Mrs. Navita Aggarwal 6,40,680
4. Mrs. Sadhna Aggarwal 16,01,700
Total 32,03,400

The lock-in period shall commence from the date of allotment of shares in the public issue.
Written consents have been obtained from the persons whose shares form part of promoter’s
contribution and are subject to lock in period.

Other than the above the entire pre-issue capital of our Company shall be locked in for a period
of 1 year from the date of allotment of shares in the public issue.

4. The specific written consent has been obtained from the respective shareholders for inclusion
of such number of their existing shares and further subscription in the Issue to ensure
minimum Promoters’ contribution subject to lock-in to the extent of 20% of Post-Issue Paid-
up Capital.

5. The Equity Shares forming part of promoter’s contribution do not consist of any private
placement made by solicitation of subscription from unrelated persons, either directly or
through any intermediary.

6. The Equity Shares held by persons other than Promoters may be transferred to any other
person holding shares prior to the Issue, subject to continuation of lock-in with transferees for
the remaining period and compliance with the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997, as applicable.

The Equity Shares to be held by the Promoters under lock-in period shall not be
sold/hypothecated/transferred during the lock-in period. However, the Equity Shares held
by Promoters, which are locked in, may be transferred to and among Promoter/Promoter
Group or to a new promoter or persons in control of the Company, subject to the
continuation of lock-in with the transferees for the remaining period and compliance with the
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 as applicable. The
Promoters may pledge their Equity Shares with banks or financial institutions as additional
security for loans whenever availed by them form banks or financial institutions.

7. The details of sale/ purchase/ financing of shares by Promoters/Directors :

The Promoters Group/Directors have not purchased and/or sold/financed any securities of
the Company during the past 6 months.

8. Details of capitalization of reserves by the Company in the past

Company has capitalized its free reserves by way of issuing bonus shares as stated below:

Sr. No Date of Allotment No of Shares Ratio

1. 06-11-1996 29,76,268 1:1
2. 08-11-2005 44,64,402 3:4
Total 74,40,670

36
9. Particulars of top ten shareholders:

a. As on the date of filing this Draft Red Prospectus

b. 10 days prior to the date of filing this Draft Red Herring Prospectus

Sr. No. Name of Shareholder No. of Equity Shares

1) Mrs. Sadhna Aggarwal 49,51,653
2) Mr. Man Mohan Sarup 20,62,900
3) Mrs. Navita Aggarwal 19,78,340
4) Mrs. Rama Rani 14,22,995
5) Mr. Kapil Aggarwal 350
6) Mr. Naresh Aggarwal 350
7) Mr. Rakesh Aggarwal 350
Total 1,04,16,938

c. 2 years prior to the date of filing this Draft Red Herring Prospectus

Sr. No. Name of Shareholder No. of Equity Shares

1) Mrs. Sadhna Aggarwal 28,29,516
2) Mr. Man Mohan Sarup 11,78,800
3) Mrs. Navita Aggarwal 11,30,480
4) Mrs. Rama Rani 8,13,140
5) Mr. Kapil Aggarwal 200
6) Mr. Naresh Aggarwal 200
7) Mr. Rakesh Aggarwal 200
Total 59,52,536

10. The Company, its Promoters, Directors and the Lead Manager to this Issue have not entered
into any buy-back, standby or similar arrangements for purchase of Equity Shares from any
person.

11. In case of over-subscription in all categories, up to 50% of the Net Issue to the Public shall be
available for allocation on a proportionate basis to Qualified Institutional Buyers (including
specific allocation of 5% within the category of QIBs for Indian Mutual Funds). Further a
minimum of 15% of the Net Issue to the Public shall be available for allocation on a
proportionate basis to Non-Institutional Bidders and a minimum of 35% of the Issue shall be
available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid
Bids being received at or above the Issue Price. Under subscription, if any, in any portion
would be met with spill over from other categories at the sole discretion of our Company in
consultation with the BRLM.

12. Our Company has not raised any bridge loan against the proceeds of this Issue.

13. An over-subscription to the extent of 10% of the net offer to public can be retained for the
purpose of rounding off to the nearest integer during finalizing the allotment, subject to
minimum allotment being equal to [●] Equity Shares, which is the minimum application size
in this issue.

14. The securities offered through the public issue shall be made fully paid up or may be
forfeited within 12 months from the date of allotment of securities in the manner specified in
clause 8.6.2 of the SEBI DIP Guidelines

37
15. There would be no further issue of capital whether by way of issue of bonus shares,
preferential allotment, and rights issue or in any other manner during the period
commencing from submission of this Prospectus with SEBI until the Equity Shares offered
through this Prospectus have been listed.

16. We presently do not have any intention or proposal to alter our capital structure for a period
of six months from the date of opening of this Issue, by way of split/ consolidation of the
denomination of Equity Shares or further issue of Equity Shares (including issue of securities
convertible into exchangeable, directly or indirectly, for our Equity Shares) whether
preferential or otherwise, or, if we go in for acquisitions or joint ventures, we may consider
raising additional capital to fund such activity or use Equity Shares as currency for
acquisition or participation in such joint ventures.

17. A Bidder cannot make a Bid for more than the number of Equity Shares offered through this
Issue, subject to the maximum limit of investment prescribed under relevant laws applicable
to each category of investor.

18. At any given time, there shall be only one denomination for the Equity shares of the
Company and the Company shall comply with such disclosure norms as specified by SEBI
from time to time.

19. As on the date of filing of this Draft Red Herring Prospectus, there are no outstanding
warrants, options or rights to convert debentures, loans or other financial instruments into
our Equity Shares. The shares locked in by the Promoters are not pledged to any party. The
Promoter may pledge the Equity Shares with banks or Financial Institutions as additional
security for loan whenever availed by them from banks/Financial Institutions, provided the
pledge of shares is one of the terms of sanction of loan.

20. Shareholding Pattern of our Company before and after the Issue is as under:

Category Pre-Issue Post Issue*

No. of Shares % holding & No. of Shares % holding &
corresponding corresponding
voting rights voting rights
Promoters & Promoters’ 1,04,16,938 100.00 [●] [●]
Group
Employees 0 0.00 [●] [●]
Public 0 0.00 [●] [●]
Total 1,04,16,938 100.00 [●] [●]
* Post Issue Shareholding pattern will be determined after the Book-Building Process.

21. Since the entire money of Rs. [●]/- per share (Rs. 10/- face value + Rs. [●]/- premium) is
being called on application, all the successful applicants will be issued fully paid-up shares.

22. The Equity Shares of our Company are fully paid up and there are no partly paid up shares
as on date.

23. In case of under subscription in the net offer to the public portion, spill over to the extent of
under subscription shall be permitted from the reserved category to the net public offer
portion. Unsubscribed portion in any reserved category may be added to any other reserved
category, and that the unsubscribed portion, if any, after such inter se adjustments amongst
the reserved categories shall be added back to the net offer to the public.

24. We have not revalued our assets since inception.

38
25. No payment, direct or indirect in the nature of discount, commission, allowance or otherwise
shall be made either by us or our promoters to the persons who receive firm allotments, if
any, in this issue.

26. Our Company does not have any ESOS/ESPS scheme for our employees and we do not
intend to allot any shares to our employees under ESOS/ESPS scheme from the proposed
issue. As and when, options are granted to our employees under the ESOP scheme, our
Company shall comply with the SEBI (Employee Stock Option Scheme and Employees Stock
Purchase Plan) Guidelines 1999.

27. The securities which are subject to lock-in shall carry the inscription “non-transferable” and
the non-transferability details shall be informed to the depositories. The details of lock-in
shall also be provided to the stock exchanges, where the shares are to be listed, before the
listing of the securities.

28. Our Company has 7 members as on the date of filing this Draft Red Herring Prospectus.

39
 SECTION V - OBJECTS OF THE ISSUE

Objects of the Issue

The issue is being made to raise the funds for the following purposes:

A) Setting up of facilities for Organic rice

B) Setting up of a packaging plant at Bahalgarh, Haryana
C) Setting up of Power Plant for Captive Consumption
D) The automation & modernization of the existing facilities at Bahalgarh, Haryana
E) Office Block at factory at Bahalgarh, Haryana
F) Adding new storage facility at Bahalgarh, Haryana
G) To meet the additional working capital requirement
H) To list the shares offered through this issue on BSE and NSE

The objects clause of the Memorandum of Association of our Company enables us to undertake
the existing activities and the activities for which the funds are being raised by us through the
present issue.

Cost of Project and Means of Finance

The cost of the project and means of finance as estimated by our management are given below:

Cost of Project
Rs. in Lacs
Sr. No Particulars Amount
A. Setting up facilities for Organic rice 374.90
B. Setting up of packaging unit at Bahalgarh 221.33
C. Setting up of power plant for captive consumption at Bahalgarh 561.22
D. New Office Block at existing unit 130.00
E. Adding new storage facility at Bahalgarh 173.36
F. Automation & Modernization of existing facilities at Bahalgarh,
Haryana 627.81
G. Additional working Capital requirement in post expansion and post
issue period 3400.00
H. Contingencies (approx @ 5% of points A…F) 100.00
I. Public Issue Expenses [●]
J. General Corporate Purposes* [●]
Total [●]

Means of Finance

Sr. No Particulars Rs. lacs

A. Proceeds from Initial Public Offer [●]
Total [●]

40
Proceeds from the initial public offer would be crystallized on finalization of the issue price on
conclusion of the book building process. Any shortfall in the cost of project would be met with
internal accruals.

*General Corporate Purposes

The funds requirement has been ascertained at the Issue price of Rs. [●]/- per Equity Share. The
amount that is in excess of the funds required for the proposed project and the issue expenses,
will be utilized for the general corporate purposes. The management, in accordance with the
policies of the Board, will have the flexibility of utilizing surplus amounts from the proceeds of
the issue, if any.

Brief Details about the Project

A. Setting up facilities for Organic rice

The Company is one of the largest exporters of organic basmati rice from India. Presently, we
process the organic and non organic rice from our facility located at Bahalgarh. But with the
market of organic rice growing rapidly, it has become imperative for us in order to meet quality
standards, to segregate processing of organic operations from non organic operations. The setting
up of independent operations for organic rice would entail the following expenditure:

Sr. No. Particulars Rs. Lacs

1. Land and site development 115.81
2. Plant and Machinery 198.96
3. Shed development charges (Factory structure) 60.13
Total 374.90

Additional land and cost of development

The company for this purpose has already acquired additional land measuring 38 Kannal and 18
Marlas at village Rai, District Sonepat, which is adjacent to our existing set up at Bahalgarh at a
cost of Rs. 77.81 lacs inclusive of registration charges. The site development on this land is in
progress and sum of Rs. 32.26 lacs have already been spend on same. The total cost for the entire
land would be around Rs. 38 lacs comprising of earth filling, levelling, boundary wall, platform
and godowns.

Factory Structures/Shed development charges

The factory shed measuring 12250 square feet (70*175) is proposed to be constructed on this land,
which as per the approved architect estimate will cost Rs. 60.13 lacs, which includes consultancy
charges of Rs. 5 lacs. As on date we have spent Rs. 1.38 lacs for this purpose.

Plant and Machinery details

Sr.
Description Name of Suppliers Qty Rs. lacs
No.
1. Precleaners Buhler India Limited 1 5.64
2. Elevators Navin Engineering 6 7.15
3. Graders Tuteja Engineers 5 1.80
4. Packing Machine Flex Engineers Limited 1 8.60
5. Metal Detector Fortress Technology 1 5.40
6. Ink Jet Printer Image India Private Limited 1 3.10
7. Metal Separation Machine Suraj Engineering Works 1 1.09
8. Tapping & Strapping line ITW India Limited 1 19.05

41
9. # Fumigation Chambers Ec02 1 *104.58
(Climatic Rooms)
including ECO2
installation
10. Nitrogen Plant MVS Engineering Limited 1 13.15
11. Compressors, utilities etc Air Power Technique 1 9.40
12. Civil and Fabrication Various 20.00
works
Total 198.96

# We have received a quotation from EcO2 B.V. Postbus 7488 3280 AG NUMANSDOP for setting
up and installation of two climatic rooms on lease basis valid for ten years having a lease price of
Euro 61,996 per year, for the first 2 years, Euro 73,329 p.a. for the next 3 years and Euro 18,000
p.a. for the next 5 years Ex. VAT. (1 Euro=53 INR). As per the terms of supply, the chambers will
become our property after the expiry of ten years lease period. The two rooms are expected to
have capacity of 100 tons each per treatment and the installation is capable of 24 treatments a
year.

B. Setting up of packaging unit at Bahalgarh

We plan to significantly increase our presence in the domestic rice, particularly branded segment,
and for this it is essential that we set up an integrated facility for packaging. Currently we do not
have this set up as the major supplies made in the exports markets have been in buyers brands
and the domestic market exist primarily for the consumer packs. It has been decided to construct
factory shed measuring 12250 square feet in all to house two lines which are able to process and
consumer pack the material for supply to domestic market buyers, primarily in branded segment.
The factory shed is to be constructed on the existing land available at our Bahalgarh Unit .The
cost and detail of such facilities are given hereunder:

Sr. No Particulars Rs. lacs

1. Land and site development (12250 sq.ft @ Rs. 450 per sq.ft) 55.12
2. Plant and Machinery 166.21
Total 221.33

Details of Plant & Machinery

Sr. Total Cost

Description Name of Suppliers Qty
No. ( Rs. In Lacs)
1. Precleaners Buhler India Limited 2 11.28
2. Elevators Navin Engineering 12 14.30
3. Graders Tuteja Engineers 10 3.60
4. Packing Machine Flex Engineers Limited 2 17.20
5. Metal Detector Fortress Technology 2 10.80
6. Ink Jet Printer Image India Private Limited 2 6.20
7. Metal Separation Machine Suraj Engineering Works 2 2.18
8. Tapping & Strapping line ITW India Limited 2 38.10
9. Nitrogen Gas generator MVS Engineering Limited 1 13.15
10. Compressors, utilities etc Air Power Technique 1 9.40
11. Civil and Fabrication Various 40.00
works
Total 166.21

The domestic branded rice market is lately gaining maturity and yielding better profitability. This
move shall improve our topline as well as bottomline.

42
C. Setting up of power plant for captive consumption at Bahalgarh

The cost of power is the one of the single largest component of the manufacturing cost. With
power cost per unit showing an upward curve, over the years, the company is closely looking to
economize and control this cost. Captive power generation, undoubtedly, is capital intensive but
its payback, on successful implementation is lucrative. We, after a detailed analysis have decided
to set up captive power generation. The plant besides meeting the power requirements of the
factory at Bahalgarh will also generate steam used for boiler for manufacturing process and thus
cost of utilities would be reduced significantly, thereby improving profitability of the company.

We propose to set up a captive power generation plant at the existing unit at Bahalgarh, Haryana.
The total cost of the plant is approximately Rs. 561.22 lacs, the details of which are as under:

Sr.
Description Name of Suppliers Qty Rs. lacs
No.
1. 1200 KW Extraction Condensing Value Max Systems 1 110.99
Turbo Generator Private Limited
2. 12 TPH High Pressure Boiler Value Max Systems 1 283.50
Private Limited
3. Installation of Chimney Value Max Systems 1 140.00
Private Limited
4. Other Charges, including civil works, Various 26.73
boiler & turbine house, freight &
insurance etc.
Total 561.22

D. New Office Block at existing unit

We did not have separate office block at Bahalgarh unit and have been operating from a make
shift arrangement. For efficient functioning, a modern office block housing latest communication
facilities, administrative tools, data and systems architecture is being built at a cost of 130 lacs out
of which a sum of Rs. 114 lacs has already been spent. The proposed office block shall have an
approximate built up area of 6000 square feet. The communication facilities like desktops,
computer servers, LAN connections, printers etc have already been installed and are operational
at the makeshift unit, and cost of these equipments do not form part of the project cost.

E. Adding new storage facility at Bahalgarh unit

For rice milling industry, availability of the open storages is key element in material handling, a
function which is of paramount importance. The need of the open storage arises because the
paddy procured from the fields required drying in order to de-moisturize it. Though there are
other methods and processes employed to achieve faster drying, but the natural drying in open is
considered to be the ideal and ensures better quality of end products with lesser breakages in the
course of processing. Though we have adequate land area, yet we have to acquire storage
capacity on hire every year. To supplement and strengthen this infrastructure, we propose to
acquire additional land measuring 5 acre at a cost of 137 lacs (including registration). The cost of
development of this land and building of platforms on this shall entail an additional investment
of Rs. 36.36 lacs. The total cost for this storage facility shall thus be Rs. 173.36 lacs. This will not
only save on hire charges paid but will bring significant saving in cost of transportation cost of
leakages, wastage pilferages in the course of carrying the material to and fro.

F. Automation & Modernization of existing facilities at Bahalgarh, Haryana

Our MIS (management information system) over the period has been consistently suggesting
towards the scope and need of improving the efficiency level being achieved by us. It was

43
pointed out that plants and processes, some of which are mechanically operated and controlled,
should be fully interlinked and integrated to improve efficiency levels. The automation being
envisaged to be inducted by the company from Dynamic Engineers Private Limited is Allen
Bradley make automation system for the complete plant. The system will be interconnected to the
whole plant and individual control through MMI’s and the data of each plant/section will be
available on the centralized PC. The whole plant will be divided into three sections- dryer,
milling, and parboiling. All the three dryer units, two par boiling plant and three milling plants,
boiler, and four grading plants will be interlinked to each other. PLC is suitably designed to
handle the Input/Output of the before mentioned plants/sections. Central PC will have SCADA
software with development and runtime capabilities and will have software for programming.

We propose to induct fully modernized parboiling plant to the meet the ever increasing demand
of basmati rice from Middle East Market. These two steps aimed at modernization and
automation shall substantially improve both top and bottom lines of the company and gets duly
reflected in the projected results. Our Company has already started the process of automation &
modernisation of the existing plant situated at Haryana.

Sr. No Particulars Name of Rs. lacs

Suppliers
1. Allen Bradley make automation system for complete Dynamic *223.80
plant. The system will be inter connected to the whole Engineers
plant and individual through MMI & the data of each Private
plant/ section will be available on centralized PC Limited
2. Setting up new modernized par boiling plant HSF Food 130.43
Pro-Tech
Private
Limited
Total 354.23

Grading & Sorting

For optimum capacity utilization of the plant capacity, it is essential that there should be ideal
balancing between the milling capacity and further processing like grading sorting etc. Our
Company has been experiencing the need to add one more unit of grading sorting etc. to achieve
perfect balance between milling and processing capacities. For this we propose to build one
factory shed measuring 15000 square feet on the existing land at a cost of Rs. 57.00 lacs. The detail
of other machineries to be set up and their cost is given as under:

Sr. No Particulars Name of Supplier Rs. Lacs

1. Precleaner Buhler India Pvt. Ltd 5.64
2. Distoner Buhler India Pvt. Ltd 6.15
3. Silky Machine Buhler India Pvt. Ltd 17.42
4. Thick Sixer M/s Sona Foods (India) .60
5. Length Grader M/s Sona Foods (India) 6.49
6. Elevators M/s Sona Foods (India) 12.56
7. Reed Medway Packaging Co.
Packing Machine
(I) Pvt. Ltd. 3.63
8. Grain Colour Sorter Satake Corporation *44.85
9. Platform & Erection
Cost of Machinery 15.00
10. Cost of Shed 57.00
Total 169.34

44
The additional processing capacity besides improving the efficiency and capacity utilization will
add to the processing capacity and help in additional sales revenue over the years.

Miscellaneous Fixed Assets

The expansion and modernization and automation plans proposed also require some additional
capital expenditure on some of the heads, the detail and cost of which is given below:

Sr. No Particulars Name of Suppliers Rs. (In Lacs)

1. Seed Grader Model Coral Osaw Agro Industries Private
Limited 5.58
2. Energy Saving Device Lovendra Sales Agency *38.16
3. GEM Aqua Saver Air Power Technique 3.75
4. Air Compressor Air Power Technique 1.6
5. Sortex Machines Sortex Limited, London *55.15
Total 104.24

Out of the above, the investment on energy saving device at the cost of Rs. 38.16 needs specific
mention and note. This Korean manufactured device shall be supplied by Lovendra Sales Agency
Mumbai.

The device model is EK33-2500; type EK11 and consists of power saving auto transformer, circuit
breaker and has by pass functions. The machine shall bring in the following benefits:
ƒ Reduction in Electric charges in the range of 10-20 percent.
ƒ Harmonics and unbalance are removed.
ƒ Power quality is improved.
ƒ Efficiency of the equipments is increased.
ƒ Life line of equipment is extended.

Note: Figures prefixed with * indicate payment in foreign currency. Our Company does not
propose to buy any second hand Plant & Machineries for the existing project.

G. Additional Margin Money for Working Capital

Our Company's optimal margin money requirement for working capital for these new projects is
estimated at about Rs.6850 lacs. A detailed working for the same is mentioned below:

Particulars

Current Assets
Inventory
- Raw Material (127 days) 10080.00
-Finished Goods (77 days) 6425.58
Sundry Debtors (82 days) 8161.02
Advances for material 750.00
Cash and Bank Balance and Other Current 3189.30
Assets
Total Current Assets 28,605.90

Current Liabilities
Sundry Creditors (12 days) 1129.62

45
 Statutory Liabilities 50.00
Other Current Liabilities 723.31
Total Current Liabilities 1902.93

Net Working Capital Requirement 26702.97

Existing working capital margin as at 31st March 3853.00
2005
Therefore Working Capital requirement 22849.97
To be funded through bank borrowing 16000.00
(Sanction letters for which have been received)
To be funded out of the issue proceeds 3400.00
Therefore, balance to be funded through 3450.00
Internal Accruals

Contingencies

Contingency at 5% has been provided on non-firm cost of Plant & Machinery and at about 10%
on non-firm cost of land, building, misc. fixed assets and preoperative expenses. This includes
contingencies arising due to foreign exchange fluctuations. It may be mentioned that the
Company is actively negotiating the prices of machineries and therefore the proposed
contingency provision is considered adequate.

Schedule of Implementation

Sr. No. Particulars Commencement Date of completion

Date
Already in progress
1. Setting up facilities for Organic rice September 2006
Land acquired
2. Setting up of packaging unit at Bahalgarh March 2006 December 2006
Setting up of power plant for captive
3. April 2006 March 2007
consumption at Bahalgarh
4. New Office Block at existing unit Commenced March 2006

5. Adding new storage facility at Bahalgarh April 2006 September 2006

Automation & Modernization of existing
6. June 2006 August 2007
facilities at Bahalgarh, Haryana

The overall cost of the proposed project and the proposed year wise break up of deployment of
funds are as under:
2007-2008
2005-06 2006-07 Total
Already
Particulars incurred Qtr IV Qtr I Qtr II Qtr III Qtr IV Qtr I Qtr II
Organic Rice facilities 111.46 37.21 38.28 38.28 39.67 39.67 50.89 19.43 374.91
Packaging unit 0.00 35.00 45.00 105.12 36.21 0.00 0.00 0.00 221.33
Power plant 0.00 0.00 225.00 75.00 75.00 186.22 0.00 0.00 561.22
New office block 114.29 15.71 0.00 0.00 0.00 0.00 0.00 0.00 130.00
Storage facilities 0.00 137.00 36.36 0.00 0.00 0.00 0.00 0.00 173.36
Automation &
modernisation 82.80 15.00 77.00 112.34 45.00 85.00 65.00 145.67 627.81
Total 308.55 239.92 421.64 330.74 195.88 310.89 115.89 165.10 2088.63

46
Add: Contingencies 100.00
Add: Working capital margin funded from IPO 3400.00
Total Project Cost 5588.63

Deployment of Funds in the Project

We have incurred the following expenditure on the project till 20th December 2005. The same has
been certified by M/s R.K. Gulati & Associates, Chartered Accountants vide his certificate dated
07th January 2006.

Deployment of Funds Rs. in Lacs

Purchase of Land, development and consultancy charges thereof 111.46
Plant and Machinery for automation and modernisation 82.60
Office Block 114.29
308.35

Sources of Funds Rs. in Lacs

Internal Accruals 308.35
Total 308.35

Interim Use of Funds

Pending utilization in the project, the proceeds of the Issue will be utilized either for reducing the
working capital limits utilisation level to save interest cost or invested in Bank Deposits and/or
Gilt Edged Government Securities, either directly or through Mutual funds.

In case the Issue does not go as planned, we will make alternative arrangements like availing of
fresh loans from bank and also internal accruals to meet the shortfall, if any.

47
 BASIC TERMS OF THE PRESENT ISSUE

Principal Terms and Conditions of the Issue

The Equity Shares being offered are subject to the provisions of the Companies Act, the
Memorandum and Articles of the Company, the terms of this Draft Red Herring Prospectus, Red
Herring Prospectus, Prospectus, Bid-cum-Application Form, the Revision Form, the Confirmation
of Allocation Note (“CAN”) and other terms and conditions as may be incorporated in the
Allotment Advice, and other documents/certificates that may be executed in respect of the Issue.
The Equity Shares shall also be subject to laws as applicable, guidelines, notifications and
regulations relating to the issue of capital and listing and trading of securities issued from time to
time by SEBI, Government of India, Stock Exchanges, RBI, ROC and/or other authorities, as in
force on the date of the Issue and to the extent applicable.

Terms of Payment:

Applications should be for a minimum of [•] equity shares and in multiples of [•] equity shares
thereafter. The entire price of the equity shares of Rs. [•]/- per share (Rs. 10/- face value + Rs.
[•]/- premium) is payable on application.

In case of allotment of lesser number of equity shares than the number applied, the excess
amount paid on application shall be refunded by us to the applicants.

48
 BASIS FOR ISSUE PRICE

Qualitative Factors:

ƒ Profit Making Company since Incorporation

We are a profit making Company since incorporation. PAT for last 5 years is given below:
Rs. in Lacs
Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 30-09-2005
(6 months)

PAT 1067.41 1277.63 901.78 413.85 680.98 480.22

ƒ Quality Standards
Our Company has always believed one of the best qualities in our processes and products.
We have been granted ISO 9002 issued by SGS Yarsley International Certification System and
ISO 14001:1996 certificate issued by BSI Management Systems for the environmental
management system associated with rice processing. We adhere to quality standards as
prescribed by our customers, which has given us a brand name among our customers.

ƒ Strong Customer Relationship

Our Company has strong customer base in the domestic as well as global market. Over a
period of time, our Company has built-up a track record for quality products and timely
deliveries. Our Marketing team closely interacts with the customers, understand their
requirements and develop the products as per their requirements. Our Company has been
able to retain customers and further strengthen the relationship by providing them end-to-
end solutions for their requirements.

ƒ Capability to Manage Multiple and Large Orders

Large orders require capabilities to manage large workforce, complex sourcing, production
planning, and ability to ensure timely delivery to the customer. Over the years, our Company
has developed the skills to manage multiple large orders concurrently.

ƒ Optimum Utilization of Manufacturing Facilities

Our Company is able to utilize manufacturing facilities at an optimum level by balancing
production and marketing efforts. Further, our Company has the capability to reprocess the
wastes generated during the production cycle. This help to reduce the raw material costs and
maintaining the cost competitiveness.

Quantitative Factors

1. Adjusted Earnings Per Share

EPS (Rs.) Weight

2002-03 14.86 1
2003-04 6.80 2
2004-05 11.44 3
Weighted Average EPS 10.46

2. Price/Earning Ratio (P/E) in relation to Issue Price of Rs. [●]/- per share

ƒ Based on 2004-05 EPS of Rs. 11.44 [●]

ƒ Based on weighted average EPS of Rs. 10.46 [●]

49
 Our Company broadly fits into the food processing industry, which consists of players
from various fields of food processing, and as such is not comparable. However,
accounting ratios of some of the comparable companies in the group is given as under:

Accounting Ratios of some of the Companies in the same Industry group:

Particulars EPS (Rs) P/E RONW (%) NAV (Rs.)

Satnam Overseas* 7.60 9.90 15.40 54.10

KRBL* 9.10 10.00 10.40 90.80
Sunstar Overseas Limited 11.44 -- 9.68 118.23
(2004-2005)
*Source: Capital Markets Volume XX/23, January 16-29, 2006.

3. Return on Net Worth

RONW % Weight
ƒ 2002-03 14.9 1
ƒ 2003-04 6.43 2
ƒ 2004-05 9.68 3
Weighted Average 9.47

ƒ Minimum Return on Total Net Worth needed after the Issue to maintain pre-Issue EPS of
Rs. 7.89 is [●]%

4. Net Asset Value

a) As on 31st March 2005 118.23

b) As on 30th September 2005 126.25
c) After Issue [●]
d) Issue Price [●]

5. The face value of our shares is Rs.10/- per share and the Issue Price of Rs. [●]/- is [●] times of
the face value of our Equity Shares. The final price would be determined on the basis of the
demand from the investors.

6. The Book Running Lead Manager believes that the Issue Price of Rs. [●]/- per share is
justified in view of the above qualitative and quantitative parameters. The investors may also
want to peruse the risk factors and our financials as set out in the Auditors Report in the
Draft Red Herring Prospectus to have a more informed view about the investment
proposition.

50
 STATEMENT OF TAX BENEFITS

We hereby report that the enclosed Annexure-I states the possible income-tax benefits available
to the Company and its shareholders under the Income-tax Act, 1961 presently in force in India.
Several of these benefits are dependent on the Company or its shareholders fulfilling the
conditions prescribed under the relevant provisions of the statute. Hence, the ability of the
Company or its shareholders to derive the tax benefits is dependent upon fulfilling such
conditions, which based on business imperatives the Company faces in the future, the Company
may or may not choose to fulfil. The benefits discussed below are not exhaustive. This statement
is only intended to provide general information to the investors and is neither designed nor
intended to be a substitute for professional tax advice. In view of the individual nature of the tax
consequences and the changing tax laws, each investor is advised to consult his or her own tax
consultant with respect to the specific tax implications arising out of their participation in the
issue. We do not express any opinion or provide any assurance as to whether:

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

The contents of this annexure are based on information, explanations and representations
obtained from the Company and on the basis of our understanding of the business activities and
operations of the Company.

While all reasonable care has been taken in the preparation of this opinion, M/s R.K. Gulati &
Associates, accepts no responsibility for any errors or omissions therein or for any loss sustained
by any person who relies on it.

For R K. Gulati & Associates

Chartered Accountants

Rakesh Gulati
Partner
Membership No: 84895

New Delhi
Date: 07th November 2005

Annexure-I

Statement of possible benefits available to the Company and its shareholders

I. Under the Income Tax Act, 1961

A. 1 Benefits available to the Company

A.1.1 The Company is eligible under section 35D of the Income Tax Act, 1961 to a deduction
equal to one-fifth of certain specified expenditure, including specified expenditure
incurred in connection with the issue for the extension of the industrial undertaking, for
a period of five successive years subject to the limits provided and conditions specified
under the said section.

A.1.2 The Company would be eligible for deprecation @ 15% on the cost of Plant & Machinery
as per the provisions of Income Tax Act, 1961. Further the company would be entitled to
depreciation @ 80% of the cost of Plant & Machinery in the nature of boilers, Air and
water pollution equipment and energy saving devices and would also be entitled to
depreciation on its other assets as per Rule 5 of the Income Tax Rules, 1962.

51
A.1.3 As per provisions of section 32 (1) (iia) of the Income Tax Act, 1961 the company would
be entitled to additional depreciation @ 20% of the actual cost of new Plant & Machinery
during previous year ending on or after 31.3.2005 subject to the fulfilment of other
conditions specified under the said section.

A.1.4 Tax holiday under Section 10A of the Act

The company is eligible to claim a deduction with respect of profits divided by its
undertaking setup for manufacturing and export of organic Rice for a period or ten
consecutive assessment years, beginning with the assessment year relevant to the
previous year in which the undertaking begins to manufacture or produce such articles
or things. The amount eligible for a deduction would be the profits and gains derived
from the export of organic rice. As per the provisions of the section, profits derived from
the export means the amount which bears to the profits of the business of the
undertaking, the same proportion as the export turnover bears to the total turnover of the
business carried on by the undertaking.

However, from the Assessment Year 2003-2004, the tax holiday under Section 10B of the
Act was limited to 90 percent of the eligible profits instead of 100 percent of such profits.
As a consequence, 10 percent of the eligible profits of the undertaking would be taxable
at the normal corporate tax rate of 30 percent (including surcharge of 10 percent and
education cess @ 2% ) for Assessment Year 2006- 07.

The benefit is available subject to fulfilment of conditions prescribed by this section and
no benefit under this section shall be allowed with respect to any such undertaking for
the assessment year beginning on the April 1, 2010 and subsequent years.

A.1.5 Unabsorbed depreciation and business losses

As per the provisions of section 32(2) of the Act, where full allowance cannot be given to
the depreciation allowance in any year, the same can be carried forward and claimed in
the subsequent years. Further, as per the provisions of section 72 (2) of the Act,
unabsorbed business losses which is not set off in any previous year can be carried
forward and set off against the business profits of the subsequent assessment years.
However, the carry forward and set off of the unabsorbed depreciation and business
losses are subject to restrictions specified in section 10A, section 79 and section 80.

A.2. Computation of Capital gains

A.2.1 Capital assets may be categorized into short term capital assets and long term capital
assets based on the period of holding. All capital assets (except shares held in a company
or any other security listed in a recognized stock exchange in India or a unit of the UTI or
a unit of a mutual fund specified under section 10(23D)) or zero coupon Bonds are
considered to be long term capital assets if they are held for a period in excess of 36
months. Shares held in a company, any other listed securities, units of UTI and Mutual
Fund units, zero coupon bonds are considered as long term capital assets if these are held
for a period exceeding 12 months.

Consequently, capital gains arising on sale of shares held in a company or any other
listed security or units of UTI or Mutual Fund units, zero coupon bonds held for more
than 12 months would be considered as “long term capital gains”.

A.2.2 Section 48 of the Act, which prescribes the mode of computation of capital gains,
provides for deduction of cost of acquisition/ improvement and expenses incurred
wholly and exclusively in connection with the transfer of a capital asset, from the sale
consideration to arrive at the amount of capital gains. However, in respect of long term
capital gains, it offers a benefit by permitting substitution of cost of acquisition /
improvement with the indexed cost of acquisition / improvement, which adjusts the cost

52
 of acquisition / improvement by a cost inflation index, as per explanation (iii) to section
48 of the Act, as prescribed from time to time.

A.2.3 As per the provisions of Section 112(1)(b) of the Act, long term capital gains as computed
above would be subject to tax at a rate of 20 percent (plus applicable surcharge and
education cess). However, as per the proviso to Section 112(1) of the Act, if the tax
payable in respect of long term capital gains resulting on transfer of listed securities or
units, calculated at the rate of 20 percent with indexation benefit exceeds the tax payable
on gains computed at the rate of 10 percent without indexation benefit, then such gains
are chargeable to tax at the rate of 10 percent without indexation benefit (plus applicable
surcharge and education cess).

Gains arising on transfer of short term capital assets are currently chargeable to tax at 30
percent (plus applicable surcharge and education cess), at the discretion of assessee.
However, as per section 111A of the Act, short term capital gain arising from transfer of
an equity share in a company or a unit of an equity oriented fund would be taxable at 10
percent (plus applicable surcharge and education cess), if:

ƒ The transaction of sale is entered into on or after 1st October 2004, through
recognized stock exchange and;
ƒ Such transaction is chargeable to securities transaction tax under that Chapter.

A.2.4 Exemption of long term capital gains from income tax

As per the provisions of Section 10(38) of the Act, long term capital gain arising from
transfer of an equity share in a company or unit of an equity oriented fund is exempt
from income-tax if:

ƒ The transaction of sale is entered into on or after 1st October 2004, through
recognized stock exchange and;
ƒ Such transaction is chargeable to securities transaction tax under that Chapter.

A.2.5. As per the provisions of Section 54EC of the Act and subject to the conditions specified
therein, capital gains arising to the Company on transfer of a long term capital asset shall
not be chargeable to tax to the extent such capital gains are invested in certain notified
bonds within six months from the date of transfer. However, if the Company transfers or
converts the notified bonds into money within a period of three years from the date of its
acquisition, the amount of capital gains exempted earlier would become chargeable to tax
as long term capital gains in the year in which the bonds are transferred or converted into
money.

A.2.6. As per the provisions of Section 54ED of the Act and subject to the conditions specified
therein, capital gains arising from transfer of long term capital assets, being listed
securities or units of a mutual fund specified under section 10(23D) of the Act or the UTI
shall not be chargeable to tax to the extent such gains are invested in acquiring equity
shares forming part of an “eligible issue of capital” within six months from the date of
transfer of the said long term capital assets.

Eligible issue of capital has been defined as an issue of equity shares which satisfies the
following conditions –

ƒ the issue is made by a public company formed and registered in India; and
ƒ the shares forming part of the issue are offered for subscription to the public.

A.2.7 Dividends exempt under section 10(34) of the Act

Dividends (whether interim or final) declared, distributed or paid by a domestic
company for any assessment year commencing on or after April 1, 2003 are exempt in the

53
 hands of the Company, in its capacity as shareholder, as per the provisions of Section
10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of
the Act.

A.2.8. Short–term capital loss suffered during the year is allowed to be- off against short-term
as well as long- term capital gains of the said year. Balance loss, if any, could be carried
forward for eight years for claiming set-off against subsequent years short-term as well
as long-term capital gains.

A.2.9 Long – term capital loss suffered during the year allowed to be set-off against long- term
capital gains. Balance Loss, if any, could be carried forward for eight years for claiming
set-off against subsequent years long-term capital gains.

A.2.10 As per section 88E of the Act, the STT paid in respect of the taxable securities transactions
entered into in the course of business would be eligible for rebate from the amount of
income-tax on the income chargeable under the head ‘Profits and Gains of Business of
Profession’ arising from taxable securities transactions.

B. The Shareholders

B.1. Benefits available to resident shareholders

B.1.1 Income of a minor exempt up to certain limit

Under Section 10(32) of the Act, any income of minor children clubbed in the total
income of the parent under Section 64(1A) of the Act will be exempt from tax to the
extent of Rs. 1,500 per minor child.

B.1.2 Dividends exempt under Section 10(34)

Dividends (whether interim or final) declared, distributed or paid by the Company for
any assessment year commencing on or after April 1, 2003 are exempt in the hands of
shareholders as per the provisions of Section 10(34) of the Act, if the same is subject to
dividend distribution tax under section 115O of the Act.

B.1.3 Computation of capital gains

Capital assets may be categorized into short term capital assets and long term capital
assets based on the period of holding. All capital assets (except shares held in a company
or any other security listed in a recognized stock exchange in India or a unit of the UTI or
a unit of a mutual fund specified under section 10(23D)) or zero coupon Bonds are
considered to be long term capital assets if they are held for a period in excess of 36
months. Shares held in a company, any other listed securities, units of UTI and Mutual
Fund units, zero coupon bonds are considered as long term capital assets if these are held
for a period exceeding 12 months.

Consequently, capital gains arising on sale of shares held in a company or any other
listed security or units of UTI or Mutual Fund units, zero coupon bonds held for more
than 12 months would be considered as “long term capital gains”.

B.1.4 Section 48 of the Act, which prescribes the mode of computation of capital gains,
provides for deduction of cost of acquisition/ improvement and expenses incurred
wholly and exclusively in connection with the transfer of a capital asset, from the sale
consideration to arrive at the amount of capital gains. However, in respect of long term
capital gains, it offers a benefit by permitting substitution of cost of acquisition /
improvement with the indexed cost of acquisition / improvement, which adjusts the cost
of acquisition / improvement by a cost inflation index, as per explanation (iii) to section
48 of the Act, as prescribed from time to time.

54
B.1.5 As per the provisions of Section 112(1)(b) of the Act, long term capital gains as computed
above would be subject to tax at a rate of 20 percent (plus applicable surcharge and
education cess). However, as per the proviso to Section 112(1) of the Act, if the tax
payable in respect of long term capital gains resulting on transfer of listed securities or
units, calculated at the rate of 20 percent with indexation benefit exceeds the tax payable
on gains computed at the rate of 10 percent without indexation benefit, then such gains
are chargeable to tax at the rate of 10 percent without indexation benefit (plus applicable
surcharge and education cess).

B.1.6 Gains arising on transfer of short term capital assets are currently chargeable to tax at 30
percent (plus applicable surcharge and education cess), at the discretion of assessee.
However, as per section 111A of the Act, short term capital gain arising from transfer of
an equity share in a company or a unit of an equity oriented fund would be taxable at 10
percent (plus applicable surcharge and education cess), if:

ƒ The transaction of sale is entered into on or after 1st October 2004 through recognized
stock exchange and;
ƒ Such transaction is chargeable to securities transaction tax under that Chapter.

B.1.7 Exemption of long term capital gains from income tax

As per the provisions of Section 10(38) of the Act, long term capital gain arising from
transfer of an equity share in a company or unit of an equity oriented fund is exempt
from income-tax if:

ƒ The transaction of sale is entered into on or after 1st October 2004 and transactions are
entered through recognized stock exchange and ;
ƒ Such transaction is chargeable to securities transaction tax under that Chapter.

B.1.8 As per the provisions of Section 54EC of the Act and subject to the conditions specified
therein, capital gains arising to the Company on transfer of a long term capital asset shall
not be chargeable to tax to the extent such capital gains are invested in certain notified
bonds within six months from the date of transfer. However, if the Company transfers or
converts the notified bonds into money within a period of three years from the date of its
acquisition, the amount of capital gains exempted earlier would become chargeable to tax
as long term capital gains in the year in which the bonds are transferred or converted into
money.

B.1.9 As per the provisions of Section 54ED of the Act and subject to the conditions specified
therein, capital gains arising from transfer of long term capital assets, being listed
securities or units of a mutual fund specified under section 10(23D) of the Act or the UTI
shall not be chargeable to tax to the extent such gains are invested in acquiring equity
shares forming part of an “eligible issue of capital” within six months from the date of
transfer of the said long term capital assets. Eligible issue of capital has been defined as
an issue of equity shares which satisfies the following conditions

ƒ The issue is made by a public company formed and registered in India; and
ƒ The shares forming part of the issue are offered for subscription to the public.

B.1.10 As per the provisions of Section 54F of the Act and subject to the conditions specified
therein, in the case of an individual or a Hindu Undivided Family (‘HUF’), gains arising
on transfer of a long term capital asset (not being a residential house) are not chargeable
to income-tax if the entire net consideration received on such transfer is invested within
the prescribed period in a residential house either purchased or constructed. If part of
such net consideration is invested within the prescribed period in a residential house,
then so much of the capital gain as bears to the whole of the capital gain the same
proportion as the cost of the new asset bears to the net consideration shall not be

55
 chargeable to income-tax. For this purpose, net consideration means full value of the
consideration received or accrued as a result of the transfer of the capital asset as reduced
by any expenditure incurred wholly and exclusively in connection with such transfer.
Further, if the residential house in which the investment has been made is transferred
within a period of three years from the date of its purchase or construction, the amount
of capital gains tax exempted earlier would become chargeable to tax as long term capital
gains in the year in which such residential house is transferred.

B.1.11 As per provisions of U/s 88E of the Income Tax Act, 1961, the securities transactions tax
paid by the shareholders in respect of taxable securities entered into the cause of his
business income tax on the income chargeable under the head profit and gain of business
or profession arising from taxable arising from taxable securities transactions subject to
the fulfilment of other conditions specified under the said section.

B. 2. BENEFITS AVAILABLE TO NON-RESIDENT INDIAN SHAREHOLDERS

B.2.1 Income of a minor exempt up to certain limit

Under Section 10(32) of the IT Act, any income of minor children clubbed in the total
income of the parent under Section 64(1A) of the IT Act will be exempt from tax to the
extent of Rs. 1,500 per minor child.

B.2.1 Dividends exempt under Section 10(34)

Dividends (whether interim or final) declared, distributed or paid by the Company for
any assessment year commencing on or after April 1, 2003 are exempt in the hands of
shareholders as per the provisions of Section 10(34) of the Act, if the same is subject to
dividend distribution tax under section 115O of the Act.

B.2.3 Computation of capital gains

Capital assets may be categorized into short term capital assets and long term capital
assets based on the period of holding. All capital assets (except shares held in a company
or any other security listed in a recognized stock exchange in India or a unit of the UTI or
a unit of a mutual fund specified under section 10(23D)) or zero coupon Bonds are
considered to be long term capital assets if they are held for a period in excess of 36
months. Shares held in a company, any other listed securities, units of UTI and Mutual
Fund units are considered as long term capital assets if these are held for a period
exceeding 12 months.

Consequently, capital gains arising on sale of shares held in a company or any other
listed security or units of UTI or Mutual Fund units, held for more than 12 months would
be considered as “long term capital gains”.

B.2.4 Section 48 of the Act contains special provisions in relation to computation of long term
capital gains on transfer of an Indian company’s shares by non-residents. Computation of
long-term capital gains arising on transfer of shares in case of non-residents has to be
done in the original foreign currency, which was used to acquire the shares. The capital
gain (i.e., sale proceeds less cost of acquisition/improvement) computed in the original
foreign currency is then converted into Indian Rupees at the prevailing rate of exchange
as per rule 115 and 115A. Benefit of indexation of cost is not available in above case.

Gains arising on transfer of short term capital assets are normally chargeable at the tax
rates as applicable to the status of the shareholder. However, as per section 111A, short
term capital gain arising from transfer of an equity share in a company or a unit of an
equity oriented fund would be taxable at 10 percent (plus applicable surcharge and
education cess), if:

56
 ƒ The transaction of sale is entered into on or after the 1st October 2004 through
recognized stock exchange and;
ƒ Such transaction is chargeable to securities transaction tax under that Chapter

B.2.5 Capital gains tax - Options available under the Act

(A) Where shares have been subscribed in convertible foreign exchange –

Option available under Chapter XII-A of the Act Non-Resident Indians [as defined in
Section 115C (e) of the Act], being shareholders of an Indian Company, have the option
of being governed by the provisions of Chapter XII-A of the Act, which inter alia entitles
them to the following benefits in respect of income from shares of an Indian company
acquired, purchased or subscribed to in convertible foreign exchange:

ƒ As per the provisions of Section 115D read with Section 115E of the Act and subject
to the conditions specified therein, long term capital gains arising on transfer of an
Indian company’s shares, will be subject to tax at the rate of 10 percent (plus
applicable surcharge and education cess), without indexation benefit.

B.2.6 As per the provisions of Section 115F of the Act and subject to the conditions specified
therein, gains arising from the transfer of a long term capital asset being shares in an
Indian company shall not be chargeable to tax if the entire net consideration received on
such transfer is invested within a period of six months from the date of transfer in any
specified asset or in any saving certificate as specified. If only part of such net
consideration is so invested, then such gains would not be chargeable to tax on a
proportionate basis. For this purpose, net consideration means full value of the
consideration received or accrued as a result of the transfer of the capital asset as reduced
by any expenditure incurred wholly and exclusively in connection with such transfer.

Further, if the specified asset in which the investment has been made is transferred
within a period of three years from the date of investment, the amount of capital gains
tax exempted earlier would become chargeable to tax as long term capital gains in the
year in which such specified asset or savings certificates are transferred.

B.2.7 As per the provisions of Section 115G of the Act, Non-Resident Indians are not obliged to
file a return of income under Section 139(1) of the Act, if their only source of income is
income from investments or long term capital gains or both, provided tax has been
deducted at source from such income as per the provisions of Chapter XVII-B of the Act.

B.2.8 Under Section 115H of the Act, where the Non-Resident Indian becomes assessable as a
resident in India, he may furnish a declaration in writing to the Assessing Officer, along
with his return of income for that year under Section 139 of the Act to the effect that the
provisions of the Chapter XII-A shall continue to apply to him in relation to such
investment income derived from the specified assets for that year and subsequent
assessment years until such assets are converted into money.

B.2.9 As per the provisions of Section 115I of the Act, a Non-Resident Indian may elect not to
be governed by the provisions of Chapter XII-A for any assessment year by furnishing
his return of income for that assessment year under Section 139 of the Act, declaring
therein that the provisions of Chapter XII-A shall not apply to him for that assessment
year and accordingly his total income for that assessment year will be computed in
accordance with the other provisions of the Act.

57
B.2.10 Exemption of long term capital gains from income tax

As per the provisions of Section 10(38) of the Act, long term capital gain arising from
transfer of an equity share in a company or unit of an equity oriented fund is exempt
from income-tax if:

ƒ the transaction of sale is entered into on or after 1st October 2004 through recognized
stock exchange and;
ƒ Such transaction is chargeable to securities transaction tax under that Chapter.

B.2.11 As per the provisions of Section 54EC of the Act and subject to the conditions specified
therein, capital gains arising to the shareholder on transfer of a long term capital asset
shall not be chargeable to tax to the extent such capital gains are invested in certain
notified bonds within six months from the date of transfer. However, if the Shareholder
transfers or converts the notified bonds into money within a period of three years from
the date of its acquisition, the amount of capital gains exempted earlier would become
chargeable to tax as long term capital gains in the year in which the bonds are transferred
or converted into money.

B.2.12 As per the provisions of Section 54ED of the Act and subject to the conditions specified
therein, capital gains arising from transfer of long term assets, being listed securities or
units of a mutual fund specified under section 10(23D) of the Act or the UTI shall not be
chargeable to tax to the extent such gains are invested in acquiring equity shares forming
part of an “eligible issue of capital” within six months from the date of transfer of the
said long term capital assets.

Eligible issue of capital has been defined as an issue of equity shares which satisfies the
following conditions:

ƒ The issue is made by a public company formed and registered in India; and
ƒ The shares forming part of the issue are offered for subscription to the public.

B.2.13 As per the provisions of Section 54F of the Act and subject to the conditions specified
therein, in the case of an individual or a Hindu Undivided Family (‘HUF’), gains arising
on transfer of a long term capital asset (not being a residential house) are not chargeable
to tax if the entire net consideration received on such transfer is invested within the
prescribed period in a residential house either purchased or constructed. If part of such
net consideration is invested within the prescribed period in a residential house, then so
much of the capital gain as bears to the whole of the capital gain the same proportion as
the cost of the new asset bears to the net consideration shall not be chargeable to income-
tax. For this purpose, net consideration means full value of the consideration received or
accrued as a result of the transfer of the capital asset as reduced by any expenditure
incurred wholly and exclusively in connection with such transfer.

Further, if the residential house in which the investment has been made is transferred
within a period of three years from the date of its purchase or construction, the amount
of capital gains tax exempted earlier would become chargeable to tax as long term capital
gains in the year in which such residential house is transferred.

B.2.14 Provisions of the Act vis-à-vis provisions of the tax treaty

As per Section 90(2) of the Act, the provisions of the Act would prevail over the
provisions of the relevant tax treaty to the extent they are more beneficial to the non-
resident.

58
B.3 Benefits available to Foreign Institutional Investors (“FIIs”)

B.3.1. As per provisions of section 10 (34) of the Act, any income by way of dividend referred to
in section 115 O (i.e. dividend declared, distributed or paid on and after April 1, 2003 by
the company) is exempt from tax.

B.3.2 Taxability of capital gains

As per the provisions of section 115AD of the Act, FIIs will be taxed on the capital gains
income at the following rates:

Nature of income Rate of tax

Long term capital gains 10 percent

Short term capital gains 30 percent/10 percent (Reduced rate of 10% if transaction of
sales is entered into on or after 1st October 2004 through recognized stock exchange and
securities transaction tax changed. The above tax rates would be increased by the
applicable surcharge and education cess. The benefits of indexation and foreign currency
fluctuation protection as provided by section 48 of the Act are not available to FIIs.

As per section 90(2) of the Act, the provisions of the Act would prevail over the
provisions of the tax treaty to the extent they are more beneficial to the non-resident.

B.3.3 Exemption of capital gain from income tax

As per the provisions of Section 10(38) of the Act, long term capital gain arising from
transfer of an equity share in a company or unit of an equity oriented fund is exempt
from income-tax if:

ƒ The transaction of sale is entered into on or after 1st October 2004 through
recognized stock exchange and;
ƒ Such transaction is chargeable to securities transaction tax under that Chapter.

B.3.4 As per the provisions of Section 54EC of the Act and subject to the conditions specified
therein, capital gains arising to the Company on transfer of a long term capital asset shall
not be chargeable to tax to the extent such capital gains are invested in certain notified
bonds within six months from the date of transfer. However, if the Company transfers or
converts the notified bonds into money within a period of three years from the date of its
acquisition, the amount of 1 Reduced rate of 10 percent if the transaction of sale is
entered into on or after 1st October 2004 through recognized stock exchange; and such
transaction is chargeable to securities transaction tax under that Chapter capital gains
exempted earlier would become chargeable to tax as long term capital gains in the year in
which the bonds are transferred or converted into money.

B.3.5 As per the provisions of section 54ED of the Act and subject to the conditions specified
therein, capital gains arising from transfer of long term assets, being listed securities or
units of a mutual fund specified under section 10(23D) of the Act or of the UTI shall not
be chargeable to tax to the extent such gains are invested in acquiring equity shares
forming part of an “eligible issue of share capital” within six months from the date of
transfer of the said long term capital assets. Eligible issue of share capital has been
defined as an issue of equity shares which satisfies the following conditions:

ƒ the issue is made by a public company formed and registered in India; and
ƒ the shares forming part of the issue are offered for subscription to the public

59
B.3.6 Tax Treaty Benefits:
As per section 90(2) of the Act, the provisions of the Act would prevail over the
provisions the tax treaty to extent they are more beneficial to the non-resident. Thus, a
non-resident can opt to be governed by the beneficial provision of an applicable tax
treaty.

Note: There is a legal uncertainty over whether a FII can elect to be governed by the
normal provisions of the Act, instead of the provisions of section 115AD.
Investors are advised to consult their tax advisors in this regard.

B. 4 Benefits available to Mutual Funds

As per the provisions of section 10(23D) of the Act, any income of Mutual Funds
registered under the Securities and Exchange Board of India Act, 1992 or Regulations
made thereunder, Mutual Funds set up by public sector banks or public financial
institutions and Mutual Funds authorized by the Reserve Bank of India would be exempt
from income tax, subject to such conditions as may be prescribed in this behalf.

B.5 Benefits available to Venture Capital Companies/Funds

As per the provisions of section 10(23FB) of the Act, any income of Venture Capital
Companies / Funds (set up to raise funds for investment in a venture capital
undertaking registered and notified in this behalf) registered with the Securities and
Exchange Board of India, would be exempt from income tax, subject to the conditions
specified therein. However, the income distributed by the Venture Capital Companies /
Funds to its investors would be taxable in the hands of the recipients.

II. Benefits available under the Wealth Tax Act, 1957

All assesses are entitled to exemption from wealth tax in respect of the shares of the
company as shares or securities are not included in the definition of asset U/s 2 (ea) of
the Wealth Tax Act, 1957.

III. Benefits available under the Gift-Tax Act, 1958

Gift of shares of the company made on or October1, 1998 would not be liable to Gift tax
under the erstwhile Gift Tax Act. However, under section 56 (2) (v) of the Income Tax
Act, 1961, where any sum of money (which could include gift of shares also) exceeding
twenty five thousand rupees is received without consideration by an individual or a
Hindu undivided family from any person on or after the 1st day of September, 2004, the
whole of such sum, would be taxed as income in the hand of the recipient, provided that
this clause shall not apply to any sum of money received:

a) from any relative; or

b) on the occasion of the marriage of the individual; or
c) under a will or by way of inheritance; or
d) in contemplation of death of the payer.

For the purposes of this clause, “relative“ means:

a) spouse of the individual;

b) brother or sister of the individual;
c) brother or sister of the spouse of the individual;
d) brother of sister of either of the parents of the individual;
e) any lineal ascendant or descendant of the individual;

60
IV. Benefits available under Export Import Policy

Import of Capital Goods under Export Promotion Capital Goods scheme (EPCG Scheme)
at concessional rate of duty subject to fulfilment of obligations.

Notes:

ƒ All the above benefits are as per the current tax laws and will be available only to the
sole/first named holder in case the Equity Shares are held by joint holders.

ƒ In respect of non-residents, taxability of capital gains mentioned above shall be further

subject to any benefits available under the Double Taxation Avoidance Agreement, if any
between India and the country in which the non-resident has fiscal domicile.

61
 SECTION VI - ABOUT US

INDUSTRY OVERVIEW

Introduction

Rice is one of man's most important foods. Today, this unique grain helps sustain two- thirds of
the world's population. Archaeological evidence suggests that rice has been feeding mankind for
more than 5,000 years. Today, agriculture is the backbone of India’s economy, providing direct
employment to about 70% of working people in the country.
(Source: www.agriculture-industry-india.com)

Rice is one of the important cereal food crops of India. Rice contributes about 43% of total food
grain production and 46% of total cereal production in the country. It continues to play vital role
in the national exports. The percentage share of rice in total national export was 4.5% during
1998-99. The percentage share of agriculture export in total national export was 18.25, whereas
the percentage share of rice export in total agriculture export was 24.62 during 1998-99. Thus, rice
export contributes nearly 25% of total agriculture export from the country.

Rice is also an important cereal food crops in South East Asia. Thailand, Vietnam, Myanmar,
China and Japan are the important countries besides India growing rice. Among the exporting
countries Thailand, Vietnam, India and Pakistan are the important countries exporting rice in
sizeable quantity. Thailand ranks first in the export of rice in the world followed by Vietnam and
India. China and Indonesia are likely to boost their import of rice, which will facilitate India to
increase its rice export. Besides, the Govt. of India has also fixed a high target for export of rice
from India including broken rice. The Govt. of India has also fixed the export price of rice quite
competitive in the international market. These measures are expected to contribute in boosting
the export of rice from India.

The Basmati export zone has been set up in Punjab to tap the potential of basmati rice to increase
its export in the international market. In fact Indian basmati rice is well recognized in the
international markets because of its quality. Keeping in view the export potential of basmati rice,
the Govt. of India has launched aggressive export promotion policy to further develop the
basmati rice by adoption of improved production technology including improved high yielding
new seeds. The scheme for export of basmati zone will cover Gurdaspur, Amritsar, Kapurthala,
Jalandhar, Hoshiarpur and Nawanshahar districts of Punjab.

The export of basmati from the country has grown by 39.4% in 2005 to 850000 MT and is
estimated at Rs 20 bn (USD 0.46bn) with major portion of exports going to the middle-east (65%
of basmati exports), Europe (20%) and USA (10-15%). At $850 per tonne, the Indian basmati
variety is the most expensive basmati imported by the European Union compared to $700 per
tonne for Pakistani basmati and $500 per tonne for Thai fragrant rice. The Indian rice market is
estimated at 89mn tones of which basmati rice is around 2%. India is the second largest producer
of rice after China and the largest exporter of basmati in the world. India has a natural
competitive edge considering that basmati grows only in India and Pakistan. Domestic
consumption of basmati rice is expected to rise significantly due to the increasing per capita
income and an improvement in the standard of living in the country. The total basmati
production in India is 1.7mn tones, out of which 0.7mn tonnes is exported while 1mn tonne is
consumed domestically. The rice business is changing from being a mere commodity business to
an industry where technology and branding is gaining importance. Moreover, with rising
disposable income and changing consumer preference the demand for basmati is expected to
grow at faster pace.

62
Structure of the Rice Industry

The industry in India has a complex structure marked by presence of both large-scale production
units as well as small-scale units. The rice industry in India is broadly divided into two segments,
basmati and non-basmati. Unorganised sector and regional players in the market dominate the
non-basmati segment. The non-basmati market is largely unbranded. India produces 86m tonnes
of non-basmati rice annually. The total market is estimated at Rs 1,000 billion. Of this, a small
fraction of around 5% is exported and the remaining is consumed domestically. It is very difficult
to create differentiation and brands and hence is not very lucrative in terms of profitability.

Status of Rice Milling Units in India:

Rice milling is the oldest and the largest agro processing industry of the country. At present it has
a turn over of more than 25,500/- crores per annum. It processes about 85 million tonnes of
paddy per year and provides staple food grain and other valuable products required by over 60%
of the population. Paddy grain is milled either in raw condition or after par-boiling, mostly by
single hullers of which over 82,000 are registered in the country. Apart from it there are also a
large number of unregistered single hulling units in the country. A good number (60 %) of these
are also linked with par-boiling units and sun -drying yards. Most of the tiny hullers of about
250-300 kg/hr capacities are employed for custom milling of paddy. Apart from it double hulling
units number over 2,600 units, underrun disc shellers cum cone polishers numbering 5,000 units
and rubber roll shellers cum friction polishers numbering over 10,000 units are also present in the
country. Further over the years there has been a steady growth of improved rice mills in the
country. Most of these have capacities ranging from 2 tonnes /hr to 10 tonnes/ hr.

Types of Rice

There are two types of rice that is consumed – raw and sella (parboiled). While raw rice is
consumed mainly in the domestic market, sella rice is generally consumed in the Middle East.
Sella is a form of rice that undergoes a special process of boiling and steaming to capture the
nutritive value of bran in the rice. Within raw rice, there are two varieties, viz., raw milled rice
and raw brown rice. Some of the different subcategories of above types of rice are mentioned
below:

Varieties of Rice

Parboiled Rice Steam Rice Raw Milled Rice Raw Brown Rice

Golden Pusa Basmati Basmati

Light Golden Sharbati Pusa Pusa

Creamy Sharbati Sharbati

Light Creamy Parmal Parmal

Rice Export International Scenario

Rice export from India constitutes the major share of Basmati rice. Nearly two-third of Basmati
rice produced in India is exported. Basmati rice is the leading aromatic fine quality rice of the
world trade and it fetches good export price in the international markets. Infact, Basmati rice is a

63
gift from "Mother Nature" to the Indian sub-continent and grows in the Indo-Gangetic plains
only.

The supremacy of basmati rice cannot be superseded by any other scented variety because of its
unique characteristics viz. superfine kernels, exquisite aroma, sweet taste, silky texture, delicate
curvature and linear kernel elongation with least breadth and swelling on cooking. Because of its
quality characteristics, basmati rice is fetching higher price in the international market. During
pre-partition times, basmati rice was grown in India only but after partition, its heritage is
shared between India and Pakistan. Presently, major growing states of basmati rice in India are
Haryana, Punjab, Western U. P. and Uttaranchal.

Being high value product, it has got good export demand. Hence, the export has been very high
and exports have been steadily growing. Gulf region remains the major markets for Indian
basmati rice and inside Gulf, Saudi Arabia accounts for the major chunk of basmati imports
from India. Pakistan is the sole competitor for India in the international market for basmati rice.
During 1998-99, 1999-2000 and 2000-01, total quantities of basmati rice exports from India were
5.98 lac mts., 6.38 lac mts. and 8.52 lac mts. in which the percentage share of Asia was 85.69%,
82.12% and 73.38% respectively. The percentage share of Asia has decreased for basmati rice,
during 1998-99, 1999-2000 and 2000-01 but the export to Europe has increased in linear order
from 11.41% in 1998-99 to 14.37% in 1999-2000 and 20.46% during 2000-01 respectively.

The export to North America has also increased in the same order from 1.39% during 1998-99 to
5.28% during 2000-01. India's major markets for basmati rice exports have been Saudi Arabia,
Australia, Austria, Belgium, Bahrain, France, Germany, U.K., Denmark, U.S.A., Canada,
Belgium , Kuwait, Italy, Oman, Yemen, Netherlands, Jordan, Indonesia etc. Infact, Saudi Arabia
traditionally has been the largest market for Indian basmati rice.

Major destinations for India's non-basmati rice exports are Bangladesh, Australia, Bahrain,
Ethiopia, Djibouti, France, Germany, U.K., Hong Kong, Korea, Sri-Lanka, Maldives, Mauritius,
Malaysia, Nigeria, Ivory coast, Indonesia, Nepal, Oman, Qatar, Russia, South Africa, Saudi
Arabia, Somalia, Singapore, U.A.E. etc. Competing countries in the international markets for
India for the exports of non-basmati rice are Thailand, Vietnam, Burma, China, U.S.A. and
Pakistan. Major quantity of non-basmati rice is exported to Asia continent.

During 1996-97, 1997-98, 1998-99 and 1999-2000 a total quantity of 9.59 lac mts., 9.28 lac mts.,
28.75 lac mts. and 7.08 lac mts. were exported to Asia continent which were 48.20%, 51.66%,
65.86% and 56.28% of total export of non-basmati rice from India to Asia, respectively. There
was a fluctuation in the export of non-basmati rice from India to Asia during 1996-97 to 1999-
2000.

After Asia, non-basmati rice is exported from India to Africa continent. During 1996-97,1997-98,
1998-99 and 1999-2000 a total quantity of non-basmati rice exports from India to Africa were 5.39
lac mts, 5.59 lac mts, 10.67 lac mts and 3.24 lac mts, in which the percentage share of Africa
continent was 27.09%, 31.14%, 24.44% and 25.73% respectively of total export of non-basmati rice
from India.

Next to Africa continent, Europe continent has been importing non-basmati rice from India
during 1996-97, 1997-98, 1998-99 and 1999-2000. The exports of non-basmati rice from India to
other continents are very meagre. The exports to Europe continent during the last few years
were an average more than 1.5 lac mts per year except 1996-97. During 1996-97 total export of
non-basmati rice to Europe was 3.38 lac mts.

Indian is exporting parboiled rice to Middle East and African countries, as these countries prefer
parboiled rice.

64
Rice Export Earnings

Basmati Rice

As already mentioned, India is exporting Basmati Rice to various countries in the world. A total
quantity of 2.66 lac mts basmati rice was exported to different countries from India during 1991-
92. However, the export increased to 8.52 lac mts during 2000-01, registering an increase of 220%
during the last nine years period. The export of basmati rice from 1996-97 to 1999-2000 was
almost static with slight increase over the years. During 1991-92 export earning from the export
of basmati rice was 499.18 crores, which increased to 2165.96 crores during 2000-01 registering
an increase of 333.90 per cent over 1991-92 export earnings. Over 80% of Basmati rice grown in
India is produced for export.
(Source:www.agriculture-industry-india.com)

Non-Basmati Rice

India is also exporting substantial quantity of non-basmati rice to various countries in the
world. However, the export of non-basmati rice has been fluctuating year to year due to
weather conditions affecting the production of non-basmati rice in the importing countries.
Over all increase in export of non-basmati rice during the last 10 years period i.e. from 1991-
92 to 2001-02 was about 3 folds. The export earnings from non-basmati rice increased more
than 4 folds during 2001-02 as compared to 1991-92.

Total Rice

During 1991-92, a total quantity of 6.78 lac mts of rice (Basmati + Non-Basmati) was exported
from India to different countries in the world. The export of total rice increased during
subsequent years and the export during 1995-96 rose to 49.14 lac mts., which was more than a
six fold increase in export as compared to 1991-92 export of total rice from India. Infact, there
was 224.19 per cent over all increase in the export of rice from India during 2001-02 as
compared to the export of 1991-92. Export earnings from the export of total rice from India
during 1991-92 was Rs. 755.59 crores and it increased to Rs. 4,568.08 crores during 1995-96,
which was more than five folds increase.

Growth Prospects

The domestic market is estimated to be growing at 6% for basmati rice and at 3-4% for non-
basmati rice. With a growing consuming class and increasing disposable incomes, demand for
premium products is on the rise. Going forward, we expect not just an increase in penetration but
also an increase in per capita consumption.

A large part of basmati exports is unbranded, which leads to lower export realizations. However,
with Indian players opting to export under own brands, we expect overall realizations to
improve. The industry is characterized by low EBITDA margins as raw material cost accounts for
around 80% of revenues. With manufacturing costs at 5%, and selling and distribution expenses
at 7-8%, rice manufacturers generally have EBITDA margins of 5-7%. The profitability of the
industry has been low due to the fact that majority of the players have been selling unbranded
rice. Traditionally, rice manufacturers have had very little bargaining power. However, with the
introduction of own brands, manufacturers are witnessing an improvement in margins.
According to industry estimates, EBITDA margins for unbranded exports are 8% while margins
on branded exports are 16%.

Prospects of Rice Export from India

India is facing stiff competition in the International markets from Thailand, Vietnam, U.S.A.
and Pakistan. There was a considerable growth in the export of rice from India during the

65
recent past, particularly in the case of non-basmati rice. There are several factors responsible
for this growth. Infact exports depend not only on our ability to sell, but also on the
willingness of importers to buy. Some times major markets/importers used to cut down their
import due to their internal economic problems or good crop harvest and trade also cut down
inventories and people reduce spending. All these measures reduce imports during that
particular year.

ƒ Awareness about basmati rice is spreading among different strata of the society in the
country and abroad.
ƒ Basmati rice is possessing unique grain, cooking, eating and digestive qualities. Hence,
majority of people in the country and abroad have developed liking for basmati rice.
ƒ Because of its superfine quality, basmati rice is most preferred and also meant for high
premium value in the national and international markets.

Middle East is the largest and fastest growing market for Basmati Rice

The consumption of basmati rice depends upon the level of per capita income and the rate of
growth of population. Rice consumption has been declining in the middle and high-income
Asian countries like Japan, China, Thailand and Malaysia. Over the next three decades their
population might grow at only about 1% per year, so these countries may not experience any
further upward pressure on the demand for rice. However the scenario for other countries is
different where there is still room for an increased per capita consumption of rice as parts of the
population are yet to be covered. Within this growing per capita consumption, the consumption
of premium rice variety like basmati is expected to be higher on account of growing affordability
and an aspiration to move to a higher standard of living. Recent projections made by
International Food Policy Research Institute (IFPRI) indicate that the demand for rice will
increase by 1.1% per year over the next three decades. Demand will increase only marginally in
East Asia (0.4%) but quite substantially in the low-income countries of South Asia (1.6%) and sub-
Saharan Africa (2.0%). Global rice production is also expected to increase from 600 mn to 800 mn
tonnes by 2030 to meet the increasing demand.

India is the largest exporter of basmati in the world.

The export of basmati from the country has grown by 39.4% in 2005 to 850000 MT and is
estimated at Rs 20 bn (USD 0.46bn) with major portion of exports going to the middle-east (65%
of basmati exports), Europe (20%) and USA (10-15%). At $850 per tonne, the Indian basmati
variety is the most expensive basmati imported by the European Union compared to $700 per
tonne for Pakistani basmati and $500 per tonne for Thai fragrant rice. The Indian rice market is
estimated at 89mn tones of which basmati rice is around 2%. India is the second largest producer
of rice after China and the largest exporter of basmati in the world. India has a natural
competitive edge considering that basmati grows only in India and Pakistan. Domestic
consumption of basmati rice is expected to rise significantly due to the increasing per capita
income and an improvement in the standard of living in the country. The total basmati
production in India is 1.7mn tones, out of which 0.7mn tonnes is exported while 1mn tonne is
consumed domestically.

The rice business is changing from being a mere commodity business to an industry where
technology and branding is gaining importance. Moreover, with rising disposable income and
changing consumer preference the demand for basmati is expected to grow at faster pace.

66
 BUSINESS OVERVIEW

Our Business

Our Company is currently engaged in the manufacturing and processing of rice. We are into
manufacturing and processing of Basmati and Non Basmati varieties of rice, with focus on
Basmati variety. Currently we are also engaged in the trading of pulses, timber, sesame, cane
sugar, cashews, almonds, paddy seed and granite.

Our Company uses the best and the latest technology available in the market. We have imported
machines from Satake (Japan), Buhler (Germany) and Sortex from Germany, to name a few. We
also propose to purchase several more automated machines for expansion and modernization of
our existing capacities.

Our Company is exporting rice to countries like Germany, Spain, Italy, Australia, U.K., U.S.A.
Saudi Arabia, Dubai and others. At present, our exports are restricted to around 22 countries only
which, leaves scope for our Company to develop new markets and to increase our presence
accordingly. Accordingly, we are planning to explore new markets. In future we plan to make a
mark on the domestic market also. Currently out of total production we are selling around 10-
15% of our produce in the domestic market.

Revenue Break up

25000
Sales Value(Rs'

20000
15000
lacs)

10000 Domestic Sales

5000 Export sales
0
2002 2003 2004 2005

Financial Year

Export Quantity Country Wise Breakup

Rest of the
world Italy
South Africa
Belgium
Lithuania

U.A.E Saudi
Arabia
Netherlands

Russia France
Germany

67
As can be seen from the above graph, the majority of sales of our Company are derived from
exports, which is comprises of Basmati Rice, in which we are the major. However, in the current
scenario, the demand for Basmati Rice is also increasing in the domestic Market.

Reasons for Shift towards Basmati are given as follows:

ƒ Rising percentage of young population – Nearly two-thirds of India’s one billion plus
population is under 35 years of age. The median age is 24 years as compared to 35 years in
the United States, 41 years in Japan and 30 years in China. The increasingly prosperous
younger generation tends to be indulgent. An evident shift in the decision making process in
favour of this indulgent younger lot for purchase of household products like food grains is
expected to result in upgradation of consumption pattern which augurs well for premium
products like Basmati.

ƒ Increase in income levels – Salaries in India are rising at a fast clip as compared to other
countries. Salaries in India have grown by 11.11% for the quarter ended 30th June 2005.
According to Mercer Human Resource Consulting, London, India’s salaries are expected to
improve 11.30% next year, which would be 7.30% inflation adjusted wage growth. The only
country, which comes close to India’s inflation-adjusted wage growth, is Egypt, where
salaries are expected to rise 7.1% above inflation.

ƒ Changing spending patterns – There has been a healthy growth in the number of
households in the middle-income and higher income categories. The number of households
in the lowest income bracket has witnessed a sharp fall; it is estimated to have fallen by 13.5%
during the 2001-2005. Households, with an annual income of over Rs 500,000 are expected to
double during the year. Due to the changing income levels the spending pattern has changed.
People are buying more and more luxury items, thus the demand for basmati is rising.

ƒ Increase in number of working urban – India’s 300 mn urban dwellers form 28% of the total
population but account for about 42% of the total private consumption expenditure. The
urban population is growing at a faster pace than the rural population. According to NCAER
urban population is growing at a 5-year CAGR as against overall population growth of 1%.
Urban growth rates have been driven by larger number of urban centres and the migration of
the young rural population to urban centres for higher education and employment.

ƒ Rising aspiration levels – Rising aspiration levels, information revolution, and the entry of
foreign brands in India after liberalization has made the purchase decision making process of
urban Indians much more dynamic. The demands of the young population are rising at a fast
pace.

ƒ Rise in Shopping Malls – The number of shopping malls in the country are rising
continuously. The arrival of these shopping malls has led to a change in the shopping
patterns of consumers. Consumers are increasingly becoming brand-conscious. Traditionally
rice was bought and sold in bulk quantities, which is now available in lower units price pack
ranging from 1 kg to 5 kg. This we believe will drive consumption for branded basmati rice
as it is nearly double the value of normal rice. Moreover as much as 40 shopping malls have
been set up in the last three years while around 300 more malls are expected to be set up by
2007 which would push the sale further. So we expect people to shift to branded basmati rice.

68
Our Products

Our Company is engaged into the manufacture of rice. The different varieties of rice
manufactured by the company are:

Parbolied Rice
ƒ Golden
ƒ Light Golden Steam Rice
ƒ Creamy ƒ Pusa
ƒ Light Creamy ƒ Sharbati

Raw Milled Rice

ƒ Basmati
ƒ Pusa Raw Brown Rice
ƒ Sharbati ƒ Basmati
ƒ Parmal ƒ Pusa
ƒ Sharbati
ƒ Parmal
Organic Basmati Rice

For producing the organic rice the cultivation process is different. The land used for cultivating
organic rice is de-pesticised and no chemical/synthetic fertilizers etc are used on the land which
is used for cultivating organic rice. It usually takes 3 years for the land to be totally free from
chemicals and unnatural residues. While cultivating organic rice, there is no use of any
pesticides, chemical fertilizers and any other chemical product. Organic rice is stored in separate
warehouses. During the processing neem is sprayed to protect the rice from the worms, insects
and pests. The manufacturing process is same as that of milled rice and raw rice. We have
entered into exclusive contracts with around 624 farmers for growing organic rice in the states of
Haryana, Uttar Pradesh, Uttaranchal and Punjab.

Our Company has the following brands, which are sold in the domestic market:
ƒ Hello
ƒ Gateway of India
ƒ Neelkamal

Applications for registration of 7 other brand names have been made to the concerned
authorities.

Our association with Fairtrade

Fairtrade Labelling was created in the Netherlands in the late 1980s. Max Havelaar launched the
first Fairtrade consumer guarantee label in 1986 on coffee sourced from Mexico. Producers
registered with Fairtrade Labelling Organisations International (FLO) receive a minimum price
that covers the cost of production and an extra premium that is invested in the local community.
This international body incorporates various stakeholders including elected producer and
commercial representatives. It sets standards and ensures the international regular auditing of
producer and commercial partners. Today, there are now 19 organisations including the
Fairtrade Foundation, that run the international standard setting and monitoring body FLO.

In September 2004 there were 422 Fairtrade certified producer groups (including many umbrella
bodies) in 49 producer countries selling to hundreds of Fairtrade registered importers, licensees
and retailers in 19 countries.

69
Background

We have tied up with Fairtrade since the year 2001, and have taken pro-active steps towards this
end. Our Company has assisted local rice growers to convert to organic production and then
helped them set up a farmers’ federation so that the group was eligible for Fairtrade certification.
The federation supplies organic basmati rice to Sunstar which markets it domestically and
internationally, including to Fairtrade markets in Switzerland, and France. Tesco supermarket
launched Fairtrade rice in 150 of its UK stores on 6 June 2005.

The farmers are located in the Khaddar area of Haridwar district in Uttaranchal state, North
India. The area is at the base of the Shivalik hills in the Western Himalayas where the River
Ganges comes down from the mountains and meets the plains before continuing its journey to
the Bay of Bengal. The area is famous for the production of high quality traditional basmati rice.
Since 2001 our Company has developed an extensive organic farming project on the flood plain
in partnership with the Khaddar Farmers’ Federation. We conducted extensive field surveys
before selecting this location, concluding that its soil quality, agro-climatic conditions and
proximity to the pure irrigation waters of the Ganges and its tributaries were ideal for the
cultivation of premium quality organic basmati rice.

Rationale for Fairtrade

While many basmati farmers successfully participate in the export market, there are large
numbers of small-scale basmati rice growers in India who make a very poor living from it.
Traditionally these farmers sell to agents at the local market, at low rates which don’t cover even
their cost of production. They are often deeply in debt to the local agents as a result of taking
high interest loans from them to pay for necessities.

Fairtrade has the potential to bring unique benefits to these farmers. Some of the benefits are:

ƒ to deepen their knowledge of rice agriculture and trade

ƒ the opportunity to organise and to develop a direct relationship with the miller/exporter
ƒ to receive a fair price to cover their costs of production with a premium to invest in
improving their agricultural practices as well as in meeting social needs of the community -
such as improved educational opportunities, establishment of financing facilities and
improved sanitation in the villages

Our Company is keen to improve the position of its farmer partners and has identified Fairtrade
as a means of achieving this. We liaison with Fairtrade as the farmers’ Promoting Body and have
been instrumental in supporting the transformation of this unorganised network of farmers into a
coherent organisation. Twenty-three village-level farmers’ clubs with a total of 520 rice farmers
have been organised into the federation structure required for Fairtrade certification. Each club
has three executives (representative, secretary and treasurer) who in turn select the executive for
the federation. The farmers have a tradition of participating in welfare activities and social
institutions at village level but hadn’t previously worked together at this level of organisation.

There is great potential for Fairtrade to bring the farmers together and strengthen their ability to
negotiate higher, stable prices with buyers, and also contribute new resources to the socio-
economic development of the area, and our Company, as a part of its Corporate Social
Responsibility is proud to be a part of this association. For further details on this aspect, you may
please refer to www.fairtrade.org.uk

70
Brief details about the project:

ƒ Location of our plant

Our Company currently has its manufacturing and processing plants at 40 Km Stone, G.T.K.
Road, Bahalgarh, Sonepat, Haryana-131001 and at G. T. Road, Nijarpura, Amritsar, Punjab.
Both these plants are well connected by rail and road to major destinations.

ƒ Plant, Machinery, Technology, Processes Etc

The existing facilities are equipped with state of the art plant and machineries with
mechanised processes for de-moisturising, temperature controlled drying, cleaning, de-
husking, de-stoning, polishing, sorting, grading. Some of the major machineries at the plant
are pre-cleaners, dryers, parboiling plant, de-stoners, paddy separators, rice huskers, length
graders, polishers, colour sorters.

Machine Functional utility

De-Huskers : Remove the husk from the paddy rice
Paddy Separators : Removes the paddy from brown rice
Precision sizers : Precision sizers are strategically placed in different stages of the
plant to ensure that the rice grain remains of the same size and
oversized grains are segregated
Length graders : Segregates rice grains of different sizes
Vertical abrasive : Polishing of the rice
polishers
Colour Sorters : These eliminate the possibility of passing of any transparent
particle like glass and other identical impurities like
discoloured grains, white stones, plastic pellets etc

ƒ Manufacturing Process

Paddy in its raw form cannot be consumed by human beings. It needs to be suitably
processed for obtaining rice. Rice milling is the process which helps in removal of husk and
bran from paddy grains to produce polished rice. Rice forms the basic primary processed
product obtained from paddy and this is further processed for obtaining various secondary
and tertiary products.

The basic rice milling processes consist of:

1. Pre Cleaning: Removing all impurities and unfilled grains from paddy
2. De-stoning: Separating small stones from paddy
3. Parboiling (Optional): Helps in improving the nutritional quality by gelatinization of
starch inside the rice grain. It improves the milling recovery percent during deshelling
and polishing/whitening operation
4. Husking: Removing husk from paddy
5. Husk Aspiration: Separating the husk from brown rice/un-husked paddy
6. Paddy Separation: Separating the unhusked paddy from brown rice
7. Whitening: Removing all or part of the bran layer and germ from brown rice
8. Polishing: Improving the appearance of milled rice by removing the remaining bran
particles and by polishing the exterior of the milled kernel
9. Length Grading: Separating small and large brokens from head rice
10. Blending: Mixing head rice with predetermined amount of brokens, as required by the
customer
11. Weighing and bagging: Preparing the milled rice for transport to the customer
12. The flow diagram of the various unit operations are as follows:

71
ƒ Description of Rice Milling Operation:

Paddy in its raw form cannot be consumed by human beings. It needs to be suitably
processed for obtaining rice. Paddy is converted into rice through a process called milling. It
involves removal of husk & bran and polishing it to make it ready for consumption. Rice
milling is a gigantic industry in India. Rice milling industry does not only mill rice. It also
carries out many other essential functions, such as procurement, parboiling, drying, storage,
quality control, utilization of by-products, etc. This milling is accomplished by a large
number of systems from very small to very large scale. Some of these require ultramodern
imported/indigenous machines based on intricate scientific principles. A brief process chart
is being presented below to understand the process in a better way.

ƒ Infrastructure Facilities:

Land

Our Company has freehold land of approximately 28 acres at the Bahalgarh unit where the
expansions are proposed. The land is utilised for manufacturing facilities including
parboiling plant, warehouse, dry area, internal roads, office structure, green belt etc. Our
Company also proposes to acquire land measuring approximately 3 acres adjoining our
existing land at the Bahalgarh unit for constructing additional storage space.

72
Raw Materials

The key raw material for manufacturing rice is paddy, which is procured only from
domestic market. Our Company normally procures paddy from areas viz., Haryana, Uttar
Pradesh, Punjab, Uttaranchal and from some parts of Rajasthan and Jammu & Kashmir. The
Our Company keeps adequate stock of paddy to cover the existing order book position,
which mitigates any adverse effect due to price fluctuation.

Raw material procurement

The raw material for the rice is paddy which is grown in fields. From the filed this paddy
comes to the nearby market (locally called mandies) for auction. The purchase of paddy is
made in these markets. There are more than 100 mandies where the Basmati rice paddy is
sold. Sunstar selects the markets (mandies) from which our Company procures paddy
keeping in mind the following factors:

Selection of market for purchase of paddy (raw material)

Selection of market is crucial for acquiring good paddy at competitive price. Our purchase
department has to take into consideration different factors while selecting the mandies
procurement. Some of the common factors are stated below:

ƒ Quality availability in the market.

ƒ Quantity of Paddy available in that market.
ƒ General Price levels from past experiences.
ƒ Past experiences of Company towards that market.
ƒ Expenses and costs in that market.
ƒ Percentage of paddy coming from farmers versus traders.
ƒ Other Purchasers buying Paddy from that market.
ƒ Availability of vendors suiting Company’s requirement in that particular market.
ƒ Climatic conditions of surrounding villages of that market.
ƒ Results of Crop Surveys conducted by Company.

For deciding the above factors Management uses different tools out of which Conducting
Surveys at various stages is a major one.

Selection of Vendors for purchase of paddy

After selecting market, Vendors (Commission agents) are selected through which our
Company will procure paddy. Certain factors are considered before selection of a
Vendor.

ƒ Goodwill of the vendor

ƒ Other companies for whom the vendor is doing business (Preferences is given to the
Vendors who can buy exclusively for the Company).
ƒ His past performance depending on quality, quantity supplied and rejection
Percentage.
ƒ Vendor’s fulfilment towards his commitment made with the Company.
ƒ Vendor’s knowledge towards the judgment of different varieties of paddy. To ensure
this, Company conducts a test of Variety Recognition. In this vendors are given
samples of mixed varieties and they are asked to segregate different varieties.
Company selects only those vendors who successfully pass this test.

Organic Rice is being procured from Uttaranchal, Haryana and Jammu. Production of
organic rice in Jammu has been started from the year 2005-06. Our Company is among
the pioneers in developing the concept of organic rice farming in India. We have entered

73
 into exclusive contracts with around 650 farmers to procure their output, which is
grown using 100% organic methods.

ƒ Utilities

Utilities comprise mainly of steam generators, besides a water effluent treatment plant,
workshop and laboratory testing facilities, with state of the art apparatus.

ƒ Power

Bahalgarh Plant – Haryana

Our existing power requirements for manufacturing facilities are catered by the State
Electricity Board. Our Company has a sanctioned and connected load of 2500 KVA from
Uttari Bijli Vitaran Nigam Limited. Presently, we are having 3 generators as standby
arrangement of 100KVA, 320 KVA and 320 KVA. Our existing power consumption is about
20,000 units per day. Presently, our Company has a storage capacity of 20KL for High Speed
Diesel. 33 KVA sub station is also installed at our unit, thereby preventing loss in transit of
the electricity.

Amritsar Plant - Punjab

Our existing power requirements for manufacturing facilities are catered by the State
Electricity Board. The unit has a sanctioned and connected load of 350 KVA from state
electricity board. Presently, we are having 2 generators as standby arrangement. One
generator is of 180KVA and the other is of 200KVA. Our existing power consumption is
about 6,000units per day, which is derived from the state electricity grid.

ƒ Compressed Air

Compressed air is used in manufacturing process. The per minute requirement is 565 cubic
feet per minute (CFM). It is generated by compressors. There are four compressors installed
at Bahalgarh, out of which 2 are standby. The capacities of compressors are 525 CFM, 365
CFM, 225 CFM and 40 CFM. At our Amritsar unit we have one compressor installed capable
of generating compressed air at 125 CFM.

ƒ Water

Water is being used for manufacturing as well as general purposes. Our water requirement at
both the units is being met in-house. We have installed tube wells at both the plants. Water is
readily available in the industrial area and we do face any water shortage.

ƒ Boiler/Steam

Steam is used for manufacturing parboiled rice. The existing plant has a steam requirement
of 850 kg/hour and would require additional steam of 200 kg/hour for the proposed project.
At present 2 boilers are installed at Bahalgarh unit of 10 tonne capacity and another one
having a capacity of 5 tonnes, which is kept for standby. Steam requirement is 200 kg per
hour at the Amritsar unit, where we have one boiler is installed at the Amritsar plant having
a capacity of 3 tonnes.

ƒ Fuel

The requirement of fuel for boiler is being met in-house. We use Husk as a fuel for our boiler
which is a waste generated during the manufacturing process. Husk is available in bulk and

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 as such we don’t see a problem regarding its availability. For generators we procure High
Speed Diesel directly from Indian Oil Corporation Limited.

ƒ Pollution Control

Our Company has installed Effluent Treatment Plant (ETP) and we have also obtained the
consent from the State Pollution Control board regarding the emission and discharge of
effluents in air and water. We adhere to all the requirements to be met in this regard. We
have installed ETP (Thermax make) for discharge of water. For emission of effluent in air we
have installed APH (Air Preheating Heaters) and Cyclomax in boilers. For sound pollution
we have installed acoustic chamber for DG Sets for controlling noise as per Pollution Control
Board norms. We do not envisage any difficulty in meeting the required parameters to
maintain a clean and healthy environment.

ƒ Manpower

The manufacturing process requires an appropriate mix of skilled, semi-skilled and Un-
skilled labour. There is no shortage of labour as they are available from nearby local areas. As
and when required, our Company also uses services of contractors for providing labour
during peak season.

As on 15th December 2005 we have 551 employees in total; the details of which are as under:

Nature of Registered Corporate Office Bahalgarh Amritsar

Worker Office Factory Factory
Regular
Employees 02 39 191 14
Contract
Workers Nil 07 239 59
Total 02 46 430 73
551

Detailed category wise break-up of the above employees/contract workers is given below:

Particulars Bahalgarh Amritsar Registered and

Corporate Office
Regular Contract Regular Contract Regular Contract
Employees Labourers Employees Labourers Employees Labourers
Managerial 05 00 02 00 14 00
Office staff 33 00 04 00 09 00
Semi skilled 147 43 07 12 15 02

Unskilled 6 196 01 47 03 05
Total 191 239 14 59 41 07

We have 246 permanent employees on our roll as on 15th December 2005, while the rest are
employed with the local contractors.

Apart from the above, there are total 300 numbers of daily wage earners, labourers engaged by
the contractors, working as loader and unloaders, during the peak season.

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The additional manpower requirements for the new project are as under:

Particulars No. of Employees Functional Area

Skilled 25 Manager, Staff, Trained Workers
Semi Skilled 50 Operations
Unskilled 100 Operations
Total 175

We will be recruiting the additional manpower as listed above in due course for which we do not
envisage any difficulty as the same is easily available in and around our plant location. The
unskilled labourers would be sourced from the contractors.

ƒ Past Production Figures for the Industry

For past production figures of the Industry please refer to section “Industry Overview”
appearing on page [•] of this Draft Red Herring Prospectus.

ƒ Approach to Marketing & Proposed Marketing Setup

We have set-up a separate full-fledged marketing department to procure orders and

contracts. The overseas marketing department is headed by Mr. Yogesh Garg, Manager
(Exports) and domestic market is headed by Mr. Virender Arora, Sr. Manager (Domestic).
They in turn are supported by other staff members.

Our marketing strategy is based on the products type and the end user segment. We adopt
hybrid-marketing module comprising of direct customers approach and existing agents
network. We have appointed various agents in domestic as well as international market to
obtain regular orders.

ƒ Competition

Our Company operates in an unorganized segment of Indian Rice Industry. There are
approximately 250 manufactures all over India. We face competition from various domestic
and international manufacturers of rice. However, due to economies of scale and quality of
our product, we have an edge over other small & medium size manufacturers in the country.
Globally, we face stiff competition from manufacturers in Pakistan, Vietnam & Thailand.
Pakistan, with similar climatic conditions as those of India, is also able to produce the same
quality of Basmati rice. Hence, we face strong competition from this country. Vietnam &
Thailand are the largest producer of Non Basmati Rice, but whenever in India there is a
bumper crop we are able to handle the competition from these countries as our cost of raw
material is lowered down. Due to our quality commitment and timely delivery, we are in the
market for more than a decade and have grown inspite of strong competition.

Business Strategy

The business strategy successfully deployed over the years has been consumer centric to bring
them value for money by imbibing best practices in all business functions and processes aiming
at all round innovation through intensive and extensive investment in technology, resources and
logistics and in that process never loosing sight of the old adage that devil is in details with an
objective to deliver and contribute maximum and sustained returns to all stakeholders.

Overall our business strategy shall be:

ƒ Maximise revenue through capacity expansion and increase in efficiency
ƒ Reduction in cost of borrowing
ƒ Enhancing production efficiency and minimize process losses
ƒ Reduce operational costs and be cost competitive

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Consumer centric approach: The unwritten but highly focused highlight of the business strategy
of the company has been carefully cultivated as customer centric approach. Right from the period
when the company took off and charted for itself the roadmap of business development, the
company set out to reach out to newer and yet- too- mature markets of rice and even at the cost
of great indulgence understanding their needs, requirements and priorities. The company’s early
foray on the European markets and their ever discerning and demanding customers has not been
without its due difficulties. In fact, in many of the markets, the company first ventured into,
basmati rice was comparatively an unknown commodity and the ethnic consumers of basmati
rice that these markets comprised of were left to fend for themselves for their needs. It took the
company fairly great pains to persuade and convince the traders in these markets of impending
potential of basmati rice. This hands down approach of interacting with consumers’ needs at
ground level gave the company enough inputs and insight to overcome the challenges to prepare
for en cashing the opportunities that came its way in due course.

The mantra of delivering value for money

The underlying mission of the Company always has been to deliver to the customers the right
products for the right price. The choice of right product, i.e. rice, is largely governed and
influenced by input that is paddy which being a natural commodity is grown and handled at the
level of farmers. The quality output of end product therefore is as much dependent on quality of
inputs that go into the processing as much as on the quality of processes in the mill. It is the
achievement of this critical balancing and deployment of impeccable quality standards at both
the levels of procurement and processing that ensures the delivery of the right product. It has
been a very conscious endeavour on the part of the company to standardize every process of
handling and procurement to sustain their quality, a not so easy task in an otherwise
unorganized sector. The system of field surveys, encouraging contract farming, sampling at
intermittent levels, strong laboratory tests, supplying standard seed, constant interaction and
education of the farmers are some of the key areas in which company has been laying a lot of
emphasis on to ensure high quality inputs.

The delivery of end products at the right price has not been a less challenging task for the
company. For this, it not only had to control the input prices, but also to optimize the cost and
remove inefficiencies in and during the processing. The real challenge before the company has
been to put in place world class infrastructure to integrate handling, state of the art technology to
minimize output of by products and broken and benchmarking its costs against the best of
national and international standards, stamp out inefficiencies at every level by introducing
automation and modernization. The objective of achieving the right price has been also possible
as the company has been able to achieve economies of scale, a critical element in any cost control
exercise. The company has a very ambitious plan to carry forward the initiative of automation
and modernization still further.

Adoption of best practices in all functions and processes

The Company all along has been conscious of the fact that no business strategy, however strong
in concept it may be, will succeed unless it is followed up with the introduction of best practices
at all functional levels down the line. There has been an equally strong realization in the
management of the Company that strength of a chain is measured by its weakest link. It was
imperative, for any business strategy to succeed that the major business functions and processes
are carefully dissected into sub functions and sub processes to such an extent that these are
capable of affecting and influencing the business operations and results.

The exercise involved first identifying the major functions and processes and then breaking them
further down into sub major functions. The procurement, material handling, processing, quality
assurance, utilities, capital, sales, logistics, human resource management, technology, certification
and statutory and non statutory compliances, research and development were identified as the

77
major business functions and processes. The real challenge before our management is to
categorize each of these functions and processes and select the best practices available and to
customize them suiting the locale nature and complexities of business, our Company is into.

The management was fully aware of the fact that the rice business in India, by and large, is
unorganized, a factor that has been limiting it to grow, and if there can be any sustainable model
in which this business can thrive in international environment, it is by way of integrating this
business with best international practices. It is always the endeavour of our Company to further
improvise on this front.

Efforts on all round innovation

Some of the initiatives aimed at innovation envisaged and put into action by our Company have
been unusual for this conventional looking old fashioned labelled industry. It required deep faith
and commitment from our Management to persist with these innovations, which after years of
hard-work and perseverance have caught our competitors by surprise. To cite one such
innovation, is our initiative in experimenting with organic paddy farming and rice processing,
and speaks volume of the company ability to conceive and then translate them into realities.

This small looking business segment, in our opinion, has the possibility of exploding into big
story in country’s exports. The enviable leadership, and the early mover advantage established
by our Company in view of its policy on innovation portends well for the future of our
Company.

Technology resources and logistics

The macro strategy throughout followed by us is Zero tolerance and no compromise attitude in
the introduction of world’s best technologies, resources and logistics. Our Company all through
has been conscious of the fact that it is dealing with the most prime European markets. Gaining
entry into overseas business houses requires state of the art technologies, internationally
benchmarked resources and world class logistics. The sensitivity of these buyers and brands to
commitments, delivery schedules, responsiveness with micro speed, consistency had always kept
our Company on its toes. The very fact of these buyers and brands having satisfying and stable
relationship with us for over a decade is ample proof of the proven technology resources and
logistics employed by our Company. The quality which is now a hallmark of our success has
become a way of life for its various constituents.

Major Customers

Our major customers, among others include big companies mentioned herein below:

ƒ Master foods (Subsidiary of Uncle Bens),

ƒ Lustcru in France (Another Leading Brand in France),
ƒ Euricom (Largest Rice miller in Europe),
ƒ Herba in Spain along with subsidiary like Boost, Euryza, Mundiriso etc.
ƒ Mullers Muhle & Huber Muhle in Germany
ƒ Federation of Migros in Switzerland
ƒ Van Sillevoldt in Netherlands
ƒ Soufflet Alimentaire & Worldwide commodities in France
ƒ Sainsbury (The largest chain of Supermarkets in U.K)
ƒ 3 Alfa in Greece
ƒ Joseph Heap & West Mills in United Kingdom

We are also the main supplier for Uncle Ben's (one of the big American brand) launched Abu
Siouf branded Basmati Rice for about 10,000 MT in Saudi Arabia. Beside this Omar Saleh
Babaker, A.K Almuhaidib, Omar Kaseem AlEsayi Group, Alshaks Establishment, Hamad Al

78
Fares, Al Mahroof & Sons, Aldera Establishment are few Saudi Arabian buyers to whom Sunstar
is a regular supplier.

Markets covered by Sunstar

ƒ Europe
ƒ United Kingdom
ƒ United States
ƒ Canada
ƒ Australia
ƒ New Zealand
ƒ Mauritius
ƒ Kingdom of Saudi Arabia
ƒ Dubai
ƒ Kuwait
ƒ Oman
ƒ Bahrain
ƒ Doha & Qatar
ƒ Russia
ƒ Ukraine

Our Company proposes the following strategies for future growth

ƒ Continue to build-up a professional organization

We have a team of professional and technocrats to look after various stages of production,
commercial and marketing divisions of our Company. We believe in transparency, flow of
information, commitment to the work among our work force and with our valuable
customers, suppliers, investors, government authorities, banks, financial institutions etc.
Over a period of time, we have been able to build-up an image that can be matched with our
peers. The philosophy of professionalism is foundation stone of our business strategy and we
wish to make it more sound and strong in times to come.

ƒ Enhancing Customer Base

Our Company intends to grow business continuously by adding new customers both in
existing as well as in the new countries. We aim to do this by effective leveraging of our
marketing skills & relationship and further enhancing customer satisfaction. We plan to
increase our customers by meeting orders in hand on time, maintaining our client
relationship and renewing our relationship with existing ex- buyers.

ƒ Wide Market Network

Our Company has a wide market network and presence. We are exporting rice to many
countries. Our not dependent on few customers rather it has a wide customer base spread
across different countries. It gives the Company a strong foothold in the market against the
competitors. Moreover all efforts are being made by the Company to ensure that the
Company retains and excels further in building up its reputation as an internationally known
rice milling company.

ƒ Quality of products, Improving Product Portfolio and Addition of New Products

Our Company, over a period of time, intends to extend existing range of varieties of Basmati
and Non Basmati Rice. We are increasing our production capacities for Organic Rice. Our
multi product portfolio also allows us to sustain the cost of high level of services we aim to
give to our customers.

79
ƒ Maintain Operational Efficiencies and Cost Competitiveness

Our Company intends to maintain operational efficiencies to the highest possible level as
compared with our peers in the industry. Further, we intend to reduce our operational costs
to maintain the competitiveness and offer the quality products at reasonable prices.

ƒ Expansion of the Existing Capacities

The existing expansion project is part of our one of the business strategies to expand the
production capacities of rice, to meet the increasing demand from customers. We also aim to
widen the existing products range, which will enable us to meet the growing demands of the
existing market segments.

Future Prospects

It is expected that India would soon gain the second spot in the world rice exports basket during
this year. India has already crossed the mark of 1 million tonne of Basmati rice during the year
2004 -2005. Non Basmati Rice exports of the country touched 36.4 lacs tonne. Thus India’s total
exports of rice amounted to 47.5 lacs tonne, which is behind Thailand but ahead of Vietnam.
Seeing the current scenario, the future prospects of our Company are better considering the
expected industrial growth. This growth rate requires matching capacity addition in the basic
raw material of rice i.e. paddy for meeting the increased requirement of the rice industry
domestically and internationally. Our Company has been expanding production base by
undertaking periodical expansion to become one of the top player in the rice manufacturing
industry. We believe that after the current expansion project, we would be able to cater the
demand for basmati and Non Basmati Rice in the global as well as domestic market.

The Company has a competitive advantage in terms of cost and performance. After the
expansion, our cost will reduce to a great extent due to increase in production and hence our
customers will get benefited.

Further, at present, our Company is exporting to around 15 to 18 countries due to limited

production capacity. With the proposed expansion project, our Company would be geared to
develop new markets and increase its presence in global market.

The strong export base with long-term relationship with customers, marketing agents in almost
17 countries, wholesale dealers in domestic market and positive industry outlook, places our
Company in favourable position to tap market potential and enhance our business accordingly.

Through aggressive exposition and diversification into related products, we are confident of
enhancing and consolidating our global presence in next five years. We look forward to defining
new benchmarks in premium quality rice production by our growth philosophy, integrity and
dedication to conform to a work environment that cherishes enduring relationships with our
business partners and work force.

Capacity and Capacity Utilization

Our capacity and capacity utilisation as per the certificate issued by our statutory auditors, M/s.
R.K. Gulati and Associates, Chartered Accountants dated 07th November 2005 is given below:

Paddy Processing Units 2002-2003 2003-2004 2004-2005

A) Bahalgarh Unit (Haryana)
ƒ Installed Capacity 175200 MT 175200 MT 210240 MT
ƒ Adjusted Capacity based on actual 97200 MT 97200 MT 108000 MT
utilisation
ƒ Actual Production 63106 MT 66566 MT 84954 MT

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ƒ Capacity Utilisation (%) 64.92 68.49 78.67

B) Amritsar Unit (Punjab)

ƒ Installed Capacity 35040 MT 35040 MT 35040 MT
ƒ Adjusted Capacity based on actual 21600 MT 21600 MT 21600 MT
utilisation
ƒ Actual Production 1753 MT 13557 MT 15046 MT
ƒ Capacity Utilisation (%) 8.10 62.77 69.65

Export Obligations

Our Company has the following export obligations against the EPCG (Export Promotion Capital
Goods) scheme. As per the scheme, our Company has to as export obligation of Rs. 2268 lacs,
details of which have to be submitted to Customs and the Director General Foreign Trade. The
export obligations have to be met within a time period of 8 years from the date of issuance of the
licence. Our Company has already fulfilled its export obligations, and only the documents for
redemption of LUT (Legal Undertaking) are to be submitted for completing the export obligation
formalities.

Sr. No. License No. Date of issuance of licence Obligation Amount

1. 0530140071 15-12-2005 $105826.83
2. 0530133483 31-10-2002 $1020661.10
3. 0530133295 05-09-2002 $2888247.30
4. 0530136256 20-05-2004 $28131.91
5. 0530135433 24-12-2003 $86943.86
6. 0530134173 14-05-2003 $39008.73
7. 0530135477 31-12-2003 $28178.72
8. 0530135486 31-12-2003 $224702.19
9. 0530136474 30-06-2004 $28131.91
10. 0530137450 25-11-2004 $222863.11
11. 0530136454 23-06-2004 $174933.00
12. 0530134707 22-08-2003 $31165.05
13. 0530137242 19-10-2004 $52641.17
Total $4931434.88
(Appx) Rs. 2268 lacs

Our Competitive Strengths

ƒ Our Company has two processing plants one located at Bahalgarh (Haryana) and the other
one located at Amritsar (Punjab). These units are strategically located so as to facilitate the
procurement of paddy from the mandies at these places.

ƒ Our Company has installed state of the art plant and machineries from Buhler (Germany),
Satake (Japan), Cimbria (Denmark) compatible with global standards.

ƒ Our Company has a team of skilled and motivated workmen, which is an advantage to our
Company. There is no labour or workers’ union in our Company. Moreover, there have been
no lockouts or strikes in our Company since inception.

ƒ Our Company has standardised and world processes. We have a number of quality
certificates as a testament to our procedures and processes followed. Among those, we have
an ISO 9002, ISO 14001:1996, ISO 9001:2000, HACCP certificate. More details about these
certifications are mentioned on page [●] of this Draft Red Herring Prospectus.

81
Insurance

Our Company keeps all critical immovable and movable properties duly insured. We maintain
insurance policies with The New India Assurance Company Limited to cover the following:

Sr. No Particulars Nature of Policy

1. Paddy/Rice/Bardana Stock Fire
2. Plant/Machinery Fire, Machinery Breakdown Policy, E.E.I
3. Building Insurance Fire
4. Cash-In-Transit Money Policy
5. Vehicle Insurance Comprehensive Insurance
6. Marine Open Policy
Property

The details of our property are provided below:

Sr. Location Area Name, address of Freehold/ Activities

No. Vendor Leasehol
d/Rental
1. 40 Km Stone, G.T.K. Road, 28 Various parties Freehold Factory
Bahalgarh, Sonepat, acre
Haryana-131001
2. 24–B, Alipur Road, Civil 496 A.K. Tyagi Freehold Corporate
Lines, Delhi sq. 24–B, Alipur Road, Office
yards Civil Lines, Delhi
3. G. T. Road, Nijarpura, 8.5 M/s. Soni Rice Mills Leasehold Factory
Amritsar, Acre through Mr. Ashok
Punjab Kumar
4. 4119/7, F. F. Naya Bazaar, 196 M/s. Star Rental Registered
New Delhi – 110 006 sq.ft International Office

Purchase of Property
Except as stated in “Objects of the Issue” on page no [●] in this Prospectus and save in respect of
the property purchased or acquired or to be purchased or acquired in connection with the
business or activities contemplated by the objects of the Issue, there is no property which we have
purchased or acquired or propose to purchase or acquire which is to be paid for wholly or partly
out of the proceeds of the present Issue or the purchase or acquisition of which has not been
completed on the date of this Prospectus, other than property in respect of which:

ƒ The contracts for the purchase or acquisition were entered into in the ordinary course of the
business, and the contracts were not entered into in contemplation of the Issue nor is the
Issue contemplated in consequence of the contracts; or

ƒ The amount of the purchase money is not material. We have not purchased any property in
which any of its promoters and/or Directors, have any direct or indirect interest in any
payment made thereof.

Note: In respect of the property located at 24-B, Alipur Road, Civil Lines, New Delhi,
admeasuring 1072 sq. yards, we have sold 576 sq. yards of the property (including
furniture and fixtures) to Mrs. Navita Aggarwal, Naresh Aggarwal (HUF) and Mr. Rohit
Aggarwal for a total consideration of Rs. 1 crore. The said property was sold vide sale
deed nos: 23431 and 23432 dated 21st November 2005. We have our Corporate Office at
the above premises admeasuring 496 sq. yards.

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 KEY INDUSTRY REGULATIONS

Set below is the summary of the significant legislations passed by the Central & State government
relating to the sale, purchase, storage and processing of agriculture produce.

The Punjab Agricultural Produce Markets Act, 1961

This Act received the assent of the President of India on the 18th May 1961, and first published for
general information in the Punjab Government Gazette (Extraordinary), Legislative Supplement,
of the 26th May 1961.

It extends to the State of Punjab & Haryana, territories transferred to the Union Territory of
Himachal Pradesh. The Act was enacted with the objective of consolidating and amending the
law relating to the better regulation of sale, purchase, storage and processing of agricultural
produce and of regulated markets in the State.

As per Section 2(a) of the Act ‘agricultural produce’ means all produce, whether processed or not,
of agriculture, horticulture, animal husbandry or forest as specified in the Schedule to this Act.

Section 5 of the Act empowers the State government to declare its intention of exercising control
over the purchase, sale, storage and processing of agricultural produce and in such area as may
be specified in the notification issued in this context.

Section 8 of the Act relates to the control of sale and purchase of agricultural produce. Sub
Section 1 of Section 8 states that “from the date of issue of notification under section 6 or from
such later date as may be specified therein, no person unless exempted by rules made under this
Act, shall, either for himself or on behalf of another person or the State Government, within the
notified market area, set up, establish or continue or allow to be continued any place for the
purchase, sell, store or process such agricultural produce except under a license granted in
accordance with the provisions of this Act, the rules and bye-laws made there under and the
conditions specified in the licenses.”

Sub Section 2 of the Section 8 states that “ From the date on which the state government has, by a
notification under Section declared any place to be a principal or sub market yard, no person,
municipal committee, Panchayat, Panchayat samiti or any other local authority, not with
standing any thing contained in Sub Section 1 or any enactment relating to such municipal
committee, Panchayat samiti, Panchayat or local authority, shall be competent to set up, establish
or continue or allow to be continued any place within a distance of 5 kms from the outer limits of
such market yards for the purchase and sale of any agricultural produce.”

Provided that nothing herein contained shall apply to the sale of agricultural produce stored in a
cold storage or processed and kept in a factory. Sub Sections 3 nothing contained in sub section 1
& 2 shall apply to:
ƒ The sale of agricultural produce by a producer himself to any person who purchases it for his
private consumption.
ƒ The purchase by a person from any person of any agricultural produce for his private
consumption.
ƒ The sale or purchase of agricultural produce through retail sale and
ƒ The storage or sale of hypothecated agricultural produce by a scheduled bank or a
warehouse established under the warehousing corporation Act, 1962 or the Punjab
warehouses Act 1957.
Rules for governing the administrative processes have been formulated based on The Punjab
Agricultural Produce Markets Act, 1961 and in themselves constitute an important administrative

83
reference both for Haryana State Agricultural Marketing Board and the Market Committees.
These rules have been named as The Punjab Agricultural Produce Markets (General) Rules, 1962

The Punjab Market Committees Bye-Laws, 1963 formulated for the Market Committees perform
significant role by supplementing the Act and the Rules.

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 OUR HISTORY AND CERTAIN CORPORATE MATTERS

Our History & Background:

The Company was incorporated on 06th January 1995 as Sunstar Overseas Limited, under the
Companies Act, 1956. It further commenced its business from 31st January 1995 onwards. Our
Company was promoted by the four partners viz. Man Mohan Sarup Aggarwal, Navita
Aggarwal, Rama Rani, Sadhna Aggarwal and Naresh Aggarwal, of M/s. Star Overseas, and
Rakesh Aggarwal and Kapil Aggarwal.

As per the agreement with M/s. Star Overseas, a partnership firm, our Company purchased the
existing business of the said firm as a going concern on ‘as is where is’ basis, at book value, along
with all its assets and liabilities. The partners of the firm were allotted 18,69,400 equity shares of
Rs. 10/- each towards the consideration of takeover of net assets of the partnership firm at book
value totalling at Rs. 1,86,94,000.

Our Company, after taking over the processing unit, of the partnership firm posted sales revenue
of Rs. 273.06 lacs for three months period ending January to March 1995. Thereafter the Company
has consistently registered sales and installed capacity growth during the last decade. The
turnover of the company for the first full financial year ending March 1996 was Rs. 4102 lacs and
after it commenced its state of the art milling operations in Bahalgarh, District Sonepat Haryana
in the year 1997, the same had witnessed impressive growth. It has been the constant endeavour
of the promoters to consistently add to the capacity, which from 8 TPH (from paddy to rice) in
the year 1997 at Bahalgarh and 70080 tons of rice processing at Alipur Delhi now stands increased
to 27 TPH at Bahalgarh and Amritsar. Rice processing capacity stands at 175200 tons per annum.
The large capacity of our operations ensures in-house standardization and quality for ultimate
satisfaction of its discerning overseas customers.

Our Company’s major growth in business has come from European market, where we were
among the first ones to enter, at a time when the number and size of Basmati customers in the
European market was quite low. The small size of the Europe market did not attract the then
large exporters and our Company sensed an opportunity in this. Having an early mover
advantage, we have been able to develop a fairly well diversified and dependable customer base
in this market growing year after year. We have also has been able to achieve a reasonable share
in the total bulk basmati rice market of Middle East. The domestic branded rice markets have also
witnessed, initially a steady, but now a fairly sharp upward movement in consumption. Being a
late entrant in the domestic market, we have observed the trends in domestic market and have
firmed up our plans to up our market share in the domestic branded rice market as we expect
reasonable growth to come from this.

Our Company was among the first ones to encourage the concept of contract farming for organic
rice, which has witnessed significant demand from overseas markets. We currently have around
exclusive contracts with 850 farmers spread across the states of Uttaranchal, Haryana, Punjab and
Uttar Pradesh for procuring organically grown paddy.

In addition, we act as merchant traders for various commodities and spices like Sesame seeds,
Sugarcane, cashews, Timber, paddy seeds, etc.

Major events in our history are given below:

Year Event
1995 ƒ Incorporated as a public limited Company, after the taking over the assets
and liabilities of Star Overseas, a partnership firm.
ƒ The Company started setting up a state of the art integrated milling
capacity of 8 TPH at Village Bahalgarh, District Sonepat, Haryana.
ƒ The company acquired for this purpose a total land measuring 9 acres for a

85
 total cost of Rs. 50 lacs
ƒ The Company was granted provisional no objection certificate by Haryana
State Pollution control Board Chandigarh in the month of May 1995, for
setting up unit for manufacturing of rice.

1996 ƒ The Company filed a memorandum and obtained an acknowledgement

thereof from Government of India Ministry of Industry, secretariat for
Industrial Approvals, Entrepreneurial Unit for processing and
manufacturing (i) 28500tons of basmati rice falling under ITC code number
10063002 (ii) 2480 tons of rice bran falling in ITC code 23022002 and (iii)
8700 tons of by products from the working of rice other than de-oiled rice
bran.
ƒ Recognized as Trading House by Ministry of commerce, directorate
General of Foreign Trade, New Delhi.

1997 ƒ Commenced commercial production of Bahalgarh, Haryana Plant on 8th

October, 1996.
ƒ The plant included the most modern technology imported from Buhler,
Germany, Satake, Japan and Cimbria, Denmark.
ƒ It acquired additional land measuring 39 Kanal & 31 Marla costing Rs. 66
lacs for the proposed expansion of capacity at Bahalgarh, Sonepat,
Haryana.
ƒ The company was awarded certificate of merit by Government of India
Ministry of Commerce for outstanding export performance in rice during
the period 1996-97.
ƒ We were granted Registration cum Membership certificate by Federation of
Indian Export Organization.
ƒ We were among the first one to undertake contract farming and milling of
organic rice.

2003 ƒ Increase in paddy processing capacity of Bahalgarh unit, Haryana from

140160 TPA to 175200 TPA.
ƒ Set up Rice processing unit at Amritsar Punjab having capacity of 4 TPH.
ƒ Accorded the status of Two Star Export House in accordance with the
provisions of Foreign Trade Policy 2004-09. The certificate is valid for a
period of five years from 1st April 2004 to 31st March 2009 and is granted by
Government of India Ministry of commerce and Industry, Office of the
Joint Director General foreign Trade.
ƒ ISO 9001 : 2000 certification by ICS
ƒ The Company adopted the concept of Total Productivity Maintenance
(TPM) and 5s Concept

2004 ƒ The company was granted certificate of registration of food safety systems
by management systems London U.K. This HACCP system has been
assessed and approved by BSI management systems in accordance with the
criteria compiled by the National Board of Experts, HACCP in the technical
specification “ criteria for assessment of an operational HACCP system”
September 2002 for the following scope “ Receiving, processing, Storage,
Handling, packaging and supply of Basmati Rice.

2005 ƒ Acquired additional land for expansion purposes at Bahalgarh at a cost of

Rs. 78 lacs measuring 39 Kanals and 3 Marlas

86
Changes in Name

There have not been any changes in the name of our Company since incorporation.

Registered Office of our Company

Our registered office is situated at 4119/7, First Floor, Naya Bazaar, Delhi 110 006. We have not
changed the registered office our Company since incorporation, which is rented.

Changes in the Memorandum of Association of our Company

Since incorporation, the following changes have been incorporated in Memorandum of

Association of our Company, after approval of the Members:

Sr. No. Particulars Date of Meeting Type of Meeting

1. Increase in Authorised Share Capital 08-01-1996 AGM
from Rs. 4 crores to Rs. 5 crores
2. Increase in Authorised Share Capital 30-09-1996 AGM
from Rs. 5 crores to Rs. 10 crores
3. Increase in Authorised Share Capital 29-09-2005 AGM
from Rs. 10 crores to Rs. 20 crores

Our Main Objects:

The main objects set out in our Memorandum of Association are as under:

1. To act as an export house and trading house for all merchandise and services.

2. To grow, cultivate, manufacture, produce, process, mill, import, export, distribute, agent,
stockist, commission agent and dealer of all types and varieties of rice, paddy, rice bran,
rice bran oil, all varieties of vegetable oil, whether edible or non edible butter, ghee;
extract oil from rice bran, copra, soyabean, cotton seeds, linseed, castor seed, sal seed,
groundnut, sugar, sugarcane, sugar beet, molasses, syrups, tea, snacks and foodstuffs and
products and by products and food products.

3. To carry on the business as producers, manufacturers, Importers, exporters, traders,

processors, commission agent and dealers of fruits, fruit juices, dehydrated-preserved or
processed vegetables fruit oils, coffee, seeds, floriculture, dairy farms and products nuts,
cashements, cereals, grains, pulses, species, tea, beverages and other food products.

4. To carry on the business of Importers, exporters, buyers, sellers, distributors, agents,

brokers and stockists of all types and varieties of garments, textiles, carpets, buriers, dress
materials, leather garments and accessories, handicrafts, hides skins and leather, shoes,
chapels, toys, brass parts and items electronical and electronic appliances, equipments and
machinery, chemical gods, pharmaceuticals, drugs, dyes and dyestuff, surgical and
medical goods, timber, wood and plywood, rags, jute begs and products, precious and
semiprecious stones, gold and silver, engineering goods and products, ornaments
jewellery, artificial jewellery soaps, toilet requisites, cosmetics, perfumes, rubber and
plastic products, foundry equipments, castings, waxes, alloys and Ferro alloys, computers
hardware & software computer peripherals, glass articles, crockery.

5. To run, maintain, and operate agency and to act as a commission agents in all branches of
business referred to in para above.

87
Subsidiaries of Our Company

As per the audited balance sheet as at 30th September 2005, our Company doesn’t have any
subsidiaries.

Shareholders’ Agreement

Our Company does not have any subsisting shareholder’s agreement as on the date of filing this
Draft Red Herring Prospectus.

Other Agreements

Except as stated otherwise in this Draft Red Herring Prospectus and the agreements, which have
been entered in regular course of business, there are no other agreements, which are subsisting as
on date.

Strategic Partners

Presently, our Company does not have any strategic partners.

Financial Partners

Presently, our Company does not have any financial partners.

88
 OUR MANAGEMENT

Board of Directors

Pursuant to the Company’s Articles of Association, the number of Directors of the Company
cannot be less than three and not more than twelve. The Company is currently managed by a
Board of Directors comprising of 6 Directors. Mr. Rakesh Aggarwal is currently the Company’s
Managing Director and in-charge of the overall management of the Company subject to the
supervision and control of the Board. He is ably supported by professional and technically
qualified team of executives specified in operations, finance, marketing, Legal and Personnel.

The following table sets forth the details regarding our Board of Directors as on the date of
filing of this Draft Red Herring Prospectus.

Sr. Name, Age, Designation, Other Directorships

No. Address & Occupation of
Director
1. Mr. Naresh Aggarwal 1. Vae Vkn Industries Private Limited
Age: 52 years 2. Digvijay Steels Private Limited
Chairman 3. Maa Sarda Rail Nirman Private Limited
Address: 24–B, Alipur Road, 4. Accustamp Private Limited
Civil Lines, Delhi – 110 054 5. Ved Kiran Steel Industries Private Limited
Occupation: Business 6. SPL Industries Limited

2. Mr. Rakesh Aggarwal 1. Digvijay Systems and Services Private

Age: 47 years Limited
Managing Director 2. Sunstar Bio Energy Private Limited
Address: 28A, Racquet Court 3. Digvijay Promoters Private Limited
Road, 4. Sunstar Buildwell Private Limited
Civil Lines, Delhi – 110 054 5. Sunstar Infocom Private Limited
Occupation: Business 6. Five Senses Builders Private Limited
7. Greatwell Construction & Developers Private
Limited
8. RRSP Builders Private Limited
9. RSA Propbuild Private Limited
10. Sunstar Exim Limited
11. Star International (Partner)

3. Mr. Rohit Aggarwal 1. Digvijay Systems and Services Private

Age: 31 years Limited
Joint Managing Director 2. Star Track Fasteners Private Limited
Address: 24–B, Alipur Road, 3. Sunstar Bio Energy Private Limited
Civil Lines, Delhi – 110 054 4. Digvijay Promoters Private Limited
Occupation: Business 5. Sunstar Buildwell Private Limited
6. Sunstar Infocom Private Limited
7. Five Senses Builders Private Limited
8. Greatwell Construction & Developers Private
Limited
9. RRSP Builders Private Limited
10. RSA Propbuild Private Limited
11. Sunstar Exim Limited

4. Mr. Sumit Aggarwal 1. Sunstar Bio Energy Private Limited

Age: 24 years
Director
Address: Gopal Nagar,

89
 Sr. Name, Age, Designation, Other Directorships
No. Address & Occupation of
Director
G.T. Road, Batala, Punjab
Occupation: Business

5. Mr. Ravinder Kumar Passi 1. R.K. Arts Private Limited

Age: 51 years 2. India Exposition Mart Limited
Director
Address: E-11, Panchsheel
Park,
New Delhi – 110 017.
Occupation: Service

6. Mr. Kishore Asthana 1. Indus Options Consultancy Private Limited

Age: 59 years 2. The Pendragon Literary Agency Private
Director Limited
Address: D-173, Sushant Lok-1,
Gurgaon – 122 002, Haryana
Occupation: Consultant

Brief Profile of our Directors other than Promoter Directors

ƒ Mr. Rohit Aggarwal aged 31 years, is the younger son of Mr. Naresh Aggarwal and is the
Joint Managing Director of our Company. A dynamic young MBA from USA, Rohit has a
knack of technology upgradation, looks after development and maintenance of systems,
TQM process and mechanisms, system and process integrations etc., has been able to achieve
significant improvement in overall quality, operational efficiency, cost control and customer
interaction.

He has about 8 years of business experience mainly in Rice industry. He has implemented
modern management techniques, in the Company, which have proved beneficial to us.

ƒ Mr. Sumit Aggarwal aged 24, younger son of Mr. Man Mohan Sarup Aggarwal. He has done
his Bachelors in Information Technology. From the past two years he is been working in the
Rice Industry and recently ventured the Bio Energy project by the name of Sunstar Bio-
Energy Private Limited.

ƒ Mr. Ravinder Kumar Passi aged 51 years,

A graduate, Mr. Passi started his career as an entrepreneur, dealing in exports of handicrafts,
made-ups and artificial jewellery and over the years has made a niche for himself in this
field. He was the Chairman of the Export promotion Council for Handicrafts and currently is
the director of India Exposition Mart Limited.

ƒ Mr. Kishore Asthana aged 59 years, is a Mechanical Engineer and has done his Management
course from Indian Institute of Management Ahmedabad (IIM-A). He has worked with Tata
Administrative Services for 8 years and has also served group Vice Chairman and Business
Advisor to His Highness Sayyid Es’ad Tarik Taimur al Said, member of the Royal family of
Oman. Currently Mr. Asthana is active in the field of technology transfer, promoting Indian
research based products through his company Indus Options Consultancy Private Limited

90
Borrowing Powers of the Board:

The Board of Directors of our Company has power to borrow upto Rs. 400 crores as per the
members’ resolution passed in the AGM of our Company held on 29th September 2005. The
extract of the latest resolution of the Company authorizing the Board’s borrowing powers is
reproduced:

Extracts of Resolution of borrowing powers passed in the AGM held on 29th September 2005.

Increase in Borrowing Powers

“RESOLVED THAT in supersession of the resolution limiting the borrowing power of the Board
of Directors of the Company up to Rs. 200 Crores (Rupees Two Hundred Crores only) passed by
the Company at the General Meeting held on 09th August 1997, the Board of Directors of the
Company be and is hereby authorized under section 293(1)(d) of the Companies Act, 1956, to
borrow money from time to time up to a limit not exceeding in the aggregate Rs. 400 Crores
(Rupees Four Hundred Crores only) notwithstanding that money to be borrowed, together with
the money already borrowed by the Company (apart from temporary loans obtained from the
Company’s bankers in the ordinary course of business), will exceed the aggregate of the paid up
capital of the company and its free reserves, that is to say, reserves not set apart for any specific
purposes.”

Compensation to Managing Directors/Wholetime Directors

1. Mr. Rakesh Aggarwal, Managing Director

Mr. Rakesh Aggarwal is the Managing Director of Company. He is appointed as per the
resolution passed in the AGM held on 29th September 2005 for a period of 5 year with effect
from 12th August 2005. As per the terms of the said resolution Mr. Rakesh Aggarwal is
entitled to draw his salary and benefits as per his service conditions with the Company and
in respect of which all expenses including contribution towards provident funds, pension
and gratuity shall be reimbursed by the Company as stated herein under:

1. Salary per month Rs. 3,00,000/- in the salary grade of Rs. 3,00,000-30,000-4,20,000

2. Perquisites: - In addition to the salary Mr. Rakesh Aggarwal shall be entitled to the
following perquisites subject to the limits contained in schedule XIII of the Companies
Act, 1956.

Category A:

a) Medical Expenditure expenses incurred for self and his family subject to a
maximum of one month’s salary in a year or three month’s salary in a block of
three years.

b) Leave Travel assistance: For self and his family once in two years, in accordance
with the rules of the company.

c) Personal accident Insurance: For an amount the annual premium of which does
not exceed the limit, if any, prescribed in the schedule XIII and other applicable
provisions of the Companies Act, 1956.

Category B:

d) Company’s Contribution towards Provident Fund: In accordance with the rules

of the company and subject to the ceiling of 12% of salary.

91
 e) Company’s Contribution towards Pension / superannuation Fund: As per the
rules of the Company.

f) Gratuity: In accordance with the rules of the Company, but shall not exceed one-
half months salary for each completed years of services.

g) Encashment of Leave: Encashment of leave at the end of the tenure will not be
included in the computation of the ceiling on perquisites.

Category C:

h) Leave: In accordance with the rules of the company but not more than one
months leave for every eleven months of salary,

i) Travelling: He shall be entitled to use Company’s car with driver for the business
use and also entitled to get reimbursements of travelling and other incidental
expenses incurred in respect of his family when he accompanies his family on
business trips and it will not be reckoned as perquisites.

j) Telephone: Provision of telephone at residence (including payment of local call

and long distance official calls) shall not be reckoned as perquisites

k) Other Perquisites: Any other perquisites, benefits, amenities as applicable to

senior management staff of the company, from time to time.

2. Mr. Rohit Aggarwal, Joint Managing Director

Mr. Rohit Aggarwal was appointed as the Joint Managing Director of the Company as per
the resolution passes in the AGM held on 29th September 2005. Further he is appointed for a
period of 5 year with effect from 12th August, 2005. As per the terms of the said resolution
Mr. Rohit Aggarwal is entitled to draw his salary and benefits as per his service conditions
with the Company and in respect of which all expenses including contribution towards
provident funds, pension and gratuity shall be reimbursed by the Company as stated herein
under:

1. Salary per month Rs 2,50,000/- in the salary grade of 2,50,000 – 25,000- 3,50,000.

2. Perquisites: In addition to the salary Mr. Rohit Aggarwal shall be entitled to the
following perquisites subject to the limits contained in schedule XIII of the Companies
Act, 1956.

Category A:

a) Medical Expenditure expenses incurred for self and his family subject to a
maximum of one month’s salary in a year or three month’s salary in a block of
three years.

b) Leave Travel assistance: For self and his family once in two years, in accordance
with the rules of the company.

c) Personal accident Insurance: For an amount the annual premium of which does
not exceed the limit, if any, prescribed in the schedule XIII and other applicable
provisions of the Companies Act, 1956.

92
 Category B:

d) Company’s Contribution towards Provident Fund: In accordance with the rules

of the company and subject to the ceiling of 12% of salary.

e) Company’s Contribution towards Pension / superannuation Fund: As per the

rules of the Company.

f) Gratuity: In accordance with the rules of the Company, but shall not exceed one-
half months salary for each completed years of services.

g) Encashment of Leave: Encashment of leave at the end of the tenure will not be
included in the computation of the ceiling on perquisites.

Category C:

h) Leave: In accordance with the rules of the company but not more than one
months leave for every eleven months of salary,

i) Travelling: He shall be entitled to use Company’s car with driver for the business
use and also entitled to get reimbursements of travelling and other incidental
expenses incurred in respect of his family when he accompanies his family on
business trips and it will not be reckoned as perquisites.

j) Telephone: Provision of telephone at residence (including payment of local call

and long distance official calls) shall not be reckoned as perquisites

k) Other Perquisites: Any other perquisites, benefits, amenities as applicable to

senior management staff of the company, from time to time.

3. Mr. Sumit Aggarwal, Director

Mr. Sumit Aggarwal has been appointed as Director of Company in the AGM held on 29th
September 2005. Further he is appointed for a period of 5 years with effect from 12th August,
2005. As per the terms of the said resolution Mr. Sumit Aggarwal is entitled to draw his
salary and benefits as per his service conditions with the Company and in respect of which
all expenses including contribution towards provident funds, pension and gratuity shall be
reimbursed by the Company as stated herein under:

1. Salary per month Rs 50,000/- in the salary grade of 50,000 – 5,000- 70,000.

2. Perquisites: - In addition to the salary Mr. Sumit Aggarwal shall be entitled to the
following perquisites subject to the limits contained in schedule XIII of the Companies
Act, 1956.

Category A:

a) Medical Expenditure expenses incurred for self and his family subject to a
maximum of one month’s salary in a year or three month’s salary in a block of
three years.

b) Leave Travel assistance: For self and his family once in two years, in accordance
with the rules of the company.

93
 c) Personal accident Insurance: For an amount the annual premium of which does
not exceed the limit, if any, prescribed in the schedule XIII and other applicable
provisions of the Companies Act, 1956.

Category B:

d) Company’s Contribution towards Provident Fund: In accordance with the rules

of the company and subject to the ceiling of 12% of salary.

e) Company’s Contribution towards Pension / superannuation Fund: As per the

rules of the Company.

f) Gratuity: In accordance with the rules of the Company, but shall not exceed one-
half months salary for each completed years of services.

g) Encashment of Leave: Encashment of leave at the end of the tenure will not be
included in the computation of the ceiling on perquisites.

Category C:

h) Leave: In accordance with the rules of the company but not more than one
months leave for every eleven months of salary,

i) Travelling: He shall be entitled to use Company’s car with driver for the business
use and also entitled to get reimbursements of travelling and other incidental
expenses incurred in respect of his family when he accompanies his family on
business trips and it will not be reckoned as perquisites.

j) Telephone: Provision of telephone at residence (including payment of local call

and long distance official calls) shall not be reckoned as perquisites

k) Other Perquisites: Any other perquisites, benefits, amenities as applicable to

senior management staff of the company, from time to time.

Corporate Governance

The Company has already taken necessary steps to implement the provisions of the Corporate
Governance. The constitution of our Board of Directors is in compliance with the said provisions
and it has the necessary committees in place in compliance with the said provisions:

A) Audit Committee
B) Remuneration Committee
C) Shareholders Grievance Committee

A) Audit Committee

The audit committee was constituted vide resolution passed by the Board of Directors at its
meeting held on 8th November 2005. The Audit Committee provides directions to and reviews
functions of the Audit department. The Committee evaluates internal audit policies, plans,
procedures and performance and reviews the other functions through various internal audit
reports and other year-end certificates issued by the statutory auditors. Quarterly and Annual
Accounts are placed before the Audit Committee, prior to being presented to the Board along
with the recommendations of the Audit Committee.

94
The terms of reference of Audit Committee complies with the requirements of Clause 49 of the
listing agreement, which will be entered into with the Stock Exchange in due course. The
committee consists of all non-executive as well as Independent Directors.

Composition of Audit Committee:

Sr. No. Name of the Director Designation in the Nature of Directorship

Committee
1. Mr. Kishore Asthana Chairman Non Executive and
Independent Director
2. Mr. Ravinder Kumar Member Non Executive and
Passi Independent Director
3. Mr. Naresh Aggarwal Member Non Executive

The terms of reference of the Audit Committee are given below:

a) To have discussions with the auditors periodically about internal control systems, the scope
of audit including the observations of the auditors and to review the half-yearly and annual
financial statements before submission to the Board and ensure compliance of internal
control systems.
b) To oversee our financial reporting process and the disclosure of its financial information to
ensure that the financial statement is correct, sufficient and credible.
c) Recommending the appointment and removal of external auditor, fixation of audit fee and
also approval for payment for any other services.
d) Reviewing with management the annual financial statements before submission to the Board.
e) Reviewing with the management, external and internal auditors, the adequacy of internal
control systems.
f) Reviewing the adequacy of internal audit function, including the structure of the internal
audit department, staffing and seniority of the official heading the department, reporting
structure coverage and frequency of internal audit.
g) Discussions with internal auditors on any significant findings and follow up thereon.
h) Reviewing the findings of any internal investigations by the internal auditors into matters
where there is suspected fraud or irregularity or a failure of internal control systems of a
material nature and reporting the matter to the Board.
i) Discussions with external auditors before the audit commences, nature and scope of audit as
well as to have post-audit discussion to ascertain any area of concern.
j) Reviewing our financial and risk management policies.
k) To look into the reasons for substantial defaults in the payment to the depositors,
shareholders (in case of non-payment of declared dividends) and creditors, if any.

B) Remuneration Committee

The functions of Remuneration Committee are to determine our policy on specific packages for
Whole time and Executive Directors.

Composition of the Remuneration Committee:

Sr. No. Name of the Director Designation in the Nature of Directorship

Committee
1. Mr. Kishore Asthana Chairman Non Executive and
Independent Director
2. Mr. Ravinder Kumar Member Non Executive and
Passi Independent Director
3. Mr. Naresh Aggarwal Member Non Executive

95
C) Shareholders Grievance Committee

The Shareholders grievance committee was constituted vide resolution passed by the Board of
Directors at its meeting held on 08th November 2005. We have designated personnel to solve
investors’ problems along with our Registrars, Intime Spectrum Registry Limited. The Investors
Grievances Committee looks into redressal of shareholder and investor complaints, issue of
duplicate/split/consolidated share certificates, allotment and listing of shares and review of
cases for refusal of transfer/transmission of shares and debentures and reference to statutory and
regulatory authorities.

Composition of the Shareholders Grievance Committee:

Sr. No. Name of the Director Designation in the Nature of Directorship

Committee
1. Mr. Ravinder Kumar Chairman Non Executive and
Passi Independent Director
2. Mr. Kishore Asthana Member Non Executive and
Independent Director
3. Mr. Rohit Aggarwal Member Executive Director

Policy on Disclosures and Internal Procedure for Prevention of Insider Trading

We will comply with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992
after listing of company’s shares on the stock exchanges.

Ms. Kiranpreet Gill, the Company Secretary is responsible for setting forth policies, procedures,
monitoring and adherence to the rules for the preservation of price sensitive information and the
implementation of the code of conduct under the overall supervision of the board.

Shareholding of the Directors in our Company

A director need not hold any equity shares in our Company to qualify him for the office of the
Director of our Company.

Sr. Name of the Director Number of Shares % of pre-issue paid

No. up share capital
1. Mr. Naresh Aggarwal 350 0.0034
2. Mr. Rakesh Aggarwal 350 0.0034
3. Mr. Rohit Aggarwal - -
4. Mr. Sumit Aggarwal - -
5. Mr. Ravinder K. Passi - -
6. Mr. Kishore Asthana - -
Total 700 0.0068

Interest of Directors

All the Directors may be deemed to be interested to the extent of the sitting fees and other
remuneration for the services rendered and the reimbursement of expenses, if any, payable to
them under the articles. The Directors may also be deemed to be interested to the extent of:

a) The shares, if any, held by them or by the relatives or by firms or companies of which any of
them is a partner and a Director/Member respectively.

96
b) The shares, if any, out of the present issue that may be subscribed for and allotted to them or
their relatives or any Company in which they are Directors/Members of to firms in which
they are partners.

c) Transactions, if any, with entities in which directors are interested have been disclosed as
related party transactions in the Auditors Report.

Except as stated above and elsewhere in this Prospectus, the Company has not entered into any
contracts, agreements or arrangement in which the directors are interested directly or indirectly
and no payments have been made to them in respect of these contracts, agreements or
arrangement or are proposed to be made.

Directors Remuneration for the year ended 31st March 2005:

Sitting
Salaries /
Sr. No Name of Director Fees per Commission Total
Perquisites
meeting
1 Mr. Naresh Aggarwal - - - -
2 Mr. Rakesh Aggarwal - 6,00,000 - 6,00,000
3 Mr. Rohit Aggarwal - 3,60,000 - 3,60,000
4 Mr. Man Mohan Sarup - - - -
Aggarwal
5 Mr. Kapil Aggarwal - - - -
6 Mr. Sumit Aggarwal - - - -
7 Mr. Kewal Kishan Goel - - - -
Total - 9,60,000 - 9,60,000

Changes in the Board of Directors during the last three years

Sr. Date of Date of

Name of the Director Reasons
No appointment Resignation
Mr. Kewal Kishan Resigned
1. 06-01-1995 03-10-2005
Goel
Mr. Man Mohan Resigned
2. Sarup Aggarwal 01-02-1995 03-10-2005

Mr. Kapil Aggarwal Resigned

3. 06-01-1995 03-10-2005
Mr. Ravinder Kumar Appointed as independent
4. 01-08-2005 --
Passi director
Appointed as independent
5. Mr. Kishore Asthana 08-11-2005 --
director
6. Mr. Sumit Aggarwal 01-04-2005 -- Appointed as director

97
Management Organisation Chart

Board of Directors

Managing Director

Head Agri Business Vice President Head Finance

Operations

Manager Marketing Manager Quality Manager Accounts

Manager Exports Company Secretary

Key Management Personnel

Sr. Name, Age & Qualific Date of joining Exper Functional Previously Present
No Designation ation ience Responsibility employed Annual
in with Compe
years nsation
1. Sanjay Aggarwal B.Sc., 01-04-2005 14 Manufacturing Satnam Rs. 5.4
Age: 40 years D. process Owner Overseas Lacs
Vice President – Pharma responsible for over Limited
Operations cy all manufacturing,
quality and
technology
upgradation
2. Narender Sidhar Charter 01-01-1996 13 Responsible for Practicing Rs .4.8
Age: 40 years ed overall functioning of Chartered Lacs
Head – Finance Account Finance dept, Accountant
ant including Financial
budgeting and
forecasting
3. Pardeep Sabharwal M.Phil., 12-05-2004 19 Overall in charge of Picric Rs. 4.2
Age: 45 years L.L.B. raw & finished Limited Lacs
Sr. Manager materials inventory.
(Materials)
4. Virender Arora B.Sc. 13-09-2004 13 Overall Incharge of United Rs. 4.5
Age: 34 years Domestic Marketing Exports lacs
Sr. Manager & Sales
(Domestic Marketing)
5. M.M. Dan PGD 19/01/2005 7 Factory Manager, and Vardhman Rs. 3.2
Age: 30 years (HR, Incharge of HR and Polytex Ltd. Lacs
HR & Factory PMIR) IR operations
Manager
6. Rajneesh Sharma M.Sc. 22-10-1999 6.5 Incharge of IT & Aptech Rs. 3.40
Age: 27 years (Comp Systems Limited Lacs
Manager – Systems Sc.)
7. Mr. Gulshan Rai B.Com 25-10-1999 10 In charge of Accounts R.T. Exports Rs.2.7
Age: 35 Years at Bahalgarh Works Limited Lacs

98
 Sr. Name, Age & Qualific Date of joining Exper Functional Previously Present
No Designation ation ience Responsibility employed Annual
in with Compe
years nsation
Manager – Accounts
8. Mr. Yogesh Garg B.A. 01-04-2000 10 Marketing, Self Rs. 3.0
Age: 31 years Coordination, Buyer employed lacs
Manager – Exports Communication &
Costing
9. Mr. Kaushik Roy B.E. 01-08-2005 7 Overall incharge of Coca Cola (I) Rs. 3.4
Barman (Mech.) production at Limited Lacs
Age: 30 years Bahalgarh unit
Manager
(Production)
10. Mr. Devraj Dabas Master 01-09-2005 4 Incharge for Coca Cola (I) Rs. 4.1
Age: 29 in Food Maintaining and Limited Lacs
Manager (Quality) Tech. implementing of
Quality Control
Systems
11. Mr. Anuj Sharma B.Com 20-05-1995 10 In charge of Logistics -- Rs. 2.8
Age : 28 & Export Lacs
Manager (Shipping) Documentation
12. Ms. Kiranpreet Gill M.Com 01-09-2005 01 In charge of Cyber Media Rs. 2.1
Age: 28 C.S. Secretarial Matter & (India) Ltd. lacs
Company Secretary Compliance Officer

Brief Profile of our Key Managerial Personnel

1. Mr. Sanjay Aggarwal, 40, Vice President (Works), is a science graduate. He has been
associated with the Company since April 2005. Prior to joining us he was associated with
Satnam Overseas Limited. He has an experience of 14 years. He is mainly involved in
planning and coordination of various operations pertaining to the Bahalgarh plant. He draws
a gross salary of Rs.5.4 lacs p.a.

2. Mr. Narender Sidhar, 40, Head - Finance, is a Chartered Accountant. He joined the Company
in January 1996. Before joining us he had his own independent practice as a Chartered
Accountant and has an overall experience of 13 years. He is overall in-charge of the Finance
Department. His work includes financial planning and forecasting and finalization of Annual
reports. He draws a gross salary of Rs. 4.50 lacs p.a.

3. Mr. Pardeep Sabharwal, 45, Sr. Manager (Materials), is M. Phil, and L.L.B. He is associated
with the Company since May, 2004. He has an experience of 19 years in this field. He is
overall incharge of the Materials Department. Before joining the Company he was associated
with Picric Limited. He draws a gross salary of Rs. 4.20 lacs p.a.

4. Mr. Virender Arora, 34, Sr. Manager (Domestic Marketing & Sales), is a Science graduate. He
joined the Company in September, 2004. He has an experience of 11 years. Earlier, he was
associated with United Exports. His work includes making arrangements for marketing
Company’s products, liasoning with Distributors, dealers in domestic market. He is also
responsible for preparation of marketing budgets. He draws a gross salary of Rs. 4.50 lacs p.a.

5. Mr. M.M. Dan, 30, Factory & HR Manager, is Post graduate Diploma in HR and PMR. He is
associated with the Company since January 2005. He has an experience of 7 years in this
field. He plans and coordinates all aspects regarding planning and managing manpower
requirement. He is also responsible for compliances regarding labour laws, provident fund
etc. Before joining the Company he was associated with Vardhman Polytex. He draws a gross
salary of Rs. 3.20 lacs p.a.

99
6. Mr. Rajneesh Sharma, 27, Manager–Systems, is a Post Graduate in Computer Science. He is
associated with the Company since October 1999. He has an industry experience of more
than 6 years. He is mainly responsible for maintenance of Information Technology Systems
and Operations. He draws a gross salary of Rs. 3.40 lacs p.a.

7. Mr. Gulshan Rai, 35, Manager (Accounts), is Bachelor of Commerce. He is associated with
the Company since October 1999. Before joining the Company he was associated with R.T.
Exports Limited. He is responsible for finalization of Accounts, income tax, sales tax and
excise returns and appearing before various authorities in respect of income tax, sales tax and
excise matters. He draws a gross salary of Rs. 2.70 lacs p.a.

8. Mr. Yogesh Garg, 31, Manager (Exports) is Bachelor of Arts. He is associated with the
Company since April 2000. He is mainly responsible for export related Marketing operations,
costing, buyer communication, selling price costing etc. He draws a gross salary of Rs. 3.00
lacs p.a.

9. Mr. Kaushik Roy Barman, 30, Manager (Production) has done his B.E. (Mech) and has more
than 7 years of experience in this line of business. He joined us from 01-08-2005 and prior to
joining us he was working with Coca Cola (I) Limited. Presently he is incharge of the
production function at Bahalgarh unit and his gross remuneration is Rs. 3.40 lacs

10. Mr. Devraj Dabas, 29, Manager (Quality) is Masters in Food Technology. He is associated
with the Company since September, 2005. Earlier he was working with Coca Cola India. He
is mainly responsible for implementing and maintaining quality system. He draws a gross
salary of 4.10 lacs.

11. Mr. Anuj Sharma, 29, Manager (Shipping) is a Bachelors of Commerce. He is associated
with the Company since May, 2005. He is responsible for Logistics, Export documentation
and Shipping operations. He draws a gross salary of 2.80 lacs.

12. Ms. Kiranpreet Gill, 28, Company Secretary is a Masters in Commerce and Associate
Member of the Institute of Company Secretaries of India. She is associated with the
Company since September 2005. She is responsible for handling secretarial matters of the
company and also to act as Compliance Officer. She draws a gross salary of Rs. 2.1 lacs.

Shareholding of Key Managerial Personnel

None of the Key Managerial Personnel in our Company hold any shares of our Company as on
the date of filing of this Draft Red Herring Prospectus

Bonus or Profit Sharing Plan for the Key Managerial Personnel

Our Company does not have any bonus/profit sharing plan for any of the employees, directors,
key managerial personnel.

Changes in the Key Managerial Personnel during last 3 years

Sr. No Name & Designation Date of Date of Reason

Joining Leaving
1. Mr. Santosh Tiwari 18-05-2003 30-12-2004 Resignation
Manager (HR)
2. Mr. Y.K. Gupta 29-09-2000 14-12-2004 Resignation
Sr. Manager (Technical)
3. Mr. S.P. Singh 01-06-2005 28-02-2005 Resignation
Vice President (Works)
4. Mr. Sanjay Aggarwal 01-11-1993 31-05-2004 Resignation

100
 Vice President (Works)
5. Mr. Sunil Kumar Jha 17-10-2001 16-05-2005 Resignation
Manager (Production)
6. Mr. Rajinder Jaswal 24-08-2000 16-05-2005 Resignation
Manager (Quality)
7. Mr. Neeraj Maheshwari 05-01-2000 07-05-2005 Resignation
Manager (Systems)
8. Mr. R. Gururajan 07-10-2002 16-05-2005 Resignation
Manager (PPC)
9. Mr. C.P. Singh 01-12-2002 01-12-2003 Resignation
Manager (Materials)
10. Mr. Pardeep Sabharwal 12-05-2005 -- Appointment
Sr. Managar(Materials)
11. Mr. M.M. Dan 19-01-2005 -- Appointment
Manager (HR)
12. Mr. Sanjay Aggarwal 01-04-2005 -- Re-Appointed
Vice President Works
13. Mr. Devraj Dabas 01-09-2005 -- Appointment
Manager (Quality)
14. Mr. Kaushik Roy Barman 01-08-005 -- Appointment
Manager (Production)
15. Mr. Virender Arora 13-09-2004 -- Appointment
Sr. Manager (Domestic Mktg.)
16. Ms. Kiranpreet Gill 01-09-2005 -- Appointment
Company Secretary

Notes:
1. All the Key Managerial Personnel are permanent employees of our Company.

2. There is no understanding with major shareholders, customers, suppliers or any others

pursuant to which any of the above mentioned personnel have been recruited.

Employees

At present, we have 246 permanent employees, which comprise of managers, office staff, skilled,
semi-skilled & unskilled labourers. For contract labour requirement, our Company uses the
services of labour contractors, who provide labour, as per our requirement. Further details
regarding the employees are given under the head “Manpower” appearing on page [•] of this
Draft Red Herring Prospectus.

ESOP/ESPS Scheme to Employees

Presently, we do not have ESOP/ESPS scheme for employees.

Payment or Benefit to Our Officers

Except for the payment of salaries and yearly bonus, we do not provide any other benefit to our
employees.

101
 OUR PROMOTERS AND THEIR BACKGROUND

The Promoters of our Company are Mr. Naresh Aggarwal, Mr. Rakesh Aggarwal, Mr. Kapil
Aggarwal, Mrs. Rama Rani, Mr. Man Mohan Sarup Aggarwal, Mrs. Navita Aggarwal and Mrs.
Sadhna Aggarwal.

MR. NARESH AGGARWAL

CHAIRMAN

Naresh Aggarwal, aged 52 years, son of Lt. Shri Ved Parkash

Aggarwal, is the Chairman of our Company.

A graduate by qualification, he is a past international Director of

International Association of Lions Club. He has received a
number of awards which includes the prestigious “Ambassador
of Goodwill” Award, twelve International President’s Medal etc.

Driving License No: P01062002175703

Voter Id No: DL/04/043/342662

MR. RAKESH AGGARWAL

MANAGING DIRECTOR

Mr. Rakesh Aggarwal aged 47 an articulate with path breaking

concepts with commercial viability and innovative global
marketing strategies. His specific skills of guiding new products
and category launches, development and implementation of
projects on turn-key basis and operational philosophy, have
been responsible for company’s transformation vertically as well
as horizontally and its present position in the global arena. He
was the past General Secretary of All India Rice Export
Association.

Driving License No: P01062002175703

Voter Id No: FSH0769620

MR. KAPIL AGGARWAL

DIRECTOR

Mr. Kapil Aggarwal aged 31 years, elder son of Mr. Man Mohan
Sarup Aggarwal. A dynamic personality, he has done his
Masters in Business Administration from Oklahoma City
University, U.S.A.

He has 4 years experience in IT Company in U.S.A and from last

6 years he is into his family business of railway components.

Driving License No: Applied for

Voter Id No: Applied for

102
MR. MAN MOHAN SARUP AGGARWAL
DIRECTOR

Mr. Man Mohan Sarup Aggarwal aged 59 years; son of Mr. Ved
Parkash Aggarwal. He was born and brought up in an industrial
family of Punjab, widely engaged in the business of Iron and
steel casting.

He has about 38 years experience mainly in Manufacturing of

Railway components.

Driving License No: 01646/RDL

Voter Id No: PB/02/002/488140

MRS. RAMA RANI

Mrs. Rama Rani aged 60 years, housewife, has almost 13 years

of experience and has served our Company as a director in the
past.

Driving License No: Not available

Voter Id No: PB/02/002/459709

MRS. NAVITA AGGARWAL

Mrs. Navita Aggarwal aged 49 years, housewife, has almost 13

years of experience and has served our Company as a director in
the past.

Driving License No: Not available

Voter Id No: DL/04/043/342660

MRS SADHNA AGGARWAL

Mrs. Sadhna Aggarwal, aged 43 years, housewife, has almost 13

years of experience and has served our Company as a director in
the past.

Driving License No: P01112002180089

Voter Id No: Not available

103
The Permanent Account Number (“PAN”), Bank Account details and Passport Number of our
Promoters have been submitted to Stock Exchanges on which our Company proposes to list its
Equity Shares at the time of filing of this Offer Document.

Common Pursuits

The promoters/directors of Sunstar Overseas Limited do not have any other businesses, which
have common pursuits to those of Sunstar Overseas Limited, except the following:

Our Managing Director, Mr. Rakesh Aggarwal, is a partner in M/s. Star International, in which
he has a 60% profit sharing ratio. One of the objects of Star International is trading and exporting
of rice, which may create conflict of business interest. The fact is mentioned as a risk factor on
page [●] of this DRHP.

Interest of Promoters

All the Promoters may be deemed to be interested to the extent of fees, if any, payable to them for
attending meetings of the Board or committee thereof as well as to the extent of other
remuneration and/or reimbursement of expenses payable to them under the Articles.

The Wholetime Directors are interested to the extent of remuneration paid to them for services
rendered to us. Further, the Promoters are interested to the extent of equity shares that they are
holding and or allotted to them out of the present Issue, if any, in terms of the Prospectus and
also to the extent of any dividend payable to them and other distributions in respect of the said
Equity Shares.

Except as stated otherwise in this Prospectus, we have not entered into any contract, agreements
or arrangements during the preceding two years from the date of this Prospectus in which the
Directors are directly or indirectly interested and no payments have been made to them in
respect of these contracts, agreements or arrangements which are proposed to be made to them.

Payment or Benefit to Our Promoters

For details of payments or benefits paid to the promoters, please refer to the paragraph
“Compensation to Managing Directors/Whole time Directors” in the section titled ‘Our
Management’ in this Draft Red Herring Prospectus.

Sales or Purchase between companies in the Promoter Group

There have been no sales or purchases between companies in the Promoter Group of the
Company exceeding in value in the aggregate 10% of the total sales or purchases of the
Company.

Related Party Transactions

The details of related party transactions have been disclose as a part of the Auditors Report. For
details, please refer page [●] of this Draft Red Herring Prospectus.

104
 CURRENCY OF PRESENTATION

In this Draft Red Herring Prospectus, unless the context otherwise requires, all references to the
word “Lakh” or “Lac”, means “One hundred thousand” and the word “million” means “Ten
Lacs” and the word “Crore” means “ten million” and the word “billion” means “One thousand
million and the word “trillion” means “One thousand billion”. In this Draft Red Herring
Prospectus, any discrepancies in any table between total and the sum of the amounts listed are
due to rounding off.

Throughout this Draft Red Herring Prospectus, all the figures have been expressed in Lacs of
Rupees, except when stated otherwise. All references to “Rupees” and “Rs.” in this Draft Red
Herring Prospectus are to the legal currency of India.

DIVIDEND POLICY

Dividends may be declared at the Annual General Meeting of the Shareholders based on a
recommendation by the Board of Directors. The Board of Directors may recommend dividends,
at its discretion, to be paid to the members. Generally the factors that may be considered by the
Board, but not limited to, before making any recommendations for the dividend include future
expansion plans and capital requirements, profits earned during the financial year, cost of raising
funds from alternate sources, liquidity, applicable taxes including tax on dividend, as well as
exemptions under tax laws available to various categories of investors from time to time and
money market conditions.

However the dividends paid in the past are not necessarily indicative of our dividend policy, in
the future.

Dividends paid by our Company during the last five years are presented below:

Particulars FY 2005 FY 2004 FY 2003 FY 2002 FY 2001

Paid up Equity Share Capital 595.25 595.25 595.25 595.25 595.25
(Rs. lacs)
Face value of Equity Shares 10 10 10 10 10
(Rs. per share)
Dividend (Rs. lacs) 59.53 29.76 Nil 89.29 44.64
Dividend rate 10 5 Nil 15 7.5
Dividend Tax (Rs. lacs) 7.59 3.72 Nil 9.11 4.55

105
 SECTION VII - FINANCIAL INFORMATION

A) Financial Statements of Sunstar Overseas Limited

Auditor’s Report

The Board of Directors

Sunstar Overseas Limited
4119/7, First Floor, Naya Bazaar,
Delhi - 110 006.

Subject: Your Proposed Public Issue

Dear Sirs,

We have examined and found correct the Audited Accounts of M/s Sunstar Overseas Ltd for the
past five accounting years ended on 31.03.2001, 31.03.2002, 31.03.2003, 31.03.2004, 31.03.2005 and
for the six months period ended 30th September 2005 being the last date up to which the accounts
of the Company have been made up and audited by us. At the date of signing this report, we are
not aware of any material adjustment, which would affect the result shown by these accounts in
accordance with the requirement of Part II of Schedule II to the Companies Act, 1956.

In accordance with the requirements of Paragraph B (1) of Part II of Schedule II of the Companies
Act 1956 (the Act), the Securities and Exchange Board of India ( Disclosure and Investor
Protection) Guidelines 2000 (SEBI Guidelines) and our terms of reference with the Company
dated 1st November 2005 requesting us to make this report for the purpose of the Offer Document
as aforesaid, we report that:

(a) The restated assets and liabilities of the Company as at 31-3-2001, 31-3-2002, 31-3- 2003,
31-3-2004, 31-3-2005 and for the six months period ended 30th September 2005 are as set out
in Annexure I to this report after making such adjustments and regroupings as in our
opinion are appropriate and more fully described in the notes appearing in Annexure III &
IV to this report.

(b) The restated profits of the Company for the Financial years ended 31-3- 2001, 31.03,
31.03.2002, 31.03.2003, 31.03.2004, 31.03.2005 and for the six months period ended 30th
September 2005, are as set out in Annexure –II to this report. These profits have been arrived
at after charging all expenses including depreciation and after making such adjustment and
regroupings as in our opinion are appropriate and more fully described in the Notes
appearing in Annexure III & IV of this report.

(c) The rates of dividends paid by the Company in respect of accounting year ended
31.03.2001,31.03.2002, 31.03.2003, 31.03.2004, 31.03.2005 and 30.09.2005 are as shown in
Annexure V of the report.

(d) We have examined the following financial information relating to the Company prepared by
the management and approved by the Board of Directors for the purpose of inclusion in the
Offer document:-

i. Accounting Ratio as appearing in Annexure VI to this report.

ii. Capitalization Statement as at 31st March, 2005 as appearing in Annexure VII to this
report.
iii. Statement of tax shelter as appearing in Annexure VIII to this report.
iv. Details of secured loans as appearing in Annexure IX to this report.
v. Details of unsecured loans as appearing in Annexure X to this report.
vi. Details of Investment as appearing in Annexure XI to this report.

106
 vii. Details of sundry debtors as appearing in Annexure XII to this report.
viii. Details of loans and advances as appearing in Annexure XIII to this report.
ix. Details of Transactions with related parties as appearing in Annexure XIV to this
report.
x. Details of other income as appearing in Annexure XV to this report.

In our opinion the above financial information of the Company read with Significant Accounting
Policies and notes on account attached in Annexure IV to this report, after making adjustments
and re-grouping as considered appropriate has been prepared in accordance with Part II of
Schedule II of the Companies Act, 1956 and the SEBI Guidelines.

This report is intended solely for your information and for inclusion in the Offer document in
connection with the specific Public Offer of equity shares of the Company and is not to be used,
referred to or distributed for any other purpose without our written consent.

Thanking you,

For R.K. Gulati & Associates

Rakesh Gulati
(Partner)
M. No. 84895

Place: New Delhi

Date: 09th January 2006

107
 Annexure I

STATEMENT OF PROFIT AND LOSSES ACCOUNT- AS RESTATED

(Rs. In Lacs)
PARTICULARS FOR THE YEAR ENDED ON
30.9.2005 31.3.2005 31.3.2004 31.3.2003 31.3.2002 31.3.2001
(6 months) (12 months) (12 months) (12 months) (12 months) (12 months)
INCOME

Sales
Of Products manufactured by the 11,061.05 20,853.69 19,422.31 22,556.39 14,879.95 11,278.81
Company
Of Products traded by the Company 1,858.51 5,381.93 1,029.51 26.00 116.90 572.93
Total 12,919.56 26,235.62 20,451.82 22,582.39 14,996.85 11,851.74
Other Income 212.16 651.46 354.96 423.70 142.02 101.58
Increase (Decrease) in Inventories 960.14 2,162.68 1,249.41 (419.94) 958.46 578.03

Total 14,091.86 29,049.76 22,056.19 22,586.15 16,097.33 12,531.35

EXPENDITURES
Cost of sales 1,230.34 3,644.92 845.81 22.67 104.53 490.00
Raw Material Consumed 9,212.20 17,748.81 15,908.35 17,272.57 11,755.35 8,332.45
Staff Cost 140.84 266.57 214.48 176.73 105.40 89.84
Other Manufacturing expenses 392.44 811.64 677.73 644.04 498.78 461.12
Administration Expenses , 1,709.53 4,048.04 2,629.01 2,665.71 1,476.62 1,427.77
Selling and Distribution Expenses
Other Expenses 38.10 152.00 132.03 122.93 33.88 31.77

Total 12,723.45 26,671.98 20,407.41 20,904.65 13,974.56 10,832.95

Profit Before Interest, Depreciation 1,368.41 2,377.78 1,648.78 1,681.50 2,122.77 1,698.40
and Income Tax
Interest 550.65 1,042.15 719.03 439.07 488.71 402.92
Depreciation 184.78 423.54 354.90 237.02 201.03 197.19
Net Profit before taxes 632.98 912.09 574.85 1,005.41 1,433.03 1,098.29
Taxation
Current tax 148.85 230.19 150.13 86.18 61.36 30.88
Fringe benefits tax 5.09
Deferred tax (1.18) 0.92 10.87 17.45 94.04 0
Net Profit after taxes 480.22 680.98 413.85 901.78 1,277.63 1,067.41

108
 Annexure II
STATEMENT OF ASSETS AND LIABILITIES - AS RESTATED
Rs. In lacs
For the year ended on
Particulars 30.09.2005 31.3.2005 31.3.2004 31.3.2003 31.3.2002 31.3.2001
(6 months) (12 months) (12 months) (12 months) (12 months) (12 months)
A. Fixed Assets:
Gross Block 4,691.44 4,593.85 3,935.60 3,045.59 2,329.52 2,052.23
Less : Depreciation 1,938.82 1,765.26 1,386.67 1,061.08 845.38 688.57
Net Block 2,752.62 2,828.59 2,548.93 1,984.51 1,484.14 1,363.66
Less: Revaluation Reserve 0 0 0 0 0 0
Capital Work in Progress 130.68 87.71 40.87 277.51 111.66 37.73
Total (A) 2,883.30 2,916.30 2,589.80 2,262.02 1,595.80 1,401.39

B. Investments (B) 69.65 392.06 335.50 241.98 7.42 57.16

C. Current Assets, Loans &

Advances
Inventories 9,862.30 12,540.47 12,930.24 8,317.90 6,663.96 5,641.26
Sundry Debtors 5,617.89 4,988.58 5,204.40 3,540.60 3,918.74 1,907.65
Cash and Bank Balances 1,779.46 1,023.96 1,223.24 908.67 321.72 102.47
Loans and Advances 2,995.32 1,560.67 924.97 597.67 650.29 406.64
Other Current Assets 353.19 348.10 315.59 111.16 42.54 29.54

Total (C) 20,608.16 20,461.78 20,598.44 13,476.00 11,597.25 8,087.56

D. Liabilities & Provisions

Secured Loans 13,315.17 15,800.69 15,250.14 9,219.79 7,302.64 5,118.99

Unsecured Loans 0 0 0 0 26.95 0
Current Liabilities and 2,354.14 639.37 1,680.99 595.28 595.58 362.78
Provisions
Provision for taxes 182.97 102.10 0.90 0.30 30.74 64.89
Fringe benefits tax 4.50
Deferred Tax Liabilities 122.10 123.29 122.37 111.50 94.04 0
Proposed Dividend 67.10 67.11 33.48 0 0 0
Total (D) 16,045.98 16,732.56 17,087.88 9,926.87 8,049.95 5,546.66

E. Net Worth (A+B+C-D ) 7,515.13 7,037.58 6,435.86 6,053.13 5,150.52 3,999.45

F. Represented by
Share Capital 595.25 595.25 595.25 595.25 595.25 595.25
Share Application Money 0 0 13.00 11.50 11.50 40.51
Reserves and Surplus 6,926.74 6,446.51 5,832.64 5,452.27 4,550.51 3,371.28
Less: Revaluation Reserves
Reserves (Net of Revaluation 0 0 0 0 0 0
Reserves)
Miscellaneous Expenditure 4.18 4.18 5.03 5.89 6.74 7.59
Share issue expenses 2.68 0 0 0 0 0
Net Worth 7,515.13 7,037.58 6,435.86 6,053.13 5,150.52 3,999.45

Notes: The shareholders accorded their approval for issue of bonus shares in the ratio of 3:4 at
their annual general meeting held on 29th September 2005 but the bonus shares have
been issued by the board on 07th November 2005.

109
 Annexure III

Notes to adjustments carried out in restated financial statements

1. Restated financial statements have been prepared in respect of five years commencing from
the financial years ended 31.03.2001 to 31.03.2005 and 6 months ended on 30.09.2005. As a
result of restatement of income and expenses amounts, the necessary adjustments have been
made against the reserves.

2. Details of various items adjusted in re-stated accounts.

(a) During the period ended on 30.09.2005, the company has changed the accounting policy
for recording the turnover and accordingly the turnover is recorded inclusive of sea
freight and insurance. The turnover of previous year has been restated accordingly.

(b) The Company has adopted Accounting Standard –22 issued by the ICAI in preparing
financial statements for the accounting year commencing from 1st October, 2003.
Accordingly, the charge in respect of deferred tax/ liability has been included in
previous years commencing from 01.04.2001 onwards.

Annexure IV

NOTES ON ACCOUNTS

(A) SIGNIFICANT ACCOUNTING POLICIES

(1) METHOD OF ACCOUNTING

1.1 The financial statements are prepared on a going concern basis with historical costs and
in accordance with accepted accounting standards applicable in India except otherwise
stated.

1.2 The Company generally, follows the mercantile system of accounting and recognizes
income and expenditure on an accrual basis except those with significant uncertainties.
Certain items of Income such as market fee refunds, overdue interest from customers
have been considered to the extent the amount is accepted/likely to be accepted by
parties.

(2) FIXED ASSETS

2.1 Fixed assets are stated at original cost including taxes, freight and other incidental
expenses related to acquisition / installation.

2.2 Expenditure Direct and Indirect, including interest on long term loans & finance charges,
net of Revenue earned during the project execution period are transferred to Pre-
operative Expenses and will be amortized with in a period of 5 years.

2.3 Capital work in Progress is stated at cost.

(3) DEPRECIATION

Depreciation on Fixed Assets is provided on written down value method basis as per
rates prescribed under Schedule XIV to the Companies Act, 1956 as prevailing except in
case of certain assets depreciation has been provided at higher rates based on useful life
as determined by the management.

110
(4) INVENTORIES

The inventories are valued as follows: -

- Finished goods & : - are valued at lower of cost or net realizable value.
By-products

- Semi finished goods. :- At material costs & appropriate share of production overheads.

- Raw materials & :- are valued at cost on First in First Out (FIFO) Basis.
Packing materials.

- Trading items :- At cost

(5) INVESTMENTS

5.1 Long-term investments are stated at cost or market value, whichever is less after
adjusting for any diminution in value, other than temporary in the value thereof.

5.2 Short-term investments are stated at cost or market value, whichever is less.

(6) TURNOVER

6.1 The Company has changed its method of accounting and now turnover indicated in
profit & Loss account is accounted for Ex-godown and inclusive of Sea Freight &
Insurance.

6.2 Dividend income from investment is recognized when the right to receive the payment is
established.

(7) OTHER INCOME

Export incentives, interest income and income from investments are accounted for on
accrual basis.

(8) FOREIGN CURRENCY TRANSACTIONS.

Transaction in foreign currency are recorded at exchange rate prevailing at the time of
the transactions and exchange differences arising from foreign currency transactions are
dealt with in profit and loss account and capitalized where they relate to fixed Assets.
Transactions in foreign currencies remaining unsettled at the end of the year are
translated at contracted rate where they are covered by foreign exchange forward
contracts and at the rate prevailing at the end of the year in other cases. Any difference
subsequently as compared to actual payments or realization is recognized as exchange
variations in the year of settlement / realization and dealt in profit and loss account.

(9) BORROWING COSTS

Borrowing Costs that are attributable to acquisition, construction or production of

qualifying assets are capitalized as part of cost of such assets. A qualifying assets is an
assets that necessarily takes a substantial period of time to get ready for intended use. All
other borrowing costs are changed to the profit and loss account/ and or to deferred
Revenue Expenditure.

111
(10) CUSTOM DUTY

Custom duty is accounted on clearance of goods from the debonding.

(11) SUBSIDY FROM APEDA/OTHERS

The subsidy from APEDA/ others has been accounted on accrual basis.

(12) TAXES ON INCOME

12.1 Provision for current tax is made in accordance with and at the rates specified under
Income Tax Act 1961, as amended.

12.2 Deferred tax is recognized, subject to consideration of prudence on timing difference,

being the difference between taxable income and accounting income that originates in
one period and are capable of reversal in one or more subsequent period and using the
tax rates and tax law that have been enacted or substantively enacted by the balance
sheet date.

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

12.4 Deferred Tax assets and Liabilities are measured using the tax rates and the tax lows that
have been enacted or substantially enacted at the balance sheet date.

(13) PRELIMINARY AND PREOPERATIVE EXPENSES

Preliminary & Pre-operative expenses are amortized over a period of 10 years on a pro
rata basis beginning from the year of incurrence.

(14) CONTINGENT

All known liabilities are provided for in the accounts except liabilities of a contingent
nature, which have been adequately disclosed in the accounts:

CURRENT PERIOD PREVIOUS YEAR

(Rs.) (Rs.)
(B) Estimated amount of contracts
Remaining to be executed on capital
Accounts and not provided for Rs. 352.33 Lacs Rs. 93.00 lacs
(Net of advances)

(C) Contingent liabilities not

provided for in respect thereof.

(i) Banks Guarantees Rs. Nil NIL

(ii) Bills Discounted with Banks Rs. 4472.10Lakhs Rs. 3891.34lakhs

(iii) Letter of credits for purchased

of Capital assets. Rs. 52.00 Lakhs Rs 130.92Lakhs

(iv) Others - Customers Rs. Nil Rs Nil

(iv) Claims against the company

112
 Not acknowledges as debts. Rs. 26.00 Lakhs Rs. 20.49Lakhs

(D) SECURED LOANS

Working Capital facilities including Packing credit limits PCFC and foreign bills
discounted and EBRD limits from The Karur Vysya Bank Ltd, the City Union Bank Ltd.
and Karnataka Bank Ltd. are secured by first charge on all the properties of the company
by way of hypothecation on immovable properties of the company and raw materials,
stock-in process and finished goods, books debts and receivable and first charge on the
fixed assets of company and collaterally secured by the personal guarantees of all the
directors of the company and collaterally secured against the immovable properties of
Sh. Naresh Aggarwal, Sh. Kewal Krishan Goel, directors and Smt. Kavita Aggarwal W/O
Sh. Man Mohan Sarup Aggarwal -director.

(E) Balances of Sundry Debtors, Creditors and advances to supplies/others are subject to
confirmation and reconciliations.

(F) In the opinion of the board, all Current Assets, loans and advances are approximately of
the value stated, if realized in ordinary course of the business except otherwise provided
for.

(G) In view of recent amendment to Part I of Schedule VI of the Companies Act 1956 vide
notification no. GSR 129 (E) dated 29th February 1999 issued by the Department of
Company affairs relating to Small Scale industry undertakings and considering, the
multiplicity and difficulty in identification of accounts of such undertakings, the
information for determining the particulars in respect of indebtedness to such
undertakings as on 30-9-2005 are not available.

(H) The Company is not maintaining the stock records of bardana and by products and
therefore the stock of these items have been arrived at on the basis of physical
inventories. The difference between financial statements at the close of the year and
physical inventory, if any, has been shown in the shortage accounts.

(I) The Company has not yet formulated the type of arrangement by which gratuity liability
may be quantified and/ or accrued so as to meet the mandatory requirements of
Accounting standard 15 issued by the Institute of Chartered Accountants of India.
However the company had during the year purchased group gratuity policy from Life
Insurance Corporation of India.

(J) The provision of bonus has been made as per the decision of the management and the
computation of liability as per payment of bonus Act 1956 is not ascertained.

(K) DIRECTORS REMUNERATION CURRENT PERIOD PREVIOUS YEAR

Rs. in Lakhs Rs. in Lakhs

(a) Director Remuneration 27.25 9.60

(b) Computation of Net profits in accordance with section 349 of the Companies Act 1956.

CURRENT PERIOD PREVIOUS YEAR

Rs. in Lakhs Rs. in Lakhs
Profit before taxes as per Profit &
Loss Account 632.98 912.09

113
Add:

(i) Depreciation debited to Profit &

Loss Account 184.78 423.54

(ii) Directors Remuneration 27.25 9.60

(iv) Loss on sale of fixed assets 5.87 --

Less:

(i) Depreciation U/s 35 of the

Companies Act 1956 184.78 423.54

(ii) Profit on sale of fixed Assets

U/s 349 of the Companies Act 1956 2.67 12.98

--------- ----------
663.43 908.71
===== ======

(L) Deferred tax Liabilities/Assets (Net) as on 30.09.2005 are set out as below:-

Deferred Tax Current Period Deferred Tax

Liability/ (assets) Changes/(Credit) Liability/
As on during the Assets as
1.04.2005 Period at 30.09.2005

(i) DEFERRED TAX LIABILITIES

Timing difference in between Book and
Tax Depreciation 12328758 (118860) 12209898
------------ ----------- ----------
12328758 (118860) 12209898
----------- ----------- ----------
-
(M) Previous Year Figures are given in brackets. Previous year figures are regrouped and
reclassified wherever considered necessary to confirm the current period’s classification.

(N) SEGMENT INFORMATION

(I) Primary
The Company is primary business segments comprise Manufacturing trading &
marketing of Rice. The business included in these business segments are given below:

Rice :- Basmati & Non Basmati Rice

Other Division :- Sesame Seeds, Cane Sugar,

114
Segment Revenue, results and other information.

Segment Rice Other Total

than Rice Rs. In Lakhs
(1) Revenue

(a) External Sales 12862.68 56.87 12919.55

(23751.18) (203.60) (24276.12)

(b) Inter – Segment Sales -- -- --

( -- ) ( -- ) ( -- )

(c) Total Revenue 12862.68 56.87 12919.55

(23751.18) (203.60) (24276.12)

(2) Total revenue of each 99.55% 0.45% 100%

segment as a percentage (97.83%) (2.17%) (100%)
of total revenue of all
segments

(3) Segment Results 478.06 2.16 480.22

(897.29) (14.80) (912.09)

(4) Combined results of 478.06 2.16 480.22

all segments in profit (897.29) (414.80) (912.09)

(5) Combined results of -- -- --

all segments in loss ( -- ) ( -- ) ( -- )

(6) Segment Results as percentage 0.45% 100%

99.55% of the greater of the (97.83%) (2.17%) (100%)
total arrived at 4 and 5 above in
absolute amount

(7) Segment Assets 23561.11 NIL 23561.11

(23770.14) (NIL) (23770.14)

(8) Segment assets as a 100% Nil 100%

percentage of total assets (100%) NIL (100%)
of all segments

(II) Secondary Segment

Revenue of Geographical Segment

OUTSIDE INDIA WITHIN INDIA TOTAL

Current Previous Current Previous Current Previous
Period Year Period Year Period Year
EXTERNAL 10796.88 23469.28 2122.67 2766.36 12919.55 26235.63
INTERNAL --- --- --- --- --- ---

Total 10796.88 23469.28 2122.67 2766.36 12919.55 26235.63

115
(O) RELATED PARTY DISCLOSURES UNDER ACCOUNTING STANDARD –18

(I) (A) Enterprises in which the company has control NIL

(B) Parties in respect of which the company is a joint venture NIL

(C) Key Management Personnel.

Chairman Sh. Naresh Aggarwal

Managing Director Sh Rakesh Aggarwal
Joint Managing Director Sh Rohit Aggarwal
Director Sh. Sumit Aggarwal
Director Sh. Manmohan Sarup Aggarwal
Director Sh. Kapil Aggarwal
Director Sh. Kewal Kishan Goel
Director Sh. Ravinder Passi

(D) Enterprises over which key management personnel

and their relatives are able to exercise significant influences.

M/s Digvijay Steels (P) Ltd.

M/s VAEVKN Industries (P) Ltd .
M/s Ved Kiran Steel Industries (P) Ltd.
M/s Star International.
M/s Maa Sarda Rail Nirman (P) Ltd.
M/s Accustamp (P) Ltd.
M/s Digvijay Systems & Services (P) Ltd.
M/S Digvijay Promoters (P) Ltd.
M/S RSA Propbuild (P) Ltd.
M/S S.S.Rice Traders
M/S Sunstar Exim Ltd.
M/S Sunstar Buildwell (p) Ltd
M/S Sunstar Bio-Energy (P) Ltd
M/S Sunstar Infocom (P) Ltd.
M/S StarTrack Fasteners (P) Ltd.
M/S Five Senses Builders (P) Ltd
M/S Greatwall Constructions (p) Ltd.
M/S RRSP Builders (P) Ltd
M/S RK Arts (P) Ltd.
M/S Indian Exposition Mart Ltd.
M/S K.K.Goel & Sons
M/s Vikas Aggarwal & sons
(II) Transaction with and out standing balance of related parties during the year
Current Period Previous Year

(A) Enterprises in which the company has control NIL NIL

(B) Parties in respect of which the company is a joint venture NIL NIL

(C) Key Managerial Personnel

Remuneration

Name Relation Current Period(Rs.) Previous

Year(Rs.)
Sh. Rohit Aggarwal Joint Managing Director 10,63,300 3,60,000

116
 Sh. Rakesh Aggarwal Managing Director 15,81,700 6,00,000
Sh Sumit Aggarwal Director 80,645 Nil

(D) Enterprises over which key management personnel and their

relatives are able to exercise significant influences.

Purchases CURRENT PERIOD PREVIOUS YEAR

(Rs.) (Rs.)

Rubber Rolls 15,67,488 33,30,542

Expenses

Material Handling Charges 12,73,042 Nil

Labour Charges 3,18,751 Nil

Sales
Rice 555.00 65,00,000

Income
Commission Received Nil Nil

Balance outstanding as at 30.09.05

- Receivable 4,13,39,328 8,506

- Payable 5,84,185 5,33,46,724

Share Application Money 1,34,73,224 4,40,000

(Investment)
(P) EARNING PER SHARES

Earnings per share is calculated by dividing the profit attributable to equity shareholders
by the weighted average number of equity shares outstanding during the period/year as
under

CURRENT PERIOD PREVIOUS YEAR

(Rs. in LACS) (Rs. in LACS)

Profit after tax 480.22 680.99

(A) Profit for the period

Attributable to equity shareholders 480.22 680.99

(B)Weighted average number of equity

Shareholders during the period (NOS) 5952536 5952536

(C) Basic & diluted Earning Per Shares

Number of Equity Shares
outstanding during the year 5952536 5952536

Earning per Share 8.06 11.44

(D) Nominal Value of shares 10 10

117
 (Q) Additional information pursuant to the provision of the paragraph 3 & 4 of Part II of
Schedule VI of the Companies Act 1956 (As certified by Directors.)

(i) INSTALLED CAPACITY & PRODUCTION

Units Licensed Installed Actual

Description Capacity@ Capacity* Production*
(Per annum) (Half yearly)

Paddy Processing M.T. N.A. 210240 31616.87

Unit. Bahalgarh N.A. (210240) (57450.03)

Rice Processing * M.T. N.A. NIL NIL

Unit. Alipur N.A. (70080) (29403.50)

Rice Processing
Unit, Amritsar M.T . N.A 35040 5353.45
(35040) (15045.83)

@ Information on Licenced Capacity has not given since licensing has been abolished.
* Manufactured Goods (including own rice processing)
** as certified by the management and accepted by auditors, this being a technical matter.

( ii ) TURNOVER, OPENING AND CLOSING INVENTORIES ( in lacs )

Class of Goods Units Opening Inventories Turnover Closing Inventories

Qty Value (Rs.) Qty Value (Rs.) Qty Value (Rs.)
Rice :- MT 23035.84 4904.25 57054.11 10795.55 30260.92 6007.78
(14887.52) (2767.44) (125813.67) (20827.33) (23035.84) (4904.25)

By Products :- MT 4246.21 70.85 8867.10 243.88 28653.86 987.23

(Nakku, Rice Bran, (1859.83) (54.93) (1865.01 (430.22) (4246.21) (70.85)
Husk etc.)

Paddy * :- MT -- -- -- --
(--) (--) (2413.95) (387.34) (--) ( --)

Bardana * :- Pcs -- -- 17.72 -- 402.53

(---)** (0.04) (--)**

Others :- 35.10 3.90 59.99

(25.15) (1.23) (35.10)
------------- ------------ ---------------
5010.20 11061.05 7457.53
Total (2847.52 ) (21646.16) (5010.20)
-------------- ------------- -----------
--
• It is not practicable to furnish quantitative details due to numerous sizes and quality of
bags used.
• ** included in raw materials

118
 (iii) Traded Items ( In Lakhs)

Class of Goods Units Opening Inventories Turnover Closing Inventories

Qty Value (Rs.) Qty Value (Rs.) Qty Value (Rs.)

Seasam Seeds MT -- -- 38.00 17.89 -- --

(--) (--) (338.01 (165.82) (--) (--)

Rice MT 2117.60 199.44 12378.19 1801.63 380.06 37.43

(Nagpur/ Raipur) (1259.06) (107.54) (37008.29) (4385.87) (2117.60) (199.44)

Dal MT -- -- 11.00 5.89 -- --

(--) (--) --- (---) (--) (--)

Cane Sugar MT 2.26 0.16 --- -- -- --

(Shakkar) (2.26) (0.16) (1.51) (0.33) (---) (----)

Mace Whole MT -- -- ---- --- -- --

(--) (--) (7.20 (18.99) (--) (--)

Timber CFT 9.02 (0.03) -- --

(9.02) (0.03 (--) (--) (9.02) (0.03)

Paddy Seeds MT 185.09 23.25 146.11 33.10 38.76 5.67

(103.88) (12.36) (84.96 (18.46 (185.09) (23.256)
------------ ------------ ------------
Total 225.97 1858.51 43.10
(120.09) (4589.47) (225.97)
------------ ------------ ------------

119
 Cash Flow Statement

( Rs. in Lacs)

6 months For the financial year ended March, 31

30.9.2005 2005 2004 2003 2002 2001

A CASH FLOW FROM OPERATING ACTIVITIES:

Net profit / (loss) before taxes and interest 1,183.63 1,954.24 1,293.88 1,444.48 1,921.74 1,501.21
Adjustment for:
Depreciation 184.78 423.54 354.90 237.02 201.03 197.19
Preliminary / preoperative expenses written off - 0.85 0.85 0.85 0.85 0.85
PROFIT/(LOSS) ON INVESTMENT 1.00 - - - - -
DIVIDEND ON SHARES (1.13) (2.57) (0.24) (0.19) (1.37) (0.11)
L OSS/(PROFIT) ON SALES OF SHARES (49.36) (17.83) (9.31) (0.22) (11.48) 15.91
(Profit) /loss on sales of fixed assets 3.20 (12.99) (2.02) 15.20 7.51 (0.44)
Appreciation in value of investments (10.02) (2.38) - - - -

Operating Profit before working capital changes 1,312.10 2,342.86 1,638.06 2,118.28 1,714.61
1,697.14

Adjustment for:
Inventories(including stock in transit) 2,678.17 389.77 (4,612.34) (1,653.94) (1,022.70)
(1,805.90)
Receivables and Loans & Advances (2,063.96) (419.88) (1,991.10) (2,254.74)
430.76 (790.68)
Other Current Assets (5.09) (32.51) (204.43) (68.62) (13.00) (9.15)
Current Liabilities & Provisions 1,714.77 (1,041.62) 1,085.71 (0.30) 232.80 183.55

Cash generated from Operations 3,635.99 1,238.62 (4,084.10) (939.36)

405.04 (707.57)

Interest Paid 550.65 1,042.15 719.03 439.07 488.71 402.92

Direct taxes paid 68.84 128.10 150.62 116.36 45.80 15.19
Fringe Benefit Tax 0.60
Income Tax Refund for Previous Year) (0.86) - (1.43)
- - -
Wealth tax 0.90 0.30 0.54
- 0.26 -

3,016.76 67.47 (4,952.62) (150.65) (1,474.41)

Net cash from Operating Activities (I) (1,125.68)

120
 Annexure – V
Statement of Dividend Paid

Particulars FOR THE YEAR ENDED ON

30.9.2005 31.3.2005 31.3.2004 31.3.2003 31.3.2002 31.3.2001
(6 months) (12 months) (12 months) (12 months) (12 months) (12 months)

Equity Share Capital 5952536 5952536 5952536 5952536 5952536 5952536

( Face Value 10/-)

Rate of Dividend 0% 10% 5% 0% 15% 7.50%

Amount of Dividend 0 5952536 2976268 0 8928804 4464402

Corporate Dividend Nil Nil Nil Nil Nil Nil

Tax

Notes: The shareholders accorded their approval for issue of bonus shares in the ratio of 3:4 at their
annual general meeting held on 29th September 2005 but the bonus shares have been issued by the
board on 07th November 2005.

Annexure – VI
Accounting Ratios

Ratio For the financial year ended March, 31

30.09.2005 2005 2004 2003 2002 2001
(6 months) (12 months) (12 months) (12 months) (12 months) (12
months)

(A.) Earning per shares

Basic 8.07 11.44 6.95 15.15 21.46 17.93
Diluted 8.07 11.44 6.80 14.86 21.06 16.79

(B.) Return on net worth 6.39 9.68 6.43 14.90 24.81 26.69
(%)

(C.) Net Asset Value per 126.25 118.23 105.81 99.76 779.25 619.15
share (Rs.)

Notes:

(1.) The shareholders accorded their approval for issue of bonus shares in the ratio of 3:4 at their
annual general meeting held on 29th September 2005 but the bonus shares have been issued by
the board on 07th November 2005

(2) A. Earning per Share (Rs.) = Net Profit After Tax for the year / No. of equity shares
B. Net asset Value per share = Net Worth / No. of Equity Shares
C. Return on Net worth (%) = Net Profit After Tax / Net worth*100

121
 Annexure – VII

Capitalisation Statement

PARTICULARS PRE - ISSUE AS AT POST ISSUE *

30.09.2005 31.03.2005
(6 months) (12 months)
Debt
Short term Debt (A) 12,895.02 15711.03
Long Term Debt (B) 420.15 89.66
Total Debt 13,315.17 15,800.69

Equity Fund
- Equity Share Capital 595.25 595.25
- Reserves & Surplus 6,926.74 6,446.51

LESS : MISCELLENEOUS 6.86 4.18

EXPS
Total Share Holders funds 7,515.13 7,037.58
(C)

Total Capitalization
Long term debt /Total 0.06 0.01
Share Holders Funds Ratio
/ (B/C)

* Share Capital & Reserve, post issue can be ascertained only on the conclusion of the Book
Building process.

Note: The shareholders accorded their approval for issue of bonus shares in the ratio of 3:4 at
their annual general meeting held on 29th September 2005 but the bonus shares have been issued
by the board on 7th November 2005.

122
 Annexure – VIII
Tax Shelter Statement

Year / Period Ended March 31

PARTICULARS 30.09.2005 2004-05 2003-04 2002-03 2001-02 2000-01
Period (In months) 6 12 12 12 12 12
Profit / (Loss) before tax as per books
632.98 912.09 574.85 1,005.41 1,433.03 1,098.29
A
Tax Rate %
NORMAL TAX RATE 33.66% 36.59% 35.88% 36.75% 35.70% 39.55%
MAT 8.41% 7.84% 7.69% 7.88% 7.65% 8.48%
Tax impact at applicable tax rate 213.06 333.73 206.26 369.49 511.59 434.37
Adjustments:
Permanent differences/ adjustments
dividend on shares 1.12 2.56 0.23 0.2 1.38 0.11
others adjustments 169.06 83.06 0 252.67 416.47 305.91
0 0 122.67 375.7 827.01 775.05
Total B 170.18 85.62 122.9 628.57 1244.86 1081.07

Timing differences
Differences between Tax,
(16.78) 285.32 33.15 69.53 48.82 33.57
Depreciation and Book Depreciation
Other Adjustments 11.60 14.43 (0.13) 0 0.05 0
Total Timing Differences C (5.18) 299.75 33.02 69.53 48.87 33.57
Net Adjustments B+C 165 385.37 155.92 698.1 1293.73 1114.64

Tax Saving Thereon 55.54 141.01 55.94 256.55 461.86 440.84

Total Taxation (A) 467.98 526.72 418.93 307.31 139.30 -

Taxation on extraordinary items 0 0 0 0 0 0

Tax on profit before extraordinary

0 0 0 0 0 0
items

Taxable income as per provision of

632.98 909.53 451.95 629.51 604.64 323.13
MAT

Taxable income as per provision of

53.23 71.31 34.75 49.61 46.25 27.38
MAT (B)

Net Tax payable as per income tax

148.45 198.80 150.65 114.42 53.67 27.38
returns
[Higher of (A) or (B) above]

Note: The figures for all the above years are as per the return of income filed and for the period
ended 30.09.2005 are as per audited financial Statements.

123
 Annexure – IX
Secured Loans- as restated
(Rs. In Lacs)

Sr. Rate of Repayment Amount o/s as on 30- Amount o/s as on

No Particulars Interest terms 09-2005 31-03-2005
TERMS

1 WORKING CAPITAL LOAN

A) PACKING CREDIT IN RS.

THE KARNATAKA BANK LTD. 7.00% One year 2052.70 1620.97
THE CITY UNION BANK LTD. 7.00% One year 1030.54 1536.6
THE KARUR VYSYA BANK LTD. 7.50% One year 2607.86 3230.11
B) PACKING CREDIT IN FOREIGN
CURRENCY
THE KARNATAKA BANK LTD. LIBOR + .75 One year 413.92 2709.55
THE CITY UNION BANK LTD. LIBOR + .75 One year 218.42 471.57
THE KARUR VYSYA BANK LTD. LIBOR + .75 One year 2099.45 1931.24

C) FOREIGN BILLS PURCHASED

IN RS.
THE KARNATAKA BANK LTD. 7.00% One year 934.03 688.07
THE CITY UNION BANK LTD. 7.25% One year 669.00 602.00
THE KARUR VYSYA BANK LTD. 7.50% One year 101.10 735.98

D) FOREIGN BILLS PURCHASED

IN FOREIGN CURRENCY
THE KARNATAKA BANK LTD. LIBOR + .75 One year 695.31 414.69
THE CITY UNION BANK LTD. LIBOR + .75 One year 317.22 25.68
THE KARUR VYSYA BANK LTD. LIBOR + .75 One year 1755.45 1424.90

2 TERM LOAN

NIL 0.00

3 VEHICLE LOAN

(A)ICICI BANK

CAR NO. DL8FA1111 3 YEARS 24.09 29.54

CAR SKODA 3 YEARS 13.33 15.99
CAR WAGNOR 3 YEARS 2.52 2.90
CAR HONDA CITY 3 YEARS 4.81 5.81

(B) KOTAK MAHINDRA PRIMUS

CAR NO. DLICJ1537 5 YEARS 0 8.15
CAR NO. DL1CJ1825 5 YEARS 10.36 11.64
CAR NO. DL1CJ1591 5 YEARS 7.25 8.15
6.65
CAR NO. DL2FE0088 5 YEARS 7.47

TOTAL 15481.01

124
 ICICI HOME FINANCE LTD.
( HOME FINANCE )

Estate Homes numbered E-135

and E-136 situated in Jaypee
Greens Ltd., Noida, measuring
1000 Sq. Yards each. 10 years 340.13

Principal Terms of Secured Loans & Assets Charged As Security

Primary Security:

For PCL/PCFC: Hypothecation of stock of Paddy and Rice meant for Export.

For FBN/P/EBD: All export documents including bill of lading evidencing shipment of goods.

For BG: 10% cash Margin and counter Guarantee from the company.

Collateral:

1. Additional pari-passu EM charge on

a) Residential Property at Khasra No. 1988, Gopal Nagar, Samadhi Road, Batala, Punjab in
the name of Mr. Naresh Aggarwal valued at Rs. 68.00 Lacs as per Vr dated 27.03.2001.(
Extent : Land -885.40 Square Yards: building -5124.00 Sq. Ft.)

b) Residential Property at Khasra no. 1988, Gopal Nagar Samadhi road Batala, Punjab in the
names of Smt. Kavita Aggarwal and Shri Kewel Kisha Goel valued at Rs. 98.00 Lacs as
per VR dated 27.03.2001 ( Extent: Land -1133.33 Sq. Yards : Building -8274.00 sq. ft.)

c) Industrial Unit at Khasra no. 1247, plot No. 519-520, Alipur Village, Delhi in the name of
Mr. Naresh Kumar Aggarwal and Mr. Rakesh Aggarwal valued at Rs. 32.00 Lacs as per
VR dated 27.03.2001. 9 Extent: Land -1008.33 Square Yards; Building -4480.00 Square Ft.)

d) Factory Land and building at Khasra nos. 78, 704, 365-317, 317 314-
315,49,50,51,210,327,50, G.t Karnal road, Village Bahalgarh , dist. Sonepat, Haryana in the
name of the company valued at Rs. 1636.00 Lacs as per VR dated 20.01.2000.( Extent :
Land -48074.00 sq. Yards; Building -84140.00 Sq.ft.)

e) Agriculture Land measuring 5.50 acres adjoining factory premise at Bahalgarh Tehsil,
district Sonepat, Haryana held in the name of the Company and valued at Rs. 100.00 Lacs
as per VR dated 27.03.2001.

2. Hypothecation charge on Pari-passu basis on the plant and Machinery of the company worth
WDV of Rs. 893.45 lacs as on 31.03.2003

3. Lien on term deposits on pari-passu basis worth Rs. 28.07 Lacs in the name of the company.

4. Exclusive Additional EM charges to Karur Vysya Bank Ltd. on the Following Properties

a. Land & building Property situated at Plot No. 6 ( Back portion), Jamuna Road, Civil
Lines, Delhi-54 standing in the name of Mrs. Navita Aggarwal & Mr. Vikas Aggarwal
valued at Rs. 313.27 Lacs as per VR dated 21.12.2003 (Values of Land is Rs. 188.80 Lacs

125
 and value of Bldg is Rs. 124.47 Lacs .Total area of construction is 5510 Sq. ft. : extent of
Land is 472 square Yards)

(b) Land & building property situated at plot No. 24-B(Part), Alipur road, Opp. Old
Secretariat ( Shamnath Marg) , Civil Lines , Delhi-54 Standing in the name of Mr.
Manmohan Sarup Aggarwal & Mr. Kapil Aggarwal valued at Rs. 451.75 Lacs as per VR
dated 20.12.2003 ( Value of Land is Rs. 248.00 Lacs and value of Bldg. is Rs. 120.30 Lacs.
Total area of construction is 5350.00 Sq. Ft. ; Extent of Land is 496 sq. Yards)

(c) Landed Property at 40 KM stone, G.T Karnal road, Village Bahalgarh and village
Asawarpur, District Sonepat, Haryana standing in the name of the Company valued at
Rs. 222.00 Lacs as per VR dated 21.12.2003 (Area of Land is 7.75 acres valued for Rs.
217.00 Lacs: construction of Platform for storage of Paddy and the like is Rs. 5.00 Lacs).

5. The company purchased three estate homes measuring 1000 Sq. Yards each from Jay Pee
Greens Ltd. at a price of Rs. 220 lacs each numbered E-134, E-135 and E-136 in Greater Noida.
Out of this two estate homes numbered as E-135 and E-136 have been got financed from
ICICI Bank Limited by availing loan of Rs. 340 lacs at the interest rate of 7.45% p.a. for a
period of 10 years. The monthly installment of the same have been fixed at Rs. 402700/-.

Annexure X

Details of unsecured loans - As restated

(Rs. In Lacs)

Particulars For the year / period ended

30.09.2005 31.03.2005 31.03.2004 31.03.2003 31.03.2002 31.03.2001
( 6 months) ( 12 months) ( 12 months) ( 12 months) (12 months) (12 months)

From banks 0 0 0 0 26.95 0

Deposit from Directors 0 0 0 0 0 0

Total 0 0 0 0 26.95 0

126
 Annexure – XI
Details of Investment

6months For the financial year ended March, 31

30/09/2005 2005 2004 2003 2002 2001
Long Term (At cost)
In associates companies
(non trade)
VAE VKN INDUSTIRES PVT LTD 0 336.97 236.50 236.50 0.00 0.00
DIGVIJAY STEELS PVT LTD 0 0.00 68.00 0.00 0.00 0.00
DIGVIJAY PROMOTORS PVT LTD 0.2
SUNSTAR BUILDWELL PVT LTD 0.2
SUNSTAR INFOCOM PVT LTD 0.2
SUNSTAR BIO-ENERGY PVT LTD 0.2
A 0.80 336.97 304.50 236.50 0.00 0.00
QUOTED SHARES
KARUR VYSYA BANK 4.64 3.26 2.96 1.30 2.27 52.66
CITY UNION BANK 0.41 0.34 3.02 1.64 1.40 4.49
APTECH 0.01 0.00 0.00 0.46 1.50 0.00
HEXAWARE 0.00 0.00 1.04 0.00 0.00
VIKAS VXP 1.04 1.04 1.04 1.04 2.25 0.00
INDERPRASTH GASES 1.64 1.36 1.16 0.00 0.00 0.00
MARUTI UDYOG LTD 0.01 0.00 0.00 0.00 0.00 0.00
UCO BANK 1.69 1.69 1.24 0.00 0.00 0.00
VIJAYA BANK 0.06 0.06 0.06 0.00 0.00 0.00
TV TODAY 0.19 0.15 0.27 0.00 0.00 0.00
SURYA PHARMA 1.44 2.04 0.64 0.00 0.00 0.00
POWER TRADING 0.2 0.21 0.06 0.00 0.00 0.00
PATNI COMPUTER 1.12 0.93 0.54 0.00 0.00 0.00
JET AIRWAYS 0.65 0.70 0.00 0.00 0.00 0.00
UTV 0.15 0.14 0.00 0.00 0.00 0.00
DENA BANK 0.24 0.23 0.00 0.00 0.00 0.00
BHARATI SHIPYARD 0.36 0.14 0.00 0.00 0.00 0.00
NTPC 2.25 1.95 0.00 0.00 0.00 0.00
TCS 2.15 2.12 0.00 0.00 0.00 0.00
NDTV 0.21 0.18 0.00 0.00 0.00 0.00
BOM 0.42 0.39 0.00 0.00 0.00 0.00
BIOCON 0.23 0.20 0.00 0.00 0.00 0.00
FLEX 0.91 0.90 0.00 0.00 0.00 0.00
BOC 0 0.91 0.00 0.00 0.00 0.00
VARUN SHIPPING 12.87 7.55 0.00 0.00 0.00 0.00
SHIPPING CORP 28.41 27.12 0.00 0.00 0.00 0.00
JHPL 1.71 0.00 0.00 0.00 0.00 0.00
SPL INDUSTRIES 0.31 0.00 0.00 0.00 0.00 0.00
IDFC 0.39 0.00 0.00 0.00 0.00 0.00
MUTUAL FUNDS
HSBC 0 0.00 20.00 0.00 0.00 0.00
TATA ENGINEERING 0 0.50 0.00 0.00 0.00 0.00
RELIANCE VISION 1.89 1.00 0.00 0.00 0.00 0.00
TATA EQ FUND 0.91 0.00 0.00 0.00 0.00 0.00
SBI MUTUAL FUND 2.33 0.00 0.00 0.00 0.00 0.00
B 68.84 55.11 30.99 5.48 7.42 57.15
TOTAL A+B 69.64 392.08 335.49 241.98 7.42 57.15
7.42

127
 Annexure XII
Statement of Sundry Debtors
(Rs. In Lacs)
Particulars For the year / period ended
30.09.2005 31.03.2005 31.03.2004 31.03.2003 31.03.2002 31.03.2001
( 6 months) ( 12 ( 12 months) ( 12 months) (12 months) (12 months)
months)

Debts outstanding
for a period
exceeding 6 months 80.64 144.74 35.40 183.00 1.21 11.26

Others 5537.25 4843.84 5169.00 3357.6 3917.53 1896.39

Total 5617.89 4988.58 5204.4 3540.60 3918.74 1907.65

Annexure – XIII
Details of Loans and Advances - as Restated

A. Analysis of Loans & Advances

For the year / period ended
30.09.2005 31.03.2005 31.03.2004 31.03.2003 31.03.2002 31.03.2001
( 6 months) ( 12 months) ( 12 months) ( 12 months) (12 months) (12 months)
Advance recoverable in
cash or
in kind for value to be
received
CLAIMS RECEIVABLE 8.62 29.26 0 202.15 106.14 0

ADVANCE FOR 1367.19 850.50 348.84 0 0 0

PROPERTY
ADVANCES TO 926.64 520.53 207.26 112.14 131.06 36.65
SUPPLIERS
ADVANCES TO 198.31 15.41 162.82 4.91 16.95 1.88
OTHERS/STAFF ETC.
DEPB RECEIVABLE 85.23 129.77 16.90 57.57 27.59 44.44
SHARE APPLICATION 133.93 12.40 189.15 220.90 368.55 316.25
MONEY
TAX PAYMENTS(NET 0 0 0 0 0 7.42
OF PROVISION)
ADVANCE TO GROUP 275.40 2.80 0 0 0 0
COMPANIES/FIRMS

Total 2,995.32 1,560.67 924.97 597.67 650.29 406.64

128
 Annexure XIV
Related Party Disclosure

Associates
1. STAR TRACK FASTENERS 2. GREATWALL CONSTRUCTIONS (P) LTD.
PVT LTD
3. STAR INTERNATIONL 4. DIGVIJAY PROMOTERS (P) LTD.
5. S S RICE TRADERS 6. SUNSTAR BUILDWELL (P) LTD.
7. DIGVIJAY SYSTEMS AND 8. SUNSTAR INFOCOM (P) LTD.
SERVICES PVT LTD
9. SUPER ENTERPRISES 10. SUNSTAR EXIM LTD.
11. VAE VKN INDUSTRIES PVT 12. SUNSTAR BIO ENERGY (P) LTD.
LTD
13. DIGVIJAY STEELS PVT LTD 14. RSA PROPBUILD (P) LTD.

15. MAA SHARDS RAIL NIRMAN 16. ACCUSTAMP (P) LTD.

PVT LTD
17. VED KIRAN STEEL 18. K.K. GOEL & SONS (HUF)
INDUSTRIES PVT LTD
19. RRSP BUILDERS (P) LTD. 20. VIKAS & SONS (HUF)
21. FIVE SENSES BUILDERS (P)
LTD.

Key Managerial Personnel

1. NARESH AGGARWAL CHAIRMAN

2. ROHIT AGGARWAL JOINT MANAGING DIRECTOR
3. SUMIT AGGARWAL EXECUTIVE DIRECTOR

129
 Details of transactions with related parties
(Rs. in lacs)

Related Relation Nature of 30/09/2005 31/03/2005 31/03/2004 31/03/2003 31/03/2002 31/03/2001

Party ship Transaction

P (6 months) (12 months) (12 months) (12 months) (12 months) (12 months)
Star Track Associate Consumable 13.23 33.30 16.37 19.40 0 23.45
Fastenrs Pvt stores
Ltd

Digvijay Associate Software 0 0 0.33 4.95 12.60 0

System and
services Pvt
Ltd.

Star Associate Interest 0 0 0 0 2.90 0

International
Sales 0 65.00 0 0 1.87 0

S S Rice Associate 0 0 0 25.65 20.44 36.15

Traders

Super Associate Paddy/ Rice 0 0 0 0 0 55.75

Enterprises

VIKAS AND Associate LABOUR 8.68 25.57 0 0 0 0

SON HUF CONT.

K K GOEL Associate LABOUR 7.23 28.48 0 0 0 0

AND SONS CONT.
Naresh Key Remuneration 0 0 0 0 0
Aggarwal Managerial
Person
Rakesh Key Remuneration 15.82 6.00 25.51 3.60 2.40 1.20
Aggarwal Managerial
Person
Rohit Key Remuneration 10.6 3.60 14.95 0 0 0
Aggarwal Managerial
Person
Sumit Key Remuneration 0.81 0 0 0 0 0
Aggarwal Managerial
Person
Rajeev Remuneration 0 0 0 0 1.44 1.20
Sharma
Pooja Remuneration 0 0 0 3 0 0
Aggarwal
Sadhna Salary 0 0 0 2.4 0 0
Aggarwal
Navita Salary 0 0 0 3 0 0
Aggarwal

130
 Annexure – XV
Details of Other Income - As Restated
(Rs. in Lacs)
Particulars 30.9.2005 31.3.2005 31.3.2004 31.3.2003 31.3.2002 31.3.2001
(6 months) (12 months) (12 months) (12 months) (12 months) (12 months)

Interest Income 0.40 30.39 8.89 0 0.38 0

Lease rent /rentals 0 0 0 0 0.41 0.89
Export Incentives 73.69 325.95 269.97 392.42 115.90 97.55
Dividend on shares 1.13 2.57 0.24 0.19 1.37 0.11
Profit on sales of 2.68 12.99 2.02 0 0 0.44
assets
Short and Excess 0 10.45 0.47 1.01 0 2.44
Recoveries
Commission 0.44 0.94 49.65 0 1.88 0
Brokerage from 5.12 23.25 13.85 24.99 9.96 0
shipping cos
Profit on sales of 49.36 17.83 9.31 0.22 11.48 0
shares
Exchange variations 25.47 167.24 0 0 0 0
Misc Income 43.85 57.47 0.56 4.87 0.64 0.15
Appreciation in 10.02 2.38
value of shares
Total 212.16 651.46 354.96 423.7 142.02 101.58

Qualification to the Auditors Report

YEAR 2000-01 NIL

YEAR 2001-02 NIL
YEAR 2002-03 NIL

Year 2003-04

In respect of statutory dues:

According to the records of the Company, undisputed statutory dues including Provident Fund,
Investor Education and Protection Fund, Employees State Insurance, income Tax, Custom duty,
Excise duty, Cess Wealth Tax, and other statutory dues have generally been deposited late with
the appropriate authorities, according to the information and explanations given to us. The
company has neither deducted provident Fund dues on one of the Contractor amounting to Rs.
1,32,950.00 nor has deposited the same with the appropriate authorities till 31st March ,2004.

The following statutory dues were outstanding as on 31st March, 2004 for a period of more than
six month from the date they become payable.

Sr. No Nature of Dues Amount outstanding for more

than 6 months from the date they
become payable

(1) Sales Tax Rs. 39,034.00

(2) Tax Deducted At Source Rs. 17,537.00
(3) E.P.F Rs. 83,180.00

YEAR 2004-05

In respect of statutory dues:

131
a) According to the records of the Company, undisputed statutory dues including
Provident fund, Employees’ State Insurance, Sales-Tax, and other statutory dues have
generally been deposited late with the appropriate authorities, according to the
information and explanations given to us.
b) According to the records of the company, the following amount has not yet so far been
deposited.

Nature of the Nature of Amount outstanding for

Statute Dues more than 6 month

-Sales Tax Sales Tax Rs. 2,617.00

-Income Tax T.D.S Rs. 6,891.00

132
B) Financial Information of Subsidiary Companies

Our Company does not have any subsidiary company.

C) Financial Information of Group Companies

1. Accustamp Private Limited

Accustamp Private Limited was incorporated under the Companies Act vide certificate of
incorporation no. 198483 on December 05,1984 with the main object of carrying on the business as
manufacturers, producers, processors, traders, exporters, importers, buyers, sellers, dealers,
stockists, distributors and agents of electrical stampings, lamination and its allied products for
motors, fans transformers and electrical goods.

The registered office of the Company is situated at 4119/7, Naya Bazaar, Delhi.

Board of Directors:

Sr. No Name of Director Designation

1. Mr. Naresh Aggarwal Director
2. Mr. Yogesh Gupta Director
3. Mr. Man Mohan S. Aggarwal Director

Shareholding Pattern of Equity Shareholders: (as on 30th September, 2005)

Particulars No. of shares % Holding

Rama Rani 69,100 8.77
Navita Aggarwal 42,600 5.41
Naresh Kumar Aggarwal (HUF) 1,38,000 17.52
Meeta Aggarwal 350 0.04
Rajneesh Aggarwal 1,250 0.16
Swati Aggarwal 100 0.01
Man Mohan S. Aggarwal & Sons (HUF) 1,82,336 23.15
Naresh Kumar Aggarwal 57,964 7.36
Navita Aggarwal 72,000 9.14
Kapil Aggarwal 41,000 5.21
Yogesh Gupta 15,000 1.90
Mona Goel 12,000 1.52
Monika Goel 1,500 0.19
Ritika Aggarwal 1,000 0.13
Rakesh Aggarwal 1,500 0.19
Kewal Krishnan Goel (HUF) 1,800 0.23
Rohit Aggarwal 1,50,000 19.05
Rama Rani 69,100 8.77
Total 7,87,500 100.00

133
Financial Performance:
(Rs. lacs)
For the Financial Year ended March 31st
Particulars
2005 2004 2003
Total Income 94.86 67.68 108.51
Profit after tax 1.15 3.16 2.04
Equity Share Capital 78.75 78.75 78.75
Share Application Money 40.76 49.18 54.05
Reserves (excluding revaluation 37.72 36.57 33.41
reserves)
Net Worth 155.01 164.15 165.73
NAV per share (Rs.) 19.68 20.84 21.05
EPS per shares (Rs.) 0.15 0.48 .26

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

2. Digvijay Steels Private Limited

Digvijay Steels Private Limited was originally incorporated as Swatee Forgings Private Limited
under the Companies Act on 16.02.82 but later upon change of name to Digvijay Steels Private
Limited a fresh certificate of Incorporation was issued vide certificate of incorporation no. 16-
04850 on 22.12.1992 with the main object of carrying on the business to set up industry for
manufacturing Industrial Fasteners, Railway Track Fittings, Machine Tools, Agricultural
Implements, Ferrous and Non-Ferrous castings of all kinds and of all articles and things used in
the manufacture, maintenance and working thereof.

The registered office of the Company is situated at 8/2- A/3, Jamna Road, Civil Lines, New Delhi

Board of Directors:

Sr. No Name of Director Designation

1. Mr. Stefan Glanz Director
2. Mr. Naresh Aggarwal Co – Chairman
3. Dr. Marc Kadoura Chairman
4. Mr. Kapil Aggarwal Director
5. Mr. Dinesh Goel Director
6. Mr. Dieter Fritz Director

Shareholding Pattern: (as on 30th September, 2005)

Particulars No. of shares % Holding

Mr. Kewal Krishnan Goel 35,560 7.91
Mr. Man Mohan Sarup Aggarwal 94,240 20.97
Mr. Naresh Aggarwal 94,468 21.02
VAE GmbH, Austria 2,25,167 50.10
Total 4,49,435 100.00

134
Financial Performance:
(Rs. lacs)
For the Financial Year ended March 31st
Particulars
2005 2004 2003
Total Income 364.94 20.35 15.53
Profit after tax (-) 32.70 14.52 6.46
Equity Share Capital 44.94 40.89 39.96
Reserves (excluding revaluation 183.12 278.63 255.74
reserves)
Net Worth 201.28 319.52 295.70
NAV per share (Rs.) 44.79 68.14 73.99
EPS per shares (Rs.) (-) 7.28 3.55 1.61

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

3. Digvijay Systems & Services Private Limited

Digvijay Systems & Services Private Limited was incorporated under the Companies Act vide
certificate of incorporation no. 55–4168 on October 25, 1990 with the main object of carrying on
the business of manufacture, sale, purchase, assembly, hire purchase, import, export, stockists,
distributors, designers, agents, traders, exchangers and jobbers in all kinds of electronics such as
computers, computer software development, conversion, data entry, software implementation,
system study, software documentation and related components computer systems, computer
peripherals, integrated circuits, process controllers, computer printers, transformers, monitors,
uninterrupted power supply systems, computer components, computer based systems, computer
aided design, computer aided manufacture, telecommunication, related hardware and software,
net working of local area and wide area, data communication for hardware and software,
computerized medical systems, bioelectrical equipments and to deal in other such office
automation machines, computer printers, computer stationery, computer furniture, ribbons,
diskettes, magnetic tapes and other such related items in India and abroad..

The registered office of the Company is situated at 6-B, Raj Narain Marg, Civil Lines, New Delhi

Board of Directors:

Sr. No Name of Director Designation

1 Mr. Rakesh Aggarwal Director
2 Mr. Rajneesh Aggarwal Director
3 Mr. Rohit Aggarwal Director
4 Mr. Vikas Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Star Track Fasteners Private Limited 20,000 37.56
Man Mohan Sarup Aggarwal 750 1.41
Dinesh Goel 450 0.85
Naresh Kumar Aggarwal 32,042 60.18
Total 53,242 100.00

135
Financial Performance:
(Rs. lacs)
For the Financial Year ended March 31st
Particulars
2005 2004 2003
Total Income 1.26 1.81 4.95
Profit after tax (-) 0.29 (-) 0.18 (-) 0.21
Equity Share Capital 53.24 53.24 53.24
Reserves (excluding Nil Nil Nil
revaluation reserves)
Net Worth 52.38 52.11 51.73
NAV per share (Rs.) 9.84 9.79 9.72
EPS per shares (Rs.) (-) 0.33 (-) 0.34 (-) 0.39

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

4. Ved Kiran Steel Industries Private Limited

Ved Kiran Steel Industries Private Limited was originally incorporated as M/s. Precision SG Iron
Foundry Pvt. Limited under the Companies Act on 19.02.1991 but later upon change of name to
M/s. Ved Kiran Steel Industries Pvt. Ltd., a fresh certificate of Incorporation no. 55-43159 was
issued on 19.08.2004 with the main object of carrying on the business to manufacture, import,
export, produce, fabricate, design, buy, sell, distribute and deal in high quality of forgings,
forming and castings of all types and varieties.

The registered office of the Company is situated at 6-B, Raj Narain Marg, Civil Lines, Delhi

Board of Directors:

Sr. No Name of Director Designation

1 Mr. Naresh Aggarwal Director
2 Mr. Kewel Krishan Goel Director
3 Mr. Vikas Aggarwal Director
4 Mr. Man Mohan Sarup Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Naresh Aggarwal 32,000 3.45
Navita Aggarwal 1,21,000 13.04
Rajneesh Aggarwal 3,000 0.32
Rohit Aggarwal 3,000 0.32
Swatee Aggarwal 11,500 1.24
N. K. Aggarwal & Sons (HUF) 1,80,000 19.40
Man Mohan Sarup Aggarwal 33,500 3.61
Navita Aggarwal 74,000 7.98
Vikas Aggarwal 250 0.03
Meeta Aggarwal 3,500 0.38
Kapil Aggarwal 46,500 5.01
Sumit Aggarwal 3,000 0.32
Man Mohan Sarup & Sons (HUF) 1,84,000 19.83
Kewal Krishnan Goel 9,500 1.02

136
Rama Rani 95,000 10.24
Dinesh Goel 1,08,000 11.64
Vikas Aggarwal (HUF) 20,000 2.16
Total 9,27,750 100.00

Financial Performance:
(Rs. lacs)
For the Financial Year ended March 31st
Particulars 2005 2004 2003
Total Income 187.85 96.34 33.82
Profit after tax 32.74 20.09 2.25
Equity Share Capital 92.775 92.775 92.775
Share Application Money 107.18 200.92 223.36
Reserves (excluding 17.81 Nil Nil
revaluation reserves)
Net Worth 217.60 278.56 264.29
NAV per share (Rs.) 23.45 30.02 28.49
EPS per shares (Rs.) 3.53 2.15 0.24

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors except those
mentioned in the section tiled “outstanding litigation.” beginning on page [*]

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

5. Star Track Fasteners Pvt. Limited

Star Track Fasteners Pvt. Limited was incorporated under the Companies Act vide certificate of
incorporation no. 55-50042 on August 24, 1992 with the main object of carrying on the business to
manufacture, import-export, produce, fabricate, design buy, sell, distribute, build and stock of all
types and varieties of fasteners for railway wagons and Tracks and Carriages and their fasteners,
fittings and accessories, wire drawings and all types of hardware, bolts, nuts, nails, rivets, hinges,
angles, brackets, pulls and knobs. Bits and stranded wire, screws, supports, handling materials,
points, crossings, signalling equipment, inter-sections, signals, steering and suppliers and
manufacturers of all types of varieties of castings and forgings.

The registered office of the Company is situated at Plot No. 519, Village Alipur, NCT of Delhi.

Board of Directors:

Sr. No Name of Director Designation

1 Mr. Dinesh Goel Director
2 Mr. Rohit Aggarwal Director
3 Mr. Vikas Aggarwal Director
4 Mr. Kapil Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Mr. Inderjit Gupta 2350 0.49
Mr. Rajender Kumar Aggarwal 600 0.12
Mr. Dinesh Goel 100 0.02
Mr. Ashish Aggarwal 5700 1.18
Mr. Vasudev Aggarwal 1,000 0.21

137
Ms. Kanchan Aggarwal 200 0.04
Shri Rajender Kumar Aggarwal & Sons 17,400 3.62
Mr. Ashish Aggarwal 1,800 0.37
Mr. Vijay Gupta 1,000 0.21
Ms. Neeru Gupta 1,000 0.21
Mr. Yogesh Gupta 1,000 0.21
Ms. Upma Gupta 1,000 0.21
Mr. Kewal Kishan Goel 1,000 0.21
Ms. Rama Rani 26,100 5.42
Mr. Dinesh Goel 20,000 4.16
Mr. Kapil Aggarwal 23,700 4.93
Mr. Rakesh Aggarwal 20,000 4.16
Ms. Sadhna Aggarwal 1,000 0.21
Mr. Naresh Kumar Aggarwal 1,000 0.21
Ms. Navita Aggarwal 39,400 8.19
Mr. Vikash Aggarwal 1,000 0.21
Mr. Rohit Aggarwal 23,500 4.88
Mr. Ajay Aggarwal 12,000 2.49
Ms. Jyoti Aggarwal 1,000 0.21
Digvijay Systems & Services P. Ltd. 90,000 18.71
Man Mohan Sarup Aggarwal (HUF) 34,300 7.13
Naresh Kumar Aggarwal (HUF) 34,300 7.13
Ms. Navita Aggarwal 13,700 2.85
Mr. Man Mohan Sarup Aggarwal 1,06,000 22.03
Total 4,81,150 100.00

Financial Performance:
(Rs. lacs)
For the Financial Year ended March 31st
Particulars
2005 2004 2003
Total Income 101.09 101.11 214.41
Profit after tax (-) 0.23 (-) 1.34 10.44
Equity Share Capital 48.115 48.115 48.115
Share Application Money 33.39 46.92 24.80
Reserves (excluding Nil Nil Nil
revaluation reserves)
Net Worth 72.79 86.35 65.17
NAV per share (Rs.) 15.13 17.95 13.54
EPS per shares (Rs.) (-) 0.05 (-) 0.28 2.17

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

6. Maa Sarda Rail Nirman Private Limited

Maa Sarda Rail Nirman Private Limited was incorporated under the Companies Act vide
certificate of incorporation no. 55-68113 on May 02, 1995 with the main object of carrying on the
business of manufacturers, producers, sellers, buyers, dealers, importers, exporters, fabricators,
founders, smelters of ferrous and non ferrous metal including steel turnout sleepers, railway
track fittings and also to set up steel furnaces, continuous and casting and rolling mill plants for
producing ingots, pellets, profiles of all kinds and sizes, sections, i.e. flats, angles, rounds,

138
squares, rails, joints, channels, strips, sheets, plates, blooms, deformed bars, plain and twisted
bars, rods, pipes, hinges hoops, circles, angels, shaftings, wires and structurals and other
expanded metals made from ferrous and non-ferrous metals, steels, alloy steels, stainless steels,
mild steel, carbon steel, forging steel, bright steel, high-speed steel and other special steels, ferro-
alloys, pig iron, wrought iron, cast iron, S.G. Iron and graded castings.

The registered office of the Company is situated at 4119/7, First Floor, Naya Bazaar, Delhi

Board of Directors:

Sr. No Name of Director Designation

1 Mr. Vikas Aggarwal Whole Time Director
2 Mr. Shishir Kad Whole Time Director
3 Mr. Inderjit Gupta Whole Time Director
4 Mr. Naresh Aggarwal Director
5 Mr. Rajneesh Aggarwal Director
6 Mr. Kapil Aggarwal Director
7 Mr. Dinesh Goel Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Mr. Naresh Aggarwal 11,558 3.37
Mr. Arun Jallan 100 0.03
Ms. Kavita Aggarwal 400 0.12
Mr. Kewal Krishnan Goel 10,276 3.00
Ms. Navita Aggarwal. 12,576 3.67
Mr. Manmohan Sarup Aggarwal. 1,49,694 43.68
Mr. Dinesh Goel 8,553 2.50
Mr. Kapil Aggarwal 1,201 0.35
Mr. Rajneesh Aggarwal 1,201 0.35
Ms. Rama Rani Goel 4,763 1.39
Ms. Ritika Aggarwal 1,872 0.55
Mr. Sumit Aggarwal 201 0.06
Mr. Naresh Aggarwal (HUF) 27, 375 7.99
Mr. Kapil Aggarwal 10,950 3.20
Ms. Rama Rani Goel 20,075 5.86
Ms. Navita Aggarwal 21,900 6.39
Ms. Kavita Aggarwal 10,950 3.20
Mr. Man Mohan S. Aggarwal (HUF) 27,375 7.99
Kewal Krishnan Goel & Sons 1,900 0.55
Mr. Naresh Kumar Kad 7,900 2.31
Mr. Shishir Kad 10,000 2.92
Ms. Mona Goel 1,900 0.55
Total 3,42,720 100.00

Financial Performance:
(Rs. lacs)
For the Financial Year ended March 31st
Particulars
2005 2004 2003
Total Income 304.36 161.21 100.29
Profit after tax 15.87 .17 (-) 3.16
Equity Share Capital 34.272 34.272 34.272
Share Application Money 15.23 24.78 45.13

139
Reserves (excluding 21.49 5.61 5.44
revaluation reserves)
Net Worth 70.92 64.56 84.71
NAV per share (Rs.) 20.69 18.84 24.72
EPS per shares (Rs.) 4.63 0.05 (-) 0.92

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

7. VAE VKN Industries Private Limited

VAE VKN Industries Private Limited was originally incorporated as M/s. Veekayan Industries
Private Limited under the Companies Act but later upon change of name to M/s. VAE VKN
Industries Private Limited, a fresh certificate of Incorporation no. U28910DL1997PTC88339 was
issued on 22nd September, 2004 with the main object of carrying on the business of forging,
fabrication, manufacturing, rolling, fabricating, importing, exporting and processing of all kinds
of steels, ferrous and non-ferrous ingots, billets and of all articles and things used in the
manufacture, maintenance and working thereof.

The registered office of the Company is situated at 812- A/3 Jamuna Road, Civil Lines, New
Delhi

Board of Directors:

Sr. No Name of Director Designation

1 Dr. Marc Kaddoura Chairman
2 Mr. Naresh Aggarwal Co-Chairman cum Managing Director
3 Mr. Stefan Glanz Jt. Managing Director
4 Mr. Kewal Krishan Goel Director
5 Mr. Vikas Aggarwal Director
6 Mr. Johannes R. Oswald Director
7 Mr. Urtsa Errazti Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

JEZ Sistemas Ferroviarios Srl, Spain 12,69,417 6.00
Mr. Kewal Krishnan Goel 7,97,246 3.77
Mr. Man Mohan Sarup Aggarwal 20,91,760 9.89
Mr. Naresh Aggarwal 20,91,728 9.89
Mr. Rakesh Aggarwal 7,47,110 3.53
Sunstar Overseas Ltd. 33,69,640 15.93
VAE GmbH, Austria 1,07,90,040 51.00
Total 2,11,56,941 100.00

Financial Performance:
(Rs. lacs)
For the Financial Year ended March 31st
Particulars
2005 2004 2003
Total Income 1374.84 1118.52 899.68
Profit after tax (-) 507.38 (-) 256.55 28.88
Equity Share Capital 2115.69 597.60 597.60

140
Share Application Money Nil 127.24 174.98
Reserves (excluding 196.78 Nil 5.81
revaluation reserves)
Net Worth 1537.82 469.46 772.62
NAV per share (Rs.) 73.44 7.86 12.93
EPS per shares (Rs.) (-) 2.39 (-) 4.29 0.50

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

8. Sunstar Infocom Private Limited

Sunstar Infocom Private Limited was incorporated under the Companies Act vide certificate of
incorporation no. U72900DL2005PTC136404 on May 18, 2005 with the main object of carrying on
the business in Business Outsourcing and Call Centre Services, consulting, project management
and to act as operators, Lessor, lessees, agents and dealers in call centres, data processing, back
office operations, Net working, electronic data processing, advanced technologies, email,
satellites, communication, world wide web, cameras, electronic optical, information technology
and commerce, technology software park, electronic records and other computer and telecom
related services of all types for domestic and international operations.

The registered office of the Company is situated at 24-B, Alipur Road, Civil Lines, Delhi 110 054

Board of Directors:

Sr. No Name of Director Designation

1 Mr. Rakesh Aggarwal Director
2 Mr. Rohit Aggarwal Director
3 Mr. Ankur Aggarwal Director
4 Mr. Sumit Kumar Arora Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Sh. Rakesh Aggarwal 2,000 20.00
Sh. Ankur Aggarwal 1,250 12.50
Sh. Rohit Aggarwal 3,250 32.50
Sh. Sumit Kumar Arora 3,500 35.00
Total 10,000 100.00

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

9. Digvijay Promoters Private Limited

Digvijay Promoters Private Limited was incorporated under the Companies Act vide certificate
of incorporation no. U70101DL2005PTC135911 on May 6, 2005 with the main object of carrying
on the business in India or abroad of promoters, developers, builders, colonies, real estate agents,
mechanical and civil contractors sanitary and electrical contractors, architect, land and site

141
developers, contractors for construction of buildings, flats factories, group housing, commercial
complexes, colonies, multi-storey buildings, shopping malls, multiplex/Cineplex, roads, bridges,
water and sewerage supply systems, highways, drains, harbourers, warehouses, godowns.

The registered office of the Company is situated at 24-B, Alipur Road, Civil Lines, Delhi 110 054

Board of Directors:

Sr. No Name of Director Designation

1 Mr. Rakesh Aggarwal Director
2 Mr. Rohit Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Sunstar Overseas Limited 2,000 20.00
Rohit Aggarwal 8,000 80.00
Total 10,000 100.00

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

10. Sunstar Buildwell Private Limited

Sunstar Buildwell Private Limited was incorporated under the Companies Act vide certificate of
incorporation no. U701DL2005PTC135912 on May 06, 2005 with the main object of carrying on
the business in India or abroad of promoters, developers, builders, colonies, real estate agents,
mechanical and civil contractors sanitary and electrical contractors, architect, land and site
developers, contractors for construction of buildings, flats factories, group housing, commercial
complexes, colonies, multistory buildings, shopping malls, multiplex/Cineplex, roads, bridges,
water and sewerage supply systems, highways, drains, harbourers, warehouses, godowns.

The registered office of the Company is situated at 24-B, Alipur Road, Civil Lines, Delhi 110 054

Board of Directors:

Sr. No Name of Director Designation

1 Mr. Rakesh Aggarwal Director
2 Mr. Rohit Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

M/s. Sunstar Overseas Limited 2,000 20.00
Rohit Aggarwal 8,000 80.00
Total 10,000 100.00

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

142
11. Sunstar Bio-Energy Private Limited

Sunstar Bio-Energy Private Limited was incorporated under the Companies Act vide certificate of
incorporation no. U40107DL2005PTC140535 on September 08, 2005 with the main object of
carrying on the business of Developing, Generating, Manufacturing, Marketing and Selling of
Bio-Energy, Bio-Fuel, Other renewable source of Energy of Agricultural Products and related
apparatus.

The registered office of the Company is situated at 24-B, Alipur Road, Civil Lines, Delhi 110 054

Board of Directors:

Sr. No Name of Director Designation

1 Mr. Rakesh Aggarwal Director
2 Mr. Rohit Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Sunstar Overseas Limited. 2,000 20.00
Rohit Aggarwal 6,000 60.00
Sumit Aggarwal 2,000 20.00
Total 10,000 100.00

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

12. Five Senses Builders Private Limited

Five Senses Builders Private Limited was incorporated under the Companies Act vide certificate
of incorporation no. U45201DL2005PTC139373 on August 05, 2005 with the main object of
carrying on the business to acquire by purchase, lease, exchange, hire or otherwise, lands and
property of any tenure or any interest in the same.

The registered office of the Company is situated at 24-B, Alipur Road, Civil Lines, Delhi 110 054.

Board of Directors:

Sr. No Name of Director Designation

1 Rakesh Aggarwal Director
2 Rohit Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Rakesh Aggarwal 5,000 50
Rohit Aggarwal 5,000 50
Total 10,000 100.00

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

143
The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

13. Greatwall Construction & Developers Private Limited

Greatwall Construction & Developers Private Limited was incorporated under the Companies
Act vide certificate of incorporation no. U45201DL2005 PTC139374 on August 05, 2005 with the
main object of carrying on the business to acquire by purchase, lease, exchange, hire or otherwise,
lands and property of any tenure or any interest in the same.

The registered office of the Company is situated at 24-B, Alipur Road, Civil Lines, Delhi 110 054

Board of Directors:

Sr. No Name of Director Designation

1 Rakesh Aggarwal Director
2 Rohit Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Rakesh Aggarwal 5,000 50
Rohit Aggarwal 5,000 50
Total 10,000 100.00

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

14. RRSP Builders Private Limited

RRSP Builders Private Limited was incorporated under the Companies Act vide certificate of
incorporation no. U45201DL2005PTC139372 on August 05, 2005 with the main object of carrying
on the business to acquire by purchase, hire or otherwise, lands and property of any tenure or
any interest in the same.

The registered office of the Company is situated at 24-B, Alipur Road, Civil Lines, Delhi 110 054

Board of Directors:

Sr. No Name of Director Designation

1 Rakesh Aggarwal Director
2 Rohit Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Rakesh Aggarwal 5,000 50
Rohit Aggarwal 5,000 50
Total 10,000 100.00

144
There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have
been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

15. RSA Propbuild Private Limited

RSA Propbuild Private Limited was incorporated under the Companies Act vide certificate of
incorporation no. U45201DL2005 PTC134100 on March 17, 2005 with the main object of carrying
on the business to engage in Real Estate Promoters, Developers & Project Management
Association including civil, mechanical, electrical and all other types of erection, commissioning
projects, project trading as well as consultant for execution of industrial, domestic and other
purposes.

The registered office of the Company is situated at 17-A/39, W.E.A., Karol, Bagh New Delhi

Board of Directors:

Sr. No Name of Director Designation

1 Mr. Rakesh Aggarwal Director
2 Mr. Rohit Aggarwal Director
3 Mr. Roshan Dabriwal Director
4 Mr. Sanjeev Pareenja Director
5 Mr. Jaspal Singh Director
6 Mr. Subhash Chand Sharma Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Mr. Roshan Dabriwal 5000 50.00
Sanjeev Preenja 5000 50.00
Total 10,000 100.00

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

16. Sunstar Exim Limited

Sunstar Exim Limited was originally incorporated as M/s. Jashan Foods Ltd. on April 23, 2001,
but later upon change of name to Sunstar Exim Ltd. a fresh certificate of Incorporation was issued
on September 10, 2004 bearing Incorporation No. CINU15499D42001PHC110527 with the main
object of carrying on the business to grow, produce, cultivate, manufacture, process, assemble,
import, export, sell, purchase and deal in all types and varieties of rice, paddy, rice bran, rice bran
oil, wheat, maize, dal, atta, sugar, pulses, sugar cane, basin, maida, bran in all branches, grains
with facilities to purity, refine and market all or any of these items and to deal in cereals of all
types of such as soya bean, cotton seed, sal seed, castor seed, nuts, cashew nuts, ground nut,
coconut & coconut oil, copra sea foods, milk powder, fruit, fruit juices, dehydrated-preserved or
processed vegetable fruit oils, such as milk powder, cream, tea, coffee, snacks and similar other
food products, by products, ghee, butter, tinned and frozen foods, vegetable oil, whether edible
or non-edible, molasses, syrups, dairy farms, beverages and other and to install and set up flour
mills, rice mills, dal mills, works and to manufacture and deal in other food products such as

145
biscuits, flakes, confectionery and to set up plant and machinery to manufacture and deal in all or
any of those products and other agricultural products.

The registered office of the Company is situated at 24 - B, Alipur Road, Civil Lines, New Delhi

Board of Directors:

Sr. No Name of Director Designation

1. Sh. Rakesh Aggarwal Director
2. Sh. Man Mohan Sarup Director
3. Mr. Rohit Aggarwal Director
4. Mr. Ankur Aggarwal Director

Shareholding Pattern: (30th September, 2005)

Particulars No. of shares % Holding

Sh. Naresh Aggarwal 10,900 21.80
Sh. Rakesh Aggarwal 15,000 30.00
Sh. Man Mohan Sarup 3,000 6.00
Sh. Rajneesh Aggarwal 100 0.20
Sh. Kewal Krishan Goel 3,000 6.00
Sh. Vikas Aggarwal 3,000 6.00
Sh. Rajiv Sharma 15,000 30.00
Total 50,000 100.00

Financial Performance:
(Rs. lacs)
For the Financial Year ended March 31st
Particulars
2005 2004 2003
Total Income Nil Nil Nil
Profit after tax (-) 0.18 (-) 0.13 (-) 0.14
Equity Share Capital 5.00 5.00 5.00
Share Application Money 0.55 0.55 0.55
Reserves (excluding Nil Nil Nil
revaluation reserves)
Net Worth 4.6 4.7 4.76
NAV per share (Rs.) 9.2 9.4 9.52
EPS per shares (Rs.) (-) 0.35 (-) 0.26 (-) 0.28

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the Company, its promoters or directors.

The Company has not been declared as a sick company within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1995 nor is it under winding up.

17. M/s Star International

M/s. Star International, a registered partnership firm was originally formed on 01st June 1989
with Sh. Rakesh Aggarwal, Sh. Man Mohan Sarup Aggarwal, Smt. Rama Rani and Smt. Navita
Aggarwal being the founder partners with the object of carrying on the business of trading and
exporting of rice, food grains and other allied activities, its principal place of business located at
4119, Naya Bazaar, Delhi - 110 006.

The constitution of the firm was changed on 01st June 1994 with the retirement of Sh. Man Mohan
Sarup Aggarwal, Smt Rama Rani and Smt. Navita Aggarwal and induction Sh. Rohit Aggarwal,

146
Sh. Dinesh Goel and Sh. Kapil Aggarwal as new partners. The constitution of firm was again
changed due to induction of Sh. Rajiv Sharma as a partner w.e.f. 01st April 1999.

The constitution of firm was further changed due to retirement of Sh. Rakesh Aggarwal, Sh. Rohit
Aggarwal and Sh. Rajiv Sharma w.e.f. 31st March 2001 and again changed due to the induction of
Sh. Rakesh Aggarwal as the partners. The object of the partnership firm was modified to included
the other business such as import and trading of Steel and Timber besides rice and food grain.

Partners as 31st December 2005

Sr. No Name of the partner Partnership Ratio

1. Sh. Rakesh Aggarwal 60%
2. Sh. Kapil Aggarwal 20%
3. Sh. Dinesh Goel 20%

Particulars For the Financial Year ended March 31st

2005 2004 2003
Total Income 271.52 33.14 5.68
Profit after tax 0.35 (3.48) 1.25
Partners Capital A/c (89.53) 38.01 41.50

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have

been initiated for economic offences against the partnership firm, or its partners.

Companies for which an application has been made for striking off name

Except as stated herein below, there are no companies associated with Sunstar Overseas Limited,
and its directors, for which an application has been made with the Registrar of Companies for
striking off the names of those companies.

Changes in Accounting Policies during preceding three years

The change in accounting policies, if any, during preceding three years are disclosed as part of
the auditors report.

Mechanism for disposal of Investor Grievances: The Company has set up a Shareholders/
Investor’s Grievance Committee for redressal of Investor’s Grievance in compliance with clause
49 of the listing agreement. The Committee members are Mr. Ravinder Passi (as its Chairman),
Mr. Kishore Asthana and Mr. Rohit Aggarwal. The Committee shall approve and monitor
transfers, transmissions, splits and consolidation of shares and allied matters and also investigate
and direct the redressal of shareholder’s grievance. As on date there are no pending investor
complaints.

147
 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS AS REFLECTED IN THE FINANCIAL STATEMENTS

You should read the following discussion and analysis of our financial condition and results of
operations together with our financial statements included in this Draft Red Herring Prospectus.
You should also read the section titled “Risk Factors” beginning on page [●] of this Draft Red
Herring Prospectus, which discusses a number of factors and contingencies that could impact our
financial condition and results of operations. These financial statements are prepared in
accordance with Indian GAAP, the Companies Act and the SEBI guidelines as described in the
auditor’s report of M/s. R.K. Gulati & Co., Chartered Accountants dated 09th January 2006, in the
section titled Financial Information.

(i) Overview of the Business of our Company

Sunstar overseas Limited is one of the leading rice exporter in the country. The Company is
one of the largest basmati exporters from India to European markets and has a strong
presence in the organic basmati export segment.

Our Company’s exports have backend support of state of the art plants ideally located in the
basmati paddy growing areas of Haryana and Punjab. We have our plant at Bahalgarh,
Sonepat, Haryana, which has milling capacity (paddy to rice) of 23 TPH with additional
grading sorting and polishing capacity of 10 TPH. The plant at Amritsar, Punjab has an
integrated capacity of 4 TPH, land for which has been taken on lease.

The primary focus of our Company has been in the exports market as the total manufacturing
capacity was barely enough to cater to the export markets. The share of the domestic sales to
the total sales of the Company was marginal and mainly came from broken left after
exporting the head grain. As the domestic branded rice market in consumer packaging is
showing growth and promise, we have plans to expand our presence in branded domestic
market.

Our registered office is situated at Naya Bazaar, Delhi and corporate office at Civil Lines,
New Delhi.

(ii) Significant Developments Subsequent to the Last Financial Year

The Directors of our Company confirm that in their opinion, except for issue of bonus share
in the ratio of 3:4 to the existing shareholders totalling 44,64,402 number of shares. No
circumstances have arisen since the date of the last financial statements as disclosed in the
Draft Red Herring Prospectus, which materially and adversely affect or are likely to affect the
trading or profitability of our Company, or the value of our assets, or our ability to pay our
liabilities within the next twelve months.

(iii) Factors that may Affect Results of the Operations

Except as otherwise stated in this Draft Red Herring Prospectus, the Risk Factors given in this
Draft Red Herring Prospectus, the following important factors, among others, could cause
the actual results to differ materially from the expectations:
ƒ General economic and business conditions;

148
 ƒ Our Company’s ability to successfully implement its strategy and its growth and
plans;
ƒ Factors affecting Agro Based Manufacturing Industry;
ƒ Increasing competition in the Rice Industry;
ƒ Increases in labour costs, raw materials prices, prices of plant & machineries and
insurance premium;
ƒ Manufacturers’ defects or mechanical problems with Company’s plant &
machineries or incidents caused by human error;
ƒ Changes in the value of the Indian rupee and other currencies, in particular, the
U.S. Dollar;
ƒ Amount that our Company is able to realize from the clients;
ƒ Changes in laws and regulations that apply to the Food Processing (Rice)
Industry;
ƒ Changes in fiscal, economic or political conditions in India;
ƒ Social or civil unrest or hostilities with neighbouring countries or acts of
international terrorism;
ƒ Changes in the foreign exchange control regulations, interest rates and tax laws
in India.

Revenues (Rs. in Lacs)

6 Months Year ended Year ended Year ended

Particulars Period ended 31st March 31st March 31st March
30.9.05 # 2005 2004 2003

Sales 12920.00 26236.00 20452.00 22582.00

% to Revenue 91.68 90.31 92.73 99.98
Increase or Decrease in
Inventory 960.00 2163.00 1249.00 -420.00
% to Revenue 6.81 7.45 5.66 -1.86
Other Income 212.00 652.00 355.00 424.00
% to Revenue 1.50 2.24 1.61 1.88
Total Revenue 14092.00 29051.00 22056.00 22586.00
% to Revenue 100.00 100.00 100.00 100.00
Cost of Material 10443.00 21394.00 16754.00 17295.00
% to Revenue 74.11 73.64 75.96 76.57
Manufacturing Expenses 392.00 811.00 678.00 644.00
% to Revenue 2.78 2.79 3.07 2.85
Employees Remuneration
and Benefits 141.00 267.00 215.00 177.00
% to Revenue 1.00 0.92 0.97 0.78
Direct Cost 10976.00 22472.00 17647.00 18116.00
% to Revenue 77.89 77.35 80.01 80.21
Gross Profit 3116.00 6579.00 4409.00 4470.00
% to Revenue 22.11 22.65 19.99 19.79
Selling, distribution and
Administrative Expenses
excluding interest and
depreciation 1748.00 4201.00 2760.00 2788.00
% to Revenue 12.40 14.46 12.51 12.34
Profit Before
Depreciation Interest
and Tax 1368.00 2378.00 1649.00 1682.00
% to Revenue 9.71 8.19 7.48 7.45
Depreciation 184.00 424.00 355.00 237.00

149
 6 Months Year ended Year ended Year ended
Particulars Period ended 31st March 31st March 31st March
30.9.05 # 2005 2004 2003

% to Revenue 1.31 1.46 1.61 1.05

Interest 551.00 1042.00 719.00 439.00
% to Revenue 3.91 3.59 3.26 1.94
Profit Before Tax 633.00 912.00 575.00 1006.00
% to Revenue 4.49 3.14 2.61 4.45
Provision for Tax 153.00 231.00 161.00 104.00
% to Revenue 1.09 0.80 0.73 0.46
Profit after Tax 480.00 681.00 414.00 902.00
% to Revenue 3.41 2.34 1.88 3.99

# Not comparable, as the figures are not annualized.

Income
Sunstar Overseas Ltd. total income has following major components:
1. Export of traditional basmati
2. Export of Organic Rice
3. Export of Non-basmati Rice
4. Export of other items
5. Sale of traditional basmati in domestic market
6. Other income

Further, the export income has following further sub-segmentations:

1. Export to European Union markets
2. Export to Middle East markets
3. Export to other markets

The following table sets out the contribution of these components in Sunstar’s income expressed
as % of total income for the last five completed financial years and for the six months ending 30th
September 2005.

Components of Revenue as % of Total Income

Year Other
Export Rice Domestic Income
Traditional Non- Other Traditional Non- Other
Basmati Organic Basmati items Total Basmati Basmati item Total
2001 82.22 0.00 2.90 4.68 89.80 7.24 0.00 2.05 9.29 0.91
2002 78.80 0.00 6.08 0.79 85.66 9.92 1.18 2.26 13.36 0.98
2003 52.79 1.16 24.80 0.11 78.86 8.41 8.33 2.44 19.18 1.96
2004 73.84 2.52 9.94 0.50 86.79 5.52 3.81 2.07 11.41 1.80
2005 63.76 2.55 19.33 0.67 86.30 7.35 0.04 3.70 11.09 2.61

150
 The value wise break-up is as follows:
Year
Other
Export Rice Domestic Income

Traditional Non- Other Traditional Non- Other Total

Basmati Organic Basmati items Basmati Basmati item Total Income

2001 9257 0 327 527 815 0 231 11157 102 11259

2002 11387 0 878 114 1434 170 326 14309 142 14451
2003 11415 250 5362 24 1819 1801 528 21199 424 21623
2004 14562 497 1960 98 1089 752 409 19367 355 19722
2005 15899 635 4820 166 1834 9 923 24286 651 24937
Share of revenue from net sales (rice) between domestic and export markets are as follows:
(Rs. in Lacs)
2005 2004 2003 2002 2001

Market % of % of % of % of % of
*Value Total Value Total Value Total Value Total Value Total
Export 21520 88.61 17117 88.38 17051 80.43 12379 86.51 10111 90.62
Domestic 2766 11.39 2250 11.62 4148 19.57 1930 13.49 1046 9.38
Total 24286 19367 21199 14309 11157
* Sale figures taken are on FOB basis for purpose of analysis

Comparison of performance and analysis of developments for financial year ended 31st March
2004 vis-à-vis 31st March 2003

Our total income for the period ended 31st March 2004 was Rs. 22,056 lacs as compared to Rs.
22,586 lacs for the previous year ended 31st March 2003, showing a marginal drop of 2.35%.
During the period the Sales from products traded by the Company showed an increase of 3800%,
from Rs. 26 lacs in FY 2003 to 1029 lacs in FY 2004. Other income for FY 2004 was Rs. 355 lacs as
compared to Rs. 424 lacs in FY 2003.

On the expenditure front, the raw material consumed reduced by 7.90% to Rs. 15908 lacs in FY
2004 from Rs. 17273 lacs in FY 2003. Cost of materials, as a percentage of revenue was marginally
down to 75.96% as compared to 76.57% during FY 2003. Staff costs showed an upward trend
climbing to Rs. 214 lacs in FY 2004, as compared to 176 lacs in the corresponding previous year.
As a % of revenue, staff costs were up to 0.97% in FY 2004 as compared to 0.78% in FY 2003.
Other manufacturing, administrative and selling and distribution expenses were at a comparable
level to the corresponding previous year.

Interest for the period was at Rs. 719 lacs as compared to 439.07 lacs during FY 2003, an increase
of 64% over the previous year. This is on account of increase in working capital requirement, and
overall increase in business activity.

PBT and PAT for FY 2004 was Rs. 575 lacs and Rs. 414 lacs respectively as compared to FY 2003
figures of 1005 lacs and 902 lacs.

During this period we increased our paddy processing capacity of Bahalgarh unit, Haryana from
140160 TPA to 175200 TPA and also set up Rice processing unit at Amritsar Punjab having
capacity of 4 TPH. Our Company also has been accorded as a 2 star house and also the ISO
9001:2000 certification.

Comparison of performance and analysis of developments for financial year ended 31st March
2005vis-à-vis 31st March 2004

151
Total turnover for FY 2005 was Rs. 26236 lacs as compared to Rs. 20452 lacs in FY 2004 and total
income during the same period was Rs. 29050 lacs as compared to Rs. 22056 lacs in FY 2004,
showing an increase of 31%.

The raw material cost as a percentage of revenue is 73.64%, vis-à-vis 75.96% for the
corresponding previous year, i.e. FY 2004, a decrease of 2.32% due to efficient procurement
management practices. The employee cost as a percentage of revenue has decreased to 0.92% as
compared to previous year figure of 0.97%. Selling, distribution and administrative expenses as a
percentage of revenue have increased to 14.46% from the previous year figure of 12.51%, due in
increase in business activity.

Interest cost, as a percentage of revenue has marginally increased from 3.26% to 3.59%. PBT and
PAT for FY 2005 was Rs. 912 lacs and Rs. 681 lacs respectively as compared to FY 2004 figures of
575 lacs and 414 lacs. PAT has shown an increase of 64% for FY 2005, as compared to FY 2004.

Information required as per clause 6.10.5.5(a) of the SEBI Guidelines

i. Unusual or infrequent events or transactions:

There have been no unusual or infrequent events that have taken place.

ii. Significant Economic changes that materially affected or are likely to affect income
from continuing operations:

Volatility in foreign exchange rates may have an inflationary effect on the import costs.
However as our Company derives 86% of our revenues from exports, shall be offset by
higher realizations from exports.

Any change in the policy by the Government of India relating to Exports and Minimum
support prices (non basmati) may have an impact on our income.

iii. Known trends or uncertainties

Apart from the risks disclosed in this Draft Red Herring Prospectus, there are no other
trends or uncertainties that have had or are expected to have a material adverse impact
on sales, revenue or income from continuing operations.

iv. Future relationship between costs and revenue

The cost depends upon the procurement prices of paddy, which account for up to 80% of
the cost. In case of non basmati rice the revenue depends on government policies relating
to free sale quotas, (in case of domestic sale). In case of basmati, the revenue would
depend on international markets, availability of paddy and the general demand-supply
situation.

v. Total turnover of the Company’s major Industry segments

Please refer to page [●] under the heading ‘Industry Overview’

vi. Status of any publicly announced new products or business segments

The Company has not announced any new products or business segments.

152
vii. Seasonality of business

Rice processing is dependant on the availability of paddy and its quality. Any factors
which may affect the crop production of paddy like extremely high or low rainfall, insect
manifestation, non availability of irrigation facilities etc may affect the crop, its quantity
and quality.

viii. Over dependence on Single supplier/Customer

Our Company sources its raw materials from ‘mandies ’. We are diversified in terms of
our customers. Our top customer contributes 6% of our revenues for FY 2005. Therefore
we are not under threat of excessive dependence on any single supplier/customer.

ix. Competitive conditions

The Company has been strengthening its position in the product lines in which it is
operating by offering variety and quality consistently, through our in-house quality
checks.

153
 SECTION VIII - LEGAL AND OTHER REGULATORY INFORMATION

OUTSTANDING LITIGATIONS

Except as stated herein, there is no outstanding or pending litigation, suit, criminal or civil
prosecution, proceeding initiated for offence (irrespective of whether specified in paragraph (I) of
Part I of Schedule XIII of the Companies Act) or litigation for tax liabilities against our Company,
[its Subsidiaries], its Directors or its Promoter or Companies promoted by its Promoters and there
are no defaults, non-payment or overdue of statutory dues, institutional/ bank dues or dues
towards holders of any debentures, bonds and fixed deposits and arrears of preference shares,
other than unclaimed liabilities of the Company or its Subsidiaries and no disciplinary action has
been taken by SEBI or any stock exchanges against the Company, its Subsidiaries, Promoters or
Directors.

Litigation against our Company

Sr. Suit Filed by Suit No. and Authority Gist of the case Financial
No with whom the suit is implication, if
Pending with any
Civil Laws
1. Mr. Manoj Gaur Civil Suit No. The charges involved is Rs.13,00,000/-
S15905/071205, before for recovery of Rs. plus interest
the Court of Shri Vimal 13,00,000/- with interest and damages
Kumar Yadav, and damages on
Additional District account of issuance of
Judge, Delhi. cheque to Mr. Manoj
Gaur by the Managing
Director of Sunstar
Overseas Limited &
stop payment of the
same.

2. M/s. Thai Airways Civil Suit No. 135 of The case is pending Rs. 3,41,788/-
Overseas Limited 2001, before the Court before the Court is as recovery
of Smt. Ina Malhotra, recovery of freight freight charges
Addl. District Judge, Tis charges along with plus interest
Hazari Courts, Delhi. interests and damages. and damages
The defence raised by for delay in
the Company in this carrying
suit is that the plaintiff, consignment to
M/s. Thai Airways, had Los Angeles
delayed in carrying the
consignment from Delhi
to Los Angles, due to
which the Company has
suffered losses.

Labour laws
3. Mr. Ramayan Rai Case No. 146/2002 is The charge involved is Not
pending in the Court of illegal termination from ascertainable
Mr. M.K. Gupta and services of the
now in the Court of Mr. Company. Mr. Rai has
S. K. Jain, Additional asked for reinstatement
District Judge/ and has not asked for
Presiding Officer any financial
Labour Court No. IX, compensation.

154
 Distt. Courts
Karkardooma, Delhi

4. Mrs. Ompati Devi Court of District Labour The charge involved is Rs. 40,000/-
and Conciliation illegal termination from
Officer, Sonepat services of the
Company. The case has
been referred to Labour
Court, and no notice
has been received as
yet.

5. Mrs. Atro Devi Court of District Labour The charge involved is Rs. 40,000/-
and Conciliation illegal termination from
Officer, Sonepat services of the
Company. The case has
been referred to Labour
Court, and no notice
has been received as
yet.

Consumer cases
6. Mr. Labh Singh Complaint No. In this case the Rs. 92,972/-
235/2004 before the Company is a co-
District Consumer defendant and the
Dispute Redressal charge involved is for
Forum, Muktsar. recovery of amount
claimed Rs. 57,972/- for
loss suffered, Rs.
25,000/- for mental
tension and Rs. 10,000/-
litigation expenses. In
this case the Company
entered into contract
farming for a particular
quality of paddy at a
certain minimum price.
The complainant did
not sow the particular
quality of paddy and
the Company refused to
purchase the particular
quality at the decided
price. Against this the
complainant filed the
case for the recovery of
the difference amount
between the decided
price and the market
price.

155
Litigation filed by Company

Sr. Suit Filed against Suit No. and Authority Gist of the case Financial
No with whom the suit is implication, if
Pending with any
Criminal Laws
1. Mr. Anil Bhargav FIR No. 366/2003 in the The matter is posted for Rs. 31.62 lacs
and others Court of Ms. Raj Rani framing of charges
Mitra, M.M., Delhi, against the accused for
under section 408 / 420 misappropriating the
/ 381 / 34 of Indian funds of the Company
Penal Code, 1873. amounting to Rs. 31.62
lacs

Civil Laws
2. Mr. Prem Chand Petition No. E36 of 1998 The petition filed by the Not
Sharma in the Court of Mr. R. K. Company is for eviction ascertainable
Sharma, Addl. Rent of defendant, an ex-
Controller, Tis Hazari employee of the
Courts, Delhi. Company.

Suit No. 883 of 1998 and The two suits are

784 of 2004 in the Court against an ex employee
of Mr. R. K. Chauhan, Shri Prem Chand
Civil Judge, Tis Hazari Sharma for recovery of
Courts, Delhi. damages for his illegal
stay in the property
taken on rent by the
Company from Shri
Rakesh Aggarwal and
was given to Shri Prem
Chand for his residence
on account of his
employment. He
ceased to be in the
employment of the
Company but refused
to vacate the premises
and the Company has
filed an eviction
petition against him
and has also filed the
aforesaid two suits for
recovery of damages.
The charge involved is
recovery of damages for
illegal occupation of the
house property.

3. Mr. Anil Bhargav Case No. 1740/2003, The same is a civil suit Rs. 31.62 lacs
pending adjudication filed for the recovery of
before the High Court Rs. 31,62,169/- for
of Delhi at New Delhi misappropriating the
funds of the Company.

156
Litigation involving the Promoters/Directors

Sr. Suit details Suit No. and Authority Gist of the case Financial
No with whom the suit is implication, if
Pending with any
Criminal Laws
1. State v/s Rakesh FIR No. 107 dated July The case involves the Not ascertained
Aggarwal, 2002, in the Court of Sh. death/ injuries to the
Managing Director, A.G. Gaur, Additional labourer while
Sunstar Overseas Chief Judicial plastering the wall in
Limited Magistrate, Sonepat, the premises of the
under Section 304A of Company
Indian Penal Code, 1873

2. Rakesh Aggarwal Application No. 1160 of The petitioner namely Rs. 20,49,000/-
v/s State of U.P. 2001 u/s 482 at High Mr. Rakesh Aggarwal with interest.
and another Court of Judicature at has approached
Allahabad Honourable high Court
of Allahabad against
FIR u/s 420 and 406 of
the Indian Penal Code
lodged by an employee
of Wajid Sons Pvt. Ltd.,
Muradabad. In the FIR
it is alleged that Mr.
Rakesh Aggarwal has
cheated M/s. Wajid
Sons Pvt. Ltd. in
connection with a
transaction involving
purchase of rice by
M/s. Star Overseas
From M/s Wajid Sons
Pvt. Ltd. The
Honourable Allahabad
High Court has stayed
the arrest of Shri
Rakesh Aggarwal and
the matter is pending.
The case was last listed
on 9th July 2004 and the
next hearing is awaited.

Civil cases
3. Prem Chand Suit No. 14 of 1998 in The plaintiff Shri Prem Not
Sharma v/s Rakesh the Court of Shri D. K. Chand Sharma is ascertainable
Aggarwal Sharma, Civil Judge, Tis seeking restrained
Hazari Courts, Delhi order to the effect that
he should not be
dispossessed forcibly
without due process of
law from the property
bearing No. LP 27 C,
First floor, Pitam Pura,
Delhi.

157
4. Prem Chand D.R No. 185 of 2001 in In this case Shri Prem Not
Sharma Vs. Rakesh the Court of Shri R. K. Chand Sharma alleged ascertainable
Aggarwal Sharma, Civil Judge, Tis himself to be the tenant
Hazari Courts, Delhi under Sh. Rakesh
Aggarwal in respect of
the property bearing
No. LP 27C, First Floor,
Pitam Pura, Delhi.

5. Vijender Singh Civil Suit No. 328 of This is a civil suit for Not ascertained
Solanki Vs. Rakesh 2005, in the Court of declaration, permanent
Aggarwal Shri Raj Kumar, Civil and mandatory
Judge, Tis Hazari injunction filed by the
Courts, Delhi plaintiff along with the
application for stay
seeking the ex-parte
stay against the
defendant. The case
pertains to Toyota
Corolla car bearing
No.DL2FCE-0088,
which was handed over
to Shri Vijender Singh
Solanki for sale and as
he did not return the
car nor sold the same a
police station complaint
was made against him
by the Company. Shri
Vijender Singh Solanki
has filed a civil suit by
falsely alleging that he
had purchased the car
from the Company and
paid Rs. 4,80,000/- in
cash and the remaining
amount was to paid at
the time of transfer of
registration certificate.
The court has granted
ex-parte ad interim stay
restraining Shri Rakesh
Aggarwal from
interfering in the lawful
possession of the car.
The written statement
and reply to the stay
application have been
filed by Shri Rakesh
Aggarwal.

158
Matters involving Sales Tax, Income Tax and Provident Fund/statutory dues

Sales Tax:

1. For the assessment year 2002-03, Sales Tax assessment under Central Sales Tax Act, 1956 has
been computed upto financial year 2002-03. Original demand raised was Rs. 8,57,663/-. In
this case amount of Rs. 1,30,661/- was deposited and for the balance amount, statutory forms
which were pending at that time have been deposited.

Note: Sales Tax assessments for the years 2003-2004 and 2004-2005 are pending, no demands
have been raised till date.

Income Tax:

1. For the assessment year 2001-02, assessment under section 143 (3) Income Tax Act, 1961,
reopened for ascertaining the justification of claim by the Company U/s 80 IB of I. T. Act,
1961. Objections against the notice have been filed and the proceedings are in process at
Delhi.

2. For the assessment year 2002-03, assessment completed u/s 143 (3) Income Tax Act, 1961,
reopened for ascertaining the justification of claim by the Company U/s 80 IB of I. T. Act,
1961. Objections against the notice have been filed and the proceedings are in process at
Delhi.

3. For the assessment year 2003-04, the case has been selected for scrutiny assessment. The
Assessing Officer has issued the notice U/s 143 (2) of the I.T. Act, 1962, for the assessment.
Proceedings are under process at Delhi.

4. For the assessment year 2004-05, the case has been selected for scrutiny assessment The
Assessing Officer has issued the notice U/s 143 (2) of the I.T. Act, 1961, for the assessment.

Note: As Income Tax assessments are pending, no demands have been raised till date.

Provident Fund:

1. The case titled as Regional Provident Fund Commissioner v/s Sunstar Overseas Ltd., is
pending at Regional P.F. Commissioner, Karnal, under section 7 of Employees Provident
Fund and Miscellaneous Provisions Act. As the proceedings are still pending the quantum
involved and the implications are not possible to determine. No provision has been made in
the financial statements for this. One contractor ’Divine Manpower and Security Services”,
providing security personnel to the Company, had not deposited the contribution with PF
authorities. The Provident Fund Commissioner has alleged that the Company being the
Principal employer is responsible for payment of provident fund dues. The total (approx)
financial implication involved in the case is Rs. 7,00,000/-

159
 Cases involving group Companies

I. Ved Kiran Steel Industries Private Limited

Labour cases:

Ved Kiran Steel Industries Private Limited, previously known as Precision SG Iron and
Foundry Works Private Limited was running its manufacturing activities in Kossi (Uttar
Pradesh). Due to Power and Labour problems the company closed its operations at the Kossi
unit. After the closure of the unit services of all the workers and employees were terminated
and against this decision some of the workers filed the case under the labour laws, as under:

1. Case No. Adj. 141/2000 filed by Workman, Sh. Parsuram against termination claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

2. Case No. Adj. 153/2000 filed by Workman, Sh. Shyam Singh against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

3. Case No. Adj. 154/2000 filed by Workman, Sh. Amar Singh against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

4. Case No. Adj. 140/2000 filed by Workman, Sh. Bahadur against termination claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

5. Case No. Adj. 150/2000 filed by Workman, Sh. Gopi Chand against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

6. Case No. Adj. 147/2000 filed by Workman, Sh. Laxmi Narayan against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

7. Case No. Adj. 145/2000 filed by Workman, Sh. Devi Singh against termination claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

8. Case No. Adj. 168/2000 filed by Workman, Sh. Chhittarpal against termination claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

9. Case No. Adj. 166/2000 filed by Workman, Sh. Shyam Singh against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

10. Case No. Adj. 144/2000 filed by Workman, Sh. Kumar Singh against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

11. Case No. Adj. 160/2000 filed by Workman, Sh. Dharm Singh against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

12. Case No. Adj. 148/2000 filed by Workman, Sh. Raghuwar against termination claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

13. Case No. Adj. 157/2000 filed by Workman, Sh. Megh Shyam against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

14. Case No. Adj. 164/2000 filed by Workman, Sh. Shankarpal against termination claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

15. Case No. Adj. 159/2000 filed by Workman, Sh. Shyam Sharan against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

160
16. Case No. Adj. 151/2000 filed by Workman, Sh. Mohan Shyam against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

17. Case No. Adj. 169/2000 filed by Workman, Sh. Hari Singh against termiantion claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

18. Case No. Adj. 170/2000 filed by Workman, Sh. Sobha Ram against termination claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

19. Case No. Adj. 162/2000 filed by Workman, Sh. Raghuveer against termination claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

20. Case No. Adj. 171/2000 filed by Workman, Sh. Ramesh Chand against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

21. Case No. Adj. 163/2000 filed by Workman, Sh. Radhey Shyam against termination claiming
back wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

22. Case No. Adj. 161/2000 filed by Workman, Sh.Mahender against termiantion claiming back
wages w.e.f. 23.10.1996. The case is pending before Labour Court, Agra.

23. Besides the above stated cases one more Case No. 164/1999 is also pending before the Labour
Court, Agra, regarding legality and illegality of closure. In this case number of workmen
contesting against the Company is forty five (45), in which twenty three (23) workmen have
already settled their case before Labour Court, Agra.

Note: Amount involved in these cases is equivalent to the outstanding back wages
alongwith other benefits (as claimed by the workmen) w.e.f. 23.10.1996 upto the date
of the final order, if the Company loses the case (Approximate liability of Rs. 20 lacs).
And if the Company wins these cases, the Company will have to pay to the workmen
only the Closure Compensation @ 15 days per year of completion of services, Gratituty
@ 15 days per year of completion of services (if applicable) and the notice pay
depending upon the length of service of the workmen, alongwith other legal dues, if
any.

Settled cases but being contested for reinstatement

1. Case No. Adj. 152/2000 filed by Workman, Shri Shyam Kishore against termination claiming
back wages w.e.f. 23.10.1996. The Company claims to have settled the case but the
workman is contesting for reinstatement with back wages and all legal benefits w.e.f.
23.10.1996.

2. Case No. Adj. 156/2000 filed by Workman, Sh. Ram Jeet against termination claiming back
wages w.e.f. 23.10.1996. The Company claims to have settled the case but the workman is
contesting for reinstatement with back wages and all legal benefits w.e.f. 23.10.1996.

3. Case No. Adj. 142/2000 filed by Workman, Sh. Mom Chand against termination claiming
back wages w.e.f. 23.10.1996. The Company claims to have settled the case but the
workman is contesting for reinstatement with back wages and all legal benefits w.e.f.
23.10.1996.

4. Case No. Adj. 158/2000 filed by Workman, Sh. Mahilal against termination claiming back
wages w.e.f. 23.10.1996. The Company claims to have settled the case but the workman is
contesting for reinstatement with back wages and all legal benefits w.e.f. 23.10.1996.

161
5. Case No. Adj. 165/2000 filed by Workman, Sh. Hari Chand against termination claiming
back wages w.e.f. 23.10.1996. The Company claims to have settled the case but the
workman is contesting for reinstatement with back wages and all legal benefits w.e.f.
23.10.1996.

6. Case No. Adj. 139/2000 filed by Workman, Sh. Sobha Ram against termination claiming back
wages w.e.f. 23.10.1996. The Company claims to have settled the case but the workman is
contesting for reinstatement with back wages and all legal benefits w.e.f. 23.10.1996.

7. Case No. Adj. 146/2000 filed by Workman, Sh. Ralti Singh against termination claiming back
wages w.e.f. 23.10.1996. The Company claims to have settled the case but the workman is
contesting for reinstatement with back wages and all legal benefits w.e.f. 23.10.1996.

Amounts Owed to Small Scale Undertakings and Other Creditors

The name of Small Scale Undertakings and Other Creditors to whom the Company owes a sum
exceeding Rs. 1 Lac which is outstanding more than 30 days, as on 30th September 2005 are as
follows: Nil

Material Developments

There have been no material developments after the date of last balance sheet i.e. 30th September
2005, except that 44,64,402 bonus shares (in the ratio of 3:4) have been issued to the existing
shareholders of the Company on 07th November 2005.

Adverse Events

There has been no adverse event affecting the operations of the Company occurring within one
year prior to the date of filing of this Draft Red Herring Prospectus with the Registrar of
Companies.

Defaults

The Company has not defaulted in meeting any statutory dues, institutional dues or bank dues.
The Company has not defaulted in making any payment/refunds for debentures, fixed deposits
and interest on debentures and fixed deposits, except as mentioned elsewhere in this Draft Red
Herring Prospectus.

162
 STATUTORY APPROVALS AND LICENCES

The Company has received all the necessary consents, licenses, permissions and approvals form
the Government/RBI and various government agencies required for its present business and no
further approvals are required for carrying on the present as well as the proposed business of the
Company except the pending approvals as mentioned under this heading.

The Company has received the necessary consents, licenses, permissions and approvals from the
Government and various Government agencies required for its present business and no further
approvals are required for carrying on the present as well as the proposed business except as
mentioned below. It must however, be distinctly understood that in granting the above
consents/licences/permissions/approvals, the Government does not take any responsibility for
the financial soundness of the Company or for the correctness of any statements or any
commitments made or opinions expressed herein.

We have received the following Government and/or statutory approvals/ licenses/ permissions:

Incorporation

1. Certificate of Incorporation bearing no. 55-64140 dated January 06th 1995 from the Registrar
of Companies, NCT of Delhi & Haryana

2. Certificate of commencement of business dated 31st January 1995

Industrial/Labour/ Tax

3. Permanent Account Number (PAN) AAACS9693J issued by Income Tax Department

4. Tax Deduction Account Number (TAN) DELS24543B, issued by the Income Tax Department,
New Delhi

5. Sales Tax registration No. LC/30/136387/0589 under the Delhi Sales Tax Rules, 1975

6. Registration no. 03771106836 under the Punjab VAT Act, 2005

7. Registration no. 06073007256 under the Haryana VAT Act, 2003

8. Certificate of Registration (Excise) No. 7256 for the factory located at Bahalgarh, Haryana

9. Certificate of Registration (Excise) No. 21065017 for the factory located at Amritsar, Punjab

10. Service Tax Registration no. AAACS9693JST001 (Bahalgarh, Haryana)

11. Service Tax Registration no. AAACS9693JST002 (Amritsar, Punjab)

12. Importer-Exporter Code (IEC) No. 0595003303 issued by the Joint Director General of Foreign
Trade, Ministry of Commerce, New Delhi vide certificate dated 10th September 2001

13. Factory license no: SPT/S-84/1343 issued by Chief Inspector of Factories, Haryana

14. License no. P/NC/HN/15/299 (P22942) issued by the Department of Explosives, Ministry of
Commerce and Industry, Government of India.

163
15. Two Star Export House Certificate no. 000235 issued by the Office of the Joint Director
General of Foreign Trade

16. Certificate of registration issued by Agricultural and Processed Food Products Export
Development Authority, Ministry of Commerce, Government of India. Registration no.
APEDA/REGN/IMP (7771)/95-96 issued on 30th May 1995 and valid till 31st December 2009

17. Registration No. HR-KL/15347 issued by the Regional Provident Fund Commissioner, under
the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952

18. Factory has been registered with Central Excise Department vide registration No. 132 /
SJ/GTA/KUN/DV/2005 under Finance Act, 1994.

19. Market Committee License No. 866-587/Board valid till March 31, 2006.

20. Certificate of approval of fumigation agency bearing No. 25/ 2003 dated September 08, 2003,
was issued by Directorate of Plant Protection, Quarantine & Storage and the same is valid up
to August 22, 2006.

21. The Factory was acknowledged vide Acknowledgement Certificate dated May 15, 1996
issued by Ministry of Industry, Government of India.

22. Approval for processing of Basmati Rice for export as required under the Export of Basmati
Rice (Quality Control and Inspection) Rules, 2003 till May 07, 2006.

23. Solvent License is valid up to March 31, 2006.

24. Certificate of Weights and Measurement Department valid up to November 01, 2006.

25. Licence for Storage of sale for unit situated at Bahalgarh, issued by the Panchayat Samiti, Rai
(Sonepat).

26. Approval no. BR – 04-007 issued by Export Inspection Agency- Delhi, Ministry of Commerce
& Industry, Government of India for processing Basmati Rice for export

Certificate from Pollution Control Boards

27. Haryana State Pollution Control Board, has given grant of consent for discharge of effluent
under Section 25/26 of the water (Prevention and control of Pollution) Act 1974, via letter no.
HSPCB/Water Consent/1037 dated 3rd September 2004 valid from 1/4/2004 to 31/3/2005.
Application for the renewal of the consent has been submitted and is still pending with
authorities.

28. Haryana State Pollution Control Board, has given grant of consent for emission of air
pollutants under Section 21/22 of the air (Prevention and control of Pollution) Act 1981, via
letter no. HSPCB/Air Consent/1035 dated 3rd September 2004 valid from 1/4/2004 to
31/3/2005. Application for the renewal of the consent has been submitted and is still
pending with authorities.

29. Certificate no. HSPCB/SR/2005/1794, issued by Haryana State Pollution Control Board
regarding noise level inside and outside the DG room.

30. Punjab Pollution Control Board has given grant of consent for emission of air pollutants
under Section 21 of the air (Prevention and control of Pollution) Act 1981, via consent no.
ZO/JAL/ASR/CTO/APC/2005-06/F-37 dated 28th July 2005.

164
31. Consent under Sections 25 and 26 of Water (Prevention & Control of Pollution) Act, 1974 for
the operation of M/s. Soni Rice Mill, G. T. Road, Nijarpura, Amritsar.

32. Consent to Operate M/s Soni Rice Mill, G.T. Road, Nijarpura Amritsar Industry are as under:

Consent Number ZO/JAL/ASR/CTO/WPC/2005-06/F-32

Date of Issue 26.07.2005
Date of Expiry 25.07.2006

33. Certificate for the use of Boiler having registration no. HA715 and HA1089

34. A certificate bearing Registration No. A-254/92 dated November 30, 2004 was issued under
the signatures of the Director of Factories to M/s. Soni Rice Mill, G. T. Road, Nijarpura,
Amritsar and the same is valid until December 31, 2005.

Certificate for quality Standards

35. ISO 9002 certification no. Q18717 issued by SGS Yarsley International Certification System

36. ISO 14001:1996 certificate issued by BSI Management Systems for the environmental
management system associated with rice processing

37. ISO 9001:2000 certification no. FM87812 by BSI Management systems for quality management
systems

38. Certificate no. FSS 88999 issued by BSI Management systems for food safety systems

39. HACCP certificate no. FSS 88999 issued by BSI Management Systems

40. Various certificates issued by SGS India Private Limited certifying the organic nature of the
crops at various locations as mentioned in the certificate

41. Certificate issued by SGS India Private Limited certifying products manufactured by Sunstar
Overseas Limited are in accordance with the requirements of USDA Production standards

42. Certificate issued by Ecocert SA, certifying products manufactured by Sunstar Overseas
Limited are in accordance with the requirements of USDA National Organic Program

43. Approval No. BR 04-007 issued by Export Inspection Agency, Delhi approving the plant for
export of Basmati Rice

44. Registration certificate no. 163/HSSCA issued by the Haryana Seed certification agency,
registering our Company as producer of certified seeds

45. Approval No. EIA/BEL/BR/IPQC/2004-05/710 to720 approved by Export Inspection

Agency-Delhi for export of Basmati Rice from Bahalgarh Plant (Haryana)

46. Certificate no. ML/REG/SH80/2000 issued by Spices Board, Ministry of Commerce,

Government of India for exporting spices

Registered Trademarks

47. Certificate no. C.C.4044/2000-2001 issued by Senior Examiner of Trademarks, Trademarks

Registry, Government of India, for Copyright registration in respect of the label “GATEWAY
OF INDIA”.

165
48. Certificate no. C.C.4023/2000-2001 issued by Senior Examiner of Trademarks, Trademarks
Registry, Government of India, for Copyright registration in respect of the label “HELLO”.

49. Trademark no. 1028895 issued by the Registrar of Trademarks, Government of India, in
respect of the registration of trademark “NEELKAMAL”.

Trademark approvals for which Application has been made but not yet received:

Following is the list of trademarks pending approvals:

Date of App./
Trade
Trade mark Valid Till Brand Name Class Status
Mark No.
Issue date
816967 31-08-98 -- Indica 30 Examination report
received and
advertisement is
awaited
833414 22-12-98 -- Tyson 30 Examination report
awaited
990379 15-02-01 -- Jahanpanah 30 Examination report
awaited
993625 01/03/01 -- Jashan 30 Examination report
awaited
1167403 17-01-03 -- Purely Yours 30 Examination report
awaited
1195088 29-04-03 -- Nature's Choice 30 Examination report
awaited
1167404 17-01-04 -- Nature's Pure 30 Examination report
awaited

Government Approvals not yet applied for

Approvals for which renewal application has been made in the normal course of business:

Sr. Approval / Consent Authority Status

No.
6. Factory Licence, Bahalgarh Chief Inspector of Factories Renewal applied for
7. Factory Licence, Amritsar Chief Inspector of Factories Renewal applied for
8. Contractors licence Office of Labour Commissioner, Renewal applied for
Haryana and the licensing officer
9. Various Trademark approvals Trademark Registry Officer As enumerated above
10. Such other licenses/approvals as Central government/State Application for the
may be required by any government/municipal authorities same shall be made in
central/state authorities the due course of
time.

The Company is proposing to expand its existing activities and has all the requisite approvals for
carrying on the existing activities. No further approval from any government authority is
required by the Company to undertake its current activities, save and except such approvals,
which may be required to be taken in the normal course of business from time to time.

Investment Approvals

As per notification number bearing FEMA/20/2000-RB dated 03rd May 2000, as amended from
time to time, under automatic route of the Reserve Bank the Company is not required to make an

166
application for Issue of Equity Shares to NRIs/FIIs with repatriation benefits. However, the
allotment/transfer of the Equity shares to NRIs/FIIs shall be subject to the prevailing RBI
Guidelines. Sale proceeds of such investments in equity shares will be allowed to be repatriated
along with the income thereon subject to the permission of the RBI and subject to the Indian tax
laws and regulations and any other applicable laws.

167
 OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue

The shareholders of our Company have approved this Issue under section 81(1A) of the Act by a
Special Resolution at our Annual General Meeting held on 29th September 2005.

Prohibition by SEBI

Our Company, our Directors, our Promoters, the Directors of our Promoter Companies, the
group companies, companies promoted by or Promoters and companies or entities with which
our Company’s Directors are associated as directors have not been prohibited from accessing or
operating in the capital markets or restrained from buying, selling or dealing in securities under
any order or direction passed by SEBI. The listing of any securities of our Company has never
been refused at anytime by any of the stock exchanges in India. Our Company, our Promoters,
their relatives, group companies and associate companies have, not been detained as willful
defaulters by RBI/government authorities and there are no violations of securities laws
committed by them in the past or pending against them.

Eligibility for the Issue

According to clause 2.2.1 of the SEBI (Disclosure and Investor Protection) Guidelines, 2000, an
unlisted company may make an initial public offering (IPO) of equity shares or any other
security, which may be converted into or exchanged with equity shares at a later date, only if it
meets all the following conditions:

1. The company has net tangible assets of at least Rs. 3 crores in each of the preceding 3 full
years (of 12 months each), of which not more than 50% is held in monetary assets.

For the year ended

Particulars
31-03-2001 31-03-2002 31-03-2003 31-03-2004 31-03-2005
Fixed Assets (Net) 1401.39 1595.80 2262.02 2589.80 2916.30
Current Assets,
8087.56 11597.25 13476.00 20598.44 20461.78
Loans & Advances
Trade Investments 0 0 0 0 0
Less: Current
Liabilities & 362.78 595.58 595.28 1680.99 639.37
provisions
Net Tangible
9126.17 12597.47 15142.74 21507.25 22738.71
Assets
Monetary Assets 102.47 321.72 908.67 1223.24 1023.96

2. The company has a track record of distributable profits in terms of section 205 of the
Companies Act, 1956, for at least three (3) out of immediately preceding five (5) years.

For the year ended

Particulars
31-03-2001 31-03-2002 31-03-2003 31-03-2004 31-03-2005
Net Profit after tax 1067.41 1277.63 901.78 413.85 680.98

168
3. The company has a net worth of at least Rs. 1 crore in each of the preceding 3 full years (of 12
months each).

For the year ended

Particulars
31-03-2001 31-03-2002 31-03-2003 31-03-2004 31-03-2005
Equity Share
595.25 595.25 595.25 595.25 595.25
Capital
Share Application
40.51 11.50 11.50 13.00 0
Money
Reserves & Surplus 3371.28 4550.51 5452.27 5832.64 6446.51
Less: Revaluation
0 0 0 0 0
Reserves
Less: Misc. Exp 7.59 6.74 5.89 5.03 4.18
Net worth 3999.45 5150.52 6053.13 6435.86 7037.58

4. The company has not changed its name since inception.

5. The Company shall ensure that the aggregate of the proposed issue and all previous issues
made in the same financial year in terms of size (i.e. public issue by way of offer document +
firm allotment + promoters’ contribution through the offer document) does not exceed five
(5) times our pre- issue net worth as per the audited balance sheet of the last financial year.

Disclaimer Clauses

SEBI Disclaimer Clause

“IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THE DRAFT

RED HERRING PROSPECTUS TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR
CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI
DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS
OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE
MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS
EXPRESSED IN THE PROSPECTUS. THE BOOK RUNNING LEAD MANAGER, UTI
SECURITIES LIMITED, HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE
PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE
SEBI (DISCLOSURES AND INVESTOR PROTECTION) GUIDELINES IN FORCE FOR THE
TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN
INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY

IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND
DISCLOSURE OF ALL RELEVANT INFORMATION IN THE PROSPECTUS, THE BOOK
RUNNING LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE
THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS
BEHALF AND TOWARDS THIS PURPOSE, THE BOOK RUNNING LEAD MANAGER, UTI
SECURITIES LIMITED HAS FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE
DATED 23RD JANUARY 2006, IN ACCORDANCE WITH THE SEBI (MERCHANT
BANKERS) REGULATIONS, 1992, WHICH READS AS FOLLOWS:

I. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING

TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES
WITH COLLABORATORS ETC., AND OTHER MATERIALS IN CONNECTION WITH
THE FINALIZATION OF THE PROSPECTUS PERTAINING TO THE SAID ISSUE.

169
 II. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE
COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES,
INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE
OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION
AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE
AND OTHER PAPERS FURNISHED BY THE COMPANY,

WE CONFIRM THAT:

A. THE DRAFT RED HERRING PROSPECTUS 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 THE SEBI, THE
GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF
HAVE BEEN DULY COMPLIED WITH; AND

C. THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE

TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-
INFORMED DECISION AS TO INVESTMENT IN THE PROPOSED ISSUE.

D. BESIDE US, ALL THE INTERMEDIARIES NAMED IN THE PROSPECTUS ARE

REGISTERED WITH SEBI AND THAT SUCH REGISTRATIONS ARE VALID TILL
DATE.

E. WE SHALL SATISFY OURSELVES ABOUT THE NET WORTH OF THE

UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS.

THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER,
ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR 68 OF THE
COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH
STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF
THE PROPOSED ISSUE. SEBI, FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY
POINT OF TIME, WITH THE BOOK RUNNING LEAD MANAGER ANY IRREGULARITIES
OR LAPSES IN THE OFFER DOCUMENT.”

Disclaimer from the Issuer and the Book Running Lead Manager

Investors may note that Sunstar Overseas Limited and UTI Securities Limited accept no
responsibility for statements made other than in this Draft Red Herring Prospectus or in the
advertisement or any other material issued by or at the instance of the Issuer Company or Book
Running Lead Manager and that any one, placing reliance on any other source of information
would do so at their own risk

The BRLM, UTI Securities Limited, do not accept any responsibility save to the limited extent as
provided in terms of the Memorandum of Understanding entered into between the Company
and the BRLM and the Underwriting Agreement to be entered into between the Company and
the Underwriters.

All information will be made available by the Book Running Lead Manager and the Company to
the public and investors at large and no selective or additional information would be available
for a section of the investors in any manner whatsoever including at road shows, presentations,
in research or sales reports etc. We shall not be liable to the Bidders for any failure in
downloading the Bids due to faults in any software/hardware system or otherwise.

170
Caution; Impersonation

As a matter of abundant caution attention of the applicants is specifically drawn to the

provisions of sub-section (1) of Section 68(A) of the Companies Act, 1956, which is reproduced
below:

"Any person who:

a) makes in a fictitious name, an application to a Company for acquiring or subscribing for,

any shares therein, or
b) otherwise induces a Company to allot, or register any transfer of shares therein to him, or
any other person in a fictitious name; shall be punishable with imprisonment for a term
which may extend to five years."

Disclaimer in respect of Jurisdiction

This Issue is being made in India to persons resident in India (including Indian nationals resident
in India who are majors, HUFs, companies, corporate bodies and societies registered under the
applicable laws in India and authorised to invest in shares, Indian mutual funds registered with
SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks
(subject to RBI permission), Trusts registered under the Societies Registration Act, 1860, as
amended from time to time, or any other Trust law and who are authorised under their
constitution to hold and invest in shares) and to NRIs, FIIs and Foreign Venture Capital Funds
Registered with SEBI. This Draft Red Herring Prospectus does not, however, constitute an
invitation to subscribe to shares issued hereby in any other jurisdiction to any person to whom it
is unlawful to make an Issue or invitation in such jurisdiction. Any person into whose possession
this Draft Red Herring Prospectus comes is required to inform himself or herself about, and to
observe any such restrictions. Any dispute arising out of this Issue will be subject to the
jurisdiction of appropriate court(s) in Delhi only.

No action has been or will be taken to permit a public offering in any jurisdiction where action
would be required for that purpose, except that this Draft Red Herring Prospectus has been
submitted for approval and has been filed with SEBI. Accordingly, the Equity Shares represented
thereby may not be offered or sold, directly or indirectly, and this Draft Red Herring Prospectus
may not be distributed, in any jurisdiction, except in accordance with the legal requirements
applicable in such jurisdiction. Neither the delivery of this Draft Red Herring Prospectus nor any
sale hereunder shall under any circumstances create any implication that there has been no
change in the affairs of our Company since the date hereof or that the information contained
herein is correct as of any time subsequent to this date.

Disclaimer Clause of the Bombay Stock Exchange Limited

Bombay Stock Exchange Limited (“the Exchange”) has given vide its letter dated [●] given
permission to this Company to use the Exchange's name in this offer document as one of the
stock exchanges on which this Company’s securities are proposed to be listed. The Exchange has
scrutinized this offer document for its limited internal purpose of deciding on the matter of
granting the aforesaid permission to this Company. The Exchange does not in any manner:

i. warrant, certify or endorse the correctness or completeness of any of the contents of this
offer document; or
ii. warrant that this Company’s securities will be listed or will continue to be listed on the
Exchange; or
iii. take any responsibility for the financial or other soundness of this Company, its
promoters, its management or any scheme or project of this Company;

171
And it should not for any reason be deemed or construed to mean that this offer document has
been cleared or approved by the Exchange. Every person who desires to apply for or otherwise
acquires any securities of this Company may do so pursuant to independent inquiry,
investigation and analysis and shall not have any claim against the Exchange whatsoever by
reason of any loss which may be suffered by such person consequent to or in connection with
such subscription/acquisition whether by reason of anything stated or omitted to be stated
herein or for any other reason whatsoever.

Disclaimer Clause of National Stock Exchange of India Limited

As required, a copy of the Draft Red Herring Prospectus has been submitted to the National
Stock Exchange of India Limited (“NSE”). NSE has given vide its letter No. [●] dated [●]
permission to the Company to use the NSE's name in this Draft Red Herring Prospectus as one of
the stock exchanges on which the Company's securities are proposed to be listed subject to, the
Company fulfilling the various criteria for listing including the one related to paid up capital (i.e.
the paid up capital shall not be less than Rs. 100 million and market capitalization shall not be
less than Rs. 250 million at the time of the listing). NSE has scrutinised the Draft Red Herring
Prospectus for its limited internal purpose of deciding on the matter of granting the aforesaid
permission to the Company. It is to be distinctly understood that the aforesaid permission given
by NSE should not in any way be deemed or construed that the Draft Red Herring Prospectus
has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the
correctness or completeness of any of the contents of this Draft Red Herring Prospectus; nor does
it warrant that the Company's securities will be listed or will continue to be listed on NSE; nor
does it take any responsibility for the financial or other soundness of the Company, its promoters,
its management or any scheme or project of the Company.

Every person who desires to apply for or otherwise acquire any securities of the Company may
do so pursuant to independent inquiry, investigation and analysis and shall not have any claim
against NSE whatsoever by reason of any loss which may be suffered by such person consequent
to or in connection with such subscription or acquisition whether by reason of anything stated or
omitted to be stated herein or any other reason whatsoever.

Filing

A copy of this Draft Red Herring Prospectus has been filed with the Corporation Finance
Department of SEBI at Ground Floor, Mittal Court, “A” Wing, Nariman Point, Mumbai – 400 021.
A copy of the Red Herring Prospectus along with the documents required to be filed under
section 60B of the Companies Act would be delivered for registration to the RoC, NCT of Delhi &
Haryana, at: B-Block, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi – 110 003, at
least 3 (three) days before the issue opening date. The final Prospectus would be filed with the
Corporate Finance Department of SEBI and the ROC at the respective aforesaid addresses upon
closure of the issue and on finalization of the issue price.

Listing

Applications have been made to the Bombay Stock Exchange Limited and the National Stock
Exchange of India Limited for permission to deal in and for an official quotation of our Equity
Shares. Our existing Equity Shares are not listed on any Stock Exchange(s) in India.

BSE shall be the Designated Stock Exchange with which the basis of allotment will be finalized
for the QIB, Non-Institutional portion and Retail portion.

If the permission to deal in and for an official quotation of the Equity Shares is not granted by any
of the stock exchanges mentioned above, we shall forthwith repay, without interest, all moneys
received from the applicants in pursuance of this Draft Red Herring Prospectus. If such money is
not repaid within eight days after we become liable to repay it, i.e., from the date of refusal or

172
within 70 days from the date of Bid/ Issue Closing Date, whichever is earlier, then we and all our
directors jointly and severally shall, on and from expiry of eight days, be liable to repay the
money, with interest at the rate of 15% per annum on application money, as prescribed under
Section 73 of the Companies Act.

We shall ensure that all steps for the completion of the necessary formalities for listing and
commencement of trading at BSE and NSE are taken within seven working days of finalization
and adoption of the Basis of Allotment for the Issue.

Consents

Necessary Consents for the issue have been obtained from the following

1. Directors of the Company

2. Promoters of the Company
3. Bankers to the Company
4. Auditors to the Company
5. Legal Advisors to the Issue
6. Book Running Lead Managers to the Issue
7. Registrar to the Issue
8. Company Secretary and Compliance Officer
9. Syndicate Members
10. Underwriters
11. Escrow Collection Bankers to the Issue (will be finalized and necessary consent letter
obtained before the final Offer document is filed with the Registrar of Companies, NCT
of Delhi & Haryana)

The said consents would be filed along with a copy of this Draft Red Herring Prospectus with the
RoC, NCT of Delhi & Haryana, as required under Sections 60 and 60B of the Companies Act, 1956
and such consents have not been withdrawn up to the time of delivery of this Draft Red Herring
Prospectus, for registration with the RoC, NCT of Delhi & Haryana.

Expert Opinion

Except as stated elsewhere in this Draft Red Herring Prospectus, we have not obtained any expert
opinions.

Issue Expenses

The expenses of this Issue include, among others, underwriting and management fees, selling
commission, printing and distribution expenses, legal fees, statutory advertising expenses and
listing fees. The estimated Issue expenses are as follows:
Rs. in lacs
Sr. Particulars Amount % of total Issue
No size
a) Book Running Lead Managers fees [●] [●]
b) Registrars fees [●] [●]
c) Underwriting commission @ [●]% [●] [●]
d) Legal Advisors fees [●] [●]
e) Printing, Postage, Advertisement and [●] [●]
Marketing expenses
f) Brokerage and selling expenses [●] [●]
g) Stock Exchange fees for providing bidding [●] [●]
terminals
h) Other Miscellaneous expenses [●] [●]

173
 Sr. Particulars Amount % of total Issue
No size
Total [●] [●]

Fess payable is as per the Memorandum of Understanding signed with the Book Running Lead
Manager and Registrars to the issue are as per the engagement letter signed with the Legal
Advisor form part of the Material Contracts and are available for inspection at the Corporate
Office of our Company at: 24-B, Alipur Road, Civil Lines, New Delhi – 110 054, India between
1100 hrs to 1500 hrs on any working day, excluding Saturday and Sunday from the date of the
Prospectus to until the date of closing of the issue.

The Registrar to the issue will be reimbursed with all relevant out-of-pocket expenses such as cost
of stationery, postage, stamp duty, communication expenses, etc as per the MOU. Adequate
funds will be provided to the Registrar to the Issue to enable them to send refund orders/
letter(s) of allotment by registered post.

Underwriting Commission, Brokerage and Selling Commission

An underwriting commission not exceeding [●]% of the total amount underwritten is payable to
the underwriters on the offer price of the Equity Shares offered through this Draft Red Herring
Prospectus to the public for subscription and underwritten in the manner mentioned in this Draft
Red Herring Prospectus.

Brokerage for the issue will be up to [●]% of the issue price of the Equity Shares, which would be
paid by our Company on the basis of the allotments made against the applications bearing the
stamp of a member of any recognized Stock Exchange in India in the ‘Broker’ column. Brokerage
at the same rate will also be payable to the Bankers to the Issue in respect of the allotments made
against applications procured by them provided the respective forms of application bear their
respective stamp in the Broker column. In case of tampering or over-stamping of
Brokers’/Agents’ codes on the application form, the Company’s decision to pay brokerage in this
respect will be final and no further correspondence will be entertained in this matter.

Previous Public or Rights Issues in the last 5 years

Our Company has not made any public or rights issue of Equity Shares/Debentures in the last 5
years.

Previous Issue of Shares otherwise than for Cash

Our Company has not issued any Equity Shares for consideration other than cash except as
detailed in the section entitled ‘Capital Structure’ in this Draft Red Herring Prospectus.

Commission or Brokerage on Previous Issues

Since this is the initial public offering of the Equity Shares, no sum has been paid or is payable as
commission or brokerage for subscribing to or procuring for, or agreeing to procure subscription
for any of the Equity Shares of the Company since its inception.

Details of capital issue made during last three years in regard to the issuer company and other
listed companies under the same management within the meaning of section 370(1)(B) of the
Companies Act, 1956.

There have been no capital issues during last 3 years by us. There are no other listed companies
under the same management within the meaning of S. 370(1)(B) of the Act at present or during
the last three years.

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Promise vis-à-vis Performance – Last 3 issues

This being the initial public offering by our Company, there have been no promises made by us
in the past.

Listed ventures of Promoters

There are no other listed ventures of the promoters.

Outstanding debentures or bonds and redeemable preference shares and other instruments
issued and outstanding as on the date of the Draft Red Herring Prospectus and terms of Issue

There are no outstanding debentures or bonds or redeemable preference shares and other
instruments outstanding as on the date of filing of this Draft Red Herring Prospectus and terms
of this Issue.

Stock Market Data

This being an initial public offering of our Company, the Equity Shares of our Company are not
listed on any stock exchange.

Investors’ Grievances Redressal Mechanism

We have appointed Intime Spectrum Registry Limited as the Registrar to the Issue, to handle the
investor grievances in co-ordination with our Compliance officer. All grievances relating to the
present issue may be addressed to the Registrar with a copy to the Compliance officer, giving full
details such as name, address of the applicant, number of equity shares applied for, amount paid
on application and bank and branch. We will monitor the work of the Registrar to ensure that the
investor grievances are settled expeditiously and satisfactorily.

A fortnightly status report of the complaints received and redressed by the Registrar to the Issue
would be forwarded to us. We would also coordinate with the Registrar to the Issue in attending
to the investors’ grievances.

We assure that any complaints received, shall be disposed off as per the following schedule:

Sr. No Nature of the Complaint Time Taken

1 Non-receipt of the refund Within 7 days of receipt of complaint, subject
to production of satisfactory evidence.
2 Change of Address Within 7 days of receipt of information.
3 Any other complaint in relation Within 7 days of receipt of complaint with all
to Public Issue relevant details.

We have appointed Ms. Kiranpreet Gill as Compliance Officer who would directly liaise with
SEBI with respect to implementation/compliance of various laws, rules, regulations and other
directives issued by SEBI and matters related to investor complaints. The investors may contact
the compliance officer in case of any pre issue/post issue related problems. The Compliance
officer will be available at our Registered Office.

Changes in Auditors during the last three years and reasons thereof

There has been no change in our Auditors during the last 3 years.

175
Capitalisation of Reserves or Profits during last five years

There has not been any capitalisation of reserves or profits during the last five years, except as
stated in section titled “Capital Structure” on page no. [•] of this Draft Red Herring Prospectus.

Revaluation of Assets during the last five years

There has not been any revaluation of Assets during the last five years, except as stated in section
titled Capital Structure on page no. [•] of this Draft Red Herring Prospectus.

176
 SECTION IX - ISSUE RELATED INFORMATION

TERMS OF THE ISSUE

The Equity Shares being offered are subject to the provisions of the Companies Act, our
Memorandum and Articles of Association, the terms of this Draft Red Herring Prospectus, the
Prospectus, Bid cum Application Form, the Revision Form, the Confirmation of Allocation Note
and other terms and conditions as may be incorporated in the allotment advices and other
documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also
be subject to laws as applicable, guidelines, notifications and regulations relating to the issue of
capital and listing and trading of securities issued from time to time by SEBI, the Government of
India, the Stock Exchanges, the RBI, RoC and/or other authorities, as in force on the date of the
Issue and to the extent applicable.

Authority for the Issue

Pursuant to Section 81(1A) of the Companies Act, 1956, the present issue of equity shares has
been authorized vide a Special Resolution passed at the Annual General Meeting of the Company
held on 29th September, 2005.

Ranking of Equity Shares

The Equity Shares being offered shall be subject to the provisions of the Companies Act, our
Memorandum and Articles of Association and shall rank pari-passu in all respects with the
existing Equity Shares including in respect of the rights to receive dividend. The allottees will be
entitled to dividend (including dividend), voting rights or any other corporate benefits, if any,
declared by us after the date of Allotment.

Mode of Payment of Dividend

The declaration and payment of dividends will be recommended by our Board of Directors and
our shareholders, in their discretion, and will depend on a number of factors, including but not
limited to our earnings, capital requirements and overall financial condition. We have been
paying dividend in cash and intend to do so in the future.

Face Value and Issue Price per Share

The Equity Shares having a face value of Rs. 10/- each are being offered in terms of this Draft Red
Herring Prospectus at a price of Rs. [•]/- per Equity Share. At any given point of time there shall
be only one denomination of the Equity Shares of the Company, subject to applicable laws.

Compliance with SEBI Guidelines

The Company shall comply with all requirements of the SEBI (Disclosure and Investor
Protection) Guidelines, 2000 as amended from time to time. The Company shall comply with all
disclosure norms as specified by SEBI from time to time.

Rights of the Equity Shareholders

Subject to applicable laws, rules, regulations and guidelines and the Articles of Association, the
equity shareholders shall have the following rights:
ƒ Right to receive dividend, if declared;
ƒ Right to attend general meetings and exercise voting rights, unless prohibited by law;
ƒ Right to vote on a poll either in person or by proxy;
ƒ Right to receive offer for rights shares and be allotted bonus shares, if announced;
ƒ Right to receive surplus on liquidation;

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ƒ Right of free transferability; and
ƒ Such other rights, as may be available to a shareholder of a listed Public Limited Company
under the Companies Act and the Memorandum and Articles of our Company.

For a detailed description of the main provision of the Articles of Association of the Company
relating to voting rights, dividend, forfeiture and lien and/or consolidation/splitting, etc., see the
section entitled ‘Main Provisions of Articles of Association’ beginning on page [●] of this Draft
Red Herring Prospectus.

Market Lot and Trading Lot

In terms of Section 68B of the Companies Act, the Equity Shares shall be allotted only in
dematerialised form. In terms of existing SEBI Guidelines, the trading in the Equity Shares shall
only be in dematerialised form for all investors.

Since trading of the Equity Shares will be in dematerialized mode, the tradable lot is one Equity
Share. Allocation and allotment of Equity Shares through this Offer will be done only in
electronic form in multiples of 1 Equity Share subject to a minimum allotment of [●] Equity
Shares to the successful bidders.

Jurisdiction

The jurisdiction for the purpose of this Issue is with competent courts/authorities in Delhi.

Nomination Facility to Investor

In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other
joint Bidders, may nominate any one person in whom, in the event of the death of sole Bidder or
in case of joint Bidders, death of all the Bidders, as the case may be, the Equity Shares allotted, if
any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of
the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to
the same advantages to which he or she would be entitled if he or she were the registered holder
of the equity share(s). Where the nominee is a minor, the holder(s) may make a nomination to
appoint, in the prescribed manner, any person to become entitled to equity share(s) in the event
of his or her death during the minority. A nomination shall stand rescinded upon a sale of equity
share(s) by the person nominating. A buyer will be entitled to make a fresh nomination in the
manner prescribed. Fresh nomination can be made only on the prescribed form available on
request at our Registered Office or to the registrar and transfer agents of our Company.

In accordance with Section 109B of the Companies Act, any person who becomes a nominee by
virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such
evidence as may be required by the Board, elect either:

a) to register himself or herself as the holder of the equity shares; or

b) to make such transfer of the equity shares, as the deceased holder could have made.

Further, the Board may at any time give notice requiring any nominee to choose either to be
registered himself or herself or to transfer the equity shares, and if the notice is not complied with
within a period of ninety days, the Board may thereafter withhold payment of all dividends,
bonuses or other moneys payable in respect of the equity shares, until the requirements of the
notice have been complied with.

Since the allotment of Equity Shares in the Issue will be made only in dematerialized mode there
is no need to make a separate nomination with our Company. Nominations registered with

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respective depository participant of the applicant would prevail. If the investor wants to change
the nomination, they are requested to inform their respective depository participant.

Minimum Subscription

If the Company does not receive the minimum subscription of 90% of the Issue amount,
including devolvement of underwriters, if any, within 60 days from the Bid/Issue Closing Date,
the Company shall forthwith refund the entire subscription amount received. If there is a delay
beyond eight days, the Company and every director of the Company who is an officer in default,
becomes liable to repay the amount with interest as per Section 73 of the Companies Act. If the
number of allottees in the proposed Issue is less than 1,000 allottees, the Company shall forthwith
refund the entire subscription amount received. If there is a delay beyond 15 days after the
Company becomes liable to pay the amount, the Company shall pay interest at the rate of 15%
per annum for the delayed period.

Withdrawal of the Issue

The Company in consultation with the BRLM reserves the right not to proceed with the issue any
time after the Bid/Issue opening date but before allotment without assigning any reason thereof.

Arrangements for Disposal of Odd Lots

Since, our Equity Shares will be traded in dematerialized form only; the marketable lot is one (1)
Equity Share. Therefore, there is no possibility of any odd lots.

Restrictions, if any on Transfer and Transmission of Equity Shares

Except as stated otherwise in this Draft Red Herring Prospectus, there are no restrictions on
transfer/transmission on our Equity Shares.

Restrictions on Foreign Ownership of Indian Securities

Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of the
Government of India and FEMA. While the Industrial Policy, 1991 prescribes the limits and the
conditions subject to which foreign investment can be made in different sectors of the Indian
economy, FEMA regulates the precise manner in which such investment may be made. Under the
Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all
sectors of Indian economy up to any extent and without any prior approvals, but the foreign
investor is required to follow certain prescribed procedures for making such investment. As per
current foreign investment policies, foreign direct investment in Food processing Industry is
permitted up to 100% under the automatic route.

Subscription by Non Residents, Eligible NRIs/FIIs

As per the extant policy of the Government of India, OCBs cannot participate in this Issue. As per
the current provisions of the Foreign Exchange Management (Transfer or Issue of Security by a
person Resident outside India) Regulations, 2000, there exists a general permission to the NRIs,
FIIs and Foreign Venture Capital Investors registered with SEBI to invest in shares of an Indian
company by way of subscription in a Public Issue. However, such investments would be subject
to other investment restrictions under the RBI and/or SEBI regulations as may be applicable to
such investors. Based on the above provisions, it will not be necessary for the investors to seek
separate permission from the FIBP/RBI for the specific purpose. However, it is to be distinctly
understood that there is no reservation for NRIs, FIIs and Foreign Venture Capital Funds

179
registered with SEBI. Applicants will be treated on the same basis with other categories for the
purpose of allocation.

Registration of Equity Shares under US Laws

The Equity Shares have not been and will not be registered under the U.S. Securities Act 1933, as
amended or any state securities laws in the United States and may not be offered or sold within
the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S
of the U.S. Securities Act, 1933), except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares will
be offered and sold only (i) in the United States to “qualified institutional buyers”, as defined in
Rule 144A of the Securities Act, and (ii) outside the United States in compliance with Regulation
S and the applicable laws of the jurisdiction where those offers and sales occur.

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 ISSUE STRUCTURE

This Issue is being made through a 100% Book Building Process. The present Issue of 56,00,000
Equity Shares of Rs.10/- each at a price of Rs. [●] for cash aggregating Rs. [•] lacs comprising of
Employee’s Reservation of 2,80,000 Equity Shares aggregating Rs. [•] lacs and Net Issue to the
Public of 53,20,000 Equity Shares aggregating Rs. [•] lacs. The issue would constitute 34.96% of
the post issue paid up capital of Sunstar Overseas Limited. The details of the issue structure are
as follows:

Non Institutional Retail Individual

Employees QIBs
Bidders Bidders
Number of Up to 2,80,000 Equity Up to 26,60,000 Equity At least 7,98,000 At least 18,62,000
Equity Shares* Shares Shares Equity Shares Equity Shares

Percentage of Up to 5% of the Issue Up to 50% of the Net At least 15% of the Net At least 35% of the
Issue Size Issue to the public (of issue to the public or Net issue to the
available for which 5% shall be Net Issue size less public or Net Issue
allocation reserved for Mutual allocation to QIBs and size less allocation
Funds) less allocation retail individual to QIBs and non
to Non-Institutional bidders.* institutional
Bidders and Retail bidders.*
Individual Bidders.*

Mutual Funds
participating
in the 5% reservation
in the
QIB Portion will also
be eligible for
allocation in the
remaining QIB
Portion. The
Unsubscribed portion,
if any, in the Mutual
Fund reservation will
be available to QIBs.
Basis of Proportionate Proportionate Proportionate Proportionate
Allocation if
respective
category is
oversubscribed
Minimum Bid [●] Equity Shares and Such number of Equity Such number of [•] Equity Shares
thereafter in multiples Shares that the Bid Equity Shares that the and in multiples of
of [●] Equity Shares Amount exceeds Rs. Bid Amount exceeds [●] Equity Shares.
1,00,000/- and in Rs. 1,00,000/- and in
multiples of [●] Equity multiples of [●] Equity
Shares. Shares.

Maximum Bid Not exceeding [●] Not exceeding the size Not exceeding the size Such number of
equity Shares of the issue, subject to of the issue, subject to Equity Shares per
regulations as regulations as retail individual
applicable to the applicable to the investor so as to
Bidder Bidder ensure that the Bid
amount does not
exceed Rs.
1,00,000/- which
has to be in
multiples of [•]
Equity Shares.

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Mode of Demat mode Demat mode Demat mode Demat mode
Allotment
Trading One (1) Equity Share One (1) Equity Share One (1) Equity Share One (1) Equity
Lot/Market lot Share

Who can apply** Permanent employees Public financial Companies, Corporate Individuals
of the Company, institutions, as Bodies, Scientific (including NRIs
including working specified in Section 4A Institutions, Societies, and HUFs in the
directors of the Companies Act, Trusts, Resident name of Karta)
scheduled commercial Indian individuals, applying for
banks, mutual funds, HUF (in the name of Equity Shares such
foreign institutional Karta), and NRIs that the Bid
investor registered (applying for an Amount does not
with SEBI, multilateral amount exceeding Rs. exceed Rs. 1,00,000
and bilateral 1,00,000/-) in value.
development financial
institutions, Venture
Capital Funds
registered with SEBI,
foreign Venture capital
investors registered
with SEBI, State
Industrial
Development
Corporations,
insurance companies
registered with the
Insurance Regulatory
and Development
Authority, provident
funds with minimum
corpus of Rs. 2500 lacs
and pension funds
with minimum corpus
of Rs. 2500 lacs in
accordance with
applicable law.

Terms of Margin Amount Margin Amount Margin Amount Margin Amount

payment applicable to applicable to QIB applicable to Non applicable to
Employees at the time Bidders at the time of Institutional Bidders at Retail Individual
of submission of Bid submission of Bid cum the time of submission Bidders at the time
cum Application form Application form to of Bid cum of submission of
to the members of the the members of the Application form to Bid cum
syndicate syndicate the members of the Application form
syndicate to the members of
the syndicate

Margin Amount Full amount on 10% of the Bid amount Full amount on Full amount on
bidding in respect of bids bidding bidding
placed by QIB bidder
on bidding

* Subject to valid bids being received at or above the Issue Price. Under-subscription, if any, in any
category, would be allowed to be met with spill over inter-se from any other categories, at the
discretion of the Company in consultation with the BRLM’s subject to applicable provisions of
SEBI Guidelines.

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** In case the Bid Cum Application Form is submitted in joint names, the investors should ensure
that the demat account is also held in the same joint names and in the same sequence in which
they appear in the Bid Cum Application Form.

Note:

1. Equity Shares being offered through this Draft Red Herring Prospectus can be applied for
in dematerialized form only.

2. ‘Subject to valid bids being received at or above the Issue Price, under-subscription, if
any, in any of the categories, would be allowed to be met with spill over from any of the
other categories, at the discretion of the Company in consultation with the BRLM.

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 ISSUE PROCEDURE

Note: The SEBI Guidelines have been recently amended on 19th September 2005. Pursuant to
those amendments, certain significant changes have been made, including with regard
to the allocation procedure for QIBs. Certain changes may be made to the terms of the
Issue and the description of the Issue procedure based on the discussions the BRLMs
may have and clarifications that they may obtain from SEBI and the Stock Exchanges.

Book Building Procedure

The Issue is being made through the 100% Book Building Process wherein not more than 50% of
the Net Issue to the Public shall be available for allocation to Qualified Institutional Buyers on a
proportionate basis (of which 5% shall be allocated for Mutual Funds). Further, not less than 15%
of the Net Issue to the Public shall be available for allocation on a proportionate basis to Non-
Institutional Bidders and not less than 35% of the Net Issue to the Public shall be available for
allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being
received at or above the Issue Price.

Bidders are required to submit their Bids through the Syndicate. We, in consultation with the
BRLM(s), reserve the right to reject any Bid procured by any or all members of the Syndicate
without assigning any reasons therefor in case of QIBs. In case of Non-Institutional Bidders and
Retail Individual Bidders, our Company would have a right to reject the Bids only on technical
grounds.

Investors should note that Equity Shares would be allotted to all successful Bidders only in
dematerialized form. Bidders will not have the option of getting Allotment of the Equity
Shares in physical form. The Equity Shares on Allotment shall be traded only in the
dematerialized segment of the Stock Exchanges.

Illustration of Book Building and Price Discovery Process (Investors should note that this
illustration is solely for the purpose of illustration and is not specific to the Issue)

The Bidders can bid at any price within the Price Band. For instance, assume a Price Band of
Rs.60 to Rs.72 per Equity Share, Issue size of 5,400 Equity Shares and receipt of five Bids from the
Bidders. A graphical representation of the consolidated demand and price would be made
available at the bidding centres during the Bidding/Issue Period. The illustrative book as set
forth below shows the demand for the Equity Shares of the Company at various prices and is
collated from Bids from various investors.

Bid Quantity Bid Price (Rs.) Cumulative Quantity Subscription

1,500 72 1,500 27.78%
3,000 69 4,500 83.33%
4,500 66 9,000 166.67%
6,000 63 15,000 277.78%
7,500 60 22,500 416.67%

The price discovery is a function of demand at various prices. The highest price at which our
Company is able to issue the desired quantity of Equity Shares is the price at which the book cuts
off, i.e., Rs.66 in the above example. Our Company, in consultation with the BRLM and Co-
BRLM, will finalize the Issue Price at or below such cut off price, i.e., at or below Rs.66. All Bids at
or above this Issue Price and cut-off Bids are valid Bids and are considered for allocation in the
respective category.

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Bid-cum-Application Form

Bidders shall only use the specified Bid-cum-Application Form bearing the stamp of a member of
the Syndicate for the purpose of making a Bid in terms of this Draft Red Herring Prospectus. The
Bidder shall have the option to make a maximum of three Bids in the Bid-cum-Application Form
and such options shall not be considered as multiple Bids. Upon the allotment of Equity Shares,
dispatch of the CAN and filing of the Prospectus with the RoC, the Bid-cum-Application Form
shall be considered as the Application Form. Upon completing and submitting the Bid-cum-
Application Form to a member of the Syndicate, the Bidder is deemed to have authorized us to
make the necessary changes in this Draft Red Herring Prospectus and the Bid-cum-Application
Form as would be required for filing the Prospectus with the RoC and as would be required by
the RoC after such filing, without prior or subsequent notice of such changes to the Bidder.

The prescribed colour of the Bid-cum-Application Form for various categories is as follows:

Category Colour of
Bid-cum-Application Form

Indian Public including QIBs, Non-Institutional Bidders or : White

NRIs applying on a non-repatriation basis

Non-residents, NRIs or FIIs applying on a repatriation basis : Blue

Permanent Employees of the Company : Pink

Who Can Bid?

1. Persons eligible to invest under all applicable laws, rules, regulations and guidelines;
2. Indian nationals resident in India who are majors, in single or joint names (not more than
three);
3. HUFs, in the individual name of the Karta. The Bidder should specify that the Bid is being
made in the name of the HUF in the Bid cum Application Form as follows: “Name of Sole or
First Bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name
of the Karta”. Bids by HUFs would be considered at par with those from individuals;
4. Companies, corporate bodies and societies registered under the applicable laws in India and
authorized to invest in Equity shares;
5. Indian mutual funds registered with SEBI;
6. Indian financial institutions, commercial banks, regional rural banks, co-operative banks
(subject to RBI regulations and SEBI Guidelines and Regulations, as applicable);
7. Venture capital funds registered with SEBI;
8. Foreign venture capital investors registered with SEBI;
9. State Industrial Development Corporations;
10. Insurance companies registered with the Insurance Regulatory and Development Authority;
11. Provident funds with minimum corpus of Rs. 25 crores and who are authorized under their
constitution to invest in Equity Shares;
12. Pension funds with minimum corpus of Rs. 25 crores and who are authorized under their
constitution to invest in Equity Shares;
13. Multilateral and bilateral development financial institutions;
14. Trusts/Societies registered under the Societies Registration Act, 1860, as amended, or under
any other law relating to Trusts/Societies and who are authorized under their constitution to
hold and invest in equity shares;
15. Eligible Non-residents including NRIs and FIIs on a repatriation/non- repatriation basis
subject to applicable local laws; and

185
16. Scientific and/or industrial research organizations authorized under their constitution to
invest in equity shares.

As per existing regulations, Overseas Corporate Bodies (OCBs) cannot bid/participate in this
issue.

The BRLM(s) and the Syndicate Members shall not be entitled to subscribe to this Issue in any
manner except towards fulfilling their underwriting obligation.

Bidders are advised to ensure that any single Bid from them does not exceed the investment
limits or maximum number of Equity Shares that can be held by them under applicable law,
rules, regulations, guidelines and approvals.

In accordance with the current regulations, the following restrictions are applicable for
investments by mutual funds: No mutual fund scheme shall invest more than 10% of its net
asset value in the Equity Shares or equity related instruments of any company provided that the
limit of 10% shall not be applicable for investments by index funds or sector or industry specific
funds. No mutual fund under all its schemes should own more than 10% of any company’s paid-
up capital carrying voting rights.
In accordance with the current regulations, the following restrictions are applicable for
investments by FIIs: The Issue of Equity Shares to a single FII should not exceed 10% of the post-
Issue paid- up capital of the Company. In respect of an FII investing in the Equity Shares on
behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of
the total issued capital or 5% of the total issued capital of our Company in case such sub-account
is a foreign corporate or an individual.

As per the current regulations, the following restrictions are applicable for investments by
SEBI registered Venture Capital Funds and Foreign Venture Capital Funds: The SEBI (Venture
Capital Funds) Regulations, 1996 and the SEBI (Foreign Venture Capital Investors) Regulations,
2000 prescribe investment restrictions on venture capital funds and foreign venture capital
investors registered with SEBI. Accordingly, the holding by any individual venture capital fund
or foreign venture capital investor registered with SEBI should not exceed 25% of the Company’s
paid-up capital. The aggregate holdings of venture capital funds and foreign venture capital
investors registered with SEBI could, however, go up to 100% of the Company’s paid-up equity
capital.

The above information is given for the benefit of the Bidders. The Company and the BRLM
are not liable for any amendments or modification or changes in applicable laws or
regulations, which may happen after the date of the Red Herring Prospectus. Bidders are
advised to make their independent investigations and ensure that the number of Equity
Shares bid for do not exceed the applicable limits under laws or regulations.

Maximum and Minimum Bid size

a) For Employees: The Bid must be for minimum [•] Equity Shares and in multiples of [•]
Equity Shares thereafter, subject to a maximum bid for 2,80,000 Equity Shares.

b) For Retail Individual Bidders: The Bid must be for minimum [•] Equity Shares and in
multiples of [•] Equity Shares thereafter subject to maximum bid amount of Rs. 1,00,000/-. In
case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Amount
does not exceed Rs. 1,00,000/-. In case the Bid Amount is over Rs. 1,00,000/- due to revision
or revision of the Price Band or on exercise of Cut-off option, the Bid would be considered for
allotment under the Non-Institutional Bidders category. The Cut-off option is an option given
only to the Retail Individual Bidders indicating their agreement to bid and purchase at the
final Issue Price as determined at the end of the Book Building Process.

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c) For Non-Institutional Bidders and QIB Bidders: The Bid must be for a minimum of such
number of Equity Shares such that the Bid Amount payable by the Bidder exceeds Rs.
1,00,000/- and in multiples of [•] Equity Shares thereafter. A Bid cannot be submitted for
more than the size of the Issue. However, the maximum Bid by a QIB should not exceed the
investment limits prescribed for them by applicable laws. Under existing SEBI guidelines, a
QIB Bidder cannot withdraw its Bid after the Bid/Issue Closing Date.

In case of revision in Bids, the Non-Institutional Bidders who are individuals have to ensure
that the Bid Amount is greater than Rs. 1,00,000/- for being considered for allocation in the
Non Institutional Portion. In case the Bid Amount reduces to Rs. 1,00,000/- or less due to a
revision in Bids or revision of Price Band, the same would be considered for allocation under
the Retail Portion. Non Institutional Bidders and QIBs are not allowed to Bid at ‘Cut-off’.

Information for the Bidders

1. We will file the Red Herring Prospectus with the Registrar of Companies, at least 3 (three)
days before the Bid/Issue Opening Date.

2. The members of the Syndicate will circulate copies of the Red Herring Prospectus along with
the Bid-cum-Application Form to their potential investors.

3. Any investor (who is eligible to invest in the Equity Shares) desirous of obtaining a copy of
the Red Herring Prospectus along with the Bid-cum- Application Form can obtain the same
from our registered office or from the BRLM(s), or from a member of the Syndicate.

4. Investors who are interested in subscribing for our Company’s Equity Shares should
approach any of the BRLMs or Syndicate Member or their authorised agent(s) to register
their Bid.

5. The Bids should be submitted on the prescribed Bid-cum-Application Form only. Bid-cum-
Application Forms should bear the stamp of the members of the Syndicate. Bid-cum-
Application Forms, which do not bear the stamp of the members of the Syndicate, will be
rejected.

6. The price band shall be advertised at least one day prior to the Bid opening date/Issue
opening date.

Method and Process of bidding

a) We, with the BRLM, shall declare the Bid/Issue Opening Date and Bid/Issue Closing Date in
the Draft Red Herring Prospectus filed with RoC and publish the same and the Price Band in
two national newspapers (one each in English and Hindi) and a regional newspaper. This
advertisement shall contain the salient features of the Red Herring Prospectus as specified
under Form 2A of the Companies Act, the method and process of bidding and the names and
addresses of the members of the Syndicate. The members of the Syndicate shall accept Bids
from the Bidders during the Issue Period.

b) Investors who are interested in subscribing for our Equity Shares should approach any of the
members of the Syndicate or their authorized agent(s) to register their Bid.

c) The Bidding Period shall be a minimum of 3 working (three) days and not exceed 7 working
(seven) days. In case the Price Band is revised, the revised Price Band and the Bidding Period
will be informed to the Stock Exchanges and published in two national newspapers (one each
in English and Hindi) and one regional newspaper and the Bidding Period may be extended,
if required, by an additional 3 working (three) days, subject to the total Bidding Period not
exceeding 10 working (ten) days.

187
d) During the Bidding Period, the Bidders may approach the Syndicate to submit their Bid.
Every member of the Syndicate shall accept Bids from all clients/investors who place orders
through them and shall have the right to vet the Bids.

e) Each Bid cum Application Form will give the Bidder the choice to bid for up to three optional
prices (for details refer to the paragraph entitled “Bids at Different Price Levels” on page [•]
of this Draft Red Herring Prospectus) within the Price Band and specify the demand (i.e., the
number of Equity Shares bid for) in each option. The price and demand options submitted by
the Bidder in the Bid cum Application Form will be treated as optional demands from the
Bidder and will not be cumulated. After determination of the Issue Price, the maximum
number of Equity Shares bid for by a Bidder at or above the Issue Price will be considered for
allocation and the rest of the Bid(s), irrespective of the Bid price, will become automatically
invalid.

f) The Bidder cannot bid on another Bid cum Application Form after Bids on one Bid cum
Application Form have been submitted to any member of the Syndicate. Submission of a
second Bid cum Application Form to either the same or to another member of the Syndicate
will be treated as multiple bidding and is liable to be rejected either before entering the Bid
into the electronic bidding system, or at any point of time prior to the allotment of Equity
Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the
procedure for which is detailed in the paragraph “Build up of the Book and Revision of Bids”
on page [•] of this Draft Red Herring Prospectus.

g) The members of the Syndicate will enter each option into the electronic bidding system as a
separate Bid and generate a Transaction Registration Slip, (“TRS”), for each price and
demand option and give the same to the Bidder. Therefore, a Bidder can receive up to three
TRS’s for each Bid cum application Form.

h) Along with the Bid cum Application Form, all Bidders will make payment in the manner
described under the paragraph “Terms of Payment and Payment into the Escrow Account”
on page [•] of the Draft Red Herring Prospectus.

Bids at Different Price Levels

a) The Price Band has been fixed at Rs. [●] to Rs. [●] per Equity Share of Rs. 10 each, Rs. [●]
being the Floor Price and Rs. [●] being the Cap Price. The Bidders can bid at any price with in
the Price Band, in multiples of Re 1. In accordance with SEBI Guidelines, the Company in
consultation with the BRLMs can revise the Price Band by informing the Stock Exchanges,
releasing a press release, disclosure on the website of the members of the Syndicate, if any
and notification on the terminal of the members of the Syndicate. In case of a revision in the
Price Band, the Issue will be kept open for a period of three working days after the revision of
the Price Band, subject to the total Bidding Period not exceeding ten working days. The
Company in consultation with BRLMs can finalise the Issue Price within the Price Band in
accordance with this clause, without the prior approval of, or intimation, to the Bidders.

b) The Bidders can bid at any price within the Price Band. The Bidder has to bid for the desired
number of Equity Shares at a specific price. Retail Individual and Employee Bidders may
bid at “Cut-off”. However, bidding at “Cut-off” is prohibited for QIB or Non Institutional
Bidders and such Bids from QIBs and Non-Institutional Bidders shall be rejected.

c) Retail Individual Bidders, who bid at the ‘cut-off’ agree that they shall purchase the Equity
Shares at any price within the Price Band. Retail Individual Bidders bidding at ‘cut-off’ shall
deposit the Bid Amount based on the Cap Price in the Escrow Account. In the event the Bid
Amount is higher than the subscription amount payable by the Retail Individual Bidders (i.e.

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 the total number of Equity Shares allocated in the Issue multiplied by the Issue Price), Retail
Individual Bidders shall receive the refund of the excess amounts from the Escrow Account.

d) The Price Band can be revised during the Bidding Period in which case the maximum
revisions on either side of the Price Band shall not exceed 20% of the Cap Price and the Floor
Price disclosed in the Red Herring Prospectus.

e) Any revision in the Price Band shall be widely disseminated including by informing the
Stock Exchanges, issuing a press release and making available this information on the
Bidding terminals.

f) In the event of any revision in the Price Band, whether upwards or downwards, the
minimum application size shall remain [●] Equity Shares irrespective of whether the Bid
Amount payable on such minimum application is not in the range of Rs. 5,000 to Rs. 7,000.

g) In case of an upward revision in the Price Band announced as above, Retail Individual
Bidders, who had bid at ‘cut-off’ Price could either (i) revise their Bid or (ii) make additional
payment based on the cap of the revised Price Band, with the members of the Syndicate to
whom the original Bid was submitted. In case the total amount (i.e. original Bid Amount plus
additional payment) exceeds Rs. 100,000, the Bid will be considered for allocation under the
Non Institutional category in terms of this Draft Red Herring Prospectus. If, however, the
Bidder does not either revise the Bid or make additional payment and the Issue Price is
higher than the cap of the Price Band prior to revision, the number of Equity Shares bid for
shall be adjusted for the purpose of allocation, such that no additional payment would be
required from the Bidder and the Bidder is deemed to have approved such revised Bid at Cut
off

h) In case of a downward revision in the Price Band, announced as above, Retail Individual
Bidders who have bid at Cut Off price could either revise their Bid or the excess amount paid
at the time of bidding would be refunded from the Escrow Account

Application by Mutual Fund

In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual
fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund
will not be treated as multiple Bids provided that the Bids clearly indicate the scheme concerned
for which the Bid has been made

Application by NRI

ƒ Individual NRI Bidders can obtain the Bid-cum-Application Forms from our registered office or from
members of the Syndicate or the Registrars to the Issue.

ƒ NRI Bidders may please note that only such Bids as are accompanied by payment in free foreign
exchange shall be considered for allotment. NRIs who intend to make payment through Non-Resident
Ordinary (NRO) accounts shall use the Bid cum Application form meant for Resident Indians (white in
colour

Escrow Mechanism

The Company and members of the Syndicate shall open Escrow Accounts with one or more
Escrow Collection Banks in whose favour the Bidders shall make out the cheque or demand draft
in respect of his or her Bid and/or revision of the bid. Cheques or demand drafts received for the

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full Bid amount from Bidders in a certain category would be deposited in the Escrow Account for
the Issue. The Escrow Collection Banks will act in terms of the Draft Red Herring Prospectus and
an Escrow Agreement. The monies in the Escrow Account of the Company shall be maintained
by the Escrow Collection Bank(s) for and on behalf of the Bidders. The Escrow Collection Bank(s)
shall not exercise any lien whatsoever over the monies deposited therein and shall hold the
monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banks
shall transfer the monies from the Escrow Account to the Public Issue Account with the Bankers
to the Issue as per the terms of the Escrow Agreement with the Company. Payment of refund to
the Bidders shall also be made from the Escrow Account as per the Escrow Agreement Draft Red
Herring Prospectus.

The Bidders may note that the Escrow Mechanism is not prescribed by SEBI and the same has
been established as an arrangement between the Company, the Syndicate, Escrow Collection
Bank(s) and the Registrars to the Issue to facilitate collections from the Bidders.

Terms of Payment and Payment into the Escrow Collection Account

In case of Non-institutional Bidders and Retail Individual Bidders, each Bidder shall, with the
submission of the Bid-cum- Application Form draw a cheque or demand draft for the maximum
amount of his/ her Bid in favour of the Escrow Account of the Escrow Collection Bank(s) (For
further details, see “Issue Procedure - Payment Instructions” on page [●] of this Draft Red
Herring Prospectus) and submit the same to the members of the Syndicate to whom the Bid is
being submitted. In case of QIB Bidders, the Margin Amount has to be submitted along with the
Bid to the members of the Syndicate. Bid-cum-Application Forms accompanied by cash and stock
invests shall not be accepted. The maximum Bid price has to be paid at the time of submission of
the Bid-cum-Application Form based on the highest bidding option of the Bidder.

The members of the Syndicate shall deposit the cheque or demand draft with the Escrow
Collection Bank(s), which will hold the monies for the benefit of the Bidders until such time as
the Designated Date. On the Designated Date, the Escrow Collection Bank(s) shall transfer the
funds from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue
Account with the Banker(s) to the Issue. The balance amount after transfer to the Public Issue
Account shall be held for the benefit of the Bidders who are entitled to refunds on the Designated
Date, and no later than 15 days from the Bid / Issue Closing Date, the Escrow Collection Bank(s)
shall refund all monies to unsuccessful Bidders and also the excess amount paid on bidding, if
any, after adjustment for allotment to the Bidders.

Each category of Bidders i.e. QIBs, Non-Institutional Bidders, Employees, and Retail Individual
Bidders would be required to pay their Margin Amount at the time of the submission of the Bid-
cum-Application Form. The Margin Amount payable by each category of Bidders is mentioned
under the heading “Issue Structure” on page [●] of this Draft Red Herring Prospectus and shall
be uniform across all the bidders in the same category. Where the Margin Amount applicable to
the Bidder is more than 10% and less than 100% of the Bid Amount, any difference between the
amount payable by the Bidder for Equity Shares allocated at the Issue Price and the Margin
amount paid at the time of Bidding, shall be payable by the Bidder no later than the Pay-in-Date,
which shall be a minimum period of two days from the date of communication of the allocation
list to the members of the Syndicate by the Registrar to the Issue. If the payment is not made
favouring the Escrow Account within the time stipulated above, the Bid of the Bidder is liable to
be cancelled. However, if the members of the Syndicate do not waive such payment, the full
amount of payment has to be made at the time of submission of the Bid-Cum-Application Form.

Where the Bidder has been allocated lesser number of Equity Shares than he or she had bid for,
the excess amount paid on bidding, if any, after adjustment for allocation, will be refunded to
such Bidder within 15 days from the Bid/Issue Closing Date.

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Electronic Registration of Bids

a) The members of the Syndicate will register the Bids using the on-line facilities of NSE and
BSE. There will be at least one BSE/NSE on-line connectivity to each city where a Stock
Exchange is located in India and the Bids are accepted.

b) NSE and BSE will offer a screen-based facility for registering Bids for the Issue. This facility
will be available on the terminals of the members of the Syndicate and their authorized
agents during the Bidding Period. Members of the Syndicate can also set up facilities for off-
line electronic registration of Bids subject to the condition that they will subsequently
download the off-line data file into the on-line facilities for book building on a regular basis.
On the Bid/Issue Closing Date, the Syndicate Member shall upload the Bids till such time as
may be permitted by the Stock Exchanges.

c) BSE and NSE will aggregate demand and price for Bids registered on their electronic facilities
on a regular basis and display graphically the consolidated demand at various price levels.
This information can be assessed on BSE’s website at www.bseindia.com or on NSE’s website
at www.nseindia.com.

d) At the time of registering each Bid, the members of the Syndicate shall enter the following
details of the investor in the on-line system:
ƒ Name of the investor
ƒ Investor Category – Individual, Corporate, NRI, FII, Mutual Fund, etc
ƒ Numbers of Equity Shares bid for
ƒ Bid price
ƒ Bid-cum-Application Form number
ƒ Whether payment is made upon submission of Bid-cum-Application Form
ƒ Depository Participant Identification No. and Client Identification No. of the demat account
of the Bidder.

e) A system generated TRS will be given to the Bidder as a proof of the registration of each of
the bidding options. It is the Bidder’s responsibility to obtain the TRS from the members of
the Syndicate. The registration of the Bid by the members of the Syndicate does not guarantee
that the Equity Shares shall be allocated either by the members of the Syndicate or the
Company.

f) Such TRS will be non-negotiable and by itself will not create any obligation of any kind.

g) Consequently, all or any of the members of the Syndicate may reject QIB Bids provided the
rejection is at the time of receipt of such Bids and the reason for rejection of the Bid is
communicated to the Bidder at the time of such rejection. In case of Non-Institutional Bidders
and Retail Individual Bidders, Bids would not be rejected except on the technical grounds
listed on Page [●] in this Draft Red Herring Prospectus.

h) It is to be distinctly understood that the permission given by BSE and NSE to use their
network and software of the online IPO system should not in any way be deemed or
construed to mean that the compliance with various statutory and other requirements by the
Company or BRLM(s) are cleared or approved by BSE and NSE; nor does it in any manner
warrant, certify or endorse the correctness or completeness of any of the compliance with the
statutory and other requirements nor does it take any responsibility for the financial or other
soundness of the Company, its promoters, its management or any scheme or project of the
Company.

i) It is also to be distinctly understood that the approval given by BSE and NSE for the use of
their online IPO system should not in any way be deemed or construed that this Draft Red

191
 Herring Prospectus has been cleared or approved by the BSE and NSE; nor does it in any
manner warrant, certify or endorse the correctness or completeness of any of the contents of
this Draft Red Herring Prospectus; nor does it warrant that the Equity Shares will be listed or
will continue to be listed on the BSE and NSE.

Build Up of the Book and Revision of Bids

a) Bids registered by various Bidders through the members of the Syndicate shall be
electronically transmitted to the NSE or BSE mainframe on a regular basis.

b) The book gets build up at various price levels. This information will be available with the
BRLM(s) on a regular basis.

c) During the Bidding Period, any Bidder who has registered his or her interest in the Equity
Shares at a particular price level is free to revise his or her Bid within the price band using the
printed Revision Form, which is a part of the Bid-cum-Application Form.

d) Revisions can be made in both the desired numbers of Equity Shares and the bid price by
using the Revision Form. Apart from mentioning the revised options in the revision form, the
Bidder must also mention the details of all the options in his or her Bid-cum-Application
Form or earlier Revision Form. For example, if a Bidder has bid for three options in the Bid-
cum-Application Form and he is changing only one of the options in the Revision Form, he
must still fill the details of the other two options that are not being changed, in the Revision
Form unchanged. Incomplete or inaccurate Revision Forms will not be accepted by the
members of the Syndicate.

e) The Bidder can make this revision any number of times during the Bidding Period. However,
for any revision(s) of the Bid, the Bidders will have to use the services of the same members
of the Syndicate through whom he or he had placed the original Bid. Bidders are advised to
retain copies of the blank Revision Form and the revised Bid must be made only in such
Revision Form or copies thereof.

f) Any revision of the Bid shall be accompanied by payment in the form of cheque or demand
draft for the incremental amount, if any, to be paid on account of the upward revision of the
Bid. The excess amount, if any, resulting from downward revision of the Bid would be
returned to the Bidder at the time of refund in accordance with the terms of this Draft Red
Herring Prospectus. In case of QIBs, the members of the Syndicate shall collect the payments
in the form of cheque or demand draft for the incremental amount in the QIB Margin
Amount, if any, to be paid on account of the upward revision of the Bid at the time of one or
more revisions by the QIB Bidders.

g) When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a
revised TRS from the members of the Syndicate. It is the responsibility of the Bidder to
request for and obtain the revised TRS, which will act as proof of his or her having revised
the previous Bid.

h) In case of discrepancy of data between NSE or BSE and members of the Syndicate, the
decision of the BRLM based on the physical records of Bid cum Application forms shall be
final and binding to all concerned.

i) The Price Band can be revised during the Bidding Period, in which case the Bidding Period
shall be extended further for a period of three working days, subject to the total Bidding
Period not exceeding ten working days. The cap on the Price Band should not be more than
20% of the Floor Price. Subject to compliance with the immediately preceding sentence, the

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 Floor Price can move up or down to the extent of 20% of the Floor Price disclosed in the Red
Herring Prospectus.

j) Any revision in the Price Band will be widely disseminated by informing the stock
exchanges, by issuing a public notice in two national newspapers (one each in English and
Hindi) and one regional newspaper and also indicating the change on the relevant websites
and the terminals of the members of the Syndicate.

Price Discovery and Allocation

a) After the Bid/Issue Closing Date, the BRLM will analyze the demand generated at various
price levels and discuss pricing strategy with us.

b) The Company, in consultation with the BRLM shall finalise the “Issue Price”, the number of
Equity Shares to be allotted.

c) The allocation for QIBs for up to 50% of the Net Issue to public, of which 5% shall be reserved
for Mutual Funds, would be on a proportionate basis, subject to valid bids being received at
or above the Issue Price in the manner as described in the section titled ”Basis of Allotment”.
The allocation to Non-Institutional Bidders and Retail Individual Bidders of not less than 15%
and 35% of the Net Issue to public, respectively, would be on proportionate basis, in the
manner specified in the SEBI Guidelines, in consultation with Designated Stock Exchange,
subject to valid Bids being received at or above the Issue Price.

d) Under subscription, if any, in Non-Institutional and Retail categories would be allowed to be

met with spill over from any of the other categories at the discretion of the Company and the
BRLMs. However, if the aggregate demand by Mutual Funds is less than [●] Equity Shares,
the balance Equity Shares from the portion specifically available for allocation to Mutual
Funds in the QIB Portion will first be added to the QIB Portion and be allocated
proportionately to the QIB Bidders in proportion to their Bids. Any under subscription in the
Equity Shares reserved for allocation to Bidders in the Employee Reservation Portion would
be treated as part of the Net Issue to the public and allocation in accordance with the Basis of
Allocation described in the section “Statutory and Other Information” beginning on page [●]
of this Draft Red Herring Prospectus.

e) Allocation to NRIs, FIIs, Foreign Venture Capital Funds registered with SEBI applying on
repatriation basis will be subject to the terms and conditions stipulated by the FIPB and RBI
while granting permission for Issue/Allocation of Equity Shares to them.

f) The BRLM, in consultation with us, shall notify the Syndicate Members of the Issue Price and
allocations to their respective Bidders, where the full Bid Amount has not been collected from
the Bidders.

g) The Company in consultation with the BRLM(s), reserves the right to cancel the Issue any
time after the Bid/Issue Opening Date but before allocation, without assigning reasons
whatsoever.

h) In terms of SEBI Guidelines, QIB Bidders shall not be allowed to withdraw their Bid after the
closure of bidding.

Signing of Underwriting Agreement and RoC Filing

1. The Company, the BRLM(s) and the Syndicate Members shall enter into an Underwriting
Agreement on finalization of the Issue Price and allocation(s) to the Bidders.

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2. After signing the Underwriting Agreement, we will update and file the updated Red Herring
Prospectus with RoC, which then would be termed ‘Prospectus’. The Prospectus would have
details of the Issue Price, Issue Size, underwriting arrangements and would be complete in all
material respects.

Advertisement regarding Issue Price and Prospectus meeting

A statutory advertisement will be issued by the Company after the filing of the Red Herring
Prospectus with the RoC. This advertisement, in addition to the information (in the format and
contain the disclosures specified in Part A of Schedule XXA of the SEBI Guidelines), that has to be
set out in the statutory advertisement shall indicate the Price Band along with a table showing the
number of Equity Shares and the amount payable by an investor. Any material updates between
the date of Red Herring Prospectus and Prospectus will be included in such statutory
advertisement.

Issuance of Confirmation of Allocation Note

a) The BRLM or Registrars to the Issue shall send to the Syndicate Members, a list of their
Bidders who have been allocated Equity Shares in the Issue.

b) The Members of the Syndicate/BRLM would then send the CAN to their Bidders who have
been allocated Equity Shares in the Issue. The dispatch of a CAN shall be deemed to be a
valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the
Equity Shares allocated to such Bidder. Those Bidders who have not paid the full Bid amount
into the Escrow account on or prior to the time of bidding shall pay in full amount into the
Escrow Account on or prior to the Pay-in Date specified in the CAN.

c) Bidders who have been allocated Equity Shares and who have already paid the full Bid
Amount into the Escrow Account at the time of bidding shall directly receive the CAN from
the Registrars to the Issue subject, however, to realization of their cheque or demand draft
paid into the Escrow Account. The despatch of a CAN shall be deemed to be a valid, binding
and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares
to be allotted to such Bidder.

Designated Date and Transfer of Funds to Public Issue Account

Successful Bidders will receive credit for the Equity Shares directly in their depository account.
Equity shares will be allotted only in the dematerialized form to all the allottees. Successful
Bidders will have the option to re-materialize the Equity Shares so allotted, if they so desire, as
per the provisions of the Companies Act and the Depositories Act.

Investors are advised to instruct their Depository Participant to accept the Equity Shares that
may be allocated to them pursuant to this Issue.

We will ensure the allotment of Equity Shares within 15 days of the Bid/ Issue Closing Date.
After the funds are transferred from the Escrow Account to the Public Issue Account on the
Designated Date, we would ensure that credit is given to the successful Bidders’ depository
accounts within two working days from the date of allotment.

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General Instructions

Do’s:

a) Check if you are eligible to apply;

b) Complete the bid-cum-application form after reading all the instructions carefully;

c) Ensure that the details about Depository Participant and beneficiary account are correct as
Equity Shares will be allotted in the dematerialized form only;

d) Ensure that the Demographic Details (as defined herein below) are updated, true and correct
in all respects.

e) Ensure that the Bids are submitted at the Bidding Centres only on forms bearing stamp of the
Syndicate Member;

f) Ensure that you have been given a TRS for all your Bid options;

g) Submit Revised Bids to the same Syndicate Member through whom the original Bid was
placed and obtain a revised TRS;

h) Ensure that the Bid is within the Price Band;

i) Investors must ensure that the name given in the bid cum application form is exactly the
same as the name in which the Depository Account is held. In case, the Bid cum Application
Form is submitted in joint names, investors should ensure that the Depository Account is also
held in the same joint names and are in the same sequence in which they appear in the Bid
cum Application Form.

j) Ensure that you mention your Permanent Account Number (PAN) allotted under the I.T. Act
where the maximum Bid for Equity Shares by a Bidder is for a total value of Rs. 50,000/- or
more. In case neither the PAN nor the GIR number has been allotted, mention “Not Allotted”
in the appropriate place.

Don'ts:

a) Do not Bid if you are prohibited from doing so under the law of your local
jurisdiction;

b) Do not Bid for lower than minimum Bid size;

c) Do not Bid or revise the Bid to less than the lower end of the Price Band or higher than the
higher end of the Price Band;

d) Do not Bid on another Bid cum Application Form after you have submitted a Bid to the
members of the Syndicate;

e) Do not pay bid amount in cash, through stock invest, by money order or by
postal order.

f) Do not provide your GIR number instead of PAN number;

g) Do not Bid at cut off price (for QIB Bidders and Non-Institutional Bidders for whom the Bid
Amount exceeds Rs. 1,00,000/-);

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h) Do not fill up the Bid cum Application Form for an amount that exceeds the investment limit
or maximum number of Equity Shares that can be held by a Bidder under the applicable law.

i) Do not send Bid cum Application Form by post; instead submit the same to a member of the
Syndicate only.

Instructions for Obtaining the Bid-Cum-Application Form

Bidders can obtain Bid-cum-Application Forms and / or Revision Forms from the Syndicate
Members or BRLM’S

Bids and Revisions of Bids

Bids and revisions of Bids must be:

(a) Made only in the prescribed Bid-cum-Application Form or Revision Form, as applicable
(white colour for Resident Indians and blue colour for NRI or FII or foreign venture
capital fund registered with SEBI applying on repatriation basis and Pink colour marked
“Employees” for Employees of the Company).

(b) Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the
instructions contained herein, in the Bid-cum-Application Form or in the Revision Form.
Incomplete Bid-cum-Application Forms or Revision Forms are liable to be rejected.

(c) The Bids from the Retail Individual Bidders must be for a minimum of [•] Equity Shares
and in multiples of [•] thereafter subject to a maximum of Rs. 1,00,000/-.

(d) For non-institutional and QIB Bidders, Bids must be for a minimum of such number of
Equity Shares that the Bid amount exceeds Rs. 1,00,000/- and in multiples of [•] Equity
Shares thereafter. Bids cannot be made for more than the size of the Issue. Bidders are
advised to ensure that a single bid from them should not exceed the investment limits or
maximum number of Equity Shares that can be held by them under applicable laws or
regulations.

(e) In single name or in joint names (not more than three and in the same order as their
Depository Participant details).

(f) Thumb impressions and signatures other than in the languages specified in the Eighth
Schedule in the Constitution of India must be attested by a Magistrate or a Notary Public
or a Special Executive Magistrate under official seal.

Bids by Permanent Employees of the Company

For the purpose of the Employee Reservation Portion, Eligible Employee means permanent
employees/executive (working) directors of the Company, who are Indian Nationals, are based
in India and are physically present in India on the date of submission of the Bid-cum-Application
Form.

Bids under Employee Reservation Portion by Eligible Employees shall be:

ƒ Made only in the prescribed Bid-cum-Application Form or Revision Form (i.e. pink colour
Bid-cum-Application form marked “Employees”).

ƒ Eligible Employees, as defined above, should mention his/her employee number at the
relevant place in the Bid-cum-Application Form.

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ƒ The sole/ first bidder should be Eligible Employees as defined above.

ƒ Only eligible employees would be eligible to apply in this Issue under this Reservation
Portion.

ƒ Eligible Employees will have to bid like any other Bidder. Only those bids, which are
received at or above the Issue Price, would be considered for allocation under this category.

ƒ Eligible Employees who apply or bid for securities of or for a value of not more than Rs.
1,00,000/- in any of the bidding options can apply at Cut-Off. This facility is not available to
other Eligible Employees whose minimum Bid amount exceeds Rs. 1,00,000/-.

ƒ The maximum bid in this category by any Eligible Employee cannot exceed [•] Equity Shares

ƒ Bid/ Application by Eligible Employees can be made also in the “Net Issue to the Public”
and such bids shall not be treated as multiple bids.

ƒ If the aggregate demand in this category is less than or equal to [•] Equity Shares at or above
the Issue Price, full allocation shall be made to the Eligible Employees to the extent of their
demand.

ƒ Under subscription in this category would be added back to the Non-Institutional and Retail
Individual Bidders category in the ratio of 50:50. In case of under-subscription in the Net
Issue to public portion, spill-over to the extent of under-subscription shall be permitted from
the Employee Reservation Portion.

ƒ If the aggregate demand in this category is greater than [•] Equity Shares at or above the
Issue Price, the allocation shall be made on a proportionate basis. For the method of
proportionate basis of allocation, refer to Para “Basis of Allocation” on page [•] of this Draft
Red Herring Prospectus.

Bidder's Bank Account Details

Bidders should note that on the basis of name of the Bidders, Depository Participants Name,
Depository Participants Identification Number and Beneficiary Account Number provided by
them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository,
the Bidder’s bank account details. These bank account details would be printed on the Refund
order, if any, to be sent to the Bidders. Hence, Bidders are advised to immediately update their
bank account details as appearing on the records of the Depository Participant. Please note that
failure to do so could result in delays in credit of refunds to Bidders at the Bidder’s sole risk and
neither the BRLM nor the Company shall have any responsibility and undertake any liability for
the same.

Bidder’s Depository Account Details

IT IS MANDATORY FOR ALL THE BIDDERS TO GET THEIR EQUITY SHARES IN THE
DEMATERIALISED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY
PARTICIPANT'S NAME, DEPOSITORY PARTICIPANT'S IDENTIFICATION NUMBER
AND BENEFICIARY ACCOUNT NUMBER IN THE BID-CUM-APPLICATION FORM.
INVESTORS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION
FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT
IS HELD. IN CASE THE BID-CUM-APPLICATION FORM IS SUBMITTED IN JOINT
NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD
IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY
APPEAR IN THE BID CUM APPLICATION FORM.

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Bidders should note that on the basis of name of the Bidders, Depository Participant’s name,
Depository Participant-Identification number and Beneficiary Account Number provided by
them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository
demographic details of the Bidders such as address, bank account details for printing on refund
orders and occupation (hereinafter referred to as Demographic Details). Hence, Bidders should
carefully fill in their Depository Account details in the Bid-cum-Application Form.

These Demographic Details would be used for all correspondence with the Bidders including
mailing of the refund orders/CANs/Allocation Advice and printing of Bank particulars on the
refund order and the Demographic Details given by Bidders in the Bid-cum-Application Form
would not be used for these purposes by the Registrar.

Hence, Bidders are advised to update their Demographic Details as provided to their Depository
Participants.

By signing the Bid-cum-Application Form, Bidder would have deemed to authorise the
depositories to provide, upon request, to the Registrar to the Issue, the required Demographic
details as available on its records.

Refund Orders/Allocation Advice/CANs would be mailed at the address of the Bidder as per
the Demographic Details received from the Depositories. Bidders may note that delivery of
refund orders/ allocation advice/ CANs may get delayed if the same once sent to the address
obtained from the depositories are returned undelivered. In such an event, the address and other
details given by the Bidders in the Bid cum Application Form would be used only to ensure
dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk.

In case no corresponding record is available with the Depositories that matches three parameters,
namely, names of the Bidders (including the order of names of joint holders), the Depository
Participant’s identity (DP ID) and the beneficiary’s identity, then such Bids are liable to be
rejected. Investors should note that the refund cheques will be overprinted with details of bank
account as per the details received from the depository.

Bids under Power of Attorney

In case of bids made pursuant to a power of attorney or by limited companies, corporate bodies,
registered societies, a certified copy of the Power of Attorney or the relevant resolution or
authority, as the case may be, along with a certified copy of the Memorandum & Article of
Association and/or Bye Laws must be lodged along with the Bid cum Application Form. Failing
this, the Company reserves the right to accept or reject any bid in whole or in part, in either case,
without assigning any reason therefor.

In case of Bids made pursuant to a Power of Attorney by FIIs, a certified copy of the power of
attorney or the relevant resolution or authority, as the case may be, along with a certified copy of
their SEBI registration certificate must be submitted with the Bid-cum-Application Form. Failing
this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case,
without assigning any reason therefor.

In case of Bids made by insurance companies registered with Insurance Regulatory and
Development Authority, a certified copy of the certificate of registration issued by Insurance
Regulatory and Development Authority must be submitted with the Bid-cum-Application Form.
Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in
either case without assigning any reason therefor.

In case of Bids made by provident fund with the minimum corpus of Rs. 25 crores and pension
fund with the minimum corpus of Rs. 25 crores, a certified copy of certificate from a chartered
accountant certifying the corpus of the provident fund/ pension fund must be lodged with the

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Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any
Bid in whole or in part, in either case without assigning any reason therefor.

In case of Bids made by mutual fund registered with SEBI, Venture Capital Fund registered with
SEBI and Foreign Venture Capital investor registered with SEBI, a certified copy of their SEBI
registration certificate must be submitted with the Bid cum Application Form. Failing this, the
Company reserves the right to accept or reject any Bid in whole or in part, in either case without
assigning any reason.

We, in our absolute discretion, reserve the right to relax the above condition of simultaneous
lodging of the power of attorney along with the Bid-cum-Application Form, subject to such terms
and conditions as the Company/BRLM may deem fit.

Bids by NRIs, FIIs, Foreign Venture Capital Funds registered with SEBI on a repatriation basis

NRI, FIIs and Foreign Venture Capital funds Bidders to comply with the following:

ƒ Individual NRI Bidders can obtain the Bid-cum-Application Forms from our registered office
or from members of the Syndicate or the Registrars to the Issue.

• NRI Bidders may please note that only such Bids as are accompanied by payment in free
foreign exchange shall be considered for allotment. NRIs who intend to make payment
through Non-Resident Ordinary (NRO) accounts shall use the Bid cum Application form
meant for Resident Indians (white in colour).

Bids and Revision to Bids must be made:

ƒ On the Bid cum Application Form or Revision Form, as applicable and completed in full in
BLOCK LETTERS in ENGLISH in accordance with the instructions contained therein.

ƒ In a single name or joint names (not more than three)

ƒ By NRIs: For a minimum of [•] Equity Shares and in multiples of [•] thereafter subject to a
maximum Bid amount of Rs. 1,00,000/- for the Bid to be considered as part of the Retail
Portion. Bids for Bid Amount more than Rs. 1,00,000/- would be considered under Non
Institutional Category for the purposes of allocation. For further details see “Maximum and
Minimum Bid Size” on page [•] of the Draft Red Herring Prospectus.

ƒ By FIIs: For a minimum of [•] Equity Shares and in multiples of [•] Equity Shares thereafter
so that the Bid Amount exceeds Rs. 1,00,000/-. For further details see section titled
“Maximum and Minimum Bid Size” on page [•] of the Draft Red Herring Prospectus.

ƒ In the names of individuals, or in the names of FIIs but not in the names of minors, OCBs,
firms or partnerships, foreign nationals (excluding NRIs) or their nominees.

ƒ Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and
net of bank charges and/or commission. In case of Bidders who remit money through Indian
Rupee drafts purchased abroad, such payments in Indian Rupees will be converted into U.S.
Dollars or any other freely convertible currency as may be permitted by the RBI at the rate of
exchange prevailing at the time of remittance and will be dispatched by registered
post/speed post or if the Bidders so desire, will be credited to their NRE accounts, details of
which should be furnished in the space provided for this purpose in the Bid-cum-Application
Form. We will not be responsible for loss, if any, incurred by the Bidder on account of
conversion of foreign currency.

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It is to be distinctly understood that there is no reservation for Non Residents, NRIs, FIIs and
Foreign Venture Capital Funds and all Non Residents, NRI, FII and Foreign Venture Capital
Funds applicants will be treated on the same basis with other categories for the purpose of
allocation.

Payment Instructions

We shall open an Escrow Account of the Company with the Escrow Collection Banks for the
collection of the Bid Amounts payable upon submission of the Bid cum Application Form. The
BRLM and Syndicate Member(s) shall also open Escrow Accounts of the Syndicate with one or
more of the Escrow Collection Banks for the collection of the margin amounts payable upon
submission of the Bid-cum-Application Form and for amounts payable pursuant to allocation in
the Issue.

Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on
allocation as per the following terms:

Payment into Escrow Account to the Issue

1. The Bidders for whom the applicable Margin Amount is equal to 100% shall, with the
submission of the Bid cum Application Form, draw a payment instrument for the Bid
Amount in favour of the Escrow Account of the Company and submit the same to the
member of the Syndicate.

2. In case the above Margin Amount paid by the Bidders during the Bidding Period is less than
the Issue Price multiplied by the Equity Shares allocated to the Bidder, the balance amount
shall be paid by the Bidders into the Escrow Account of the Company within the period
specified in the CAN which shall be subject to a minimum period of two days from the date
of communication of the allocation list to the members of the Syndicate by the BRLM.

3. The payment instruments for payment into the Escrow Account of the Company should be
drawn in favour of:

i. In case of Resident Bidders : Escrow Account – Sunstar Overseas Limited Public

Issue

ii. In case of Non Resident : Escrow Account - Sunstar Overseas Limited Public
Bidders Issue – NR

iii. In case of Employees of the : Escrow Account - Sunstar Overseas Limited Public
Company Issue – Employees

In case of Bids by NRIs applying on repatriation basis, the payments must be made through
Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on
application remitted through normal banking channels or out of funds held in Non-Resident
External (NRE) Accounts or Foreign Currency Non-Resident (FCNR) accounts, maintained
with banks authorised to deal in foreign exchange in India, along with documentary
evidence in support of the remittance. Payment will not be accepted out of a Non-Resident
Ordinary (NRO) Account of a Non-Resident bidder bidding on a repatriation basis. Payment
by drafts should be accompanied by a bank certificate confirming that the draft has been
issued by debiting an NRE or FCNR Account.

In case of Bids by FIIs, the payment should be made out of funds held in a Special Rupee
Account along with documentary evidence in support of the remittance. Payment by drafts

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 should be accompanied by a bank certificate confirming that the draft has been issued by
debiting the Special Rupee Account.

4. Where a Bidder has been allocated a lesser number of Equity Shares than what the Bidder has
Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance
amount payable on the Equity Shares allocated, will be refunded to the Bidder from the
Escrow Account of the Company.

5. The monies deposited in the Escrow Account of the Company will be held for the benefit of
the Bidders till the Designated Date.

6. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the
Escrow Account of the Company as per the terms of the Escrow Agreement into the Public
Issue Account with the Bankers to the Issue.

7. On the Designated Date and no later than 15 days from the Bid/Issue Closing Date, the
Escrow Collection Bank shall also refund all amounts payable to unsuccessful Bidders and
also the excess amount paid on Bidding, if any, after adjusting for allocation to the Bidders.

Payments should be made by cheque, or demand drafts drawn on any Bank (including a Co-
operative Bank), which is situated at, and is a member of or sub-member of the bankers’
clearing house located at the centre where the Bid cum Application Form is submitted.
Outstation cheque/bank drafts drawn on banks not participating in the clearing process will
not be accepted and applications accompanied by such cheques or bank drafts are liable to be
rejected. Cash / Stockinvest / Money Orders / Postal Orders will not be accepted.

Payment by Stockinvest

In terms of Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-2004 dated
05th November , 2003, the option to use the stockinvest instrument in lieu of cheques or bank
drafts for payment of Bid money has been withdrawn. Hence, payment through stockinvest will
not be accepted.

Submission of Bid-cum-Application Form

All Bid-cum-Application Forms or Revision Forms duly completed and accompanied by account
payee cheques or drafts shall be submitted to the Syndicate Member at the time of submission of
the Bid. Member of the Syndicate may at its sole discretion waive the requirement of payment at
the time of submission of the Bid-cum-Application Form and Revision Form in the case of QIB
Bidders, prescribed however, that for QIB Bidders the Syndicate member shall collect the QIB
Margin and deposit the sum in a specified escrow account.

No separate receipts shall be issued for the money payable on submission of Bid-cum-
Application Form or Revision Form. However, the collection centre of the BRLM/Syndicate
Member will acknowledge the receipt of the Bid cum Application Forms or Revision Forms by
stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip
will serve as the duplicate of the Bid-cum-Application Form for the records of the Bidder.

Other Instructions

Joint Bids in the case of Individuals

Bids may be made in single or joint names (not more than three). In the case of joint Bids, all
payments will be made out in favour of the Bidder whose name appears first in the Bid-cum-
Application Form or Revision Form (“First Bidder”). All communications will be addressed to the
First Bidder and will be dispatched to his or her address.

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Multiple Bids

A Bidder should submit only one Bid (and not more than one) for the total number of Equity
Shares required. Two or more Bids in single or joint names will be deemed to be multiple bids if
the sole and/or first bidder is one and the same.

In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual
fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund
will not be treated as multiple bids provided that the Bids clearly indicate the scheme concerned
for which the Bid has been made. The applications made by the asset management companies or
custodians of a Mutual Fund shall clearly indicate the name of the concerned scheme for which
application is being made.

Bidders in the Employees Reservation category can also bid in the “Net Issue to the Public” and
such Bids shall not be treated as multiple Bids.

We reserve the right to reject, in their absolute discretion, all or any multiple Bids in any or all
categories.

PAN or GIR Number

Where Bid(s) is/are for Rs. 50,000 or more, the Bidder or in the case of a Bid in joint names, each
of the Bidders, should mention his/her Permanent Account Number (PAN) allotted under the
I.T. Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the
application form. Applications without this information and documents will be considered
incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not
submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground.
In case the Sole/First Bidder and Joint Bidder(s) is/are not required to obtain PAN, each of the
Bidder(s) shall mention “Not Applicable” and in the event that the sole Bidder and/or the joint
Bidder(s) have applied for PAN which has not yet been allotted each of the Bidder(s) should
mention “Applied for” in the Bid cum Application Form. Further, where the Bidder(s) has
mentioned “Applied for” or “Not Applicable”, the Sole/First Bidder and each of the Joint
Bidder(s), as the case may be, would be required to submit Form 60 (Form of declaration to be
filed by a person of declaration to be filed by a person who does not have a permanent account
number and who enters into any transaction specified in rule 114B), or, Form 61 (form of
declaration to be filed by a person who has agricultural income and is not in receipt of any other
income chargeable to income tax in respect of transactions specified in rule 114B), as may be
applicable, duly filled along with a copy of any one of the following documents in support of the
address: (a) Ration Card (b) Passport (c) Driving License (d) Identity Card issued by any
institution (e) Copy of the electricity bill or telephone bill showing residential address (f) Any
document or communication issued by any authority of the Central Government, State
Government or local bodies showing residential address (g)Any other documentary evidence in
support of address given in the declaration. It may be noted that Form 60 and Form 61 have
been amended vide a notification issued on December 1, 2004 by the Ministry of Finance,
Department of Revenue, Central Board of Direct Taxes. All Bidders are requested to furnish,
where applicable, the revised Form 60 or 61 as the case may be.

Unique Identification Number – MAPIN

With effect from 01st July 2005, SEBI has decided to suspend all fresh registrations for obtaining
Unique Identification Number (MAPIN) and the requirement to quote MAPIN under MAPIN
Regulations/Circulars vide its circular MAPIN/Circular-13/2005.

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Right to Reject Bids

The Company, the BRLM and the members of the Syndicate reserve the right to reject any Bid
without assigning any reason therefor in case of QIBs. In case of Non-Institutional Bidders and
Retail Individual Bidders and Employees, we would have a right to reject bids based on technical
grounds. Consequent refunds shall be made by cheque or pay order or draft and will be sent to
the bidder’s address at the bidder’s risk.

Grounds for Technical Rejections

Bidders are advised to note that Bids are liable to be rejected on technical grounds, including the
following:-

1. Amount paid doesn’t tally with the amount payable for the highest value of Equity Shares
bid for;
2. Bank account details (for refund) are not given;
3. Age of First Bidder not given;
4. Bid by minor;
5. Bids by persons not competent to contract under the Indian Contract Act, 1872, including
minors, insane persons
6. PAN or GIR Number not given if Bid is for Rs. 50,000 or more;
7. Copy of PAN card/PAN allotment letter not submitted along the bid cum application form;
8. Bids for lower number of Equity Shares than specified for that category of investors;
9. Bids at a price less than the lower end of the Price Band;
10. Bids at a price more than the higher end of the Price Band;
11. Bids at cut-off price by Non-Institutional and QIB Bidders;
12. Bids for number of Equity Shares, which are not in multiples of [•];
13. Category not ticked;
14. Multiple bids as defined in this Draft Red Herring Prospectus;
15. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant
documents are not submitted;
16. Bids accompanied by Stockinvest/money order/ postal order/ cash;
17. Bids not duly signed by the sole /joint Bidders;
18. Bid-cum-Application Form does not have the stamp of the Syndicate Member;
19. Bid-cum-Application Form does not have Bidder’s depository account details;
20. Bid-cum-Application Forms are not submitted by the Bidders within the time prescribed as
per the Bid-cum-Application Form, Bid/Issue Opening Date advertisement and this Draft
Red Herring Prospectus and as per the instructions in this Draft Red Herring Prospectus and
the Bid-cum-Application Form; or
21. Bids for amounts greater than the maximum permissible amounts prescribed by the
regulations;
22. In case no corresponding record is available with the Depositories that matches three
parameters, namely, names of the Bidders (including the order of names of joint holders), the
depository participant’s identity (DP ID) and the beneficiary’s identity;
23. Bids by OCBs;
24. Bids by US persons other than “qualified institutional buyers” as defined in Rule 144A of the
Securities Act;
25. Bids by NRIs not disclosing their residential status;
26. Any other reason which the BRLMs or the Company deem necessary.

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Equity Shares in Dematerialized Form with NSDL or CDSL

As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be
allotted only in a dematerialized form, (i.e. not in the form of physical certificates but be fungible
and be represented by the statement issued through the electronic mode).

In this context, two tripartite agreements have been signed among the Company, the
Depositories and the Registrar:

1. An Agreement dated [•] among NSDL, the Company and Intime Spectrum Registry
Limited;
2. An Agreement dated [•] among CDSL, the Company and Intime Spectrum Registry
Limited

All bidders can seek allocation only in dematerialised mode. Bids from any investor without
relevant details of his or her depository account are liable to be rejected. All Bids from any
Bidder without the following details of his or her depository account are liable to be rejected:

1. A Bidder applying for Equity Shares must have at least one beneficiary account with either of
the Depository Participants of NSDL or CDSL prior to making the Bid.

2. The Bidder must necessarily fill in the details (including the beneficiary account number and
Depository Participant’s Identification number) appearing in the Bid cum Application Form
or Revision Form.

3. Equity Shares allotted to a Bidder will be credited in electronic form directly to the
beneficiary account (with the Depository Participant) of the Bidder.

4. Names in the Bid-cum-Application Form or Revision Form should be identical to those

appearing in the account details in the Depository. In case of joint holders, the names should
necessarily be in the same sequence as they appear in the depository account of the Bidder(s).

5. Non-transferable allocation advice or refund orders will be directly sent to the Bidder by the
Registrar to the Issue.

6. If incomplete or incorrect details are given under the heading ‘Bidders Depository Account
Details’ in the Bid-cum-Application Form or Revision Form, it is liable to be rejected.

7. The Bidder is responsible for the correctness of his or her demographic details given in the
Bid-cum-Application Form vis-à-vis those with his/her Depository Participant.

8. It may be noted that Equity Shares in electronic form can be traded only on the stock
exchanges having electronic connectivity with NSDL or CDSL. BSE, where Equity Shares are
proposed to be listed is connected to NSDL and CDSL.

9. The trading of our Equity Shares would only be in dematerialized form for all investors in
the demat segment of BSE.

10. Investors are advised to instruct their Depository Participants to accept the Equity Shares that
may be allocated to them, pursuant to the issue.

Communications

All future communications in connection with Bids made in this Issue should be addressed to the
Registrar to the Issue quoting the full name of the sole or First Bidder, Bid-cum-Application Form

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number, number of Equity Shares applied for, date of Bid Form, name and address of the
member of the Syndicate where the Bid was submitted and cheque or draft number and issuing
bank thereof.

The Company has appointed Ms. Kiranpreet Gill (Company Secretary) as the Compliance
Officer. The Compliance Officer can be contacted at Sunstar Overseas Limited, 24B, Alipur Road,
Civil Lines, New Delhi – 110 054. Telephone: (011) 2399 4383 – 87; Fax No: (011) 2399 4326 Email:
[email protected]

The Investors can contact the Compliance Officer in case of any pre-Issue or post-Issue related
problems such as non-receipt of letters of allotment, credit of allotted shares in the respective
beneficiary account, refund orders, etc.

Impersonation

As a matter of abundant caution attention of the applicants is specifically drawn to the

provisions of sub-section (1) of Section 68(A) of the Companies Act, 1956, which is reproduced
below:

"Any person who:

a) makes in a fictitious name, an application to a Company for acquiring or subscribing for,

any shares therein, or
b) otherwise induces a Company to allot, or register any transfer of shares therein to him, or
any other person in a fictitious name; shall be punishable with imprisonment for a term
which may extend to five years."

Interest on Refund of Excess Bid Amount

We shall pay interest at the rate of 15% per annum on the excess Bid Amount received by us if
refund orders are not dispatched within 15 days from the Bid/Issue Closing Date as per the
Guidelines issued by the Government of India, Ministry of Finance pursuant to their letter No.
F/8/S/79 dated 31st July 1983, as amended by their letter No. F/14/SE/85 dated 27th September
1985, addressed to the stock exchanges, and as further modified by SEBI’s Clarification XXI dated
27th October 1997, with respect to the SEBI Guidelines.

BASIS OF ALLOTMENT

I) For Retail Individual Bidders

ƒ Bids received from the Retail Individual Bidders at or above the Issue Price shall be
grouped together to determine the total demand under this portion. The allocation to all
the successful Retail individual Bidders will be made at the Issue Price.

ƒ The Net Issue size less allocation to Non-Institutional Bidders and QIBs shall be
available for allocation to Retail Individual Bidders who have bid in the Issue at a price,
which is equal to or greater than the Issue Price.

ƒ If the aggregate demand in this category is less than or equal to 18,62,000 Equity Shares
at or above the Issue Price, full allocation shall be made to the Retail Individual Bidders
to the extent of their demand.

ƒ If the aggregate demand in this category is greater than 18,62,000 Equity Shares at or
above the Issue Price, the allocation shall be made on a proportionate basis up to a

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 minimum of [•] Equity Shares (being the minimum bid quantity) or in multiples of one
Equity Share. For the method of proportionate basis of allocation, refer below.

II) For Non Institutional Bidders

ƒ Bids received from Non-Institutional Bidders at or above the Issue Price shall be
grouped together to determine the total demand under this portion. The allocation to all
successful Non-Institutional Bidders will be made at the Issue Price.

ƒ The Net Issue size less allocation to QIBs and Retail Portion shall be available for
allocation to Non-Institutional Bidders who have bid in the Issue at a price, which is
equal to or greater than the Issue Price.

ƒ If the aggregate demand in this category is less than or equal to 7,98,000 Equity Shares at
or above the Issue Price, full allocation shall be made to Non-Institutional Bidders to the
extent of their demand.

ƒ In case the aggregate demand in this category is greater than 7,98,000 Equity Shares at
or above the Issue Price, allocation shall be made on a proportionate basis up to a
minimum of [•] Equity Shares (being the minimum bid quantity) or in multiples of one
Equity Share. For the method of proportionate basis of allotment refer below.

III) For QIB Bidders

ƒ Bids received from the QIB bidders at or above the Issue Price shall be grouped together
to determine the total demand under this portion. The allocation to all the QIB Bidders
will be made at the issue price.

ƒ The QIB portion shall be available for allocation to QIB bidders who have bid in the
Issue at a price that is equal to or greater than the Issue Price.

ƒ Allotment shall be undertaken in the following manner:

(a) In the first instance allocation to Mutual Funds for 5% of the QIB Portion shall be
determined as follows:
i. In the event that Mutual Fund Bids exceed 5% of the QIB portion, allocation to
Mutual Funds shall be done on a proportionate basis for 5% of the QIB portion.
ii. In the event that the aggregate demand for Mutual Funds is less than 5% of the
QIB portion then all Mutual Funds shall get full allotment to the extent of valid
bids received above the Issue Price.
iii. Equity shares remaining unsubscribed, if any, not allocated to Mutual Funds
shall be available to all QIB Bidders as set out in (b) below;

(b) In the second instance allocation to all QIB’s shall be determined as follows:
i. In the event that the oversubscription in the QIB portion, all QIB bidders who
have submitted bids above the Issue Price shall be allotted Equity Shares on a
proportionate basis for up to 95% of the QIB portion.
ii. Mutual Funds, who have received allocation as per (a) above, for less than the
number of Equity Shares Bid for by them, are eligible to receive Equity Share on
a proportionate basis along with other QIB Bidders.
iii. Under-subscription below 5% of the QIB portion, if any, from Mutual Funds,
would be included for allocation to the remaining QIB bidders on a
proportionate basis.

(c) The aggregate allocation to QIB Bidders shall be up to 26,60,000 Equity Shares.

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IV) For Bidders in Employee Reservation category

ƒ Bids received from the Bidders in Employee Reservation category at or above the Issue
Price shall be grouped together to determine the total demand under this category. The
allotment to all the successful Bidders in Employee Reservation category will be made at
the Issue Price.

ƒ The Equity Shares under the Employee Reservation portion shall be available for
allotment to Bidders who have bid in this category at a price that is equal to or greater
than the Issue Price.

ƒ If the aggregate demand in this category is less than or equal to [•] Equity Shares at or
above the Issue Price, full allotment shall be made to the Bidders in Employee
Reservation category to the extent of their demand.

ƒ If the aggregate demand in this category is greater than [•] Equity Shares at or above the
Issue Price, the allotment shall be made on a proportionate basis subject to minimum
allocation being equal to the minimum bid/ application size of [•] Equity Shares. For
the method of proportionate basis of allotment, kindly refer to the paragraph on the
following pages on method of proportionate basis of allotment.

Procedure and Time Schedule for Allotment of Equity Shares

The Company and the members of the Syndicate reserve the right to reject any Bid without
assigning any reason thereof in case of QIBs. In case of Non- Institutional Bidders and Retail
Individual Bidders, the Company has a right to reject bids based on technical grounds. In case a
Bid is rejected in full, the whole of the Bid Amount will be refunded to the Bidder within 15 days
of the Bid/Issue Closing Date. In case a Bid is rejected in part, the excess Bid Amount will be
refunded to the Bidder within 15 days of the Bid/Issue Closing Date. The Company will ensure
allotment of the Equity Shares within 15 days from the Bid/Issue Closing Date, and the
Company shall pay interest at the rate of 15% per annum (for any delay beyond the periods as
mentioned above), if Equity Shares are not allotted, refund orders are not dispatched and/ or
demat credits are not made to investors within two working days from the date of allotment.

Method of Proportionate Basis of Allocation in the Retail and Non-Institutional Portions

In the event of the Issue being over-subscribed, the basis of allotment to Retail and Non
Institutional Bidders shall be finalized by the Company, in consultation with the Designated
Stock Exchange. The Executive Director or Managing Director (or any other senior official
nominated by them) of the Designated Stock Exchange along with the BRLM and the Registrar to
the Issue shall be responsible for ensuring that the basis of allotment is finalized in a fair and
proper manner. The allocation shall be made in multiples of one share, on a proportionate basis
as explained below subject to minimum allocation being equal to [•] Equity Shares:

a) The subscription in the Retail and the Non-Institutional portion will be computed separately.

b) Bids which are eligible for pure proportionate allotment as provided in the SEBI (DIP)
Guidelines shall be those which have applied for a minimum shares arrived at by
multiplying the minimum shares to be allotted by the number of time the category is
subscribed. Allotment to such bidders will be calculated as shares applied for divided by the
number of time the category is subscribed.

c) If the pure proportionate allotment to a Bidder is a number that is more than minimum
allotment lot but is not a multiple of one (which is the marketable lot), the decimal would be
rounded off to the higher whole number if that decimal is 0.5 or higher. If that number is

207
 lower than 0.5, it would be rounded off to the lower whole number. All Bidders in such
categories would be allotted Equity Shares arrived at after such rounding off.

d) The balance of the bids will be those, which will not be directly entitled for allotment of
minimum shares. Such bidders will be allotted shares by a drawal of lots in a fair manner to
ensure that each successful bidder (determined by drawal of lot) gets the minimum number
of shares to be allotted.

e) If the Equity Shares allocated on a proportionate basis to any category are more than the
Equity Shares allotted to the Bidders in that category, the remaining Equity Shares available
for allotment shall be first adjusted against any other category, where the allotted shares are
not sufficient for proportionate allotment to the successful Bidders in that category. The
balance Equity Shares, if any, remaining after such adjustment will be added to the category
comprising bidders applying for minimum number of Equity Shares.

Letters of allotment or refund orders

The Company shall give credit to the beneficiary account with depository participants within 2
working days of finalization of the basis of allotment of Equity Shares. The Company shall
despatch refund orders above Rs. 1,500/-, if any, by registered post or speed post at the sole or
first bidder’s sole risk within 15 days of the Bid/Issue Closing Date. In accordance with the
Companies Act, the requirements of the Stock Exchanges and the SEBI Guidelines, the Company
further undertakes that:

a) Allotment of Equity Shares will be made only in dematerialized form within 15 days from the
Bid/Issue Closing Date;

b) Despatch of refund orders will be done within 15 days from the Bid/Issue Closing Date;

c) The Company shall pay interest @ 15% per annum (for any delay beyond the 15 day time
period as mentioned above), if Allotment is not made, refund orders are not dispatched
and/or demat credits are not made to investors within 15 day being the prescribed time
period stated above.

The Company will provide adequate funds required for dispatch of refund orders or allotment
advice to the Registrar to the Issue. Refunds will be made by Electronic Clearing Services (ECS),
Direct Credit , RTGS, National Electronic Funds Transfer(NEFT) wherever available and
permitted by SEBI and RBI or through Cheques, pay-orders or demand drafts drawn on a bank
appointed by us, as an Escrow Collection Bank and payable at par at places where Bids are
received. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other
centres will be payable by the Bidders.

Disposal of Applications and Application Money

The Company shall ensure dispatch of allocation advice or refund orders and give benefit to the
Beneficiary Account with Depository Participants and submit the documents pertaining to the
allocation to the Stock Exchanges within two working days of date of finalisation of allocation of
Equity Shares. The Company shall dispatch refund orders, if any, of value up to Rs. 1,500,
“Under Certificate of Posting”, and shall dispatch refund orders above Rs. 1,500, if any, by
Registered Post or Speed Post at the sole or First Bidder’s sole risk or through electronic mode
wherever available and permitted by SEBI and RBI . Where refunds are made through electronic
means a communication shall be sent to applicant within 15 days of closure of the issue giving
the details of the bank where refunds being credited with amount being credited and expected
date of electronic credit of refund.

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We shall use best efforts to ensure that all steps for completion of the necessary formalities for
allocation and trading at all the Stock Exchanges where the Equity Shares are proposed to be
listed, are taken within seven working days of finalization of the basis of allotment.

In accordance with the Act, the requirements of the Stock Exchange and the SEBI Guidelines, we
further undertake that:

1. Allotment of Equity Shares will be made only in dematerialized form within 15 days from the
Bid/Issue closing date

2. Dispatch of refund orders will be done within 15 days from the Bid/Issue closing date

3. Our Company shall pay interest at 15 % per annum (for delay beyond 15 days time period as
mentioned above), if allotment is not made, refund orders are not dispatched and/or demat
credit are not made to investors within the 15 day time period prescribed above.

The Company will provide adequate funds required for dispatch of refund orders or allocation
advice to the Registrar to the Issue. Refunds will be made by cheques, pay orders or demand
drafts drawn on a bank appointed by the Company as a refund banker and payable at par at
places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or
demand drafts at other centres will be payable by the Bidders.

Interest in case of delay in Despatch of Allotment Letters/Refund Orders in case of Public

Issues

The company agrees that allotment of securities offered to the public shall be made not later
than 15 days of the closure of public issue. The company further agrees that it shall pay interest
@15% per annum if the allotment letters/ refund orders have not been despatched to the
applicants or if, in a case where the refund or portion thereof is made in electronic manner, the
refund instructions have not been given to the clearing system in the disclosed manner within 15
days from the date of the closure of the issue.

Despatch of Refund Orders

The Company shall ensure despatch of refund orders of value over Rs. 1,500 by registered post or
speed post only and refund orders of value up to Rs. 1,500 by under Certificate of Posting and
adequate funds for the purpose shall be made available to the Registrar to the Issue by the
Company.

The Company shall pay interest at the rate of 15% per annum on the excess Bid Amount received
if refund orders are not dispatched within 15 days from the Bid/Issue Closing Date as per the
Guidelines issued by the Government of India, Ministry of Finance pursuant to their letter
No.F/8/S/79 dated 31st July 1983, as amended by their letter No. F/14/SE/85 dated 27th
September 1985, addressed to the stock exchanges, and as further modified by SEBI’s clarification
XXI dated October 27, 1997, with respect to the SEBI (DIP) Guidelines.

Undertaking by the Company

We undertake as follows:

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

b. That all steps for completion of the necessary formalities for listing and commencement of
trading at all stock exchanges where the Equity Shares are to be listed are taken within 7
working days of finalization of the basis of allotment;

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c. That the funds required for dispatch of refund orders by registered post shall be made
available to the Registrar to the Issue by the Company;

d. That the certificates of Equity Shares/refund orders to non-resident Indian applicants shall
be dispatched within specified time;

e. That the promoters’ contribution in full, wherever required, shall be brought in advance
before the issue opens for public subscription and the balance, if any, shall be brought in pro
rata basis before the calls are made on public;

f. That no further issue of Equity Shares shall be made till the Equity Shares offered through
this Prospectus are listed or till the application moneys are refunded on account of non-
listing, under-subscription, etc.

Utilisation of Issue Proceeds

The Board of Directors of our Company certify that:

a. All monies received out of this issue of shares to public shall be transferred to a separate bank
account other than the bank account referred to in sub-section (3) of section 73 of the Act;

b. Details of all monies utilized out of the issue referred to in sub-item (a) shall be disclosed
under an appropriate separate head in the Balance Sheet of the Company indicating the
purpose for which such monies had been utilized;

c. Details of all unutilized monies out of the issue of shares, if any, referred to in sub-item (a)
shall be disclosed under an appropriate separate head in the Balance Sheet of the Company
indicating the form in which such unutilized monies have been invested;

d. The utilization of monies received under promoter’s contribution and reservations shall be
disclosed under an appropriate head in the Balance Sheet of the Company indicating the
purpose for which such monies have been utilized; and

e. The details of all unutilized monies, out of the funds received under promoter’s contribution
and reservations, shall be disclosed under a separate head in the Balance Sheet of the
Company indicating the manner in which such unutilized monies have been invested.

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 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
Foreign investment in Indian securities is regulated through the industrial policy of Government
of India, or the Industrial Policy and FEMA. While the Industrial Policy prescribes the limits and
the conditions subject to which foreign investment can be made in different sectors of the Indian
economy, FEMA regulates the precise manner in which such investment may be made.

Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted
in all sectors of Indian economy up to any extent and without any prior approvals, but the
foreign investor is required to follow certain prescribed procedures for making such investment.
The government bodies responsible for granting foreign investment approvals are the Foreign
Investment Promotion Board of Government of India (FIPB) and the RBI. As per current foreign
investment policies, FDI in the food processing sector is allowed up to 100% under the
automatic route.
RBI, vide its circular A.P.(DIR Series) Circular No. 53 dated December 17, 2003 , permitted FIIs to
subscribe to shares of an Indian Company in the public issue without prior approval of RBI, so
long as the price of equity shares to be issued is not less than the price at which the equity shares
are issued to residents.
Investment by Non-Resident Indians
A variety of special facilities for making investments in India in shares of Indian Companies is
available to individuals of Indian nationality or origin residing outside India (“NRIs”). These
facilities permit NRIs to make portfolio investments in shares and other securities of Indian
companies on a basis not generally available to other foreign investors. Under the portfolio
investment scheme, NRIs are permitted to purchase and sell equity shares of the Company
through a registered broker on the stock exchanges. NRIs collectively should not own more than
10% of the post-issue paid up capital of the Company. No single NRI may own more than 5% of
the post- issue paid up capital of the Company. NRI investment in foreign exchange is now fully
repatriable whereas investments made in Indian Rupees through rupee accounts remains non
repatriable.
Investment by Foreign Institutional Investors
Foreign Institutional Investors (“FIIs”) including institutions such as pension funds, investment
trusts, asset management companies, nominee companies and incorporated, institutional
portfolio managers can invest in all the securities traded on the primary and secondary markets
in India. FIIs are required to obtain an initial registration from the SEBI and a general permission
from the RBI to engage in transactions regulated under FEMA. FIIs must also comply with the
provisions of the SEBI (Foreign Institutional Investors) Regulations, 1995, as amended from time
to time. The initial registration and the RBI’s general permission together enable the registered FII
to buy (subject to the ownership restrictions discussed below) and sell freely securities issued by
Indian companies, to realise capital gains or investments made through the initial amount
invested in India, to subscribe or renounce rights issues for shares, to appoint a domestic
custodian for custody of investments held and to repatriate the capital, capital gains, dividends,
income received by way of interest and any compensation received towards sale or renunciation
of rights issues of shares.
Ownership restrictions of FIIs
Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation
basis should not exceed 24% of post-issue paid-up capital of the Company. However, the limit of
24% can be raised up to the permitted sectoral cap for that Company after approval of the board
of directors and shareholders of the Company. The issue of equity shares to a single FII should
not exceed 10% of the post-issue paid-up capital of the Company. In respect of an FII investing in
equity shares of a Company on behalf of its sub-accounts, the investment on behalf of each sub-
account shall not exceed 10% of the total issued capital of that Company.

The above information is given for the benefit of the Bidders and neither the Company nor
the BRLM(s) are liable for any changes in the regulations after the date of this Draft Red
Herring Prospectus.

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 SECTION X - DESCRIPTION OF EQUITY SHARES AND TERMS OF ARTICLES OF
ASSOCIATION

MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

The Authorized capital of our Company is Rs. 20 crores divided into 2,00,00,000 Equity Shares of
Rs. 10/- each.

Pursuant to Schedule II of the Companies Act and the SEBI Guidelines, the main provisions of
the Articles of Association of our Company are detailed below:

SHARE CAPITAL AND VARIATION OF RIGHTS

3. A) The authorized share capital of the Company shall be as specified in the

Memorandum of Association.

B) The Company may from time to time, by ordinary resolution increase the Share
capital by such sum, to be divided into shares of such amount, as may be
specified in the resolution.

C) Subject to any special rights or privileges for the time being attached to any
shares in the capital of the Company than issued, the new shares may be issued
of different classes upon such terms and conditions, and with such rights,
privileges, and conditions attached thereof as the general meeting resolving
upon the creation thereof shall direct and if no direction be given m as the Board
shall determine, and in particular such shares may be issued with a preferential
or qualified right to dividend and in the distribution of assets of the Company.

D) Subject to the provisions of the Act, the shares shall be under the control of the
Board, who may invite subscription from, allot or otherwise dispose or any class
of shares to such persons and at such terms and conditions as the Board may
determine, provided that such shares shall not be allotted to persons other than
the members of the company except with the sanction of the company in general
meeting.

E) Subject to the provisions of the Act, the company shall have power to Issue
shares at a premium of discount.

F) The company may, by ordinary resolution:

I) consolidate and divide all or any of its share capital into shares of larger
amount than its existing shares.

II) sub divide its existing shares or any of them into shares of smaller
amount than is fixed by the memorandum, subject, nevertheless, to the
provisions of clause (d) of sub-section (1) of section 94:

III) cancel any shares which, at the date of passing of the resolution, have not
been taken or agreed to be taken by any person;

G) The company may, by special resolution, reduce in any manner and with, and
subject to any incident authorized and consent required by law:

I) Its share capital

II) Capital Redemption Reserve Accounts; and

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 III) Share Premium Accounts.

H) The company may place, reserve, or distribute as bonus shares among the
Members or otherwise to apply, any monies received by way of premium on
shares, debentures issued by the company, capital reserve by whatever name
called and any monies received in respect of shares and their subsequent sale.

I) If owing to any inequality in the number of new shares to be issued and the
number of shares held by members entitled to have the offer of such new shares,
any difficulty arises in the apportionment of such new shares or any of them
amongst the members, such difficulty shall in the absence of any direction in the
resolution creating the shares or by the company in general meeting, be
determined by the Board.

J) Subject to the provisions of the Act, the directors may issue and allot Shares for
consideration in cash or otherwise in payment or in part payment for any
property, moveable or immoveable, tangible or intangible, or assets of every king
and description, supplied or transferred or for services rendered to the company
at any time for pursuing the objects of the company.

K) Subject to the provisions of sections 80, any preference shares may, with the
sanction of an ordinary resolution, be issued on the terms that they are, or at the
option of the company are liable, to be redeemed on such terms and conditions
as the company before the issue of shares may, by special resolution determine.

L) Notwithstanding anything to the contrary contained in the forgoing Articles, the

directors of the company may, without requiring any resolution of the company
in general meeting, or without making any offer to the existing shareholders of
the company, increase the share capital, caused by the reservation and/ or
allotment of any shares by exercise of an option by the debenture holders to
whom debenture have been issued, or to financial institutions specified by the
Central Government, from whom loans have been raised by the company.

M) Notwithstanding anything to the contrary contained in those articles with regard

to issue of share capital, the Company may issue warrants, whether are or
attached to any shares, debentures or other securities, to such persons as the
Board may decide, and entitling the warrants to subscribe to the share capital of
the company at such price on such terms and conditions as may be approved by
the company in a general meeting.

4. A) If at any time the share capital is divided into different classes of share, the rights
attached to any class (unless otherwise provided by the terms of issue of the
share of that class) may subject to the provisions of the Act, and whether or not
the company in being wound up be varied with the consent in writing of the
holders of three fourths of the issued shares of that class or with the sanction of
a special resolution passed at a separate general meeting of the holders of the
shares of that class.

B) Subject to the provisions of the Act, to every such separate general meeting; the
provisions of these Regulations relating to General meeting shall mutatis
mutandis apply, but so that the necessary quorum shall be two persons at least
holding or representing by proxy one – third of the issued shares of the class in
question.

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 C) The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of shares of that class, be deemed to be varied by the creation or
issue further shares ranking pari-passu therewith.

5. Except as required by law, no person shall be recognized by the company as

holding any share upon any trust, and the company shall not be bound by, or be
compelled in any way to recognize (even when having notice thereof) any
equitable, contingent, future or partial interest in any share, or any interest in any
fractional part of a share, or (except only as by these regulations or by law
otherwise provided any other rights in respect of any shares except an absolute
right to the entirely thereof in the registered holder,

6. The company may pay commission, underwriting commission and brokerages

In any issue of shares, debentures and other securities in accordance with the
provisions of the Act, and/or any prevailing guidelines in force

SHARE CERTIFICATES

7. The certificate of little to share shall be issued under the seal of the company
And shall be issued, sealed and signed in conformity with the provision of the
Companies (issue of share certificate) Rules, 1960 or any statutory modification
or re- enactment thereof for the time being in force. Any two or more joint
allottees or owners of a share shall, for the purpose of this Articles be treated as a
single member and the certificate of any share may be delivered to any one of
such joint allottees or owners on behalf of all of them.

8. The company shall, within three months after the allotment of any of its share
debentures or debenture stock and within two months after the application for
the registration of the transfer of any such shares, debentures or debenture stock,
complete and dispatch the Certificate of all shares, debentures and debenture
stock allotted or transferred, unless the conditions of issue of shares, debenture
or debenture stock otherwise provide.

9. The Board of Directors may renew / duplicate a share or Debenture Certificate, if

such certificate:

I) Is proved to have been lost or destroyed, or

II) Having been defaced or mutilated or form is surrendered to the
Company, or
III) Is old, decrepit, or worn out or where the cages on the reverse for
recoding transfers are fully utilised

CALLS ON SHARES

10. A) The Board may, from time to time, make call upon the members in respect of any
moneys unpaid on their shares (whether on account of the nominal value of
the shares or by way of premium) and not by the conditions of allotment thereof
made payable at fixed times.

B) Each member shall, subject to receiving at least thirty days notice specifying the
time to time and place of payment, pay to the company at the time or times and
place so specified the amount called on his shares.

C) A call may be revoked or postponed at the discretion of the Board.

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11 A call shall be deemed to have been made at the time when the resolution of the
board authorizing the call was passed and may be required to be paid by
instalments.

12. The joint- holders of a share shall be jointly and severally liable to pay all calls in
respect thereof.

13. A) If a sum called in respect of a share is not paid before or on the day appointed for
payment thereof, the person from whom the sum is due shall pay interest
thereon from the day appointed for payment thereof to the time to actual
payment at such rate as the Board may determine.

B) The Board shall be at liberty to waive payment of any such interest wholly or in
part.

14. A) Any sum which by the terms of issue of a share becomes payable on allotment or
at any fixed date, whether on account of the nominal value of the share or by
way of premium, shall, for the purpose of these Regulations, be deemed to be a
call duly made and payable on the date on which by the terms of issue such sum
becomes payable.

B) In case of non-payment of such sum, all the relevant provisions of the

Regulations as to be payment of interest and expenses, forfeiture or otherwise
shall apply as if such sum had become payable by virtue of a call duly made and
notified.

Provided that nay amount be paid in advance of call on ay shares, may carry
interest at a rate determined by the Board but shall not in respect thereof confer a
right to dividend or to participate in profit.

15. The Provisions of the above clauses shall, to the extent applicable, cover calls on
debentures.

LIEN

16. A) The company shall have a first and paramount lien upon all the shares (other
than fully paid up shares) registered in the name of each member (whether
presently payable or not) called or payable at a fixed time in respect of such
shares and no equitable interest in any share shall be created except upon the
footing and condition that article 5 thereof will have full effect and such lien shall
extend to all dividends, rights and bonuses from time to time declared in respect
of such shares.

B) Unless otherwise agreed the registration of a transfer of shares shall not operate
as a waiver of the Company’s lien, if any on such shares.

C) The Directors may at any time declare any shares wholly or in part to be Exempt
from the provisions of this clause.

17. The company may sell, in such manner as the Board thinks fit, any shares on
which the Company has a lien:

Provided that no sale shall be made

I Unless a sum is respect of which the lien exists is presently payable, or

215
 II Until the expiration of fourteen days after a notice in writing stating and
demanding payment of such part of the amount in respect of which the
lien exists as is presently payable, has been given to the registered holder
for time being of the share or the person entitled thereto by reason of his
death or insolvency.

18. A) to give effect to any such sale, the Board may authorize some person to transfer
the shares sold to the purchaser thereof.

B) The purchaser shall be registered as the shareholder of the shares comprised in

any such transfer.

C) The purchaser shall not be bound to see to the application of the purchase
Money, nor shall his little to the shares be affected by any irregularity or
Invalidity in the proceedings in reference to the sale.

D) The proceeds of the sale shall be received by the company and applied in
Payment of such part of the amount in respect of which the lien exists as is
presently payable.

E) The residue, if any, shall, subject to a like lien for sums not presently Payable as
existed upon the shares before the sale, be paid to the person Entitled to the
shares at the date of sale.

19. No member shall exercise any voting rights in respect of any share registered in
his name on which any calls or other sums presently payable by him have not
been paid or in regard to which the company has exercised any right of lien.

FORFEITURE OF SHARES

20. A) If a member falls to pay any call or installment of a call, on the day appointed for
payment thereof, the Board may at any time thereafter during such time as any
part of the call or installment remains unpaid. Remains unpaid, serve a notice on
him requiring payment of so much of the call or installment as is unpaid,
together with any interest, which may have accrued.

B) The notice aforesaid shall

I name a further day (not being earlier than the expiry of fourteen days
from the date of service of notice) on or before which the payment as
required by the notice is to be made; and

II state that, in the event of non payment on or before the day so named,
the share3s in respect of which the call was made will be liable to be
forfeited.

C) If the requirements of any such notice as aforesaid are not complied with, any
share in respect of which the notice has been given may, at any time thereafter,
before the payment as required by the notice has been made, be forfeited by a
resolution of the Board to that effect.

21. A) A forfeited share may be sold or otherwise disposed of in such manner as the
Board thinks fit.

B) At any time before a sale or disposal as aforesaid, the Board, may cancel the
forfeiture on such terms as it thinks fit.

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22. A) A person whose shares have been forfeited shall cease to be a member in respect
of the forfeited shares, but shall, notwithstanding the forfeiture, remain able to
pay to the company all monies which, at the date of forfeiture, were payable by
him to the company in respect of the shares.

B) The liability of such person shall cease, if and when the company shall have
received the payment in full of all such monies in respect of the shares.

23. A) A duly verified declaration in writing that the declarant is a Director, the
Manager or the Secretary, of the company, and that a share in the company has
been duly forfeited on a date stated in the declaration shall be conclusive
evidence of the facts there in stated as against all persons
claiming to be entitled to the share.

B) The Company may receive the consideration, if any, given for the share on any
sale or disposal thereof and may execute a transfer of the share is sold or
disposed of.

C) The transferee, shall thereupon be registered as the holder of the share.

D) The transferee shall not be bound to see to the application of the purchase
Money, if any, nor shall his title to the shares be affected by any irregularity or
invalidity in the proceedings in reference to the forfeiture, sale or Disposal of the
share.

24. A) The provisions of these regulations as to forfeiture shall apply in the case of non-
payment of any sum which by the terms of issue of a share, becomes payable at a
fixed time, whether on account of the nominal value of the share or by way of
premium, as if the same had been payable by virtue of a call duly made and
notified.

B) The forfeiture of share shall involve the extinction of all interest in and also of all
claims and demands against the company in respect of the share and all other
rights incidental to the share, except only such of those rights as by these Articles
are expressly saved.

25. The provisions of the above clauses shall, to the extent applicable, cover
forfeiture of debentures.

TRANSFER AND TRANSMISSION OF SHARES

26. A) The instrument of transfer on any share in the Company shall be executed by or
on behalf of both the transferor and transferee. The transferor shall be deemed to
remain a holder of the share until the name of transferee is entered in the
Register of members in respect thereof.

B) Shares in the Company shall be transferred in the form prescribed by the

Companies (Central Government) General Rules and Forms 1956. The Company
shall not charge any fees for registration of transfer. The provisions of the Act for
the time being in force, shall be complied with in respect of all transfer of shares
and registration thereof.

27. Subject to the provisions of the Act, and Section 22A of the Securities Contracts
(Regulation) Act, 1956, the Directors may in their absolute and unqualified

217
 discretion decline to register any transfer of shares without assigning any reason
thereof. The Directors may also decline to recognize any Instrument of transfer
unless it is accompanied by the certificate(s) of the shares to which it relates and
such other evidence as the Directors may reasonably require to show the right of
the transferor to make the transfer. If the Directors refuse to register the transfer
of any shares, they shall, within two months after the date on which the transfer
was lodged with the company send to the transferee and the transferor notice of
the refusal provided that registration of the transfer shall not be refused merely
on the ground of the transferor, being either alone or jointly with any other
person, indebted to the company on any account whatsoever except a lien on the
share.

28. The Board may also refuse to register a transfer when any statutory prohibition
or any attachment or prohibitory order of a competent authority restrains the
Board from transferring the shares out of the name of the transferor or when a
Transferor objects to the transfer, provided he serves on the company within a
Reasonable time a prohibitory order of a Court of competent jurisdiction.

29. Every Instrument of transfer shall be left at the premises designated by the Board
for this purpose for registration, accompanied by the certificate of the share to be
transferred or, if no such certificate is in existence, by the letter of allotment of the
share and such other evidence as the Board may require to prove the title of the
transferor or his right to transfer the share.

30. The registration of transfers may be suspended at such times and for such
periods as the Board may from time to time determine.

Provided that such registration shall not be suspended for more that forty-five
days in any year and provisions of the Act shall be complied with.

31 A) On the death of a member, the survivor or survivors where the member was a
joint holder, and his legal representatives where he was a sole holder, shall be the
only persons recognized by the Company as having any title to his interest in the
shares.

B) Nothing in clause (A) shall release the estate of a deceased joint holder from any
liability in respect of any share, which had been jointly held by him with other
persons.

32. A) Any person becoming entitled to a share in consequence of the death or

insolvency of a member may, upon such evidence being produced as may from
time to time properly be required by the Board and subject as hereinafter
provided, elect, either-

I) to be registered himself as holder of the share: or

II) to make such transfer of the share as the deceased or insolvent member
could have made.

B) The Board shall, in either case have the same right to decline or suspend
registration as it would have had, if the deceased or insolvent member has
transferred the shares before his death or Insolvency.

33. A) If the person so becoming entitled shall elect, to be registered as holder of the
share himself, he shall deliver or send to the company a notice in writing signed
by him stating that he so elects.

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 B) If the person aforesaid shall elect to transfer the share, he shall testily his election
by executing a transfer of the share.

C) All the limitations, restrictions and provisions of these regulations relating to the
right to transfer and the registration of transfer of shares Shall be applicable to
any such notice or transfer as aforesaid as if the Death or Insolvency of the
member had not occurred and the notice or transfer signed by that member,

34. A person so becoming entitled to a share by reason of the death or insolvency of

the holder shall be entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the share, except that he
shall not, before being registered as a member in respect of the share, be entitled
in respect of it to exercise any right conferred by membership in relation to
meetings of the Company.

Provided that the Board may, at any time, give notice requiring any such person
to select either to be registered himself or to transfer the share, and if the notice is
not complied with within ninety days, the Board may thereafter with hold
payment of all dividends, bonuses or other monies, payable in respect of the
share until the requirements of the notice have complied with.

BORROWING POWERS

35. A) Subject to the express provisions of the Act, the Company shall have power to
borrow from any persons and secure the payment of any sums or sums of money
for the purpose of the company and the Directors may, from time to time, at their
discretion exercise this power, and may themselves lend to the Company on
security or otherwise.

Provided further that no debt Incurred or security given in excess of limit

imposed by the Act shall be Invalid or Ineffectual except in the case of Express
notice to the lender or the recipient of the security at the time when the debt was
Incurred or security given, that limit Imposed has been or was hereby exceeded.

B) The Directors may raise, or secure the repayment of, any sum or of any sum or
sums in such manner and upon such terms and conditions in all respects as they
may think it and In particular by creation of any mortgage or charge on the
whole or any part of the property, present or future, or uncalled capital of the
company or by the issue of bonds, perpetual, convertible, or redeemable
debentures or debenture stock of the company charged upon all or any part of
the property of the company, both present and future, including its uncalled
capital for the time being.

C) Subject to the provisions of the Act and the rules made there under the Directors
may receive deposits for such terms and bearing interest at such rates as the
directors may decide from time to time The deposits may be received from any
person or persons including the Directors and the shareholders of the Company.

GENERAL MEETINGS

37. A) All general meetings other that Annual General Meeting shall be called
Extraordinary General meetings.

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 B) The Board may, whenever it thinks fit, or on the requisition of such number of
members as prescribed in Section 169 of the Act convene an extraordinary
general meeting.

D) The company shall in each year hold, in addition to any other meeting, a meeting
called the Annual General Meeting, at such time and place as may be determined
by the Board, and not more that 15 months shall elapse between one Annual
General Meeting and that of the next. If for any reason. The meeting cannot be so
held the same may be extended by a further period of three months. Subject to
the provisions of the Act.

.38. A) A General Meeting of the Company may be called by giving not less than twenty
one days notice in writing or after giving such shorter notice as provided for in
the Act.

B) Notice of every meeting of the Company shall be given:

I) to every member of the Company

II) to the persons entitled to a share in consequence of the death or
Insolvency of a member
III) to the Auditor or Auditors for the time being, of the company in the
manner provided for in the Act.

C) Accidental Omission to give notice to, or the non-receipt of notice by any

member or other person to whom it should be given shall not invalidate the
proceedings of the meeting.

39. The Company shall give to its member’s notice of resolutions requiring special
notice at the same time and in the same manner as it gives notice of the meeting
or if that is not practicable, shall give notice thereof either by advertisement in a
newspaper having circulation, In the State In which the registered office is
situated, not less than 21 days before the meeting.

40. Subject to the provisions of the Act, the receipt of representation, if any, made by
a retiring auditor or by a Director sought to be removed from office as a Director,
must be stated in the notice of meeting, and a copy of the representation shall be
sent to the members of the company, if the representations are received in time.

PROCEEDINGS AT GENERAL MEETINGS

41. A) No business shall be transacted at any general meeting unless a quorum of

members is present at the time when the meeting proceeds to business

B) Save as herein otherwise provided, 5 members present in person shall be a

quorum. As long as the core promoter shareholders hold shares in the company,
quorum shall be complete only when 3 of them attend the meeting.

C) If within fifteen minutes from the time appointed for the meeting. a quorum is
not Present, the meeting, if convened upon requisition, shall stand dissolved, but
in any other case it shall stand adjourned in accordance with the provisions of
Section174(4) of the Act, with the future proviso that a quorum in accordance
with clause (B) above be present.

42. The chairman, if any of the Board, or in his absence the Managing Director of the
company shall preside as chairman at every general meeting.

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43. A) The chairman may, with the consent of any meeting at which a quorum is
present, and shall, if so directed by the meeting, adjourn the meeting from time
to time and from place to place.

B) No business shall be transacted at any adjourned meeting other than the

Business left unfinished at the meeting from which the adjournment took place.

C) If shall not to necessary to give any notice of an adjournment or of the Business

to be transacted at an adjourned meeting, except where the Meeting is adjourned
for thirty days or more.

44. No act or resolution, which under the provisions of the Act is permitted or
required to be done or passed by the company in general meeting shall be
sufficiently so done or passed unless it is effected by a resolution which is
adopted by an affirmative vote of at least three fourths majority of members
present and voting.

45. Every resolution or question submitted to a general meeting for decision shall be
decided in the first instance by a show of hands, and before or on the declaration
of the result of the voting on a resolution on a show of hands, a poll may be
ordered to be taken by the Chairman of the meeting of his own motion, and shall
be ordered to be taken by him o a demand made in that behalf by the person (S)
specified below viz.:

I) by at least five members having the right to vote on the resolution and
present in person ; or
II) by any member or members present in person and having not less than
one tenth of the total voting power in respect of the resolution; or
III) by any member or members present in person and holding shares in the
company conferring a right to vote on the resolution being holders of
shares on which an aggregate sum has been paid up which is no less
than one tenth of the total sum paid up on all those shares conferring
that right.

46. In the case of an equality of votes, whether by show of hands or on a poll, the
chairman of the meeting at which the show of hands takes place, or at which the
poll is demanded shall be entitled to a second or casting vote.

47. The demand for a poll may be withdrawn at any time by any of the persons who
made the demand.

48. A poll demanded on a question of adjournment shall be taken up forthwith, and

on any other question shall be taken up at such time not being later than 48 hours
from the time when the demand was made as the chairman may direct.

49. Any business other than that upon which a poll has been demanded may be
proceeded with, pending the taking of the poll.

VOTES OF MEMBERS

50. Subject to any rights or restrictions for the time being attached to any class or
classes of shares;

I) on a show of hands, every member present in person shall have one

vote; and

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 II) on a poll, the voting rights of members shall be as laid down in Section
87.

51. In the case of joint holders, the vote of the senior who tenders a vote shall be
accepted to the exclusion of the votes of the other joint holders.

For this purpose, seniority shall be determined by the order in which the names
stand in the register of members.

52. A) A body corporate (whether a company within the meaning of this Act or not)
may, if it is a member of the company by resolution of its board of directors or
other governing body, authorize any individual, as it thinks fit, to act as its
representative at any meeting of members of the company.

B) The person authorized by the resolution as aforesaid, shall be entitled to exercise

the same right to vote by proxy, on behalf of the body corporate, which the
represents, as the person could exercise if he were a member.

53. A) Any member of the company entitled to attend and vote at a meeting of the
company shall be entitled to appoint another person whether a member or not,
as his proxy to attend instead of himself and the proxy so appointed shall have
no right to speak at the meeting,

B) The instrument appointing proxy and the power of attorney or authority, if any,
under which it is signed or a notary ally certified copy of that power or authority
shall be deposited at the registered office of the company not less than 48 hours
before the time of holding the meeting or adjourned meeting or in the case of a
poll, not less than 24 hours before the appointed time for the taking of the poll,
and in default instrument of proxy shall not be treated as valid.

54. An instrument appointing a proxy shall not be questioned, if it is in any of the

forms set out in schedule IX of the Act.

55. A vote given in accordance with the terms of an instrument of proxy shall be
valid, notwithstanding the previous death or insanity of the principal or the
revocation of the proxy or of the authority under which the proxy was executed
or the transfer of the shares in respect to the shares in respect of which the proxy
is given.

56. Every member entitled to vote at meeting of the company on any resolution to be
moved there at shall be entitled during the period beginning twenty four hours
before the time fixed for the commencement of the meeting and ending with the
conclusion of the meeting to inspect the proxies lodged at any time during the
business hours of the company, provided not less than three days notice in
writing of the intention so to inspect is given to the company.

57. Several executors or administrators of a deceased member in whose name any

share is registered shall for the purpose of these articles be deemed to be
members registered jointly in respect thereof.

58. On a poll, votes may be given either personally or by proxy, and person entitled
to more than on e vote need not use all his votes, or cast all the votes he uses in
the same way.

59. Any objection as to the admission or rejection of a vote, either on a show of

hands, or on a poll made in due time, shall be referred to the chairman who shall

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 forthwith determine the same, and such determination made in good faith shall
be final and conclusive.

BOARD OF DIRECTORS

60. The number of directors shall be not less than three and more than twelve,
subject however, to the power of company to increase of decrease the said
numbers in a general meeting.

61. The directors are not required to hold any shares in the company as qualification
shares.

62. The first Directors of the company are the following:

1. Shri Naresh Aggarwal 2. Shri. Rakesh Aggarwal

3. Smt Sadhna Aggarwal 4. Shri Rajiv Sharma
5. Shri Rohit Aggarwal 6. Shri Kewal Krishan
Goel
7. Shri Kapil Aggarwal

63. The board shall have power at any time, and from time to time, to appoint a
person as an additional director, or fill up a casual vacancy.

64. The board shall have the power to appoint an alternate director in place of a
director during the latter’s absence for a period of not less than three months.

65. At each Annual General Meeting of the company, one third of such directors for
the time being as are liable to retire by rotation, or if their number is not three or
a multiple of three, then the number nearest to one-third shall retire from office.

66. Any director or other person referred to in Section 314 of the Act may be
appointed to hold any office or place of profit in the company or any of its
subsidiaries subject to the provisions of the Act.

67. A director of this company may be or become a director or member of any other
company promoted by this company or in which it may be interested as a
vendor, shareholder, buyer or otherwise and no such director shall be
accountable for any benefits received as a director or as a member of such
company.

68. Subject to the provisions of Section 297 of the Act, neither shall a director be
disqualified from contracting with the company either as a vendor, purchaser or
otherwise for goods, materials or services or for underwriting the subscription of
any shares in or debentures of the company not shall any such contract or
arrangement entered into by or o behalf of the company with a relative of such
director or a firm in which such director or relative is a partner, or with any other
partner in such firm, or with a private company of which such director is a
member or director be avoided nor shall any director so contracting or being
such member or so interested be liable to account to the company for any profit
realized by any such contract or arrangement by reason of such director holding
office or of the fiduciary relation thereby established.

69. Every director shall comply with the provisions of Section 299 of the Act with
regard to disclosure of his concern or interest in any contract or arrangement
entered into or to be entered into by the company.

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70. Save as permitted by section 300 of the act or any other applicable provisions of
the Act, no director shall as a director, take any part in the discussion of or vote
or any contract or arrangement in which he is in any way whether directly or
indirectly concerned or interested, nor shall his presence count for the purpose of
forming a quorum at the time of such discussion or vote.

71. No Director shall as a Director take any part, in the discussion of, or vote on any
contract or arrangement entered into or to be entered into by or on behalf of the
company if he is in any way, whether directly or indirectly concerned or
interested in such contract or arrangement not shall his presence count for
purpose count for purpose of forming a quorum at the time of any such
discussion or vote, and if he does vote, his vote shall be void; provided, however,
that nothing herein contained shall apply to :

a) Any contract of indemnity against any loss, which the Directors, or any one or
more of them, suffer by reason of becoming or being surety for the company.
b) Any contract or arrangement entered into or to be entered into with a public
company or a private company which is a subsidiary of a public company in
which the interest of the director consists solely-
I) In his being:
a) A Director of such Company and
b) The holder of not more than shares of such number and value
therein as is required to quality him for appointment as Director
thereof he having been nominated as such Director by the
Company; or
II) In his being a member holding not more than two percent of its paid up
share capital.

72. Acts done by a person as a director shall be valid notwithstanding that it may
afterwards be discovered that his appointment was invalid by reason of any
defect or disqualification or had terminated by virtue of any provisions in the
Act or in the Articles, provided that nothing in the Act shall be deemed to give
validity to acts done by a director after his appointment has been shown to the
Company to be invalid or to have been terminated.

73. Unless otherwise determine by the company in general meeting, each director
shall be entitled to receive out of the funds of the company a fee not exceeding
Rs.1000 per meeting of the board of directors and in addition to reimbursement
of out of pocket expenses incurred as a consequence of their attending the
meeting.

74. The Board of Directors shall appoint one amongst themselves as a Managing
Director of the company, who shall be a nominee of the core promoter
shareholders.

75. The Managing Director shall be responsible for the day-to-day management,
supervision and control of the operations of the company subject to the
supervisions of the Board.

76. The Managing Director and other whole time directors shall receive such
remuneration, perquisites and commission as recommended by the Board within
the overall ceilings as stipulated by the Act and Various amendments thereto,
from time to time, subject to approval of the company in a general meeting.

77. The tenure, remuneration, retirement and other terms of appointment of

Managing Director and other whole-time directors shall be governed by the

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 provisions of any contract or agreement or other arrangement between him and
the company, however that, he shall cease to be a Managing Director or other
Whole time Director, if he cease to hold the office of director for any cause.

78. Subject to the provisions of the Act and in particular, to the prohibitions and
restrictions contained in Section 292 thereof, the Board may, from time to time
entrust to and confer upon a Managing Director for the time being, such of the
powers exercisable by the Board as it may think fit, and may confer such powers
for such time and to be exercised for such objects and purposes and upon such
terms and conditions and with such restrictions as it thinks fit and the Board may
confer such power either collaterally with or to the exclusion of , and in
substitution for all or any of the powers of the board in that behalf and may,
from time to time revoke, withdraw, after and vary all or any of such powers.

PROCEEDINGS OF BOARD

79. A) The Board of Directors may meet for the dispatch of business, adjourn and
otherwise regulate its meeting as it thinks fit, provided however that the board
shall meet once in every three months in accordance with the Act.

B) A director may, and secretary on the requisition of a Director shall at any time
summon a meeting of the Board.

C) A notice along with a statement of business to be transacted at the meeting, shall

be given at least 7 days prior to the date of meeting, to every director in India.
Notice may be waived or a meeting be called by giving shorter notice with the
prior approval of the chairman.

80. The Chairman of the company and in his absence the Managing Director shall be
the Chairman of the Board.

81. A) The Quorum for a meeting of the Board shall be two Directors or one-third of its
total strength whichever is greater, if quorum is not present within fifteen
minutes from time appointed for holding a meeting, it shall be adjourned until
such date and time as the chairman of the Board may decide.

B) Notwithstanding what is contained in clause (A) above, Quorum for the meeting
shall be complete only when the meeting is attended by at least two directors
who are also core promoter shareholders.

82. A) A meeting of the board at which a quorum be present shall be competent to

exercise all or any of the authorities, power and directions by or under these
Articles of the Act for the time being vested in or exercisable by the Board.

83. Questions arising at any meeting of the Board shall be decided by a majority of
votes, in case of equality of votes, the Chairman of the Board shall have a second
or casting vote.

84. The continuing directors may act notwithstanding any vacancy in its body but if
and so long as their number is reduced below the quorum fixed by the Articles
for a meeting of the Board, the continuing director or directors may act for the
purpose of increasing the number of directors to that fixed for the quorum or for
summoning a General Meeting of the Company but for no other purpose.

85. The Board may, subject to the provisions of the Act, delegate any of its powers to
committees consisting of such member or members of its body as it thinks fit.

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 Any committee so formed shall, in the exercise of the powers so delegated,
conform to any regulations that may be imposed on it by the board.

86. The meeting and proceedings of any such committee consisting of two or more
members shall be governed by the provisions herein contained for regulating the
meeting and proceedings of the board, so far as the same are applicable thereto,
and are not superseded by any regulations made by the board while constituting
the committee under clause 85.

87. Save as otherwise provided by the Act, a resolution in writing signed by all the
members of the board or of a committee thereof for the time being entitled to
receive notice of a meeting of the board or committee, shall be as valid and
effectual as if it had been passed at a meeting of the Board or committee duly
convened and held.

88. All acts done by any meeting of the Board or by any person acting as a Director
shall not withstanding that it shall afterward be discovered that there was some
defect in the appointment of directors or persons acting as aforesaid or that they
or he or any of them were or was disqualified, be as valid as if every such person
had been duly appointed and was qualified to be a Director.

89. Subject to the provisions of the Act, the control of the Company shall be Vested
in the board which shall be entitled to exercise all such powers, and to do all
such acts and things as the company is authorized to exercise and do.

Provided that the Board shall not exercise any power or do any act or thing,
which is directed or required by the Act or any other provision of law or by the
Memorandum of Association of the Company or by these Articles to be exercised
or done by the Company in General Meeting.

90. No regulation made by the Company in general meeting shall invalidate any
prior act of the Board, which would have been valid, if that regulation had not
been made.

91. Without prejudice to the general powers, the Board shall have the following
specific powers: -

A) To carry out the object and exercise the powers contained in clause ill of the
Memorandum of Association of the company;

B) To delegate, subject to the provisions of the Act, any of its powers to any
committee of directors, Managing Director of the Secretary of the Company

C) To provide for the management of the affairs of the company in any specified
locality in or outside India and to delegate to a person in charge of the local
management, such powers as the board may think fit.

D) To appoint at anything and from time to time by a power of attorney under seal,
any person authorities to exercise such of the powers delegated to them and for
such period and subject to such conditions as the Board may from time to time
think fit, with power to such attorneys, to sub-delegate all or any of the powers,
authorities and descriptions vested in the attorney for the time being.

E) To institute, conduct, defend compound or abandon any legal proceeding by or

against the Company or its officers or otherwise concerning the affairs of the
company and also to compound and allow time for payment of satisfaction or

226
 any debt due and claims or demands by or against the company and to appoint,
advocates, Counsel and other legal advisers for such purposes or for any other
purposes and settle and pay their remunerations.

F) To set aside portion of the profits of the company to form a fund or funds before
recommending any dividends for the objects mentioned above;

G) To exercise the powers conferred by the Act with regard to having an official seal
for use aboard;

H) To exercise the powers conferred on the Company by the Act with regard to the
keeping of foreign registers;

SECRETARY

92. The Board may appoint any person as the Secretary of the Company on such
terms and conditions as the board may decide and delegate to him such of its
powers which it deems fit and to remove any secretary so appointed and fill up
the vacancy in the said office. A director may be appointed as a Secretary.

THE SEAL

93. The Directors shall provide a Common seal for the purpose of the company and
shall have power form time to time to destroy the same and substitute a new seal
in lieu thereof.

94. The seal of the Company shall not be affixed to any instrument except by the
authority of a resolution of the board or a committee of the board authorized by
it in that behalf, and except in the presence of at least two directors and of the
secretary or such other person as the board may appoint for the purpose; and
those two director and the secretary or other person aforesaid shall sign every
instrument to which the seal of the company is so affixed in their presence.

95. Save as otherwise provided in the Act, any director or the secretary or any
person appointed by the board for the purpose shall have power to authenticate
any documents affecting the constitution of the company and any resolution
passed by the company or the board and any books, records, documents and
accounts relating to the business of the company and to certify copies. If records,
documents, accounts and books are kept elsewhere than at the registered office,
the local manager or other officer of the company having the custody thereof
shall be deemed to be a person appointed by the board of directors as aforesaid.

96. A document purporting to be a copy of a resolution of the board or an extract

from the minutes of a meeting of the board which is certified as such in
accordance with the provisions of the last preceding Article, shall be conclusive
evidence in favour of all persons dealing with the company upon the faith
thereof that such resolution has been duly passed or as the case may be, that such
extract is true and accurate record of a duly constituted meeting of the board.

DIVIDENDS AND RESERVE

97. The company in General Meeting may declare dividends, but no dividend shall
exceed the amount recommended by the board.

98. The board may from time to time pay to the members such interim dividends as
appear to it to be justified by the profits of the company.

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99. A) The board may, before recommending any dividend, set aside out of the profits
of the company such sums as it thinks proper as a reserve or reserves which
shall, at the description to the board, be applicable for any purpose to which the
profits of the company may be property applied, including provision for meeting
contingencies or for equalizing dividends, and pending such application, may at
the sole description, either be employed in the business of the company or be
invested in such investments as the board may, from time to time, think fit.

B) The board may also carry forward any profits, which it may think prudent not to
divide, without setting them aside as a reserve.

100 A) Subject to the rights of the persons, if any, entitled to shares with special rights
as to dividends, all dividends shall be declared and paid according to the
amounts paid or credited as paid on the shares in respect whereof the dividend
is paid, but if and so long as nothing is paid upon any of the shares in the
company, dividends may be declared and paid according to the amounts of the
shares.

B) No amount paid or credited as paid on a share in advance of calls shall be treated

for the purpose of these regulations as paid on the shares.

C) All dividends shall be apportioned and paid proportionately to the amounts paid
or credited as paid on the shares during any portions of the period in respect of
which the dividend is paid, but if any share is issued on terms providing that it
shall rank for dividend as from a particulars date such share shall rank for
dividend accordingly.

101. The Board may deduct from any dividend payable to any member all sums of
money, if any, presently payable by him to the Company on account of calls or
otherwise in relation to the shares of the company.

102. A) Any General Meeting declaring a dividend or bonus may direct payment of such
dividend or bonus wholly or partly by the distribution of specific assets and the
board shall give effect to the resolution of the meeting.

B) Where any difficulty arises in regard to such distribution, the board may settle
the same as it think expedient, and in particular may issue fractional certificates,
and fix the value for distribution of such specific assets or any part thereof and
may determine that cash payment shall be made to any member upon the footing
of the values so fixed in order to adjust the rights of all parties, and may vest
such specific assets in trustees as may seen expedient to the board.

103. A) Any dividend, interest or other moneys payable in cash in respect of shares may
be paid by cheques or warrants through the post directed to the registered
address of the holder or in case of joint holders to the registered address of that
one of the joint holders who is first named on the register of members or to such
person and to such address as the holder or joint holders may in writing direct.

B) Every such cheque or warrant shall be made payable to the order of the person to
whom it is sent.

104. Any one of the two or more joint holders of a share may give effectual receipts
for any dividends, bonuses or other monies payable in respect of such share.

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105. Notice of any dividend that may have been declared shall be given to the persons
entitled to share therein, in the manner mentioned in the Act.

106. No dividend shall bear interest against the company.

107. Any Annual General Meeting declaring a dividend may make a call on the
members of such amount as the meeting fixes, but so that the call on each
member shall not exceed the dividend payable to him and so that the call be
made payable at the same time as the dividend, and the dividend if so arranged
between the company and the member set off against the call. The making of a
call under this clause shall be deemed ordinary business of an ordinary general
meeting, which declare a dividend.

108. All dividends on any share not having a legal registered owner entitled to
require payment of and competent to give a valid receipt shall remain in
suspense until some competent person be registered as the holder of the share.

109. If share are issued for the purpose of raising money to defray the expenses of the
construction of any work or building or the provision of any plants, which
cannot be made profitable for a long period, the board may, on behalf of the
company.

I pay interest on so much of that share capital as is for the time being paid
up for the period and subject to the conditions and restrictions
mentioned in the Act, and
II charge the sum so paid by way of interest on capital as part of the cost of
construction of the work or building or the provisions of the plant.

110. No dividend shall to payable except in cash. Provided that nothing in the
foregoing shall prohibit the capitalization of profits or reserves of the company
for the purpose of issuing fully paid-up bonus shares or paying up any amount
for the time being unpaid on the shares held by the members of the company.

SECRECY

114. Every director, secretary, auditor, trustee for the company, its members or
debenture holders, members of a committee, officer, servant, agent, employee,
attorney or other person employed or about the business of the company shall so
required by the board before entering upon his duties sign a declaration
pledging himself to observe a strict secrecy respecting all transaction of the
company with its customers and in such a declaration pledge himself not to
reveal any of the matters which may come to his knowledge in the discharge of
his duties except when required to do so by the board or by any general meeting
or by a court of law and except so far as may be necessary in order to comply
with any of the provisions of these Articles. Any such person is found to have
breached the pledge, the board is entitled to dismiss the said person without
notice and without compensation.

115. No shareholder or other person (not being a director) shall be entitled to enter
upon the property of the company or to inspect or examine the premises or
properties of the company without the permission of the board or to require
discovery of or any information respecting any details of the trading of the
company or any matter which is or may be in the nature of a trade secret, or
secret process or of any matter whatsoever which may relate to the conduct of
the business of the company and which in the opinion of the board it will be
inexpedient in the interest of the company to allow inspection of contracts

229
 entered into by the company with third parties for obtaining rights under their
secret know-how process and other secret information.

116. Any director or officer or any other person who has given the pledge of secrecy
shall be entitled, if he thinks fit, to decline to answer any questions concerning
the business of the company which may be put to him on any occasion including
any meeting of the company on the ground that the answer to such question
would disclose directly or indirectly, the trade secrets of the company.

WINDING UP

117. If the company shall be wound up, and the assets, available for distribution
among the members as such, shall be insufficient to repay the whole of the paid
up capital, such assets shall be distributed so that, as nearly as may be, the losses
shall be borne by the members, in proportion to the capital paid up which ought
to have been paid up at the commencement of the winding up, on the shares
held by them respectively and if in a winding up the assets available for
distribution among the members shall be more than sufficient to repay the whole
of the capital paid up at the commencement of the winding up, the excess shall
be distributed amongst the members in proportion to the capital paid up or
which ought to have been paid up at the commencement of the winding up on
the shares held by them respectively. But this clause is to be without prejudice to
the rights of the holders of shares issued upon special terms and conditions.

118. A) If the company shall be wound up, the liquidator may, with the sanction of a
special resolution of the company and any other sanction required by Act, divide
amongst the members, in specie or kind, the whole or any part of the assets of
the company, whether they shall consist of property of the same kind or not

B) For the purpose aforesaid, the liquidator may set such value as he deems fair
upon any property to be divided as aforesaid and may determine how such
division shall be carried out as between the members of different classes of
members.

C) The liquidator may, with the like sanction, vest the whole or any part of such
assets in trustee upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no member shall be
compelled to accept any shares or other securities whereon there is any liability.

DEMATERIALISATION OF SECURITIES

121. 1 For the purpose of this Article, the expression Beneficial Owner, Depository,
Registered Owner and Security shall have the meaning as defined in the
Depositories Act, 1956 or any re-enactments or modifications thereof.

2. Notwithstanding anything contained in these Articles, the Company shall be

entitled to dematerialize/re-materialize its securities and to offer securities in the
dematerialized form pursuant to the Depositories Act, 1996.

3. All the securities held by a Depository shall be dematerialized and be in a

fungible form.

4. Nothing contained in these Articles relating to transfer of securities in physical

form shall apply to transfer of securities held in Demat form.

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5. Notwithstanding anything contained in these Articles, where the securities are
dealt within a Depository, the Company shall intimate the details of allotment of
securities to Depository immediately on allotment of such securities.

6. The Register and index of Beneficial Owners maintained by a Depository under

the Depositories Act shall be deemed to be the Register and Index of members
and other security holders of the Company.

7. Notwithstanding anything to the contrary contained in the Act or these Articles,

a Depository shall be deemed to be the registered owner for the purpose of
effecting transfer of ownership of security on behalf of the beneficial owner. The
Depository, as the registered owner, shall not have any voting rights or any other
rights in respect of the securities held by it. Every person holding securities of the
Company and whose name is entered as beneficial owner in the records of the
Depository shall be deemed to be a member of the Company. Every beneficial
owner of the securities shall be entitled to all the rights and benefits and be
subject to all the liabilities in respect of the securities that are held by a
Depository.”

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 SECTION XI - OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following contracts not being contracts entered in the ordinary course of business carried on
by our Company which are or may be deemed material have been entered or to be entered into
by our Company. These contracts, copies of which have been attached to the copy of this Draft
Red Herring Prospectus delivered to Registrar of Companies, NCT of Delhi & Haryana at New
Delhi for registration and also the documents for inspection referred to hereunder, may be
inspected at our corporate office situated at: 24B, Alipur Road, Civil Lines, New Delhi – 110 054
between 1100 hrs to 1500 hrs on any working day, excluding Saturday and Sunday, from the date
of this Draft Red Herring Prospectus until the Issue closing date.

MATERIAL CONTRACTS

1. Memorandum of Understanding dated 04th January 2006 with UTI Securities Limited,
appointing them as the Book Running Lead Manager to this Issue.

2. Memorandum of Understanding dated 13th January 2006 signed by our Company with
Intime Spectrum Registry Limited, appointing them as Registrar to the Issue.

3. Letter dated 23rd August 2005 by Luthra & Luthra, Law Offices, offering their services to act
as legal advisors to the issue.

4. Tripartite Agreement dated [●] between the Company, Intime Spectrum Registry Limited
and NSDL.

5. Tripartite Agreement dated [●] between the Company, Intime Spectrum Registry Limited
and CDSL.

DOCUMENTS FOR INSPECTION

1. Memorandum and Articles of Association as amended from time to time.

2. Certificate of Incorporation No. 55-64140 dated 06th January 1995 from the Registrar of
Companies, NCT of Delhi & Haryana to Sunstar Overseas Limited.

3. Certificate of Commencement of Business dated 31st January 1995 issued by the Registrar of
Companies, NCT of Delhi & Haryana to Sunstar Overseas Limited

4. Resolution passed by the shareholders under Section 81(1A) of the Act, at the Annual
General Meeting of the Company held on 29th September 2005, approving the issue.

5. Agreement dated 01st February 1995 between M/s. Star Overseas and us, taking over the then
existing business of M/s. Star Overseas.

6. Consent from the Directors, Compliance Officer, Auditor, Lead Managers, Registrar to the
Issue, Bankers to the Issue, Bankers to the Company, Underwriters, Legal Advisor and Tax
Consultant to act in their respective capacities.

7. Certificate dated 07th November 2005 from M/s. R.K. Gulati & Associates, Chartered
Accountants and Statutory Auditors of the Company detailing the Tax Benefits.

8. Auditor’s report dated 09th January 2006 included in the Draft Red Herring Prospectus and
copies of the Balance Sheet referred in the said report.

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9. Copy of the Auditors Certificat e dated 07th January 2006 regarding the sources and
deployment of funds as on 20th December 2005.

10. Copies of Power of Attorneys from Directors to sign the offer document on their behalf.

11. Copies of Initial Listing Application made to BSE and NSE.

12. Copy of in-principal approval for listing from BSE and NSE dated [●] and [●] respectively.

13. Copies of quotations obtained for Plant and Machinery.

14. SEBI observation Letter No. [●] dated [•].

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 SECTION XII - DECLARATION

We, hereby declare that all the relevant provisions of the Companies Act, 1956 and the guidelines
issued by the government or the guidelines issued by the Securities and Exchange Board of India
established under section 3 of the Securities and Exchange Board of India Act, 1992, as the case
may be, have been complied with and no statement made in this Draft Red Herring Prospectus is
contrary to the provisions of the Companies Act, 1956 or the Securities and Exchange Board of
India Act, 1992 or rules made there under or guidelines issued, as the case may be. We further
certify that all statements in this Draft Red Herring Prospectus are true and correct.

Signed by the Directors

Mr. Naresh Aggarwal

Chairman __________________________________

Mr. Rakesh Aggarwal

Managing Director __________________________________

Mr. Rohit Aggarwal

Joint Managing Director __________________________________

Mr. Sumit Aggarwal

Director __________________________________

Mr. Ravinder Kumar Passi

Director __________________________________

Mr. Kishore Asthana

Director __________________________________

Signed by the General Manager (Finance & Accounts)

Mr. Narender Sidhar __________________________________

Signed by the Company Secretary and Compliance Officer

Ms. Kiranpreet Gill __________________________________

Date: ________________ Place: New Delhi

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