Jyoti CNC Automation Limited - Securities and … “Jyoti CNCAutomations Private Limited” and received fresh certificate of incorporation dated May 08, 2002. Subsequently, the name

DRAFT RED HERRING PROSPECTUSDated March 05, 2013

Please read Section 60B of the Companies Act, 1956100 % Book Building Issue

(Our Company was incorporated as “AMB Engineering Company Private Limited” on January 17, 1991 as a private limited company under the CompaniesAct, 1956. The name of our Company was changedto “Jyoti CNC Automations Private Limited” and received fresh certificate of incorporation dated May 08, 2002. Subsequently, the name of our Company was changed to “Jyoti CNC Automation PrivateLimited” and received fresh certificate of incorporation datedApril 28, 2008. Further, pursuant to a special resolution of the shareholders of our Company at an annual general meeting held on September 17,2012, our Company became a public limited company and the word “private” was deleted from its name. The fresh certificate of incorporation to reflect the new name was issued by the RoC on November 30,2012. For details of changes in the name and registered office of our Company, see section titled “ ” on page 155.)

G - 506, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India+91 (02827) 306 100; +91 (02827) 306 161Maulik Gandhi, Company Secretary and Compliance Officer

[email protected]; www.jyoti.co.in

History and Certain Corporate MattersRegistered and Corporate Office:

Tel: Fax:Contact Person:

Email: Website:

PUBLIC ISSUE OF 13,384,826 EQUITY SHARES OF FACE VALUE OF 10 EACH (“EQUITY SHARES”) OF JYOTI CNC AUTOMATION LIMITED (THE “COMPANY”

OR THE “ISSUER”) FOR CASH ATA PRICE OF PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF PER EQUITY SHARE) AGGREGATING TO

MILLION (THE “ISSUE”). THE ISSUE WILLCONSTITUTE 31.82 % OFTHE POST ISSUE PAID UPCAPITALOFTHE COMPANY.

`

` [•] ` [•] `

[•]

`Our Company is considering a Pre-IPO Placement of upto 2,790,000 Equity Shares and / or aggregating upto 600 million with certain investors ("Pre-IPO Placement"). The Pre-IPOPlacement will be at the discretion of our Company. Our Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPO Placement, if any, prior to filing of theRed Herring Prospectus with the Registrar of Companies (the "RoC"). If the Pre-IPO Placement is completed, the Issue size will be reduced to the extent of such Pre-IPO Placement, subject tothe Issue size constituting at least 25 % of the post-Issue paid-up equity share capital of our Company.

Jyoti CNC Automation Limited

PROMOTERS OF OUR COMPANY: PARAKRAMSINH JADEJA, VIKRAMSINH RANA, SAHDEVSINH JADEJA AND JYOTI INTERNATIONAL PRIVATE LIMITEDPROMOTERS OF OUR COMPANY: PARAKRAMSINH JADEJA, VIKRAMSINH RANA, SAHDEVSINH JADEJA AND JYOTI INTERNATIONAL PRIVATE LIMITED

THE FACE VALUE OF EQUITY SHARES IS 10 EACH.

THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY THE COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND

ADVERTISED IN EDITION OF (A WIDELY CIRCULATED ENGLISH NATIONAL NEWSPAPER), EDITION OF (A WIDELY CIRCULATED HINDI NATIONAL

NEWSPAPER) AND EDITION OF (A WIDELY CIRCULATED GUJARATI NEWSPAPER) AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/ISSUE OPENING DATE

AND SHALLBE MADEAVAILABLE TO THE STOCK EXCHANGES (AS DEFINED BELOW) FOR THE PURPOSE OFUPLOAD ON THEIR WEBSITE.

`

[•] [•] [•] [•]

[•] [•]

In case of any revision in the Price Band, the Bid/Issue Period will be extended by three additional Working Days after revision of the Price Band, subject to the Bid/Issue Period not exceeding10 Working Days.Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will 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 also by indicating the change on the websites of the Book Running Lead Managers (“ ”)and at the terminals of the other members of the Syndicate and by intimation to Self Certified Syndicate Banks (“ ”).

BSENSE BRLMs

SCSBs

Pursuant to Rule 19(2)(b)(i) of the Securities Contracts (Regulation) Rules, 1957, as amended (the “ ”), the Issue is being made for at least 25% of the post-Issue paid-up Equity Sharecapital of our Company. The Issue is being made through the Book Building Process where at least 75% of the Issue will be allocated on a proportionate basis to Qualified Institutional Buyers(“ ”) (the “ ”), provided that our Company may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the “ ”), ofwhich one-third shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Issue Price. For details, see“ ” on page 323. Further, 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only. Theremainder shall be available for allocation on a proportionate basis to all QIBs including Mutual Funds, subject to valid Bids being received from them at or above the Issue Price. If at least75% of the Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not more than 15% of the Issue will be available for allocation on aproportionate basis to Non-Institutional Bidders and not more than 10% of the Issue will be available for allocation to Retail Individual Bidders, subject to valid Bids being received at orabove the Issue Price. Retail Individual Bidders may participate in the Issue through theASBAprocess by providing the details of theASBAAccounts in which the corresponding BidAmounts willbe blocked by the SCSBs. QIB Bidders (except Anchor Investors) and Non-Institutional Bidders shall compulsorily participate in the Issue through the ASBA process. Anchor Investors are notpermittedtoparticipateintheIssuethroughtheASBAprocess.Fordetailsinthisregard,specificattentionisinvitedto“ ”onpage323.

SCRR

QIBs QIB Portion Anchor Investor Portion

Issue Procedure

IssueProcedure

RISK IN RELATION TO THE FIRST ISSUE

This being the first public issue of the Equity Shares of our Company, there has been no formal market for the Equity Shares. The face value of the Equity Shares is 10 each. The Floor Price istimes of the face value and the Cap Price is times of the face value. The Issue Price (as has been determined and justified by our Company and the BRLMs as stated in the section titled

“ ” on page 100) 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 anactive and/or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.

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[•] [•]Basis for Issue Price

IPO GRADING

This Issue has been graded by [•] as IPO Grade [•], indicating[•] fundamentals. The IPO grade is assigned on a five -point scale from 1 to 5, with IPO grade 5/5 indicating strong fundamentalsand IPO grade 1/5 indicating poor fundamentals. For details, see section titled “ ” on page 56.General Information

GENERAL RISKS

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 theirinvestment. 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 ownexamination of our Company and the Issue, including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and ExchangeBoard of India (“ ”), nor does SEBI guarantee the accuracy or adequacy of the contents of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the sectiontitled “ ” on page 13.

SEBIRisk Factors

ISSUER'S ABSOLUTE RESPONSIBILITY

The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Company andthe 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 anymaterial respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Red Herring Prospectus as a wholeor any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING ARRANGEMENT

The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on BSE and NSE. We have received an 'in-principle' approval from BSE and NSE for the listing of theEquity Shares pursuant to letters dated and , respectively. For the purposes of the Issue, the Designated Stock Exchange shall be [•].[•] [•]

REGISTRAR TO THE ISSUE

AVENDUS CAPITAL PRIVATE LIMITED5th Floor, B QuadrantIL&FS Financial CentreBandra Kurla ComplexBandra (East)Mumbai 400 051Tel: +91 22 6648 0050Fax: +91 22 6648 0040Email: [email protected] grievance E-mail: [email protected]: www.avendus.comContact Person: Rashi MalikSEBI Registration No.: INM000011021

* Our Company may consider participation by Anchor Investors. The Anchor Investor Bidding Date shall be one Working Day prior to the Bid/ Issue Opening Date.**Our Company may close the Bid/Issue Period for QIBs one Working Day prior to the Bid/Issue Closing Date in accordance with the SEBI Regulations

BID/ISSUE OPENS ON

BID/ISSUE PROGRAMME*

BID/ISSUE CLOSES ON**

[•] FOR QIB BIDDERS: [•] FOR OTHER BIDDERS: [•]

SBI CAPITAL MARKETS LIMITED202, Maker Tower 'E'Cuffe ParadeMumbai 400 005IndiaTel: +91 22 2217 8300Fax: +91 22 2218 8332E-mail: [email protected] Grievance E-mail: [email protected]: www.sbicaps.comContact Person: Sylvia Mendonca /Arvind GaneshanSEBI Registration No.: INM000003531

LINK INTIME INDIA PRIVATE LIMITEDC-13, Pannalal Silk Mills CompoundL.B.S. Marg, Bhandup (West)Mumbai 400 078Tel: (91 22) 2596 0320Fax: (91 22) 2596 0329Email: [email protected]: www.linkintime.co.inInvestor Grievance E-mail: [email protected] Person: Sanjog SudSEBI Registration No. : INR000004058

BOOK RUNNING LEAD MANAGERS

TABLE OF CONTENTS

SECTION I: GENERAL ................................................................................................................... 2

DEFINITIONS AND ABBREVIATIONS ...................................................................................... 2 PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA ................................ 10 FORWARD LOOKING STATEMENTS ..................................................................................... 12

SECTION II: RISK FACTORS ..................................................................................................... 13

SECTION III: INTRODUCTION .................................................................................................. 32

SUMMARY OF INDUSTRY ....................................................................................................... 32 SUMMARY OF BUSINESS ........................................................................................................ 37 SUMMARY FINANCIAL INFORMATION ............................................................................... 43 THE ISSUE ................................................................................................................................... 55 GENERAL INFORMATION ....................................................................................................... 56 CAPITAL STRUCTURE .............................................................................................................. 65 OBJECTS OF THE ISSUE ........................................................................................................... 80 BASIS FOR ISSUE PRICE ......................................................................................................... 100 STATEMENT OF TAX BENEFITS ........................................................................................... 103

SECTION IV: ABOUT THE COMPANY .................................................................................. 115

INDUSTRY OVERVIEW .......................................................................................................... 115 BUSINESS .................................................................................................................................. 130 REGULATIONS AND POLICIES ............................................................................................. 151 HISTORY AND CERTAIN CORPORATE MATTERS ............................................................ 155 MANAGEMENT ........................................................................................................................ 162 PROMOTERS AND PROMOTER GROUP ............................................................................... 174 OUR GROUP COMPANIES ...................................................................................................... 179 RELATED PARTY TRANSACTIONS...................................................................................... 181 DIVIDEND POLICY .................................................................................................................. 182

SECTION V: FINANCIAL INFORMATION ............................................................................ 183

RESTATED CONSOLIDATED FINANCIAL STATEMENTS ................................................ 183 RESTATED UNCONSOLIDATED FINANCIAL STATEMENTS .......................................... 220 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .................................................................................................... 259 FINANCIAL INDEBTEDNESS ................................................................................................. 284

SECTION VI: LEGAL AND OTHER INFORMATION .......................................................... 292

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ................................. 292 GOVERNMENT APPROVALS ................................................................................................. 296 OTHER REGULATORY AND STATUTORY DISCLOSURES .............................................. 303

SECTION VII: ISSUE INFORMATION .................................................................................... 315

TERMS OF THE ISSUE ............................................................................................................. 315 ISSUE STRUCTURE ................................................................................................................. 318 ISSUE PROCEDURE ................................................................................................................. 323 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ............................ 363

SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ............... 365

SECTION IX: OTHER INFORMATION ................................................................................... 382

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION .................................... 382 DECLARATION ........................................................................................................................ 384

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SECTION I: GENERAL

DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise indicates, the following terms have the meanings given below. References to statutes, rules, regulations, guidelines and policies will be deemed to include all amendments and modifications notified thereto.

Term Description “The Issuer”, “the Company”, “our Company”

Unless the context otherwise requires, refers to Jyoti CNC Automation Limited, a public limited company incorporated under the Companies Act with its registered office at G - 506, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India

“We”, “us”, “Our” Unless the context otherwise requires, refers to Jyoti CNC Automation Limited and its Subsidiaries on a consolidated basis, as described herein

Company Related Terms

Term Description Articles / Articles of Association/ AoA

The articles of association of our Company, as amended

Auditors The statutory auditors of our Company, namely, Kalaria & Sampat, Chartered Accountants

Board/ Board of Directors

The board of directors of our Company or a duly constituted committee thereof

Director(s) The director(s) on the Board of Directors of our Company Group Companies The companies, firms, ventures disclosed in section titled “Our Group

Companies” on page 179, promoted by our Promoters, irrespective of whether such entities are covered under Section 370(1B) of the Companies Act

Memorandum/ Memorandum of Association /MoA

The memorandum of association of our Company, as amended

Promoters Parakramsinh Jadeja, Vikramsinh Rana, Sahdevsinh Jadeja and Jyoti International Private Limited.

Promoter Group The persons and entities constituting our promoter group pursuant to regulation 2(1)(zb) of the SEBI Regulations, a list of which is provided in the section titled “Promoters and Promoter Group” on page 174

Registered Office The registered office of our Company located at G - 506, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India

Subsidiaries The subsidiaries of our Company, namely, Jyoti S. A. S., Huron Graffenstaden S. A. S., Huron Fräsmaschinen GmbH and Huron Canada Inc

Issue Related Terms

Term Description Allotment/Allot/Allotted The issue and allotment of Equity Shares to successful Bidders

pursuant to the Issue Allottee A successful Bidder to whom the Equity Shares are Allotted Allotment Advice The note or advice or intimation of Allotment, sent to each successful

Bidder who has been or is to be Allotted the Equity Shares after approval of the Basis of Allotment by the Designated Stock Exchange

Alternative Investment Funds or AIFs

Alternative Investment Funds (as defined under the SEBI AIF Regulations) registered with SEBI

Anchor Investor A Qualified Institutional Buyer, who applies under the Anchor Investor Portion with a minimum Bid of ` 100 million

Anchor Investor Bidding Date

The date, one Working Day prior to the Bid/Issue Opening Date, on which Bids by Anchor Investors shall open and allocation to Anchor Investors shall be completed. Anchor Investors are not permitted to withdraw their bids after the Anchor Investor Bidding Date

Anchor Investor Issue Price

The final price at which the Equity Shares will be issued and Allotted to Anchor Investors in terms of the Red Herring Prospectus and the

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Term Description Prospectus, which price may be equal to or higher than the Issue Price but not higher than the Cap Price. The Anchor Investor Issue Price will be decided by our Company, in consultation with the BRLMs

Anchor Investor Portion Up to 30% of the QIB Portion, consisting of up to [●] Equity Shares, which may be allocated to Anchor Investors by our Company in consultation with the BRLMs, on a discretionary basis. One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Issue Price

Application Supported by Blocked Amount/ ASBA

An application (whether physical or electronic) by an ASBA Bidder to make a Bid authorising the relevant SCSB to block the Bid Amount in the ASBA Account

ASBA Account Account maintained with a SCSBs which will be blocked by such SCSB to the extent of the appropriate Bid Amount in relation to a Bid by an ASBA Bidder

ASBA Bidder Any Bidder (other than Anchor Investors) who intends to bid through the ASBA process

Avendus Avendus Capital Private Limited Bankers to the Issue/ Escrow Collection Banks

The bank(s) which is/are clearing member(s) and registered with SEBI as Bankers to the Issue, with whom the Escrow Account(s) in relation to the Issue will be opened, in this case being [●]

Basis of Allotment The basis on which the Equity Shares will be Allotted, described in the section titled “Issue Procedure – Basis of Allotment” on page 356

Bid An indication to make an offer during the Bid/Issue Period by a Bidder (including an ASBA Bidder), or on the Anchor Investor Bidding Date by an Anchor Investor, pursuant to submission of a Bid cum Application Form to subscribe to the Equity Shares at a price within the Price Band, including all revisions and modifications thereto, to the extent permitted under the SEBI Regulations

Bid Amount The highest value of the optional Bids as indicated in the Bid cum Application Form

Bid cum Application Form

The form in terms of which the Bidder shall make an offer to subscribe for Equity Shares and which shall be considered as the application for the issue of Equity Shares pursuant to the terms of the Red Herring Prospectus and the Prospectus

Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form, including an ASBA Bidder and Anchor Investor

Bid/Issue Closing Date Except in relation to Anchor Investors, [●]. Our Company, in consultation with the BRLMs, may decide to close the Bid/Issue Period for QIBs one Working Day prior to the Bid/Issue Closing Date, subject to the SEBI Regulations

Bid/Issue Opening Date Except in relation to Anchor Investors, [●]. Bid/Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue

Closing Date inclusive of both days during which prospective Bidders (excluding Anchor Investors) can submit their Bids

Book Building Process The book building process as described in Schedule XI of the SEBI Regulations, in terms of which the Issue is being made

BRLMs/Book Running Lead Managers

The book running lead managers to the Issue, in this case being Avendus and SBICAP

Client ID Client identification number of the Bidder’s beneficiary account Cap Price The higher end of the Price Band above which the Issue Price and

Anchor Investor Issue Price will not be finalised and above which no Bids will be accepted, including any revisions thereof

Cut-off Price The Issue Price, finalised by our Company, in consultation with the BRLMs, which shall be any price within the Price Band. Only Retail Individual Bidders are entitled to Bid at the Cut-off Price. QIBs (including Anchor Investors) and Non-Institutional Bidders are not entitled to Bid at the Cut-off Price

Demographic Details The demographic details of the Bidders such as their address, occupation and bank account details

Designated Branches Such branches of the SCSBs which shall collect the Bid cum

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Term Description Application Form used by the ASBA Bidders, a list of which is available at the website of SEBI (www.sebi.gov.in) and updated from time to time

Designated Date The date on which the Escrow Collection Banks transfer the funds from the Escrow Account to the Public Issue Account(s) or the Refund Account(s), as appropriate and the Registrar to the Issue issues instruction to SCSBs for transfer of funds from the ASBA Accounts to the Public Issue Account(s) in terms of the Red Herring Prospectus

Designated Stock Exchange

[●]

DP ID The Depository Participant’s identity Draft Red Herring Prospectus

This Draft Red Herring Prospectus dated March 05, 2013, filed with SEBI and issued in accordance with Section 60B of the Companies Act and the SEBI Regulations, which does not contain complete particulars of the price at which the Equity Shares are offered

Eligible NRI A non-resident Indian, resident in a jurisdiction outside India where it is not unlawful to make an offer or invitation under the Issue and in relation to whom the Red Herring Prospectus constitutes an invitation to subscribe for the Equity Shares

Eligible QFI Qualified Foreign Investors from such jurisdictions outside India where it is not unlawful to make an offer or invitation under the Issue and in relation to whom the Red Herring Prospectus constitutes an invitation to purchase the Equity Shares offered thereby and who have opened demat accounts with SEBI registered qualified depositary participants

Equity Shares The Equity Shares of our Company with a face value of ` 10 each Escrow Account Account(s) opened with the Escrow Collection Bank(s) for the Issue

and in whose favour the Bidders (excluding ASBA Bidders) will issue cheques or demand drafts in respect of the Bid Amount when submitting a Bid

Escrow Agreement The agreement to be entered into among our Company, the Registrar to the Issue, the BRLMs, the Syndicate Members, the Escrow Collection Bank(s) and Refund Bank(s) for collection of the Bid Amounts and remitting refunds, if any, to the Bidders (excluding ASBA Bidders), on the terms and conditions thereof

First Bidder The Bidder whose name appears first in the Bid cum Application Form or the Revision Form

Floor Price The lower end of the Price Band, and any revisions thereof, below which the Issue Price will not be finalised and below which no Bids will be accepted and which shall not be less than the face value of the Equity Shares

Issue Public issue of 13,384,826 Equity Shares for cash at a price of ` [●] per Equity Share aggregating to ` [●] million Our Company is considering a Pre-IPO Placement of upto 2,790,000 Equity Shares and / or aggregating upto ` 600 million with certain investors. The Pre-IPO Placement is at the discretion of our Company. Our Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPO Placement, if any, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the Issue size will be reduced to the extent of such Pre-IPO Placement, subject to the Issue size constituting at least 25 % of the post-Issue paid-up equity share capital of our Company

Issue Agreement The agreement entered into on March 05, 2013 between our Company and the BRLMs, pursuant to which certain arrangements are agreed to in relation to the Issue

Issue Price The final price at which Equity Shares will be issued and Allotted to the Bidders (except Anchor Investors), as determined in accordance with the Book Building Process on the Pricing Date

Issue Proceeds The proceeds of the Issue that are available to our Company Listing Agreement The equity listing agreement to be entered into by our Company with

the Stock Exchanges Mutual Funds A mutual fund registered with SEBI under the SEBI (Mutual Funds)

5

Term Description Regulations, 1996

Mutual Funds Portion 5% of the QIB Portion (excluding the Anchor Investor Portion) available for allocation to Mutual Funds only, on a proportionate basis

Net Proceeds The Issue Proceeds less the Issue expenses. For further information about use of the Issue Proceeds and the Issue expenses, see section titled “Objects of the Issue” on page 80

Non-Institutional Bidders

All Bidders, including sub-accounts which are foreign corporate or foreign individuals, that are not QIBs (including Anchor Investors) or Retail Individual Bidders, who have Bid for Equity Shares for an amount exceeding ` 200,000

Non-Institutional Portion The portion of the Issue, being not more than [●] Equity Shares, available for allocation on a proportionate basis to Non-Institutional Bidders subject to valid Bids received at or above the Issue Price

Non-Resident A person resident outside India, as defined under FEMA and includes a Non Resident Indian

Non Syndicate Broker Centre

A broker centre of the Stock Exchanges with broker terminals, wherein a Non Syndicate Stock Broker may accept Bid cum Application Forms, a list of which is available on the websites of the Stock Exchanges at www.bseindia.com and www.nseindia.com and at such other websites as may be prescribed by SEBI from time to time.

Non Syndicate Stock Broker

A broker registered with SEBI under the Securities and Exchange Board of India (Stock Brokers and Sub Brokers Regulations), 1992, having office in any of the Non Syndicate Broker Centres, and eligible to procure Bids in terms of the circular No. CIR/CFD/14/2012 dated October 4, 2012 issued by SEBI.

Non Syndicate Stock Broker Mechanism

Investors applying through Non Syndicate Stock Broker at a Non Syndicate Broker Centre pursuant to SEBI circular no. CIR/CFD/14/2012 dated October 04, 2012

Preference Shares The Preference Shares of our Company with a face value of ` 10 each Pre-IPO Placement The preferential issue of up to 2,790,000 Equity Shares, aggregating

up to ` 600 million with certain investors, which is being considered by our Company. Our Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPO Placement, if any, prior to the filing of the Red Herring Prospectus with the RoC

Price Band Price Band of a minimum price of ` [●] (Floor Price) and the maximum price of ` [●] (Cap Price) and include revisions thereof. The Price Band and the minimum Bid lot size for the Issue will be decided by our Company, in consultation with the BRLMs, and advertised in [●] edition of [●] (a widely circulated English national newspaper), [●] edition of [●] (a widely circulated Hindi national newspaper) and [●] edition of [●] (a widely circulated Gujarati newspaper), at least five Working Days prior to the Bid/ Issue Opening Date, with the relevant financial ratios calculated at the Floor Price and at the Cap Price and shall be made available to the Stock Exchanges for the purpose of upload on their website

Pricing Date

The date on which our Company, in consultation with the BRLMs, finalises the Issue Price

Prospectus The Prospectus to be filed with the RoC pursuant to Section 60 of the Companies Act and the SEBI Regulations, containing, inter alia, the Issue Price that is determined at the end of the Book Building Process on the Pricing Date, including any addenda or corrigenda thereto

Public Issue Account(s) The account(s) to be opened with the Banker(s) to the Issue to receive monies from the Escrow Account(s) and the ASBA Accounts, on the Designated Date

QIB Portion The portion of the Issue, being at least [●] Equity Shares, or at least 75 % of the Issue available for allocation to QIBs on a proportionate basis, subject to valid Bids being received at or above the Issue Price, including the Anchor Investor Portion. Allocation to Anchor Investors, if any, will be made by our Company in consultation with the BRLMs, on a discretionary basis.

Qualified Foreign Investors or QFIs

Non-resident investors, other than SEBI registered FIIs or sub-accounts or SEBI registered FVCIs, who meet ‘know your client’ requirements prescribed by SEBI and are resident in a country which

6

Term Description is (i) a member of Financial Action Task Force or a member of a group which is a member of Financial Action Task Force; and (ii) a signatory to the International Organisation of Securities Commission’s Multilateral Memorandum of Understanding or a signatory of a bilateral memorandum of understanding with SEBI. Provided that such non-resident investor shall not be resident in country which is listed in the public statements issued by Financial Action Task Force from time to time on: (i) jurisdictions having a strategic anti-money laundering/combating the financing of terrorism deficiencies to which counter measures apply; (ii) jurisdictions that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the Financial Action Task Force to address the deficiencies.

Qualified Institutional Buyers or QIBs

Public financial institutions as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual fund registered with SEBI, FII and sub-account registered with SEBI (other than a sub-account which is a foreign corporate or foreign individual), scheduled commercial banks, mutual funds and venture capital funds registered with SEBI, FVCIs, Alternative Investment Funds, multilateral and bilateral development financial institutions, state industrial development corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with minimum corpus of ` 250 million, pension funds with minimum corpus of ` 250 million, the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the GoI published in the Gazette of India, insurance funds set up and managed by the army, navy or air force of the Union of India and insurance funds set up and managed by Department of Posts, GoI.

Red Herring Prospectus or RHP

The Red Herring Prospectus to be issued in accordance with Section 60B of the Companies Act and the SEBI Regulations, which will not have complete particulars of the price at which the Equity Shares shall be issued and which shall be filed with the RoC at least three days before the Bid/Issue Opening Date and will become a Prospectus upon filing with the RoC after the Pricing Date

Refund Account(s) Account(s) opened with the Escrow Collection Bank(s) from which refunds if any, of the whole or part of the Bid Amount shall be made to the Bidders (excluding the ASBA Bidders)

Refund Bank(s) One or more Escrow Collection Bank(s) with whom Refund Account(s) will be opened and from which a refund of the whole or part of the Bid Amount, if any, shall be made, in this case being, [●]

Registrar /Registrar to the Issue

Link Intime India Private Limited

Retail Individual Bidders Bidders (including HUFs and Eligible NRIs), whose Bid Amount for Equity Shares in the Issue is less than or equal to ` 200,000

Retail Portion The portion of the Issue, being not more than [●] Equity Shares available for allocation to Retail Individual Bidder(s), subject to valid Bids being received at or above the Issue Price

Revision Form The forms used by the Bidders to modify the quantity of Equity Shares or the Bid Amount in any of their Bid cum Application Forms or any previous Revision Form(s)

SBICAP SBI Capital Markets Limited Self Certified Syndicate Banks or SCSBs

The banks registered with the SEBI under the Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994 offering services in relation to ASBA, including blocking of an ASBA Account in accordance with the SEBI Regulations and a list of which is available at the website of the SEBI (www.sebi.gov.in) and updated from time to time. A list of the branches of the SCSBs where Bid cum Application Forms will be forwarded by such members of the Syndicate is also available at the website of the SEBI (www.sebi.gov.in) and updated from time to time

Stock Exchanges BSE and the NSE Syndicate Agreement The agreement to be entered into among the members of the

7

Term Description Syndicate, our Company and the Registrar in relation to the collection of Bids in the Issue (other than Bids directly submitted to the SCSBs under the ASBA Process)

Syndicate ASBA Bidding Locations

Bidding centres at Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bengaluru, Hyderabad, Pune, Vadodara and Surat where the Syndicate shall accept Bid cum Application Forms in terms of the SEBI Circular No. CIR/CFD/DIL/1/2011 dated April 29, 2011

Syndicate Members Intermediaries registered with the SEBI and permitted to carry out activities as an underwriter, in this case being [●]

Syndicate or members of the Syndicate

The BRLMs and the Syndicate Members

Syndicate / Non Syndicate Stock Broker SCSB Branches

In relation to ASBA Bids submitted to a member of the Syndicate or to a Non Syndicate Stock Broker, such branches of the SCSBs at the Syndicate ASBA Bidding Locations or at the Non Syndicate Broker Centres named by the SCSBs to receive deposits of Bid cum Application Forms from the members of the Syndicate or the Non Syndicate Stock Broker, and a list of which is available at the website of the SEBI (www.sebi.gov.in) and updated from time to time

TRS or Transaction Registration Slip

The slip or document issued by a member of the Syndicate or the SCSBs, as the case may be, to a Bidder generated at each price and demand option as the proof of registration of the Bid

Underwriters The members of the Syndicate Underwriting Agreement The agreement among the Underwriters and our Company to be

entered into on or after the Pricing Date Working Day(s) All days, excluding Sundays and public holidays, on which

commercial banks in India are open for business, except with reference to announcement of Price Band and Bid/Issue Period, where working day shall mean all days, excluding Saturdays, Sundays and public holidays, which are working days for commercial banks in India

Industry Related Terms

Term Description AMC Annual Maintenance Contract APC Auto Pallet Changer AT Automation with Turning ATC Auto Tool Changer ATM Automation with Turning and Milling CAD Computer Aided Design CAM Computer Aided Manufacturing CED Cathode Electro Deposition CII Confederation of Indian Industry CMTI Central Manufacturing Technology Institute CNC Computerised Numerical Control DSIR Department of Scientific & Industrial Research EDM Electro-Discharge Machines EFTA European Free Trade Association EPCG Scheme Export Promotion Capital Goods Scheme EU European Union FSI Floor Space Index GPMs General Purpose Machines HMC Horizontal Machining Centers HSM High Speed Machines IMTEX Indian Machine Tool Exhibition IMTMA Indian Machine Tool Manufacturers Association MTB Machine Tool Builders NMCC National Manufacturing Competitiveness Council PPP Public Private Partnership R&D Research & Development SME Small and Medium Enterprises SPMs Special Purpose Machines TMC Turn Mill Centers

8

VMC Vertical Machining Centers Conventional and General Terms/ Abbreviations

Term Description Act or Companies Act Companies Act, 1956, as amended AGM Annual General Meeting AS/Accounting Standards

Accounting Standards issued by the Institute of Chartered Accountants of India

BSE BSE Limited CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited CIN Corporate Identity Number Civil Code Code of Civil Procedure, 1908, as amended Depositories NSDL and CDSL Depositories Act Depositories Act, 1996, as amended DIN Director Identification Number DP ID Depository participant identity DP/ Depository Participant A depository participant as defined under the Depositories Act, 1996

EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation ECS Electronic Clearing Service EGM Extraordinary General Meeting EPS Earnings Per Share i.e., profit after tax for a Fiscal Year divided by the

weighted average outstanding number of equity shares at the end of that Fiscal Year

FCNR Account Foreign Currency Non-Resident Account established in accordance with the FEMA

FDBN Foreign Document Bill for Negotiation FDBP Foreign Document Bill Purchase FDI Foreign Direct Investment FEMA

Foreign Exchange Management Act, 1999 read with the rules and regulations thereunder and amendments thereto

FEMA Regulations FEM (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 and amendments thereto

FII(s) Foreign Institutional Investors as defined under SEBI (Foreign Institutional Investor) Regulations, 1995 and registered with SEBI under applicable laws in India

FIPB Foreign Investment Promotion Board French GAAP Generally Accepted Accounting Principles in France Fiscal Year/ FY/ Fiscal Unless stated otherwise, the period of 12 months ending March 31 of that

particular year FVCI Foreign Venture Capital Investor registered under the SEBI (Foreign

Venture Capital Investors) Regulations, 2000 GDP Gross domestic Product GoI/Government Government of India GWP Gross World Product HUF Hindu Undivided Family I.T. Act Income Tax Act, 1961, as amended ICAI Institute of Chartered Accountants of India IFRS International Financial Reporting Standards Indian GAAP Generally Accepted Accounting Principles in India Indian Partnership Act Indian Partnership Act 1932, as amended IPO Initial Public Offering IT Information Technology LIBOR London Inter-Bank Offer Rate MAT Minimum Alternate Tax Mn / mn Million MOU Memorandum of Understanding NA/ n.a. Not Applicable NAV Net Asset Value NEFT National Electronic Fund Transfer

9

Term Description NOC No Objection Certificate NRE Account Non Resident External Account NRI Non Resident Indian, being a person resident outside India, as defined

under FEMA and the FEMA Regulations. NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OCB A company, partnership, society or other corporate body owned directly

or indirectly to the extent of at least 60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly and which was in existence on October 3, 2003 and immediately before such date had taken benefits under the general permission granted to OCBs under the FEMA. OCBs are not permitted to invest in the Issue

p.a. Per annum P/E Ratio Price/Earnings Ratio PAN Permanent Account Number allotted under the Income Tax Act, 1961 PAT Profit after tax PBT Profit before tax PCFC Packing Credit in Foreign Currency PCL Packing Credit Loan PIO Person of Indian Origin PLR Prime Lending Rate PSCFC Post Shipment Credit in Foreign Currency `/Rs./INR Indian Rupees RACB Rupee Advance against Collection Bills RBI Reserve Bank of India RoC Registrar of Companies, Gujarat, Dadra and Nagar Havelli RONW Return on Net Worth RTGS Real Time Gross Settlement SCRA Securities Contracts (Regulation) Act, 1956, as amended SCRR Securities Contracts (Regulation) Rules, 1957, as amended SEBI Securities and Exchange Board of India constituted under the SEBI Act SEBI Act Securities and Exchange Board of India Act 1992, as amended SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investment Funds)

Regulations, 2012 SEBI FII Regulations Securities Exchange Board of India (Foreign Institutional Investors)

Regulations 1995, as amended SEBI Regulations Securities and Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2009 as amended SEBI Takeover Regulations

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 as amended

SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996 as amended

SICA Sick Industries Companies (Special Provisions) Act, 1985 State Government The government of a state of the Union of India UK United Kingdom UK GAAP Generally Accepted Accounting Principles in United Kingdom US / USA United States of America US GAAP Generally Accepted Accounting Principles in United States of America USD/US$ United States Dollars VCFs Venture Capital Funds as defined in and registered with SEBI under the

SEBI (Venture Capital Fund) Regulations, 1996

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PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA All references to “India” contained in this Draft Red Herring Prospectus are to the Republic of India and all references to the “US” are to the United States of America and to the “U.K.” are to the United Kingdom. Financial Data Unless stated otherwise, the financial data in this Draft Red Herring Prospectus is derived from the restated audited standalone financial statements of our Company as of and for the past five Fiscals and restated audited consolidated financial statements as of and for the past five Fiscals, prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations, and included in this Draft Red Herring Prospectus. The fiscal year of our Company commences on April 1 and ends on March 31 of the next year, so all references to particular fiscal year, unless stated otherwise, are to the 12 months period ended on March 31 of that year. All numbers in this Draft Red Herring Prospectus have been represented in million or in whole numbers, where the numbers have been too small to present in million. All numbers have been rounded off to two decimals. 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, US GAAP, UK GAAP, French GAAP and IFRS. We do not provide reconciliation of the financial statements of our Company to IFRS or US GAAP or UK GAAP or French GAAP financial statements. Our Company has 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 the financial data of our Company. 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 practices. 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. Any percentage amounts, as set forth in the sections titled “Risk Factors”, “Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 13, 130 and 259 respectively and elsewhere in this Draft Red Herring Prospectus, unless otherwise indicated, have been calculated on the basis of the restated audited consolidated and standalone summary financial statements of our Company prepared in accordance with Indian GAAP. Currency and Units of Presentation All references to “Rupees” or “Rs.” or “`” are to Indian Rupees, the official currency of the Republic of India. All references to “US$”, “USD” or “US Dollars” are to United States Dollars, the official currency of the United States of America. All references to Canadian “CAD” are to Canadian Dollars, the official currency of the Canada. All references to “Euro” or “€” are to the official currency of the member states of the European Union participating in the Economic and Monetary Union. Exchange Rates This Draft Red Herring Prospectus contains conversions of US Dollar, Euro, CAD and other currency amounts into Indian Rupees that have been presented solely to comply with the requirements of the SEBI Regulations. These conversions should not be construed as a representation that those US Dollar, Euro, CAD or other currency amounts could have been, or can be converted into Indian Rupees, at any particular rate. Definitions For definitions, see section titled “Definitions and Abbreviations” on page 2. In the section titled “Main Provisions of the Articles of Association” on page 365, defined terms have the meaning given to such terms in the Articles. Industry and Market Data Unless stated otherwise, industry and market data used in this Draft Red Herring Prospectus has

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been obtained or derived from publicly available information as well as industry publications and sources. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Accordingly, no investment decision should be made on the basis of such information. Although industry data used in this Draft Red Herring Prospectus is reliable, it has not been independently verified by our Company or the BRLMs. Similarly, internal Company reports, which we believe to be reliable, have not been verified by any independent sources. The extent to which the market and industry data used in this Draft Red Herring Prospectus is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data. There are no standard data gathering methodologies in the industry in which our Company conducts its business, and methodologies and assumptions may vary widely among different industry sources.

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FORWARD LOOKING STATEMENTS All statements contained in this Draft Red Herring Prospectus that are not statements of historical fact constitute “forward-looking statements.” All statements regarding our expected financial condition and results of operations, business, plans and prospects are forward-looking statements. These forward-looking statements include statements as to our business strategy, our expected revenue and profitability, planned projects and other matters discussed in this Draft Red Herring Prospectus regarding matters that are not historical facts. These forward-looking statements and any other projections contained in this Draft Red Herring Prospectus (whether made by us or any third party) are predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. Investors can generally identify forward-looking statements by terminology such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others: • growth of the manufacturing sector and the user industry including but not limited to auto,

auto ancillary, aerospace, general engineering, consumer goods and dies and moulds sectors;

• market fluctuations and industry dynamics beyond our control; • our ability to successfully procure critical components for our products; • potential mergers, acquisitions or restructuring; • our ability to successfully launch new products; • our ability to retain our current employees; • changes in monetary and/ or fiscal policies of the Government of India, inflations,

deflation, foreign exchange rates, unanticipated turbulence in interest rates; • occurrence of natural disasters or calamities affecting the areas in which we have

operations; • changes in political and social conditions in India; • the performance of the financial markets in India and globally; and • competition in the industry. For further discussion of factors that could cause the actual results to differ from the expectations, see sections titled “Risk Factors”, “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 13, 130 and 259, respectively. 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 gains or losses could materially differ from those that have been estimated. Our Company, our Directors, the Syndicate and their respective affiliates or associates do not have any obligation to, and do not intend 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 the SEBI requirements, our Company and the BRLMs will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permissions by the Stock Exchanges.

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SECTION II: RISK FACTORS

RISK FACTORS An investment in our Equity Shares involves a high degree of risk. You should carefully consider all the information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before making an investment in our Equity Shares. To obtain a complete understanding of our Company, you should read this section in conjunction with the sections “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as the other financial and statistical information contained in this Draft Red Herring Prospectus. The risks and uncertainties described in this section are not the only risks and uncertainties we currently face. Additional risks and uncertainties not known to us or that we currently deem immaterial may also have an adverse effect on our business, financial condition and results of operations. If any of the following risks, or other risks that are not currently known or are now deemed immaterial, actually occur, our business, financial condition and results of operations could suffer, the price of our Equity Shares could decline, and you may lose all or part of your investment. Unless otherwise stated, the financial information used in this section is derived from our restated audited financial statements prepared under Indian GAAP. See “Restated Consolidated Financial Statements” and “Restated Unconsolidated Financial Statements”on page 183 and 220. Internal Risk Factors

1. There are outstanding legal proceedings involving our Company, our Subsidiaries and

our Directors

There are outstanding legal proceedings involving our Company, Subsidiaries and Directors. These proceedings are pending at different levels of adjudication before various courts, tribunals, enquiry officers and appellate tribunals. The brief details of such outstanding litigations are as follows: Litigation against our Company

Sr. No

Nature of the cases/ claims No. of cases outstanding

Amount involved (` in million)

1 Civil 1 3.14 2 Service tax 2 0.48* 3 Excise 3 4.69 4 FEMA 1 Not-quantifiable 5 Stamp duty 1 1.68

Total 8 9.99 * Amount is not quantifiable in one case. Litigation by our Company

Sr. No



1 Income tax 3 10.41* Total 3 10.41 * In one case there is no tax demand in view of carry forward business losses / unabsorbed depreciation of our Company. Litigation involving our Subsidiaries

Sr. No



1 Civil 1 Not quantifiable 2 Labour 1 Not quantifiable

Total 2 Not-quantifiable Litigation involving our Directors

Sr. No

Nature of the cases/claim No. of cases outstanding


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1 Objection against registration of trade mark

1 Not quantifiable

An adverse outcome in any of these proceedings may affect our reputation and standing and could have an adverse effect on our business, financial condition and results of operations. For further details of outstanding litigation, see section titled “Outstanding Litigation and Material Developments” on page 292.

2. We had renegotiated the terms of repayment of instalments to our term loan lenders in the past and had overdue payments to two of our lenders. We cannot assure that we shall not renegotiate or restructure debts due to our lenders or default on timely repayments to our lenders in the future which could have an adverse effect on our business, reputation, result of operations or financial condition. We had renegotiated the terms of repayment of quarterly instalment falling due from March 28, 2009 by deferring the payment by 12 months i.e. moratorium of 12 months on the repayment of principal loan amount from March 28, 2009 to March 28, 2010. Also, we had overdue payments of ` 43.50 million (principal amount) to two of our lenders, which was paid on March 04, 2013. We cannot assure that we shall not renegotiate or restructure the debt due to our lenders or default on timely repayment as per the financing agreement with our lenders in the future. In the event of default under such financing agreement, our lenders can elect to accelerate all amounts outstanding and declare such amounts immediately due and payable together with accrued, unpaid and penal interest which may require us to dedicate a substantial portion of our cash flow from operations to make payments under the financing documents, thereby reducing the availability of cash flow to meet working capital requirements and use for other general corporate purposes which could have an adverse effect on our business and financial condition and results of operation. Further, any action initiated by a lender may result in the price of the Equity Shares being adversely impacted along with our ability to obtain further funding from other banks and financial institutions.

3. Demand for our products depends on demand and capital spending by customers in the auto and auto ancillary, aerospace, general engineering, dies and moulds and Government entities. Any downturn affecting these sectors may result in a decrease in demand for our products and services and adversely affect our business, financial condition and results of operations. Demand for many of our products and services depends on capital spending by auto and auto ancillary, aerospace, general engineering, dies and moulds and Government entities, which is directly affected by trends in these sectors and the current economic scenario. In FY12, 30.84%, 18.08%, 17.41%, 7.18% and 11.70% of our revenues came from auto and auto ancillaries, aerospace, general engineering, dies and moulds and government entities respectively. The corresponding figures for the nine months ended December 31, 2012 were 21.13%, 15.37%, 21.16%, 8.23% and 14.10% respectively. Our customers may defer major expenditures given the long term nature of many large scale projects due to perception of lower demand for their products or other reasons. Further, any financial crisis may lead to tightening of credit and consequently our customers, who may not have the ability to fund capital expenditures, may have difficulty in obtaining financing, which may result in cancellations of projects or deferral of projects to a later date. Such cancellations or deferrals may result in decreased demand for our products and could adversely affect our results of operations, cash flows and liquidity.

4. Increased costs for raw materials and components, interruptions in their availability and poor quality of these raw materials may adversely affect our results of operations. Our business is significantly affected by the availability, cost and quality of the raw materials and components which we need to develop our products. Our principal raw materials include controllers, isolation transformers, switch gears, drives, MCPs, Rotary table packages, LM Guide ways & runner blocks, lubrication systems chucks, cylinders, draw bars, pig iron, CRC/SS sheets. We are dependent on external suppliers for certain of the materials /components. The prices and supply of these and other raw materials and components depend on factors beyond our control, including general economic conditions, competition, production levels, transportation costs and duties. If, for any

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reason, our suppliers of raw materials and components should curtail or discontinue their delivery of such materials to us in the quantities we need or at prices that are competitive or expected by us, our ability to meet the requirements of our customers could be impaired and our earnings and business could suffer. Further, we may not be able to pass on any increase in the cost of manufacturing our products to our customers, which may adversely affect our results of operations. Additionally, we do not have control over the quality of raw materials and components they supply, which may adversely affect the quality and workmanship of our products.

5. Dependence on a few suppliers for key components may require us to procure them

from other suppliers at higher cost and cause operational interruptions and affect our delivery capacity leading to loss of production and underutilisation of our capacity. We source controllers largely from key suppliers like Siemens and FANUC. Similarly, other key components like isolation transformers, switch gears, drives, MCPs, rotary table package etc. are also supplied by a few suppliers. The relationship with these key suppliers plays an important role in helping us provide complete integrated solutions to our customers in the agreed timeframe. If we are unable to maintain a beneficial relationship with our key suppliers for our products, then we may have to purchase key inputs from other suppliers at higher costs or we may not be able to source key inputs from other suppliers, which may result in operational interruptions or prolonged loss of production and can significantly affect our delivery capacity and lead to under-utilization of our production capacity. Any delay in delivery or increase in price may result in order cancellations by our customers or even claims for damages, and may harm our relationships with those customers and our business and results of operations could be adversely affected.

6. The operations of our Company are subject to manufacturing risk and may be

disrupted by failure in the facilities causing fatal injury to personnel including death and destruction of property and consequent imposition of civil and criminal penalties. Our manufacturing facilities are subject to operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, earthquakes, other natural disasters and industrial accidents. Our manufacturing facilities are also subject to operating risk resulting in fatal personal injury and property damage and consequent imposition of civil and criminal penalties. In last 10 years, there have been 2 (two) fatal incidents at our manufacturing facilities leading to the death of an employee and a contract labourer. The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations.

7. A portion of the Net Proceeds of the Issue is proposed to be utilized towards procurement of various milling and turning machines for the machine shop which will be manufactured in-house and by our subsidiary, Huron Graffenstadden S. A. S.

One of the objects of the Issue includes the utilization of the Net Proceeds towards expansion of capacities at our manufacturing facility. For this purpose we intend to procure various CNC machines for the machine shop manufactured by us and by our subsidiary, Huron Graffenstadden S. A. S. We intend to procure 20 machines which will be manufactured in-house and 4 machines will be procured from our subsidiary, Huron Graffenstadden S. A. S. aggregating to ` 552.53 million. While we believe that our decision to manufacture the machines in-house and procure the machines from our subsidiary is cost effective, there can be no assurance that we could not have achieved more favourable terms had such machines been purchased from unrelated parties. For details of procurement of various CNC machines for the machine shop, see “Objects of the Issue” on page 80.

8. We have not placed orders for 100% of the machinery, equipments and toolings that is required for expansion of the facility and as a result, we may face time and cost overruns. One of the objects of the Issue includes expansion of capacities at the manufacturing facility which, inter-alia, includes purchase of machinery, equipments and toolings for the machine and foundry shop and sheet metal division. For details, see the section titled “Objects of the Issue” on page 80. We are yet to enter into definitive agreements or are

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yet to place orders for all the machinery, equipments and toolings required for expansion at the manufacturing facility. The total cost of machinery, equipments and toolings proposed to be procured is estimated to be ` 579.77 million. We are subject to risks on account of inflation in the price of machinery, equipments and toolings and fluctuations in foreign currency rates. Further we have not received any quotations for some of the measuring equipments required for the machine shop which has been estimated at ` 2.60 million based on management estimates. These factors may increase the overall cost of our expansion, and we may have to raise additional funds by way of additional debt or equity placement to complete our expansion of manufacturing facility, which may have an adverse effect on our business and results of operations.

9. A portion of the Net Proceeds of the Issue is proposed to be utilized towards prepayment of certain loans.

Our Company intends to utilize up to ` 285.30 million from the Net Proceeds towards prepayment of certain term loans of our Company that would be outstanding as of June 30, 2013. Certain of our loan facilities contain prepayment penalty clauses that we may be required to comply with and as a result, we may be required to pay an additional prepayment premium to our lenders. For details, see “Objects of the Issue” on page 80.

10. We have incurred losses on a consolidated basis in 4 (four) years out of the last 5 (five) years and we have had negative cash flow from operating activities. We incurred losses on a consolidated basis for the FY 2011, 2010, 2009 and 2008 of ` 41.82 million, ` 413.20 million, ` 14.88 million and ` 31.50 million, respectively. For the nine months ended December 31, 2012 and FY 2009, we had negative cash flows from operating activities of ` 37.89 million and ` 181.87 million respectively on a consolidated basis. We cannot assure you that we will not incur losses, have negative cash flows from operating activities in the future, which may adversely affect our ability to carry out our business.

11. The trademark ‘Jyoti’ with associated logo we currently use is not owned by us but is owned by our Promoter, Parakramsinh Jadeja which is not registered in his name. In case we are unable to use this trademark, our business and result of operation may be adversely impacted. We have entered into a licence agreement with Parakramsinh Jadeja, one of our Promoters, inter-alia, for use of the ‘Jyoti’ brand with associated logo. Parakramsinh Jadeja has made an application for registration of ‘Jyoti’ brand with associated logo before the Trade Mark Registry to have this trademark registered in his name. However, ‘Jyoti’ brand with associated logo has not been registered in his name till date. Parakramsinh Jadeja has received an objection against the registration and an affidavit in support of the application has been filed by Parakramsinh Jadeja before the Trade Mark Registry on October 27, 2011. We cannot assure you that ‘Jyoti’ brand with associated logo will be registered in his name and we will continue to have the uninterrupted use and enjoyment of ‘Jyoti’ brand with associated logo. Loss of right to use these trademarks may adversely affect our business, financial condition and results of operations.

12. Failure by the customers to make payment and take delivery of our products could affect our cash flows and working capital, which may have an adverse effect on our results of operations. Many of our customers purchase our machines through funding from bank. In such cases, banks directly make us the payment and we deliver the machines to our customers. Before commencing any work order, we receive earnest money as advance from our customers. If there is any delay by the customers in procuring the funds or the loan arrangement from the bank then we may be left with a complete machine ready for delivery without any buyers. In such case, our working capital would be blocked and our cash flow would be affected and thereby adversely affecting our results of operations.

13. Our success depends largely on our senior management and our ability to attract and retain our key personnel. Any inability to attract, recruit and retain skilled personnel could adversely affect our business and results of operations.

17

We believe that our current management team contributes significant experience and expertise to the management and growth of the business. The continued success of the business and the ability to execute the business strategies in the future will depend largely on our ability to attract, retain and motivate our key management and operational personnel. Our management team has been involved in the machine tool industry in India for a significant period. During this time, our management team has developed sector-specific and operational management expertise and an understanding of the key opportunities and risks associated with the business. Any failure to retain key managers, or to replace our key management and operational personnel with equally qualified persons in the event of the departure, could have a material adverse effect on our business, prospects, results of operations and financial condition. Further, as our business continues to grow we will need to recruit and train additional qualified personnel. If we fail to attract and retain qualified personnel, our business prospects, results of operations, cash flows and financial condition may also be adversely affected. We do not maintain key-man life insurance in relation to our key managerial personnel. The loss of the services of our key management and operational personnel due to death or disability or a failure to recruit suitable or comparable replacements in a timely manner could have a material adverse effect on our business, prospects, results of operations, cash flows and financial condition.

14. We provide after sales service to our customers. Any failure or deterioration of after sale service could have an adverse effect on our business, reputation, results of operations or financial condition. We believe that our ability to provide effective after sales service has played a huge part in our success. Effective after sales service ensures repeat customers and also adds to our brand value. Presently, our service network caters to 19 cities across India where a team of qualified engineers is present to provide support to our customers. However, we cannot guarantee that we will be able to maintain the standard and quality of our after sale services considering the volumes and the increasing number of customers across geographical territories coupled with the complexity of the requirements of diverse segment of customers. The performance and quality of our after sales service to our customers is critical to the success of our business. The effectiveness and quality of our after sales service depends significantly on the engineers’ skill and experience which in turn is dependent on the quality of training program. We cannot give any assurance that training given to the field service engineers is adequate or that they will continue to provide services after completion of their training. Any failure or deterioration of after sale service could have an adverse effect on our business, reputation, results of operations or financial condition.

15. We face significant competition in our business from Indian and international companies which could adversely affect our operations and our profitability. We operate in a competitive market. Many Indian and foreign players are operating in the machine tools market. There are several strategies adopted by our competitors to increase their market share through pricing, service, new product introductions and distribution reach among others. This increased competition by both traditional and new players may affect our margins. In order to protect our existing market share or capture market share, we may be required to increase expenditure for increasing our reach and to introduce and establish new products. Due to inherent risks in the marketplace associated with new product introductions, including uncertainties about user industry’s response, increased expenditure may not prove successful in maintaining or enhancing our market share and could result in lower profitability. For further details, see the section titled “Business – Competition” on page 144.

16. Any inability to manage our growth may disrupt our business and affect our profitability. We have experienced year-on-year growth in our income from operations on consolidated basis of 37.62% and 57.05% in FY 2012 and FY 2011, respectively. Further, our strategy is to continue to grow by expanding the size and scope of existing business. This growth strategy will place significant demands on us and require us to continuously evolve and improve our operational, financial and internal controls across our organisation. In particular, continued expansion increases the challenges involved in:

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• maintaining high levels of customer satisfaction; • recruiting, training and retaining sufficient skilled management, technical and

marketing personnel; • adhering to health, safety and environment and quality and process execution

standards that meet customer expectations; • preserving a uniform culture, values and work environment in operations at our

manufacturing facilities; and • developing and improving our internal administrative infrastructure, particularly our

financial, operational, communications and other internal systems. Any inability to manage our growth may have an adverse effect on our business, results of operations and financial condition. If we fail to manage growth effectively it could have an adverse effect on our results of operations.

17. Our Company is subject to restrictive covenants under credit facilities provided to us by our lenders. These restrictions could restrict our ability to conduct our business and operations There are restrictive covenants in the agreements which our Company has entered into with our lenders. The agreements governing our debt obligations include terms that require us to, among other things, take prior approval of our lenders for undertaking any change in capital structure, formulate any scheme of amalgamation or re-construction, implement any scheme of expansion / diversification / modernisation, make any corporate investment and undertake any guarantee obligations. Such restrictive covenants our ability to conduct our business and operations. For details, see section titled “Financial Indebtedness” on page 284.

18. We have substantial working capital requirements and if we are unable to obtain working capital loans to help finance these requirements it would a have significant adverse effect on our business, results of operations and financial condition. Our business requires a substantial amount of working capital, primarily to maintain a high level of inventory on account of a long manufacturing cycle. As we increase our production and undertake expansion our business may require a large amount of working capital to finance the purchase of raw materials. Our working capital requirements may also increase owing to a growing number of orders to be delivered within a similar timeframe or if for certain orders the payment terms do not include advance payments. All of these factors may result in an increase in our working capital requirements. We avail the majority of our working capital by way of loan from various banks. Such financing arrangement could cause our debt to equity ratio to increase. Our Company’s working capital (i.e. current assets less the current liabilities and provisions) as of March 31, 2012 was ` 1,334.82 million. We cannot assure you that we will be able to secure adequate financing in the future on acceptable terms, in time, or at all. Failure to obtain financing on terms favourable to us could have a material adverse effect on our business, results of operations and financial condition. For details of the working capital facilities currently availed by us, see the section titled “Financial Indebtedness” on page 284.

19. We cannot assure you that we will be able to secure adequate financing in the future

on acceptable terms, in time, or at all. Our failure to obtain sufficient financing could result in the delay or abandonment of implementation of our business development plans or any acquisition plans and this may affect our business and future results of operations.

We may require additional funds in connection with other future business expansion and development initiatives. In addition to the net proceeds from the Issue and our internally generated cash flow, we may need additional sources of funding to meet our future capital requirements, which may include entering into new debt facilities with lending institutions or raising additional equity in the capital markets. If we decide to raise additional funds through the incurrence of debt, our interest obligations will increase, and we may be subject to additional covenants. Such financings could cause our debt to equity ratio to increase or require us to create charges or liens on our assets in favour of lenders. If we decide to raise additional funds through the issuance of equity (other than through a rights issue to the existing shareholders), the ownership interest of our existing

19

shareholders will be diluted. We cannot assure you that we will be able to secure adequate financing in the future on acceptable terms, in time, or at all. Our failure to obtain sufficient financing could result in the delay in implementation of our business development plans or abandonment of any acquisition plans and this may affect our business and future results of operations.

20. Our Company has availed unsecured loans, which can be recalled anytime by their respective lenders.

Unsecured loans amounting to ` 117.37 million (including interest) is outstanding as on January 31, 2013. Such unsecured loans availed by our Company can be recalled anytime by the lenders by giving notice to our Company. In the event such loans are recalled, our Company may be required to arrange alternative sources of financing. For details of our indebtedness, please refer to the chapter titled “Financial Indebtedness” on page 284 of the Draft Red Herring Prospectus.

21. Our Promoters have significant control over us, and have the ability to direct our business and affairs; their interests may conflict with your interests as a shareholder. Our Promoters, together with the members of the Promoter Group, beneficially own 96.91% of our issued and outstanding Equity Shares. Our Promoters, together with the members of the Promoter Group, will hold 66.07% of our post-Issue paid up capital. Our Promoters have the ability to control our business, including matters relating to sale of all or substantially all of our assets, timing and distribution of dividends, election of directors and change of control transactions. Our Promoters may influence the material policies of our Company in a manner that could conflict with the interests of our other shareholders. The Promoters’ control could delay, defer or prevent a change in control of our Company, impede a merger, consolidation, takeover or other business combination involving our Company, or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company, even if it is in the best interest of our other shareholders.

22. We have entered into certain related party transactions and we expect that we will

continue to do so in the future which may involve conflicts of interest. We have entered into certain transactions with related parties, such as our Promoters including entities affiliated with our Promoters, Directors and their relatives, key management personnel and enterprises in which key management personnel/Directors have significant influence. For detailed information on our related party transactions, see the section titled “Related Party Transactions” on page 181. While we believe that all our related party transactions have been conducted on an arm’s length basis, there can be no assurance that we could not have achieved more favourable terms had such transactions been entered into with unrelated parties. Furthermore, it is likely that we will enter into related party transactions in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our business, financial condition and results of operations.

23. The objects of the Issue for which funds are being raised have not been appraised by any bank or financial institution and we have not entered into any definitive agreements to utilise the Issue proceeds. In addition, we have not appointed any third party to monitor the deployment of the Issue proceeds. The objects for which the funds are being raised have not been appraised by any bank or financial institution. We have not entered into any definitive agreements to utilise the Issue proceeds. There has been no independent appraisal of our expansion plans. Whilst the quotations obtained by us for machines, equipments and toolings and civil works in relation to expansion plans, such costs are subject to change in the light of various factors beyond our control, including delays or increase in quoted prices by identified vendors. In the event, for whatsoever reason, we are unable to execute our expansion plans, we could have a significant amount of unallocated net proceeds. Due to the number and variability of factors that we will analyze before we determine how to use these unutilised net proceeds, we presently cannot determine how we would reallocate such proceeds. Accordingly, investors will not have the opportunity to evaluate the economic, financial and other relevant information that will be considered by us in the determination on the application of any such net proceeds in these circumstances. In addition, the deployment

20

of funds is not subject to monitoring by any independent agency. For details, see the section titled “Objects of the Issue” on page 80.

24. We generate income and incur expenses in multiple currencies and exchange rate movement may cause us to incur losses.

Changes in currency exchange rates influence our results of operations. We report consolidated financial results in Indian Rupees, while portions of each of our total income and expenses are denominated, generated or incurred in currencies other than the Indian Rupee such as the U.S. Dollar, Euro, Japanese Yen, British Pound and other currencies. In accordance with “Accounting Standard 21 ― Consolidated Financial Statements” issued by ICAI, at the time of conversion of the financial statements during the consolidation process, line items of the profit and loss account are converted using an average exchange rate for the period or year under consideration except for opening and closing stock which are converted at the opening and closing exchange rate respectively and depreciation which is converted using the exchange rate at the date of purchase of the assets, where as items of the balance sheet are converted using the closing exchange rate for the period or calendar year under consideration. Any expansion into new geographies such as the international acquisitions exposes us to additional foreign currency risks associated with such diversification. To the extent that income and expenditures are not denominated in Indian Rupees, despite our entering into foreign exchange hedging contracts from time to time, exchange rate fluctuations could affect the amount of income and expenditure we recognize. Further, our future capital expenditures, including any imported equipment and machinery, may be denominated in currencies other than the Indian Rupee. Our Company also has currency exposures related to its financing in currencies other than the local currency in which our Company operates. Any depreciation in the value of the Indian Rupee against such other currencies could increase the Indian Rupee cost for our Company for servicing our debt or making such capital expenditures. Although we follow foreign currency exposure closely, including on a contract-by-contract basis, and selectively enter into hedging transactions in an attempt to reduce the risks of currency fluctuations, these activities are not always sufficient to protect against incurring large losses if currencies fluctuate significantly. Fluctuations in foreign exchange rates adverse to us that are not sufficiently hedged could adversely affect our results of operations.

24. Our Company had entered into a cross currency derivative transaction in March 2008

with its closing date being March 11, 2013 which was prematurely settled by our Company on February 11, 2013 at a loss of ` 14.93 million. We cannot guarantee that our Company will not enter into any similar transaction in derivatives in the future that may have an adverse effect on our business, financial condition and results of operations. Our Company had entered into a cross currency derivative transaction in March 2008 with the closing date being March 11, 2013 which was prematurely settled by our Company on February 11, 2013 at a loss of ` 14.93 million. Our company does not have a formal policy or strategy for hedging of currency risk and we cannot guarantee that our Company will not enter into any similar transaction in derivatives in the future. Our Company’s use of derivative transaction involves the risk that such transactions may not work as intended due to unanticipated developments in market conditions or other causes and may have an adverse effect on our business, financial condition and results of operations.

25. The proposed expansion is largely funded by the Issue Proceeds from IPO. Any delay in raising the funds from IPO may have an adverse impact on our future performance. Delay in raising funds is likely to have an impact on our growth plans in the short run due to delayed deployment of funds. If this happens, it is likely that we may have to renegotiate with some of the suppliers and in some cases even settle for alternate suppliers for key equipment. Such processes can delay the project thereby affecting our future performance.

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26. We are vulnerable to failure of our information technology systems, which could adversely affect our business and results of operations We have implemented SAP enterprise resource planning application (SAP ERP) for control of our production process. We also manage our inventory through the same application. We have connected our various manufacturing facilities and administrative office at Metoda, Rajkot via an optic fiber network. Any malfunction in the hardware or software systems could disrupt our production process and may necessitate the inventory management and production process to shift to the manual mode till the system is rectified. We have at present large number of components that are used assembling various machines. It would be an extremely difficult and time consuming task to manually determine the location and availability of components and managing the ordering process for out of stock items. The whole process could delay the assembly schedule and increase the cost of our machines thereby having an adverse effect on our business, reputation, financial condition and results of operations.

27. We require certain approvals, permits and licenses in the ordinary course of business, and the failure to obtain or renew them in a timely manner may adversely affect our operations. We require certain statutory and regulatory permits and approvals for our business. Additionally, we may need to apply for more approvals in the future including renewal of approvals that may expire from time to time. There can be no assurance that the relevant authorities will issue such permits or approvals in the timeframe anticipated by us or at all. Failure by us to renew, maintain or obtain the required permits or approvals at the requisite time may result in the interruption of our operations and may have a material adverse effect on our business, financial condition and results of operations. Further, we cannot assure that the approvals, licenses, registrations and permits issued to us would not be suspended or revoked in the event of non-compliance or alleged non-compliance with any terms or conditions thereof, or pursuant to any regulatory action. Any failure to renew the approvals that have expired or apply for and obtain the required approvals, licenses, registrations or permits, or any suspension or revocation of any of the approvals, licenses, registrations and permits that have been or may be issued to us, may adversely affect our operations. For details, please refer to the section entitled “Government Approvals” on page 296.

28. Our product designs are not protected by Intellectual Property Rights. Any misuse of the same may have an adverse effect on our reputation and goodwill, business and results of operations. Our product designs are not protected by intellectual property rights and we have not applied for registration of any of the trademarks. As a result, we may not be able to protect our trademarks and tradenames, which we rely on to support our awareness with customers and to differentiate our products and services from those of our competitors and prevent the use of our name or variations thereof by any other party, nor ensure that we will continue to have a right to use it. We further cannot assure you that our goodwill in such name or logo will not be diluted or harmed by misuse of our name or logo by third parties, which in turn would have a material adverse effect on our reputation, goodwill, business, financial condition and results of operations.

29. We have entered into an arrangement with Jyoti Enterprise, a Promoter Group entity, for use of their property to carry out certain manufacturing activities and as we do not have any legal rights in the said property we are exposed to the possibility of being evicted. At present we are using the leasehold land of Jyoti Enterprise measuring 3,024 sq. meters at Metoda, Rajkot and 300 sq. yard at Gondal road, Rajkot and its machines for carrying out certain manufacturing operations. We have executed an agreement with Jyoti Enterprise granting us the contractual right for use of land and some of the machines installed thereon by Jyoti Enterprise. However, we do not have any legal right in the land or the machines installed by Jyoti Enterprise (except for the machines installed by us). If we are required to vacate these properties, we would have to divert considerable man

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power in shifting the machines and equipments to our facility. This would involve considerable expenditure and would affect our business and results of operations.

30. We may face potential liabilities or claims by the customers in the future which could

have an adverse effect on our business, reputation, results of operations or financial condition. We may face the risk of legal proceedings and claims being brought against us by the customers for any defects in the machines sold to them. This may result in liabilities and/or financial claims against us and could have an adverse effect on our business, reputation, results of operations or financial condition. In the past, one of the customers of our Subsidiary has made a claim for loss arising from burning of the machine. For details, please refer to the section entitled “Outstanding Litigations and Material Developments” on page 292.

31. Our ability to pay dividends in the future will depend upon our future earnings,

financial condition, cash flows, working capital requirements and capital expenditures and the terms of our financing arrangements. We have not paid any dividends since incorporation. The declaration of dividends in the future will be recommended by our Board of Directors, at its sole discretion, and will depend upon our future earnings, financial condition, cash flows, working capital requirements and capital expenditures. There can be no assurance that we will pay dividends in the future. Additionally, we are restricted by the terms of our debt financing from making dividend payments in the event we default in any of the debt repayment instalments.

32. Our insurance coverage may not be adequate to protect us against all potential losses to which we may be subject and this may have a material adverse effect on our business.

While we believe that the insurance coverage that we maintain is reasonably adequate to cover all normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be honoured fully, in part or on time. Accordingly, to the extent that we suffer loss or damage that is not covered by insurance or which exceeds our insurance coverage, our results of operations or cash flows may be affected. Although we intend to maintain adequate insurance against losses, there is a risk that our insurance policies may not be sufficient in covering all losses which we may suffer. If we suffer an event for which we are not adequately insured, it could have a material adverse effect on our business, results of operations and financial condition. For details of our insurance cover, see section titled “Business-Insurance” on page 150.

33. Four of our Subsidiaries have incurred losses in the past and may continue to incur losses in the future which may have an adverse effect on our business and results of operations. Our Group Companies currently do not have any operations. As set forth below, four of our Subsidiaries have incurred losses during last three financial years (as per their respective standalone audited financial statements). They may continue to incur losses in future periods, which may have an adverse effect on our business and results of operations.

(` in million) Sr. No

Name of the Subsidiaries Profit / (Loss) after tax

For nine months ended

December 31, 2012

For the year ended March 31,

2012


2011


2010

1 Jyoti S.A.S. (42.21) (54.76) (28.72) (37.20) 2 Huron Graffenstaden S.A.S. 2.58 0.11 (173.62) (334.50) 3 Huron Frasmaschinen GmbH (7.05) (6.58) (13.61) (21.32) 4 Huron Canada Inc. (13.69) (4.71) (8.96) (17.52)

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Further, our Group Companies (i.e. Jyoti Enterprise and Jyoti International Private Limited) currently do not have any operations.

34. Our inability to fulfill export obligations under the Export Promotion Capital Goods Scheme could result in potential customs duty liability. We have imported capital goods under the Export Promotion Capital Goods Scheme without payment of import duty for which we had undertaken to meet certain quantum of export requirements. We have saved customs duty of ` 6.78 million as of December 31, 2012 and are required to fulfill export obligation to the extent of 6 to 8 times the duty saved. Unfulfilled obligations under the Export Promotion Capital Goods Scheme of our Company as on December 31, 2012 amounts to ` 9.09 million. Our inability to fulfill these future export obligations could result in potential customs duty liability.

35. We may have certain contingent liabilities and capital commitments not provided for which may adversely affect our financial condition. Our contingent liabilities as of December 31, 2012 not provided for (as disclosed in our financial statements) are as detailed in the following table:

(` in million) Particulars Amount Export obligation under EPCG Scheme 9.09 Outstanding letter of credit and bank guarantees 250.50 Claims not acknowledged as debt 3.14 Corporate guarantee to Bank of India, Paris on behalf of Jyoti SAS

365.82

Disputed excise duties and service tax liabilities 4.77* Estimated amount of contracts remaining to be executed on capital account and not provided for

1.00

* Out of the above amount, ` 2.22 million has been paid under protest. Any or all of these contingent liabilities and commitments may become actual liabilities. In the event that any of our contingent liabilities become non-contingent, our business, financial condition and results of operations may be adversely affected. Our capital commitments not provided for could adversely affect our financial condition if such commitments are not executed according to the terms and conditions of the respective contracts. For further information, please see the section titled “Restated Consolidated Financial Statements – Annexure - XVII” on page 214.

36. Tax benefits available to us may be withdrawn which could adversely affect our financial condition and results of operations.

Various tax benefits under the Income Tax Act, 1961 (the “I.T. Act”) are available to us. For details of the tax benefits available to us, please see the section titled “Statement of Tax Benefits” on page 103. A change in the law, including the proposed migration to the direct tax code, or in the interpretation of the law may result in the discontinuation or withdrawal of these tax benefits, which could adversely affect our financial condition and results of operations. In addition, certain tax benefits we had previously claimed may be denied and we may therefore be required to pay the relevant tax authorities the amounts in relation to the claimed tax benefits. For details of our taxation related disputes, please see the section entitled “Outstanding Litigation and Material Developments” on page 292. This could adversely affect our financial condition and results of operations.

37. The complexity of transfer pricing regulations across countries may result in substantial tax liabilities to us, which could have an adverse effect on our business and results of operations. Each country’s transfer pricing regulations require that international transactions involving associated enterprises be at an arm’s-length price. Transactions between our Company and our Subsidiaries in other countries fall into this classification, for purposes of Indian tax laws and regulations. Accordingly, we determine the pricing among our

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associated enterprises on the basis of benchmarking against transactions with entities that are not under common control. If the applicable income tax authorities, on review of our tax returns, determine that the transfer price we applied was not appropriate, we may incur increased tax liability, including accrued interest and penalties. These penalties could be substantial and have an adverse effect on our business.

38. If any of the owners of the premises on which we operate our branch offices terminate or do not renew the agreements under which we occupy the premises, or if they seek to renew such agreements on terms and conditions unfavourable to us, our business and results of operations may be adversely affected.

We do not own the premises on which our branch offices and other offices are located. All of our branch offices are located on lease or leave and license premises. If we are unable to renew the leases prior to the expiry of the term thereof or if they seek to renew such agreements on terms and conditions unfavourable to us, we may suffer disruption in our operations or increased costs, or both, which may adversely affect our business and results of operations. Further some of the branch offices are operated from residential premises and we may have to vacate these premises and shift to new premises if any objections are raised by members of such residential complex or local bodies. In such a case, there can be no guarantee that we would be able to find suitable premises for setting up our branch office at the similar rent and may adversely affect our business and result of operations.

39. We have, in the past, relied on our Promoters to provide guarantees to our lenders to assist us in funding our expansion which may not necessarily be available in the future. We have historically depended on guarantees provided to our lenders by our Promoters in order to help fund our expansion plans, as well as improvements to our existing infrastructure and other business requirements. Our Promoters have not committed to provide such forms of credit support on a going-forward basis. Hence, we may be unable to obtain future funds from lenders on favourable terms or at all without such support, and our expansion plans may be curtailed.

40. Our Company has issued Equity Shares during the last one year at a price that may be below the Issue Price. In the last one year, we have issued Equity Shares at a price that may be lower than the Issue Price:

Date of Allotment

No of Equity Shares

Face Value (in `)

Issue Price (in `)

Reasons Description

March 31, 2012 556,000 10 125 Further

AllotmentIssue of Equity Shares to Parakramsinh Jadeja

March 31, 2012 19,200 10 125 Further

AllotmentIssue of Equity Shares to Sahdevsinh Jadeja

March 31, 2012 764,000 10 125

Further Allotment

Issue of Equity Shares to Jyoti International Private Limited

March 31, 2012 8,000 10 125 Further

AllotmentIssue of Equity Shares to Bindiya Solanki

March 31, 2012 7,200 10 125 Further

AllotmentIssue of Equity Shares to Chaitanya Solanki

March 31, 2012 8,000 10 125

Further Allotment

Issue of Equity Shares to Chaitanya Solanki HUF

March 31, 2012 864,000 10 125 Further

AllotmentIssue of Equity Shares to Smit Ramesh Virani

March 31, 2012 4,315 10 125 Further

AllotmentIssue of Equity Shares to Anil Virani

March 31, 2012 377,060 10 125 Further

AllotmentIssue of Equity Shares to Kishore Virani

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September 22, 2012 80,000 10 125 Further

AllotmentIssue of Equity Shares to Parakramsinh Jadeja

September 22, 2012 1,13,000 10 125

Further Allotment


September 24, 2012 13,947,583 10 -

Bonus in the ratio of

1:1

Bonus Issue to all existing Equity Shareholders of our Company

December 31, 2012 69,750 10 215 Further

Allotment


February 16, 2013 714,450 10 215 Further

Allotment


41. We were not compliant with the requirements of Section 383A of the Companies Act

subjecting us to initiation of proceedings against us by Registrar of Companies and the consequent penalties and fines. Under the provisions of Section 383A of the Companies Act, we were required to appoint a whole-time Company Secretary from December 12, 2003. We appointed Maulik Gandhi as a whole-time Company Secretary on September 17, 2012. Thus we were not compliant with the provisions of the said section in the intermediate period from December 12, 2003 until the appointment of Maulik Gandhi. Consequently, we and our Directors (who are considered to be ‘officers in default’) may be subject to proceedings which may be initiated for such non-compliance by the Registrar of Companies.

42. Our Company is unable to trace certain secretarial records and have relied on data available on MCA website subjecting us to proceeding by Registrar of Companies and consequent penalties and fines. Our Company was unable to trace secretarial records of RoC filings in respect of change of our registered office to our current registered address. In the absence of complete records, we have relied on latest master record available on the MCA website. In the event of any inspection of our record we may not be able to produce these documents and may be subject to proceedings by the Registrar of Companies and consequent penalties and fines.

43. Our business and results of operations could be adversely affected by strikes, work stoppages or increased wage demands by our employees. India has stringent labour legislation that protects the interests of workers, including legislation that sets forth detailed procedures for establishment of unions, dispute resolution and employee removal and legislation that imposes certain financial obligations on employers upon retrenchment. Although our employees are not currently unionized, there are can be no assurances that they will not unionize in the future. If our employees unionize, it may become difficult for us to maintain flexible labour related policies, which may have an adverse effect on our business, financial condition and results of operations.

44. We haven’t entered into any non-compete agreements with our Promoters or Jyoti Enterprise; a Promoter Group entity to desist them from carrying out commercial activities in relation to manufacturing of CNC machines which may adversely affect our business and operations. Our Promoters originally started manufacturing of CNC machines under the name and style of Jyoti Enterprise. Since 2006, Jyoti Enterprise has not carried out any commercial activities in relation to manufacturing of CNC machines. However, we have not entered into non – compete arrangements with our Promoters or Jyoti Enterprise to desist them from carrying out commercial activities in relation to manufacturing of CNC machines. We cannot guarantee that our promoters or any of their ventures will not be in the same line of business. If such a situation arises, then our business and results of operations could be affected.

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External Risk Factors

45. Political instability or changes in the Government could adversely affect economic conditions in India generally and our business in particular. The Government of India has traditionally exercised and continues to exercise a significant influence over many aspects of the economy. Our business, and the market price and liquidity of our Equity Shares, may be affected by interest rates, changes in Government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. Since 1991, successive governments have pursued policies of economic liberalization and financial sector reforms. However, there can be no assurance that such policies will be continued in the future. A significant change in India’s economic liberalization and deregulation policies could disrupt business and economic conditions in India generally and adversely affect our business, financial condition and results of operations.

46. Significant differences exist between Indian GAAP and other accounting principles,

such as U.S. GAAP or U.K. GAAP and IFRS, which may be material to investors’ assessments of our financial condition. Our financial statements included in this Draft Red Herring Prospectus are prepared in accordance with Indian GAAP and restated in accordance with the SEBI Regulations. We have not attempted to quantify the impact of U.S. GAAP or U.K. GAAP or IFRS on the financial data included in this Draft Red Herring Prospectus, nor do we provide a reconciliation of our financial statements to those of U.S. GAAP or U.K. GAAP or IFRS. Each of U.S. GAAP and IFRS differs in significant respects from Indian GAAP. Accordingly, the degree to which the 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 practices. 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.

47. Our transition to the use of the IFRS-converged Indian Accounting Standards may adversely affect our financial condition and results of operations. According to the press release dated January 22, 2010 issued by the Ministry of Corporate Affairs, the adoption of, and convergence with the IFRS will be implemented in phases and our Company may soon be required to prepare our annual and interim financial statements under IFRS. The convergence of certain Indian Accounting Standards with IFRS was notified by the Ministry of Corporate Affairs on February 25, 2011. Because there is significant lack of clarity on the adoption of and convergence with IFRS and there is not yet a significant body of established practice on which to draw in forming judgments regarding its implementation and application, we have not determined with any degree of certainty the impact that such adoption will have on our financial reporting. There can be no assurance that our financial condition, results of operations, cash flows or changes in shareholders' equity will not appear materially worse under IFRS than under Indian GAAP. As we transition to IFRS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems. Moreover, there is increasing competition for the small number of IFRS-experienced accounting personnel available as more Indian companies begin to prepare IFRS financial statements. Any of these factors relating to the use of IFRS-converged Indian Accounting Standards may adversely affect our financial condition and results of operations.

48. Civil unrest, acts of violence including terrorism or war involving India and other countries could materially and adversely affect the financial markets and our business. Any major hostilities involving India or other acts of violence, including civil unrest or similar events that are beyond our control, could have a material adverse effect on India’s economy and our business. Terrorist attacks and other acts of violence may adversely affect the Indian stock markets, where our Equity Shares will trade, and the global equity

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markets generally.

49. Sluggish global and domestic economic conditions may have a material adverse effect on our business, financial condition and results of operations.

In the recent past, global financial markets have experienced major upheaval characterized by extreme volatility and declines in prices of securities, diminished liquidity and credit availability, inability to access capital markets, the bankruptcy, failure, collapse, nationalization or sale of financial institutions and significant governmental intervention. The Indian economy and financial markets were also significantly impacted by such global economic and market conditions.

We are currently experiencing various developments adversely affecting the global economy such as rising national fiscal deficits, the downgrading of credit ratings of various significant financial institutions and developed countries including the United States and bailouts for various EU economies which have dented investor confidence and caused increased volatility in global and Indian securities markets. Any further financial turmoil, in major global economies may continue to have a negative impact on the Indian economy. Indian financial markets also experienced the contagion effect of the volatility and turmoil in the global financial markets. As we increase our global footprint through our subsidiaries in France, Germany and Canada, our global operations would be influenced by the economic and financial conditions prevailing in these parts of the world. Additionally, due to the conditions in the global and domestic financial markets, we cannot be certain that funding will be available or that we would be able to raise funds, if needed or to the extent required and we may be unable to implement our strategy.

50. Changes in the GoI's policies in the future could delay the liberalization of the Indian economy and adversely affect economic conditions in India generally, which may impact our future prospects.

Since 1991, successive Indian governments have pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant. The current central government, which came to power in May 2009, is headed by the Indian National Congress and is a coalition of several political parties. Although the current government has announced policies and taken initiatives that support the economic liberalization policies that have been pursued by previous governments, the rate of economic liberalization may change, and specific laws and policies affecting banking and finance companies, foreign investment and other matters affecting investment in our securities may change as well. Any major change in government policies might affect the growth of the Indian economy and thereby our growth prospects.

51. Unfavourable changes in legislation, including tax legislation, or policies applicable to us could adversely affect our results of operations.

The Direct Tax Code Bill, 2010 (“DTC Bill”) was placed before the Indian Parliament on August 30, 2010 which seeks to substitute the existing Income Tax Act and Wealth Tax Act, 1957. The DTC Bill was subsequently referred to the Standing Committee of Finance (‘SCF’) on September 9, 2010 for examination. The SCF has submitted its report to the Indian Parliament on March 9, 2012. Currently, the recommendations made by the SCF are under consideration by the Ministry of Finance, GoI. On the finalisation of the DTC Bill, the DTC Bill will be placed before the Indian Parliament for its approval and notification as an Act of Parliament. Accordingly, it is currently unclear what effect the finally approved Direct Tax Code would have on our financial statements. GoI is seeking to introduce a GST. GST will rationalise the Indian indirect tax system by amalgamating central and state levies including excise duty, service tax and value added tax into GST. A special ‘Central Sales Tax Compensation Committee’ and ‘GST Design Committee’ was set up for review of GST regime in India and their reports on the GST implementation were proposed to be submitted by December 31, 2012. The implementation of this rationalized tax structure might be affected by disagreement between certain state governments, which could create uncertainty. Any such increases or amendments may affect the overall tax efficiency of companies operating in India and

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may result in significant additional taxes becoming payable and affect our results of operations.

52. Our operations in foreign countries are subject to political, regulatory and other risks of doing business in those countries.

We primarily operate in France, Germany and Canada through our subsidiaries. Consequently, we are subject to risks associated with uncertain political environments and government instability, as well as legal systems, laws and regulations in those countries. In addition, we could be subject to adverse changes in the tax regimes or expropriation or deprivation of assets or contract rights. Our failure to manage successfully the international operations, including our ability to comply with applicable regulations, legal standards and procedures, could adversely affect our business and operations.

53. Third party statistical and financial data in this Draft Red Herring Prospectus may be incomplete or unreliable. We have not independently verified data from industry publications and other sources and therefore cannot assure you that they are complete or reliable. Discussions of matters relating to India, its economy or the industries in which we operate in this Draft Red Herring Prospectus are subject to the caveat that the statistical and other data upon which such discussions are based may be incomplete or unreliable.

54. Exchange control regulations may constrain our ability to obtain financing on competitive terms in foreign currencies.

As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such regulatory restrictions may limit our financing sources and hence could constrain our ability to obtain financing on competitive terms and refinance existing indebtedness. Limitations on raising foreign debt may have an adverse effect on our business growth, financial condition and results of operations.

55. Any downgrading of India’s debt rating by an international rating agency could have a

negative impact on our business. Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely impact our ability to raise additional financing as and when required, and the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on our business, financial condition and results of operations.

56. A third party could be prevented or deterred from acquiring control of our Company because of the takeover regulations under Indian law.

There are provisions in Indian law that may delay, deter or prevent a future takeover or change in control of our Company, even if a change in control would result in the purchase of your Shares at a premium to the market price or would otherwise be beneficial to you. These provisions may discourage or prevent certain types of transactions involving actual or threatened change in control of our Company. Under the takeover regulations an acquirer has been defined as any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights or control over a company, whether individually or acting in concert with others. Although these provisions have been formulated to ensure that interests of investors/shareholders are protected, these provisions may also discourage a third party from attempting to take control of our Company. Consequently, even if a potential takeover of our Company would result in the purchase of the Equity Shares at a premium to their market price or would otherwise be beneficial to its stakeholders, it is possible that such a takeover would not be attempted or consummated because of Indian takeover regulations.

57. An outbreak of an infectious disease or any other serious public health concerns in

Asia or elsewhere could adversely affect our business.

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The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concern, such as H5NI, the “avian flu” virus, the “swine flu” etc., could have a negative impact on the global economy, financial markets and business activities worldwide, which could adversely affect our business. Although, we have not been adversely affected by such outbreaks in the past, we can give you no assurance that a future outbreak of an infectious disease or any other serious public health concern will not have a material adverse effect on our business.

Risks Related to Equity Shares

58. An active trading market for the Equity Shares may not develop and the price of the Equity Shares may be volatile. Prior to this Issue, there has been no public market for the Equity Shares. An active public trading market for the Equity Shares may not develop or, if it develops, may not be maintained after the Issue. Our Company, in consultation with the BRLMs, will determine the Issue Price. The Issue Price may be higher than the trading price of our Equity Shares following this Issue. As a result, investors may not be able to sell their Equity Shares at or above the Issue Price or at the time that they would like to sell. The trading price of the Equity Shares after the Issue may be subject to significant fluctuations in response to factors such as, variations in our results of operations, market conditions specific to the sectors in which we operate, economic conditions of India and volatility of the BSE, NSE and securities markets elsewhere in the world.

59. There is no guarantee that our Equity Shares will be listed on the Stock Exchanges in a timely manner or at all. In accordance with Indian law and practice, permission to list the Equity Shares will not be granted until after the Equity Shares have been issued and allotted. Approval will require all other relevant documents authorising the issuing of our Equity Shares to be submitted. There could be a failure or delay in listing our Equity Shares on the Stock Exchanges. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares. In addition, pursuant to India regulations, certain actions are required to be completed before the Equity Shares can be listed and trading may commence. Investors’ book entry or dematerialized electronic accounts with depository participants in India are expected to be credited only after the date on which the issue and allotment is approved by our Board of Directors. There can be no assurance that the Equity Shares allocated earlier to Investors will be credited to their dematerialized electronic accounts, or that trading will commence on time after Allotment has been approved by our Board of Directors, or at all.

60. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder’s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time. Following the Issue, we will be subject to a daily “circuit breaker” imposed by all stock exchanges in India, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker operates independently of the index-based, market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on our circuit breakers will be set by the stock exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The stock exchanges will not inform us of the percentage limit of the circuit breaker in effect from time to time and may change it without our knowledge. This circuit breaker will limit the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance can be given regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity Shares at any particular time.

61. Substantial future sales of our Equity Shares in the public market could cause our Equity Share price to fall. The Equity Shares offered in this Issue will be freely tradable without restriction in the public market, unless purchased by our affiliates. The holders of Equity Shares which are

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subject to a lock-in period of one year will be entitled to dispose of their Equity Shares following the expiration of the lock-in period. Sales of a large number of our Equity Shares by our shareholders could adversely affect the market price of our Equity Shares. In addition, any perception by investors that such sales might occur could also adversely affect the trading price of our Equity Shares.

62. Any future issuance of Equity Shares may dilute your shareholding and sales of our Equity Shares by our Company may adversely affect the trading price of the Equity Shares. Any future equity issuances by us may lead to the dilution of investors’ shareholdings in our Company and may adversely affect the trading price of the Equity Shares. In addition, any perception by investors that such issuances might occur could also affect the trading price of our Equity Shares.

Prominent Notes: • Public issue of 13,384,826 Equity Shares of face value of ` 10 each of our Company for

cash at a price of ` [●] per Equity Share, including a share premium of [●] per Equity Share, aggregating to ` [●] million. The issue will constitute 31.82 % of the post issue paid up capital of our Company. Our Company is considering a Pre-IPO Placement of upto 2,790,000 Equity Shares and / or aggregating upto ` 600 million with certain investors. The Pre-IPO Placement is at the discretion of our Company. Our Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPO Placement, if any, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the Issue size will be reduced to the extent of such Pre-IPO Placement, subject to the Issue size constituting at least 25 % of the post-Issue paid-up equity share capital of our Company.

• Our Company’s net worth of December 31, 2012 and March 31, 2012 was ` 1,400.37 million and `1,055.88 million respectively as per our restated consolidated financial statements and our Company’s net worth as of December 31, 2012 and March 31, 2012 was ` 1,893.09 million and ` 1,592.94 million respectively as per our restated standalone financial statements.

• The net asset value per Equity Share as of December 31, 2012 and March 31, 2012 was ` 50.08 and ` 76.77 respectively as per our restated consolidated financial statements and the net asset value per Equity Share as of December 31, 2012 and March 31, 2012 was ` 67.70 and ` 115.81 respectively as per our restated standalone financial statements.

• The average cost of acquisition per Equity Share by our Promoters, which has been calculated by taking the average amount paid by them to acquire our Equity Shares, is as follows: Sr. No. Name of the Promoter Cost of acquisition per Equity

Share (`) 1. Parakramsinh Jadeja 23.37 2. Vikramsinh Rana 3.93 3. Sahdevsinh Jadeja 8.39 4. Jyoti International Private Limited 91.01

• Our Company has entered into certain transactions with related parties, including our Promoter Group, Group Companies and Subsidiaries, Directors and their relatives, key management personnel and enterprises in which key management personnel/ Directors have significant influence. For details of the related party transaction entered into by our Company, see section titled “Related Party Transactions” on page 181.

• Except as disclosed in the section titled “Our Group Companies” on page 179, the Group Companies do not have any common pursuits and business interests.

• Pursuant to a special resolution of the shareholders of our Company at an annual general meeting held on September 17, 2012, our Company became a public limited company and the word “private” was deleted from its name. The fresh certificate of incorporation to reflect the new name was issued by the RoC on November 30, 2012.

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• Investors may contact any of the BRLMs for any complaint pertaining to the Issue.

• There have been no financing arrangements whereby our Promoter Group, the directors

of our Promoter companies, Directors and their relatives have financed the purchase by any other person of the Equity Shares other than in the normal course of our business during the period of six months immediately preceding the filing of this Draft Red Herring Prospectus.

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SECTION III: INTRODUCTION

SUMMARY OF INDUSTRY Our Company’s ability to implement its business strategy may be affected by various factors that have an influence on its operations or on the industry segment in which our Company operates. Such factors have been disclosed in the section titled “Risk Factors” on page 13. The “Summary of Industry” section should be read in conjunction with such risk factors. The information in this section has been extracted from the websites of and publicly available information, data and statistics from various sources, industry websites and publications including the website of Indian Machine Tool Manufacturers’ Association (“IMTMA”).The data may have been re-classified by us for the purpose of presentation. Neither we nor any other person connected with the Issue has independently verified the information provided in this chapter. Industry sources and publications, referred to in this section, generally state that the information contained therein has been obtained from sources generally believed to be reliable but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured, and, accordingly, investment decisions should not be based on such information. Overview of the World Economy In 2012, many countries pursued more austere economic policies, reducing government spending in order to attack their deficit and debt problems directly. The rate of growth of the world economy slipped from 5.1% in 2010, and 3.7% in 2011, to just 3.3% in 2012. The global budget deficit narrowed to roughly US$2.7 trillion, or 3.8% of World GDP. Many central banks also tightened monetary policy; growth of the global money supply, narrowly defined, slowed from 9.5% in 2010 and 8.7% in 2011, to 6% in 2012. In 2012, the 85 countries that followed a pro-growth approach achieved a median GDP growth rate of 4.9%, compared to just 0.8% for the 47 countries with restrictive fiscal and monetary policies. China grew 7.8%, Indonesia 6.0%, Mexico 3.8%, Russia 3.6%, Turkey 3.0%, the United States 2.3%, and Canada 1.9%, while Brazil grew 1.3%, Germany 0.9%, France 0.1%, Belgium 0%, Netherlands -0.5%, Spain -1.5%, and Italy -2.3%. Slower growth of world income reduced import demand and, especially, crude oil prices. As a result, world trade grew just 1% in 2012, compared with 18% in 2011. (Source: CIA World Factbook, accessed on February 7, 2013) Overview of the Indian Economy India is one of the fastest growing economies in the world with an estimated real Gross Domestic Product (“GDP”) growth rate of 5.4% per annum in 2012. India is also the world’s largest democracy by population size. According to CIA World Factbook, India’s estimated population was 1.20 billion people in July 2012. India had an estimated GDP of approximately US$ 4.73 trillion in 2012, which makes it the third largest economy in the world after the US and China, in terms of purchasing power parity. The following table presents a comparison of India’s real GDP growth rate with the real GDP growth rate of certain other countries for the periods indicated: Countries 2012 2011 2010 Australia 3.3% 2.1% 2.5% Brazil 1.3% 2.7% 7.5% China 7.8% 9.2% 10.4% Germany 0.9% 3.0% 3.7% India 5.4% 6.8% 10.1% Indonesia 6.0% 6.5% 6.2% Japan 2.2% -0.8% 4.5% South Korea 2.7% 3.6% 6.3% Malaysia 4.4% 5.1% 7.2% Russia 3.6% 4.3% 4.3% Thailand 5.6% 0.1% 7.8% United Kingdom -0.1% 0.8% 1.8% United States 2.3% 1.8% 2.4% (Source: CIA World Factbook, accessed on February 7, 2013)

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Overview of the Machine Tool Industry The machine tools industry is a primary segment of the manufacturing industry which forms the backbone of major sectors of industrial activity in a country. Machine tools like lathes and presses form the key building blocks for machine and components manufacturing. Being an integral sector, growth of the machine tool industry has an immense bearing on the country’s economy and in the development of the manufacturing sector. The industry is even more crucial for development of the country’s strategic segments such as defence, railways, space, and atomic energy. The machine tool industry can be classified in the following ways:

Based on how the metal is shaped, the industry can be classified into metal cutting machines and metal forming machines. (Metal cutting is a collection of processes wherein metal is brought to a specified geometry by removing excess material using various kinds of tooling operations, leaving a finished part matching a set of specifications. Metal forming is modifying the shape of the metal being formed by deforming the object, that is, without removing any material)

Based on how the tool selection/ movement is controlled, the industry can be classified into CNC (Computer Numerically Controlled) machines and conventional machines.

Global Machine Tool Industry The global machine tool industry (primarily constituting the top 28 machine tool manufacturing countries) reached a production value of $93.8 billion in calendar year 2011 from $70.2 billion in 2010, recording a growth rate of 34%. Global consumption, exports and imports also grew at almost the same rate. The global industry is expected to cross a production value of $100 billion in 2012. China dominated global production with a share of over 30% and along with other four Asian majors - Japan, Korea, Taiwan (ROC) and India, the share notched up to 62 % of the total global metalworking machine tool production in 2011. Asian countries are expected to achieve a two-third share in global production within the next year. European countries fared equally well with Germany, the third largest machine tool manufacturing country, growing at 42%. Other European countries like France (41%), Switzerland (45%), United Kingdom (30%), Italy (24%) and Spain (26%) also witnessed strong growth notwithstanding the not-so-positive conditions in European Union. (Source: IMTMA Annual Report 2011-2012) Global Machine Tool Production:

Countries

2011 (value in $ Mn)

2010 (value in $

Mn)

2009 (value in $

Mn) Total

production % Cutting production

% Forming production

Total production

Total production

China 28,277 70% 30% 21,859 15,300 Japan 18,353 89% 11% 11,971 7,007 Germany 13,495 74% 26% 9,489 10,800 Italy 6,233 49% 51% 5,018 5,242 Republic of Korea 5,641 69% 31% 4,498 2,758

Taiwan (ROC) 5,000 80% 20% 3,877 2,266

USA 4,161 73% 27% 3,340 2,219 Switzerland 3,463 84% 16% 2,395 2,164 Spain 1,053 64% 36% 837 1,036 Austria 1,002 54% 46% 844 897 France 931 61% 39% 662 558 India 875 87% 13% 769 278 Others 5,332 4,606 4,187 Total 93,815 70,166 54,712 (Source: IMTMA Annual Report 2011-2012 and 2010-2011)

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Exports of metalworking machine tools by 28 countries in 2011 totalled $45.7 billion, which is a 37 % growth over the previous year. Japan continues its dominance on the export front followed closely by Germany. Together with Italy the three countries accounted for more than half of the global machine tool exports in 2011. On the import front China is the world's most voracious importer with more than one-third share followed by USA, Germany and India. All the top four countries registered over 40 % growth in their respective imports in 2011 in comparison to the previous year. The global industry consumed $86.3 billion worth of metalworking machine tools in 2011 registering a growth of 34% over the previous year. China continues to be the largest consuming country in the world with a share of over 45% of total consumption. Other big consumers - Japan, Germany and USA also reported quantum growth in their respective machine tool markets. India with 3% global share occupies seventh largest position in the world. (Source: IMTMA Annual Report 2011-2012) European Machine Tool Industry Unless stated otherwise, information in this section is taken from the CECIMO study on the competitiveness of the European machine tool industry, December 2011, by CECIMO. CECIMO is the European association of the machine tool industries. Countries represented under the umbrella of CECIMO include EU member States, Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Italy, Portugal, Sweden, the Netherlands, UK, Turkey and Switzerland. The machine tool industry is one of the most globally competitive sectors in Europe. Europe generates more than one third of the world machine tool production and half of world exports originate from Europe. In 2010, the production of machine tools in Europe (includes the 27 member states of the EU, European Free Trade Association (EFTA) states and Turkey) amounted to 16.6 billion Euros and was stable compared to 2009, but significantly lower than 24.4 billion Euros posted in record 2008. The production of the sector is highly concentrated in Germany and Italy, which together accounted for two thirds of 2010’s output. The other significant producers with share in the total output higher than 3% are Switzerland, Austria and Spain. Indian Machine Tool Industry India stands twelfth in production and seventh in consumption of machine tools in the world. The Indian machine tool industry achieved a production of ` 43.0 billion in 2012 recording a growth rate of 19% over the previous year.

Industry segmentation in 2012

CNC Conventional

Met

al

Form

ing

Quantity – 1,116 Value - ` 3.3 billion

Quantity – 1,023 Value – ` 1.7 billion

Met

al

Cut

ting



(Source: IMTMA Annual Report 2011-2012) CNC machines form the major component of machine tools used in India and their use is expected to increase as manufacturing companies focus on productivity improvements and product innovation. During 2006 CNC machines constituted 67% of the value of machine tools produced in India which has increased to 83% in 2012. Metal cutting CNC machines are the largest

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contributors to the industry’s revenue comprising 76% of the industry production in terms of value and 73% in terms of volume in 2012. (Source: IMTMA Annual Report 2005-06 and 2011-2012)

Demand supply scenario The Indian machine tool industry has good design and development capabilities and is able to develop most machines in the mid-level applications. The industry manufactures a wide range of products such as conventional machines, CNC machines, some specialized technologies/products however it lacks in design and engineering capability to manufacture high end CNC machines such as multi-axes machining centres, multi tasking machines, high precision machines and large machine tools. The primary reasons are:

Capacity constraints of domestic manufacturers (for standard machines) Low volume of production (grinding, gear cutting, metal forming etc.) Technology gaps (high precision, multi-axes machines for aerospace, power, auto etc.) Gaps in the production of large machine tools (power, railways, infrastructure)

Hence the demand for high end machines is mostly met through imports. Imports have been strong in certain product lines such as CNC turning and machining centres, grinding, gear cutting, metal forming and large machines where the Indian machine tool industry is weak. This has resulted in market share of domestic players reducing from 70% in 2000 to around 30% in 2010. The major suppliers are Japan, Germany, Italy, Korea, China and USA. Exports of machine tools from India are limited as the large domestic market absorbs most of the production. Technology gaps have also played a role in making Indian machines unattractive to foreign buyers although in some cases prices have been competitive. Of late, some Indian machine tool companies with niche/technology products (EDM, grinding, CNC turning, automation etc) have re-entered the export markets by setting up subsidiaries and marketing offices abroad. Consumption of machine tools has increased at a CAGR of 31% in the last 10 years (2002-2012). Domestic production has not been able to meet the domestic demand and has increased at a CAGR of 24% during the same period while imports have grown at a CAGR of 42% during the same period. Technology expectations and gaps As per the vision document & perspective plan 2010-2020 prepared by the Ministry of Heavy Industries & Public Enterprises a summary of the existing technologies of the Indian machine tool industry and those that the industry should develop is given below: Existing technology 5 year development perspective

Non CNC general purpose machines Standard CNC machines Gear cutting, Grinding Medium sized machines EDM, Wire‐EDM SPMs Medium size machines Presses, Press Brakes Pipe Bending Hydroforming (limited) Servo presses (limited) Rolling, Bending Measuring, metrology and gauging Drives and controllers (limited)

Metal cutting machine tools Multi-axes, Multi-tasking machines High precision machines Large machines (boring-milling, turning) Gear cutting and finishing machines Grinding technology and machines Electrical and micro-machining

Metal forming machines

Higher press automation and transfer systems

Servo presses Sheet working machines (including laser,

waterjet heads) Hydroforming Fine blanking Forging machines Flow forming

Special technologies

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Explosive forming Electro-magnetic forming etc Cutting tool technologies Robotics and automation Alternative materials (epoxy granite etc.) Thermally stable welded structures Hydrostatic spindles, guideways Motorised and high frequency spindles Smart machines with embedded sensors

Critical components development

Anti-friction linear guideways Ball screws Precision spindle and ball screw support

Bearings CNC controls Spindle/axes servo motors with controllers Feedback measurement systems

Outlook for the Indian machine tool industry It is estimated that the industry must grow at a CAGR of 25% p.a. till 2020 to meet the targets set down. The projected demand for machine tools is expected to reach ` 293.0 billion in 2020 and production is expected to reach ` 230.8 billion.

Projected machine tool demand (consumption) and production

(Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises)

CAGR – Demand – 15% CAGR – Production – 25%

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SUMMARY OF BUSINESS

“Our Company’s ability to successfully implement its business strategy, growth and expansion plans may be affected by various factors. Our Company’s business overview, strengths and strategies must be read along with the risk factors provided in the section entitled “Risk Factors” on page 13.” In this section unless otherwise stated, any reference to “we” or “us” refers to Jyoti CNC Automation Limited along with its subsidiaries. “Our company” or “the company” refers to Jyoti CNC Automation Limited. “Our Subsidiaries” refer to” Jyoti SAS”, Huron Graffenstaden SAS, Huron Fräsmaschinen GmbH and Huron Canada Inc. COMPANY OVERVIEW We are a global player in the machine tools industry with market presence in India and 37 other countries in Asia, Europe, Middle East, North America, South America and Africa. We believe we are one of India’s largest CNC machine manufacturing companies in the metal cutting segment with a 12.7% share of the value of domestic production in FY 2012. We are a technology driven company and have been at the forefront of technological advances in the field of metal cutting in India. We share strategic and technical expertise across our global operations that we believe, allows research, operational and marketing synergies. Our Promoter; Parakramsinh Jadeja, a first generation entrepreneur who was in the machining and metal cutting business, acquired our company in 2002. We have grown from manufacturing gear boxes for lathe machines to developing precision all-geared head lathe machines to high-end CNC machines. Our Promoter, Parakramsinh Jadeja was honoured with the Small Scale Entrepreneur 3rd Award 2003 from Ministry of Small Scale Industries which was presented to him by the then President of India, Abdul Kalam. He received the CII Entrepreneur of the year award in 2005. He also received the IMTMA Premier “Outstanding Entrepreneur Award” by IMTMA in 2013. We believe we are a one-stop metal cutting solutions provider. We offer a wide range of CNC metal cutting products for both Turning and Milling operations, from the entry level to high-end machines viz; CNC Turning Center, CNC Vertical Machining Center (3-4-5 Axes), CNC Horizontal Machining Center, Vertical Line CNC Machines and Multitasking Machines. We offer our customers a choice of 24 products in 81 variants. We operate from 5 manufacturing facilities, 3 in Rajkot; India and 2 in Strasbourg; France. We are an integrated CNC machine manufacturer with design, development and manufacturing most of the critical components in-house. We have a captive foundry, machining, sheet metal unit, paint shop and assembly unit. Our Indian operations are ISO 9001:2008 certified by TUV and our manufacturing units in France have Quality certification ISO 9001:2008 from AFNOR. For maintaining consistently superior manufacturing practices, we received the Golden Award from the Quality Circle Forum of India. We have a capacity to manufacture 2,500 machines p.a. in India and 150 machines p.a. in France. We have supplied over 6,582 machines to our customers across the globe since 2008.

We are a technology driven company with a R&D centre manned by 87 skilled and experienced personnel with many firsts to our credit. Our Company and our Promoters have won many accolades for technology and innovation including receiving the CMTI-PMT trust award for "The Best Innovative Machine Design VMC 70 Linear" at IMTEX in 2004. Our Company also received the Black Pearl Award for Display & Demonstration of Best Innovative Technology at ENGIMACH’ 2006 and Meaningful Technological Innovation Award at ENGIMACH 2008. Our Company received the DESIGNOMICS AWARD 2011 at World Brand Congress at Mumbai. We have an Application Engineering Division manned by 28 engineers who specialise in designing and developing processes for customers seeking solutions to their manufacturing operations. We work with them continuously advising them on the optimum process, materials and provide them with customised CNC machines from our product range. We have in the past 3 years, worked with and successfully developed 92 customized solutions for our customers in the automobile, consumer durables, general engineering, textile and diamond jewellery sectors. Our products find application in various end-use industries including Automobile, Aerospace, Agriculture, Bearings, Consumer Durables, Die and Mould, Diamond Jewellery, Defence, General

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Engineering, Medical Equipment, Plastic Processing, Pumps and Valves, Railways, Tooling and Textile Machinery. Our machines are also used in R&D institutes and Educational institutes. In FY12, 30.84%, 18.08%, 17.41%, 7.18% and 11.70% of our revenues came from Auto and Auto Ancillaries, Aerospace, General Engineering, Dies & Moulds and Government entities respectively. The corresponding figures for the nine months ended December 31, 2012 were 21.13%, 15.37%, 21.16%, 8.23% and 14.10% respectively. Our customers include vehicle manufacturers like Volkswagen, Peugeot Citroen, Solomon and Sonalika Tractors; aviation sector companies like Safran, Dassault, and AVIC; Auto component manufacturers like Amtek Auto, Sona Steering, Lucas TVS, Delphi-TVS, Mahindra Gears, Kalyani, Harsha Engineers, Vulcan and Rico Auto; General engineering companies like Larsen & Toubro, Siemens,, Sandvik, Paharpur Cooling Towers Limited, KEC Engineering and Shakti Pumps; Consumer companies like Titan, Godrej & Boyce, Rossignol; Defence companies like MBDA and Mahindra Defence Naval Systems and Government entities like HAL, Heavy Vehicle Factory, Ordnance Factory and Railways. We have catered to over 1,233 customers during the nine months ended December 31, 2012 and 1,705 customers in FY12. We market our products in India and 37 other countries across the globe through our principal offices in India, France, Canada and Germany. We also have a dealer network in 18 countries. As on January 31, 2013, we had an order book for 824 machines amounting to ` 4,675.93 million. High-realization sectors like Aerospace and Defence constitute 46.81% of our order book as compared to the contribution of 29.78% by these sectors in FY12. In November 2007, our Company acquired Huron Graffenstaden S.A.S., a French machine tool manufacturer supplying high-end CNC machines to the aerospace and general manufacturing industries. Pursuant to this acquisition, Huron Graffenstaden S.A.S. and its subsidiaries became the subsidiaries of our Company. For the nine months ended December 31, 2012 our consolidated revenues and profit after tax were ` 4,167.37 million and ` 209.57 million respectively. For the year ended March 31, 2012, our consolidated revenues and profit after tax were `6,016.71 million and ` 161.66 million respectively. STRENGTHS AND STRATEGIES

COMPETITIVE STRENGTHS

One-stop solution provider with presence across the CNC metal cutting machinery value chain We believe we are a one-stop solution provider for the metal cutting requirements of manufacturing operations across industries. Our Application Engineering Division, manned by 28 engineers engage with potential customers from a pre-sales stage and advises them on designing and developing processes to best address their manufacturing needs. We believe in constant innovation through continuous interaction with our customers. Our skill lies in the speed of design and process development providing a quick turnaround time for new product development for our customers. We advise them on the optimum process, materials and provide them with customised CNC machines from our product range. We have in the past 3 years, worked with and successfully developed 92 customized solutions for our customers in the automobile, consumer durables, general engineering, textile and diamond jewellery sectors. We believe our strength in devising solutions help us in winning new customers and increasing our share in our customers’ future expenditure on metal cutting solutions. We have a strong presence across the CNC metal cutting product range, from entry level machines (the 2 and 3 axes machines) to the high-end machine categories (simultaneous 4 and 5 axes machines). We offer our customers a choice of 24 products in over 81 variants for both turning and milling applications making us a one-stop-shop for all metal cutting requirements. We believe that our broad range of products and solutions allows our customers to source their varied requirements from us and enables us to expand our business from existing customers, as well as address a larger base of potential customers.

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Focus on technology and ability to deliver innovative solutions

We believe our in-house design expertise enables us to provide our customers innovative and customized solutions. We have a dedicated R&D unit in India – “Leonardo da Vinci Centre” spread across 3,123 sq. meters equipped with latest design and development tools. It has been recognised by the Department of Scientific and Industrial Research (DSIR). Our 87 member R&D team focuses on new product development and improving the operating characteristics of our existing products. We have developed 14 new variants of our products in the last two years. We also have a 21 member R&D team at our facility in France who work on innovative milling strategies and development of complex components. Over the years the R&D team at Huron have developed expertise in ultra precision, multitasking, high speed 5 axes Vertical Machining Centres catering to niche applications in the Aeronautical and Dies and Moulds sector. Our Company and our promoters have won many accolades for technology and innovation including receiving the CMTI-PMT trust award for "The Best Innovative Machine Design VMC 70 Linear" at IMTEX in 2004. Our Company also received the Black Pearl Award for Display & Demonstration of Best Innovative Technology at ENGIMACH 2006 and Meaningful Technological Innovation Award at ENGIMACH 2008. Our Company received the DESIGNOMICS AWARD 2011 at World Brand Congress at Mumbai. World class vertically integrated operations

We are an integrated CNC machine manufacturer with design, development and manufacturing capabilities. We manufacture most of the critical machine components like spindles, tool-changers, pallet changers, rotary tables and universal heads in-house. We have a captive foundry, machining, sheet metal unit, paint-shop and assembly unit.We believe that our integrated operations reduce our dependence on third party suppliers of products and services, enabling us to streamline our production process and achieve timely delivery of quality products at competitive costs. We have 5 manufacturing facilities, 3 in Rajkot, India and 2 in Strasbourg, France. Our units are spread over 237,408 sq. meters of industrial land in India and 60,680 sq meters in France. Our Indian operations are ISO 9001:2008 certified by TUV and our manufacturing units in France have Quality certification ISO 9001:2008 from AFNOR. We have invested in the latest technology to meet the quality expectations of our customers. Further, our IT infrastructure assists in ensuring seamless interaction between various teams and processes within our Company. We have quality management procedures which focus on (i) improvement in customer satisfaction, (ii) supplier performance improvement, (iii) on-time delivery, and (iv) reduction of wastage. These procedures include specific processes implemented to ensure quality checks at every phase of the production process which enable us to ensure quality of our products that we delivered to our customers at competitive prices. Diversified customer base and long standing customer relationships

We have catered to over 1,233 customers during the nine months ended December 31, 2012 and 1,705 customers in FY 12 across various sectors like Automobile, Aerospace, Allied Machinery, Die and Mould, Diamond, Defense, Medical Equipment, Plastic Processing and Textile Machinery. We are not dependent on the fortunes of any particular sector for growing our business and this diversification also helps us to withstand cyclical downturns in one or more sectors. For FY 12, we derived 30.84% of our revenues from auto and auto ancillaries, 18.08% from aerospace, 17.41% from general engineering, 10.31% from allied machinery and 11.70% from Indian Government entities. Our top 10 customers contributed 17.04%, 23.05%, 14.87% and 27.38% of our revenues in the nine months ended December 31, 2012, FY12, FY11 and FY10 respectively. One of the characteristics of the machine tool industry is the reluctance of the customer to switch vendors, if an existing process has been running efficiently. We have been able to retain our customers by promising and delivering cost savings and process enhancements. We have also gained additional business from our existing clients as they seek to replace older machines or expand capacities. A large number of our clients have relied upon us for their subsequent CNC machinery requirements, as a result of which 56.67% of our revenues during the nine months ended December 31, 2012 and 46.75% of our revenues in FY12 were from our existing customers.

40

Strategic advantage and synergies through Huron acquisition

We believe we have gained significant advantages over our competitors through the acquisition of Huron. The synergies are in the areas of design and engineering, manufacturing and assembly, marketing and after sales service. In FY12, imports constituted 65% share of the machine tool consumption in India. Imports of medium to high-end machines from European and Japanese players have been growing continuously since 2007. The major gap in Indian industry is the technology to manufacture high-end machines. With the acquisition of Huron, we are in a position to offer the entire range of turning and milling solutions to customers who are currently importing a significant part of their high-end machine requirements. Huron has traditionally focused on critical design and assembly operations and sources all intermediate components from vendors. We have been able to supply a large part of their outsourced requirements viz. castings, sheet metal parts and other components from our Indian facility, reducing the overall input cost significantly. Our access to Huron’s technology, experience and design and development capabilities has helped our company to quickly move up the learning curve. We are able to leverage Huron’s capabilities in the European aerospace and automobile industries to acquire customers in these sectors in other markets. The acquisition has also enabled us to supply entry level to mid-range machines at comparatively lower prices to the overseas markets using Huron’s sales network and supply high -end machines to satisfy the growing needs of the Indian buyers, who are currently importing a significant part of their high-end machines from Huron’s competitors in Europe. The sales of our high-end machines defined as a machine with a realization of over `5 million as a percentage of our total sales for the nine months ended December 31, 2012 was 40.31% as against 37.61% in FY12 and 25.70% in FY11. Skilled technical teams and experienced management team

We believe that our qualified and experienced management and technical teams have contributed to growth of our operations and the development of in-house processes and competencies. The average age of the staff at our Indian operations is 30 years and the average age at our overseas operations is 46 years. This blend of youth and experience provides us a balance of dynamism and knowledge that has enabled us to build a technology driven global business. The ready availability of skilled and experienced manpower, due to our location in Rajkot, Gujarat – a mechanical engineering hub enables us to select the best talent available for our operations. Our Promoter and most of our senior management team have been with us for several years. Parakramsinh Jadeja, Sahadevsinh Jadeja and Vikramsinh Rana have been in the machine tool business for over 20 years. They are actively involved in our day to day activities and possess a deep understanding of the machine tools industry. They combine entrepreneurial skills with professional commitment which has helped us to achieve an eminent position in the industry. We believe the strength and quality of our management team and the nature of our organizational structure have been instrumental in implementing our business and growth strategies successfully. We believe our management team has worked towards ensuring good labour relations and we have not faced any labour unrest since the founding of our Company. BUSINESS STRATEGY

Our business strategy is guided by the vision and mission to be at the forefront of technology advances in our field and rank among the top ten machine tool manufacturers in the world by 2020. Augmenting manufacturing capacity to meet the growing industry demand

We believe that the growing demand for machine tools presents a significant opportunity for us. The consumption of machine tools in India was ` 117.6 bn in 2012 and is expected to reach ` 293.0 bn in 2020 (Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020,

41

August 2010, by the Ministry of Heavy Industries & Public Enterprises). As per the National Manufacturing Policy, the Government has announced its intention to keen to improve the share of Manufacturing in GDP from nearly 16% currently to 25% by 2022. The continued increase in domestic and foreign investment into industry will translate into a higher demand for machine tools, the “Mother Industry” for all manufacturing activities. The major mechanical engineering ancillary hubs in the country that comprise a large number of SMEs and MSMEs are expected to contribute in a major way to the growth of the machine tools industry. We intend to continue the expansion of our manufacturing capacities to address this growing industry demand. In the past we have increased our manufacturing capacity in India from 500 machines p.a. in FY08 to 2,500 machines p.a. in FY12. In addition we have also undertaken expansion in our manufacturing facility in France from 100 machines p.a at the time of acquisition in 2007 to 150 machines p.a. in FY12. We intend to increase our manufacturing capacity in India to 4,000 machines p.a. by FY14. Our Management further intends to ramp-up the capacity to 7,000 machines by FY16. To support the expansion in our manufacturing capacity we are increasing the capacity of our foundry from 900 MT per month to 1,500 MT per month. We had planned our earlier capacity expansions in India keeping in mind future requirements of capacity addition. After the current capacity expansion plan, we have land available at our existing manufacturing facilities in Rajkot on which we can construct 217,361 sq. meters based on FSI available. Focus on import substitution by widening our product basket Currently the demand for high end CNC machines in India is mostly met through imports. Imports which constituted 30% of the domestic consumption in 2000 have grown to 65% in 2012. (Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises, IMTMA). The reasons for increase in imports mainly include capacity constraints of domestic manufacturers in standard machines and lack of technology for making high-end machines. We intend to leverage our technological expertise, design capability and integrated operations to offer quality products in a cost efficient manner to Indian user industries which are currently meeting their machine tool requirements through imports. We believe that our technological expertise coupled with low production cost will give us a significant competitive advantage while competing with imports. We intend to expand our current product portfolio of 24 products offered in 81 variants in the turning and milling machine segment. Additionally we plan to add grinding machines to our product basket in the CNC metal cutting segment. Consolidate our position as an international player by continuing to drive synergies between our Indian and international operations

We intend to continue to harness the synergies between our Indian and international operations to consolidate our position as an international player in the machine tool industry. The synergies are in the areas of design and engineering, procurement, manufacturing and assembly, marketing and after sales service. We believe that the technological expertise of Huron and its experience in manufacturing high - end machines specifically for Aerospace, Heavy Engineering and Dies and Moulds, coupled with the low cost manufacturing base of our Indian operations provides us with a significant competitive advantage in our foray into these sectors in new markets. We intend to fully exploit the infrastructure synergies between the two operations to enhance the operating margins of Huron. Diversify customer base, geographical reach and service offerings

We believe that our diverse product portfolio and the ability to continuously expand our product offerings based on the requirements of our customers give us a unique opportunity to add to our customer base across diverse sectors. We intend to leverage the skills of our Application Engineering Division to target sectors which we have currently not tapped to increase the use and application of our machine tool products. We have commenced work with a European machine tool builder, reputed for its EDMs (Electrical Discharge Machines) for high precision micro Die-Mould and Medical Implants applications. We

42

believe our efforts in this direction will help us to enter new industries and broaden our customer base. We plan to further expand our geographical coverage by selling our products in countries such as China and other Far Eastern nations. In the past we have focused on select markets in Europe, Middle-East, Africa and South America as a part of our global strategy and intend to continue to focus on these markets in the future. We intend to increase our presence outside India, both in terms of value and markets, by leveraging our technological expertise and cost competitiveness to attract new customers in different geographies. We also intend to increase our revenue from after sales activities like service support and sale of spares by leveraging the machine base sold by us in the past.

43

SUMMARY FINANCIAL INFORMATION The following tables set forth summary financial information derived from the audited restated standalone financial statements as of and for the nine months ended December 31, 2012 and the years ended March 31, 2012, 2011, 2010, 2009 and 2008 and consolidated financial statements as of and for the nine months ended December 31, 2012 and the years ended March 31, 2012, 2011, 2010, 2009 and 2008. These financial statements have been prepared in accordance with the Indian GAAP, the Companies Act and the SEBI Regulations and presented under the sections titled “Restated Consolidated Financial Statements” and “Restated Unconsolidated Financial Statements” on pages 183 and 220 respectively. The summary financial information presented below should be read in conjunction with the restated standalone and consolidated financial statements, the notes thereto and the sections “Restated Consolidated Financial Statements”, “Restated Unconsolidated Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 183, 220 and 259 respectively.

Annexure - I Restated Consolidated Summary Statement of Assets & Liabilities

` in Million Particulars 31-Dec-

12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A Non-Current Assets Fixed Assets Tangible Assets 2,744.71 2,463.73 1,951.68 1,852.86 1,713.91 1,562.82 Intangible Assets 181.80 140.85 100.65 121.98 141.27 109.03 Capital Work-in-

progress 18.74 120.61

- 38.60 102.50 -

Long Term Loans & Advances

119.35 130.16 135.22 112.96 205.20 104.60

Other Non-current Assets

0.87 19.60 15.32 15.32 0.02 0.02

Total Non-Current Assets

3,065.47 2,874.96 2,202.87 2,141.72 2,162.91 1,776.48

B Current Assets Inventories 4,232.19 3,301.50 3,045.24 2,733.23 2,891.74 2,052.35 Trade Receivables 1,431.72 1,241.94 741.85 592.99 558.74 719.40 Cash and Bank

Balances 217.49 128.86 78.55 67.50 85.17 95.20

Short Term Loans & Advances

151.22 238.79 169.07 196.34 265.83 247.32

Other Current Assets 3.21 5.73 2.51 1.48 1.67 3.98 Total Current Assets 6,035.83 4,916.82 4,037.22 3,591.53 3,803.15 3,118.25

C Non-Current Liabilities

Long Term Borrowings

1,182.70 1,553.45 1,211.35 1,427.35 1,645.08 1,268.54

Deferred Tax Liabilities [Net]

139.62 120.26 107.63 75.40 62.93 53.64

Long Term Provisions 81.27 102.66 160.59 143.17 153.31 125.78 Total Non-Current

Liabilities 1,403.59 1,776.38 1,479.58 1,645.92 1,861.33 1,447.95

D Current Liabilities Short Term

Borrowings 3,169.82 2,216.66 1,699.02 1,344.29 902.60 800.12

Trade Payables 1,276.37 1,061.43 828.65 642.55 872.74 739.80 Other Current

Liabilities 1,687.44 1,490.10 1,478.42 1,384.99 1,171.19 1,047.91

Short Term Provisions 163.71 191.34 32.77 0.06 7.53 2.43 Total Current

Liabilities 6,297.34 4,959.53 4,038.87 3,371.88 2,954.07 2,590.26

44

E Net-Worth (A+B-C-D)

1,400.37 1,055.88 721.65 715.46 1,150.66 856.52

Net-Worth Represented by : F Shareholder's Fund Share Capital 279.65 137.55 111.47 111.47 111.47 87.97 Share Application

Money -

- 128.30 129.50 108.00 132.19

Total Shareholder's Fund

279.65 137.55 239.77 240.97 219.47 220.15

G Reserve & Surplus 1,120.72 918.33 481.88 474.49 931.19 636.36 Net-Worth (F+G) 1,400.37 1,055.88 721.65 715.46 1,150.66 856.52

Note : 1. The above statement should be read with notes to the Restated Consolidated

Summary Statement of Assets & Liabilities, Statement of Profit & Loss and Cash Flow as appearing in Annexure – IV.

2. All numbers have been rounded off to two decimals. Any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off.

45

Annexure - II Restated Consolidated Summary Statement of Profit & Loss


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A INCOME Revenue from

Operation 4,160.48 6,003.76 4,362.50 2,777.79 3,612.39 1,830.85

Other Income 6.90 12.95 67.30 93.82 138.70 5.83 4,167.37 6,016.71 4,429.81 2,871.61 3,751.10 1,836.68 B EXPENSES Cost of Material

Consumed 2,358.02 3,248.07 2,381.71 1,469.29 1,740.13 1,252.30

Change in Inventory of Work-in-progress and Finished Goods

(463.33) 3.20 (32.07) (29.34) (305.37) (298.01)

Employee Benefit Expenses

621.21 741.70 639.16 637.75 638.20 213.75

Finance Cost 330.25 389.82 294.06 269.43 268.90 132.36 Depreciation

Expenses 166.98 202.74 206.06 240.62 229.86 87.50

Other Expenses 852.10 1,179.93 951.21 691.63 1,194.43 467.54 3,865.24 5,765.45 4,440.12 3,279.38 3,766.15 1,855.44 - - - - - C PROFIT

BEFORE TAX (A-B)

302.14 251.26 (10.31) (407.77) (15.05) (18.77)

D TAX EXPENSES Current Tax 73.21 76.97 (0.72) (7.05) (9.46) 7.03 Deferred Tax 19.36 12.63 32.23 12.47 9.29 5.70 92.57 89.60 31.51 5.43 (0.18) 12.73 E PROFIT AFTER

TAX (C-D) 209.57 161.66 (41.82) (413.20) (14.88) (31.50)

Note :

1. The above statement should be read with notes to the Restated Consolidated Summary Statement of Assets & Liabilities, Statement of Profit & Loss and Cash Flow as appearing in Annexure – IV.


46

Annexure - III Restated Consolidated Cash Flow Statement

` in Million

Particular 31-Dec-12

31-Mar-12

31-Mar-11

31-Mar-10

31-Mar -09

31-Mar- 08

A Restated Profit before Tax

302.14 251.26 (10.31) (407.77) (15.05) (18.77)

Adjustment for:

Depreciation Expenses

166.98 202.74 206.06 240.62 229.86 87.50

Loss/(Gain) on Capital Items

(1.30) (1.37) (55.48) (22.59) (123.20) (4.89)

Finance Cost 330.25 389.82 294.06 269.43 268.90 132.36

Interest and Commission Income

(4.81) (9.64) (5.70) (5.71) (6.13) (2.73)

Foreign Exchange Loss/(Gain) on Cash Equivalents [Net]

- - - (0.01) 0.01 0.01

Direct Tax Expense 0.12 0.11 0.09 0.06 0.06 0.02

Operating Profit before Working Capital Change (As Restated)

793.38 832.92 428.71 74.03 354.44 193.51

Change in Working Capital

Adjustment for:

(Increase)/Decrease in Trade Receivables

(189.78) (500.09) (148.86) (34.25) 160.67 (117.99)

(Increase)/Decrease in Inventories

(930.69) (256.25) (312.02) 158.51 (839.39) (420.63)

(Increase)/Decrease in Loans and Advances & Other Current Assets

84.96 (62.40) 10.25 140.17 (55.23) (114.75)

Increase/(Decrease) in Trade Payables & Other Current Liability

251.69 329.82 282.77 (224.48) 171.71 627.07

Increase/(Decrease) in Provisions

(27.09) 62.91 17.43 (10.15) 27.54 255.48

Cash generated

from Operations (17.53) 406.91 278.28 103.84 (180.25) 422.68

Less : Direct Taxes

paid (20.37) (51.32) 11.07 (13.73) (1.62) (8.04)

47

Net Cash Generated/Used from Operating Activities

(37.89) 355.59 289.35 90.11 (181.87) 414.64

B CASH FLOW USED IN INVESTING ACTIVITIES

Purchase of Fixed Assets Including Capital Advances & Payables for assets

(366.34) (935.81) (136.99) (547.41) (499.02) (569.68)

Sale of Fixed Asset 2.10 2.02 65.34 179.39 135.52 0.78

Acquisition of Subsidiaries

- - - - - (900.86)

Interest Received 7.21 6.46 4.68 5.96 4.47 (1.49)

(Increase)/Decrease in Deposits with Banks

47.10 (64.97) 2.26 (30.70) (12.17) (23.50)

Net Cash flow Generated/Used in Investing Activities

(309.92) (992.29) (64.72) (392.76) (371.20) (1,494.75)

C CASH FLOW FROM FINANCIAL ACTIVITIES

Receipts from Issue of Equity Share Capital/(Refund of Shares Application Money)

39.12 150.00 (1.20) 21.50 269.58 310.47

Long Term Borrowings [Net of repayment/proceeds]

(274.10) 394.69 (328.32) 71.80 433.47 298.20

Short Term Borrowings [Net of repayment/proceeds]

953.16 517.64 354.73 441.68 102.48 587.82

Finance Cost Paid (328.61) (377.40) (262.53) (271.29) (265.88) (134.20)

Net Cash Generated/Used in Financial Activities

389.57 684.93 (237.32) 263.69 539.66 1,062.29

D EXCHANGE DIFFERENCE ARISING ON CONVERSION DEBITED/(CREDITED) TO FOREIGN CURRENCY TRANSLATION RESERVE

66.33 (59.88) 25.61 9.38 (12.71) (44.38)

48

E NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENTS (A+B+C+D)

108.08 (11.65) 12.92 (29.58) (26.12) (62.20)

F CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR

19.37 29.74 16.43 49.51 71.70 62.07

G CASH AND CASH EQUIVALENTS ON ACQUISITION OF SUBSIDARY

- - - - - 66.19

H EXCHANGE DIFFERENCE ARISING ON TRANSLATION OF FOREIGN CURRENCY CASH & CASH EQUIVALENTS

8.92 1.28 0.39 (3.49) 3.92 5.65

I CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

136.37 19.37 29.74 16.43 49.51 71.70

Note : 1. The above statement should be read with notes to the Restated Consolidated Summary

Statement of Assets & Liabilities, Statement of Profit & Loss and Cash Flow as appearing in Annexure – IV.

2. Restated Consolidated Cash Flows statement of the company has been prepared under the ‘Indirect method’ as set out in Accounting Standard – 3 on Cash Flow Statements


49

Annexure - I Restated Unconsolidated Summary Statement of Assets and Liabilities ` in Million

Particulars 31-Dec-12

31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Non-Current Assets

Fixed Assets Tangible Assets 1,944.05 1,734.69 1,701.23 1,572.16 1,252.31 1,167.85 Intangible Assets 14.07 9.93 5.20 5.31 2.51 3.84 Capital Work-in-

progress 0.10 120.61 - 38.60 102.50 -

Non Current Investment

288.29 288.29 288.29 2.06 2.06 2.06

Long Term Loans & Advances

862.51 586.48 337.42 384.57 480.58 293.99

Other Non-current Assets

0.87 19.60 15.32 15.32 0.02 0.02


3,109.90 2,759.61 2,347.45 2,018.02 1,839.99 1,467.75

B Current Assets Inventories 2,339.74 1,884.35 1,743.32 1,254.03 889.68 520.75 Trade Receivables 1,377.47 887.45 500.61 323.30 386.74 282.19 Cash and Bank

Balances 144.63 111.77 56.55 58.75 51.53 38.66

Short Term Loans & Advances

63.92 127.94 74.48 81.65 45.95 28.87

Other Current Assets

50.07 28.87 2.51 1.48 1.67 3.98

Total Current Assets

3,975.83 3,040.39 2,377.47 1,719.21 1,375.57 874.45

C Non-Current

Liabilities


518.71 739.14 796.19 779.41 765.01 350.95


139.62 120.26 107.63 75.40 62.93 53.64

Long Term Provisions

11.26 4.97 99.85 55.54 71.93 47.28

Total Non-Current Liabilities

669.59 864.37 1,003.67 910.36 899.88 451.87


Borrowings 2,273.21 1,433.87 990.61 631.11 613.30 587.38

Trade Payables 1,205.26 884.85 758.14 512.92 326.26 308.18 Other Current

Liabilities 880.51 832.55 832.21 709.43 400.43 339.45

Short Term Provisions

164.08 191.42 32.77 0.06 7.53 2.44

Total Current Liabilities

4,523.05 3,342.69 2,613.74 1,853.52 1,347.53 1,237.45

E Net-Worth (A+B-

C-D) 1,893.09 1,592.94 1,107.51 973.36 968.15 652.88

Net worth

Represented by :

F Shareholder's Fund

Share Capital 279.65 137.55 111.47 111.47 111.47 87.97

50

Share Application Money

- - 128.30 129.50 108.00 132.19


279.65 137.55 239.77 240.97 219.47 220.15

G Reserve & Surplus 1,613.44 1,455.39 867.74 732.39 748.68 432.72 Net-Worth (F+G) 1,893.09 1,592.94 1,107.51 973.36 968.15 652.88

Note: 1. The above statement should be read with notes to the Restated Unconsolidated Summary

Statement of Assets and Liabilities, Profit and Loss and Cash Flows as appearing in Annexure – IV.


51

Annexure - II Restated Unconsolidated Summary Statement of Profit and Loss


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-


Operation 2,938.76 4,126.95 3,021.68 1,562.18 1,444.39 1,473.17

Other Income 28.94 31.97 12.37 58.57 20.55 2.92 2,967.70 4,158.92 3,034.05 1,620.75 1,464.94 1,476.10

B EXPENSES Cost of Material

Consumed 1,875.51 2,511.56 1,965.30 1,096.87 989.58 965.90


(321.16) (54.22) (266.42) (205.73) (258.34) (67.67)


225.94 228.56 182.52 119.53 98.42 72.14

Finance Cost 262.50 304.33 228.97 188.35 173.86 95.78 Depreciation

Expenses 110.59 134.77 118.48 107.98 83.83 62.48

Other Expenses 498.49 669.01 636.60 278.86 345.07 313.47 2,651.87 3,794.01 2,865.45 1,585.86 1,432.42 1,442.10 688.92 804.01 516.05 331.22 184.83 55.80

C PROFIT BEFORE TAX (A-B)

315.83 364.91 168.60 34.89 32.51 34.00

D TAX EXPENSES Current Tax 78.00 87.80 7.78 0.58 2.09 10.55 Deferred Tax 19.36 12.63 32.23 12.47 9.29 5.70 97.36 100.43 40.01 13.05 11.38 16.25

E PROFIT AFTER TAX (C-D)

218.47 264.49 128.59 21.84 21.13 17.74

Note : 1. The above statement should be read with the Notes to the Restated Unconsolidated

Summary Statement of Assets and Liabilities, Profit and Loss and Cash Flows as appearing in Annexure – IV.


52

Annexure - III Restated Unconsolidated Cash Flow Statement

` in Million Particular 31-Dec-

12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A CASHFLOW FROM OPERATING ACTIVITIES Restated Profit

before Tax 315.83 364.91 168.60 34.89 32.51 34.00

Adjustment for: Depreciation

Expenses 110.59 134.77 118.48 107.98 83.83 62.48


0.37 0.04 0.20 0.27 - 0.21

Direct Tax Expenses

0.40 0.40 0.34 0.06 0.06 0.02

Finance Cost 262.50 304.33 228.97 188.35 173.86 95.78 Foreign Exchange

Loss/(Gain) on Cash Equivalents - Net

- - - (0.01) 0.01 0.01

Interest & Commission Income

(28.48) (29.87) (4.36) (3.00) (2.71) (2.37)

Operating Cash flow before Working Capital Change

661.21 774.59 512.23 328.54 287.56 190.12

Change in

Working Capital

Adjustment for: (Increase) /

Decrease in Trade Receivables

(490.02) (386.84) (177.31) 63.93 (105.03) (223.35)

(Increase) / Decrease in Inventories

(455.39) (141.03) (489.28) (364.35) (368.93) (118.34)

(Increase) / Decrease in Loans and Advances & Other Current Assets

55.87 (44.57) (0.81) (38.00) (17.97) 48.98

Increase / (Decrease) in Trade Payables & Other Current Liability

306.04 195.00 454.92 289.66 34.29 71.93

Increase / (Decrease) in Provisions

7.02 (93.28) 44.31 (16.39) 24.65 47.28

Cash generated

from Operation 84.73 303.86 344.05 263.38 (145.43) 16.63

Less : Direct Taxes

paid (16.98) (49.11) (13.31) (16.52) (12.91) (4.52)

Net Cash

Generated/Used from Operating Activities

67.75 254.75 330.74 246.86 (158.34) 12.11


53

Investment in Subsidiary

- - - - - (2.06)

Loan given to Subsidiary

(242.76) (231.88) (188.02) (41.05) (54.43) (220.18)


47.10 (64.97) 2.26 (30.70) (12.17) 32.71

Interest Received 7.28 3.50 3.33 3.18 5.01 (1.61) Purchase of Fixed

Assets Including Capital Advances & Payables for assets

(202.91) (298.26) (214.67) (304.70) (344.10) (455.44)

Sale of Fixed Asset 0.43 0.61 1.52 0.40 9.76 0.78 Net Cash flow

Generated/Used in Investing Activities

(390.85) (590.99) (395.58) (372.86) (395.93) (645.80)

C CASH FLOW FROM FINANCIAL ACTIVITIES Proceeds from

Issue of Equity Share Capital/(Refund of Share Application Money)

39.12 150.00 (1.20) 21.50 269.58 310.47


(225.45) 37.46 (69.42) 257.52 431.86 55.10


839.34 443.25 359.50 17.81 25.92 375.07

Finance Cost Paid (268.68) (299.94) (224.00) (178.53) (172.87) (97.62) Net Cash

Generated/Used in Financial Activities

384.33 330.77 64.88 118.31 554.50 643.03

D NET INCREASE/

(DECREASE) IN CASH & CASH EQUIVALENTS (A+B+C+D)

61.23 (5.48) 0.07 (7.70) 0.22 9.34

E CASH AND

CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR

2.27 7.75 7.68 15.37 15.16 5.83

Less : Foreign Exchange Gain/(Loss) on Cash Equivalents [Net]

- - - 0.01 (0.01) (0.01)

F CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

63.51 2.27 7.73 7.69 15.38 15.16

54

Note: 1. The above statement should be read with the Notes to the Restated Unconsolidated Summary


2. Restated Unconsolidated Cash Flows statement of the company has been prepared under the ‘Indirect method’ as set out in Accounting Standard – 3 on Cash Flow Statements.


55

THE ISSUE

Issue by the Company(1) 13,384,826 Equity Shares aggregating upto `

[●] million Of which A) QIB Portion(2) At least [●] Equity Shares

Of which Anchor Investor Portion Not more than [●] Equity Shares Balance available for allocation to QIBs other than the Anchor Investor Portion (assuming Anchor Investor Portion is fully subscribed)

Not more than [●] Equity Shares

Of which

Available for allocation to Mutual Funds only (5% of the QIB Portion excluding the Anchor Investor Portion)

[●] Equity Shares

Balance for all QIBs including Mutual Funds[●] Equity Shares B) Non-Institutional Portion(2) Not more than [●] Equity Shares C) Retail Portion(2) Not more than [●] Equity Shares

Equity Shares outstanding prior to the Issue 28,679,366 Equity Shares Equity Shares outstanding after the Issue 42,064,192 Equity Shares Use of Net Proceeds See section titled “Objects of the Issue” on

page 80 for information about use of the Net Proceeds

(1) Our Company is considering a Pre-IPO Placement of upto 2,790,000 Equity Shares and / or aggregating upto ` 600 million with certain investors. The Pre-IPO Placement is at the discretion of our Company. Our Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPO Placement, if any, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the Issue size will be reduced to the extent of such Pre-IPO Placement, subject to the Issue size constituting at least 25 % of the post-Issue paid-up equity share capital of our Company.

(2) If at least 75% of the Issue cannot be allotted to QIBs, the entire application money shall be refunded. In the event

aggregate demand in the QIB Portion has been met, under subscription, if any, in the Non-Institutional Portion and Retail Portion would be allowed to be met with spill-over from other categories or combination of categories at the discretion of our Company in consultation with the BRLMs and the Designated Stock Exchange.

Our Company, in consultation with the BRLMs, may allocate up to 30% of the QIB Portion to Anchor Investors on a discretionary basis. One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Issue Price. For further details, see section titled “Issue Procedure” on page 80. In the event of over-subscription, allocation to QIB Bidders and Non Institutional Bidders shall be made on a proportionate basis, except the Anchor Investor Portion. The allotment to each Retail Individual Bidder shall not be less than the minimum Bid lot size, subject to availability of Equity Shares in the Retail Portion, and the remaining available Equity Shares, if any, shall be allotted on a proportionate basis.

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GENERAL INFORMATION Our Company was incorporated as “AMB Engineering Company Private Limited” on January 17, 1991 as a private limited company under the Companies Act, 1956. The name of our Company was changed to “Jyoti CNC Automations Private Limited” and it received a fresh Certificate of incorporation dated May 08, 2002. Subsequently, the name of our Company was changed to “Jyoti CNC Automation Private Limited” and it received a fresh Certificate of incorporation dated April 28, 2008. Further, pursuant to a special resolution of the shareholders of our Company at an annual general meeting held on September 17, 2012, our Company became a public limited company and the word “private” was deleted from its name. The fresh certificate of incorporation to reflect the new name was issued by the RoC on November 30, 2012. For further details, see section titled “History and Certain Corporate Matters” on page 151. Registered and Corporate Office of our Company Jyoti CNC Automation Limited G - 506, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India Tel: +91 (02827) 306 100 Fax: +91 (02827) 306 161 Email: [email protected] Website: www.jyoti.co.in Set forth below are the details of the Registration Number and Corporate Identity Number of our Company:

Details Registration/Identification number Registration Number 014914 Corporate Identity Number U29221GJ1991PLC014914

Address of the RoC Our Company is registered with the RoC, situated at the following address: RoC Bhavan, Opp Rupal Park Society, Behind Ankur Bus Stop, Naranpura, Ahmedabad – 380 013, Gujarat, India. Board of Directors The Board of our Company comprises of the following:

Name Designation DIN Address Parakramsinh Jadeja Managing Director 00125050 Osho, 2, Shivaji Park, Opp.

Income Tax Society, Rajkot – 360 001, Gujarat, India.

Vikramsinh Rana Whole Time Director 00125079 601, Kishan Kanaiya – II, University Road, Indira Chowk, Rajkot – 360 007, Gujarat, India

Sahdevsinh Jadeja Whole Time Director 00126392 Plot no. 70, Silver Stone, Main Road, Near. Oscar Tower, Rajkot – 360 005, Gujarat, India

Mansingh Bhakta Independent Director 00001963 4, Sagar Villa, 38, B. Desai Road, Mumbai, 400026, Maharashtra, India

Vijay Paranjape Independent Director 00370451 Mauli 2nd Floor, Gawand Path, Naupada, Thane – 400

57

Name Designation DIN Address 602, Maharashtra, India.

Ketan Marwadi Independent Director 00088018 Marwadi Villa, Ram Park Main Road, Nr. Central School, Kalawad Road, Rajkot – 360 005, Gujarat, India

For further details of the Directors, see section titled “Management” on page 162. Company Secretary and Compliance Officer Maulik Gandhi is the Company Secretary and the Compliance Officer of our Company. His contact details are as follows: Maulik Gandhi G - 506, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India Tel: +91 (02827) 306 100 Fax: +91 (02827) 306 161 Email: [email protected] Investors can contact the Compliance Officer or the Registrar in case of any pre- or post-Issue related problems, such as non-receipt of letters of Allotment, credit of Allotted shares in the respective beneficiary account and refund orders. All grievances pertaining to the Issue must be addressed to the Registrar to the Issue quoting the full name of the sole or first Bidder, Bid cum Application Form number, Bidders’ DP ID, Client ID, PAN, number of Equity Shares applied for, date of Bid cum Application Form, name and address of the Syndicate Member or the Non Syndicate Stock Broker where the Bid was submitted and cheque or draft number and issuing bank thereof. All grievances relating to the ASBA may be addressed to the Registrar to the Issue, with a copy to the relevant SCSB or the member of the Syndicate if the Bid was submitted to a member of the Syndicate at any of the Syndicate ASBA Bidding Locations or the Non Syndicate Stock Broker if the Bid was submitted to the Non Syndicate Stock Broker at any of the Non Syndicate Broker Centres, as the case may be, quoting the full name of the sole or first Bidder, Bid cum Application Form number, Bidders’ DP ID, Client ID, PAN, number of Equity Shares applied for, date of Bid cum Application Form, name and address of the member of the Syndicate or the Designated Branch, as the case may be, where the ASBA Bid was submitted and ASBA Account number in which the amount equivalent to the Bid Amount was blocked. Book Running Lead Managers Avendus Capital Private Limited 5th Floor, B Quadrant, IL&FS Financial Centre, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 Tel: +91 22 6648 0050 Fax: +91 22 6648 0040 Email: [email protected] Investor grievance email: [email protected] Website: www.avendus.com Contact Person: Rashi Malik SEBI Registration No.: INM000011021 SBI Capital Markets Limited 202, Maker Tower E, Cuffe Parade, Mumbai 400 005, India

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Tel: +91 22 2217 8300 Fax: +91 22 2218 8332 E-mail: [email protected] Investor Grievance E-mail: [email protected] Website: www.sbicaps.com Contact Person: Sylvia Mendonca / Arvind Ganeshan SEBI Registration No.: INM000003531 Syndicate Members [●]

Legal Counsel to the Issue Sterling Associates

A - 606, Winsway Complex, Near Metropolitan Magistrates Court, Andheri (E), Mumbai 400 069, India Tel: +91 22 2292 5534 Fax: +91 22 2683 9866

Statutory Auditors of our Company Kalaria & Sampat, Chartered Accountants 302, Star Avenue, Dr. Radhakrishnan Road, Opp. Rajkumar College, Rajkot – 360 001, Gujarat, India Tel: + 91 0281 246 4391 Fax: +91 0281 269 3310 Email: [email protected]

Registrar to the Issue Link Intime India Private Limited C-13, Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (West) Mumbai 400 078 Tel: (91 22) 2596 0320 Fax: (91 22) 2596 0329 Email: [email protected] Website: www.linkintime.co.in Investor Grievance E-mail: [email protected] Contact Person: Sanjog Sud SEBI Registration No. : INR000004058 Bankers to the Issue and Escrow Collection Banks [●] Non Syndicate Stock Brokers A broker registered with SEBI under the Securities and Exchange Board of India (Stock Brokers and Sub Brokers Regulations), 1992, having office in any of the Non Syndicate Broker Centres, and eligible to procure Bids in terms of the circular No. CIR/CFD/14/2012 dated October 4, 2012 issued by SEBI. For details on the Non Syndicate Broker Centres which can collect Bid cum

59

Application Forms please refer to the website of the Stock Exchanges at www.bseindia.com and www.nseindia.com. Self Certified Syndicate Banks The list of banks that have been notified by SEBI to act as SCSBs for the ASBA process is provided on the website of SEBI. For details on the Designated Branches of the SCSBs which shall collect Bid cum Application Forms, please refer to the SEBI website (www.sebi.gov.in). Syndicate / Non Syndicate Stock Broker SCSB Branches In relation to ASBA Bids submitted to a member of the Syndicate or to a Non Syndicate Stock Broker, the list of branches of the SCSBs at the Syndicate ASBA Bidding Locations or at the Non Syndicate Broker Centres named by the respective SCSBs to receive deposits of Bid cum Application Forms from the members of the Syndicate or the Non Syndicate Stock Broker is available on the website of the SEBI (www.sebi.gov.in) and updated from time to time. For more information on such branches collecting Bid cum Application Forms from the members of the Syndicate at Syndicate ASBA Bidding Locations or the Non Syndicate Stock Brokers at the Non Syndicate Broker Centres, see the website of the SEBI. Bankers to our Company Corporation Bank Dhebar Road, Rajkot – 360 002 Tel: (91 0281) 2226663 Fax: (91 0281) 2225896 Email: [email protected]

State Bank of India Commercial Branch, Nobel House, Kalawad Road, Rajkot Tel: (91 0281) 2474365 Fax: (91 0281) 2477590 Email: [email protected]

IDBI Bank Ambrish, Near KKV Circle, Kalawad Road, Rajkot – 360 005, Gujarat Tel: (91 0281) 6565911 Fax: (91 0281) 2588212 Email: [email protected]

Bank of Baroda Corporate Financial Services Branch, 1st Floor, BOB Tower, Law Garden, Ahmedabad – 380 006 Tel: (91 079) 26473010 Fax: (91 079) 26560009 Email: [email protected]

Bank of India BOI Building, 1st Floor, Para Bazar, M G Road, Rajkot Tel: (91 0281) 2230006 Fax: (91 0281) 2231754 Email: [email protected]

IPO Grading Agency Our Company will be seeking an IPO grading from a credit rating agency registered with SEBI. Such rating and the rationale furnished by the IPO grading agency for its grading will be disclosed in the Red Herring Prospectus to be filed with the RoC. A copy of the IPO grading of this Issue will be annexed to the Red Herring Prospectus as “Annexure I”. Expert Opinion Except for the report of [●] in respect of the IPO Grading of the Issue (a copy of which will be annexed to the Red Herring Prospectus as “Annexure I”), furnishing the rationale for its grading, and except for the reports of the Auditors of our Company on the restated financial statements and the “Statement of Tax Benefits”, included in this Draft Red Herring Prospectus, our Company has not obtained any expert opinions.

60

Monitoring Agency There is no requirement to appoint a monitoring agency for the Issue, as this Issue is for an amount less than ` 5,000 million. Inter-se Allocation of Responsibilities between the BRLMs The following table sets forth the inter se allocation of responsibilities for various activities among the BRLMs for the Issue:

Activity Responsibility Co-ordination

1. Capital structuring with relative components and formalities etc.

Avendus, SBICAP

Avendus

2. Due diligence of Company’s operations/ management/ business plans/ legal etc. Drafting and design of Draft Red Herring Prospectus and of statutory advertisement including memorandum containing salient features of the Prospectus. The BRLMs shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges, RoC and SEBI including finalisation of Prospectus and RoC filing including co-ordination with Auditors for preparation of financials and drafting and approving all statutory advertisements.

Avendus, SBICAP

Avendus

3. Drafting and approval of all publicity material other than statutory advertisement including corporate advertisement, brochure etc.

Avendus, SBICAP

Avendus

4. Appointment of other intermediaries viz., Registrar(s), Printers, Escrow Collection Banks, Advertising Agency, IPO Grading Agency, Monitoring Agency (if required)

Avendus, SBICAP

SBICAP

5. Preparation of roadshow presentation and FAQs Avendus, SBICAP

SBICAP

6. International Institutional marketing strategy:

Avendus, SBICAP

SBICAP

7. Domestic Institutional marketing strategy Avendus, SBICAP

Avendus

8. Retail/ HNI marketing strategy: • Finalise centers for holding conference for brokers etc; • Finalise media, marketing & PR Strategy; and • Follow up on distribution of publicity and issue

materials including form, prospectus and deciding on the quantum of the Issue material

• Finalise bidding centers

Avendus, SBICAP

SBICAP

9. Manage the book and coordination with Stock Exchanges Avendus, SBICAP

SBICAP

10. Finalisation of pricing in consultation with the Company Avendus, SBICAP

Avendus

11. Post bidding activities including management of Escrow Accounts, coordinate non-institutional allocation, coordination with Registrar and Banks, intimation of allocation and dispatch of refund to Bidders, etc. The post issue activities of the issue will involve essential follow up steps, which include finalization of trading and dealing instruments and dispatch of certificates and demat delivery of shares, with the various agencies connected with the work such as Registrar to the Issue, Banker to the Issue and the bank handling refund business. The BRLMs shall be responsible for ensuring that these agencies fulfill their functions and enable it to discharge this responsibility through suitable agreements with the Company.

Avendus, SBICAP

SBICAP

If any of these activities are handled by other intermediaries, the BRLMs shall be responsible for ensuring that these agencies fulfil their functions and enable them to discharge these

61

responsibilities through suitable agreements with the Company. Credit Rating As this is an Issue of Equity Shares, there is no credit rating for this Issue. Trustees As this is an Issue of Equity Shares, the appointment of trustees is not required. Book Building Process The book building, in the context of the Issue, refers to the process of collection of Bids on the basis of the Red Herring Prospectus within the Price Band, which will be decided by our Company, in consultation with the BRLMs, and advertised in [●] edition of [●] (a widely circulated English national newspaper), [●] edition of [●] (a widely circulated Hindi national newspaper) and [●] edition of [●] (a widely circulated Gujarati newspaper) and shall be available on the website of the Stock Exchange, at least five working days prior to the Bid/Issue Opening Date and shall be made available to the Stock Exchanges for the purpose of upload on their website. The Issue Price is finalised after the Bid / Issue Closing Date. The principal parties involved in the Book Building Process are: • the Company; • the BRLMs; • the Syndicate Members who are intermediaries registered with SEBI or registered as

brokers with BSE/NSE and eligible to act as Underwriters. The Syndicate Members are appointed by the BRLMs;

• the SCSBs; • the Registrar to the Issue; • Non Syndicate Stock Brokers; and • the Escrow Collection Banks. Pursuant to Rule 19(2)(b)(i) of the SCRR, the Issue is being made for at least 25% of the post-Issue paid-up Equity Share capital of our Company. In terms of the SEBI Regulations, the Issue is being made through the Book Building Process where at least 75% of the Issue will be allocated on a proportionate basis to QIBs (the “QIB Portion”), provided that our Company may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the “Anchor Investor Portion”), of which one-third shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Issue Price. Further, 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to all QIBs including Mutual Funds, subject to valid Bids being received from them at or above the Issue Price. If at least 75% of the Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not more than 15% of the Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not more than 10% of the Issue will be available for allocation Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. In accordance with the SEBI Regulations, QIBs (including QIBs bidding in the Anchor Investor Portion) and Non-Institutional Investors are not allowed to withdraw or lower the size of their Bids at any stage. For further details, see section titled “Terms of the Issue” on page 315. Our Company will comply with the SEBI Regulations and any other ancillary directions issued by SEBI for this Issue. In this regard, our Company has appointed the BRLMs to manage the Issue and procure subscriptions to the Issue. The process of Book Building under the SEBI Regulations is subject to change from time to time and the investors are advised to make their own judgment about investment through this process prior to making a Bid or application in the Issue. Illustration of Book Building and Price Discovery Process (Investors should note that this example is solely for illustrative purposes and is not specific to the Issue and excludes Anchor Investors.)

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Bidders can bid at any price within the price band. For instance, assume a price band of ` 20 to ` 24 per share, issue size of 3,000 equity shares and receipt of five bids from bidders, details of which are shown in the table below. A graphical representation of the consolidated demand and price would be made available at the bidding centres during the bidding period. The illustrative book below shows the demand for the shares of the issuer company at various prices and is collated from bids received from various investors.

Bid Quantity Bid Amount (`) Cumulative Quantity Subscription 500 24 500 16.67%

1,000 23 1,500 50.00% 1,500 22 3,000 100.00% 2,000 21 5,000 166.67% 2,500 20 7,500 250.00%

The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issue the desired number of shares is the price at which the book cuts off, i.e., ` 22.00 in the above example. The issuer, in consultation with the book running lead managers, will finalise the issue price at or below such cut-off price, i.e., at or below ` 22.00. All bids at or above this issue price and cut-off bids are valid bids and are considered for allocation in the respective categories. Steps to be taken by the Bidders for Bidding: 1. Check eligibility for making a Bid (see section titled “Issue Procedure – Who Can Bid?”

on page 326); 2. Ensure that you have a demat account and the demat account details are correctly

mentioned in the Bid cum Application Form, as applicable; 3. Ensure correctness of your PAN, DP ID and Client ID mentioned in the Bid cum

Application Form. Based on these parameters, the Registrar will obtain the Demographic Details of the Bidders from the Depositories.

4. Except for Bids on behalf of the Central or State Government officials, residents of Sikkim and the officials appointed by the courts, who may be exempt from specifying their PAN for transacting in the securities market, for Bids of all values ensure that you have mentioned your PAN allotted under the I.T. Act in the Bid cum Application Form. The exemption for Central or State Governments and officials appointed by the courts and for investors residing in Sikkim is subject to the Depositary Participant’s verification of the veracity of such claims of the investors by collecting sufficient documentary evidence in support of their claims.

5. Ensure that the Bid cum Application Form is duly completed as per instructions given in

the Red Herring Prospectus and in the Bid cum Application Form;

6. Bids by ASBA Bidders may be submitted in the physical mode to the Syndicate at the Syndicate ASBA Bidding Locations or to the Non Syndicate Stock Brokers at the Non Syndicate Broker Centres and either in physical or electronic mode, to the SCSBs with whom the ASBA Account is maintained. ASBA Bidders should ensure that the ASBA Accounts have adequate credit balance at the time of submission to the SCSB to ensure that the Bid cum Application Form is not rejected. Ensure that the SCSB where the ASBA Account (as specified in the Bid cum Application Form) is maintained has named at least one branch at least one branch at that location for the members of the Syndicate or the Non Syndicate Stock Brokers to deposit the Bid cum Application Form. For further details see “Issue Procedure” on page 323.

7. Bids by QIBs (other than Anchor Investors) and Non-Institutional Bidders must be submitted through the ASBA process only.

Underwriting Agreement

After the determination of the Issue Price and allocation of Equity Shares, but prior to the filing of the Prospectus with the RoC, our Company will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be offered through the Issue. It is proposed that

63

pursuant to the terms of the Underwriting Agreement, the BRLMs shall be responsible for bringing in the amount devolved in the event that the Syndicate Members do not fulfil their underwriting obligations. The Underwriting Agreement is dated [●]. Pursuant to the terms of the Underwriting Agreement, the obligations of the Underwriters are several and are subject to certain conditions specified therein. The Underwriters have indicated their intention to underwrite the following number of Equity Shares:

Name and Address of the Underwriters Indicated Number of Equity Shares to be

Underwritten

Amount Underwritten (` In million)

Avendus Capital Private Limited 5th Floor, B Quadrant, IL&FS Financial Centre, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 Tel: +91 22 6648 0050 Fax: +91 22 6648 0040 Email: [email protected] Investor grievance email: [email protected] Website: www.avendus.com Contact Person: Rashi Malik SEBI Registration No.: INM000011021

[●] [●]

SBI Capital Markets Limited 202, Maker Tower E, Cuffe Parade, Mumbai 400 005, India Tel: +91 22 2217 8300 Fax: +91 22 2218 8332 E-mail: [email protected] Investor Grievance E-mail: [email protected] Website: www.sbicaps.com Contact Person: Sylvia Mendonca / Arvind Ganeshan SEBI Registration No.: INM000003531

[●] [●]

This portion has been intentionally left blank and will be filled in before filing of the Prospectus with the RoC. The above-mentioned is indicative underwriting and this will be finalised after pricing and actual allocation. In the opinion of the Board of Directors (based on certificates provided by the Underwriters), the resources of the above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. The abovementioned Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered as brokers with the Stock Exchange(s). The Board of Directors / Committee of Directors, at its meeting held on [●], has accepted and entered into the Underwriting Agreement mentioned above on behalf of our Company. Allocation among the Underwriters may not necessarily be in proportion to their underwriting commitment. Notwithstanding the above table, the BRLMs and the Syndicate Members 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 Equity Shares to the extent of the defaulted amount.

64

Notwithstanding the foregoing, the Issue is also subject to obtaining (i) final listing and trading approvals of the Stock Exchanges, which our Company shall apply for after Allotment; and (ii) the final approval of the RoC after the Prospectus is filed with the RoC.

65

CAPITAL STRUCTURE The equity share capital as of the date of this Draft Red Herring Prospectus is set forth below:

(In ` except share data) Aggregate Value at

face value Aggregate Value

at Issue Price A AUTHORISED SHARE CAPITAL 45,000,000 Equity Shares 450,000,000 2,000,000 Preference Shares 20,000,000 B ISSUED, SUBSCRIBED AND PAID-UP

CAPITAL BEFORE THE ISSUE

28,679,366 Equity Shares 286,793,660 C PRESENT ISSUE IN TERMS OF THIS

DRAFT RED HERRING PROSPECTUS(1)

13,384,826 Equity Shares 133,848,260 [●] E SECURITIES PREMIUM ACCOUNT Before the Issue 932,735,223(2) After the Issue (3) [●] F EQUITY CAPITAL AFTER THE ISSUE 42,064,192 Equity Shares 420,641,920 (1) Our Company is considering a Pre-IPO Placement of upto 2,790,000 Equity Shares and / or aggregating upto ` 600

million with certain investors. The Pre-IPO Placement is at the discretion of our Company. Our Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPO Placement, if any, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the Issue size will be reduced to the extent of such Pre-IPO Placement, subject to the Issue size constituting at least 25 % of the post-Issue paid-up equity share capital of our Company.

(2) The securities premium account was ` 786,272,973 as on December 31, 2012. This was increased to ` 932,735,223

pursuant to allotment of 714,450 Equity Shares on February 16, 2013 at a premium of ` 205 per Equity Share. (3) The Securities Premium Account after the Issue shall be determined after Book Building Process. The present Issue has been authorized by the Board of Directors and the shareholders of our Company, pursuant to their resolutions dated September 17, 2012 and September 22, 2012, respectively. Changes in the Authorised Capital (1) The initial authorised share capital of ` 1,000,000 divided into 100,000 Equity Shares of

` 10/- each was increased to ` 30,000,000 divided into 3,000,000 Equity Shares of ` 10/- each pursuant to a resolution of the shareholders passed in an EGM held on July 22, 2003.

(2) The authorised share capital of ` 30,000,000 divided into 3,000,000 Equity Shares of ` 10/- each was increased to ` 35,000,000 divided into 3,000,000 Equity Shares of ` 10/- each and 500,000 Special Equity Shares of ` 10/- each pursuant to a resolution of the shareholders in an EGM held on December 15, 2003.

(3) The authorised share capital of ` 35,000,000 divided into 3,000,000 Equity Shares of `

10/- each and 500,000 Special Equity Shares of ` 10/- each was increased to ` 70,000,000 divided into 6,500,000 Equity Shares of ` 10/- each and 500,000 Special Equity Shares of ` 10/- each pursuant to a resolution of the shareholders in an EGM held on March 31, 2006.


10/- each and 500,000 Special Equity Shares of ` 10/- each was reclassified to ` 70,000,000 divided into 6,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each pursuant to a resolution of the shareholders in an EGM held on February 07, 2007.

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(5) The authorised share capital of ` 70,000,000 divided into 6,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each was increased to ` 75,000,000 divided into 7,417,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each pursuant to a resolution of the shareholders in an EGM held on March 28, 2007.


10/- each and 82,500 Special Equity Shares of ` 10/- each was increased to ` 120,000,000 divided into 11,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each pursuant to a resolution of the shareholders in an EGM held on August 24, 2007.


10/- each and 82,500 Special Equity Shares of ` 10/- each was reclassified to ` 120,000,000 divided into 12,000,000 Equity Shares of ` 10/- each pursuant to a resolution of the shareholders in an EGM held on August 24, 2007.


10/- each was increased to ` 150,000,000 divided into 14,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each pursuant to a resolution of the shareholders in an EGM held on March 27, 2012.


10/- each was increased to `450,000,000 divided into 44,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each pursuant to a resolution of the shareholders in an AGM held on September 17, 2012.

(10) The authorised share capital of ` 450,000,000 divided into 44,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each was reclassified to ` 450,000,000 divided into 45,000,000 Equity Shares of ` 10/- each pursuant to a resolution of the shareholders in an AGM held on September 17, 2012.

(11) The authorised share capital of ` 450,000,000 divided into 45,000,000 Equity Shares of ` 10/- each was increased to ` 470,000,000 divided into 45,000,000 Equity Shares of ` 10/- each and 2,000,000 Preference Shares of ` 10/- each pursuant to a resolution of the shareholders in an EGM held on February 11, 2013.

Notes to Capital Structure 1. Share Capital History of our Company The following is the history of the equity share capital and securities premium account of our Company:

Date of Allotment

Number of Equity Shares Alloted

Face value

(`)

Issue price (`)

Consideration (cash, bonus, consideration

other than cash)

Cumulative No. of Equity Shares

Cumulative paid-up

equity capital (`)

Cumulative securities premium

(`) January 17, 1991 400 10 10 Subscription to

MoA(1) 400 4,000 -

January 10, 2002 9,960 10 10 Cash(2) 10,360 103,600 -

December 12, 2003 1,989,640 10 10 Cash(3) 2,000,000 20,000,000 -

December 12, 2003 1,000,000 10 30 Cash(4) 3,000,000 30,000,000 20,000,000

March 10, 2005 82,500 10

40 Cash(5) 3,082,500 30,825,000 22,475,000

March 31, 2006 2,917,500 10 10 Cash(6) 6,000,000 60,000,000 22,475,000

February 08, 2007 1,000,000 10 100 Cash(7) 7,000,000 70,000,000 112,475,000

March 31, 2007 368,000 10 125 Cash(8) 7,368,000 73,680,000 154,795,000

August 28, 1,080,000 10 125 Cash(9) 8,448,000 84,480,000 278,995,000

67

Date of Allotment

Number of Equity Shares Alloted

Face value

(`)

Issue price (`)

Consideration (cash, bonus, consideration

other than cash)

Cumulative No. of Equity Shares

Cumulative paid-up

equity capital (`)

Cumulative securities premium

(`) 2007 March 31, 2008 348,700 10 125 Cash(10) 8,796,700 87,967,000 319,095,500

April 17, 2008 870,500 10 125 Cash(11) 9,667,200 96,672,000 419,203,000

June 25, 2008 8 10 501 Cash(12) 9,667,208 96,672,080 419,206,928

June 25, 2008 369,800 10 125 Cash(13) 10,037,008 100,370,080 461,733,928

September 7, 2008 339,600 10 125 Cash(14) 10,376,608 103,766,080 500,787,928

March 31, 2009 770,200 10 125 Cash(15) 11,146,808 111,468,080 589,360,928

March 31, 2012 2,607,775 10 125 Cash(16) 13,754,583 137,545,830 889,255,053

September 22, 2012 1,93,000 10 125 Cash(17) 13,947,583 139,475,830 911,450,053

September 24, 2012 13,947,583 10 - Bonus in the

ratio of 1:1(18) 27,895,166 278,951,660 771,974,223

December 31, 2012 69,750 10 215 Cash(19) 27,964,916 279,649,160 786,272,973

February 16, 2013 714,450 10 215 Cash(20) 28,679,366 286,793,660 932,735,223

(1) Subscription to Memorandum of Association by Harsukh Jogiya (100 Equity Shares), Jayeshkumar Bhogyata (100

Equity Shares), Jaysukhlal Bakotia (100 Equity Shares) and Satish Santhara (100 Equity Shares). (2) Further Allotment of 9,960 Equity Shares to Parakramsinh Jadeja (2,490 Equity Shares), Rajshree Jadeja (2,490

Equity Shares), Jyoti Jadeja (2,490 Equity Shares), Hansa Chauhan (2,000 Equity Shares) and Vikramsinh Rana (490 Equity Shares).

(3) Further Allotment of 1,989,640 Equity Shares to 25 individuals. (4) Further Allotment of 1,000,000 Equity Shares to Kishore Virani (500,000 Equity Shares) and Anil Virani (500,000

Equity Shares). (5) Further Allotment of 82,500 Special Equity Shares with no voting rights to Alka India Limited (30,000 Special Equity

Shares), Magan Industries Limited (15,000 Special Equity Shares) and Tripex Overseas Limited (37,500 Special Equity Shares). The Special Equity Shares were converted into Equity Shares vide shareholders resolution dated August 24, 2007.

(6) Further Allotment of 2,917,500 Equity Shares to 15 Individuals. (7) Further Allotment of 1,000,000 Equity Shares to Kishore Virani (550,000 Equity Shares) and Anil Virani (450,000

Equity Shares). (8) Further Allotment of 368,000 Equity Shares to Bindiya Solanki (400 Equity Shares), Chaitanya Solanki (3,600 Equity

Shares), Jagdishsinh Jadeja (1,200 Equity Shares), Shiluben V Rana (4,800 Equity Shares), Sahdevsinh Jadeja (38,000 Equity Shares), Anil Virani (152,000 Equity Shares) and Kishore Virani (168,000 Equity Shares)

(9) Further Allotment of 1,080,000 Equity Shares to Parakramsinh Jadeja (600,000 Equity Shares) and Smit Ramesh Virani (480,000 Equity Shares).

(10) Further Allotment of 348,700 Equity Shares to Parakramsinh Jadeja (189,400 Equity Shares), Smit Ramesh Virani (158,500 Equity Shares) and Jagdishsinh Jadeja (800 Equity Shares).

(11) Further Allotment of 870,500 Equity Shares to Smit Ramesh Virani (391,700 Equity Shares) and Jyoti International Private Limited (478,800 Equity Shares).

(12) Further Allotment of 8 Equity Shares to Sangeeta Pradeep Rathod (1 Equity Share), Babita Pankaj Rathod (1 Equity Share), Mahendra Fulchand (1 Equity Share), Basant Fulchand (1 Equity Share), Subhash Fulchand (1 Equity Share), Regal Computer Systems Private Limited (1 Equity Share), Samir Nandlal Shah (1 Equity Share) and Popatlal Fulchand (1 Equity Share).

(13) Further Allotment of 369,800 Equity Shares to Smit Ramesh Virani. (14) Further Allotment of 339,600 Equity Shares to Jyoti International Private Limited. (15) Further Allotment of 770,200 Equity Shares to Smit Ramesh Virani (740,000 Equity Shares), Jyoti International

Private Limited (9,600 Equity Shares), Parakramsinh Jadeja (16,600 Equity Shares) and Chaitanya Solanki (4,000 Equity Shares).

(16) Further Allotment of 2,607,775 Equity Shares to Jyoti International Private Limited (764,000 Equity Shares), Bindiya Solanki (8,000 Equity Shares), Chaitanya Solanki (7,200 Equity Shares), Chaitanya Solanki HUF (8,000 Equity Shares), Parakramsinh Jadeja (556,000 Equity Shares), Sahdevsinh Jadeja (19,200 Equity Shares), Smit Ramesh Virani (864,000 Equity Shares) Anil Virani (4,315 Equity Shares) and Kishore Virani (377,060 Equity Shares).

(17) Further Allotment of 193,000 Equity Shares to Parakramsinh Jadeja (80,000 Equity Shares) and Jyoti International Private Limited (113,000 Equity Shares).

(18) Bonus issue of an aggregate of 13,947,583 Equity Shares in the ratio of one Equity Share for every one Equity Share held by the then existing shareholders of our Company undertaken through the capitalisation of ` 139,475,830 from the securities premium account.

(19) Further Allotment of 69,750 Equity Shares to Jyoti International Private Limited. (20) Further Allotment of 714,450 Equity Shares to Jyoti International Private Limited.

68

2. Equity Shares allotted for consideration other than cash:

Date of Allotment

Number of Equity Shares

Face value

(`)

Reason for Allotment

Benefit accrued to our Company

September 24, 2012 13,947,583 10 Bonus in the

ratio of 1:1 NIL

Other than as specified above, our Company has not issued any Equity Shares for consideration other than cash. 3. History of the equity share capital held by our Promoters: Details of the build up of the Promoters’shareholding in our Company Parakramsinh Jadeja

Date of Allotment / Acquisition / Transfer

Nature of Transaction


Face value

(`)

Issue price/ Consideration (`)

% of pre- Issue Capital

% of post- Issue Capital

Nature of Consideration (Cash, bonus / kind etc)

Cumulative number of Equity Shares

January 10, 2002 Purchase 400 10 10

0.00%

0.00% Cash 400

January 10, 2002

Further Allotmen

t 2,490 10 10

0.01%

0.01%

Cash 2,890

December 12, 2003

Further Allotmen

t 465,910 10 10

1.62%

1.11% Cash 468,800

March 31, 2006

Further Allotmen

t 853,150 10 10

2.97%

2.03%

Cash 1,321,950

April 1, 2007 Gift 332,300 10 - 1.16% 0.79% Other than

cash 1,654,250

April 1, 2007 Purchase 4,000 10 125 0.01% 0.01% Cash 1,658,250

April 1, 2007 Purchase 17,500 10 12.85 0.06% 0.04% Cash 1,675,750

April 1, 2007 Purchase 104,000 10 10 0.36% 0.25% Cash 1,779,750

August 4, 2007 Purchase 82,500* 10 10 0.29% 0.20% Cash 1,862,250

August 28, 2007

Further Allotmen

t 600,000 10 125 2.09% 1.43% Cash 2,462,250

March 31, 2008

Further Allotmen

t 189,400 10 125 0.66% 0.45% Cash 2,651,650

March 31, 2009

Further Allotmen

t 16,600 10 125 0.06% 0.04% Cash 2,668,250

October 1, 2011 Transfer (152,400) 10 125 (0.53%) (0.36%) Cash 2,515,850

March 31, 2012

Further Allotmen

t 556,000 10 125 1.94% 1.32% Cash 3,071,850

September 22, 2012 Gift 634,640 10 - 2.21% 1.51% Other than

cash 3,706,490

September 22, 2012

Further Allotmen

t 80,000 10 125 0.28% 0.19% Cash 3,786,490

September 24, 2012

Bonus in the ratio 3,786,490 10 - 13.20% 9.00% Other than

cash 7,572,980

69




Face value

(`)






of 1:1

Total 7,572,980 26.41% 18.00% * These Special Equity Shares were converted into Equity Shares vide shareholders resolution dated August 24, 2007. Vikramsinh Rana




Face value

(`)




Nature Of Consideration (Cash, bonus / kind etc)


January 10, 2002

Further Allotment

490 10 10

0.00%

0.00% Cash 490

December 12, 2003

Further Allotment

115,460 10 10

0.40%

0.27% Cash 115,950

March 31, 2006

Further Allotment

241,900 10 10

0.84%

0.58% Cash 357,850


cash 454,750

September 24, 2012

Bonus in the ratio of 1:1

454,750 10 -

1.59%

1.08% Other than cash 909,500

Total 909,500

3.17%

2.16% Sahdevsinh Jadeja




Face value

(`)




Nature of Consideration (Cash, bonus / kind Etc)


December 12, 2003

Further Allotment

126,450 10 10

0.44%

0.30% Cash 126,450

March 31, 2006

Further Allotment

280,600 10 10

0.98%

0.67% Cash 407,050

March 31, 2007

Further Allotment

38,000 10 125

0.13%

0.09% Cash 445,050

March 31, 2012

Further Allotment

19,200 10 125

0.07%

0.05% Cash 464,250


cash 668,540

September 24, 2012


668,540 10 -

2.33%

1.59% Other than cash 1,337,080

Total 1,337,080 4.66% 3.18% Jyoti International Private Limited




Face value (`)






70

April 17, 2008

Further Allotment

478,800 10 125

1.67%

1.14% Cash 478,800

September 7, 2008

Further Allotment

339,600 10 125

1.18%

0.81% Cash 818,400

March 31, 2009

Further Allotment

9,600 10 125

0.03%

0.02% Cash 828,000

March 31, 2012

Further Allotment

764,000 10 125

2.66%

1.82% Cash 1,592,000

September 22, 2012

Further Allotment

113,000 10 125

0.39%

0.27% Cash 1,705,000

September 24, 2012


1,705,000 10 -

5.95%

4.05% Other than cash 3,410,000

December 31, 2012

Further Allotment 69,750 10 215

0.24%

0.17%

Cash 3,479,750

February 16, 2013

Further Allotment 714,450 10 215

2.49%

1.70%

Cash 4,194,200

Total 4,194,200

14.62%

9.97% None of the Equity Shares held by our Promoters have been pledged by them as of the date of this Draft Red Herring Prospectus. All pre-Issue Equity Shares were fully paid-up at the time of allotment of the Equity Shares. 4. Details of Promoters’ Contribution and Lock-in:

The Equity Shares, which are being locked-in, are eligible for computation of Promoters’ contribution under the SEBI Regulations. Equity Shares offered by our Promoters for the minimum Promoters’ contribution are not subject to pledge. (a) Details of Promoters’ contribution locked-in for three years

Pursuant to the SEBI Regulations, an aggregate of 20.48% of the post-Issue capital of our Company held by our Promoters shall be locked in for a period of three years from the date of Allotment of the Equity Shares in the Issue. The details of such lock-in are set forth in the table below:

Date of

transaction Nature of

Transaction Nature of

consideration

No. of Equity Shares locked-

in*

Face value (`)

Issue/Acquisiti

on Price

(`)

Percentage of Post-Issue

Paid-up Capital

Parakramsinh Jadeja January 10, 2002 Purchase Cash 400 10 10 0.00%

January 10, 2002

Further Allotment Cash 2,490 10 10 0.01%

December 12, 2003


March 31, 2006


April 1, 2007 Gift Other than

cash 332,300 10 - 0.79%

April 1, 2007 Purchase Cash 4,000 10 125 0.01%

April 1, 2007 Purchase Cash 17,500 10 12.85 0.04%

April 1, 2007 Purchase Cash 104,000 10 10 0.25%

71

August 4, 2007 Purchase Cash 82,500 10 10 0.20%

August 28, 2007


March 31, 2008


March 31, 2009


September 24, 2012


Other than cash 2,515,850 10 - 5.98%

Vikramsinh Rana January 10, 2002

Further Allotment Cash 490 10 10 0.00%

December 12, 2003


March 31, 2006


September 24, 2012


Other than cash 357,850 10 - 0.85%

Sahdevsinh Jadeja December 12, 2003


March 31, 2006


March 31, 2007


September 24, 2012


Other than cash 445,050 10 - 1.06%

Jyoti International Private Limited April 17, 2008


September 7, 2008


March 31, 2009


September 24, 2012


Other than cash 828,000 10 - 1.97%

December 31, 2012


February 16, 2013


Total 8,613,250 20.48% * All the Equity Shares issued were fully paid up on the date of allotment. Our Promoter’s contribution has been brought in to the extent of not less than the specified minimum lot and from the person defined as ‘promoter’ under the SEBI Regulations. The Equity Shares that are being locked-in are not ineligible for computation of Promoter’s contribution under Regulation 33 of the SEBI Regulations. In this connection, our Company confirms the following: (i) The Equity Shares offered for Promoter’s contribution (a) have not been

acquired in the last three years for consideration other than cash and revaluation of assets or capitalisation of intangible assets; or (b) bonus shares out of revaluation reserves or unrealised profits of our Company or issued against Equity Shares which are otherwise ineligible for computation of Promoter’s contribution;

(ii) As of the date of this Draft Red Herring Prospectus, our Promoters hold 14,013,760 Equity Shares which constitutes 48.86 % of the pre-Issue paid-up Equity Share capital of our Company. Out of the aggregate shareholding of our Promoters, 8,613,250 Equity Shares are offered by our Promoters for the minimum Promoters’ contribution as per the table above. This includes 319,750 Equity Shares acquired by Jyoti International Private Limited, during the preceding one year at a price which may be lower than the Issue Price. Jyoti International Private Limited has given an undertaking to pay the difference between the Issue Price and the acquisition price of 319,750 Equity Shares in

72

case the Issue Price determined through the book building process is higher than the acquisition price. For this purpose, Jyoti International Private Limited will keep an amount aggregating to ` [•] million representing the difference between the Cap Price and the acquisition price of 319,750 Equity Shares in an Escrow and will be utilised in accordance with the SEBI Regulations if the conditions specified in Regulation 33(1)(b) of the SEBI Regulations are not complied with. Our Company undertakes that the Equity Shares constituting minimum Promoters’ contribution in the Issue, which shall be locked-in for three years, are eligible for minimum Promoters’ contribution in terms of the SEBI Regulations;

(iii) Our Company has not been formed by the conversion of a partnership firm into a

company; (iv) The Equity Shares held by our Promoters and offered for Promoter’s

contribution are not subject to any pledge; (v) All the Equity Shares of our Company held by our Promoters shall be held in

dematerialized form prior to the filing of the Red Herring Prospectus with the RoC.; and

(vi) Our Company has obtained consent letters dated February 17, 2013 from our

Promoters for lock-in of 20.48% of the post-Issue paid-up Equity Share capital of our Company, held by them, for three years from the date of Allotment.

(b) Details of pre-Issue Equity Share capital locked-in for one year

In addition to 20.48% of the post-Issue shareholding of our Company held by our Promoters and locked in for three years as specified above, the balance pre-Issue share capital of our Company will be locked in for a period of one year from the date of Allotment.

(c) Other Requirements in respect of lock-in

The Equity Shares held by persons other than our Promoters prior to the Issue may be transferred to any other person holding the Equity Shares which are locked-in along with the Equity Shares proposed to be transferred, subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with the Takeover Regulations as applicable.

Equity Shares held by our Promoters can be transferred to and amongst our Promoters or any person of the Promoter Group or to a new promoter or person in control of our Company, subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with the Takeover Regulations as applicable.

The Equity Shares held by our Promoters, which are locked-in for a period of three years from the date of Allotment in the Issue can be pledged with any scheduled commercial bank or public financial institution as collateral security for loans granted by such banks or financial institutions, provided that the pledge of the Equity Shares can be created when the loan has been granted by such banks or financial institutions for financing one or more of the objects of the Issue and pledge of Equity Shares is one of the terms of sanction of the loan. The Equity Shares held by our Promoters which are locked-in for a period of one year from the date of Allotment in the Issue can be pledged with any scheduled commercial bank or public financial institution as collateral security for loans granted by such bank or financial institution, provided that pledge of Equity Shares is one of the terms of sanction of the loan. Any Equity Shares Allotted to Anchor Investors in the Anchor Investor Portion shall be locked-in for a period of 30 days from the date of Allotment of Equity Shares in the Issue.

73

5. The shareholding pattern of our Company

The table below presents the shareholding pattern of our Company before the proposed Issue and as adjusted for the Issue:

Category of Shareholder

No. of Share holders

Pre-Issue Shareholding Post – Issue Shareholding# Shares pledged or otherwise encumbered

Total No. of Shares

Total No. of Shares

held in Demat Form

Total Shareholding as a % of total No.

of Shares

Total No. of Shares

Total Shareholding as a % of total No. of

Shares

Number of shares

As a % of Total

No. of Shares

As a % of

(A+B)

As a % of (A+B+C)

As a % of (A+B)

As a % of (A+B+C)

(A) Shareholding of Promoter and Promoter Group

(1) Indian Individuals / Hindu Undivided Family

8 17,591,426 - 61.34 61.34 17,591,426 41.82 41.82 N.A. N.A.

Central Government/ State Governments

N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Bodies Corporate

1 4,194,200 - 14.62 14.62 4,194,200 9.97 9.97 N.A. N.A.

Financial Institutions/ Banks


Any other (specify)


Sub Total 9 21,785,626 - 75.96 75.96 21,785,626 51.79 51.79 N.A. N.A. (2) Foreign Individuals (Non-Resident Individuals/ Foreign Individuals)

1 6,008,000 - 20.95 20.95 6,008,000 14.28 14.28 N.A. N.A.

Bodies Corporate


Institutions N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.Any other (specify)


Sub Total 1 6,008,000 - 20.95 20.95 6,008,000 14.28 14.28 N.A. N.A.Total shareholding of Promoter and Promoter Group (A)

10 27,793,626 - 96.91 96.91 27,793,626 66.07 66.07 N.A. N.A.

(B) Public Shareholding

(1) Institutions

Mutual Funds / UTI

N.A. N.A. N.A. N.A. N.A.N.A. N.A.

N.A.

N.A. N.A.

Financial Institutions / Banks

N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Central Government / State Government(s)


Venture Capital Funds


Insurance Companies


Foreign Institutional Investors


Foreign Venture Capital Investors


Any other (specify)


Sub Total N.A. N.A. N.A. N.A. N.A. N.A. N.A. (2) Non-Institutions

Bodies Corporate


Individuals Individual shareholders holding nominal share


74

Category of Shareholder

No. of Share holders

Pre-Issue Shareholding Post – Issue Shareholding# Shares pledged or otherwise encumbered

Total No. of Shares

Total No. of Shares

held in Demat Form

Total Shareholding as a % of total No.

of Shares

Total No. of Shares

Total Shareholding as a % of total No. of

Shares

Number of shares

As a % of Total

No. of Shares

As a % of

(A+B)

As a % of (A+B+C)

As a % of (A+B)

As a % of (A+B+C)

capital up to ` 1 lakh Individual shareholders holding nominal share capital in excess of ` 1 lakh

7 885,740 - 3.09 3.09 885,740 2.11 2.11 N.A. N.A.

Any Others (Specify)

Non Resident Indians


Trusts N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.Clearing Members


Overseas Corporate Bodies


Foreign Corporate Bodies


Foreign Nationals


Sub Total 7 885,740 - 3.09 3.09 885,740 2.11 2.11 N.A. N.A.Total Public shareholding (B)

7 885,740 - 3.09 3.09 885,740 2.11 2.11 N.A. N.A.

Total (A)+(B) 17 28,679,366 - 100.0 100.0 28,679,366 68.18 68.18 N.A. N.A.(C) Shares held by custodians and against which Depository Receipts have been issued

(1) Promoter and Promoter Group


(2) Public N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.(D) Pursuant to the Issue*

N.A. N.A. N.A. N.A. N.A. 13,384,826 31.82 31.82 N.A. N.A.

Total (A)+(B)+(C)+(D)

17 28,679,366 - 100.0 100.0 42,064,192 100.0 100.0 N.A. N.A.

#Based on the assumption that non-Promoter Group shareholders do not apply for, and are not Allotted Equity Shares in terms of the Issue. None of our Promoters and Promoter Group will participate in the Issue. * Our Company is considering a Pre-IPO Placement of upto 2,790,000 Equity Shares and / or aggregating upto ` 600 million with certain investors. The Pre-IPO Placement is at the discretion of our Company. Our Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPO Placement, if any, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the Issue size will be reduced to the extent of such Pre-IPO Placement, subject to the Issue size constituting at least 25 % of the post-Issue paid-up equity share capital of our Company.

6. Shareholding of our Promoter Group

The table below presents the shareholding of our Promoter Group, who holds Equity Shares as on the date of filing of this Draft Red Herring Prospectus:

Shareholder Pre-Issue Post-Issue No. of Equity

Shares held

Percentage of total paid-up

capital

No. of Equity Shares held


capitalSmit Ramesh Virani 6,008,000 20.95% 6,008,000 14.28% Kishore Virani 4,190,120 14.61% 4,190,120 9.96% Anil Virani 3,212,630 11.20% 3,212,630 7.64% Bhavesh Jadeja 197,516 0.69% 197,516 0.47% Jagdishsinh Jadeja 127,700 0.45% 127,700 0.30% Vijay Zala 43,900 0.15% 43,900 0.10% Total 13,779,866 48.05% 13,779,866 32.76%

75

7. Shareholding of directors of our Corporate Promoter

The table below presents the shareholding of directors of our Corporate Promoter, who holds Equity Shares as on the date of filing of this Draft Red Herring Prospectus:

Shareholder Pre-Issue Post-Issue

No. of Equity

Shares held


capital



capitalParakramsinh Jadeja 7,572,980 26.41% 7,572,980 18.00% Vikramsinh Jadeja 909,500 3.17% 909,500 2.16% Total 8,482,480 29.58% 8,482,480 20.16%

8. Public Shareholders holding more than 1% of the pre-issue paid-up capital of our Company

Shareholder Pre-Issue Post-Issue No. of Equity Shares

held


capital



capital

Kaushik Solanki 288,940 1.01% 288,940 0.69% Shyamalram Shekharan 338,800 1.18% 338,800 0.81%

9. Top 10 Shareholders:

The list of top 10 shareholders of our Company and the number of Equity Shares held by them is as under:

(a) As on the date of this Draft Red Herring Prospectus:

Shareholder No. of Equity Shares held Percentage of

total paid-up capital

(Pre Issue) Parakramsinh Jadeja 7,572,980 26.41% Smit Ramesh Virani 6,008,000 20.95% Jyoti International Private Limited 4,194,200 14.62% Kishore Virani 4,190,120 14.61% Anil Virani 3,212,630 11.20% Sahdevsinh Jadeja 1,337,080 4.66% Vikramsinh Rana 909,500 3.17% Shyamalram Shekharan 338,800 1.18% Kaushik Solanki 288,940 1.01% Bhavesh Jadeja 197,516 0.69%

(b) As of 10 days prior to the date of this Draft Red Herring Prospectus:

Shareholder No. of Equity Shares held Percentage of

total paid-up capital

(Pre Issue) Parakramsinh Jadeja 7,572,980 26.41% Smit Ramesh Virani 6,008,000 20.95% Jyoti International Private Limited 4,194,200 14.62% Kishore Virani 4,190,120 14.61% Anil Virani 3,212,630 11.20% Sahdevsinh Jadeja 1,337,080 4.66% Vikramsinh Rana 909,500 3.17% Shyamalram Shekharan 338,800 1.18% Kaushik Solanki 288,940 1.01% Bhavesh Jadeja 197,516 0.69%

(c) Two years prior to the date of this Draft Red Herring Prospectus:

76

Shareholder



capital (Pre Issue)

Parakramsinh Jadeja 2,668,250 23.94% Smit Ramesh Virani 2,140,000 19.20% Kishore Virani 1,718,000 15.41% Anil Virani 1,602,000 14.37% Jyoti International Private Limited 828,000 7.43% Sahdevsinh Jadeja 445,050 3.99% Vikramsinh Rana 357,850 3.21% Rajshree Jadeja 287,490 2.58% Ghanshyamsinh Jadeja 213,900 1.92% Lalubha Jadeja 181,800 1.63%

10. Our Company does not have any Employee Stock Option Scheme or Employee Stock

Purchase Scheme. 11. Our Company, Promoters, Directors and the BRLMs have not entered into any buy-back

arrangements and/ or safety net facility for the purchase of Equity Shares from any person.

12. Except as stated in the sections titled “Capital Structure” and “Management” on pages

65 and 162, none of the Directors or the key management personnel holds any Equity Shares in our Company.

13. Except as stated below, there has been no allotment of Equity Shares that may be at a price lower than the Issue Price within the last 12 months from the date of filing this Draft Red Herring Prospectus: Date of Allotment

No of Equity Shares

Face Value (in `)

Issue Price (in `)

Reasons Description

March 31, 2012 556,000 10 125

Further Allotment

Issue of Equity Shares to Parakramsinh Jadeja

March 31, 2012 19,200 10 125 Further

Allotment Issue of Equity Shares to Sahdevsinh Jadeja

March 31, 2012 764,000 10 125

Further Allotment


March 31, 2012 8,000 10 125 Further

Allotment Issue of Equity Shares to Bindiya Solanki

March 31, 2012 7,200 10 125 Further

Allotment Issue of Equity Shares to Chaitanya Solanki

March 31, 2012 8,000 10 125

Further Allotment

Issue of Equity Shares to Chaitanya Solanki HUF

March 31, 2012 864,000 10 125

Further Allotment

Issue of Equity Shares to Smit Ramesh Virani

March 31, 2012 4,315 10 125 Further

Allotment Issue of Equity Shares to Anil Virani

March 31, 2012 377,060 10 125 Further

Allotment Issue of Equity Shares to Kishore Virani

September 22, 2012 80,000 10 125

Further Allotment

Issue of Equity Shares to Parakramsinh Jadeja

September 22, 2012 1,13,000 10 125

Further Allotment


September 24, 2012 13,947,583 10 -

Bonus in the ratio of

1:1

Bonus Issue to all existing Equity Shareholders of our Company

December 31, 2012 69,750 10 215 Further

Allotment


February 16, 714,450 10 215 Further Issue of Equity Shares

77

2013 Allotment to Jyoti International Private Limited

14. Except as stated below none of our Promoters, Promoter Group, the Directors and their

immediate relatives, have purchased or sold any Equity Shares during a period of six months preceding the date on which this Draft Red Herring Prospectus has been filed with the SEBI.

Sr. No. Transferee Date of

Transaction

No of Equity Shares

Price (`)

Nature of Transaction Transferor

1 Bhavesh Jadeja September 22, 2012 1 501 Transfer Babita Pankaj

Rathod

2 Bhavesh Jadeja September 22, 2012 1 501 Transfer Basant Fulchand

3 Bhavesh Jadeja September 22, 2012 1 501 Transfer Mahendra Fulchand

4 Bhavesh Jadeja September 22, 2012 1 501 Transfer Popatlal Fulchand

5 Bhavesh Jadeja September 22, 2012 1 501 Transfer Regal Computer

Systems Pvt Ltd

6 Bhavesh Jadeja September 22, 2012 1 501 Transfer Samir Nandlal Shah

7 Bhavesh Jadeja September 22, 2012 1 501 Transfer Sangeeta Pradeep

Rathod

8 Bhavesh Jadeja September 22, 2012 1 501 Transfer Subhash Fulchand

9 Parakramsinh Jadeja September 22, 2012 213,900 - Gift Ghanshyamsinh

Jadeja

10 Parakramsinh Jadeja September 22, 2012 367,490 - Gift Rajshree Jadeja

11 Parakramsinh Jadeja September 22, 2012 53,250 - Gift Ramnik Jadeja

12 Rajshree Jadeja September 21, 2012 80,000 - Gift Vijay Zala

13 Sahdevsinh Jadeja September 22, 2012 22,490 - Gift Jyoti Jadeja

14 Sahdevsinh Jadeja September 22, 2012 181,800 - Gift Lalubha Jadeja

15 Vikramsinh Rana September 22, 2012 96,900 - Gift Daksha Rana

15. Except as stated below, none of our Promoters, Promoter Group or our Directors have

purchased/subscribed any securities of our Company within three years immediately preceding the date of filing this Draft Red Herring Prospectus with SEBI which in aggregate is equal to or greater than 1% of Pre-Issue capital of our Company:

Sr. No.

Name of the Share holder

Promoter/Promoter Group/Director

Date Nature of Transaction

No. of Shares Purchased/Subscribed

% of Pre-Issue Paid-up Capital

1 ParakramsinhJadeja

Promoter September 22, 2012

Further Allotment 80,000 0.28%

March 31, 2012


September 22, 2012

Gift of shares from Ghanshyamsinh Jadeja

213,900 0.75%

September 22, 2012

Gift of shares from Rajshree Jadeja

367,490 1.28%

September 22, 2012

Gift of shares from Ramnik Jadeja

53,250 0.19%

September 24, 2012

Bonus Issue in the ratio 1:1

3,786,490 13.20%

5,057,130 17.63% 2 Smit Ramesh

Virani Promoter Group

March 31, 2012


78

September 24, 2012


3,004,000 10.47%

3,868,000 13.48% 3 Jyoti

International Private Limited

Promoter September 22, 2012


March 31, 2012


September 24, 2012


1,705,000 5.95%

December 31, 2012


February 16, 2013


3,366,200 11.74%

4 Kishore Virani

Promoter Group

March 31, 2012


September 24, 2012


2,095,060 7.31%

2,472,120 8.62% 5 Anil Virani Promoter

Group March 31, 2012


September 24, 2012


1,606,315 5.60%

1,610,630 5.62% 6 Sahdevsinh

Jadeja Promoter March 31,

2012 Further Allotment 19,200 0.07%

September 22, 2012

Gift of shares from Jyoti Jadeja

22,490 0.08%

September 22, 2012

Gift of shares from Lalubha Jadeja

181,800 0.63%

September 24, 2012


668,540 2.33%

892,030 3.11% 7 Vikramsinh

Rana Promoter September 22,

2012 Gift of shares from Daksha Rana

96,900 0.34%

September 24, 2012


454,750 1.59%

551,650 1.93% Further, except as stated below, none of our Promoters, Promoter Group or our Directors have sold any securities of our Company within three years immediately preceding the date of filing this Draft Red Herring Prospectus with SEBI which in aggregate is equal to or greater than 1% of Pre-Issue capital of our Company:

Sr. No.

Name of the Share holder

Promoter/Promoter Group/Director

Date Nature of Transaction

No. of Shares sold

% of Pre-Issue Paid-up Capital

1 Rajshree Jadeja

Promoter Group

September 22, 2012

Gift of shares to Parakramsinh Jadeja

367,490 1.28%

367,490 1.28% 16. No person connected with the Issue shall offer any incentive, whether direct or indirect,

in any manner, whether in cash, kind, services or otherwise, to any Bidder.

17. In terms of the SEBI Regulations, the Issue is being made through the Book Building Process where at least 75% of the Issue will be allocated on a proportionate basis to QIBs (the “QIB Portion”), provided that our Company may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the “Anchor Investor Portion”), of which one-third shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Issue Price. Further, 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to all QIBs including Mutual Funds, subject to valid Bids being received from them at or above the Issue Price. If at least 75% of the Issue cannot be allocated to QIBs, then the entire application money will be

79

refunded forthwith. Further, not more than 15% of the Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not more than 10% of the Issue will be available for allocation to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price.

18. If at least 75% of the Issue cannot be allotted to QIBs, the entire application money shall be refunded. In the event aggregate demand in the QIB Portion has been met, under subscription, if any, would be allowed to be met with spill-over from any other categories or combination of categories at the discretion of our Company in consultation with the BRLMs and the Designated Stock Exchange.

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

20. An oversubscription to the extent of 10% of the Issue can be retained for the purposes of

rounding off to the nearer multiple of minimum Allotment lot.

21. Our Company has not raised any bridge loan against the proceeds of the Issue. For details on the use of proceeds, see section titled “Objects of the Issue” on page 80.

22. Subject to the Pre-IPO Placement, there will be no further issue of Equity Shares, whether

by way of issue of bonus shares, preferential allotment, rights issue or in any other manner during the period commencing from the submission of this Draft Red Herring Prospectus with SEBI until the Equity Shares have been listed.

23. Our Company presently does not intend or propose to alter the capital structure for a

period of six months from the Bid/Issue Opening Date, by way of split or consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly or indirectly for Equity Shares) whether on a preferential basis or issue of bonus or rights or further public issue of specified securities or qualified institutions placement or otherwise. However, if our Company enters into acquisitions, joint ventures or other arrangements, our Company may, subject to necessary approvals, consider raising additional capital to fund such activity or use Equity Shares as currency for acquisitions or participation in such joint ventures.

24. There shall be only one denomination of the Equity Shares, unless otherwise permitted by

law. Our Company shall comply with such disclosure and accounting norms as may be specified by SEBI from time to time.

25. None of our Promoters or the Promoter Group will participate in the Issue.

26. Our Company has 17 members as of the date of this Draft Red Herring Prospectus. 27. Our Company has not issued any Equity Shares out of revaluation reserves.

28. All Equity Shares will be fully paid-up at the time of Allotment failing which no

Allotment shall be made to the applicant.

29. There have been no financial arrangements whereby the Promoter Group, the Directors and their relatives have financed the purchase by any other person of securities of our Company, other than in the normal course of the business of the financing entity during a period of six months preceding the date of this Draft Red Herring Prospectus.

30. The BRLMs or associates of the BRLMs do not hold any Equity Shares in our Company.

80

OBJECTS OF THE ISSUE The proceeds of the Issue, after deducting the Issue related expenses (“Net Proceeds”) are estimated to be approximately ` [●]. Our Company intends to utilise the Net Proceeds for the following objects: 1. Expansion of capacity at our manufacturing facility; 2. Construction/ extension of office building, R&D centre and centre for excellence; 3. Prepayment of certain indebtedness; 4. Funding long term working capital requirements of our Company; 5. Equity investment in our subsidiary, Jyoti S. A. S. for prepayment of indebtedness; and 6. General corporate purposes. The details of the Issue Proceeds are summarised in the table below:

Particulars Amount (In ` million) Issue Proceeds [●](1) Less: Issue related expenses [●](1) Net Proceeds [●](1)

(1) To be finalised upon determination of the Issue Price. Further, we believe that, as a growing company, accessing the equity capital markets will be an effective source for meeting our long term funding requirements and that the listing of our Equity Shares will enhance our visibility and brand name among our existing and potential consumers. The main objects clause of our Memorandum of Association enables us to undertake the activities for which the funds are being raised by us in the Issue. Further, the activities we have been carrying out until now are in accordance with the main objects clause of our Memorandum of Association. Utilisation of the Net Proceeds and Deployment of Funds The Net Proceeds will be utilised in accordance with the table set forth below: S.

No. Particulars Amount (In `

million)

Estimated Schedule of

Deployment of Net Proceeds as

on March 31, 2014 (In ` million)

Estimated Schedule of

Deployment of Net Proceeds as

on March 31, 2015 (In ` million)

1. Expansion of capacity at our manufacturing facility

1,267.68 960.17 307.51

2. Construction/ extension of office building, R&D centre and centre for excellence

90.16 - 90.16

3. Prepayment of certain indebtedness

285.30 285.30 -

4. Funding long term working capital requirements of our Company

400.00 400.00 -

5. Equity investment in our subsidiary, Jyoti S.A.S. for prepayment of indebtedness.

244.15 244.15 -

6. General corporate purposes [●](1) [●](1) [●](1)

Total [●](1) [●](1) [●](1)

(1)To be finalised upon determination of the Issue Price. The fund requirements and deployment, as discussed below, are based on internal management estimates in light of the current requirements of our business and are subject to change in light of changes in external circumstances or costs, or in our financial condition, business or strategy, as discussed further below. Our management, in response to the competitive and dynamic nature of the industry, will have the discretion to revise its business plan and estimates from time to time and consequently our funding requirements and deployment of funds may also change. This may

81

also include rescheduling the proposed utilization of Net Proceeds and increasing or decreasing expenditure for a particular object vis-à-vis the utilization of Net Proceeds, subject to compliance with applicable law. Our Company’s historical capital and operational expenditure may not be reflective of our future expenditure plans. We may have to revise our estimated costs, fund allocation and fund requirements owing to factors such as economic and business conditions, increased competition and other external factors which may not be within the control of our management. This may entail rescheduling or revising the planned expenditure and funding requirements, including the expenditure for a particular purpose at the discretion of our management. In case of any increase in the actual utilization of funds earmarked for the objects, such additional funds for a particular activity will be met by way of means available to our Company, including from internal accruals and any additional equity and/or debt arrangements. If the actual utilization towards any of the objects is lower than the proposed deployment such balance will be used for future growth opportunities including funding existing objects, if required and general corporate purposes. Our Company is in compliance with the regulation 4 (2) (g) of the SEBI Regulations for firm arrangements of finance through verifiable means towards 75% of the stated means of finance, excluding the amount to be raised through the Issue. Details of the Objects 1. Expansion of capacity at our manufacturing facility We are engaged in the production of CNC machines and offer a wide range of CNC metal cutting products for both Turning and Milling operations, from the entry level to high-end machines. For further details, please see the section “Business” on page 130 of this Draft Red Herring Prospectus. We operate from 5 manufacturing facilities, 3 in Rajkot, India and 2 in Strasbourg, France. We are an integrated CNC machine manufacturer with design, development and manufacturing most of the critical components in-house. We have a captive foundry, machining, sheet metal unit, paint shop and assembly unit. In order to achieve our growth strategy of expanding our customer base and tapping the domestic and global markets for our products, we propose to undertake a capacity expansion and modernization program at our manufacturing facilities in Rajkot and plan to increase our manufacturing capacity in India from the existing 2,500 machines per annum to 4,000 machines per annum. The total funds required for the said object is approximately ` 1,267.68 million. The detailed break-up of the said object is provided below: Sr. No. Particulars Estimated Total

Cost (In ` million) 1 Expansion of our machine shop 970.542 Expansion of our foundry 196.233 Purchase of measuring equipments for assembly and civil works

for extension of sub assembly 31.22

4 Purchase of machinery and equipments for the sheet metal division

69.69

Total 1,267.68 Expansion of our machine shop We undertake manufacturing of critical components in-house for our machines. To manufacture these components, we have a machine shop to undertake various machining operations like turning, milling, drilling, tapping and boring. We propose to utilise ` 970.54 million for expanding our machine shop which includes ` 20.35 million for the civil works for extension of machine shop and ` 950.19 million for purchasing CNC machines and equipments and toolings for the machine shop.

82

Civil works for extension of machine shop The cost of civil works for extension of machine shop situated at unit no. 1 in Rajkot has been estimated at ` 20.35 million based on estimates provided by SMPS Consultants Private Limited vide letter dated January 03, 2013. The civil works shall comprise extension of machine shop area, road work, electrical work and other related expenditure. The detailed break-up of expenditure for the said civil works is provided below: Sr. No. Particulars Estimated cost in `

million 1 Civil works – buildings 16.732 Civil works - roads 0.203 Electrical works 2.004 Contingency at 7.5% 1.42 Total 20.35

Purchase of CNC machines for the machine shop We intend to utilise ` 815.41 million on purchasing CNC machines for the machine shop for which CNC machines are proposed to be manufactured in-house, procured from our subsidiary, Huron Graffenstadden S. A. S. and sourced from other suppliers. CNC machines we will manufacture in-house: Particulars Quantity (Nos) Total Price in `

million*# Multi tasking machine TMX-200 2 28.12 CNC vertical line series ATM-160 (turn mill machine)

1 5.76

Turning center (DX -500) 1 8.85 Vertical machining center (SX-6) 2 8.15 Horizontal machining center (HMC 560) 6 93.71 Horizontal machining center (HMC 860) 4 80.61 Vertical machining center (NX 4222) 4 60.69 Total 20 285.89 * Inclusive of excise duty. #Since these machines will be manufactured in-house, we have not considered the profit element while computing the price for procuring these machines. CNC machines we will procure from our subsidiary, Huron Graffenstadden S. A. S.: Particulars Quantity (Nos) Total Price in `

million*# MX 12-5 axis machining center 2 114.44(1) KX-300 machining center 2 152.19(1) Total 4 266.64 * Inclusive of packing & forwarding charges, freight, insurance and transportation charges payable. #Since these machines will be procured from our subsidiary Huron, we have not considered the profit element while computing the price for procuring these machines. (1) The cost of the machine is available in Euro. For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325. CNC machines we will procure from suppliers: Particulars Quotation Quantity

(Nos) Total Price in

` million* High speed multi center RB-4NM/CS Dated January

25, 2013 from Shin Nippon Koki Co Ltd

1 63.06(1)

Precision guideway and surface grinding machine (WayGrind 2500 FC)

Dated August 23, 2012 from WALDRICH

1 199.82(2)

83

COBURG GmbH

Total 2 262.88 * Inclusive of packing & forwarding charges, freight, insurance, transportation charges payable. (1) Quotation received is in Japanese Yen. For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Yen = ` 0.5866. (2) Quotation received is in Euro. For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325. Purchase of equipments and toolings for the machine shop We intend to utilise ` 134.78 million to purchase the following equipments and toolings for the machine shop:

Particulars Quotation Quantity (Nos)

Total Price in ` million*

INDIset400 tool presetter with accessories

Dated February 01, 2013 from Zoller India Private Limited

1 1.50

Power Clamp Preset NG shrink fit machine (part no. 80.130.00 NG)

Dated February 01, 2013 from Haimer India Private Limited

2 2.72

Various machine toolings for TMX 200 – VDI 40 and ATM -160 machines

Dated February 01, 2013 from Sandvik Asia Private Limited

8.29

Various machine toolings for the CNC machines

Dated February 01, 2013 from Seco Tools India Private Limited

49.07

Godrej Counterbalance stacker - Model GCS 1545 (1500 kgs @ 600 mm Load Centre)

Dated September 15, 2012 from Jay Engineers

4 4.45

BAKA make Battery operated stacker model EGV 1600-63

Dated February 02, 2013 from Gloline Equipment Private Limited

1 0.96

Pallet racks

Dated September 22, 2012 from Godrej & Boyce Mfg. Co. Ltd

1 12.04

3D CNC Co-ordinate Measuring Machine (Accura II 12/18/10 scanning sensor system) with accessories and Gear wheel measuring software

Dated February 01, 2013 from Carl Zeiss India (Bangalore) Private Limited

1 16.81(1)

XL80 Laser System with accessories and XR20-W KIT

Dated February 01, 2013 from Renishaw Plc

2 7.52(1)

QC20-W Ballbar System with accessories

Dated February 01, 2013 from Renishaw Plc

5 4.18(1)

Crown Pedestrian Stacker Model ES 4000 – 1.6 TT and higher battery capacity compartment 24V/375 Ah

Dated February 05, 2013 from Godrej & Boyce Mfg. Co.

Ltd

1 1.31(1)

Battery and charger for Crown Pedestrian Stacker

1 0.14

TSK Equipment (Countourecord 1710SD-13) Dated February 01, 1 2.82(2)

84

2013 from Carl Zeiss India (Bangalore) Private Limited

Ultra autocollimator with accessories

Dated February 01, 2013 from Taylor Hobson Limited

5 12.56(3)

Measuring equipments Dated January 21, 2013 from Hemant

Tools Private Limited

3.85

Dated January 22, 2013 from Pramukh

Instruments & Tools

0.29

Dated January 24, 2013 from Micro-Flat Datums Pvt

Ltd

2.91

Dated January 25, 2013 from Electronica

Mechatronic Systems (India)

Pvt Ltd

0.76

Company estimates

2.60

Total 134.78 * Inclusive of packing & forwarding charges, freight, insurance and transportation charges payable and VAT/CST and excise duty where applicable. (1) Quotation received is in Euro. For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325. (2) Quotation received is in Japanese Yen. For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Yen = ` 0.5866. (3)Quotation received is in Pound. For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Pound = ` 84.2233.

Expansion of our foundry Our present foundry has an integrated mechanized moulding loop line with sand reclamation plant and induction furnaces with shot-blasting and modern testing facilities to ensure quality castings. To support the expansion in our manufacturing capacity we propose to increase the capacity of our foundry from 900MT per month to 1,500 MT per month. The increase in capacity will be achieved by adding 2000 KW/ 500 Hz induction melting furnaces with 2 melting furnaces with a capacity of 5 MT which will increase the melting capacity. We also propose to acquire a sand mixer with a capacity of 45 ton/hour which will help us to manufacture large castings upto 20 tons. We also intend to purchase a thermal reclamation unit with a capacity of 2 Ton/ hour. The main purpose of this unit is for reclaiming the sand lost during mixing and to dispose the balance unusable sand which will be without any chemicals. The expanded foundry area will also house a room type shot blasting machine which is required for getting better quality castings. We also propose to purchase a 10 ton bottom pouring ladle. We propose to utilise ` 196.23 million towards expansion of our foundry which includes ` 90.75 million for the civil works and ` 105.48 million for purchasing machines and equipments for the foundry. Civil works for extension of foundry The cost of civil works for extension of foundry situated at unit no. 3 in Rajkot has been estimated at ` 90.75 million based on estimates provided by SMPS Consultants Private Limited vide letter dated January 03, 2013. The civil works shall comprise extension of the foundry area and fettling

85

shed, road work, electrical work and other related expenditure. The detailed break-up of expenditure for the said civil works is provided below: Sr. No. Particulars Estimated cost in `

million 1 Foundry area 33.122 Extension of fettling shed 15.30 Civil works – buildings 48.423 Civil works - roads 1.504 Electrical works 34.505 Contingency at 7.5% 6.33 Total 90.75

Purchase of machines and equipments for the foundry

Machinery Quotation Total Price in ` million*

2000 KW/500 Hz VIP Dual Trak PLUS-R-PI Power and Control System, 2 5000 kg Duraline furnaces, 2 lid covers and other auxiliaries such as pumps, cooling tower, furnace transformer and external plate type heat exchangers

Dated September 10, 2012 from Inductotherm (India) Private Limited 15.69

Spartan 345AB/8.2 mts continuous sand mixer including powering to jib and trough on mixer, stand alone control, fumematic unit, 4 way pneumatic sand blending gate, gamma vibratory attrition unit, cooler classifier, pressure vessel, electric control panel and manual flood coat

Dated September 11, 2012 from Omega Foundry Machinery Ltd

18.37(1)

Other equipments for sand mixing including hopper, dust collector and ducting, water cooling tower, pumps, pipeline, pneumatic sand conveying pipe line and bends, electrical connections and wiring, and vent filter

Dated September 14, 2012 from Gargi Engg Entps Pvt. Ltd

7.94

2 ton/hour thermal reclamation plant including vibratory screen, ferrite magnetic separator, pneumatic conveying pressure vessel, vibratory tray feeder, heat exchanger/cooler classifier and electrical control cabinet

Dated August 24,2012 from Omega Foundry Machinery Ltd

28.20(1)

Other equipments for thermal reclamation unit including water cooling system, dust extraction unit, discharge pipe, hopper and cleaning tower

Dated September 11, 2012 from Omega Foundry Machinery Ltd and September 14, 2012 from Gargi Engg Entps Pvt. Ltd

4.00

Air compressors including filter grade, dryer model and air receiver tank

Dated September 11, 2012 from P. Prabhudas & Co

2.79

Double girder EOT Cranes for safe area having capacity of 50 ton, 25 ton and 5 ton

Dated September 12, 2012 from Safex Electromech Private Limited

24.57

Blast room system including shot blasting room plant, rubber lining, hopper with screw, bucket belt, pressure pot, safety wears, dust collector model and electrical control panel

Dated September 12, 2012 from Patel Furnace & Forging Private Limited

1.90

Manually operated trolley of 15 ton capacity for Blast room system

Dated September 25, 2012 from Aryan Enterprise

0.37

Bottom pouring ladle 10 ton capacity

Dated February 14, 2013 from Baroda Machinery MFRS Private Limited

1.65

Total 105.48

86

* Inclusive of packing & forwarding charges, freight, insurance and transportation charges payable and VAT/CST and excise duty where applicable. (1)Quotation received is in Pound. For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Pound = ` 84.2233. Purchase of measuring equipments for assembly and civil works for extension of sub assembly Purchase of measuring equipments for assembly We intend to utilise ` 6.94 million to purchase the measuring equipments for assembly:

Quotation Total Price in ` million*

Dated January 25, 2013 from Electronica Mechatronic Systems (India) Pvt Ltd 1.13 Dated January 24, 2013 from Micro-Flat Datums Pvt Ltd 1.25 Dated January 22, 2013 from Pramukh Instruments & Tools 0.84 Dated January 21, 2013 from Hemant Tools Private Limited 1.75 Dated January 24, 2013 from Jay Engineers 0.60 Dated January 09, 2013 from Safelink Agencies Private Limited 0.52 Dated January 24, 2013 from Trimos Metrology (I) Private Limited 0.68 Dated January 24, 2013 from Siddhi Precision Components And Accessories Private Limited

0.16

Total 6.94 * Inclusive of packing & forwarding charges, freight, insurance and transportation charges payable and VAT/CST and excise duty where applicable. Civil works for extension of sub assembly The cost of civil works for extension of sub assembly situated at unit no. 3 in Rajkot has been estimated at ` 24.28 million based on estimates provided by SMPS Consultants Private Limited vide letter dated January 03, 2013. The civil works shall comprise extension of the sub assembly area, road work, electrical work and other related expenditure. The detailed break-up of expenditure for the said civil works is provided below: Sr. No. Particulars Estimated cost in `

million 1 Civil works – buildings 16.142 Electrical works 3.083 Air conditioning works 3.374 Contingency at 7.5% 1.69 Total 24.28

Purchase of machinery and equipments for the sheet metal division

We propose to utilise ` 69.69 million towards the purchase of following machines for the sheet metal division:

Machinery Quotation Quantity (Nos)

Total Price in ` million*

Trulaser 5030 fiber (L41) with SINUMERIK 840D control and related accessories

Dated September 12, 2012 from TRUMPF (India) Private Limited

1 52.22(1)

TruBend 5130 with related accessories

Dated September 13, 2012 from TRUMPF (India) Private Limited

1

16.52(1)

Single Girder EOT Crane (SWL – 2 ton X 18m span x 6m lift)

Dated September 15, 2012 from Safex Electromech Private Limited

1

0.95

Total 69.69

87

* Inclusive of packing & forwarding charges, freight, insurance and transportation charges payable and VAT/CST and excise duty where applicable. (1) Quotation received is in Euro. For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325 2. Construction/ extension of office building, R&D centre and centre for excellence

The cost of civil works for extension of office building situated at unit no 1, extension of R & D centre situated at unit no 3, extension of chiller & compressor area, construction of warehouse for storage of CNC controller, construction of centre for excellence and installation of 66 KV switchyard at unit no. 3 in Rajkot has been estimated at ` 90.16 million based on estimates provided by SMPS Consultants Private Limited vide its letter dated January 03, 2013. The detailed break-up of expenditure for the said civil works is provided below: Sr. No. Particulars Estimated cost in `

million 1 Extension of office building 21.472 Extension of R & D centre 16.303 Extension of chiller & compressor area and construction of

warehouse for storage of CNC controller 5.02

4 Construction of centre for excellence 27.485 Installation of 66 KV switchyard 19.89 Total 90.16

Civil works for extension of office building The detailed break-up of expenditure for the said civil works is provided below: Sr. No. Particulars Estimated cost in `

million 1 Civil works – buildings 14.052 Civil works - roads 0.253 Electrical works 2.004 Air conditioning works 3.675 Contingency at 7.5% 1.50 Total 21.47

Civil works for extension of R & D centre The detailed break-up of expenditure for the said civil works is provided below: Sr. No. Particulars Estimated cost in `

million 1 Civil works – buildings 11.592 Electrical works 2.003 Air conditioning works 1.574 Contingency at 7.5% 1.14 Total 16.30

Civil works for extension of chiller & compressor area and construction of warehouse for storage of CNC controller supplied

The detailed break-up of expenditure for the said civil works is provided below:

Sr. No. Particulars Estimated cost in `

million 1 Civil works – buildings (chiller and compressor area and

warehouse) 4.22

2 Civil works - roads 0.203 Electrical works 0.254 Contingency at 7.5% 0.35 Total 5.02

88

Civil works for construction of centre for excellence The detailed break-up of expenditure for the said civil works is provided below: Sr. No. Particulars Estimated cost in `

million 1 Civil works – buildings 17.562 Civil works - roads 0.273 Electrical works 3.004 Air conditioning works 4.735 Contingency at 7.5% 1.92 Total 27.48

Installation of 66 KV switchyard The detailed break-up of expenditure for the said works is provided below:

Sr. No.

Particulars Quantity Estimated cost in ` million

1 66KV SF6 Breaker 1 0.542 66KV Isolator (a) with earth switch 1 0.19 (b) without earth switch 2 0.343 66KV CT (a) For GEB 3 0.32 (b) For Metering/Protection 3 0.254 66KV PT (a) For GEB 3 0.28 (b) For Metering/Protection 3 0.275 Lightning Arrestor 6 0.186 Steel Structure for installation of 66KV switchyard 10 0.787 Misc equipment for 66 KV switchyard like battery

charger / AC DB / Relay & Control Panel 1.10

8 11KV HT VCB panel 4 1.649 H.T. / L.T. cables for switchyard area 0.8510 Earthing / Lighting Work - Inside Control Room &

Yard Area 0.75

11 Civil work for foundation of equipment & control room

4.50

12 66/11KV, 10 MVA transformer 6.7013 H.T. cable from switch yard to different location 1.20 Total 19.89

3. Prepayment of certain indebtedness Our Company has entered into various financing arrangements with banks and other lenders. We intend to utilize up to ` 285.30 million from the Net Proceeds towards prepayment of certain term loans of our Company that would be outstanding as of June 30, 2013. As on the date of filing of this Draft Red Herring Prospectus, the details of the term loan facilities intended to be prepaid from the Net Proceeds in the financial year 2014 are provided below: Name of the Lender

Nature of loan facility

Sanctioned Amount (` in million)

Rate of Interest

Repayment schedule^

Prepayment charges

End use

Outstanding as of January 31, 2013#

(` in million)

Outstanding as of June 30, 2013 (` in million)

Corporation Bank

Term loan (80012)

91.50(1) CB BR + 3.50 %

15 quarterly instalments of `

- To part finance the expansi

92.60 61.10

89

Name of the Lender


Sanctioned Amount (` in million)

Rate of Interest

Repayment schedule^

Prepayment charges

End use

Outstanding as of January 31, 2013#

(` in million)

Outstanding as of June 30, 2013 (` in million)

p.a. 15.20 million each from August 19, 2010 and last instalment of ` 15.50 million.

on project

Term loan (110009)

97.90(1) CB BR + 3.50 % p.a.

Repayable in 16 quarterly instalments.

- To part finance the capex

94.90 81.20

Bank of Baroda

Term loan - 3

19.25(2) BB BR + 3.50 % p.a.

15 quarterly instalments of ` 2.75 million each from September 10, 2010.

0.50 % p.a. of the amount prepaid for the prepayment period subject to maximum of 2.00 %

For capacity expansion / backward integration / Capex

13.91 8.70

Term loan – 4

150.00(2) BB BR + 3.50 % p.a.

Repayable in 16 quarterly instalments of ` 10.00 million each from June 30, 2012

0.50 % p.a. of the amount prepaid for the prepayment period.

For capacity expansion / backward integration / Capex

80.97## 108.80

Bank of India

Term loan

63.10(3) BI BR+ 4% p.a.

Repayable in 16 quarterly instalments of ` 12.50 million each from April 2010.

Applicable from time to time

For capex or expansion of unit

51.20 25.50

Total 421.75 333.58 285.30 (1) The amount outstanding as of sanction letter dated December 29, 2012 (except for term loan – 110009 wherein the amount is sanctioned amount as of December 29, 2012). (2)The amount outstanding as of sanction letter dated September 26, 2012 (except for term loan – 4 wherein the amount is sanctioned amount as of September 26, 2012. Further, the undisbursed amount is ` 58.80 million).

90

(3) The amount outstanding as of sanction letter dated September 06, 2012.

^The repayment schedule is based on the total sanctioned amount for the financing arrangement. #The amount includes interest accrued as of January 31, 2013. ## The amount includes overdue of ` 10.00 million which was paid by our Company on March 04, 2013.

As per the certificate dated February 13, 2013 issued by our Auditors, the amount under abovementioned loans have been utilized towards purposes for which such loans have been sanctioned. For further details on the terms and conditions of these financing arrangements, see “Financial Indebtedness” on page 284. Further, we may also be required to pay prepayment charges to our lenders. See, “Risk Factors – A portion of the Net Proceeds of the Issue is proposed to be utilized towards prepayment of certain loans” on page 16. 4. Funding long term working capital requirements of our Company

Our business is working capital intensive and we avail majority of our working capital in the ordinary course of our business from banks. As on the date of the Draft Red Herring Prospectus, the aggregate amount sanctioned under the fund based and non-fund based working capital facilities was ` 1,900 million. Based upon our internal estimates as given below, we propose to utilise ` 400 million from the Issue proceeds to fund the long term working capital requirements of our Company. For further details of the working capital facilities availed by us, please see the chapter titled “Financial Indebtedness” beginning on page 284 of the Draft Red Herring Prospectus. Our Company’s existing working capital requirements, holding period and funding on a standalone basis as at March 31, 2012 and estimates for the same for the year ending March 31, 2014 is as under:

(` in million) Components of Working Capital FY 12

Period (Months) FY14

Period (Months)

Current Assets Inventories 1,884.35 5.48 3,030.37 5.60 Debtors 887.45 2.36 1,438.37 2.40 Cash and bank balance 111.77 0.13 150.00 1.23 Other Current Assets 154.96 0.45 245.00 0.45 Total Current Assets 3,038.53 4,863. 74 Current Liabilities Creditors-Raw Material 884.85 3.92 1,569.83 4.00 Creditors-Expenses 181.53 2.03 178.68 1.47 Advance received from customers

181.79 0.55 141.88 0.27

Other current liabilities and provisions

156.17 0.45 200.60 0.37

Total Current Liabilities 1,404.34 2,090.99 Net Working Capital 1,634.19 2,772.75 Bank Limits 1,134.50 1,900.00 Short Term Bank Finance 299.37 Working Capital Margin 200.32 872.75 Internal Accruals 200.32 472.75 IPO Proceeds 400.00 Note: Inventory comprises domestic and imported raw material and spares, work in process and finished goods. The holding period for the total inventory is expressed as a percentage of net sales. Debtors comprise amounts receivables due from domestic and overseas buyers and the holding

91

period is computed based on gross sales. Other Current Assets include advances to suppliers and other advances and deposits and are computed based on net sales. Cash and bank balances are computed based on expenses. Holding period for creditors for raw material and spares is based on purchases and creditors for expenses on operating expenses. Period for advances from customers and other current liabilities are based on net sales. 75% of the total working capital gap excluding IPO proceeds towards the margin funding amounts to ` 1,779.56 million. Based on our sanctioned credit facility of ` 1,900 million as on January 31, 2013, our Company has firm arrangements for more than 75% of the working capital requirements from banks. 5. Equity investment in our subsidiary, Jyoti S. A. S. for prepayment of indebtedness. Jyoti S. A. S. had availed term loan facility of € 11.25 million from Bank of Baroda, Bank of India (Jersey Branch) and Bank of India (Paris Branch) to acquire 100 % shareholding of Huron Graffenstaden S. A. S. Our Company proposes to make an equity investment of ` 244.15 million in our subsidiary Jyoti S. A. S for prepayment of term loan facility that would be outstanding as of June 30, 2013. Although our Company is not assured of dividends from such equity investment, we believe such investment will be beneficial to our business and prospects. As on the date of filing of this Draft Red Herring Prospectus, the details of the term loan facility intended to be prepaid from the Net Proceeds in the financial year 2014 are provided below: Name of the Lender


Sanctioned Amount

Rate of Interest

Repayment schedule

Prepayment charges

End use Outstanding as of January 31, 2013

Outstanding as of June 30, 2013

Bank of Baroda

Term Loan

€ 5.00 million

EURIBOR 6 months + 2.50 % p.a.

20 equal quarterly instalments

No prepayment charges shall be due if the loan is prepaid provided the prepayment is from cash flows of the borrower.

To acquire 100 % shareholding of Huron Graffenstaden S. A. S.

€ 5.06 million

(` 365.50 million)(1

)

€ 3.38 million (` 244.15 million)(1

) Bank of India (Jersey Branch)

€ 3.25 million

EURIBOR 6 months + 3.50 % p.a.*

Bank of India (Paris Branch)

€ 3.00 million

*Revised pursuant to letter dated January 12, 2011. (1) For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325. As per the certificate dated February 13, 2013 issued by our Auditors, the amount under abovementioned loan has been utilized towards purposes for which such loans have been sanctioned. For further details on the terms and conditions of these financing arrangements, see “Financial Indebtedness” on page 284. The audited financials of Jyoti SAS for the nine months ended December 31, 2012 and for FY 2012, 2011, 2010, 2009 and 2008 are set forth below:

92

Statement of Assets and Liabilities

(` in Million)

ASSETS 31-Dec-12

31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

Intangible Fixed Assets

-

-

-

-

-

-

Tangible Fixed Assets

-

-

-

-

-

- Other Tangible Fixed Assets

-

-

-

0.02

0.06

0.10

Financial Fixed Assets

-

-

-

-

-

- Other Participating Interest

1,120.04

1,059.27

980.22

938.68

1,045.94

1,009.44

Other Financial Fixed Assets

0.14

0.13

0.12

0.12

0.13

0.12

-

-

-

-

-

-

FIXED ASSETS 1,120.18

1,059.40

980.34

938.82

1,046.14

1,009.66

Stocks

-

-

-

-

-

-

Debts Receivables

166.77

79.99

-

-

-

-

Others

-

-

-

-

-

-

Available Funds

0.55

0.22

0.04

0.23

0.73

2.84

Accrual Accounts

-

-

-

-

-

-

Pre Payments

-

-

-

0.01

0.01

-

CURRENT ASSETS 167.32

80.21

0.04

0.24

0.73

2.84

TOTAL III 167.32

80.21

0.04

0.24

0.73

2.84

Loans Issues Costs to be Spread

2.73

4.14

5.74

7.33

10.21

11.46

OVERALL TOTAL 1,290.24

1,143.75

986.13

946.39

1,057.08

1,023.97

LIABILITIES

31.12.2012

31.12.20

12

31.03.20

11

31.03.20

10

31.03.20

09

31.03.20

08 Share OR Individual Capital

354.58

335.34

310.32

2.24

2.50

2.33

Other Reserves (223.02)

(54.76)

(28.72)

(37.20)

(58.30)

(19.57)

Foreign Currency Translation Reserve

(1.63)

(99.37)

(83.75)

(36.92)

36.11

19.57

Loss Carried Forward (42.21)

(56.79)

(30.16)

(33.58)

(60.40)

(20.75)

-

-

93

EQUITY CAPITAL 87.72

124.42

167.69

(105.46)

(80.09)

(18.41)

Financial Debts Loans & Other Amounts Owing to Credit Institutions

365.82

461.29

533.59

681.30

759.15

709.76

Bank & Other Financial Borrowings

835.74

522.65

244.68

334.74

18.55

18.49

Misc. Financial Loans & Debts

-

-

-

-

322.04

249.26

Operating Cost -

-

-

-

-

-

Payments On Account Received OR Orders

0.95

35.38

33.71

32.21

35.20

64.86

-

-

-

-

-

-

Other Debts -

-

-

-

-

-

Debts Payables On Fixed Assets & Related Accounts

-

-

6.46

3.60

2.24

-

DEBTS PAYABLE 1,202.51

1,019.33

818.44

1,051.85

1,137.17

1,042.38

OVERALL TOTAL 1,290.24

1,143.75

986.13

946.39

1,057.08

1,023.97

94

Statement of Profit & Loss

(` in Million)

PARTICULARS 31-Dec-12

31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

TOTAL INCOME FROM OPERATIONS

-

-

-

-

-

10.81

-

-

-

-

-

10.81

Changes In Stocks 1.26

2.50

3.03

3.24

-

-

Other Purchases & External Charges

0.04

0.04

-

0.05

3.36

12.92

Appropriations To Fixed Assets Depreciations

1.58

2.00

1.84

2.07

2.01

0.01

Taxes & Assimilated Payments

-

-

-

-

0.08

-

Operating Appropriations

-

-

-

-

-

-

Other Charges -

0.00

-

-

-

-

TOTAL OPERATING CHARGES

2.88

4.53

4.87

5.36

5.45

12.94

OPERATING PROFIT / LOSS

(2.88)

(4.53)

(4.87)

(5.36)

(5.45)

(2.13)

TOTAL FINANCIAL INCOME

-

-

-

-

-

-

-

-

-

-

-

-

Financial Charges -

-

-

-

-

-

Interest & Similar Charges

38.77

50.27

23.05

31.84

52.85

17.45

TOTAL FINANCIAL CHARGES

38.77

50.27

23.05

31.84

52.85

17.45

FINANCIAL PROFIT / LOSS

(38.77)

(50.27)

(23.05)

(31.84)

(52.85)

(17.45)

OPERATING RESULT BEFORE TAX

(41.65)

(54.80)

(27.92)

(37.20)

(58.30)

(19.57)

Extra Ordinary Items Extra Ordinary Income On Operating Transactions

-

0.04

-

-

-

-

TOTAL EXTRA ORDINARY INCOME

-

0.04

-

-

-

-

Extra Ordinary Charges Extra Ordinary Charges On Operating

0.56

-

0.80

-

-

-

95

Transactions TOTAL EXTRA ORDINARY CHARGES

0.56

-

0.80

-

-

-

EXTRA ORDINARY INCOME / LOSS

(0.56)

0.04

(0.80)

-

-

-

TOTAL INCOME -

0.04

-

-

-

-

TOTAL CHARGES (42.21)

(54.80)

(28.72)

(37.20)

(58.30)

(19.57)

PROFIT / LOSS (42.21)

(54.76)

(28.72)

(37.20)

(58.30)

(19.57)

96

Cash Flow Statement

(` in Million)

Particulars 31-Dec-

12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08

1 CASHFLOW FROM OPERATING ACTIVITIES

Net Profit before Tax (42.21) (54.76) (28.72) (37.20) (58.30) (19.57) Adjustment for:

Depreciation and non cash charges 1.58 2.00 1.84 2.07 2.01 0.01

Loss on Capital Item - - - - - - Direct Tax Expenses - - - - - -

Interest Expenses [On Borrowing] - - - - - -

Foreign Exchange Gain on Cash Equivalents [Net of Loss] - - - - - -

Excess provision of Depreciation - - - - - -

Interest & Commission Income - - - - - -

Operating Cash flow before Working Capital Change (40.63) (52.76) (26.87) (35.13) (56.29) (19.56)


Adjustment for:

Movement in Loans and Advances - - - - - -

Increase in Inventories - - - - - -

Increase/Decrease in Trade Receivables/Trade Payables (33.56) (9.57) 3.75 (5.70) (33.27) 83.44

Increase in Provisions - - - - - -

Cash generated from Operation (74.19) (62.33) (23.13) (40.82) (89.56) 63.88

Less : Direct Taxes paid - - - - - -

Net Cash flow from Operating Activities (74.19) (62.33) (23.13) (40.82) (89.56) 63.88

2 CASH FLOW USED IN INVESTING ACTIVITIES

Loan given to Subsidy and Associate (82.19) (79.99) - - - -

Movement in Capital Advances/ Investment in subsidiary - - - - 33.74

(1,021.14)

Movement in Deposits with Banks - - - - - -

Interest Received - - - - - -

Purchase of Fixed Assets - - - - - -

Sale of Fixed Asset - - - - - -

Net Cash flow Used in Investing Activities (82.19) (79.99) - - 33.74

(1,021.14)

3 CASH FLOW FROM

97

FINANCIAL ACTIVITIES

Proceeds from Issue of Share Capital

-

-

-

-

- 2.33

Proceeds/(Repayment) of Long Term Borrowings [Including Current Maturity] 158.27 144.45 24.28 36.99 55.52 958.94

Increase in Short Term Borrowings - - - - - -

Interest Paid - - - - - -

Movement in FCMITD A/c. - - - - - -

Net Cash flow from Financial Activities 158.27 144.45 24.28 36.99 55.52 961.28

4 EXCHANGE DIFFERENCE ARISING ON CONVERSION DEBITED/(CREDITED) TO FOREIGN CURRENCY TRANSLATION RESERVE

(1.57) (1.95) (1.35) 3.41 (2.02) (1.17)

5 NET CASH GENERATED DURING THE YEAR 0.32 0.17 (0.20) (0.42) (2.32) 2.84

6 CASH AND CASH EQUIVALENTS AT THE BEGINNING 0.22 0.04 0.23 0.73 2.84 -

Less : Foreign Exchange Gain on Cash Equivalents [Net of Loss] 0.01 0.00 0.01 (0.07) 0.20 -

7 CASH AND CASH EQUIVALENTS AT THE END 0.55 0.22 0.04 0.23 0.73 2.84

Note: Exchange Rates used:

1. for nine months ended December 31, 2012: Average rate of € 1 = ` 69.57 and Closing rate of € 1 = ` 72.26. 2. for year ended March 31, 2012: Average rate of € 1 = ` 65.90 and Closing rate of € 1 = ` 68.34. 3. for year ended March 31, 2011: Average rate of € 1 = ` 60.21 and Closing rate of € 1 = ` 63.24. 4. for year ended March 31, 2010: Average rate of € 1 = ` 67.08 and Closing rate of € 1 = ` 60.56. 5. for year ended March 31, 2009: Average rate of € 1 = ` 65.14 and Closing rate of € 1 = ` 67.48. 6. for year ended March 31, 2008: Average rate of € 1 = ` 59.52 and Closing rate of € 1 = ` 63.09.

6. General corporate purposes We are continuously looking for opportunities to grow. While, we have not identified any specific projects at present, the management is continuously identifying and evaluating opportunities. We intend to use part of net proceeds towards such growth plans and opportunities. We intend to deploy the proceeds of this Issue aggregating to [●] for general corporate purposes including but not limited to strategic initiatives, strengthening of the marketing capabilities, partnerships, joint ventures, future projects and meeting exigencies which our Company in the ordinary course may not foresee etc. Our management, in response to the competitive and dynamic nature of the industry, will have the discretion to revise its business plan from time to time and consequently the

98

funding requirements and deployment of funds may also change. Our Company’s management in accordance with policies set out by the Board will have flexibility in applying the balance proceeds of this issue, for general corporate purposes. We confirm that the proceeds of the Issue utilised for General corporate purposes shall not exceed 25% of the Issue size. Issue Expenses

The estimated Issue related expenses are as follows:

(in ` million) Particulars Amount(1) As a

percentage of total

expenses(1)

As a percentage

of Issue size(1)

Lead management fee, underwriting and selling commission

[●] [●] [●]

Commission payable to Non Syndicate Stock Brokers (2) [●] [●] [●] Advertising and marketing expenses

[●] [●] [●] Printing and stationery

[●] [●] [●] Others (including legal fees, listing fee, Registrar’s fee) [●] [●] [●] Total

[●] [●] [●] (1)Will be incorporated after finalisation of Issue Price. (2) Disclosure of commission and processing fees will be incorporated at the time of filing the Red Herring Prospectus. Bridge Financing Facilities Our Company has not raised any bridge loans from any bank or financial institution as of the date of this Draft Red Herring Prospectus which are proposed to be repaid from the Net Proceeds. Interim use of Net Proceeds

Our Company, in accordance with the policies established by our Board from time to time, will have flexibility in deploying the proceeds received from the Issue. Pending utilization of the proceeds of the Issue for the purposes described above, we intend to temporarily invest the funds in high quality interest bearing/dividend bearing liquid instruments including investments in mutual funds, deposits with banks and other investment grade interest bearing securities or deploy the Net Proceeds of the Issue to temporarily reduce our exposure to working capital borrowings from banks and financial institutions, which amounts will be redrawn as and when necessary to meet expenditure towards the objects of the Issue. Such investments would be in accordance with the business and investment policies approved by the Board of Directors. Our Company confirms that pending utilization of the Net Proceeds it shall not use the funds for any investments in the equity markets. Monitoring of Utilization of Funds Our Audit Committee and our Board of Directors will monitor the utilization of the Net Proceeds. Our Company will disclose the utilization of the Net Proceeds under a separate head along with details for such Net Proceeds that have not been utilized. Our Company will indicate investments, if any, of unutilized Net Proceeds in the balance sheet of our Company for the relevant Fiscals subsequent to the Issue.

Pursuant to Clause 49 of the Listing Agreement, our Company shall, on a quarterly basis, disclose to the Audit Committee the uses and applications of the Net Proceeds. On an annual basis, our Company shall prepare a statement of funds utilised for purposes other than those stated in this Draft Red Herring Prospectus and place it before the Audit Committee. Such disclosure shall be made only until such time that all the Net Proceeds have been utilised in full. The statement shall be certified by the statutory auditors of our Company.

99

Furthermore, in accordance with Clause 43A of the Listing Agreement our Company shall furnish to the stock exchanges on a quarterly basis, a statement including material deviations if any, in the utilisation of the proceeds of the Issue from the objects of the Issue as stated above. This information will also be published in newspapers simultaneously with the interim or annual financial results, after placing the same before the Audit Committee. No part of the Net Proceeds will be paid by our Company as consideration to its Promoters, its Directors, our Company’s key management personnel or Group Companies except in the usual course of business.

100

BASIS FOR ISSUE PRICE

The Issue Price will be determined by the Company, in consultation with the BRLMs, on the basis of the assessment of market demand for the Equity Shares being offered through the Book Building Process. The face value of the Equity Shares is ` 10 each and the Issue Price is [●] times of the face value at the lower end of the Price Band and [●] times the face value at the higher end of the Price Band. Qualitative Factors We believe that we have the following principal competitive strengths:

• One-stop solution provider with presence across the CNC metal cutting machinery value chain

• Focus on technology and ability to deliver innovative solutions • World class vertically integrated operations • Diversified customer base and long standing customer relationships • Strategic advantage and synergies through Huron acquisition • Skilled technical teams and experienced management team

For further details regarding some of the qualitative factors, which form the basis for computing the Issue Price, see sections titled “Risk Factors” and “Business – Competitive Strengths” on pages 13 and 131, respectively. Quantitative Factors 1. Basic and Diluted Earnings per share (EPS)- Consolidated

Period ended Basic EPS (`) Diluted EPS (`) Weight March 31, 2012 7.24 7.24 3 March 31, 2011 (1.88) (1.79) 2 March 31, 2010 (18.53) (17.71) 1

Weighted Average (0.10) 0.07 Nine months ended December 31 2012

7.58 7.58

Basic and Diluted Earnings per share (EPS)- Standalone

Period ended Basic EPS (`) Diluted EPS (`) Weight

March 31, 2012 11.85 11.85 3 March 31, 2011 5.77 5.51 2 March 31, 2010 0.98 0.94 1

Weighted Average 8.01 7.92 Nine months ended December 31 2012

7.90 7.90

Note: (i) Basic/Diluted Earnings per Share (`) = Restated Net Profit after Tax as Adjusted

divided by the Numbers of Shares outstanding at the end of the year.

(ii) The earnings per share has been calculated on the basis of the restated profits and losses of the respective years.

(iii) The denominator considered for the purpose of calculating the earnings per share is the weighted average number of Equity Shares outstanding during the year in accordance with the requirement of Accounting Standard- 20 “Earnings per share”.

(iv) The earnings per share (basic and diluted) have been computed based on the

total number of shares in accordance with the requirement of Accounting Standard- 20 “Earnings per share”.

(v) The face value of the Equity Share is ` 10.

101

2. Price Earning (P/E) Ratio in relation to the Issue Price of ` [●] per Equity Share of

`10 each: Consolidated: [●] Standalone: [●] Price Earning (P/E) Ratio in relation to the Floor Price and Cap Price: Sr. No.

Particulars Consolidated Standalone

1. P/E ratio on the Basic EPS for the year ended March 31, 2012 at the Floor Price

[●] [●]

2. P/E ratio on the Diluted EPS for the year ended March 31, 2012 at the Floor Price

[●] [●]

3. P/E ratio on the Basic EPS for the year ended March 31, 2012 at the Cap Price

[●] [●]

4. P/E ratio on the Diluted EPS for the year ended March 31, 2012 at the Cap Price

[●] [●]

Industry P/E P/E ratio Name of the company Face value of

equity shares (`) Highest 17.37 Kennametal India Limited 10 Lowest 16.23 Lakshmi Machine Works

Limited 10

Average 16.80 Source: BSE and annual reports of the companies

3. Return on Networth (RoNW) - Consolidated

Period ended RONW*(%) Weight March 31, 2012 15.31 3 March 31, 2011 (5.80) 2 March 31, 2010 (57.75) 1

Weighted Average (3.90) Nine months ended December 31 2012

14.97

* Return on Networth = Profit after tax as restated/Networth at the end of the year (excluding preference share capital) Return on Networth (RoNW) – Standalone

Period ended RONW*(%) Weight March 31, 2012 16.60 3 March 31, 2011 11.61 2 March 31, 2010 2.24 1

Weighted Average 12.54 Nine months ended December 31 2012

11.54

* Return on Networth = Profit after tax as restated/Networth at the end of the year (excluding preference share capital)

4. Minimum Return on Total Net Worth after Issue needed to maintain Pre-Issue Basic EPS

for the year ended March 31, 2012 is [●]

5. Net Asset Value

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NAV (Consolidated) as at March 31, 2012 : ` 76.77 per Equity Share NAV (Standalone) as at March 31, 2012 : ` 115.81 per Equity Share NAV (Consolidated) as at December 31, 2012 : ` 50.08 per Equity Share NAV (Standalone) as at December 31, 2012 : ` 67.70 per Equity Share Issue Price : ` [●] per Equity Share NAV (Consolidated) after the Issue : ` [●] per Equity Share NAV (Standalone) after the Issue : ` [●] per Equity Share Note: (i) Net Asset Value per Equity Share (`) = Net worth as per statement of adjusted

assets and liabilities divided by the number of Equity Shares. 6. Comparison with other listed companies We are in the business of manufacturing CNC machines. Being in the manufacturing of Metal Cutting CNC Machines, the Company is not exactly comparable with the listed Indian players. However, we have drawn comparison with the listed company mentioned hereunder based on the sector, the Company operates in.

Name of the Company

Diluted EPS as of March 31, 2012 (`)

P/E Ratio RoNW (%) NAV per Equity

Share (`)

Sales (` in million)

Jyoti CNC Automation Limited

7.24 [●] 15.31 76.77 6,016.71

Peers Kennametal India Limited 31.20 17.37 22.86 137.17 5,623.30 Lakshmi Machine Works Limited 123.23 16.23 16.40 784.46 23,053.70

Source: Annual reports of the companies Notes:- P/E for peers based on closing price of March 5, 2013 on BSE and the EPS of Fiscal 2012. All figures for Jyoti CNC Automation Limited and Lakshmi Machine Works Limited are on consolidated basis while all figures for Kennametal India Limited are on standalone basis as the company does not have any subsidiaries. The year end for Kennametal India Limited is June 30, 2012. The Issue Price of ` [●] has been determined by the Company, in consultation with the BRLMs, on the basis of assessment of market demand for the Equity Shares offered through the Book Building Process and is justified in view of the above qualitative and quantitative parameters. For further details, see section titled “Risk Factors” on page 13 and the financials of the Company including important profitability and return ratios, as set out in the section titled “Restated Consolidated Financial Statements” and “Restated Unconsolidated Financial Statements” on pages 183 and 220 respectively.

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STATEMENT OF TAX BENEFITS To The Board of Directors, Jyoti CNC Automation Limited G-506, GIDC Lodhika, Metoda Rajkot 360021 Dear Sirs We hereby confirm that the enclosed annexure, prepared by Jyoti CNC Automation Limited (“the Company”) states the possible tax benefits available to the Company and the shareholders of the Company under the Income – tax Act, 1961 (“Act”), the Wealth Tax Act, 1957 and the Gift Tax Act, 1958, 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 Act. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on the business imperatives, the company may or may not choose to fulfill. The Direct Tax Code (which consolidates the prevalent direct tax laws) is proposed to come into effect from April 1, 2013. However, it may undergo a few more changes by the time it is actually introduced and hence, at the moment, it is unclear what effect the proposed Direct Tax Code would have on the Company and the investors. The benefits discussed in the enclosed Annexure are not exhaustive and the preparation of the contents stated is the responsibility of the Company’s management. We are informed that this statement is only intended to provide general information to the investors and hence is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences, 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. Our confirmation is based on the information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company. We do not express any opinion or provide any assurance as to whether: The Company or its shareholders will continue to obtain these benefits in future; or The conditions prescribed for availing the benefits, where applicable have been/would be met. The Authorities/ courts will concur with the views expressed herein. Our views are based on

the existing provisions of law and our interpretation of the same, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such change.

This report is addressed to and is provided to enable the Board of Directors of the Company to include this report in the Draft Red Herring Prospectus and the Prospectus to be filed by the Company with SEBI and the concerned Registrar of Companies in connection with the proposed Issue. For Kalaria & Sampat Chartered Accountants Firm Regn No: 104570W (Atul M. Kalaria) Partner Membership No. : 41432 Place: Rajkot Date: 12th February 2013

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ANNEXURE TO THE STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO JYOTI CNC AUTOMATION LIMITED AND ITS SHAREHOLDERS The information provided below sets out the possible tax benefits available to the shareholders in a summary manner only and is not a complete analysis or listing of all potential tax consequences of purchase, ownership and disposal of equity shares, under the tax laws presently in force in India. It is not exhaustive or comprehensive analysis and is not intended to be a substitute for professional advice. YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY SHARES IN YOUR PARTICULAR SITUATION. Tax Considerations As per the taxation laws in force, the tax benefits / consequences as applicable, to the Company and the prospective shareholders are stated as under. Several of these benefits are dependent on the Company or its Shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon the fulfilling such conditions. 1. Benefits available to the Company - Under the Act 1.1 Special Tax Benefits

No special tax benefit is available to the Company. 1.2 General Tax Benefits 1.2.1 Income from Business Profits

The Company is entitled to claim depreciation on specified tangible and intangible assets owned by it and used for the purpose of its business as per provisions of Section 32 of the Act. Business losses, if any, for an assessment year can be carried forward and set off against business profits for eight subsequent years. Unabsorbed depreciation, if any, for an assessment year can be carried forward and set off against any source of income in subsequent years as per provisions of Section 32 of the Act.

Under Section 32(1)(iia) of the Act, the company is entitled to claim additional

depreciation at the rate of 20% of the actual cost of any new machinery or plant, subject to fulfillment of conditions mentioned therein.

As per section 35(2AB)(1) of the Act, Company is eligible to claim deduction of sum

equal to two times of the expenditure (not being expenditure in the nature of cost of any land or building) incurred on in house scientific research and development facility as approved by prescribed authority.

As per provisions of Section 36(1) (xv) of the Act, STT paid in respect of the

taxable securities transactions entered into in the course of the business is allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head ‘Profit and gains of business or profession’. Where such deduction is claimed, no further deduction in respect of the said amount is allowed while determining the income chargeable to tax as capital gains.

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1.2.2 MAT Credit

As per provisions of Section 115JAA(1A) of the Act, the Company is eligible to claim credit for Minimum Alternate Tax (‘MAT’) paid for any assessment year commencing on or after April 1, 2006 against normal income-tax payable in subsequent assessment years.

MAT credit shall be allowed for any assessment year to the extent of difference between

the tax payable as per the normal provisions of the Act and the tax paid under Section 115JB for that assessment year. Such MAT credit is available for set-off up to ten years succeeding the assessment year in which the MAT credit arises.

1.2.3 Computation of capital gains

Capital assets are to be categorized into short - term capital assets and long – term capital assets based on the period of holding. All capital assets, being shares held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under section 10(23D) of the Act or a zero coupon bond, held by an assessee for more than twelve months are considered to be long – term capital assets, capital gains arising from the transfer of which are termed as long – term capital gains (‘LTCG’). In respect of any other capital assets, the holding period should exceed thirty six months to be considered as long – term capital asset.

Short Term Capital Gains (‘STCG’) means capital gains arising from the transfer of

capital asset being shares held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under clause (23D) of Section 10 or a zero coupon bonds, held by an assessee for twelve months or less.

In respect of any other capital assets, STCG means capital gains arising from the transfer of an asset, held by an Assessee for thirty six months or less

LTCG arising on transfer of equity shares of a Company or units of an equity

oriented fund (as defined which has been set up under a scheme of a mutual fund specified under Section 10(23D) is exempt from tax as per provisions of Section 10(38) of the Act, provided the transaction is chargeable to securities transaction tax (STT) and subject to conditions specified in that section.

Income by way of LTCG exempt under Section 10(38) of the Act is to be taken into

account while determining book profits in accordance with provisions of Section 115JB of the Act.

As per provisions of Section 48 of the Act, LTCG arising on transfer of capital assets,

other than bonds and debentures (excluding capital indexed bonds issued by the Government) and depreciable assets, is computed by deducting the indexed cost of acquisition and indexed cost of improvement from the full value of consideration.

As per provisions of Section 112 of the Act, LTCG not exempt under Section 10(38) of

the Act are subject to tax at the rate of 20% with indexation benefits. However, if such tax payable on transfer of listed securities or units or zero coupon bonds exceed 10% of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of computing the tax payable by the Assessee.

Under Section 54EC of the Act, capital gain arising from transfer of long - term

capital assets [other than those exempt u/s 10(38)] shall be exempt from tax, subject to

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the conditions and to the extent specified therein, if the capital gain are invested within a period of six months from the date of transfer in the bonds redeemable after three years and issued by -:

1. National Highway Authority of India (NHAI) constituted under Section 3 of

National Highway Authority of India Act, 1988; and

2. Rural Electrification Corporation Limited (REC), a company formed and registered under the Companies Act, 1956.

Where a part of the capital gains is reinvested, the exemption is available on a

proportionate basis. The maximum investment in the specified long term asset cannot exceed ` 5,000,000 per assessee during any financial year.

Where the new bonds are transferred or converted into money within three years

from the date of their acquisition, the amount so exempted is taxable as capital gains in the year of transfer / conversion.

As per provisions of Section 111A of the Act, STCG arising on sale of equity shares or

units of equity oriented mutual fund (as defined which has been set up under a scheme of a mutual fund specified under Section 10(23D)), are subject to tax at the rate of 15% provided the transaction is chargeable to STT. No deduction under Chapter VIA is allowed from such income.

STCG arising from transfer of shares, other than those covered by Section 111A of the Act, would be subject to tax at normal tax rate.

The tax rates mentioned above stands increased by surcharge, payable at the rate of 5% where the taxable income of a domestic company exceeds ` 10,000,000. Further, education cess and secondary and higher education cess on the total tax payable at the rate of 2% and 1% respectively is payable by all categories of taxpayers.

As per provisions of Section 71 read with Section 74 of the Act, short term capital loss arising during a year is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent eight assessment years.

As per provisions of Section 71 read with Section 74 of the Act, long term capital loss

arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during subsequent eight assessment years

The characterization of the gain / losses, arising from sale / transfer of shares as business

income or capital gains would depend on the nature of holding and various other factors. 1.2.4 Dividend Income

As per provisions of Section 10(34) read with Section 115-O of the Act, dividend (both interim and final), if any, received by the Company on its investments in shares of another Domestic Company is exempt from tax. The Company will be liable to pay dividend distribution tax at the rate of 15% (plus a surcharge of 5% on the dividend distribution tax and education cess and secondary and higher education cess of 2% and 1% respectively on the amount of dividend distribution tax and surcharge thereon) on the total amount distributed as dividend. Credit in respect of dividend distribution tax paid by a subsidiary of the Company could be available while determining the dividend distribution tax payable by the Company as per provisions of Section 115-O (1A) of the Act, subject to fulfillment of prescribed conditions.

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As per provisions of Section 10(35) of the Act, income received in respect of units of a mutual fund specified under Section 10(23D) of the Act (other than income arising from transfer of such units) is exempt from tax.

As per provisions of Section 14A of the Act, expenditure incurred to earn an exempt

income is not allowed as deduction while determining taxable income.

As per provisions of Section 80G of the Act, the Company is entitled to claim deduction of a specified amount in respect of eligible donations, subject to the fulfillment of the conditions specified in that section.

As per the provisions of Section 115BBD of the Act, dividend received by Indian

company from a specified foreign company (in which it has shareholding of 26% or more) would be taxable at the concessional rate of 15% on gross basis (excluding surcharge and education cess).

2. Benefits available to resident shareholders under the Act 2.1 Dividends exempt under Section 10(34)

As per provisions of Section 10(34) of the Act, dividend (both interim and final), if any, received by the resident members / shareholders from the Company is exempt from tax. The Company will be liable to pay dividend distribution tax at the rate of 15% plus a surcharge of 5% on the dividend distribution tax and education cess and secondary and higher education cess of 2% and 1% respectively on the amount of dividend distribution tax and surcharge thereon on the total amount distributed as dividend.

2.2 Computation of capital gains

Capital assets are to be categorized into short - term capital assets and long – term capital assets based on the period of holding. All capital assets, being shares held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under section 10(23D) of the Act or a zero coupon bond, held by an assessee for more than twelve months are considered to be long – term capital assets, capital gains arising from the transfer of which are termed as LTCG. In respect of any other capital assets, the holding period should exceed thirty six months to be considered as long – term capital asset.

STCG means capital gains arising from the transfer of capital asset being a share held in

a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under clause (23D) of Section 10 or a zero coupon bonds, held by an assessee for twelve months or less.

In respect of any other capital assets, STCG means capital gain arising from the transfer

of an asset, held by an assessee for thirty six months or less

As per provisions of Section 48 of the Act, LTCG arising on transfer of capital assets, other than bonds and debentures (excluding capital indexed bonds issued by the Government) and depreciable assets, is computed by deducting the indexed cost of acquisition and indexed cost of improvement from the full value of consideration.

As per provisions of Section 112 of the Act, LTCG not exempt under Section 10(38) of

the Act are subject to tax at the rate of 20% with indexation benefits. However, if such tax payable on transfer of listed securities or units or zero coupon bonds exceed 10% of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of computing the tax payable by the Assessee.

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As per provisions of Section 111A of the Act, STCG arising on sale of equity shares or

units of equity oriented mutual fund (as defined which has been set up under a scheme of a mutual fund specified under Section 10(23D)), are subject to tax at the rate of 15% provided the transaction is chargeable to STT. No deduction under Chapter VIA is allowed from such income.

STCG arising from transfer of shares, other than those covered by Section 111A of the Act, would be subject to tax at normal tax rate.

The tax rates mentioned above stands increased by surcharge, payable at the rate of 5% where the taxable income of a domestic company exceeds ` 10,000,000. Further, education cess and secondary and higher education cess on the total tax payable at the rate of 2% and 1% respectively is payable by all categories of taxpayers.

As per provisions of Section 71 read with Section 74 of the Act, short - term capital loss

arising during a year is allowed to be set-off against short - term as well as long - term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent eight assessment years.

As per provisions of Section 71 read with Section 74 of the Act, long - term capital loss

arising during a year is allowed to be set-off only against long - term capital gains. Balance loss, if any, shall be carried forward and set-off against long - term capital gains arising during subsequent 8 assessment years.

Exemption of capital gain from income-tax

LTCG arising on transfer of equity shares of a Company or units of an equity oriented fund (as defined which has been set up under a scheme of a mutual fund specified under Section 10(23D)) is exempt from tax as per provisions of Section 10(38) of the Act, provided the transaction is chargeable to STT and subject to conditions specified in that section. However, in case of a shareholder being a company, profits on transfer of above referred long-term capital asset shall be taken into account for computing the book profit for the purposes of computation of MAT.

As per Section 54EC of the Act, capital gains arising from the transfer of a long – term

capital asset are exempt from capital gains tax if such capital gains are invested within a period of six months after the date of such transfer in specified bonds issued by NHAI and REC and subject to the conditions specified therein.


proportionate basis. The maximum investment in the specified long - term asset cannot exceed ` 5,000,000 per assessee during any financial year.

Where the new bonds are transferred or converted into money within three years from

the date of their acquisition, the amount so exempted is taxable as capital gains in the year of transfer / conversion.


income or capital gains would depend on the nature of holding and various other factors.

As per provision of Section 54F of the Act, in case of Individual and HUF, long term capital gains [in case not covered under Section 10(38)] arising from transfer of shares is exempt from tax if the net consideration from such transfer is utilized within a period of one year before, or two years after the date of transfer, for purchase of a new residential house, or for construction of residential house within three years from the date of transfer and subject to conditions and to the extent specified therein.

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income is not allowed as deduction while determining taxable income. 2.3 Income from Business Profits

Where the equity shares form part of stock-in-trade of a shareholder, any income realized in the disposition of the equity Shares will be chargeable under the head “Profit and Gains of Business or Profession” as per the provisions of the Act. The nature of the equity shares (i.e. whether held as‘stock-intrade’ or as ‘investment’) is usually determined inter-alia on the basis of the substantial nature of the transactions, the manner of maintaining books of account, the magnitude of purchases and sales and the ratio between purchases and sales and the holding.

As per Section 36(1)(xv) of the Act, an amount equal to the STT paid by the assessee in

respect of the taxable securities transactions entered into in the course of his business during the previous year will be allowable as deduction, if the income arising from such taxable securities transactions is included in the income computed under the head “Profits and gains of business or profession”.

2.4 Income from other sources [Section 56(2)(vii)]

As per provisions of Section 56(2)(vii) of the Act and subject to exception provided in second proviso therein, where an individual or HUF receives shares and securities without consideration or for a consideration which is less than the aggregate fair market value of the shares and securities by an amount exceeding fifty thousand rupees, the excess of fair market value of such shares and securities over the said consideration is chargeable to tax under the head ‘income from other sources’.

3. Benefits available to Non-residents (Other than Foreign Institutional Investors) under the Act

NRI means a citizen of India or a person of Indian origin who is not a resident. A person is deemed to be of Indian origin if he, or either of his parents or any of his grandparents, were born in undivided India.

Specified foreign exchange assets include shares of an Indian company which are

acquired / purchased / subscribed by NRI in convertible foreign exchange.

3.1 Dividends exempt under Section 10(34) of the Act

As per provisions of Section 10(34) of the Act, dividend (both interim and final), if any, received by the resident members / shareholders from the Company is exempt from tax. The Company will be liable to pay dividend distribution tax at the rate of 15% plus a surcharge of 5% on the dividend distribution tax and education cess and secondary and higher education cess of 2% and 1% respectively on the amount of dividend distribution tax and surcharge thereon on the total amount distributed as dividend.

3.2 Computation of capital gains

Capital assets are to be categorized into short - term capital assets and long – term capital assets based on the period of holding. All capital assets, being shares held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under section 10(23D) of the Act or a zero coupon bond, held by an assessee for more than twelve months are considered to be long – term capital assets, capital gains arising from the transfer of which are termed as LTCG. In respect of any other capital assets, the holding period should exceed thirty six months to be considered as long – term capital assets.

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STCG means capital gain arising from the transfer of capital asset being a share held in a

company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under clause (23D) of Section 10 or a zero coupon bonds, held by an assessee for 12 months or less.


of an asset, held by an assessee for 36 months or less. Capital assets are to be categorized into short - term capital assets and long – term capital assets based on the period of holding. All capital assets, being shares held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under section 10(23D) of the Act or a zero coupon bond, held by an assessee for more than twelve months are considered to be long – term capital assets, capital gains arising from the transfer of which are termed as LTCG. In respect of any other capital assets, the holding period should exceed thirty six months to be considered as long – term capital asset.

STCG means capital gains arising from the transfer of capital asset being a share held in

a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under clause (23D) of Section 10 or a zero coupon bonds, held by an assessee for twelve months or less.


of an asset, held by an assessee for thirty six months or less

As per first proviso to Section 48 of the Act, the capital gains arising on transfer of share of an Indian Company need to be computed by converting the cost of acquisition, expenditure incurred in connection with such transfer and full value of the consideration receiving or accruing as a result of the transfer, into the same foreign currency in which the shares were originally purchased. The resultant gains thereafter need to be reconverted into Indian currency. The conversion needs to be at the prescribed rates prevailing on dates stipulated. Further, the benefit of indexation as provided in second proviso to Section 48 is not available to non-resident shareholders.

The tax rates mentioned above stands increased by surcharge, payable at the rate of 5%

where the taxable income of a domestic company exceeds ` 10,000,000. Further, education cess and secondary and higher education cess on the total tax payable at the rate of 2% and 1% respectively is payable by all categories of taxpayers.

As per provisions of Section 115E of the Act, LTCG arising to a NRI from

transfer of specified foreign exchange assets is taxable at the rate of 10% (plus education cess and secondary & higher education cess of 2% and 1% respectively).

As per provisions of Section 115E of the Act, income (other than dividend which is

exempt under Section 10(34)) from investments and LTCG (other than gain exempt under Section 10(38)) from assets (other than specified foreign exchange assets) arising to a NRI is taxable at the rate of 20% (education cess and secondary & higher education cess of 2% and 1% respectively). No deduction is allowed from such income in respect of any expenditure or allowance or deductions under Chapter VI-A of the Act.


income is not allowed as deduction while determining taxable income. Exemption of capital gain from income-tax

111

LTCG arising on sale equity shares of a company subjected to STT is exempt from tax as per provisions of Section 10(38) of the Act. It is pertinent to note that as per provisions of Section 14A of the Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income.

As per Section 54EC of the Act, capital gains arising from the transfer of a long – term

capital asset are exempt from capital gains tax if such capital gains are invested within a period of six months after the date of such transfer in specified bonds issued by NHAI and REC and subject to the conditions specified therein.


proportionate basis. The maximum investment in the specified long - term asset cannot exceed ` 5,000,000 per assessee during any financial year.

Where the new bonds are transferred or converted into money within three years from the date of their acquisition, the amount so exempted is taxable as capital gains in the year of transfer / conversion.

As per provision of Section 54F of the Act, in case of Individual and HUF, long term

capital gains [in case not covered under Section 10(38)] arising from transfer of shares is exempt from tax if the net consideration from such transfer is utilized within a period of one year before, or two years after the date of transfer, for purchase of a new residential house, or for construction of residential house within three years from the date of transfer and subject to conditions and to the extent specified therein.

As per provisions of Section 115F of the Act, LTCG arising to a NRI on transfer of a

foreign exchange asset is exempt from tax if the net consideration from such transfer is invested in the specified assets or savings certificates within six months from the date of such transfer, subject to the extent and conditions specified in that section.

As per provisions of Section 71 read with Section 74 of the Act, short term capital loss arising during a year is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent 8 assessment years.

As per provisions of Section 71 read with Section 74 of the Act, long term capital loss

arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during subsequent 8 assessment years.

3.3 Exemption from filing of return of income

As per provisions of Section 115G of the Act, where the total income of a NRI consists only of income / LTCG from such foreign exchange asset / specified asset and tax thereon has been deducted at source in accordance with the Act, the NRI is not required to file a return of income.

3.4 Taxability as per DTAA

As per provisions of Section 90 (2) of the Act, non-resident shareholders can opt to be taxed in India as per the provisions of the Act or the double taxation avoidance agreement entered into by the Government of India with the country of residence of the non-resident shareholder, whichever is more beneficial.

As per provisions of Section 115H of the Act, where a person who is a NRI in any

previous year, becomes assessable as a resident in India in respect of the total income of any subsequent year, he/she may furnish a declaration in writing to the assessing officer, along with his/her return of income under Section 139 of the Act for the assessment year

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in which he/she is first assessable as a resident, to the effect that the provisions of the Chapter XII-A shall continue to apply to him/her in relation to investment income derived from the specified assets for that year and subsequent years until such assets are transferred or converted into money.

As per provisions of Section 115I of the Act, a NRI can opt not to be governed

by the provisions of Chapter XII-A for any assessment year by furnishing return of income for that assessment year under Section 139 of the Act, declaring therein that the provisions of the chapter shall not apply for that assessment year. In such a situation, the other provisions of the Act shall be applicable while determining the taxable income and tax liability arising thereon.

4. Benefits available to Foreign Institutional Investors (“FIIs”) under the Act 4.1 Dividends exempt under Section 10(34)

As per provisions of Section 10(34) of the Act, dividend (both interim and final), if any, received by a shareholder from a domestic Company is exempt from tax. The Company will be liable to pay dividend distribution tax at the rate of 15% plus a surcharge of 5% on the dividend distribution tax and education cess and secondary and higher education cess of 2% and 1% respectively on the amount of dividend distribution tax and surcharge thereon on the total amount distributed as dividend.

4.2 Taxability of capital gains

As per provisions of Section 115AD of the Act, income (other than income by way of dividends referred to Section 115-O) received in respect of securities (other than units referred to in Section 115AB) is taxable at the rate of 20% (plus applicable surcharge and education cess and secondary & higher education cess). No deduction is allowed from such income in respect of any expenditure or allowance or deductions under Chapter VI-A of the Act.

As per provisions of Section 115AD of the Act, capital gains arising from transfer of securities are taxable as follows:

Nature of income Rate of tax (%)

LTCG on sale of equity shares not subjected to STT 10 STCG on sale of equity shares subjected to STT 15 STCG on sale of equity shares not subjected to STT 30

For corporate FIIs, the tax rates mentioned above stands increased by surcharge, payable at the rate of 5% where the taxable income exceeds ` 10,000,000. Further, education cess and secondary and higher education cess on the total income at the rate of 2% and 1% respectively is payable by all categories of FIIs. The benefit of exemption under Section 54EC of the Act mentioned above in case of the Company is also available to FIIs.

Exemption of capital gain from income-tax

LTCG arising on sale equity shares of a company subjected to STT is exempt from tax as per provisions of Section 10(38) of the Act. It is pertinent to note that as per provisions of Section 14A of the Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income.

It is pertinent to note that as per provisions of Section 14A of the Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income.

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4.3. Income from Business Profits

Where the equity shares form part of stock-in-trade of a shareholder, any income realized in the disposition of the Equity Shares will be chargeable under the head “Profit and Gains of Business or Profession”, taxable in accordance with the DTAAs between India and the country of tax residence of the FII.

As per provisions of Section 36(1)(xv) of the Act, STT paid in respect of the taxable

securities transactions entered into in the course of the business is allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head ‘Profit and gains of business or profession’. Where such deduction is claimed, no further deduction in respect of the said amount is allowed while determining the income chargeable to tax as capital gains.

4.4 Taxability as per DTAA

As per provisions of Section 90(2) of the Act, FIIs can opt to be taxed in India as per the provisions of the Act or the double taxation avoidance agreement entered into by the Government of India with the country of residence of the FII, whichever is more beneficial.


income or capital gains would depend on the nature of holding and various other factors

5. Benefits available to Mutual Funds under the Act

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 there under, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India is exempt from income-tax, subject to the prescribed conditions. However, the Mutual Funds shall be liable to pay tax on distributed income to unit holders of non equity oriented mutual fund under Section 115R of the Act.

6. Benefits available under the Wealth-tax Act, 1957

Wealth tax is chargeable on prescribed assets. As per provisions of Section 2(m) of the Wealth Tax Act, 1957, the Company is entitled to reduce debts owed in relation to the assets which are chargeable to wealth tax while determining the net taxable wealth.

Shares in a company, held by a shareholder are not treated as an asset within the

meaning of Section 2(ea) of the Wealth Tax Act, 1957 and hence, wealth tax is not applicable on shares held in a company

7. Benefits available under the Gift-tax Act, 1958

Gift tax is not leviable in respect of any gifts made on or after 1 October 1998.

Notes:

The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares;

The above Statement of Possible Direct Tax Benefits sets out the possible tax benefits

available to the Company and its shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws;

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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, 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;

In respect of non-residents, the tax rates and the consequent taxation mentioned above

shall be further subject to any benefits available under the Double Taxation Avoidance Agreement, if any, between India and the country/specified territory (outside India) in which the non-resident has fiscal domicile; and

The stated benefits will be available only to the sole/first named holder in case the shares

are held by joint shareholders.

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SECTION IV: ABOUT THE COMPANY

INDUSTRY OVERVIEW

The information in this section has been extracted from the websites of and publicly available information, data and statistics from various sources, industry websites and publications including the website of Indian Machine Tool Manufacturers’ Association (“IMTMA”).The data may have been re-classified by us for the purpose of presentation. Neither we nor any other person connected with the Issue has independently verified the information provided in this chapter. Industry sources and publications, referred to in this section, generally state that the information contained therein has been obtained from sources generally believed to be reliable but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured, and, accordingly, investment decisions should not be based on such information. Overview of the World Economy In 2012, many countries pursued more austere economic policies, reducing government spending in order to attack their deficit and debt problems directly. The rate of growth of the world economy slipped from 5.1% in 2010, and 3.7% in 2011, to just 3.3% in 2012. The global budget deficit narrowed to roughly US$2.7 trillion, or 3.8% of World GDP. Many central banks also tightened monetary policy; growth of the global money supply, narrowly defined, slowed from 9.5% in 2010 and 8.7% in 2011, to 6% in 2012. In 2012, the 85 countries that followed a pro-growth approach achieved a median GDP growth rate of 4.9%, compared to just 0.8% for the 47 countries with restrictive fiscal and monetary policies. China grew 7.8%, Indonesia 6.0%, Mexico 3.8%, Russia 3.6%, Turkey 3.0%, the United States 2.3%, and Canada 1.9%, while Brazil grew 1.3%, Germany 0.9%, France 0.1%, Belgium 0%, Netherlands -0.5%, Spain -1.5%, and Italy -2.3%. Slower growth of world income reduced import demand and, especially, crude oil prices. As a result, world trade grew just 1% in 2012, compared with 18% in 2011. (Source: CIA World Factbook, accessed on February 7, 2013) Overview of the Indian Economy India is one of the fastest growing economies in the world with an estimated real Gross Domestic Product (“GDP”) growth rate of 5.4% per annum in 2012. India is also the world’s largest democracy by population size. According to CIA World Factbook, India’s estimated population was 1.20 billion people in July 2012. India had an estimated GDP of approximately US$ 4.73 trillion in 2012, which makes it the third largest economy in the world after the US and China, in terms of purchasing power parity. The following table presents a comparison of India’s real GDP growth rate with the real GDP growth rate of certain other countries for the periods indicated: Countries 2012 2011 2010 Australia 3.3% 2.1% 2.5% Brazil 1.3% 2.7% 7.5% China 7.8% 9.2% 10.4% Germany 0.9% 3.0% 3.7% India 5.4% 6.8% 10.1% Indonesia 6.0% 6.5% 6.2% Japan 2.2% -0.8% 4.5% South Korea 2.7% 3.6% 6.3% Malaysia 4.4% 5.1% 7.2% Russia 3.6% 4.3% 4.3% Thailand 5.6% 0.1% 7.8% United Kingdom -0.1% 0.8% 1.8% United States 2.3% 1.8% 2.4% (Source: CIA World Factbook, accessed on February 7, 2013) Overview of the Machine Tool Industry The machine tools industry is a primary segment of the manufacturing industry which forms the backbone of major sectors of industrial activity in a country. Machine tools like lathes and presses form the key building blocks for machine and components manufacturing. Being an integral sector, growth of the machine tool industry has an immense bearing on the country’s economy and

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in the development of the manufacturing sector. The industry is even more crucial for development of the country’s strategic segments such as defence, railways, space, and atomic energy. The machine tool industry can be classified in the following ways:

Based on how the metal is shaped, the industry can be classified into metal cutting

machines and metal forming machines. (Metal cutting is a collection of processes wherein metal is brought to a specified geometry by removing excess material using various kinds of tooling operations, leaving a finished part matching a set of specifications. Metal forming is modifying the shape of the metal being formed by deforming the object, that is, without removing any material)

Based on how the tool selection/ movement is controlled, the industry can be classified into CNC (Computer Numerically Controlled) machines and conventional machines.

Key advantages of CNC machines over conventional machines are the following:

Offers efficiency gains in material consumption resulting directly in cost reduction Offers improvement in set-up and lead times and ensures quality improvement Reduced human interaction required in different stages of machining process Eliminates the need for manual work required to make complicated mathematical

calculations to produce shapes with high complexity and accuracy Use of computer-aided design (CAD) and computer-aided manufacturing (CAM)

software have shortened the period between the design and production process Key differentiation factors in the CNC machine tool industry include the following: Manufacturing and technology specific:

Productivity and reliability of machines supplied Cost of ownership of the machine tool Degree of precision and accuracy of the machines– measured in terms of tolerance Ability to design and assemble high end machines such as multi-axes machining centres,

multi tasking machines, high precision machines and large machine tools In house expertise in critical stages of production such as:

o Design and development o Machining of some key components o Final machining

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o Assembly including the subassembly of critical parts such as high precision components, spindle or head constructions

o Fine tuning and testing (quality assurance) Customer specific:

Ability to offer complete solutions covering the entire value chain from customer application engineering, supply of machines based on requirement, onsite training and after sales support

Distribution network through direct presence in key geographies to offer consultation services and respond to customer queries

Types of machine tools

Global Machine Tool Industry The global machine tool industry (primarily constituting the top 28 machine tool manufacturing countries) reached a production value of $93.8 billion in calendar year 2011 from $70.2 billion in 2010, recording a growth rate of 34%. Global consumption, exports and imports also grew at almost the same rate. The global industry is expected to cross a production value of $100 billion in 2012. China dominated global production with a share of over 30% and along with other four Asian majors - Japan, Korea, Taiwan (ROC) and India, the share notched up to 62 % of the total global metalworking machine tool production in 2011. Asian countries are expected to achieve a two-third share in global production within the next year. European countries fared equally well with Germany, the third largest machine tool manufacturing country, growing at 42%. Other European countries like France (41%), Switzerland (45%), United Kingdom (30%), Italy (24%) and Spain (26%) also witnessed strong growth notwithstanding the not-so-positive conditions in European Union. (Source: IMTMA Annual Report 2011-2012) Global Machine Tool Production:

Countries

2011 (value in $ Mn)

2010 (value in $

Mn)

2009 (value in $

Mn) Total

production % Cutting production

% Forming production

Total production

Total production

China 28,277 70% 30% 21,859 15,300 Japan 18,353 89% 11% 11,971 7,007 Germany 13,495 74% 26% 9,489 10,800 Italy 6,233 49% 51% 5,018 5,242

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Republic of Korea 5,641 69% 31% 4,498 2,758

Taiwan (ROC) 5,000 80% 20% 3,877 2,266

USA 4,161 73% 27% 3,340 2,219 Switzerland 3,463 84% 16% 2,395 2,164 Spain 1,053 64% 36% 837 1,036 Austria 1,002 54% 46% 844 897 France 931 61% 39% 662 558 India 875 87% 13% 769 278 Others 5,332 4,606 4,187 Total 93,815 70,166 54,712 (Source: IMTMA Annual Report 2011-2012 and 2010-2011) Exports of metalworking machine tools by 28 countries in 2011 totalled $45.7 billion, which is a 37 % growth over the previous year. Japan continues its dominance on the export front followed closely by Germany. Together with Italy the three countries accounted for more than half of the global machine tool exports in 2011. On the import front China is the world's most voracious importer with more than one-third share followed by USA, Germany and India. All the top four countries registered over 40 % growth in their respective imports in 2011 in comparison to the previous year. The global industry consumed $86.3 billion worth of metalworking machine tools in 2011 registering a growth of 34% over the previous year. China continues to be the largest consuming country in the world with a share of over 45% of total consumption. Other big consumers - Japan, Germany and USA also reported quantum growth in their respective machine tool markets. India with 3% global share occupies seventh largest position in the world. (Source: IMTMA Annual Report 2011-2012) Global Machine Tool Consumption: Country 2011

(value in $ Mn) 2010

(value in $ Mn) 2009

(value in $ Mn) 2 year CAGR

China 39,099 29,423 19,790 41% Japan 7,620 4,890 3,239 53% Germany 6,956 4,677 5,798 10% USA 6,612 4,313 3,246 43% Republic of Korea 5,131 4,264 2,679 38% Italy 2,963 2,672 2,799 3% India 2,638 2,021 1,205 48% Brazil 1,990 1,861 1,488 16% Taiwan (ROC) 1,800 1,623 867 44% Mexico 1,361 1,060 1,012 16% Russia 1,317 1,165 1,189 5% Turkey 1,285 865 580 49% Switzerland 1,241 850 909 17% France 1,182 850 851 18% Canada 1,144 849 738 25% Others 3,951 3,161 3,811 2% Total 86,290 64,544 50,201 31% (Source: IMTMA Annual Report 2011-2012 and 2010-2011) European Machine Tool Industry Unless stated otherwise, information in this section is taken from the CECIMO study on the competitiveness of the European machine tool industry, December 2011, by CECIMO. CECIMO is the European association of the machine tool industries. Countries represented under the umbrella of CECIMO include EU member States, Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Italy, Portugal, Sweden, the Netherlands, UK, Turkey and Switzerland.

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The machine tool industry is one of the most globally competitive sectors in Europe. Europe generates more than one third of the world machine tool production and half of world exports originate from Europe. In 2010, the production of machine tools in Europe (includes the 27 member states of the EU, European Free Trade Association (EFTA) states and Turkey) amounted to 16.6 billion Euros and was stable compared to 2009, but significantly lower than 24.4 billion Euros posted in record 2008. The production of the sector is highly concentrated in Germany and Italy, which together accounted for two thirds of 2010’s output. The other significant producers with share in the total output higher than 3% are Switzerland, Austria and Spain. Major machine tool producers in Europe: Country Share in production in 2010 Share in employment in 2010 Germany 43.5% 44.8% Italy 23.0% 20.1% Switzerland 11.0% 7.7% Austria 3.9% 2.0% Spain 3.8% 3.4% Turkey 2.6% 3.5% UK 2.5% 3.8% France 2.3% 4.0% Czech Rep 2.2% 6.3% Netherlands 1.5% 0.4% Belgium 1.4% 0.7% Sweden 1.1% 2.1% Finland 0.6% 0.5% Denmark 0.3% 0.3% Portugal 0.3% 0.4% (Source: CECIMO study on the competitiveness of the European machine tool industry, December 2011, by CECIMO) Industry structure The European machine tool builders are mostly small and medium enterprises (SMEs). The average number of employees per company in 2010 was less than 100. Most of the machine tool businesses are family-owned and the management positions are also held by family members. Meanwhile there is a strong trend towards institutionalization and many companies are run by hired managers and CEOs. Regional Specialization The European machine tool industry is characterized in global markets by its capacity to supply high-end machine tools. The production is mainly concentrated in traditionally strong industrial centers such as South Germany, Northern Italy, Switzerland, Austria and the Basque country in Spain. Germany, Italy and France specialize in high customer-intimacy machines, Southern Europe specializes in bigger and more traditional machine tool solutions and Northern Europe specializes in flexible automated solutions as well as customer intimacy machines. Trade The European machine tool industry is highly export oriented. Europe is the most important production base for machine tools as well as for engineering industries which are the major buyer of machine tools. 79% of the European machine tool production is exported. However in recent years Europe has lost its significance in the sector to Asia. The share of European exports in total global exports which amounted to 62% in 2008 has dropped to 50% in 2010. European machine tools are mainly shipped to China, US, India, Russia, Korea and Brazil, but intra-EU trade is still significant.

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CECIMO zone wise exports in 2010

(Source: CECIMO study on the competitiveness of the European machine tool industry, December 2011, by CECIMO)

CECIMO top export destinations

(Source: CECIMO study on the competitiveness of the European machine tool industry, December 2011, by CECIMO)

CECIMO zone wise imports in 2010

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(Source: CECIMO study on the competitiveness of the European machine tool industry, December 2011, by CECIMO) Competitive position of the industry In the case of the European machine tool industry, their source of uniqueness lies mainly in the product features and unique technology. Main strengths of the European machine tool builders are quality, performance, precision, productivity and the ability to solve customer problems. Costs are not a driver of differentiation for them. European manufacturers supply application solutions rather than standard machines. The ability to deliver high precision parts in low volume just in time determines to a large extent the level of differentiation from competitors. The share of the European machine tool industry in global output has dropped from to 33% in 2010 compared to 44% before the global economic crisis in 2008. This share has been lost to Asian competitors including China, Korea and Taiwan. China has emerged as a strong competitor to the European industry. However, Chinese companies largely satisfy their domestic market by supplying low value machines which can perform basic operations and they need to overcome a large technological gap to reach the level of technology leaders such as Europe and Japan. Indian Machine Tool Industry India stands twelfth in production and seventh in consumption of machine tools in the world. The Indian machine tool industry achieved a production of ` 43.0 billion in 2012 recording a growth rate of 19% over the previous year.

Industry segmentation in 2012

CNC Conventional

Met

al

Form

ing

Quantity – 1,116 Value - ` 3.3 billion


Met

al

Cut

ting



(Source: IMTMA Annual Report 2011-2012) The industry has good design and manufacturing competence for manufacturing a wide range of metal cutting and metal forming tools and is in a position to export general purpose and standard machine tools to even technologically advanced countries. However the product range and the technologies manufactured in India have a substantial gap when compared with the levels present abroad. Few Indian companies are focusing on moving up the value chain by investing in R&D and inorganic growth. The strategy is to acquire companies complementing their Indian products and to extend their market reach both in India and abroad. CNC machines form the major component of machine tools used in India and their use is expected to increase as manufacturing companies focus on productivity improvements and product innovation. During 2006 CNC machines constituted 67% of the value of machine tools produced in India which has increased to 83% in 2012. Metal cutting CNC machines are the largest contributors to the industry’s revenue comprising 76% of the industry production in terms of value and 73% in terms of volume in 2012. (Source: IMTMA Annual Report 2005-06 and 2011-2012)

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Machine tool production 2006

Machine tool production 2012

(Source: IMTMA Annual Reports) The most popular types of CNC machines manufactured are CNC lathes, vertical and horizontal machining centres, wire cut EDM, CNC external grinders and flexible CNC SPMs. The Indian industry is achieving a key advantage of volume driven competitiveness in the CNC machine tools segment which is making it a sunrise segment of the industry.

Production of CNC machines

(Source: IMTMA Annual Reports)

CAGR – Metal Cutting – 28% CAGR – Metal Forming – 59%

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Industry structure The industry is widely dispersed comprising units of various sizes. The industry has an estimated 1,000 companies, producing machine tools, accessories/attachments, sub-systems and parts. Of these around 20 companies are in the large scale sector accounting for 70% of the turnover and the rest are in the SME (Small & Medium Enterprises) sector. While the large organized players cater to India’s heavy and medium industries, the small-scale sector meets the demand of ancillary and other units. (Source: IMTMA website accessed on February 7, 2013) Manufacturing hubs are located near the raw material source or end user industries. The geographical spread of the industry is mainly in the south, west and north. Around 50% of the total machine tool industry output comes from the south, and Peenya in Bangalore is recognized as the primary centre of machine tool production in the country. The presence of a large automobile industry in Pune has spurred the development of the machine tool industry in this city. In the west Rajkot and Bhavnagar are important centres of machine tool production. A few large units and a large number of SMEs produce both advanced CNC machine tools and the conventional manually operated general purpose machine tools. In the north the industry is located in Ghaziabad, Jalandhar, Batala and Ludhiana. These machine tool companies are family owned and smaller in size compared to units in the south. (Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises) User industries Demand for machine tools comes from manufacturers of primary and intermediate goods. Primary user industries include automotive, power equipment and rotating machinery, railways and heavy transportation, capital goods, consumer durables, defence, aerospace and atomic energy. Intermediate user industries include auto components, die and mould, electrical and electronic components, industrial valves, earth moving machinery etc.

User segmentation

(Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises) Demand supply scenario The Indian machine tool industry has good design and development capabilities and is able to develop most machines in the mid-level applications. The industry manufactures a wide range of products such as conventional machines, CNC machines, some specialized technologies/products however it lacks in design and engineering capability to manufacture high end CNC machines such as multi-axes machining centres, multi tasking machines, high precision machines and large machine tools. The primary reasons are:

Capacity constraints of domestic manufacturers (for standard machines) Low volume of production (grinding, gear cutting, metal forming etc.)

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Technology gaps (high precision, multi-axes machines for aerospace, power, auto etc.) Gaps in the production of large machine tools (power, railways, infrastructure)

Hence the demand for high end machines is mostly met through imports. Imports have been strong in certain product lines such as CNC turning and machining centres, grinding, gear cutting, metal forming and large machines where the Indian machine tool industry is weak. This has resulted in market share of domestic players reducing from 70% in 2000 to around 30% in 2010. The major suppliers are Japan, Germany, Italy, Korea, China and USA. Exports of machine tools from India are limited as the large domestic market absorbs most of the production. Technology gaps have also played a role in making Indian machines unattractive to foreign buyers although in some cases prices have been competitive. Of late, some Indian machine tool companies with niche/technology products (EDM, grinding, CNC turning, automation etc) have re-entered the export markets by setting up subsidiaries and marketing offices abroad. Consumption of machine tools has increased at a CAGR of 31% in the last 10 years (2002-2012). Domestic production has not been able to meet the domestic demand and has increased at a CAGR of 24% during the same period while imports have grown at a CAGR of 42% during the same period.

Consumption, production and export trend

(Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises and IMTMA Annual Report 2011-2012) Technology expectations and gaps The demand for machine tools is undergoing a rapid change in tune with the requirements of user industries. The global aspirations of India’s domestic industries as opposed to a domestic orientation in the past have led to the adoption of latest technologies in manufacturing and machine tools to meet quality and productivity demands. There are also new manufacturing sectors which have come up in India, among which the aerospace manufacture is the most noteworthy. Hence the technological up-gradation and product development of machine tool industry in India needs to be structured to meet the present and future demands of the user industries. As per the vision document & perspective plan 2010-2020 prepared by the Ministry of Heavy Industries & Public Enterprises a summary of the existing technologies of the Indian machine tool industry and those that the industry should develop is given below: Existing technology 5 year development perspective

Non CNC general purpose machines Standard CNC machines Gear cutting, Grinding Medium sized machines EDM, Wire‐EDM

Metal cutting machine tools Multi-axes, Multi-tasking machines High precision machines Large machines (boring-milling, turning) Gear cutting and finishing machines

Imports

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SPMs Medium size machines Presses, Press Brakes Pipe Bending Hydroforming (limited) Servo presses (limited) Rolling, Bending Measuring, metrology and gauging Drives and controllers (limited)

Grinding technology and machines Electrical and micro-machining

Metal forming machines

Higher press automation and transfer systems

Servo presses Sheet working machines (including laser,

waterjet heads) Hydroforming Fine blanking Forging machines Flow forming

Special technologies Explosive forming Electro-magnetic forming etc Cutting tool technologies Robotics and automation Alternative materials (epoxy granite etc.) Thermally stable welded structures Hydrostatic spindles, guideways Motorised and high frequency spindles Smart machines with embedded sensors

Critical components development

Anti-friction linear guideways Ball screws Precision spindle and ball screw support

Bearings CNC controls Spindle/axes servo motors with controllers Feedback measurement systems

The major technology demands may be set forth as below:

Multi-axes machining centres: These are required to meet the manufacturing of components for aerospace and to some extent the auto and rotating machinery sectors. Typically the machines will have the ability to machine in 5 axes with simultaneous interpolation, high speed spindles, and high precision. Such machines are mostly imported. Except for limited development carried out by some Indian manufacturers, there is no commercial production of these machines.

Multi-tasking machines: The trend towards multi-tasking machines has shown strong development abroad, especially in industries manufacturing components of high complexity, large size and high accuracy in batch production. Typically such applications are in power equipment, aerospace, valves and process industry components. Typical multi-tasking machines are mill-turn centres, machining centres with turning capability, Vertical Turning Machines with machining and milling capability.

High precision machines: The average tolerance band for components which was 5 microns a decade ago has shrunk to 1‐2 microns today. Machine tools are required to deliver high precision in regular production environment with high process capability index. High precision machines are required to be developed in turning, machining centre and grinding primarily, but the technology is applicable to practically every machine tool type including special purpose machines.

Large machine tools: The rapid growth of the energy, power, process and atomic energy industries, railways and defence and the nascent wind-mill industry has spurred the

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demand for large machines such as floor boring machines, large gantry machining centres, vertical turning machines etc. A limited capacity for the manufacture of such machines exists in Indian companies but the machines lack the latest features and technologies like hydrostatic bearings and slideways, error compensation etc. which makes the machines accurate and productive.

Gear cutting and grinding machines: Indian machine tool technology is lagging by around 10 years in these two critical areas, which are the mainstay of the automobile component industry. These machines are largely imported. Both gear cutting and grinding have developed very high productivity through the application of latest technologies. Indian manufacturers lack the ability to compete and usually meet the less demanding applications from users. Development of latest technology in these areas will require intense R&D.

Electrical and micro-machining: Electrical machining technologies such as Electro-Discharge Machines (EDM), wire-EDM and electrochemical machines play a vital role in high precision and fine engineering in industries such as die and mould, defence, instrumentation, medical, optical, electronics and toys besides others. These are the backbone of the tool making industries and are critical to component manufacturing in the sub-millimetre dimension often going down to micron level.

Metal forming machines: Domestic manufacturing of metal forming machines is largely limited to presses and sheet bending machines. There is very little manufacturing of modern sheet working machines such as punch/turret punch presses, transfer presses, fine blanking, cold/hot headers, forging machines, form rolling machines etc. Die casting machines, an important component of metal forming machines, are produced in limited quantities in India. Imports dominate in this category as well, thanks to advanced technologies in process control.

Critical components for CNC machine tools: The industry depends entirely on imports for all the critical components it needs to build CNC machines. These are anti-friction linear guideways, ball screws, precision spindle and ball screw support bearings, CNC controls, spindle and axes servo motors with drive controllers and feedback measurement systems. These form the “heart” or “core” of all CNC machine tools. This import dependence is because these items are of high technology and require heavy investment in technology and manufacturing.

The vision document & perspective plan 2010-2020 prepared by the Ministry of Heavy Industries & Public Enterprises has laid down an action plan for technology development which includes the following:

Form a high powered Machine Tool Technology Committee with representation from all stake holders and policy and finance agencies of the government

Draw up detailed R&D projects, considering not only the development phase but also the marketing phase to take the developments commercial

Strengthen the Central Manufacturing Technology Institute (CMTI), the only R&D institution with a long background and competence in machine tools and manufacturing technology

Set up a separate financing mechanism for the program Select the machine tool companies which will participate, and also draft the CMTI into

the program Government, machine tool industry and R&D/Technology sources may form Public

Private Partnership (PPP) companies to address special areas like critical components for machine tools and CNC/machine tool electronics. These companies will develop and commercialize the technologies; government would underwrite the R&D costs.

Promote the risk sharing “Development Contract” route by large government and private buyers as a route to development;

Implement and monitor the program through the high powered committee

Government policy and regulations

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Given the importance of the machine tool industry, it has been recognized as a “strategic industry” in NMCC’s (National Manufacturing Competitiveness Council) report to the PMO (Prime Minister’s Office) and has been included in the capital goods industry. The PMO has asked the NMCC to work out a development plan for the industry to meet future requirements of the country for advanced manufacturing technology. The Government has also instituted comprehensive policies and procedures to aid the industry’s growth, some of the key highlights are as listed below:

100% FDI is allowed in the machine tools industry Machine tools manufacturers are exempt from obtaining an industrial licence to

manufacture Manufacturers are free to select the location of the project Only specific items under machine tools are reserved for production by small-scale

industries Facilities such as duty free import of capital goods, raw material and components are

offered to Export Oriented Units (EOUs) to enable the companies to get inputs for production at international prices for competing in export market.

Manufacturing units of machine tools and consumer companies can take benefit of the EPCG scheme

Recognise exports as national priority, by all union and state government agencies and private sector

Locations with high growth potential to be supported by government, to bridge technology and productivity gaps. Skills upgradation, physical infrastructure, environmental mitigation facilities to be provided by the Government, in selected areas of intervention.

Schemes similar to SEZs can be developed for export oriented units, with capital investment in plant and machinery over $6 million.

Outlook for the Indian machine tool industry India has defined its ambitions for the manufacturing sector:

To raise contribution from manufacturing sector to the GDP from 17% at present to 30-35% by 2020 (National Manufacturing Competitiveness Council (NMCC) Strategy Paper 2006)

To attain a growth rate of 12-14% in manufacturing To make India a global automotive hub (Automotive Mission Plan 2006-2016)

One of the key inputs to achieving the above is machine tools since machine tools are the mother machines that build all other machines. It has been estimated that investments in machine tools have a multiplier effect of 1:100 on the ultimate output of industry. Considering the small share that India holds in world production, there is ample scope for the growth of the industry not only domestically but also internationally. Since the developed economies are facing stagnation in manufacturing capacity and fall in the growth rate for the machine tools industry, shifting machine tool capacity to low-cost high skill geographies like India has become imperative. Given the current gap between demand and supply, there is a clear need for adding capacities in this sector. The industry is moving towards increasingly sophisticated CNC machines, driven by demand from key user segments, such as automobiles and consumer durables. It is estimated that the industry must grow at a CAGR of 25% p.a. till 2020 to meet the targets set down. The projected demand for machine tools is expected to reach ` 293.0 billion in 2020 and production is expected to reach ` 230.8 billion. (Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises)

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Projected machine tool demand (consumption) and production

(Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises) Key growth drivers

End user industry growth: Growth in end user industries like automotive, auto components, capital goods, consumer durables and aerospace has been key to the success of this sector. Entry of multinational players and rapid strides made by the Indian players has made the end user industries technologically advanced and sophisticated. This is fuelling the need for complex machine tools to meet the customized requirements of end user industries.

o Automotive and auto-components industry: The Automotive Mission Plan 2006-2016 has estimated an investment of ` 160,000‐180,000 crore during this period to meet the stated objectives of the plan. These are gross project investments in plant, machinery and facilities. The investment in machine tools, both from auto majors and auto component industry, may be estimated at ` 20,000 crore.

o Power equipment: BHEL, the largest producer of power equipment in the country, has forecast a machine tool requirement of ` 5,000 crore over the next five years, to raise its capacity to 30,000 MW annually. Assuming that other companies in the sector proportionally increase their production capacities to meet demand, the demand for machine tools is likely to be around ` 7,000 crore from this sector

o Process industry: India has a fast growing process industry in gas, fertilizer, chemical and petroleum. The likely demand for plant equipment and machinery is ` 10,000 – 15,000 crore over the next few years. Of this, around 20% may be taken as machine tool requirements to machine the various components of process plants. This would translate into a demand of ` 2,000 to 2,500 crore.

o Consumer durables: The demand for machine tools from this sector is mostly for metal forming machinery and plastics processing machines. To a large extent these are met through imports, and this sector represents a field for generating substantial demand for domestic machine tool manufacturers.

o Railways: The modernization of existing railway workshops and setting up new capacities in locomotives and rolling stock is expected to generate an investment of ` 2,500 crore in machinery over the next five years. These are for standard and special machines required by the railways.

o Defence and aerospace: These sectors form one of the most important and large consumers of machine tools. Requirements range from standard CNC machines to large machines, multi-axes machines and special machines to meet the stringent requirements of these industries in terms of materials processed, complications and size of parts, and high accuracy demands. The demand for

CAGR – Demand – 15% CAGR – Production – 25%

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machine tools from the Government aerospace and defence sectors has been estimated at ` 2,750 crore over next five years. The private sector is expected to generate an additional demand of ` 1,000 crore of machine tools.

(Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises)

Import substitution: Currently the Indian machine tool manufacturers lack in higher technology leading the end user industries to go for imported machines. As the Indian players improve the technology of machines, there will be a huge market for them to cater which is currently served by foreign players.

Indian companies are expected to tap the demand for high end CNC machines through a series of strategic initiatives taken by the companies and favourable policy from the centre. Some of the initiatives taken by the industry include:

o Increased spending in Research and Development o Acquisition of new technologies to service high end requirements through

technology transfer and strategic acquisitions in Europe o Development of high end machines by Indian companies such as:

Multi-axes machines Multi-tasking machines High precision machines Large machines for niche sectors Gear cutting and grinding machines Electrical and micro machining machines

o Strengthening of key institutes for R&D like CMTI, Indian Institute of Technology (IIT) etc.

o Shift towards customer centric solution based approach through closer interactions with companies

o Backward integration viz. foundry, paint shop, sheet metal shop enabling the Companies to extend the cost advantage

Through these initiatives, the domestic market share of Indian Companies is expected to improve from around 30% currently to 50% by 2015 and upto 65% by 2020, if the production grows at a CAGR of 25% p.a. (Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises)

Increasing use of CNC machines: CNC machines are gaining more ground against conventional machine tools especially in the wake of new demand drivers such as the emerging aerospace components industry and the renewable industry which require large amount of machined components. In addition use of CNC machines by other end users is also expected to increase as they focus on productivity improvements and product innovation.

Export potential: At present India does not have major machine tool exports. However the significant cost differences resulting from both labour and component cost pose a huge opportunity for global companies to outsource their requirements to Indian companies to be more competitive in the global market. As Indian manufacturers start to plug technology gaps, there is potential of a huge outsourcing market opening for them.

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BUSINESS

In this section unless otherwise stated, any reference to “we” or “us” refers to Jyoti CNC Automation Limited along with its subsidiaries. “Our company” or “the company” refers to Jyoti CNC Automation Limited. “Our Subsidiaries” refer to” Jyoti SAS”, Huron Graffenstaden SAS, Huron Fräsmaschinen GmbH and Huron Canada Inc. COMPANY OVERVIEW We are a global player in the machine tools industry with market presence in India and 37 other countries in Asia, Europe, Middle East, North America, South America and Africa. We believe we are one of India’s largest CNC machine manufacturing companies in the metal cutting segment with a 12.7% share of the value of domestic production in FY 2012. We are a technology driven company and have been at the forefront of technological advances in the field of metal cutting in India. We share strategic and technical expertise across our global operations that we believe, allows research, operational and marketing synergies. Our Promoter; Parakramsinh Jadeja, a first generation entrepreneur who was in the machining and metal cutting business, acquired our company in 2002. We have grown from manufacturing gear boxes for lathe machines to developing precision all-geared head lathe machines to high-end CNC machines. Our Promoter, Parakramsinh Jadeja was honoured with the Small Scale Entrepreneur 3rd Award 2003 from Ministry of Small Scale Industries which was presented to him by the then President of India, Abdul Kalam. He received the CII Entrepreneur of the year award in 2005. He also received the IMTMA Premier “Outstanding Entrepreneur Award” by IMTMA in 2013. We believe we are a one-stop metal cutting solutions provider. We offer a wide range of CNC metal cutting products for both Turning and Milling operations, from the entry level to high-end machines viz; CNC Turning Center, CNC Vertical Machining Center (3-4-5 Axes), CNC Horizontal Machining Center, Vertical Line CNC Machines and Multitasking Machines. We offer our customers a choice of 24 products in 81 variants. We operate from 5 manufacturing facilities, 3 in Rajkot; India and 2 in Strasbourg; France. We are an integrated CNC machine manufacturer with design, development and manufacturing most of the critical components in-house. We have a captive foundry, machining, sheet metal unit, paint shop and assembly unit. Our Indian operations are ISO 9001:2008 certified by TUV and our manufacturing units in France have Quality certification ISO 9001:2008 from AFNOR. For maintaining consistently superior manufacturing practices, we received the Golden Award from the Quality Circle Forum of India. We have a capacity to manufacture 2,500 machines p.a. in India and 150 machines p.a. in France. We have supplied over 6,582 machines to our customers across the globe since 2008. We are a technology driven company with a R&D centre manned by 87 skilled and experienced personnel with many firsts to our credit. Our Company and our Promoters have won many accolades for technology and innovation including receiving the CMTI-PMT trust award for "The Best Innovative Machine Design VMC 70 Linear" at IMTEX in 2004. Our Company also received the Black Pearl Award for Display & Demonstration of Best Innovative Technology at ENGIMACH’ 2006 and Meaningful Technological Innovation Award at ENGIMACH 2008. Our Company received the DESIGNOMICS AWARD 2011 at World Brand Congress at Mumbai. We have an Application Engineering Division manned by 28 engineers who specialise in designing and developing processes for customers seeking solutions to their manufacturing operations. We work with them continuously advising them on the optimum process, materials and provide them with customised CNC machines from our product range. We have in the past 3 years, worked with and successfully developed 92 customized solutions for our customers in the automobile, consumer durables, general engineering, textile and diamond jewellery sectors. Our products find application in various end-use industries including Automobile, Aerospace, Agriculture, Bearings, Consumer Durables, Die and Mould, Diamond Jewellery, Defence, General Engineering, Medical Equipment, Plastic Processing, Pumps and Valves, Railways, Tooling and Textile Machinery. Our machines are also used in R&D institutes and Educational institutes. In FY12, 30.84%, 18.08%, 17.41%, 7.18% and 11.70% of our revenues came from Auto and Auto Ancillaries, Aerospace, General Engineering, Dies & Moulds and Government entities

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respectively. The corresponding figures for the nine months ended December 31, 2012 were 21.13%, 15.37%, 21.16%, 8.23% and 14.10% respectively. Our customers include vehicle manufacturers like Volkswagen, Peugeot Citroen, Solomon and Sonalika Tractors; aviation sector companies like Safran, Dassault, and AVIC; Auto component manufacturers like Amtek Auto, Sona Steering, Lucas TVS, Delphi-TVS, Mahindra Gears, Kalyani, Harsha Engineers, Vulcan and Rico Auto; General engineering companies like Larsen & Toubro, Siemens, Sandvik, Paharpur Cooling Towers Limited, KEC Engineering and Shakti Pumps; Consumer companies like Titan, Godrej & Boyce, Rossignol; Defence companies like MBDA and Mahindra Defence Naval Systems and Government entities like HAL, Heavy Vehicle Factory, Ordnance Factory and Railways. We have catered to over 1,233 customers during the nine months ended December 31, 2012 and 1,705 customers in FY12. We market our products in India and 37 other countries across the globe through our principal offices in India, France, Canada and Germany. We also have a dealer network in 18 countries. As on January 31, 2013, we had an order book for 824 machines amounting to ` 4,675.93 million. High-realization sectors like Aerospace and Defence constitute 46.81% of our order book as compared to the contribution of 29.78% by these sectors in FY12. In November 2007, our Company acquired Huron Graffenstaden S.A.S., a French machine tool manufacturer supplying high-end CNC machines to the aerospace and general manufacturing industries. Pursuant to this acquisition, Huron Graffenstaden S.A.S. and its subsidiaries became the subsidiaries of our Company. For the nine months ended December 31, 2012 our consolidated revenues and profit after tax were ` 4,167.37 million and ` 209.57 million respectively. For the year ended March 31, 2012, our consolidated revenues and profit after tax were `6,016.71 million and ` 161.66 million respectively.

STRENGTHS AND STRATEGIES

COMPETITIVE STRENGTHS

One-stop solution provider with presence across the CNC metal cutting machinery value chain We believe we are a one-stop solution provider for the metal cutting requirements of manufacturing operations across industries. Our Application Engineering Division, manned by 28 engineers engage with potential customers from a pre-sales stage and advises them on designing and developing processes to best address their manufacturing needs. We believe in constant innovation through continuous interaction with our customers. Our skill lies in the speed of design and process development providing a quick turnaround time for new product development for our customers. We advise them on the optimum process, materials and provide them with customised CNC machines from our product range. We have in the past 3 years, worked with and successfully developed 92 customized solutions for our customers in the automobile, consumer durables, general engineering, textile and diamond jewellery sectors. We believe our strength in devising solutions help us in winning new customers and increasing our share in our customers’ future expenditure on metal cutting solutions. We have a strong presence across the CNC metal cutting product range, from entry level machines (the 2 and 3 axes machines) to the high-end machine categories (simultaneous 4 and 5 axes machines). We offer our customers a choice of 24 products in over 81 variants for both turning and milling applications making us a one-stop-shop for all metal cutting requirements. We believe that our broad range of products and solutions allows our customers to source their varied requirements from us and enables us to expand our business from existing customers, as well as address a larger base of potential customers.

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Focus on technology and ability to deliver innovative solutions

We believe our in-house design expertise enables us to provide our customers innovative and customized solutions. We have a dedicated R&D unit in India – “Leonardo da Vinci Centre” spread across 3,123 sq. meters equipped with latest design and development tools. It has been recognised by the Department of Scientific and Industrial Research (DSIR). Our 87 member R&D team focuses on new product development and improving the operating characteristics of our existing products. We have developed 14 new variants of our products in the last two years. We also have a 21 member R&D team at our facility in France who work on innovative milling strategies and development of complex components. Over the years the R&D team at Huron have developed expertise in ultra precision, multitasking, high speed 5 axes Vertical Machining Centres catering to niche applications in the Aeronautical and Dies and Moulds sector. Our Company and our promoters have won many accolades for technology and innovation including receiving the CMTI-PMT trust award for "The Best Innovative Machine Design VMC 70 Linear" at IMTEX in 2004. Our Company also received the Black Pearl Award for Display & Demonstration of Best Innovative Technology at ENGIMACH 2006 and Meaningful Technological Innovation Award at ENGIMACH 2008. Our Company received the DESIGNOMICS AWARD 2011 at World Brand Congress at Mumbai. World class vertically integrated operations

We are an integrated CNC machine manufacturer with design, development and manufacturing capabilities. We manufacture most of the critical machine components like spindles, tool-changers, pallet changers, rotary tables and universal heads in-house. We have a captive foundry, machining, sheet metal unit, paint-shop and assembly unit.We believe that our integrated operations reduce our dependence on third party suppliers of products and services, enabling us to streamline our production process and achieve timely delivery of quality products at competitive costs. We have 5 manufacturing facilities, 3 in Rajkot, India and 2 in Strasbourg, France. Our units are spread over 237,408 sq. meters of industrial land in India and 60,680 sq meters in France. Our Indian operations are ISO 9001:2008 certified by TUV and our manufacturing units in France have Quality certification ISO 9001:2008 from AFNOR. We have invested in the latest technology to meet the quality expectations of our customers. Further, our IT infrastructure assists in ensuring seamless interaction between various teams and processes within our Company. We have quality management procedures which focus on (i) improvement in customer satisfaction, (ii) supplier performance improvement, (iii) on-time delivery, and (iv) reduction of wastage. These procedures include specific processes implemented to ensure quality checks at every phase of the production process which enable us to ensure quality of our products that we delivered to our customers at competitive prices. Diversified customer base and long standing customer relationships

We have catered to over 1,233 customers during the nine months ended December 31, 2012 and 1,705 customers in FY 12 across various sectors like Automobile, Aerospace, Allied Machinery, Die and Mould, Diamond, Defense, Medical Equipment, Plastic Processing and Textile Machinery. We are not dependent on the fortunes of any particular sector for growing our business and this diversification also helps us to withstand cyclical downturns in one or more sectors. For FY 12, we derived 30.84% of our revenues from auto and auto ancillaries, 18.08% from aerospace, 17.41% from general engineering, 10.31% from allied machinery and 11.70% from Indian Government entities. Our top 10 customers contributed 17.04%, 23.05%, 14.87% and 27.38% of our revenues in the nine months ended December 31, 2012, FY12, FY11 and FY10 respectively. One of the characteristics of the machine tool industry is the reluctance of the customer to switch vendors, if an existing process has been running efficiently. We have been able to retain our customers by promising and delivering cost savings and process enhancements. We have also gained additional business from our existing clients as they seek to replace older machines or expand capacities. A large number of our clients have relied upon us for their subsequent CNC

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machinery requirements, as a result of which 56.67% of our revenues during the nine months ended December 31, 2012 and 46.75% of our revenues in FY12 were from our existing customers. Strategic advantage and synergies through Huron acquisition

We believe we have gained significant advantages over our competitors through the acquisition of Huron. The synergies are in the areas of design and engineering, manufacturing and assembly, marketing and after sales service. In FY12, imports constituted 65% share of the machine tool consumption in India. Imports of medium to high-end machines from European and Japanese players have been growing continuously since 2007. The major gap in Indian industry is the technology to manufacture high-end machines. With the acquisition of Huron, we are in a position to offer the entire range of turning and milling solutions to customers who are currently importing a significant part of their high-end machine requirements. Huron has traditionally focused on critical design and assembly operations and sources all intermediate components from vendors. We have been able to supply a large part of their outsourced requirements viz. castings, sheet metal parts and other components from our Indian facility, reducing the overall input cost significantly. Our access to Huron’s technology, experience and design and development capabilities has helped our company to quickly move up the learning curve. We are able to leverage Huron’s capabilities in the European aerospace and automobile industries to acquire customers in these sectors in other markets. The acquisition has also enabled us to supply entry level to mid-range machines at comparatively lower prices to the overseas markets using Huron’s sales network and supply high -end machines to satisfy the growing needs of the Indian buyers, who are currently importing a significant part of their high-end machines from Huron’s competitors in Europe. The sales of our high-end machines defined as a machine with a realization of over `5 million as a percentage of our total sales for the nine months ended December 31, 2012 was 40.31% as against 37.61% in FY12 and 25.70% in FY11. Skilled technical teams and experienced management team

We believe that our qualified and experienced management and technical teams have contributed to growth of our operations and the development of in-house processes and competencies. The average age of the staff at our Indian operations is 30 years and the average age at our overseas operations is 46 years. This blend of youth and experience provides us a balance of dynamism and knowledge that has enabled us to build a technology driven global business. The ready availability of skilled and experienced manpower, due to our location in Rajkot, Gujarat – a mechanical engineering hub enables us to select the best talent available for our operations. Our Promoter and most of our senior management team have been with us for several years. Parakramsinh Jadeja, Sahadevsinh Jadeja and Vikramsinh Rana have been in the machine tool business for over 20 years. They are actively involved in our day to day activities and possess a deep understanding of the machine tools industry. They combine entrepreneurial skills with professional commitment which has helped us to achieve an eminent position in the industry. We believe the strength and quality of our management team and the nature of our organizational structure have been instrumental in implementing our business and growth strategies successfully. We believe our management team has worked towards ensuring good labour relations and we have not faced any labour unrest since the founding of our Company. BUSINESS STRATEGY

Our business strategy is guided by the vision and mission to be at the forefront of technology advances in our field and rank among the top ten machine tool manufacturers in the world by 2020. Augmenting manufacturing capacity to meet the growing industry demand

We believe that the growing demand for machine tools presents a significant opportunity for us. The consumption of machine tools in India was ` 117.6 bn in 2012 and is expected to reach `

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293.0 bn in 2020 (Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises). As per the National Manufacturing Policy, the Government has announced its intention to keen to improve the share of Manufacturing in GDP from nearly 16% currently to 25% by 2022. The continued increase in domestic and foreign investment into industry will translate into a higher demand for machine tools, the “Mother Industry” for all manufacturing activities. The major mechanical engineering ancillary hubs in the country that comprise a large number of SMEs and MSMEs are expected to contribute in a major way to the growth of the machine tools industry. We intend to continue the expansion of our manufacturing capacities to address this growing industry demand. In the past we have increased our manufacturing capacity in India from 500 machines p.a. in FY08 to 2,500 machines p.a. in FY12. In addition we have also undertaken expansion in our manufacturing facility in France from 100 machines p.a at the time of acquisition in 2007 to 150 machines p.a. in FY12. We intend to increase our manufacturing capacity in India to 4,000 machines p.a. by FY14. Our Management further intends to ramp-up the capacity to 7,000 machines by FY16. To support the expansion in our manufacturing capacity we are increasing the capacity of our foundry from 900 MT per month to 1,500 MT per month. We had planned our earlier capacity expansions in India keeping in mind future requirements of capacity addition. After the current capacity expansion plan, we have land available at our existing manufacturing facilities in Rajkot on which we can construct 217,361 sq. meters based on FSI available. Focus on import substitution by widening our product basket Currently the demand for high end CNC machines in India is mostly met through imports. Imports which constituted 30% of the domestic consumption in 2000 have grown to 65% in 2012. (Source: Indian Machine Tool Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises, IMTMA). The reasons for increase in imports mainly include capacity constraints of domestic manufacturers in standard machines and lack of technology for making high-end machines. We intend to leverage our technological expertise, design capability and integrated operations to offer quality products in a cost efficient manner to Indian user industries which are currently meeting their machine tool requirements through imports. We believe that our technological expertise coupled with low production cost will give us a significant competitive advantage while competing with imports. We intend to expand our current product portfolio of 24 products offered in 81 variants in the turning and milling machine segment. Additionally we plan to add grinding machines to our product basket in the CNC metal cutting segment. Consolidate our position as an international player by continuing to drive synergies between our Indian and international operations

We intend to continue to harness the synergies between our Indian and international operations to consolidate our position as an international player in the machine tool industry. The synergies are in the areas of design and engineering, procurement, manufacturing and assembly, marketing and after sales service. We believe that the technological expertise of Huron and its experience in manufacturing high - end machines specifically for Aerospace, Heavy Engineering and Dies and Moulds, coupled with the low cost manufacturing base of our Indian operations provides us with a significant competitive advantage in our foray into these sectors in new markets. We intend to fully exploit the infrastructure synergies between the two operations to enhance the operating margins of Huron. Diversify customer base, geographical reach and service offerings

We believe that our diverse product portfolio and the ability to continuously expand our product offerings based on the requirements of our customers give us a unique opportunity to add to our customer base across diverse sectors. We intend to leverage the skills of our Application Engineering Division to target sectors which we have currently not tapped to increase the use and application of our machine tool products. We have commenced work with a European machine tool builder, reputed for its EDMs (Electrical

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Discharge Machines) for high precision micro Die-Mould and Medical Implants applications. We believe our efforts in this direction will help us to enter new industries and broaden our customer base. We plan to further expand our geographical coverage by selling our products in countries such as China and other Far Eastern nations. In the past we have focused on select markets in Europe, Middle-East, Africa and South America as a part of our global strategy and intend to continue to focus on these markets in the future. We intend to increase our presence outside India, both in terms of value and markets, by leveraging our technological expertise and cost competitiveness to attract new customers in different geographies. We also intend to increase our revenue from after sales activities like service support and sale of spares by leveraging the machine base sold by us in the past. OUR PRODUCTS We have a diverse product range which includes, metal cutting machines, CNC Lathes, Turning centers, Machining centres, Special purpose machines and gear cutting machines. We believe we are among the very few Indian manufacturers with the capability to manufacture CNC Machines ranging from 2 axes to 5 axes. PRINCIPAL PRODUCTS

Entry Level Machines High End Machines

Description

Mid/High precision, versatile turning, milling and vertical machining centers ideal for mass production

Ultra precision, versatile, high speed and high technology products to service specific complex applications in niche sectors

Products

• 5 types of Turning Machines

• 1 Milling Machine

• 3 types of 3- Axis Vertical Machining Centers

• 4 types of Turning Machines

• 3 types of 3-AxisVertical Machining centers

• 1 Horizontal Machining Center

• 6 types of 5-Axis Vertical Machining centers

Applications

• Turning Machines: Low/Mid precision components like cylinder liners, pistons, engine valve guides in automobile, various general engineering components, chemical and process valves

• Milling Machines: Machine tool parts, bearings cages, auto shaft machining, medical and dental implants

• Vertical Machining Centers: Mass production of auto components like clutch disks, engine housings, injection moulds, castings, forging dies and pattern making

• Turning Machines: Large part components in heavy engineering, oil & gas, aluminum piston machining in automobiles

• 3-Axes Vertical Machines: Versatile, High speed, high precision machining of moulds, Aeronautical parts, cylinder heads of bigger engines and blade machining of power/ energy sector

• Horizontal Machining Centre: Primarily in engine body, cylinder head, gear boxes and connecting rods of automobiles

• 5-Axes Machining centres: Ultra precision and complex applications in Aeronautical, large die and moulds, medical and dental parts and large and complex power/ energy parts

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Sectors Served

• Automobile • Auto components • Bearings • Pumps and Valves • Textile Machinery • Dies and moulds • Medical and dentals • General Engineering

• Aerospace • Power, • Dies and moulds • Medical and Dental • Automobile • Plastic and Textile • Railway • Mining

Price Range Below `5 Million Above `5 Million

OUR SUBSIDIARIES

Our corporate structure is outlined below. Our Company has a wholly owned subsidiary which acts as a holding company for our three operating subsidiaries; all incorporated outside India.

The direct Subsidiary of our Company is as follows: Jyoti S. A. S. (“Jyoti S. A. S.”) Jyoti S. A. S. was incorporated on September 06, 2007 under the laws of France and has its registered office at 156 route de Lyon 67400 Illkirch-Graffenstaden. . Jyoti S. A. S. was incorporated as a special purpose vehicle for acquiring entire shareholding of the Huron Graffenstaden S. A. S., a high-end CNC machine manufacturing company incorporated in France. Jyoti S. A. S. holds entire shareholding of the Huron Graffenstaden S. A. S.

Huron Graffenstaden S. A. S. (“Huron”) Huron was incorporated on April 28, 1987 under the laws of France and has its registered office at 156 Route de Lyon 67400 Illkirch-Graffenstaden. Huron is involved in the business of designing, developing, all types of projects in the field of machine tools and automatic systems for industrial manufacturing as well as construction and sale of these high-end CNC machines to the aerospace and general manufacturing industry. Huron became a step-down subsidiary of our Company pursuant to the acquisition of its entire shareholding by Jyoti S. A. S.; a wholly owned subsidiary of our Company in 2007.

Huron Fräsmaschinen GmbH (“Huron GmbH”) Huron GmbH was incorporated on November 18, 1997 under the laws of Germany and has its

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registered office at 56 Benz strasse N° – 71272, Renningen – Deutschland. Huron GmbH is primarily in the business of marketing of Jyoti and Huron products in Europe. Huron GmbH is a wholly-owned subsidiary of Huron and thus an indirect subsidiary of our Company. Huron Canada Inc. (“Huron Canada”) Huron Canada was incorporated on February 26, 2001 under the laws of Canada and has its registered office at 408 Isabey – Saint Laurent - Québec H4T 1V3, Canada. Huron Canada is in the business of marketing of Jyoti and Huron products and to provide after sales service, application support and training in Canada and USA. Huron Canada is a wholly-owned subsidiary of Huron and thus an indirect subsidiary of our Company. MANUFACTURING PROCESS

We manufacture a wide range of horizontal and vertical metal cutting machines at our manufacturing units including CNC Lathes, Turning centres, Machining centres, Special purpose machines and Gear cutting machines.

Raw material

Metal cutting CNC machine manufacturing involves assembling various parts either manufactured in-house or sourced from vendors. We manufacture many key components in-house and have firm arrangements/agreement for procuring rest of the raw material requirements. The main raw materials used in the manufacturing process of our products and major vendors, based on different stages of input include Pig Iron sourced from, CR sheets Scrap Iron from various local vendors, and CNC panels from Siemens AG and Fanuc. Other inputs like Linear guide ways from Bosch and NSK, Ball screws from NSK, Bearings from SKF and FAG Electrical switchgear from Siemens AG and Hydraulic power packs from Bosch, Yuken and Chuck cylinders from Kitagawa and Panel AC from Ritall. We are not dependent on any single vendor for our raw material supplies. All our inputs are easily available at competitive prices from both domestic and overseas suppliers.

Power Our Company has received approval from Paschim Gujarat Vij Company Limited vide letter no: PGVCL/Comm/2010-11/PG-171/3571 dated May 25, 2011 for increase in HT power supply to 3500 KVA for Unit No. 1 on Plot No. G - 506, Lodhika GIDC, Village Metoda, Rajkot and vide letter no: PGVCL/TECH/HT/2007-08/PG-226/1116 dated March 15, 2008 for increase in HT power supply to 2500 KVA for Unit No. 3 on Plot No. 2839, Lodhika GIDC, Metoda, Rajkot, Gujarat, India. Water supply Our Company has two wells which suffice our regular water requirements. In case of additional requirement, we arrange it from water suppliers. Our Manufacturing Process

Our manufacturing process can be broadly divided into five stages comprising of foundry, machining, sheet metal forming, surface coating and assembly. High degree of automation through the entire manufacturing process helps our company to achieve cost minimization, quality improvement, minimizing lead time and improve reliability and performance of the machines.

A diagrammatic representation of the manufacturing process is given below:

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I. Foundry Process

The principal reason for building our own foundry was to leverage our understanding of metallurgy and have complete control on the quality of material used for our machines. Raw material used for manufacturing CNC machines is an important factor in improving the life and reliability of the machine. Our captive foundry has a capacity of 900 MT per month., which we intend to increase to 1,500 MT per month. We can make small, mid and large sized castings ranging from 250 kgs to 14 tonnes in the foundry. The foundry operations involve the following:

Pattern Making We have a captive pattern making shop where patterns are produced from aluminium, wood and polystyrene using CNC machines. The shop also has a storage area for keeping patterns.

Moulding Process Patterns made in the pattern shop are delivered to the moulding area as per requirement. Moulds are produced from sand sourced from sand drier having a capacity of 5MT per hour. Moulding process is carried out with 2 part chemically bound flaskless, fastloop moulding technique. Maximum cake size of 1.8mx2.5mx0.75m can be moulded which includes base, saddle, headstock, table, tailstock etc used for various models of CNC machines. The moulding cake is further processed with automatic manipulator. Heavy structural components including base, column etc.

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weighing between 2 tonnes and 15 tonnes are moulded using floor moulding technique. The floor moulding capacity is 300 MT per month.

Melting Our melting facility includes a dual track 3 tonne induction furnace supported by 10 tonne induction holding furnace. Graded castings are produced as per IS210 standard of different grades-FG260, FG300, SG400/50, SG600/3, etc. All batches of molten metal are tested for their chemical composition.

Pouring and Knock-off Pouring process for these graded materials is accomplished on mechanized pouring and cooling lines equipped with 91 plates. Knock-off process is done with pneumatically operated vibrator and the wasted sand is re-cycled through sand reclamation plant.

Casted components thus produced are relieved of stresses ensuring life time accuracy of CNC machines in a gas fired furnace which has a capacity to process castings of 20MT in a single batch. Shot blasting is done in automated shot blasting chamber for components weighing less than 2 tonnes whereas bigger components are shot blasted in separate chamber.

Finally the castings are protected with superior primer coating and chemicals. Casts produced are tested in the laboratory equipped with latest equipments including spectrometer & ultrasonic testing facilities.

II. Machine Shop

Our machining facility is equipped with 10 universal machining centres, 9 horizontal machining centres, 7 vertical machining centres, 9 turning centres, 10 cylindrical grinders, 4 surface grinders and 3 drilling machines. These machines are equipped with features like high speed spindles, auto-pallet changers, auto-tool changers and universal machining head.

Castings as well as other raw material such as graded steel are outsourced to local vendors for semi-finished machining. These semi-finished components are received in the machine shop for finishing operations. Various machining operations like turning, milling, drilling, tapping, boring are carried out on different CNC machines maintained in temperature controlled and dust free environment, to achieve finished component accuracies of upto 10 microns.

Components requiring superior finish & higher accuracies of less than 10 microns are processed further on various CNC cylindrical & surface grinders.

Quality standards for all the components are ensured by thorough quality inspection at input, in process, and finished stages. The metrology lab is equipped with co-ordinate measuring machine, portable co-ordinate measuring machine, roundness testing machine, profile testing machine apart from various other measuring devices.

In house machining facilities accomplishes cost control, quality improvement and produce high precision components.

We intend to add 4 5-axis machining centres, 10 horizontal machining centres, 6 vertical machining centres, 4 turning centres, 1 high speed multi centre and 1 surface grinder as part of the expansion.

III. Sheet Metal Forming

Sheet metal division produces precision sheet metal components and has 2 machines with laser cutting technology, 3 CNC press brake / bending machines, 2 robotic welding machines, 10 welding machines and 3 grinding machines. We intend to add 1 laser cutting and1 bending machine to support the expansion in our manufacturing capacity.

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Raw sheets are fed to CNC laser cutting machines, which operate on the fine tuned computerised nested programmes to achieve minimum wastage ensuring cost savings. The laser cut components are segregated & processed in CNC bending machines. Bend components are then welded with the aid of CNC robot welders as well as manual welding employing suitable fixtures. Finishing operations of grinding & buffing are carried out before sending the components for surface coating.

IV. Surface Coating

The finished machined and sheet metal components are processed for surface coatings of liquid painting or powder coating as per the requirement.

We have a fully automated paint shop comprising 7 tank pre-treatment process followed by Cathodic Electro Deposited (CED) primer coating and conveyorized baking with powder coating booths. There are 4 powder coating booths for different colours.

This versatile surface coating facility has enabled us to satisfy the aesthetic & protective requirements of our customers.

V. Assembly

Assembly is equipped with customized fixtures and precision inspection equipments. All the assemblies are carried under controlled & dust free operating environment to deliver machines with the required accuracy.

Critical sub-assemblies manufactured in-house such as spindle, turret, auto-tool changer, auto-pallet changer, rotary tables etc. are separately pre-assembled and tested in the dedicated sub-assembly shop. The electrical panel is sub-assembled in dedicated controlled environment.

Stage wise assembly tests are carried out during the assembly process. Final assembled machine is tested for required accuracies and other performance parameters employing laser interferometer, ball-bar test kit, and other geometrical test charts.

The machines are passed through pre-dispatch inspection before final dispatch.

OUR MANUFACTURING FACILITIES

Locations Our manufacturing activities include design, development and final assembly of CNC cutting machines. We manufacture most of the critical components in-house.

We operate from 5 manufacturing facilities, 3 in Rajkot; India and 2 in Strasbourg; France.

Infrastructure - India

Our company operates out of 3 manufacturing units covering a total area of 237,408 sq. meters, all located in Rajkot including an R&D Centre spread across 3,123 sq. meters.

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Unit II Our company started manufacturing operations in what we currently call Unit II. It is a facility measuring 3,024 sq. meters and was the location from where our Promoters had started their machining business in 1989. These premises and the equipment located therein were earlier owned by Jyoti Enterprise. The Unit is now being operated by us under an Agreement. This was our first manufacturing facility and we started our operations here in 2002. This Unit houses a turning shop and has CNC Turn-Mill Centers and CNC Turning Centers. These provide us with sufficient in-house capacity and capability for precision component manufacturing. Unit I In 2004, we built a 28,604 sq. meters facility to house the entire metrology, milling, grinding and a show room cum technology centre for demonstrations and pre‐sales functions. This was our second manufacturing facility, but was named Unit I. Our Metrology Laboratory is equipped with a state-of-the-art quality control and measuring instruments like Mitutoyo 3-D co-ordinate measuring machine, roundness tester, auto collimator, etc. This setup enables us to ensure high degree of geometrical accuracy like flatness, parallelism, straightness, roundness, cylindricity in our components through stringent metrological aspects. The Milling Shop has top of the line milling machines from Jyoti CNC, DMG, Mitsui Seiki, and Nicolas Correa. It is equipped with features like high speed spindles, auto pallet changers, auto tool changers, universal machining head, etc. and provides facilities to produce precise components. The Grinding Shop is equipped with imported high-end grinding machines from Studer, Kellenberger & Elb-Schilff. The facility provides a modern set up to carry out grinding operations on critical components like spindles, hearth couplings, guide ways, pallet changers, rotary tables and universal heads. The Tech Centre is equipped with simulators & advanced machines for hands-on experience for customers and educational institutions. Our tech centres give our customers a platform to select the ideal machine for their machining requirements. We plan to set up similar Tech Centers across India and in Europe. We have serviced more than 450 customer applications at this centre. Until FY 07, we assembled machines in this manufacturing facility which currently functions as our main machining center. The machine shop is equipped with the state of the art high end machines which include 5 face machining centre from Shin Nippon and 5 axis Universal Head Machining Centre and 5 axis Mill -Turn Machining Centre from Huron.

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Unit III In 2007, as our operations expanded, we decided to set up large capacities to implement our backward integration strategy by putting an in‐house foundry, sheet metal shop and surface coating facilities. In FY 08, we started our new facility; Unit III, covering 205,780 sq. meters of land with a state-of-the-art foundry, assembly facility, sheet metal facility, surface coating facility and R & D centre. Foundry Our foundry has a fully integrated mechanized molding loop line with sand reclamation plant and induction furnaces with versatile shot-blasting facilities and modern testing facilities to ensure quality castings. It currently has a capacity to produce 900 MT of castings per month. Assembly and Sub-Assembly Shop We also set-up a temperature controlled facility with 90 assembly stations with well laid out plant design for higher workmen comfort and productivity. Sheet Metal Plant We also installed a modern metal forming facility equipped with CNC laser cutting system, CNC sheet bending machine and robot welding solutions. Setting up the sheet metal plant has resulted in improving quality of aesthetics and superior performance. Surface Coating Plant We have a fully automated seven tank pre-treatment process followed by Cathode Electro Deposition (CED) primer coating and conveyorised baking with powder coating booths having an installed capacity of 4,000 machines. Our surface coating plant helps us achieve enhanced component aesthetics and durability. R&D centre The facility also houses a dedicated R&D Centre to focus on development of new products, processes, designs and technology. It is well equipped with high end CAD-CAM software and a full-fledged machine tool and assembly shop. Currently, we have a manufacturing capacity of 2,500 machines per annum in India. This facility also has recreation centers and a club house for its employees and their families. Unit III has enough spare land capacity to allow us to to increase our manufacturing capacity to four times the current capacity.

Infrastructure - France

Our overseas manufacturing activities are carried out in the two plants operated by our subsidiary Huron Graffenstaden. Both plants are located in the south of Strasbourg on the French side of the border with Germany.

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Plant I- Illkirch Plant I is located in Illkirch, in a building with an area of 13,546 sq.meters. Besides the main assembly area, this facility houses our overseas corporate offices, R&D and Quality divisions, supply chain management division, and the after sales division. The total land area under our occupation is 18,080 sq. metres. The assembly shop covers 9,064 sq. meters and is equipped with 12 cranes with capacities ranging from 5 tons to 20 tons, 2 painting cabins, 1 CMM room, and 2 air compressors with a total power capacity of 110kW). Plant II. - Eschau In order to increase our manufacturing capacity for large-sized machines, we acquired a new production facility, just a few miles away from our Illkirch plant, in October 2011. Equipped with the most modern production facilities, the new facility has commenced production since beginning of 2012. The total land area available in the new facility is 42,600 sq. metres. After the current expansion, we will have an area of 20,418 sq. metres land available for future extension. The building has offices, assembly shop and technical rooms spread over an area of 7,325 sq. meters. The assembly shop is equipped with 10 cranes with capacities ranging from 5 tons to 40 tons and 2 air compressors with a total power of 55kW. We have a 21 member R&D team at our facility in France that works on innovative milling strategies and development of complex components. Our team is manned by skilled and experienced engineers focused on the design and development of machining technologies, new materials and processes.

Both our operations in France use BaaN enterprise resource planning software to facilitate the flow of information between all business functions.

MARKETING AND SELLING ARRANGEMENTS Our diversified product offering has allowed us to develop a broad customer base across a range of industries and has reduced our dependence on any particular industry or market segment. Our wide portfolio of products gives us a competitive advantage, as we can cater to all the major verticals thus positioning ourselves as a one-stop-shop to our customers. Our diversified product offering has allowed us to develop a broad customer base across a range of industries and has reduced our dependence on any particular industry or market segment. Our wide portfolio of products gives us a competitive advantage, as we can cater to all the major industry verticals thus positioning ourselves as a one-stop-solution provider to our customers. We sell our products directly to customers as well as through our dealer networks. Domestic Sales -Direct: We focus our marketing and selling efforts in regional mechanical engineering hubs located at Rajkot, Ahmedabad, Pune, Chennai, Gurgaon and Kolkata. Our sales and services operations are carried out through various branch offices located at Indore, Mumbai, Bangalore, Coimbatore, Hyderabad Ahmedabad, Chennai, Gurgaon, Pune, Kolkata, Jamshedpur and Jaipur. In addition, direct sales representatives based at Vadodara, Surat, Vapi, Nashik, Nagpur, Aurangabad, Kolhapur, Belgaum, and Hosur cater to customers in the respective geographies. Domestic Sales- Dealer Network: Our Company also operates through dealers in North India based in Faridabad and Ludhiana. All the branch offices facilitate the pre-sales, sales and after sales support to the customers.

Sales Promotion: As a part of establishing our brand in the industry and increasing the awareness of our products in the minds of potential customers, we undertake various activities to promote our product basket and solutions. We regularly participate in national and international machine tools/engineering

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exhibitions like EMO, IMTEX, INTEC, Engineering Expo events organized by Infomedia, Engimach etc. Besides exhibitions, we organize “Open House” events where products and demonstrated exclusively and target customers are invited. We also organize “Technology-Seminars” at various locations bringing us closer to our customer and potential customers by enhancing their technological knowledge and providing them a forum to discuss issues related to manufacturing. We use the print media regularly to build awareness of our brand and products to our target audience through advertisements, interviews and articles in prominent industrial magazines like Search, Modern Machine Tools, Auto Monitor, Engineering Review, Purchase, Industrial Product Finder, Manufacturing Today and Efficient Manufacturing. We have Technology Centers at Rajkot and Chennai where machines are kept for demonstrations, application support and customer training. In the near future we’ll be establishing an additional Technology Center at Pune. End User Industries – Automobile - OEMs, Tier I ,II,III suppliers and ancillary companies Aerospace parts/components - Manufacturers and Exporters Heavy Engineering component – Power generators and distributors Engineering component - Capital goods and medium engineering manufacturers and

exporters Machinery Manufacturers - Small milling and special machinery manufacturers. Defense equipment manufacturers and suppliers Oil field equipments and component suppliers Agricultural parts and machinery manufacturers Medical inserts - plate manufacturers Institutional (for training): e.g. ITI, Engineering colleges and other training institutes Textile machinery and components manufacturers Jewellery manufacturers and exporters

Customers

We serviced 1,233 customers during the nine months ended December 31, 2012 and 1,705 customers in FY 2012 globally. Since FY08, we have added 3,826 customers globally. These customers are across industries and therefore we are not dependent on one customer, sector or geography. In the nine months ended December 31, 2012 and FY 12 sales in India accounted for 45.19% and 60.97% respectively of our consolidated global sales.

Competition We face competition from other CNC metal cutting machine manufacturers in the Indian and overseas markets. In India, our competitors include Ace Designers Limited, Bharat Fritz Werner Limited, Lakshmi Machine Works and Indian operations of large global players like Makino, Yamazaki Mazak, Kennametal and DMG Mori Seiki. In the global markets we compete against the aforementioned global machine tool manufacturers and local players in respective markets.

Target Markets - Domestic

Automobile Hubs

Gurgaon/Pune/Chennai/Pithampur - component suppliers to Maruti-Suzuki, Hero Honda, TATA & TELCO, Delphi-TVS, Eicher Motors etc.

Sanand – New location for TATA Nano project where we will be supplying machines initially to their different vendors

Low cost hubs

Rajkot, Nashik, Belgaum, Indore, Coimbatore, Vadodara, Aurangabad, Agra

Major tier II suppliers to Mahindra and Mahindra, Eicher, Bajaj, Kinetic etc. and replacement component manufacturers for the automobile components like pistons, valves, piston rings, etc.

Export promotion zones and tax exemption zones

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Roorkee, Haridwar, Baddi, Hazira, Noida SEZ, Mumbai SEEPZ, Bhuj have a large number of engineering component manufacturers and Export Oriented Units

Engineering hubs

Ahmedabad, Mumbai, Bangalore, Ludhiana, Faridabad, Chennai have feeder industries supporting major sectors like Textiles, Pharmaceuticals, Machinery, Forging, Plastic Moulding, Material Handling equipment, Tractor and Farm equipment manufacturers, etc.

Specific component manufacturing hubs

Component manufacturing centres like Kolhapur, Jaipur, Tarapur, Surendranagar, Alwar, Kanpur, Trichy, etc, where some big companies have plants and their ancillaries

Defense and Aerospace part hubs

Bangalore, Hyderabad, Chennai, Trichy with suppliers and subsidiaries of Defence and aerospace industries.

Target Markets – Overseas

We intend to increase our presence outside India, both in terms of value and markets, by leveraging our technological expertise and cost competitiveness to attract new customers in different geographies. European Union

Middle East countries

South American countries

Africa

SALES NETWORK

Direct Sales

Over 80% of our domestic sales volume is generated through direct sales. We have branch offices with teams of sales engineers with relevant experience in the machine tool industry and thorough product knowledge of entire product range offered by us. We have branch offices at Ahmedabad, Mumbai, Pune, Bangalore, Chennai, Coimbatore, Jaipur, Indore, Hyderabad, Gurgaon and Kolkata. Smaller industrial pockets are covered by deputation of Sales Engineers in areas like Baroda, Surat, Nashik, Aurangabad, Kolhapur, Nagpur, Belgaum and Jamshedpur.

Dealer Sales

Industrial pockets across North India are serviced through the dealers based in Faridabad and Ludhiana. These dealers have comprehensive selling strength, supporting infrastructure and thorough understanding of the market. Dealers’ employees are given comprehensive training in product, sales and service areas at regular intervals by us. We regularly monitor performance of dealers and provide them with market information and guidance, whenever required.

International Sales Network

We sell our products in France, Germany, Portugal, Turkey, Netherland, Hungary, Poland, Austria, Spain, Switzerland, Italy, Slovakia, Canada and UK through the established Huron dealer network. We also have dealers and distributors in Argentina, USA, Sri Lanka, South Africa and China. Direst sales support is also extended to customers in UAE, Bahrain and other Middle East countries, Malaysia and Singapore.

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ENTERPRISE RESOURCE PLANNING (“ERP”) In April 2005, we implemented an ERP software system developed by SAP, which integrates the management and allocation of resources for all segments of the business operations ranging from human resources to quality control. We believe that the ERP system, coupled with strong internal mechanisms, will facilitate the management and personnel to take informed decisions in managing inventories, supply chain and consignment status across all products, locations and divisions across the country in a more efficacious and efficient manner.

HUMAN RESOURCES

We rely on our experienced top management to anticipate industry trends and capitalise on new business opportunities that may emerge. Our company believes that a combination of market reputation, working environment and competitive compensation programs allow it to attract and retain talented people. The senior management team consists of experienced individuals with diverse skills in manufacturing, marketing and finance. The principal corporate office housed in Rajkot conducts the all administrative and reporting activities.

MANPOWER

Our manufacturing facilities are located in well established industrial areas and therefore we do not foresee any difficulty in the availability of and recruitment of the requisite quality manpower. Further, trained and skilled manpower is easily available in the region. Allocation of labour is done astutely to ensure optimum and judicious use of the manpower.

As of January 31, 2013 we had a total of 1,326 employees, 1,178 employees in India and 148 employees overseas. 18.78% of our employees are engineers. Our employees are responsible for the various awards received by us over the years for technological innovation. The attrition rate of our employees in Application Engineering Division and our R&D division for FY12 was 4.35%. There is a well laid out recruitment process beginning with the requisitions from respective department heads being sent to the HRD which in turn seeks approval from Senior Management. Over the years, we have earned the reputation of being the most preferred employer in the Rajkot area.

Our technical teams bring with them extensive experience in design, R&D, engineering, procurement, manufacturing, quality assurance, and after sales services. We have implemented a skills enhancement program for our employees, wherein our Indian employees work at our overseas facilities and vice-versa, enabling them to understand requirements of a different set of customers thus adding to their abilities and experience. We have continuous in-house training programs for all our employees. We send our employees to attend various seminars and training programs around the world conducted by reputed institutions and professionals to keep them updated in their field of work. A department-wise breakup of our company’s manpower resources is given below.

Department Nos

Planning 23

R & D 87

Quality Assurance 50

Production 636

Administration 67

Finance 16

Marketing, Sales & Customer Support 214

HR 8

Maintenance 21

Purchase 17

IT 6

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Support Staff 33

Total 1,178

Health and Safety We are committed to protecting the health and safety of the workers and employees working in our Company’s manufacturing units, people who come in contact with our company’s operations and the heath and sustainability of the environment in which it operates. The policies, procedures and training programs have all been developed in line with recognised industry standards, supplemented by input from management and employees.

RESEARCH AND DEVELOPMENT

We have a dedicated R&D unit – “Leonardo da Vinci Centre” spread across 3,123 sq. meters located at Unit 3 equipped with latest design and development tools. It has been recognised by the Department of Scientific and Industrial Research (DSIR). In addition, there is a well equipped R & D Tool room and an Assembly and Testing area. The in-house R&D efforts have helped our company to develop processes, tools and technology to make the manufacturing process more efficient and broaden our product range. Development of CNC machines is a highly technologically‐intensive process and is a key differentiator for us. We have invested significant resources in creating a competent 87 member team focused on engineering and designing of machines. We also have a 21 member R&D team at our facility in France that works on innovative milling strategies and development of complex components. Over the years the R&D team at Huron have developed expertise in ultra precision, multitasking, high speed 5 axes Vertical Machining Centres catering to niche applications in the Aeronautical and Dies and Moulds sector.

Our R&D initiatives have received a tremendous boost through the acquisition of Huron. This has enabled the team to gain the experience in design and development of high‐end machines. We are now acquired expertise in automation and have a number of innovations to our credit. Our Indian and French R&D teams have worked on many new projects jointly to develop high end five axes machining centers, mill turn centers, and heavy duty machining centers to cater to new markets in India and abroad. Our R & D unit is equipped with the latest design and development tools like Pro/E FOUNDATION. Pro/E advance assembly extension, Pro/Mechanical solutions, Pro/Manufacturing, UNIGRAPHICS advanced design & manufacturing Altair HyperWorks, UNIGRAPHICS mould design and E PLAN. We also use testing equipment like RENISHAW Laser calibration equipment (resolution 0.001 microns) RENISHAW Ball bar test kit (resolution 0.1 microns), Taylor Hobson Autocollimator, Schenck Avery Vibrotest, Wyler Electro Level, SKF Vibration and temperature analyzer (under implementation) and SKF Spindle balancer. Our Indian R&D unit comprises approximately 7% of the total staff strength of our company. The table below provides a function-wise breakup of the R&D Department. Function No. of Personnel Product Design 20

Development of Components 9

Development of Assembly & Prototype Testing 15

Electrical Design and PLC design 18

Special software applications 2

R&D Assembly and Tool room 23

Total 87

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CORPORATE SOCIAL RESPONSIBILITY We believe that our corporate social responsibility (“CSR”) program achieves an integration of economic, environmental and social imperatives while simultaneously addressing shareholder expectations. CSR is used as an integral business process in order to support sustainable development and there is a constant endeavour to be a better corporate citizen while enhancing financial performance. As a part of social responsibility we have established technology centres at Chennai and Rajkot and have already purchased the land to establish the third one at Pune. We invite young engineers and management trainees to experience the practical working environment through in house training, thus helping bridge the gap between the academic syllabus and practical implementation. All technical/vocational training programs are conducted free of cost for the students. We are keen to contribute to the uplift the sporting standards of our nation and towards this objective we have built sporting infrastructure in form of an Indoor Stadium for various sports like table tennis, badminton, Chess, etc and a free lodging and boarding facility for the players. Our infrastructure is frequently used for various sports coaching camps. We understand our responsibility towards the society and the activities initiated and run by us reflects this sense of duty. Our company periodically arranges “Tree Plantation” and “Blood Donation” programs as a humble contribution to the society. INTELLECTUAL PROPERTY Our intellectual property consists primarily of industry know-how and trade secrets. We do not have any registered patents or trade marks. Our trade marks “Jyoti” or “Jyoti” with the associated logo is not a registered trade marks in the name of our Company. We have entered into a trade mark licence agreement dated September 27, 2012 with Parakramsinh Jadeja, one of our Promoters, for use of the ‘Jyoti’ trade mark and associated logo. The trade mark “Jyoti” is registered in the name of Parakramsinh Jadeja. Parakramsinh Jadeja has also made an application for registration of ‘Jyoti’ trade mark with associated logo before the Trade Marks Registry to have the trade marks registered in his name. However, ‘Jyoti’ trade mark with associated logo has not been registered in his name till date. Parakramsinh Jadeja has received an objection against registration and an affidavit in support of the application has been filed by Parakramsinh Jadeja before the Trade Marks Registry. The registration of any trade mark is a time-consuming process and there can be no assurance that our Company will continue to have the benefit of the trade mark license agreement in the future. Our subsidiary, Huron Graffenstaden SAS owns the trademark ‘Huron’ and the related logo is registered in 60 countries out of which the registration has expired in 13 countries for which application for renewal is being processed. PROPERTY Our Company leases several properties including for its manufacturing facilities and corporate purposes. Set forth below is a summary of immovable properties: Sr. No

Address Nature of Ownership

Area Validity period

1. Plot No. G-506, GIDC, Lodhika Industrial Estate, Kalawad Road, Metoda, Rajkot

Lease from GIDC vide lease deed dated October 5, 2002

20,778 sq. meters 99 years

2. Plot No. G-506/1, GIDC, Lodhika Industrial Estate, Kalawad Road, Metoda, Rajkot

Lease from GIDC vide lease deed dated May 30, 2003

5,550.65 sq. meters

99 years

3. Plot No. 2839, GIDC, Lodhika Industrial Estate, Kalawad Road, Metoda, Rajkot

Lease from GIDC vide lease deed dated September 4, 2006

205,780.05 sq. meters

99 years

4. Plot no. 1125, Sub Plot Lease from Rajkot 300.86 sq. meters 99 years

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no. 9, T.P Scheme No. 4, Samrat Industrial Area, Rajkot

Municipal Corporation vide lease deed dated March 20, 1992

5. Plot no. 4/8 Adhar Sahakari Premises Society Ltd Sector no. 10, Bhosari Pune.

Plot Allotment Letter dated December 12, 2006 from M/s. Adhar Inustrial Premises Co-op Soc. Ltd. and Lease Deed dated July 28, 2006 between Pimpri-Chinchwad New Town development Authority and M/s. Adhar Inustrial Premises Co-op Soc. Ltd.

420.00 sq. meters 99 years

6 Plot no. P-4, GIDC, Lodhika Industrial Estate, Road No. 8, Metoda, Rajkot

Licensed user agreement dated September 27, 2012 with Jyoti Enterprise, a Promoter Group entity

3,024.00 sq. meters

3 years

Further, our Company has entered into lease / leave and license agreements with various parties in respect of 14 premises which are used as branch offices, for use by our representatives and for carrying out marketing activities across India. Sr. No Address of Property taken on

leave and license / lease Commercial / Residential

Purpose

1 Office no. 412 & 412A, Abhishree, Opp Star India Bazaar, Satellite Road, Ahmedabad – 380 015

Commercial To carry on marketing and sales & services activities

2 No. 152 A, first floor, 36th cross, 2nd Block, Rajajinagar, Bangalore – 560 010

Residential Only for residential purpose for stay of our representatives

3 Flat No. G2, Asian Enclave, B-25, 1ST Main road, T.V. Nagar, Ambattur, Chennai – 600 053


4 Flat no. 4, Nav Bharat Apt, Swaroop Nagar, Kanpur


5 401, Highway commerce Center, off. I .B. Patel Road, Goregaon – East, Mumbai – 400 063.

Commercial To carry on marketing and sales & services activities

6 Flat no. 3D, 6 A Hindustan Road, Kolkata – 700 029


7 Flat no. 1, Wing 3, 6th Floor, Arihant Majestic tower, 216 Jawaharlal Nehru Salai, Chennai

Residential Only for residential purpose

8 Office No. S-24, Second Floor, Dwarika Tower, Plot No A-12, Central Spine, Vidhyadhar Nagar, Jaipur

Commercial To carry on marketing and sales & Services activities

9 Dr. V. S. Road, Behind S. T. Workshop, Gondal Road, Rajkot

Commercial

To Carry on machining process for CNC Machine

10 Flat no. F / 403, Shri Ganesh Aangan CHSL, Thakur Village, Kandivali – East, Mumbai – 400

Residential Only for residential purpose

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101. 11 112A, Dr. Nanjappa Road,

Coimbatore – 18 Commercial To carry on marketing

and sales & Services activities

12 Plot no. 87, 2nd Floor, Hastinapur, Sainikpuri, Secunderabad


13 402, Highway Commerce Center, off. I .B. Patel Road, Goregaon – East, Mumbai – 400 063.


14. Plot no. 115, Development Plot, Ambattur Inds Estate, Chennai


INSURANCE Our operations are subject to hazards inherent to manufacturing units, such as risks relating to fire and earthquake. This includes hazards that may cause damage and destruction of property and equipment. We have taken insurance to cover different risks which we believe is sufficient to cover all material risks to operations and revenues. We have, however, not obtained “key man insurance” for our senior management. We have taken “Standard Fire and Special Perils” Policy for covering our risk in relation to the properties located at 1) Plot No. G-506, GIDC, Lodhika Industrial Estate, Kalawad Road, Village Metoda, Rajkot, 2) Plot No. 2839, GIDC, Lodhika Industrial Estate, Kalawad Road, Village Metoda, Rajkot, 3) Plot No. P-4, GIDC, Lodhika Industrial Estate,Road No. 8, Rajkot 4) Plot no. 1125, Sub Plot no. 9, T.P Scheme No. 4, Samrat Industrial Area, Rajkot. The policies covers damages to building, plant and machinery and other equipments situated thereon arising in the event of fire, lighting, storm, cyclone, flood, Typhoon, Tempest, Hurricane, Tornado and other related perils Further, workers and employees of our Company are covered under “Workmen’s Compensation” and “Group Personal Accident Policy” (accident and related perils) and Employee Deposit Link Insurance (death of employee). Our Company has also taken “Marine Cargo Open Policy” for covering damages and liabilities arising from movement of products (including depot movement and movement for job work) in India or outside. Our subsidiary Huron Graffenstaden has undertaken insurance policies covering liability for industrial multi-risks and business interruption, operating liability, assembly and testing of marketed equipment, vehicle fleet and handling equipment in France and Germany, coverage of employees’ vehicles for professional missions, freight for purchased and sold equipment, insurance for sudden and fortuitous breakdowns of various equipment, Supplementary insurance for the entire staff, Pensions for all staff (death, incapacity, disability), Personal Accident for travelling abroad. Huron Graffenstaden and another subsidiary Jyoti SAS has taken insurance policies for covering liability of Directors and officers.

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REGULATIONS AND POLICIES The following description is a summary of the relevant regulations and policies, as prescribed by the GoI or State Governments which are applicable to our Company. The information detailed in this chapter has been obtained from publications available in the public domain. The regulations set out below may not be exhaustive, and are only intended to provide general information to the investors and are neither designated not intended to substitute for professional legal advice. There are no specific regulations governing the industry in which our Company operates in India. Set forth below are certain significant legislations and regulations that generally govern our Company in India: Environmental Laws Manufacturing projects must also ensure compliance with environmental legislation such as the Water (Prevention and Control of Pollution) Act 1974 (“WPA”), the Air (Prevention and Control of Pollution) Act, 1981 (“APA”) and the Environment Protection Act, 1986 (“EPA”). The Central Government may make rules for regulating environmental pollution. The Water (Prevention and Control of Pollution) Act, 1974 (the “Act”) The Act provides for the prevention and control of water pollution and the maintaining or restoring of wholesomeness of water, for the establishment, with a view to carrying out the purposes aforesaid, of Boards for the prevention and control of water pollution, for conferring on and assigning to such Boards powers and functions relating thereto and for matters connected therewith. The Act defines pollution as such contamination of water or such alteration of the physical, chemical or biological properties of water or such discharge of any sewage or trade effluent or of any other liquid, gaseous or solid substance into water (whether directly or indirectly) as may, or likely to, create a nuisance or render such water harmful or injurious to public health or safety, or to domestic, commercial, industrial, agricultural or other legitimate uses, or to the life and health of animals or plants or of aquatic organisms. The Act envisages establishing a Central Board as well as State Board for Prevention and Control of Water Pollution. Accordingly, the previous consent of the Board constituted under the Act must be obtained, for establishing or taking steps to establish operation or process, or any treatment and disposal system or any extension or addition thereto, which is likely to discharge sewage or trade effluent into a stream or well or sewer or on land. Such previous consent is required for bringing into use any new or altered outlet for the discharge of sewage or for the new discharge of sewage. If at any place where any industry, operation or process, or any treatment and disposal system or any extension or addition thereto is being carried on, due to accident or other unforeseen act or event, any poisonous, noxious or pollution matter is being discharged, or is likely to be discharged into a stream or well or sewer or on land and, as a result of such discharge, the water in any stream or well is being polluted, or is likely to be polluted, then the person in charge of such place shall forthwith intimate the occurrence of such accident, act or event to the Board constituted under the Act and such other authorities or agencies as may be prescribed. The Air (Prevention and Control of Pollution) Act, 1981 (the“Act”) The Act provides for the prevention, control and abatement of air pollution, for the establishment, with a view to carrying out the aforesaid purposes of Boards for conferring on and assigning to such Boards powers and functions relating thereto and for matters connected therewith. The Act envisages establishing a Central Board as well as State Pollution Control Boards in each State. The Central Board constituted under Water (Prevention and Control of Pollution) Act, 1974, shall, without prejudice to its powers and functions under this Act, shall also exercise the powers and perform the functions of the Central Board under the Prevention and Control of Air Pollution. Similarly if in any State, the State Government has constituted for that State, a State Board for the Prevention and Control of Water Pollution, then such State Board shall be deemed to be the State Board for the Prevention and Control of Air Pollution and exercise the powers and perform the functions of the State Board for the Prevention and Control of Air Pollution also. As per the Act, no person operating any industrial plant, in any air pollution control area (so declared under Section 19 of the Act) shall discharge or cause or permit to be discharged the emission of any air pollutant in excess of the standards laid down by the Board constituted under the Act. Further, no person shall, without the previous consent of the Board constituted under the Act, establish or operate any industrial plant in an air pollution control area. The Act further prescribes certain compliances with regard to the reporting and prevention of accidents. Thus, where in any area the

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emission of any air pollutant into the atmosphere in excess of the standards laid down by the Board constituted under the Act occurs or is apprehended to occur due to accident or other unforeseen act or event, the person in charge of the premises from where such emission occurs or is apprehended to occur shall forthwith intimate the fact of such occurrence or the apprehension of such occurrence to such Board and to such authorities or agencies as may be prescribed by the Act. The Environment (Protection) Act, 1986 (the “Act”) The Act provides for the protection and improvement of environment and for matters connected therewith and is in pursuance of India‘s participation in the United Nations Conference on the Human Environment held at Stockholm in June, 1972. In keeping with its mandate, the Act provides for the constitution of Boards to regulate pollution levels and protect the environment, the formulation of rules with regard to environmental standards and imposes certain obligations. It stipulates that no person carrying on any industry, operation or process shall discharge or emit or permit to be discharged or emitted any environmental pollutant in excess of such standards as may be prescribed. Further, no person shall handle or cause to be handled any hazardous substance except in accordance with such procedure and after complying with such safeguards as may be prescribed.

Electricty Act 2003 and rules framed thereunder

Our Company is also required to comply with the various provisions of the Electricity Act, 2003 and the rules thereunder wherever applicable, including but not limited to, electricity loading and payment of cess. Labour Laws The Factories Act, 1948 The Factories Act, 1948 (“Factories Act”) provides for the health, safety and welfare of all workers while at work in the factory, including adequate maintenance of plant, systems and other places of work, and provision of adequate information, training and supervision. The Factories Act also provides for the approval, licensing and registration of factories by the respective State Governments. Contravention of the provisions of the Factories Act may attract imprisonment of up to 10 years, along with fine. Payment of Gratuity Act, 1972 The Payment of Gratuity Act, 1972 provides for payment of gratuity to employees employed in factories, shops and other establishments who have put in a continuous service of 5 years, in the event of their superannuation, retirement, resignation, death or disablement due to accidents or diseases. The rule of 5 year continuous service is however relaxed in case of death or disablement of an employee. Gratuity is calculated at the rate of 15 days wages for every completed year of service with the employer. Presently, an employer is obliged for a maximum gratuity payout of ` 1 million for an employee. The Payment of Wages Act, 1936 The Payment of Wages Act, 1936 (the “Act”) is enacted to regulate the period and payment of wages, overtime wages and deductions from wages and also to regulate the working hours, overtime, weekly holidays of certain classes of employed persons. The Act contains provisions as to the minimum wages that are to be fixed by the appropriate governments for the employees, entitlement of bonus of the employees, fixing the payment of wages to workers and ensuring that such payments are disbursed by the employers within the stipulated time frame and without any unauthorized deductions. The Workman Compensation Act, 1923 The Workmen's Compensation Act, 1923 (the “WC Act”) aims at providing financial protection to employees (for their dependents in the event of fatal accidents) by means of payment of compensation by the employers, if personal injury is caused to them by accidents arising out of and in the course of their employment. The WC Act makes it obligatory for the employers brought within the ambit of the Act to furnish, to the State Governments/Union Territory Administrations,

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annual returns containing statistics relating to the average number of workers covered under the Act, number of compensated accidents and the amount of compensation paid. Employees State Insurance Act, 1948 The Employees State Insurance Act, 1948 (the “ESI Act”) provides for certain benefits to employees in case of sickness, maternity and employment injury. All employees in establishments covered by the ESI Act are required to be insured, with an obligation imposed on the employer to make certain contributions in relation thereto. In addition, the employer is also required to register itself under the ESI Act and maintain prescribed records and registers. The Contract Labour (Regulation and Abolition) Act, 1970 The purpose of the Contract Labour (Regulation and Abolition) Act, 1970 is to regulate the employment and protect the interests of labourers who are hired on the basis of individual contracts. In the event that any aspect of the activity is outsourced and is carried out by labourers hired on a contractual basis, then compliance with the Contract Labour (Regulation and Abolition) Act, 1970 will also be necessary. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 The Employees’ Provident Funds And Miscellaneous Provisions Act, 1952 (“Employees Provident Fund Act”) provides for the institution of provident funds, pension fund and deposit-linked insurance fund and applies to every establishment which is a factory engaged in any industry (as specified in the Act) and any other establishment which employ twenty or more persons. Contravention of the Employees Provident Fund Act is punishable by imprisonment up to six months and/or a fine of up to ` 5,000. The Maternity Benefit Act, 1961 The purpose of the Maternity Benefit Act, 1961 is to regulate the employment of pregnant women and to ensure that they get paid leave for a specified period during and after their pregnancy. It provides, inter alia, for payment of maternity benefits, medical bonus and enacts prohibitions on dismissal, reduction of wages paid to pregnant women, etc. Intellectual Property Laws The law relating to intellectual property also apply to our Company. The Trade Marks Act, 1999 The Trade Marks Act, 1999 (“Trademark Act”) governs the statutory protection of trademarks in India. In India, trademarks enjoy protection under both statutory and common law. Indian trademarks law permits the registration of trademarks for goods and services. Certification trademarks and collective marks are also registrable under the Trade Mark Act. An application for trademark registration may be made by any person claiming to be the proprietor of a trademark and can be made on the basis of either current use or intention to use a trademark in the future. The registration of certain types of trademarks is absolutely prohibited, including trademarks that are not distinctive and which indicate the kind or quality of the goods. Applications for a trademark registration may be made for in one or more international classes. Once granted, trademark registration is valid for 10 years unless cancelled. If not renewed after 10 years, the mark lapses and the registration for such mark has to be obtained afresh. While both registered and unregistered trademarks are protected under Indian law, the registration of trademarks offers significant advantages to the registered owner, particularly with respect to proving infringement. Registered trademarks may be protected by means of an action for infringement, whereas unregistered trademarks may only be protected by means of the common law remedy of passing off. In case of the latter, the plaintiff must, prior to proving passing off, first prove that he is the owner of the trademark concerned. In contrast, the owner of a registered trademark is prima facie regarded as the owner of the mark by virtue of the registration obtained Shops and Establishments legislations in various states

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The provisions of various Shops and Establishments legislations, as applicable, regulate the conditions of work and employment in shops and commercial establishments and generally prescribe obligations in respect of inter alia registration, opening and closing hours, daily and weekly working hours, holidays, leave, health and safety measures and wages for overtime work. The Customs Act The Customs Act, 1962 (the “Customs Act”) is to consolidate and amend the laws related to customs. The Custom Act provides that all importers must file a bill of entry or a cargo declaration, containing the prescribed particulars for a customs clearance. Additionally, a series of other documents relating to the cargo are to be filed with the appropriate authority. After registration of the bill of entry, it is forwarded to the concerned appraising group in the custom house. This is followed by an assessment by the assessing officer in order to determine the duty liability which is on the basis of statement made in the entry relating thereto and the documents produced and information furnished by the importer or exporter. Further, all imported goods are examined for verification of correctness of description given in the bill of entry. Post- assessment, the importer may seek delivery of the goods from the custodians. Central Excise Excise duty imposes a liability on a manufacturer to pay excise duty on production or manufacture of goods in India. The Central Excise Act, 1944 is the principal legislation in this respect, which provides for the levy and collection of excise and also prescribes procedures for clearances from factory once the goods have been manufactured etc. Additionally, the Central Excise Tariff Act, 1985 prescribes the rates of excise duties for various goods. Value Added Tax Value Added Tax (the “VAT”) is a system of multi-point levy on each of the entities in the supply chain with the facility of set-off input tax whereby tax is paid at the stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer. Only the value addition in the hands of each of the entities is subject to tax. VAT is based on the value addition of goods, and the related VAT liability of the dealer is calculated by deducting input tax credit for tax collected on the sales during a particular period. VAT is essentially a consumption tax applicable to all commercial activities involving the production and distribution of goods, and each State that has introduced VAT has its own VAT Act, under which, persons liable to pay VAT must register themselves and obtain a registration number. Sales Tax The tax on sale of movable goods within India is governed by the provisions of the Central Sales Tax Act, 1956 or relevant state law depending upon the movement of goods pursuant to the relevant sale. If the goods move inter-state pursuant to a sale arrangement, then the taxability of such sale is determined by the Central Sales Tax Act, 1956. On the other hand, when the taxability of an arrangement of sale of movable goods which does not contemplate movement of goods outside the state where the sale is taking place is determined as per the local sales tax/VAT legislations in place within such state. Foreign Investment For details in relation to the regulations regarding foreign investment, see section titled “Restrictions on Foreign Ownership of Indian Securities” on page 363.

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HISTORY AND CERTAIN CORPORATE MATTERS Brief History of our Company Our Company was incorporated as “AMB Engineering Company Private Limited” on January 17, 1991 under the Companies Act, 1956. In January 2002, Parakramsinh Jadeja, one of the Promoters, acquired 100 Equity Shares from each of the 4 subscribers to the Memorandum and Articles of Association of AMB Engineering Company Private Limited, namely, Satishbhai Santhara, Jayeshkumar Bhogayta, Jaysukhlal Bakotia and Harsukhbhai Jogia. Thereafter, the name of our Company was changed to “Jyoti CNC Automations Private Limited” and our Company received certificate of incorporation dated May 8, 2002 from the RoC. Subsequently, the name of our Company was changed to “Jyoti CNC Automation Private Limited” and our Company received certificate of incorporation dated April 28, 2008 from the RoC. Further, pursuant to a special resolution of the shareholders of our Company at an annual general meeting held on September 17, 2012, our Company became a public limited company and the word “private” was deleted from its name. The fresh certificate of incorporation to reflect the new name was issued by the RoC on November 30, 2012. In 2007, our Company, through its wholly owned subsidiary, Jyoti S.A.S., France, acquired the entire shareholding of Huron Graffenstaden S.A.S., France. Pursuant to this acquisition, Huron Graffenstaden S.A.S. and its subsidiaries became the Subsidiaries of our Company. For further details, please see the section titled “Subsidiaries” on page 157. Changes in Registered Office There has been no change in the registered office of our Company after it was acquired by our Promoters except as given below: Details of the address of Registered Office The registered office of our company was changed from C/1, 208/1, AJI Industrial Estate Phase – IV Rajkot to G - 506, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India. The Main Objects of our Company The main objects, inter alia, contained in the Memorandum of Association of our Company are as follows:

1. To carry on the business of manufacturers of and dealers in all kinds of machinery and plants of every kind and in particular CNC Machine and its tools and implements, and to manufacture, produce, repair alter, convert, recondition, prepare for sale, buy, sell, hire, import, explore, let out on hire, trade and deal in CNC Machine tools and implements, other machinery, plant equipments articles, apparatus, component parts, accessories, fittings and things in any stage or degree manufacture, process or refinement.

2. To carry on the business of manufacturing of all kinds of rolling bearing and the business

of Engineers, Founders, Smiths, Mechanical Engineers and Dealers in rolling bearings.

3. To carry the business as buyers, sellers, distributors, whole sellers, semi whole sellers, retailers, exporters, importers, manufacturers, manufacturers representatives, dealers, fabricators, processors, jobbers, contractors, Engineers, and agent in rolling bearing, iron and steel materials, machinery parts rubber goods, motor goods, automobile accessories steel products and all other engineering goods and allied products.

4. To carry on the business as general order suppliers commission agents, brokers,

principals, stockiest, distributors, whole sellers, exporters, imports, fanciers, shippers, and / or dealers in all other kind of goods in addition to the foregoing, and to undertake, transact and execute, all kinds, of agency businesses and trusts.

5. To carry in the business of acquiring manufacturing, importing, buying and selling of

machinery, equipments plants, stores, spares, accessories and any materials required for activities for which the Company is established and to carry other business which may mutually and conveniently be combined with the business of the Company.

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The main objects as contained in the Memorandum of Association enable our Company to carry on the business presently carried out as well as business proposed to be carried out and the activities proposed to be undertaken pursuant to the Objects of the Issue. Amendments to the Memorandum of Association Date of shareholders’ resolution

Nature of Amendment

January 28, 2002

Changes in the object clause of the Memorandum of Association by insertion of new clause III (A) 1 “To carry on the business of Manufactures of and dealers in all kinds of machinery and plants of every kind and in particular CNC machine and its tools and implements, and to manufacture, produce, repair, alter, convert, recondition, prepare for sale, buy, sell, hire, import, export, let out on hire, trade and deal in CNC machine tools and implements, other machinery, plant equipments articles, apparatus, component parts, accessories, fitting and things in any stage or degree manufacture, process or refinement.” and re-numbered the existing clause III (A) 1 – 4 as clause III (A) 2 – 5

April 19, 2002 The name of our Company was changed from “AMB Engineering Company Private Limited” to “Jyoti CNC Automations Private Limited”

July 22, 2003 The initial authorised share capital of ` 1,000,000 divided into 100,000 Equity Shares of ` 10/- each was increased to ` 30,000,000 divided into 3,000,000 Equity Shares of ` 10/- each aggregating to ` 30,000,000

December 15, 2003

The authorised share capital of ` 30,000,000 divided into 3,000,000 Equity Shares of ` 10/- each was increased to ` 35,000,000 divided into 3,000,000 Equity Shares of ` 10/- each aggregating to ` 30,000,000and 500,000 Special Equity Shares of ` 10/- each aggregating to ` 5,000,000

March 31, 2006 The authorised share capital of ` 35,000,000 divided into 3,000,000 Equity Shares of ` 10/- each and 500,000 Special Equity Shares of ` 10/- each was increased to ` 70,000,000 divided into 6,500,000 Equity Shares of ` 10/- each aggregating to `65,000,000 and 500,000 Special Equity Shares of ` 10/- each aggregating to ` 5,000,000

February 7, 2007

The authorised share capital of ` 70,000,000 divided into 6,500,000 Equity Shares of ` 10/- each and 500,000 Special Equity Shares of ` 10/- each was reclassified to ` 70,000,000 divided into 6,917,500 Equity Shares of ` 10/- each aggregating to `69,175,000 and 82,500 Special Equity Shares of ` 10/- each aggregating to `825,000

March 28, 2007 The authorised share capital of ` 70,000,000 divided into 6,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each was increased to ` 75,000,000 divided into 7,417,500 Equity Shares of ` 10/- each aggregating to ` 74,175,000 and 82,500 Special Equity Shares of ` 10/- each aggregating to `825,000

August 24, 2007

The authorised share capital of ` 75,000,000 divided into 7,417,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each was increased to ` 120,000,000 divided into 11,917,500 Equity Shares of ` 10/- each aggregating to ` 119,175,000and 82,500 Special Equity Shares of ` 10/- each aggregating to `825,000

August 24, 2007

The authorised share capital of ` 120,000,000 divided into 11,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each was reclassified to ` 120,000,000 divided into 12,000,000 Equity Shares of ` 10/- each

April 28, 2008 The name of our Company was changed from “Jyoti CNC Automations Private Limited” to “Jyoti CNC Automation Private Limited”

March 27, 2012 The authorised share capital of ` 120,000,000 divided into 12,000,000 Equity Shares of ` 10/- each was increased to ` 150,000,000 divided into 14,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each

September 17, 2012

Conversion from a private limited company to a public limited company and change in name of our Company from “Jyoti CNC Automation Private Limited” to “Jyoti CNC Automation Limited”

September 17, 2012

The authorised share capital of `150,000,000 divided into 15,000,000 Equity Shares of ` 10/- each was increased to `450,000,000 divided into 44,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each

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Date of shareholders’ resolution

Nature of Amendment

September 17, 2012

The authorised share capital of ` 450,000,000 divided into 44,917,500 Equity Shares of ` 10/- each and 82,500 Special Equity Shares of ` 10/- each was reclassified to ` 450,000,000 divided into 45,000,000 Equity Shares of ` 10/- each

February 11, 2013

The authorised share capital of ` 450,000,000 divided into 45,000,000 Equity Shares of ` 10/- each was increased to ` 470,000,000 divided into 45,000,000 Equity Shares of ` 10/- each and 2,000,000 Preference Shares of ` 10/- each

Major events of our Company The table below sets forth some of the key events in the history of our Company: Year Event 2003 Received ISO 9001:2000 from TUV 2004

Started commercial production of CNC Machines Received "CE Markings" for CNC Turning Center from TUV Designed and manufactured SPM laser cutting machine for diamond industry.

2006 Received Export House certification from Engineering Export Promotion Council, India

2007

Commissioned own foundry, sheet metal shop and paint shop Increase in assembly line from 500 machines to 1,500 machines p.a. Takeover of Huron Graffenstaden S.A.S., France through wholly owned subsidiary, Jyoti S. A. S

2010 Quality Management System Certification upgraded to ISO 9001:2008 from TUV 2011 Increase in assembly line from 1,500 machines to 2,500 machines p.a. Awards and Recognition Year Award 2004 Received CMTI-PMT trust award for "The Best Innovative Machine Design

VMC 70 Linear" at IMTEX 2004 2006 Black Pearl Award for Display & Demonstration of Best Innovative Technology

at ENGIMACH 2006 2008 Meaningful Technological Innovation Award at ENGIMACH 2008 2011

PLATINUM AWARD for the best products and best designed stall at ENGIMACH 2011 DESIGNOMICS AWARD 2011 at World Brand Congress

Subsidiaries Our Company has four Subsidiaries. All of the Subsidiaries are incorporated outside India. The direct Subsidiary of our Company is as follows: Jyoti S. A. S. (“Jyoti S. A. S.”) Corporate Information: Jyoti S. A. S. was incorporated on September 06, 2007 under the laws of France (registration number 499 810 968) and has its registered office at 156 route de Lyon 67400 Illkirch-Graffenstaden. Jyoti S. A. S. was incorporated as a special purpose vehicle for acquiring entire shareholding of the Huron Graffenstaden S. A. S., a company incorporated under the laws of France (registration number 340 767 433). Jyoti S. A. S. holds entire shareholding of the Huron Graffenstaden S. A. S. Capital Structure: The paid up capital of Jyoti S. A. S. is € 4,907,000 divided into 4,907,000 equity shares of € 1 each.

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Shareholding Pattern: Jyoti S. A. S. is a wholly-owned subsidiary of our Company. Financial Performance The summary audited financial information is as follows:

( in ` Million) Sr. No.

Particulars


December 31, 2012

For the year ended March 31, 2012

March 31, 2011

March 31, 2010

1. Equity Capital 354.58 335.35 310.32 2.24 2. Reserves (excluding

revaluation reserves) and surplus

(266.86) (210.92) (142.63) (107.70)

3. Income including other income

- - - -

4. Profit after tax (42.21) (54.76) (28.72) (37.20) 5. Earnings per share (in `) (8.60) (11.16) (5.85) (1,005.32

) 6. Net asset value per share (in

`) 17.88 25.36 34.17 (2,850.24)


1. for nine months ended December 31, 2012: Average rate of € 1 = ` 69.57 and Closing rate of € 1 = ` 72.26.

2. for year ended March 31, 2012: Average rate of € 1 = ` 65.90 and Closing rate of € 1 = ` 68.34. 3. for year ended March 31, 2011: Average rate of € 1 = ` 60.21 and Closing rate of € 1 = ` 63.24. 4. for year ended March 31, 2010: Average rate of € 1 = ` 67.08 and Closing rate of € 1 = ` 60.56.

The Indirect Subsidiaries of our Company are as follows: Huron Graffenstaden S. A. S. (“Huron”) Corporate Information: Huron was incorporated on April 28, 1987 under the laws of France (registration number 340 767 433) and has its registered office at 156 Route de Lyon 67400 Illkirch-Graffenstaden. Huron is involved in the business of designing, developing, all types of projects in the field of machine tools and automatic systems for industrial manufacturing as well as construction and sale of these high-end CNC machines to the aerospace and general manufacturing industry. Huron became the subsidiary of our Company pursuant to the acquisition of entire shareholding by Jyoti S. A. S., a wholly owned subsidiary of our Company, for a purchase consideration of € 16,000,000 (Euro Sixteen million) payable in cash under the share purchase agreement dated September 13, 2007 executed between HT2I SA, a company established and existing under the laws of Republic of France, Jyoti S. A. S. and Gilbert Fischer, a French national. Capital Structure: The paid up capital of Huron is € 13,000,000 divided into 337,000 equity shares of € 39 each. Shareholding Pattern: Huron is a wholly-owned subsidiary of Jyoti S. A. S. Financial Performance

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The summary audited financial information is as follows:

(in ` Million) Sr. No.

Particulars


December 31, 2012


March 31, 2011

March 31, 2010



(545.43) (518.38) (479.80) (284.84)


2,319.53 2624.09 1,973.62 1977.62

4. Profit after tax 2.58 0.11 (173.62) (334.50) 5. Earnings per share (in `) 7.66 0.33 (515.18) (992.59) 6. Net asset value per share (in

`) 1,169.00 1,098.05 1,015.79 1490.92



2. for year ended March 31, 2012: Average rate of € 1 = ` 65.90 and Closing rate of € 1 = ` 68.34.



Huron Fräsmaschinen GmbH (“Huron GmbH”) Corporate Information: Huron GmbH was incorporated on November 18, 1997 under the laws of Germany (registration number HRB 205623) and has its registered office at 56 Benzstrasse N° – 71272 Renningen. Huron GmbH is involved in the business of marketing of Huron products in Europe. Capital Structure: The paid up capital of Huron GmbH is € 256,000 divided into 256,000 equity shares of € 1 each. Shareholding Pattern: Huron GmbH is a wholly-owned subsidiary of Huron. Financial Performance The summary audited financial information is as follows:


Particulars


December 31, 2012


March 31, 2011

March 31, 2010



(45.17) (35.79) (26.81) (11.98)

3. Income including other 117.02 140.11 127.64 144.14

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income 4. Profit after tax (7.05) (6.58) (13.61) (21.32) 5. Earnings per share (in `) (27.55) (25.70) (53.17) (83.27) 6. Net asset value per share (in

`) (104.18) (71.46) (41.47) 13.77

Note: Exchange Rates used for year ended:


2. for year ended March 31, 2012: Average rate of € 1 = `65.90 and Closing rate of € 1 = `68.34.



Huron Canada Inc. (“Huron Canada”) Corporate Information: Huron Canada was incorporated on February 26, 2001 under the laws of Canada and has its registered office at 408 Isabey – Saint Laurent - Québec H4T 1V3, Canada. Huron Canada is involved in the business of marketing of Huron products and to provide after sales service, application support and training in Canada and USA. Capital Structure: The paid up capital of Huron GmbH is CAD 1,500,100 divided into 1,500,100 equity shares of CAD 1 each. Shareholding Pattern: Huron Canada is a wholly-owned subsidiary of Huron. Financial Performance The summary audited financial information is as follows

(in `Million) Sr. No.

Particulars


December 31, 2012


March 31, 2011

March 31, 2010



(136.34) (112.57) (97.06) (84.78)


57.28 101.34 49.21 23.25

4. Profit after tax (13.69) (4.71) (8.96) (17.52) 5. Earnings per share (in `) (9.12) (3.14) (5.97) (11.68) 6. Net asset value per share (in

`) (35.60) (24.08) (18.74) (12.20)


1. for nine months ended December 31, 2012: Average rate of CAD 1 = `53.22 and Closing rate of CAD 1 = ` 55.28.

2. for year ended March 31, 2012: Average rate of CAD 1 = `48.46 and Closing rate of CAD 1 = ` 50.96.

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3. for year ended March 31, 2011: Average rate of CAD 1 = `45.14 and Closing rate of CAD 1 = `45.96.

4. for year ended March 31, 2010: Average rate of CAD 1 = ` 42.13 and Closing rate of CAD 1 = `44.31.

Interest of our Subsidiaries in our Company Our Subsidiaries do not hold any Equity Shares in our Company. For details on the related party transactions, to the extent of which our Company is involved, see “Related Party Transactions” on page 181. Common Pursuits of our Subsidiaries in our Company Our Subsidiaries have common pursuits and are involved in the business of manufacturing of CNC machines. We shall adopt necessary procedures and practices as permitted by law to address any conflict situations, as and when they may arise. For further details on the related party transactions, to the extent of which our Company is involved, see “Related Party Transactions” on page 181. Material Agreements 1. Trade Mark License Agreement Our Company has entered into a Trade Mark License Agreement dated September 27, 2012 with Parakramsinh Jadeja whereby Parakramsinh Jadeja has granted sole license to use the trademark ‘Jyoti’ and associated logo in connection with sale of the products manufactured by our Company for initial period of 5 years and shall be automatically renewed for a further period of 1 year each at the end of every term of 1 year after the initial term of 5 years unless terminated by our Company. 2. Use of Premises agreement Our Company has entered into a licensed user agreement dated September 27, 2012 with Jyoti Enterprise for exclusive utilisation of the factory building together with the plant and machinery (including dies & tools, electric fittings, generator, measuring instruments, overhead crane, pattern, weighing machine etc) situated on land measuring 3,024 sq. meters at Plot no. P/4, Lodhika Industrial Estate, GIDC, Taluka Lodhika, Rajkot and factory building situated on land admeasuring 300 sq. yards at Dr. V. S. Road, Gondal Road, Rajkot. 3. Share Purchase Agreement (“SPA”) between HT2I SA, Gilbert Fischer and Jyoti SAS Jyoti SAS had entered into Share Purchase Agreement (“SPA”) with HT2I SA and Gilbert Fischer on September 13, 2007 to purchase 100% of the equity share capital of Huron for the total consideration of € 16 million. The SPA contains various customary clauses relating to representations, warranties, covenants and indemnification. Further the SPA was amended by the amendment agreement dated November 13, 2007 in order to extend the time to satisfactorily fulfil and accomplish conditions precedent for the completion until November 23, 2007. Further Jyoti SAS executed reiterative share purchase agreement on November 20, 2007 with HT2I SA and Gilbert Fischer in order to take note and agree that the conditions precedent set out in the SPA have been fulfilled and accomplished the parties agreed and declare sale and purchase of the shares by the transferor to the transferee is completed in terms and conditions of the SPA. In addition to SPA, Huron has entered into assistance agreement dated November 20, 2007 with Gilbert Fisher to provide Huron and its subsidiaries assistance and services (i.e. Public relation assistance, sales assistance, technical assistance) for compensation of € 430,000 per year. The termof assistance agreement was fixed for three years commencing from January 1, 2008 to December 31, 2011. Financial and Strategic Partners Our Company does not have any financial or strategic partners.

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MANAGEMENT Board of Directors Under the Articles of Association, our Company is required to have not less than 3 Directors and not more than 12 Directors. Our Company currently has 6 Directors out of which three Directors are independent directors in terms of Clause 49 of the Listing Agreement. The following table sets forth details regarding the Board of Directors of our Company as of the date of this Draft Red Herring Prospectus: Name, Designation, Father’s Name, Address, Occupation, Nationality and Term and DIN

Age (in years)

Other Directorships/Partnerships/Trusts in which the Director is a trustee

Parakramsinh Jadeja Managing Director S/o Ghanshyamsinh Jadeja Address: Osho, 2, Shivaji Park, Opp. Income Tax Society, Rajkot – 360 001, Gujarat, India. Occupation: Business Nationality: Indian Term: Not liable to retire by rotation DIN:00125050

44

Companies Jyoti International Private Limited Foreign Companies Jyoti S. A. S., France (President) Huron Graffenstaden S. A. S., France (President) Partnerships Jyoti Enterprise

Vikramsinh Rana Whole time Director S/o Raghuvirsinh Rana Address: 601, Kishan Kanaiya – II, University Road, Indira Chowk, Rajkot – 360 007, Gujarat, India Occupation: Business Nationality: Indian Term: Not liable to retire by rotation DIN:00125079

43

Companies Jyoti International Private Limited

163

Name, Designation, Father’s Name, Address, Occupation, Nationality and Term and DIN

Age (in years)


Sahdevsinh Jadeja Whole Time Director S/o Lalubha Jadeja Address: Plot no. 70, Silver Stone, Main Road, Near Oscar Tower, Rajkot – 360 005, Gujarat, India Occupation: Business Nationality: Indian Term: Not liable to retire by rotation DIN:00126392

47

Partnerships Jyoti Enterprise

Vijay Paranjape Independent Director S/o Vaman Paranjape Address: Mauli, 2nd floor, Gawand Path, Naupada, Thane - 400602 Occupation: Business Nationality: Indian Term:Liable to retire by rotation DIN:00370451

64

Companies 1. DOL Motors Private Limited 2. Reliable Autotech Private Limited Trusteeship Automation Industries Association

Ketan Marwadi Independent Director S/o Harkishan Marwadi Address: Marwadi Villa, Ram Park Main Road, Nr. Central School, Kalawad Road, Rajkot- 360 005. Occupation: Business Nationality: Indian Term:Liable to retire by rotation DIN:00088018

46

Companies 1. Marwadi Shares and Finance Limited 2. Marwadi Commodity Broker Private

Limited. 3. Marwadi Stock Broking Limited 4. Marwadi Education Management

Services Private Limited 5. Marwadi Education Private Limited 6. Marwadi Education Infra Private

Limited 7. Marwadi Universal Education Private

Limited Section 25 Company 1. Marwadi Charitable Foundation 2. Association of National Exchanges

Members of India 3. Marwadi Education Foundation

Trusteeship Marwadi Education Foundation (Trust)

164

Name, Designation, Father’s Name, Address, Occupation, Nationality and Term and DIN

Age (in years)


Mansingh Bhakta Independent Director S/o Laxmidas Bhakta Address: 4, Sagar Villa, 38, B. Desai Road, Mumbai, 400026, Maharashtra, India Occupation: Business Nationality: Indian Term:Liable to retire by rotation DIN:00001963

81

Companies 1. Reliance Industries Limited 2. Ambuja Cements Limited 3. Micro Inks Limited 4. JCB India Limited 5. Anand Rathi Private Wealth

Management- Rental yield and Appreciation Portfolio.

Partnerships Kanga and Company, Advocates and Solicitors, Bombay. Trusteeship The Indian Merchant’s Chamber, Bombay. Others 1. Association of Hospitals, Bombay

(President Emeritus) 2. Nathdwara Temple Board, Rajasthan

(Board Member)

Relationship between our Directors None of our Directors are related to each other. Brief Biographies of our Directors 1. Parakramsinh Jadeja, aged 44 years, is the Promoter and Managing Director of our Company

and has 23 years of experience at grass root engineering level. He is responsible for development of new products as well as formulating strategy for our company. He has also contributed to the development of the machine tool industry. He served as the invitee member to the executive committee of the Indian Machine Tool Manufacturers’ Association (IMTMA) in 2011-12 and is currently a member of “UDAAN” a young machine tool entrepreneur’s club started by IMTMA whose charter objective is to put together a set of action plans for the group and the industry at large. He received the Small Scale Entrepreneur 3rd Award 2003 from Ministry of Small Scale Industries which was presented to him by the then President of India, Abdul Kalam. He was awarded the CII Entrepreneur of the year award in 2005. He received the IMTMA Premier “Outstanding Entrepreneur Award” by IMTMA in 2013.

2. Vikramsinh Rana, aged 43 years, is the Promoter and Whole Time Director of our Company. He is working with our Company since last 10 years. He is in charge of plant maintenance and logistics.

3. Sahdevsinh Jadeja, aged 47 years, is the Promoter and Whole Time Director of our Company,

and has more than 20 years of experience in machine tools industry. He is involved in day-to-day operations of our company and looks after production, production, planning and quality control divisions.

4. Vijay Paranjape, aged 64 years, is an Independent Director of our Company. He has a Bachelor’s degree in Electrical Engineering from the University of Bombay. He began his career in Siemens Limited after his bachelor’s degree and over the next several decades oversaw several major businesses and retired from the company as a whole time director on the board of directors in 2011. He was the president of Indian Electrical and Electronics Manufacturers Association in 2008-2009. He was also the president of Automation Industry Association in 2010-2011.

5. Ketan Marwadi, aged 46 years, is an Independent Director of our Company. He has a Bachelor’s degree in Civil Engineering. He has 21 years of experience in capital markets. He is the present chairman of Association of National Exchanges Members of India, Western

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Region. He has been associated with the National Stock Exchange and the Saurashtra Kutch Stock Exchange in advisory and managerial capacities.

6. Mansingh Bhakta, aged 81 years, is an Independent Director of our Company. He holds a Bachelor‘s degree in Law from Government Law College, Mumbai. He is a senior partner in Kanga & Company, Advocates and Solicitors. . He has been appointed as a member of several committees by several professional bodies, legal, regulatory and governmental organizations, including, inter alia, the Reserve Bank of India, Law and Company Affairs Committee of the Indian Merchants' Chamber and Taxation Laws Standing Committee of LAWASIA an association of lawyers of Asia and Pacific having its headquarters in Australia on legal aspects relating to operations of banking and financial systems. He has been named as one of the leading lawyers of Asia by Asia Law Journal, Hong Kong and as one of India‘s top 50 independent directors in a survey undertaken by the Capital Markets Magazine in 2003.

Confirmations None of our Directors is or was a director of any listed companies during the last five years preceding the date of filing of this Draft Red Herring Prospectus and until date, whose shares have been or were suspended from being traded on any stock exchange during the term of their directorship in such companies. Except Mansingh Bhakta, who is a director on the board of directors of Micro Inks Limited, relevant details of which are disclosed below, none of the Directors of our Company is or was a director of any listed company which has been or was delisted from any stock exchange during the term of their directorship in such company. Name of the director Mansingh Bhakta Name of the company delisted Micro Inks Limited Listed on the stock exchange BSE and NSE Date of delisting April 13, 2010 Compulsory or Voluntary delisting Voluntary Whether relisted No Term of director in the delisted company

Liable to retire by rotation

Reasons for delisting To facilitate formulation of suitable business plans for various businesses and entities around the world and integration of these entities.

Further, our Directors have not been declared wilful defaulters by the RBI or any other governmental authority and there are no violations of securities laws committed by our Directors in the past and no proceedings pertaining to such penalties are pending against them. Additionally, none of our Directors have been restrained from accessing the capital markets for any reasons by the SEBI or any other authorities. Except Ketan Marwadi, none of our Directors are in any manner associated with the securities market. Further, none of our Directors was or is a promoter, director or person in control of any other company, which is debarred from accessing the capital markets under any order or directions made by the SEBI. Terms of Appointment of executive Directors The remuneration of the executive Directors of our Company is pursuant to the terms of appointment summarised below: Agreement dated September 23, 2012 between Parakramsinh Jadeja and our Company Pursuant to Board and shareholders’ resolutions dated August 24, 2012 and September 17, 2012 respectively, Parakramsinh Jadeja has been appointed as the Managing Director of our Company for a period of five years with effect from September 01, 2012. Our Company has entered into an agreement dated September 23, 2012 with Parakramsinh Jadeja for appointment as the Managing Director of our Company for a period of five years. The agreement, inter alia, provides that Parakramsinh Jadeja is entitled to a salary of ` 1.00 million per

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month (subject to maximum annual payment not exceeding ` 13.00 million) with effect from September 01, 2012. Agreement dated September 23, 2012 between Vikramsinh Rana and our Company Pursuant to Board and shareholders’ resolutions dated August 24, 2012 and September 17, 2012, respectively, Vikramsinh Rana has been appointed as the Whole Time Director of our Company for a period of five years with effect from September 01, 2012. Our Company has entered into an agreement dated September 23, 2012 with Vikramsinh Rana for appointment as the Whole Time Director of our Company for a period of five years. The agreement, inter alia, provides that Vikramsinh Rana is entitled to a salary of ` 0.34 million per month (subject to maximum annual payment not exceeding ` 4.50 million) with effect from September 01, 2012. Agreement dated September 23, 2012 between Sahdevsinh Jadeja and our Company Pursuant to Board and shareholders’ resolutions dated August 24, 2012 and September 17, 2012 respectively, Sahdevsinh Jadeja has been appointed as the Whole Time Director of our Company for a period of five years with effect from September 01, 2012. Our Company has entered into an agreement dated September 23, 2012 with Sahdevsinh Jadeja for appointment as the Whole Time Director of our Company for a period of 5 years. The agreement, inter alia, provides that Sahdevsinh Jadeja is entitled to a salary of ` 0.62 million per month (subject to maximum annual payment not exceeding ` 8.00 million) with effect from September 01, 2012. Payment or benefit to Directors/officers of our Company The sitting fees/other remuneration paid to the Directors of our Company for the last FY are as follows: 1. Remuneration to Executive Directors:

The aggregate value of salary and perquisites paid for the last FY to the Executive Directors of our Company are set forth in the table below S. No Name of the Director Salary (` in million) 1. Parakramsinh Jadeja 5.202. Vikramsinh Rana 1.633. Sahdevsinh Jadeja 4.55 2. Remuneration to Non-Executive Directors: Our Company shall pay sitting fees of an amount not exceeding ` 0.02 million to Non-Executive Directors, for attending each meeting of the Board of Directors and the committees of our Board. The sitting fees for Non-Executive Directors has been fixed pursuant to a resolution dated September 24, 2012 passed by our Board of Directors. Shareholding of Directors

The shareholding of our Directors as of the date of this Draft Red Herring Prospectus is set forth below:

Name of Director Number of Equity Shares held Parakramsinh Jadeja 7,572,980 Vikramsinh Rana 909,500 Sahdevsinh Jadeja 1,337,080

Borrowing Powers of Board In accordance with the Articles of Association, the Board may, from time to time, at its discretion, by a resolution passed at a meeting of the Board, accept deposits from members either in advance of calls or otherwise and generally raise or borrow or secure the payment of any sum or sums of

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money for the purpose of our Company. Provided however, where the money to be borrowed together with the money already borrowed (apart from temporary loan obtained from our Company’s bankers in the ordinary course of business) exceeds the aggregate of the paid up capital of our Company and its free reserves (not being reserves set apart for any specific purpose) the Board shall not borrow such moneys without the consent of our Company in a general meeting. Pursuant to a resolution passed at the extraordinary general meeting dated October 25, 2012, our shareholders have authorized our Board to borrow, from time to time, such sums of money as may be required, provided that such amount shall not exceed ` 4,500 million. Corporate Governance The provisions of the Listing Agreement to be entered into with the Stock Exchanges with respect to corporate governance will be applicable to our Company immediately upon the listing of the Equity Shares with the Stock Exchanges. Our Company believes that it is in compliance with the requirements of the applicable regulations, including the Listing Agreement with the Stock Exchanges and the SEBI Regulations, in respect of corporate governance including constitution of the Board and committees thereof. The corporate governance framework is based on an effective independent Board, separation of the Board’s supervisory role from the executive management team and constitution of the Board Committees, as required under law. Our Company has a Board of Directors constituted in compliance with the Companies Act and Listing Agreement with Stock Exchanges and in accordance with best practices in corporate governance. The Board of Directors functions either as a full board or through various committees constituted to oversee specific operational areas. Currently the Board has 6 Directors. In compliance with the requirements of Clause 49 of the Listing Agreement, our Company has 3 executive Directors and 3non-executive Directors, who are all independent directors, on the Board. Committees of the Board under Clause 49 of the Listing Agreement. Audit Committee The members of the Audit Committee are: 1. Ketan Marwadi (Chairman); 2. Vijay Paranjape; and 3. Parakramsinh Jadeja. The Company Secretary of our Company is the Secretary to the Audit Committee. The Audit Committee was constituted by a meeting of the Board of Directors held on September 24, 2012. The chairman of the Audit Committee is Ketan Marwadi, an independent director of our Company. The scope and function of the Audit Committee is in accordance with Section 292A of the Companies Act and Clause 49 of the Listing Agreement and its terms of reference include the following: 1. Overseeing our Company’s financial reporting process and disclosure of its financial

information;

2. Recommending to the Board the appointment, re-appointment and replacement of statutory auditor and the fixation of audit fee;

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;

4. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:

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a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956;

b. Changes, if any, in accounting policies and practices and reasons for the same;

c. Major accounting entries involving estimates based on the exercise of judgment by management;

d. Significant adjustments made in the financial statements arising out of audit findings;

e. Compliance with listing and other legal requirements relating to financial statements;

f. Disclosure of any related party transactions; and

g. Qualifications in the draft audit report.

5. Reviewing, with the management, the quarterly, half-yearly and annual financial statements before submission to the Board for approval;

5A. Reviewing, with the management, the statement of uses/ application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilised for purposes other than those stated in the offer document/ prospectus/ notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.

6. Reviewing, with the management, the performance of statutory and internal auditors, and adequacy of the internal control systems;

7. Reviewing the adequacy of internal audit function if any, 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;

8. Discussion with internal auditors on any significant findings and follow up there on;

9. 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;

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors;

12. Reviewing the functioning of the whistle blower mechanism, in case the same is existing; and

13. Review of management discussion and analysis of financial condition and results of operations, statements of significant related party transactions submitted by management, internal audit reports relating to internal control weaknesses, and the appointment, removal and terms of remuneration of the internal auditor.

14. Approving the appointment of the Chief Financial Officer or any other person heading the

finance function after assessing the qualifications, experience and background, etc., of the candidate; and

15. Carrying out any other function as is mentioned in the terms of reference of the Audit

Committee or contained in the equity listing agreements as and when amended from time to time.

The powers of the audit committee shall include the power to: 1. To investigate any activity within its terms of reference; 2. To seek information from any employee; 3. To obtain outside legal or other professional advice; and

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4. To secure attendance of outsiders with relevant expertise, if it considers necessary. The Audit Committee shall mandatorily review the following information: 1. Management discussion and analysis of financial condition and results of operations; 2. Statement of significant related party transactions (as defined by the audit committee),

submitted by management; 3. Management letters / letters of internal control weaknesses issued by the statutory auditors; 4. Internal audit reports relating to internal control weaknesses; and 5. The appointment, removal and terms of remuneration of the chief internal auditor shall be

subject to review by the Audit Committee. As required under the Equity Listing Agreement, the Audit Committee shall meet at least four times in a year. Remuneration Committee The members of the Remuneration Committee are:

1. Vijay Paranjape (Chairman); 2. Ketan Marwadi; and 3. Mansingh Bhakta. The Remuneration Committee was constituted by a meeting of the Board of Directors held on September 24, 2012. The chairman of the Remuneration Committee is Vijay Paranjape, an Independent Director of our Company. The terms of reference of the Remuneration Committee include the following: 1. Framing suitable policies and systems to ensure that there is no violation, by an employee of

any applicable laws in India or overseas, including: (i) The Securities and Exchange Board of India (Insider Trading) Regulations, 1992; or

(ii) The Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair

Trade Practices relating to the Securities Market) Regulations, 1995.

2. Determine on behalf of the Board and the shareholders our Company’s policy on specific remuneration packages for executive directors including pension rights and any compensation payment.

3. Approve the remuneration of executive Directors of our Company as may be required pursuant to the provisions of the Companies Act, 1956.

4. Perform such functions as are required to be performed by the Remuneration Committee

under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, in particular, those stated in Clause 5 of the Employee Stock Purchase Scheme Guidelines.

5. Such other matters as may, from time to time, be required by any statutory, contractual or other regulatory requirements to be attended to by such committee.

Shareholders/Investors Grievance Committee The members of the Shareholders/Investors Grievance Committee are:

1. Mansingh Bhakta (Chairman); 2. Ketan Marwadi; and 3. Sahdevsinh Jadeja. The Shareholders/Investors Grievance Committee was constituted by the Board of Directors at their meeting held on September 24, 2012. The chairman of the Shareholders/Investors Grievance Committee is Mansingh Bhakta, an independent director of our Company. This Committee is

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responsible for the redressal of shareholder grievances. The terms of reference of the Shareholders/Investors Grievance Committee include the following: 1. Efficient transfer of shares including review of cases for refusal of transfer / transmission of

shares and debentures; 2. Redressing of shareholders and investor complaints such as non-receipt of declared dividend,

annual report, transfer of Equity Shares and issue of duplicate/split/consolidated share certificates;

3. Monitoring transfers, transmissions, dematerialization, re-materialization, splitting and consolidation of Equity Shares and other securities issued by our Company, including review of cases for refusal of transfer/ transmission of shares and debentures;

4. Allotment and listing of shares in future; 5. Review of cases for refusal of transfer / transmission of shares and debentures; 6. Reference to statutory and regulatory authorities regarding investor grievances; 7. Ensure proper and timely attendance and redressal of investor queries and grievances; and 8. To do all such acts, things or deeds as may be necessary or incidental to the exercise of the

above powers. IPO Committee

The members of the IPO Committee are:

1. Parakramsinh Jadeja (Chairman); 2. Vikramsinh Rana; and 3. Sahdevsinh Jadeja. The IPO Committee is authorised to take all decision in connection with the IPO and matters flowing there from, connected with and incidental to any of the matters in relation to IPO on behalf of the Board and to take all actions and to do all such deeds, matters and things as it may, in its absolute discretion, deem necessary, desirable or expedient to the issue, allotment, listing with the Stock Exchange(s) of the securities being offered in the IPO and to resolve and settle all questions and difficulties that may arise in the proposed IPO. Interest of Directors All of our Directors may be deemed to be interested to the extent of fees payable to them for attending meetings of the Board of Directors or a Committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under the Articles, and to the extent of remuneration paid to them for services rendered as an officer or employee of our Company. Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or that may be subscribed by or allotted to the companies, firms and trusts, in which they are interested as directors, members, partners, trustees and promoters, pursuant to this Issue. All of our Directors may also be deemed to be interested to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. Our Directors have no interest in any property acquired or proposed to be acquired by our Company within two years from the date of this Draft Red Herring Prospectus. For details of the interest of our Directors who are also Promoters of our Company, see section titled “Promoter and Promoter Group” on page 174. Except as stated in this section titled “Management” on page 162, no amount or benefit has been paid within the two preceding years or is intended to be paid or given to any of our Company’s officers including our Directors and key management personnel. Additionally, there is no arrangement or understanding with the major shareholders, customers, suppliers or others, pursuant to which our Directors were selected as a Director of our Company or any key management person was selected. Further, except statutory benefits upon termination of their employment in our Company or retirement, no officer of our Company, including our Directors and the key management personnel of our Company, are entitled to any benefits upon termination of employment. Except as stated in the section “Related Party Transactions” on page 181, none of the beneficiaries of loans and advances and sundry debtors are related to our Company, our Directors or our Promoters.

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No loans have been availed by our Directors from our Company. Except as stated in the section titled “Related Party Transactions” on page 181 and described in this section, our Directors do not have any other interest in the business of our Company. Changes in the Board of Directors in the last three years

Name Date of Appointment/ Cessation

Reason

Vijay Paranjape September 21, 2012 Appointment Ketan Marwadi September 21, 2012 Appointment

Mansingh Bhakta September 17, 2012 Appointment Management Organisation Structure

Key Management Personnel The details of the key management personnel, other than the whole-time directors, as of the date of this Draft Red Herring Prospectus, are as follows: Kamlesh Solanki, Chief Financial Officer Kamlesh Solanki, aged 42 years, is the Chief Financial Officer of our Company. He holds Bachelor’s Degree in Commerce from University of Saurashtra. He has been working with our Company since 2004. Prior to joining our Company he was employed with Jyoti Enterprise and has 23 years of work experience. For the year ended March 31, 2012, the total remuneration that he received was ` 0.59 million. Hiren Jadeja, President Marketing Hiren Jadeja, aged 39 years, is the President of Marketing department of our Company. He holds a Bachelor’s degree in electronics and telecommunications engineering from North Maharashtra University, Jalgaon and Master’s degree in business administration from Newport University, California. He has been working with our Company since 2004. Prior to joining our Company, he has worked with Zenith Computers Limited and has 15 years of work experience. For the year ended March 31, 2012, the total remuneration that he received was ` 1.16 million. Mihir Baxi, President Global Sales Mihir Baxi, aged 52 years, is the President of Global Sales department of our Company.He holds a Diploma in Mechanical Engineering from Government Polytechnic, Ahmedabad, Gujarat. He has been working with our Company since 2008. Prior to joining our Company he was working as

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Sole Representative of Brighetti Mechannica S.r.l, Gedee Weiler Pvt. Ltd and Toolcraft Sales & Service Pvt Ltd. He has also worked with Voltas Ltd in the machine tools division. He has work experience of 32 years in the machine tool field. For the year ended March 31, 2012, the total remuneration that he received was ` 0.82 million. Vijay Zala, Head R&D Vijay Zala, aged 35 years, is the Head of Research and Development department of our Company. He holds a Bachelor’s Degree in Mechanical Engineering from Sardar Patel University, Gujarat. He has been working with our Company since 2004. Prior to joining our Company, he was employed with Jyoti Enterprise and has 13 years of work experience. For the year ended March 31, 2012, the total remuneration that he received was ` 1.36 million. Hitesh Patel, General Manager Manufacturing Hitesh Patel, aged 39 years, is the General Manager of Manufacturing department of our Company. He holds a Bachelor’s Degree in electronics and telecommunications engineering from North Maharashtra University, Jalgaon and master’s degree in business administration from Newport University, California. He has been working with our Company since 2004. Prior to joining our Company, he was employed with Jyoti Enterprise and has 14 years of work experience. For the year ended March 31, 2012, the total remuneration that he received was ` 1.22 million. Prahladsinh Jadeja, General Manager Planning Prahladsinh Jadeja, aged 46 years, is the General Manager of Planning department of our Company. He holds a Bachelor’s Degree in production engineering from University of Mumbai. He has been working with our Company since 2005. Prior to joining our Company, he was employed with Jyoti Enterprise and has 22 years of work experience. For the year ended March 31, 2012, the total remuneration that he received was ` 1.08 million. Bernard Echevard, General Manager Bernard Echevard, aged 54 years, is the General Manager of our Subsidiary. He holds Diploma of Igneur Arts and Textile Industries. He has been working with our Subsidiary since 1998 prior to which he was employed with Lectra Systemes and has 15 years of work experience. For the year ended March 31, 2012, the total remuneration that he received was € 0.07 million. Maulik Gandhi, Company Secretary Maulik Gandhi, aged 28 years, is the Company Secretary of our Company. He holds a bachelor’s degree in Business administration from the University of Saurashtra. He is an Associate Member of Institute of Company Secretaries of India, New Delhi .He has been appointed as the Company Secretary of our Company on September 17, 2012. Prior to joining our Company he was employed with ANS Private Limited and has 4 years of experience. We confirm that all the key managerial personnel mentioned above are the permanent employees of our Company / or our Subsidiary. Further, none of the key managerial personnel are related to each other. Shareholding of key management personnel Except as stated below, none of the key management personnel hold any shares in our Company as on the date of this Draft Red Herring Prospectus. Name of the key managerial personnel Number of Equity shares held Prahladsinh Jadeja 100,000 Vijay Zala 43,900 Hiren Jadeja 36,000 Hitesh Patel 36,000 Kamlesh Solanki 36,000

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Bonus or profit sharing plan of the key management personnel Our Company does not have a performance linked bonus or a profit sharing plan for the key management personnel of our Company. Interests of key management personnel The key management personnel of our Company do not have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment, reimbursement of expenses incurred by them during the ordinary course of business, the employee stock options held, if any and shareholding in our Company, if disclosed in the section “Management – Shareholding of key management personnel” on page 172. Changes in the key management personnel There are no changes in the key management personnel in the last three years except as stated below:

Name Date of Appointment/ Cessation

Reason

Maulik Gandhi September 17, 2012 Appointment Payment or benefit to officers of our Company No amount of benefit has been paid or given to any officer of our Company within the two preceding years from the date of filing of this Draft Red Herring Prospectus or is intended to be paid, other than in the ordinary course of their employment, except free lunch. Except statutory benefits upon termination of their employment in our Company, no officer of our Company is entitled to any benefit upon termination of such officer’s employment in our Company. Loans taken by Key Management Personnel Following are the details of the loans availed by our Key Management Personnel: Sr. no Name Loan amount (` in

million) Amount outstanding as on January 31, 2013 (` in million)

1 Hitesh Patel 0.23 0.21

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PROMOTERS AND PROMOTER GROUP The Promoters of our Company are as follows: Individual Promoters: 1. Parakramsinh Jadeja; 2. Vikramsinh Rana; and 3. Sahdevsinh Jadeja. Corporate Promoter: Jyoti International Private Limited Details of our Individual Promoters .

Parakramsinh Jadeja, aged 44 years, is the Managing Director of our Company. For further details, see section titled “Management” on page 162. His voter identification number is GNC5558325 and driving license number is GJ03/318091/02

Vikramsinh Rana, aged 43 years, is the Whole Time Director of our Company. For further details, see section titled “Management” on page 162. His voter identification number is JVT9370644 and driving license number is GJ03 19880049069

Sahdevsinh Jadeja, aged 47 years, is the Whole Time Director of our Company. For further details, see section titled “Management” on page 162. His voter identification number is JVT8057556 and driving license number is GJ03/102128/01

Our Company confirms that the permanent account number, bank account number and passport number of Parakramsinh Jadeja, Vikramsinh Rana and Sahdevsinh Jadeja shall be submitted to the Stock Exchanges at the time of filing this Draft Red Herring Prospectus with them.

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defaulter. Also it has not been declared a sick company within the meaning of the SICA and is not under winding up. Change in control of JIPL There has been no change in control or management of JIPL in the three years preceding the date of filing of this Draft Red Herring Prospectus. Our Company confirms that the Permanent Account Number, Bank Account Number, Company Registration Number and address of the Registrar of Companies where our Corporate Promoter is registered, shall be submitted to the Stock Exchanges at the time of filing this Draft Red Herring Prospectus with them. Interests of our Promoters and Common Pursuits Our Promoters are interested in our Company to the extent that they have promoted our Company and hold Equity Shares in our Company. For details on the shareholding of our Promoters in our Company, see section titled “Capital Structure” on page 65. Our individual Promoters are also Directors of our Company and hence may be interested to the extent of their remuneration and reimbursement payable to them by our Company. For further details see section titled “Management” on page 162. Except as stated below and in the ordinary course of business, our Company has not entered into any contract, agreements or arrangements during the preceding two years from the date of this Draft Red Herring Prospectus in which our Promoters are directly or indirectly interested and no payments have been made to our Promoters in respect of the contracts, agreements or arrangements which are proposed to be made with our Promoters including the properties purchased by our Company. Our Company has entered into a Trade Mark License Agreement dated September 27, 2012 with Parakramsinh Jadeja whereby Parakramsinh Jadeja has granted sole license to use the trademark ‘Jyoti’ and associated logo in connection with sale of the products manufactured by our Company for initial period of 5 years and shall be automatically renewed for a further period of 1 year each at the end of every term of 1 year after the initial term of 5 years unless terminated by our Company. Further our Promoters are also directors on the boards, or are members, or are partners, of certain Promoter Group entities and may be deemed to be interested to the extent of the payments made by our Company, if any, to these Promoter Group entities. Our Company has entered into a licensed user agreement with Jyoti Enterprise, a Promoter Group entity, on September 27, 2012 for exclusive utilisation of the factory building together with the plant and machinery (including dies & tools, electric fittings, generator, measuring instruments, overhead crane, pattern, weighing machine etc) situated on land measuring 3,024 sq. meter at Plot no. P/4, Lodhika Industrial Estate, GIDC, Taluka Lodhika, Rajkot and factory building situated on land admeasuring 300 sq. yards at Dr. V. S. Road, Gondal Road, Rajkot. For the payments that are made by our Company to Promoter Group entities, please see the section “Related Party Transactions” on page 181. Other than as disclosed in the section “Our Group Companies”, our Promoters do not have any interest in any venture that is involved in any activities similar to those conducted by our Company. Our Company will adopt the necessary procedures and practices as permitted by law to address any conflict situation as and when they arise. Payment of benefits to our Promoters Except as stated in the section titled “Related Party Transactions” on page 181, there has been no payment of benefits to our Promoters during the two years preceding the filing of this Draft Red Herring Prospectus. Companies with which our Promoters have disassociated in the last three years Our Promoters have not disassociated with any of the companies in the last three years. Further, the subsidiary of Huron in Portugal ‘Rolo and Huron’ was liquidated on March 24, 2009.

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Confirmations Further, our Promoters have not been declared wilful defaulters by the RBI or any other governmental authority and there are no violations of securities laws committed by the Promoters in the past and no proceedings pertaining to such penalties are pending against them. Additionally, none of our Promoters have been restrained from accessing the capital markets for any reasons by the SEBI or any other authorities. Further, none of our Promoters was or is a promoter, director or person in control of any other company, which is debarred from accessing the capital markets under any order or directions made by the SEBI. The Promoter Group In addition to the Promoters named above, the following individuals and entities form a part of the Promoter Group: 1. Natural persons who are part of the Promoter Group

The natural persons who are part of the Promoter Group (due to their relationship with the Promoters), other than the Promoters, are as follows: Name of the Promoter Name of the Relative Relationship with

Promoter Parakramsinh Jadeja Ghanshyamsinh Jadeja Father

Ramnik Jadeja Mother Rajashree Jadeja Spouse Shiluben V Rana Sister Jyoti Raijada Sister Prathna Jadeja Daughter Pravinsinh Zala Spouse's Father Manhar Zala Spouse's Mother Vijay Zala Spouse's Brother

Sahdevsinh Jadeja Lalubha Jadeja Father Bapal Jadeja Mother

Jyoti Jadeja Spouse Jagdishsinh Jadeja Brother Bhavesh Jadeja Brother Meena Gohil Sister Shreepal Jadeja Son Neelraj Jadeja Son Lakhdhirsinh Chudasama Spouse's Father Majiraj Chudasama Spouse's Mother Pradhyumansinh Chudasama Spouse's Brother Usha Jadeja Spouse's Sister Purna Gohil Spouse’s Sister

Vikramsinh Rana Raghuvir Rana Father Indu Rana Mother Daksha Rana Spouse Vijay Rana Brother Narvirsinh Rana Brother Jeet Rana Son Devangi Rana Daughter Vanrajsinh Vala Spouse's Father Nimba Vala Spouse's Mother Ravindrasinh Vala Spouse's Brother Arvindsinh Vala Spouse's Brother

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2. Entities forming part of our Promoter Group Partnership 1. Jyoti Enterprise 2. Radhe Enterprise Sole proprietorship 1. Favourite Engineering

All persons whose shareholding is aggregated for the purpose of disclosing under the heading “shareholding of promoter group” as per Regulation 2(zb)(v) of the SEBI Regulations: 1. Kishore Virani 2. Anil Virani 3. Smit Ramesh Virani

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OUR GROUP COMPANIES

Entities forming part of our Group Companies Following entities form part of our Group Companies: Companies Jyoti International Private Limited For details, refer to section titled “Promoters and Promoter Group - Details of our Corporate Promoter” on page 175. Partnership firms Jyoti Enterprise Details of Jyoti Enterprise Corporate Information Jyoti Enterprise is a partnership firm formed pursuant to partnership deed dated April 3, 1989, as amended and situated at Plot No. P/4, Lodhika GIDC, District Rajkot, Gujarat 360021, India. This partnership is engaged inter alia in manufacturing of CNC turning centre and special purpose machines. Interest of the Promoters

Name of the Promoter Profit or loss sharing ratio as on date of this Draft Red Herring Prospectus

Parakramsinh Jadeja 50 %Sahdevsinh Jadeja 50 % Financial Performance The summary financial information is as follows:


Particulars


2012 March 31,

2011 March 31,

2010 1. Capital 4.66 4.61 4.55* Jyoti Enterprise currently does not carry on any business or operations. Jyoti Enterprise does not have any interest in the promotion of our Company. Our Company has not acquired any properties from Jyoti Enterprise in the past two years before filing the Draft Red Herring Prospectus with SEBI nor does it propose to acquire any properties from Jyoti Enterprise. Jyoti Enterprise does not have any interest in any transactions for acquisition of land, construction of building and supply of machinery by our Company. Common Pursuits of Jyoti Enterprise with our Company Jyoti Enterprise was involved in activities similar to those conducted by our Company and currently does not carry on any business or operations. Our Company will adopt the necessary procedures and practices as permitted by law to address any conflict situation as and when they arise. Related Business Transactions with Jyoti Enterprise and Significance on the Financial Performance of our Company Our Company has entered into a licensed user agreement with Jyoti Enterprise on September 27, 2012 for exclusive utilisation of the factory building together with the plant and machinery

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(including dies & tools, electric fittings, generator, measuring instruments, overhead crane, pattern, weighing machine etc) situated on land measuring 3,024 sq. meters at Plot P/4, Lodhika GIDC, Rajkot and factory building situated on land admeasuring 300 sq. yards at Dr. V. S. Road, Gondal Road, Rajkot. For details, see section titled “Related Party Transactions” on page 181. Business Interest of Group Companies in our Company

Except as disclosed in the Draft Red Herring Prospectus and in sections titled “Business” and “Related Party Transactions” on pages 130 and 181, Jyoti Enterprise does not have any business interest in our Company. Other Confirmations None of the entities forming part of our Group Companies is a sick company under the meaning of SICA and none of them are under winding up. Our Group Companies have not been declared wilful defaulters by the RBI or any other governmental authority and there are no violations of securities laws committed by our Group Companies in the past and no proceedings pertaining to such penalties are pending against them. Additionally, none of our Group Companies have been restrained from accessing the capital markets for any reasons by the SEBI or any other authorities. Further, all the Group Companies are unlisted companies and they have not made any public issue of securities in the preceding three years. The information provided in this section is as of the date of this Draft Red Herring Prospectus.

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RELATED PARTY TRANSACTIONS For details of the related party transactions, see sections titled “Restated Consolidated Financial Statements – Related Party Information” and “Restated Unconsolidated Financial Statements – Related Party Information” on pages 213 and 250, respectively.

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DIVIDEND POLICY The declaration and payment of dividend, if any, will be recommended by the Board of Directors and approved by the shareholders of our Company at their discretion, subject to the provision of the Articles and the Companies Act. The dividend, if any, will depend on a number of factors, including but not limited to, the earnings, general financial conditions, capital requirements and surplus, contractual restrictions, applicable Indian legal restrictions and overall financial position of our Company and other factors considered relevant by the Board. The Board may, from time to time, pay interim dividend. Our Company has no stated dividend policy and has not declared any dividends in the past.

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SECTION V: FINANCIAL INFORMATION

RESTATED CONSOLIDATED FINANCIAL STATEMENTS Restated Consolidated Summary Statement of Assets and Liabilities as at 31st December, 2012, 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 and Statement of Profit and loss and Cash Flows for nine months period ended 31st December 2012, and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 for Jyoti CNC Automation Limited and its subsidiary companies (collectively, the “Restated Consolidated Summary Statements”)

Auditor’s report as required by Part II of Schedule II to the Companies Act, 1956

The Board of Directors Jyoti CNC Automation Limited Plot No. G-506, G.I.D.C. Metoda, Kalavad Road, Rajkot. Dear Sirs, 1. We have examined the Restated Consolidated Financial Information of Jyoti CNC

Automation Limited (the “Company”) and Consolidated Financial Statement of Jyoti SAS, France (which consolidates financial information of direct subsidiary Jyoti SAS, France and indirect subsidiaries namely Huron Graffenstaden SAS France, Huron Canada Inc. Canada, and Huron Frasmaschinen GMBH, Germany and its Associate Rolo & Huron Portugal) (together referred to as the “Group”), for nine months period ended 31st December 2012 and for each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 annexed to this report for the purpose of inclusion in the offer document prepared by the Company in connection with its proposed Initial Public Offer (“IPO”). Such financial information, which has been approved by the Board of Directors of the Company, has been prepared in accordance with the requirements of:

a) Paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (the “Act”); and

b) Relevant provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the “Regulations”) issued by the Securities and Exchange Board of India (“SEBI”) on August 26, 2009, as amended from time to time in pursuance of the Securities and Exchange Board of India Act, 1992.

2. We have examined such restated financial information taking into consideration:

a) the terms of our engagement agreed with you vide our engagement letter dated 18th January 2013, requesting us to carry out work on such financial information, proposed to be included in the offer document of the Company in connection with its proposed IPO; and

b) The Guidance Note on Reports in Company Prospectuses (Revised) issued by The Institute of Chartered Accountants of India.

3. The Restated Consolidated Financial Information has been compiled by the management from the Audited Consolidated Financial Statements of the Group for nine months period ended 31st December 2012 and each of the years ended 31st March, 2012, 31st March, 2011, 31st March 2010, 31st March 2009 and 31st March 2008 prepared under generally accepted accounting principles in India (together, the “Historical Period Consolidated Financial Statements")

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For the purpose of Audit of the Historical Period Consolidated Financial Statements as defined above, we did not Audit the Consolidated Financial Statements of Jyoti SAS France (which consolidates financial information of direct subsidiary Jyoti SAS, France and indirect subsidiaries Huron Graffenstaden SAS, France, Huron Canada Inc., Canada, Huron Frasmaschinen GMBH, Germany and its Associate Rolo & Huron, Portugal) for nine months period ended 31st December, 2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008, whose Financial Statements reflected, total assets of `3,611.53 million, total revenues of `1,974.40 million and cash flow of `(15.72) million as at 31st December, 2012, total assets of `2,964.03 million, total revenues of `2,333.85 Million and cash inflows amounting to ` (22.01) Million as at and for the year ended 31st March 2012, total assets of `2,171.49 Million, total revenues of `1,703.48 Million and cash inflows amounting to `46.78 Million as at and for the year ended 31st March 2011, total assets of `2,298.62 Million, total revenues `1,583.24 Million and cash inflows amounting to ` (524.70) Million as at and for the year ended 31st March 2010 and total assets of `2,998.53 Million, total revenues of `2,981.13 Million and cash inflows amounting to ` (87.22) Million as at and for the year ended 31st March 2009 and total assets of `2,587.32 Million, total revenues `550.27 and cash inflows amounting to ` (117.25) Million as at and for the year ended 31st March 2008, which were approved by the board of directors in their respective board meetings. The Consolidated Financial Statements of Jyoti SAS (which consolidates financial statements of direct subsidary Jyoti SAS France and indirect subsidiaries Huron Graffenstaden SAS France, Huron Canada Inc. Canada, Huron Frasmaschinen GMBH Germany and its Associate Rolo & Huron Portugal) have been audited by other auditor, whose report on those consolidated financial statements have been solely relied upon by us. Our examination, in so far as it relates to the amounts related to Consolidated financial statement of Jyoti SAS (which consolidates financial statements of direct subsidiary Jyoti SAS France and indirect subsidiaries Huron Graffenstaden SAS France, Huron Canada Inc. Canada, Huron Frasmaschinen GMBH Germany and its Associate Rolo & Huron Portugal) for nine months period ended 31st December, 2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008, included in these Restated Consolidated Summary Statements, is based solely on the Consolidated report of the other auditor as mentioned above. 4. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the Regulations and terms of our engagement agreed with you, we report that: Read with paragraph 3 above, we have examined the Restated Consolidated Summary Statements of Assets and Liabilities of the Group as at 31st December, 2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009, and 31st March 2008 and the related Restated Consolidated Summary Statement of Profit and Loss and Cash Flows for nine months period ended 31st December,2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 and as set out in Annexure I to III. 5. Based on our examination and the reliance placed on the reports of the auditors of entities not Audited by us as referred to in paragraph 3 above to the extent applicable, we report that:

a) Adjustments for the material amounts in the respective financial years/period to which they relate have been adjusted in the attached Restated Consolidated Summary Statements;

b) There are no extraordinary items which need to be disclosed separately in the Restated Consolidated Summary Statements;

c) There are no qualifications in the Auditor’s Reports on the Consolidated Financial Statements of the Group for nine month period ended 31st December,2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008, which require any adjustments to the Restated Consolidated Summary Statements;

185

d) In our opinion, the Restated Summary Statements as disclosed in the Annexure to this report, read with the notes disclosed in Annexure IV have been prepared in accordance with Part II of Schedule II of the Act and the Regulations.

Other Financial Information: 6. At the Company’s request, we have also examined the following consolidated financial information proposed to be included in the offer document prepared by the management and approved by the Board of Directors of the Company and annexed to this report relating to the Group for nine months period ended 31st December, 2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008:

a. Notes to the Restated Consolidated Summary Statement of Assets and Liabilities, Profit and Loss and Cash flows (Annexure IV);

b. Restated Consolidated Statement of Share Capital (Annexure V);

c. Restated Consolidated Statement of Share Application Money pending Allotment (Annexure VI);

d. Restated Consolidated Statement of Long Term Loans & Advances (Annexure VII);

e. Restated Consolidated Statement of Other Non-current Assets (Annexure VIII);

f. Restated Consolidated Statement of Trade Receivables (Annexure IX);

g. Restated Consolidated Statement of Short-term Loans and Advances (Annexure X);

h. Restated Consolidated Statement of Other Current Assets (Annexure XI);

i. Restated Consolidated Statement of Long-term Borrowings (Annexure XII);

j. Restated Consolidated Statement of Short-term Borrowings (Annexure XIII);

k. Restated Consolidated Statement of Other Current Liabilities (Annexure XIV);

l. Restated Consolidated Statement of Accounting Ratios (Annexure XV);

m. Restated Consolidated Statement of Related Party Information (Annexure XVI)

n. Restated Consolidated Statement of Contingent Liabilities (Annexure XVII);

o. Restated Consolidated Statement of Commitments (Annexure XVIII);

p. Restated Consolidated Statement of Revenue from Operation (Annexure XIX);

q. Restated Consolidated Statement of Other Income (Annexure XX);

r. Restated Consolidated Statement of Employee Benefit Expenses (Annexure XXI);

s. Restated Consolidated Statement of Finance Cost (Annexure XXII); 7. This report should not, in any way, be construed as a reissuance or re-dating of any of the previous audit reports, nor should this be construed as a new opinion on any of the financial statements referred to herein.

8. We have no responsibility to update our report for events and circumstances occurring after the date of the report.

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9. This report is intended solely for your information and for inclusion in the offer document in connection with the proposed IPO of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.

For Kalaria & Sampat, Chartered Accountants (Firm Registration No. 104570W) Atul M. Kalaria Partner Membership No.: 41432 Place: Rajkot Date: 5th March, 2013

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Annexure - I Restated Consolidated Summary Statement of Assets & Liabilities ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Non-Current Assets Fixed Assets Tangible Assets 2,744.71 2,463.73 1,951.68 1,852.86 1,713.91 1,562.82 Intangible Assets 181.80 140.85 100.65 121.98 141.27 109.03 Capital Work-in-

progress 18.74 120.61

- 38.60 102.50 -

Long Term Loans & Advances (VII)

119.35 130.16 135.22 112.96 205.20 104.60

Other Non-current Assets (VIII)

0.87 19.60 15.32 15.32 0.02 0.02


3,065.47 2,874.96 2,202.87 2,141.72 2,162.91 1,776.48

B Current Assets Inventories 4,232.19 3,301.50 3,045.24 2,733.23 2,891.74 2,052.35 Trade Receivables

(IX) 1,431.72 1,241.94 741.85 592.99 558.74 719.40

Cash and Bank Balances

217.49 128.86 78.55 67.50 85.17 95.20

Short Term Loans & Advances (X)

151.22 238.79 169.07 196.34 265.83 247.32

Other Current Assets (XI)

3.21 5.73 2.51 1.48 1.67 3.98

Total Current Assets 6,035.83 4,916.82 4,037.22 3,591.53 3,803.15 3,118.25

C Non-Current Liabilities

Long Term Borrowings (XII)

1,182.70 1,553.45 1,211.35 1,427.35 1,645.08 1,268.54


139.62 120.26 107.63 75.40 62.93 53.64

Long Term Provisions 81.27 102.66 160.59 143.17 153.31 125.78 Total Non-Current

Liabilities 1,403.59 1,776.38 1,479.58 1,645.92 1,861.33 1,447.95


Borrowings (XIII) 3,169.82 2,216.66 1,699.02 1,344.29 902.60 800.12

Trade Payables 1,276.37 1,061.43 828.65 642.55 872.74 739.80 Other Current

Liabilities(XIV) 1,687.44 1,490.10 1,478.42 1,384.99 1,171.19 1,047.91

Short Term Provisions 163.71 191.34 32.77 0.06 7.53 2.43 Total Current

Liabilities 6,297.34 4,959.53 4,038.87 3,371.88 2,954.07 2,590.26

E Net-Worth (A+B-C-D)

1,400.37 1,055.88 721.65 715.46 1,150.66 856.52

Net-Worth Represented by :

188

F Shareholder's Fund Share Capital (V) 279.65 137.55 111.47 111.47 111.47 87.97 Share Application

Money(VI) -

- 128.30 129.50 108.00 132.19


279.65 137.55 239.77 240.97 219.47 220.15

G Reserve & Surplus 1,120.72 918.33 481.88 474.49 931.19 636.36 Net-Worth (F+G) 1,400.37 1,055.88 721.65 715.46 1,150.66 856.52

Note : 1. The above statement should be read with notes to the Restated Consolidated

Summary Statement of Assets & Liabilities, Statement of Profit & Loss and Cash Flow as appearing in Annexure – IV


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Annexure - II Restated Consolidated Summary Statement of Profit & Loss


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-


Operation (XIX) 4,160.48 6,003.76 4,362.50 2,777.79 3,612.39 1,830.85

Other Income (XX) 6.90 12.95 67.30 93.82 138.70 5.83 4,167.37 6,016.71 4,429.81 2,871.61 3,751.10 1,836.68 B EXPENSES Cost of Material

Consumed 2,358.02 3,248.07 2,381.71 1,469.29 1,740.13 1,252.30


(463.33) 3.20 (32.07) (29.34) (305.37) (298.01)

Employee Benefit Expenses (XXI)

621.21 741.70 639.16 637.75 638.20 213.75

Finance Cost (XXII) 330.25 389.82 294.06 269.43 268.90 132.36 Depreciation Expenses 166.98 202.74 206.06 240.62 229.86 87.50 Other Expenses 852.10 1,179.93 951.21 691.63 1,194.43 467.54 3,865.24 5,765.45 4,440.12 3,279.38 3,766.15 1,855.44 - - - - - C PROFIT BEFORE

TAX (A-B) 302.14 251.26 (10.31) (407.77) (15.05) (18.77)

D TAX EXPENSES Current Tax 73.21 76.97 (0.72) (7.05) (9.46) 7.03 Deferred Tax 19.36 12.63 32.23 12.47 9.29 5.70 92.57 89.60 31.51 5.43 (0.18) 12.73 E PROFIT AFTER

TAX (C-D) 209.57 161.66 (41.82) (413.20) (14.88) (31.50)

Note :

1. The above statement should be read with notes to the Restated Consolidated Summary Statement of Assets & Liabilities, Statement of Profit & Loss and Cash Flow as appearing in Annexure – IV


190

Annexure - III Restated Consolidated Cash Flow Statement

` in Million

Particular 31-Dec-12

31-Mar-12

31-Mar-11

31-Mar-10

31-Mar -09

31-Mar- 08

A Restated Profit before Tax

302.14 251.26 (10.31) (407.77) (15.05) (18.77)

Adjustment for:

Depreciation Expenses

166.98 202.74 206.06 240.62 229.86 87.50


(1.30) (1.37) (55.48) (22.59) (123.20) (4.89)

Finance Cost 330.25 389.82 294.06 269.43 268.90 132.36

Interest and Commission Income

(4.81) (9.64) (5.70) (5.71) (6.13) (2.73)

Foreign Exchange Loss/(Gain) on Cash Equivalents [Net]

- - - (0.01) 0.01 0.01

Direct Tax Expense 0.12 0.11 0.09 0.06 0.06 0.02

Operating Profit before Working Capital Change (As Restated)

793.38 832.92 428.71 74.03 354.44 193.51


Adjustment for:

(Increase)/Decrease in Trade Receivables

(189.78) (500.09) (148.86) (34.25) 160.67 (117.99)

(Increase)/Decrease in Inventories

(930.69) (256.25) (312.02) 158.51 (839.39) (420.63)

(Increase)/Decrease in Loans and Advances & Other Current Assets

84.96 (62.40) 10.25 140.17 (55.23) (114.75)

Increase/(Decrease) in Trade Payables & Other Current Liability

251.69 329.82 282.77 (224.48) 171.71 627.07

Increase/(Decrease) in Provisions

(27.09) 62.91 17.43 (10.15) 27.54 255.48

Cash generated from Operations

(17.53) 406.91 278.28 103.84 (180.25) 422.68

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Less : Direct Taxes paid

(20.37) (51.32) 11.07 (13.73) (1.62) (8.04)

Net Cash Generated/Used from Operating Activities

(37.89) 355.59 289.35 90.11 (181.87) 414.64


Purchase of Fixed Assets Including Capital Advances & Payables for assets

(366.34) (935.81) (136.99) (547.41) (499.02) (569.68)

Sale of Fixed Asset 2.10 2.02 65.34 179.39 135.52 0.78

Acquisition of Subsidiaries

- - - - - (900.86)

Interest Received 7.21 6.46 4.68 5.96 4.47 (1.49)


47.10 (64.97) 2.26 (30.70) (12.17) (23.50)

Net Cash flow Generated/Used in Investing Activities

(309.92) (992.29) (64.72) (392.76) (371.20) (1,494.75)

C CASH FLOW FROM FINANCIAL ACTIVITIES

Receipts from Issue of Equity Share Capital/(Refund of Shares Application Money)

39.12 150.00 (1.20) 21.50 269.58 310.47


(274.10) 394.69 (328.32) 71.80 433.47 298.20


953.16 517.64 354.73 441.68 102.48 587.82

Finance Cost Paid (328.61) (377.40) (262.53) (271.29) (265.88) (134.20)

Net Cash Generated/Used in Financial Activities

389.57 684.93 (237.32) 263.69 539.66 1,062.29

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D EXCHANGE DIFFERENCE ARISING ON CONVERSION DEBITED/(CREDITED) TO FOREIGN CURRENCY TRANSLATION RESERVE

66.33 (59.88) 25.61 9.38 (12.71) (44.38)

E NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENTS (A+B+C+D)

108.08 (11.65) 12.92 (29.58) (26.12) (62.20)

F CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR

19.37 29.74 16.43 49.51 71.70 62.07

G CASH AND CASH EQUIVALENTS ON ACQUISITION OF SUBSIDARY

- - - - - 66.19

H EXCHANGE DIFFERENCE ARISING ON TRANSLATION OF FOREIGN CURRENCY CASH & CASH EQUIVALENTS

8.92 1.28 0.39 (3.49) 3.92 5.65

I CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

136.37 19.37 29.74 16.43 49.51 71.70

Note : 1. The above statement should be read with notes to the Restated Consolidated Summary

Statement of Assets & Liabilities, Statement of Profit & Loss and Cash Flow as appearing in Annexure – IV

2. Restated Consolidated Cash Flows statement of the company has been prepared under the ‘Indirect method’ as set out in Accounting Standard – 3 on Cash Flow Statements


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Annexure – IV Notes to the Restated Consolidated Summary Statement of Assets & Liabilities, Profit & Loss and Cash Flows

OVERVIEW

Jyoti CNC Automation Limited “the company” was originally incorporated on 17th January 1991 under the name & style of “AMB Engineering Company Private Limited” under Companies Act, 1956. The name of the Company was subsequently changed to Jyoti CNC Automation Private Limited by passing necessary resolution in terms of section 21/31 of the Companies Act, 1956 and obtaining approval from Registrar of Companies, Gujarat vide their certificate of incorporation dated 8th May 2002. The Company is engaged in manufacturing of CNC machines like CNC Turning Centres, Vertical Machining Centres, Oval Turning Centre i-SECT and VMC 40/70 Linear with innovative linear technology.

The Company has following direct & indirect subsidiaries and associate referred as the ‘Group’.

Name of the Subsidiary Company

Date of Acquisiti

on*

Country of

Incorpo-ration

% of holding either Directly or through subsidiary as at

31-Dec-12

31-Mar

2012 2011 2010 2009 2008 Direct Subsidiary

1 Jyoti SAS 06.09.2007 France 100

% 100% 100% 100% 100% 100%

Indirect Subsidiaries

2 Huron

Graffenstaden SAS

20.11.2007 France 100

% 100% 100% 100% 100% 100%

3 Huron

Frasmaschinen,GMBH

20.11.2007

Germany

100% 100% 100% 100% 100% 100%

4 Huron Canada Inc.

20.11.2007 Canada 100

% 100% 100% 100% 100% 100%

Associate 5 Rolo & Huron

(Ceased as Associate from

24.03.2009)

20.11.2007 Portugal -- -- -- -- 47% 47%

Jyoti SAS was floated as a 100% subsidiary of Jyoti CNC Automation Ltd on 6th September, 2007. Jyoti SAS thereafter acquired 100% shareholding of Huron Graffenstaden SAS along with its marketing subsidiaries namely, Huron Frasmaschinen GMBH, Huron Canada Inc. and Rolo & Huron on 20th November, 2007. The Restated Consolidated Summary Statement of Assets and Liabilities of the Group as at 31st December 2012, 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 and the related Restated Consolidated Summary Statement of Profit and Loss and Restated Consolidated Statement of Cash Flows for nine months period ended 31st December 2012, and each of the year ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 (hereinafter collectively referred to as “Restated Consolidated Summary Statements” have been prepared specifically for inclusion in the Offer Document to be filed by the Company with the Securities and Exchange Board of India (“SEBI”) in connection with proposed Initial Public Offering of its equity shares. These Restated Consolidated Summary Statements have been prepared to comply in all material respects with the requirements of paragraph B (1) of Part II of Schedule II to the

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Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Issue of capital and disclosure requirements) Regulations, 2009 issued by SEBI and as amended from time to time. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES ADOPTED BY THE GROUP IN THE PREPARATION OF FINANCIAL STATEMENTS A. Basis of Preparation of Financial Statement

The Restated Consolidated Summary Statements have been prepared by applying the necessary adjustments to the consolidated financial statements of Jyoti CNC Automation Limited. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in India (‘Indian GAAP’).

B. Principal for Consolidation

The Consolidated Financial Statements have been prepared to comply in all material reflect with notified accounting standard by Companies (Accounting Standards) Rules, 2006 (‘as amended’) and the relevant provision of the Companies Act, 1956 (hereinafter referred to as “Act”) to reflect the financial position and the results of operations of the Group. These Consolidated Financial Statements are prepared under the historical cost convention on the accrual basis of accounting and reporting requirements of Accounting Standard (‘AS-21’) ‘Consolidated Financial Statements’ notified under Companies (Accounting Standards) Rules, 2006, (‘as amended’). The accounting policies have been consistently applied by the Group and are consistent with those used for the purpose of preparation of consolidated financial statements as at 31st December 2012.

The financial statements of the Company and Consolidated Financial Statement of its direct subsidiary Jyoti SAS have been combined on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. The intra-group balances and intra-group transactions and unrealised profits have been fully eliminated. The excess of cost to the Company of its investments in the subsidiary company over its share of equity of the subsidiary company, at the dates on which the investments in the subsidiary company are made, is recognised as 'Goodwill' being an asset in the Consolidated Financial Statements. Alternatively, where the share of equity in the subsidiary company as on the date of investment is in excess of cost of investment of the Company, it is recognised as 'Capital Reserve' and shown under the head 'Reserves and Surplus', in the Consolidated Financial Statements. Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made by the Company in the subsidiary companies and further movements in their share in the equity, subsequent to the dates of investments as stated above. The Consolidated Financial Statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

C. Presentation and disclosure of Consolidated Financial Statements

During the nine months period ended 31st December 2012 and year ended 31st March, 2012, the Revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company for the preparation and presentation of its financial statements, accordingly previous year’s figures have been re-grouped/re-classified wherever applicable.

D. Use of Estimates

The preparation of Consolidated Financial Statements requires estimates and assumptions to be made that affect the reported amount of Assets and Liabilities on the date of the Consolidated Financial Statements and the reported amount of revenues and expenses during the reporting period.

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Estimates and Assumptions used in the preparation of the Consolidated Financial Statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the Consolidated Financial Statements, which may differ from the actual results at a subsequent date. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

E. Fixed Assets

Tangible & Intangible Assets are stated at cost net of recoverable taxes less accumulated depreciation and impairment loss, if any. Cost includes purchase price, taxes and duties, labour cost and directly attributable costs for self constructed assets and other direct costs incurred up to the date the asset is ready for its intended use. Borrowing cost incurred for qualifying assets is capitalized up to the date the asset is ready for intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset. The cost of acquisition is further adjusted for exchange differences relating to long term foreign currency borrowings attributable to the acquisition of depreciable asset. Fixed Assets acquired for research and development are included as part of fixed assets and depreciated on the same basis as other fixed assets. Finance leases, which effectively transfer to the Group substantially all the risks and benefits incidental to ownership of the leased asset, are capitalized at the inception of the lease term at the lower of the fair value of the leased asset and present value of minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as finance costs in the statement of profit and loss.

F. Depreciation/Amortisation

Depreciation / amortisation on fixed assets other than on freehold land and capital work in progress is charged so as to write-off the cost of the assets on the Straight Line Method basis at following rates.

Sr.No Types of Assets Parent Company

Subsidiary Companies

Period 1 Buildings

At rates prescribed in schedule XIV of the Act.

10 to 20 years 2 Plant & Machinery 3 to 6 years 3 Furniture & Fixture 3 to 6 years 4 Office Equipments 3 to 6 years 5 Dies & Tools 3 to 6 years 6 Electric Installation 3 to 6 years 7 Computer 3 to 6 years 8 Vehicles 3 to 6 years

G. Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when the asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

H. Inventories Cost of Inventories comprise of all cost of purchase, conversion and other cost incurred in bringing the inventories to their present location and condition.

196

Inventories are valued at cost or realizable value whichever is lower.

I. Revenue recognition The Company recognizes revenue on sale of products, when the products are delivered to the dealer / customer, which is when the risks and rewards of ownership pass to the dealer /customer. Interest income is recognized on time proportion basis depending upon the amount outstanding and the rate applicable. Annual Maintenance Contract Income (AMC) is recognized on time proportion basis. Revenue on servicing income is recognized when services are rendered.

J. Transactions in Foreign Currencies

(i) Exchange differences: Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates.

(a) Exchange differences arising on settlement of transactions and translation of monetary

items other than those covered by (b) below are recognized as income or expense in the year in which they arise.

(b) Exchange differences relating to long term foreign currency monetary assets/liabilities

are accounted for with effect from April 1, 2007 in the following manner:

Differences relating to borrowings attributable to the acquisition of the depreciable capital asset are added to / deducted from the cost of such capital assets. Pursuant to notification issued by the Ministry of Corporate Affairs, on December 29, 2011, the exchange differences on long term foreign currency monetary items (other than those relating to acquisition of depreciable asset) are amortized over the period till the date of maturity or March 31, 2020, whichever is earlier.

(c) On consolidation, the assets, liabilities and goodwill or capital reserve arising on the

acquisition, of the Group’s overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expenditure items are translated at the average exchange rates for the year/ period.

Exchange differences arising in case of non integral foreign operations are recognized in the Group’s Translation Reserve classified under Reserves and surplus.

(ii) Forward Contract:

Any Premium or discount arising at the inception of forward exchange contract is recognized as an income or expense in the statement of profit & loss over the life of the contract.

K. Borrowing Cost:

Interest on borrowings is recognized in the Profit and Loss account except interest incurred on borrowings specifically raised for projects which are capitalized to the cost of the respective assets until such time that the asset is ready to be put to use for the intended purpose except where installation is extended beyond reasonable/normal time lines.

L. Employee Benefits

197

(a) Jyoti CNC Automation Ltd.

Short term employee benefits are recognized in the period during which the services have been rendered.

Gratuity: Gratuity for each year is arrived at as per actuarial valuation and is recognized and charged to the statemetnt of Profit and Loss in the year in which employee has rendered service. Provident Fund: Company’s contribution to employee’s Provident fund is accounted for at actual Cost when the liability to contribute to the Provident Fund under the relevant act arises. Compensated absences: Privilege compensated absences are considered as long term unfunded benefits and are recognized on the basis of an actuarial valuation using the projected unit credit method determined by an appointed actuary.

(b) Huron Graffenstaden SAS

Gratuity: Retirement gratuities provision was established according to a method including employees' length of service, the probability of presence in the company at retirement age (staff turnover and mortality) an annual salary adjustment of 0.75%, a discount rate of 3.17% for retirement at the employee’s own initiative at the age of 67.

M. Income tax:

Tax expense comprises current and deferred taxes. Current taxes are determined based on respective taxable income of each taxable entity and tax rules applicable for respective tax jurisdictions. Current tax is net of credit for entitlement for Minimum Alternative Tax. Minimum Alternate Tax credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an assets in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said assets is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specified period. Deferred tax is recognized, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Such deferred tax assets and liabilities are computed separately for each taxable entity and for each taxable jurisdiction. Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the period when asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.

N. Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its

198

present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Huron Graffenstaden SAS Provision for Warranty & Commissioning: Each time a new machine is sold, a provision is made on the basis of a standard amount defined for each family of machines to cover any warranty costs and an amount is determined machine by machine for the costs of bringing into line with standards known at the end of the financial year. The costs of commissioning machines are provisioned each time a machine is sold on the basis of a standard amount defined for each family of machines. The standard amounts of the provision for warranty and commissioning are re-evaluated at the end of each year in view of the costs actually incurred (hours of labour, cost of parts and work entrusted to subcontractors, minus any reimbursements obtained from suppliers of components or their insurers) during the warranty period and exclusively for work carried out under the warranty or for commissioning machines. This revision is determined overall for all the machine stock. These provisions are followed machine by machine, the net costs incurred giving rise to a write-back of the provision originally constituted. At the end of the warranty period or on completion of the commissioning, the remainder of the provision is written back in full.

O. Earnings per Share The earnings considered in ascertaining the Company's Earnings per Share (EPS) comprise the net profit after tax. The number of shares used in computing Basic and diluted EPS is weighted average number of shares outstanding during the year. For the purpose of calculating diluted earnings per share, the restated net profit or loss for the year attributable to the equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares including shares to be issued against the share application money.

P. Contingent Liabilities and Assets Contingent Liabilities are not recognized but disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

Other Notes

A. The Parent Company had entered into a USD/JPY currency derivative deal with erstwhile Centurion Bank of Punjab (now HDFC Bank) on 7th March 2008. The Mark to Market difference was accounted for and charged to Profit & Loss account on respective Balance Sheet Dates in restated Accounts. The deal got unwound on 13th February, 2013 and an amount of `14.93 million was determined as payable by the Company on unwinding of the deal. The same was paid on 19th February, 2013.

B. Segment reporting

1. Primary Segment:

The Group is exclusively engaged in the business of "CNC Machines". This in the context of Accounting Standard-17 “Segment Reporting”, notified under the Companies (Accounting Standard) Rules, 2006, constitutes one single primary segment.

199

2. Geographical Segment


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A Revenue from

operations

Within India 2,451.05 3,581.30 2,698.64 1,391.70 993.00 1,188.60 Outside India 1,709.43 2,422.46 1,663.86 1,386.09 2,619.39 642.25 4,160.48 6,003.76 4,362.50 2,777.79 3,612.39 1,830.85

B Fixed Assets Within India 1,958.22 1,865.24 1,706.43 1,616.07 1,357.32 1,171.69 Outside India 987.02 859.96 345.90 397.36 600.36 500.16 2,945.24 2,725.20 2,052.33 2,013.43 1,957.68 1,671.85

C Total Assets Within India 5,656.45 4,640.69 3,962.54 3,333.23 2,589.82 2,022.57 Outside India 3,444.85 3,151.10 2,277.55 2,400.03 3,376.24 2,872.16 9,101.30 7,791.79 6,240.09 5,733.26 5,966.06 4,894.73

C. All numbers have been

rounded off to two decimals. Any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off.

200

Annexure - V Restated Consolidated Statement of Share Capital ` in Million Particulars 31-Dec-

12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A Authorized Share Capital Ordinary

Equity Shares of Rs.10/- each

450.00 150.00 120.00 120.00 120.00 120.00

No. of Shares

45,000,000 15,000,000 12,000,000 12,000,000 12,000,000 12,000,000

B Issued, Subscribed and Paid-up Share Capital Ordinary

Equity Shares of Rs.10/- each, fully paid-up

279.65 137.55 111.47 111.47 111.47 87.97

No. of Shares

27,964,916 13,754,583 11,146,808 11,146,808 11,146,808 8,796,700

279.65 137.55 111.47 111.47 111.47 87.97 Particulars 31-Dec-

12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 Number of Shares

1 Number of Shares at the beginning of the year

13,754,583

11,146,808

11,146,808

11,146,808

8,796,700 8,796,700

2 Shares issued during the year

262,750 2,607,775 - - 2,350,108 -

3 Issue of Bonus Shares

13,947,583

- - - - -

4 Number of Shares at the end of the year

27,964,916

13,754,583

11,146,808

11,146,808

11,146,808

8,796,700

201

Annexure - VI Restated Consolidated Statement of Share Application Money pending

Allotment

` in Million Particulars 31-

Dec- 12

31-Mar-

12

31-Mar-

11

31-Mar-

10

31-Mar-

09

31-Mar-08

A Share Application Money

- - 128.30 129.50 108.00 132.19

- - 128.30 129.50 108.00 132.19

202

Annexure - VII Restated Consolidated Statement of Long Term Loans & Advances


12 31-

Mar- 12

31-Mar-

11

31-Mar-

10

31-Mar-

09

31-Mar-08

[Unsecured, considered good unless otherwise stated] A Capital Advance 2.72 3.65 0.05 1.15 56.78 13.98 B Security Deposits 13.79 10.35 28.72 44.70 46.00 50.25 C Advances to

Related Parties 17.98 17.96 17.94 17.93 17.96 17.86

D Advances to Employees

13.11 9.06 8.42 5.39 - -

E MAT Credit Entitlement

41.55 57.54 58.84 17.62 18.36 -

F Others 30.21 31.61 21.24 26.16 66.10 22.51 119.35 130.16 135.22 112.96 205.20 104.60

For details of loans & advances related to the directors or promoters or the issuer in any

way, please refer to Annexure XVI - Related Party Information

203

Annexure - VIII Restated Consolidated Statement of Other Non-Current Assets


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A Bank Deposits

having maturity period of more than 12 months, maturing after 12 months from balance sheet date

0.87 18.32 14.32 14.32 0.02 0.02

B Interest Accrued on Bank Deposits

- 1.28 1.00 1.00 - -

0.87 19.60 15.32 15.32 0.02 0.02

204

Annexure - IX Restated Consolidated Statement of Trade Receivables


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 [Unsecured, considered good unless otherwise stated] A Trade Receivable

outstanding for a period exceeding Six months from the date they were due for payment

120.29 163.31 121.98 51.29 39.08 67.57

B Other Trade

Receivables 1,311.42 1,078.63 619.86 541.70 519.65 651.83

1,431.72 1,241.94 741.85 592.99 558.74 719.40

For details of receivables related to the directors or promoters or the issuer in any way, please refer to Annexure XVI - Related Party Information

205

Annexure - X Restated Consolidated Statement of Short Term Loans & Advances

` in Million

Particulars 31-Dec- 12

31-Mar-12

31-Mar- 11

31-Mar-10

31-Mar- 09

31-Mar-08

[Unsecured, considered good unless otherwise stated] A Pre-paid Expense 63.94 91.63 70.46 66.34 127.72 110.11 B Advance to

Employees 4.59 8.48 5.97 3.97 8.37 6.97

C Advance to Suppliers

61.09 118.25 66.62 50.81 49.11 42.96

D Advance Tax [Net of Provision]

- - - 1.86 - -

E Balance with Statutory Authorities

21.59 20.43 26.03 73.36 80.62 87.27

151.22 238.79 169.07 196.34 265.83 247.32

For details of loans & advances related to the directors or promoters or the issuer in any way,

please refer to Annexure XVI - Related Party Information

206

Annexure - XI Restated Consolidated Statement of Other Current Assets

` in Million


31-Mar-12

31-Mar- 11

31-Mar- 10

31-Mar- 09

31-Mar-08

A Interest accrued on Bank Deposits

3.21 5.61 2.43 1.41 1.66 1.24

B Others - 0.12 0.08 0.07 0.01 2.74 3.21 5.73 2.51 1.48 1.67 3.98

207

Annexure - XII Restated Consolidated Statement of Long Term Borrowings


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 Secured Loans from Banks Term Loans 595.45 1,012.46 997.12 1,073.17 1,265.92 1,057.16 Vehicle Loans 2.89 3.20 3.67 1.34 2.83 2.38 [Vehicle loans are secured by way of hypothecation of vehicles.]

Long Term Maturities of Finance Lease Obligations Secured 466.10 412.39 1.10 120.66 134.87 189.92 [Secured by leased Equipment]

Loans and Advances from Others Unsecured 118.26 125.41 209.47 232.17 241.46 19.08 [Repayable after 1 year and interest rate 15% for loans raised in Parent Company]

1,182.70 1,553.45 1,211.35 1,427.35 1,645.08 1,268.54

Details of Terms of Repayment for the Long-term Borrowings of Parent Company

Particulars Term Loan &

Corporate Loan from Bank *

Vehicle Loan from

Bank

Finance Lease

Name of Bank Bank of Baroda HDFC Bank

Hewlett -Packard Financial Service

India Pvt. Ltd. Corporation Bank ICICI Bank Bank of India IDBI State Bank of India Kotak

Mahindra Bank

Interest Rate Base Rate + 2.50% to 4.75%

10.5% to 15.10%

11% to 13%

Maturity Period from 31st December,2012

15 to 45 Months 14 to 28 Months

3 to 31 Months

Repayment Schedule No. of Installment/EMI 11 to 16 Quarterly

Installment 36 Monthly Installment

36 Months Installment

Starting Date of repayment

30.04.2010 to 09.11.2012

05.02.2010 to

12.05.2012

07.11.2009 to 01.10.2012

Installment Amount 11 to 16 Quarterly Installments ranging from Rs.2.5 million

to Rs.21 million

36 EMI ranging from Rs.19,210 to

Rs.48,500

12 Quarterly installments ranging from Rs.34,700 to

Rs.6,87,002 * The above Loans are secured by first charge on pari passu basis on the Company's movable

assets and immovable assets, and second charge on inventory, receivables & other current assets, both present and future

The above Term Loans are also secured by personal guarantee of Promoter Directors and Mr. Ghanshyamsinh Jadeja and equitable mortgage of immovable property of Enterprise influenced by Key Management Personnel on pari passu basis.

208

Details of Terms of Repayment for the Long-term Borrowings of Direct & Indirect subsidiaries

Particulars Term Loan from Bank * Finance Lease

Name of Bank/Financial institutions

Bank of Baroda Bank of India

Fructicomi CIC Lease

OSEO Alsabail

Interest Rate EURIBOR 6 Months + 2.50%/year

EURIBOR 3 Months + 2.50%/year


33 Months 14 years

Repayment Schedule No. of Installment/EMI 20 quarterly installments 56 to 60 quarterly installments


31.03.2010 23.09.2011 to 23.09.2012

Installment Amount 20 quarterly installments of 5,62,500 Euro each

54 quarterly 12,000 to 1,42,300 Euro

*The above term loan is secured by Pledge of 100% shares of Jyoti SAS France held by Jyoti CNC Automation Limited, pledge of 100% shares of Huron Graffenstaden SAS held by Jyoti SAS France, pledge of current accounts of Jyoti SAS France with State Bank of India, Bank of India and corporate guarantee of Jyoti CNC Automation Limited and personal guarantee of Promoter Directors of Jyoti CNC Automation Limited and Mr. Ghanshyamsinh Jadeja.

209

Annexure - XIII Restated Consolidated Statement of Short-term Borrowings

` in Million

Particulars 31-Dec-12 31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Loan repayable on Demand From Banks Secured 3,169.82 2,216.66 1,699.02 1,344.29 902.60 800.12 3,169.82 2,216.66 1,699.02 1,344.29 902.60 800.12 The Parent Company’s Loan repayable on demand (working Capital limits) are secured

by first charge on pari passu basis over company’s stock & book debts and second charge on pari passu basis over Company's movable and immovable assets.

The Parent Company’s working capital loans are also secured by personal guarantee of Promoter Directors of the company and Mr. Ghanshyamsinh Jadeja and equitable mortgage of immovable property of Enterprise influenced by Key Management Personnel on pari passu basis. The working capital loans of Huron Graffenstaden SAS is secured by Pledge on Huron Graffenstaden SAS’s current assets including stocks and debtors/receivables/invoices and business pledge for Euro 1 million and negative lien on fixed Assets of Huron Graffenstaden SAS. The working capital loans of Huron Graffenstaden SAS are also secured by Corporate Guarantee of Jyoti CNC Automation Limited, personal guarantee of Promoters Directors of the Jyoti CNC Automation Limited and Mr. Ghanshyamsinh Jadeja.

210

Annexure - XIV Restated Consolidated Statement of Other Current Liabilities


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A Financial Liability Current Maturity

of Long Term Borrowings

537.90 445.55 476.73 591.23 217.46 161.71

Current Maturity of Finance Lease Obligations

45.50 41.20 5.10 1.73 85.96 84.79

Interest accrued on Long Term Borrowings

40.54 38.29 27.75 21.27 21.64 20.65

Interest accrued but not due on Borrowings

4.87 5.48 3.60 3.56 5.05 3.01

Interest accrued on Trade Payables

0.21 0.21 0.37 0.43 - -

B Statutory

Liabilities 178.16 63.25 22.42 15.08 12.99 9.82

C Others Income received

in Advance 170.14 13.05 45.20 170.54 141.00 91.40

Payables for Assets

31.84 35.11 137.81 36.43 116.03 91.46

Creditors for Expenses

206.59 283.63 190.80 104.46 90.73 77.80

Advance received from Customers

226.36 258.00 318.34 188.99 188.91 195.83

Expenses Payable 176.68 254.12 206.34 251.28 291.42 311.44 Other Payables 68.65 52.22 43.97 - - - 1,687.44 1,490.10 1,478.42 1,384.99 1,171.19 1,047.91

211

Annexure - XV Restated Consolidated Statement of Accounting Ratio

` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Net Worth 1,400.37 1,055.88 721.65 715.46 1,150.66 856.52

B Restated Profit /(Loss) after Tax

209.57 161.66 (41.82) (413.20) (14.88) (31.50)

C Weighted

No. of Equity Shares outstanding during the period/year *

27,651,188

22,314,991

22,293,616

22,293,616

20,212,996

16,018,562

D Weighted

No. of Equity Shares outstanding during the period/year including Share Application Money (which should be considered for the calculation of Diluted Earning per Share)*

27,651,188

22,314,991

23,320,016

23,329,616

21,076,996

17,076,082

E No. of

Shares Outstanding at the end of the period/year

27,964,916

13,754,583

11,146,808

11,146,808

11,146,808

8,796,700

F Basic

Earning per Share (B/C )

7.58 7.24 (1.88) (18.53) (0.74) (1.97)

Diluted Earning per Share (B/D)

7.58 7.24 (1.79) (17.71) (0.71) (1.84)

212

G Return on Net Worth (B/A)

14.97% 15. 31% (5.80%) (57.75%) (1.29%) (3.68%)

H

Net Asset Value per share of Rs.10 each (A/E)

50.08 76.77 64.74 64.19 103.23 97.37

Notes:

The ratios has been computed as below: a Basic

Earnings per

Restated Net Profit after Tax attributable to Equity Shareholders

Share = Weighted Average number of Equity Shares outstanding during the period/year

(After considering impact of bonus shares, refer note “h” below)

b Diluted

Earnings Restated Net Profit after Tax attributable to Equity shareholders

per Share = Weighted Average number of Dilutive Equity Shares outstanding during the period/year (After considering impact of bonus shares, refer note “h”

below)

c Return on

Net Restated Net Profit after Tax attributable to Equity shareholders

worth (%) =

Net Worth at the end of the period/year

d Net Assets

Value Net Worth at the end of the period/year

per share = Total number of Equity Shares outstanding at the end of the period/year

e Net Worth for ratio mentioned in above note "c" and "d" represents sum of equity share

capital and reserves and surplus.

f Earnings per share calculations are in accordance with Accounting Standard 20 – “Earning per share”.

g The figures disclosed above are based on the Restated Consolidated Summary Statement of the Company.

h

As per Accounting Standard 20 – “Earning per share”, in case of bonus shares, the number of shares outstanding before the event is adjusted for the proportionate change in the number of equity shares outstanding as if the event has occurred at the beginning of the earliest period reported. The Company on 24th September, 2012 issued bonus shares in the ratio of one share for every one share held, to the existing shareholders by way of capitalization of securities premium account. Weighted average number of equity shares outstanding during all the previous years have been considered accordingly.

213

Annexure - XVI Restated Consolidated Statement of Related Party Information

As per Accounting Standard 18, the disclosures of transactions with related parties are given below:

A List of related parties and relationships Related Party Nature of Relationship

1 Parakramsinh Jadeja Key Management Personnel (KMP) 2 Sahdevsinh Jadeja Key Management Personnel (KMP) 3 Vikramsinh Jadeja Key Management Personnel (KMP) 4 Bhavesh Jadeja Relative of Key Management Personnel (KMP) 5 Jagdishsinh Jadeja Relative of Key Management Personnel (KMP) 6 Bernard Echevard Key Management Personnel (KMP) 7 Jyoti International Pvt. Ltd. Enterprise influenced by Key Management Personnel

(KMP) 8 Jyoti Enterprise Enterprise influenced by Key Management Personnel

(KMP) ` in Million

B Details of related party transactions during the year and balances outstanding as at Nature of

Transaction 31-Dec-

12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08

A Enterprise influenced by Key Management Personnel (KMP) I Transactions 1 Equity

Contribution received

29.12 95.50 - - 103.50 -

2 Advances given 0.02 0.02 0.01 - 0.55 6.26 3 Receipt towards

refund of advances - - - 0.03 0.45 12.27

II Balances outstanding at the end of the year

Advances given 17.98 17.96 17.94 17.93 17.96 17.86

B With Key Management Personnel I Transactions 1 Equity

Contribution Recevied

10.00 71.90 - - 0.17 10.11

2 Loan Given - - - - 7.96 1.25 3 Loans Recovered - - - - 8.43 1.00 4 Employee Benefit

Expenses 22.34 21.66 14.28 16.80 14.37 8.39

C With Relatives of Key Management Personnel (KMP) I Transactions 1 Employee Benefit

Expenses 0.69 0.86 0.79 0.52 0.47 0.37

214

Annexure - XVII Restated Consolidated Statement of Contingent Liabilities

` in Million Particulars 31-

Dec-12 31-

Mar-12 31-

Mar-11 31-

Mar-10 31-

Mar-09 31-

Mar-08 A Contingent Liability on

account of Outstanding Letter of Credit and Bank Guarantee

250.50 54.89 32.53 50.64 8.18 11.31

B Claim against company

not acknowledged as Debt

3.14 3.14 3.14 3.14 - -

C Corporate Guarantee to Banks on behalf of Jyoti SAS The Parent Company has given irrevocable and unconditional Corporate Guarantee to

Bank of India, Paris Branch and New Jersey Branch and Bank of Baroda, Paris Branch for and on behalf of Wholly owned Subsidiary Company "Jyoti SAS" in respect of term loan availed by Jyoti SAS to part finance the acquisition of 100% of the equity share capital in "Huron Graffenstaden SAS, France".

Outstanding Term Loan as on Balance sheet Date

` 365.82

(€ 5.06)

` 461.29

(€ 6.75)

` 533.59

(€ 8.44)

` 681.30

(€ 11.25)

` 759.15

(€ 11.25)

` 709.76

(€ 11.25)

D Disputed Excise Duty and Service Tax Liabilities Disputed Excise Duty

and Service Tax liabilities

4.77 4.77 4.77 - - -

Out of above amount following amount has been paid under protest

2.22 2.22 2.00 - - -

215

Annexure - XVIII Restated Consolidated Statement of Commitments

` in Million


31-Mar-

12

31-Mar-

11

31-Mar-

10

31-Mar-

09

31-Mar-

08

A Export Obligation under EPCG Scheme The company is under obligation to export goods within a period of 6/8 years from the

date of issue of EPCG licenses. Details of Duty saved on Capital Goods imported under EPCG Scheme, Export

Obligation (excluding Export Obligation fulfilled but [Export Obligation Discharge Certificate] EODC is pending as mentioned above) and Number of years with in which Export Obligation to be fulfilled are as follow

Duty Saved on Import of Capital Goods during the period/year

6.78 13.37 8.56 68.67 28.98 4.21

Cumulative Export Obligation as on Balance Sheet date

9.09 68.92 259.71 527.84 190.44 235.31

Number of year within which Export Obligation to be fulfilled

6/8 Years

6/8 Years

6/8 Years

6/8 Years

6/8 Years

6/8 Years

Any default on part of the company in respect of the aforesaid export obligation will

render the company liable for payment of full amount of custom duty saved and interest thereon as applicable.

B Estimated amount of

contract remaining to be executed on capital account and not provided as on Balance Sheet Date

1.00 27.54 4.66 4.49 192.83 453.46

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Annexure - XIX Restated Consolidated Statement of Revenue from Operation


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A Sale of

Products 4,288.59 6,194.51 4,446.61 2,756.47 3,571.96 1,958.80

B Sale of Service 101.55 179.80 198.88 138.63 176.68 45.73 C Other

Operating Income

73.58 11.68 7.90 8.18 11.46 1.75

4,463.72 6,385.98 4,653.39 2,903.29 3,760.10 2,006.28

D Less : Excise Duty

(303.24) (382.23) (290.89) (125.50) (147.71) (175.43)

4,160.48 6,003.76 4,362.50 2,777.79 3,612.39 1,830.85

217

Annexure XX Restated Consolidated Statement of Statement of Other

Income

` in MillioParticulars 31-Dec-

12 31-

Mar-12 31-

Mar-11 31-

Mar-10 31-

Mar-09 31-

Mar-08 Recurring

A Interest Income 4.81 9.64 5.70 5.71 6.13 2.73 B Foreign Exchange

Fluctuation Gain [Net of Loss]

- - 2.88 48.38 4.86 -

C Discount 0.41 1.90 3.04 16.88 4.51 0.45 Non-Recurring

D Profit on Sale of Asset

1.67 1.41 55.68 22.86 123.20 2.55

E Insurance Claim on Finished Goods

- - - - - 0.11

6.90 12.95 67.30 93.82 138.70 5.83

1 The classification of "Other income" as Recurring / Non-recurring is based on the current operations and business activities of the Company as determined by the Management.

2 The figures disclosed above are based on the Restated Consolidated Summary Statement of Profits and Loss of the Company.

218

Annexure - XXI Restated Consolidated Statement of Employee Benefit Expenses


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-

Mar-09

31-Mar-08

A Salary and Wages and other personnel Expenses

532.68 582.08 496.62 502.50 516.06 174.42

B Contribution to Provident Fund & other Funds

147.76 173.57 148.66 166.44 186.50 45.73

C Other Expenses 18.05 48.82 15.09 8.65 10.58 7.59 698.49 804.48 660.38 677.58 713.13 227.73 Less : Attributable

to Capital Expenditure

(77.28) (62.78) (21.21) (39.83) (74.94) (13.99)

621.21 741.70 639.16 637.75 638.20 213.75

219

Annexure - XXII Restated Consolidated Statement of Finance Cost


12 31-

Mar-12 31-

Mar-11 31-

Mar-10 31-

Mar-09 31-

Mar-08 A Interest Expenses On Borrowings 290.05 352.20 263.29 250.32 242.05 113.11 On Trade Payable 2.69 1.96 2.61 1.28 0.71 - To Others 2.17 1.08 0.54 2.03 0.61 0.07

B Other Borrowing Cost Bank and Other

Financial Charges 35.33 34.57 27.61 15.81 25.54 19.17

330.25 389.82 294.06 269.43 268.90 132.36

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RESTATED UNCONSOLIDATED FINANCIAL STATEMENTS Restated Unconsolidated Summary Statement of Assets and Liabilities as at 31st December, 2012, 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 and Statement of Profit and Loss and Cash Flows for nine months period ended 31st December 2012, and for each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 for Jyoti CNC Automation Limited (collectively the “Restated Unconsolidated Summary Statements”)

Auditor’s Report as required by Part II of Schedule II to the Companies Act, 1956 To, The Board of Directors, Jyoti CNC Automation Limited Plot No. G-506, G.I.D.C. Metoda, Kalavad Road Rajkot Dear Sirs, 1. We have examined the restated Unconsolidated Financial Information of Jyoti CNC Automation Limited (the “Company”) for nine months period ended 31st December 2012, and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 annexed to this report for the purpose of inclusion in the offer document prepared by the Company in connection with its proposed Initial Public Offer (“IPO”) of equity shares. Such financial information, which has been approved by the Board of Directors of the Company, has been prepared in accordance with the requirements of: a) paragraph B(1) of Part II of Schedule II to the Companies Act, 1956 (the “Act”); and

b) relevant provisions of the Securities and Exchange Board of India (Issue of Capital and

Disclosure Requirements) Regulations, 2009, as amended (the “Regulations”) issued by the Securities and Exchange Board of India (“SEBI”) on August 26, 2009, as amended from time to time in pursuance of the Securities and Exchange Board of India Act, 1992.

We have examined such Restated Financial Information taking into consideration: a) the terms of our engagement agreed with you vide our engagement letter dated 18th January

2013 requesting us to carry out work on such financial information, proposed to be included in the offer document of the Company in connection with its proposed IPO; and

b) the Guidance Note on Reports in Company Prospectuses (Revised) issued by the Institute of Chartered Accountants of India.

2. Financial Information as per Audited Financial Statements We have examined the attached Restated Unconsolidated Summary Statement of Assets and Liabilities of the Company as at 31st December 2012,31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 (Annexure I), Restated Unconsolidated Summary Statement of Profit and Loss of the Company for nine months period ended 31st December,2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 (Annexure II) and Restated Unconsolidated Statement of Cash Flows of the Company for nine months period ended 31st December 2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 (Annexure III), collectively referred to as Restated Unconsolidated Summary Statements. These Restated Summary Statements have been extracted by the Company from the audited financial statements of the Company for nine months period ended 31st December 2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 as approved / adopted by the Board of Directors / Members for those respective periods and years. The financial statements of the Company for the aforesaid financial years have been audited and reported by us.

221

Based on our examination of these Restated Summary Statements, we state that:

I. in our opinion, the Financial Information as per Audited Financial Statements and Other Financial Information mentioned above, as at and for nine months period ended 31st December 2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008, have been prepared in accordance with Part II B of Schedule II of the Act and the SEBI Regulations.

II. These have to be read in conjunction with the Significant Accounting Policies given in Annexure IV to this report.

III. The Restated Summary Statements have been arrived after adjusting for the changes in accounting policies retrospectively in the respective financial years to reflect the same accounting treatment as per changed accounting policy for all the reporting periods.

IV. The restated Profits have been arrived at after charging all expenses including depreciation and after making such adjustments and regroupings, as in our opinion are appropriate in the year to which they relate.

V. There are no extraordinary items that need to be disclosed separately in the Restated Summary Statements.

There are no qualifications in the auditor’s report on the financial statements that require adjustments to the Restated Summary Statements. 3. Other Financial Information: At the company’s request, we have also examined the following Restated Unconsolidated Financial information relating to the Company for nine months period ended 31st December 2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008, proposed to be included as an annexure to this report, as approved by the Board of Directors.

i. Notes to the Restated Unconsolidated Summary Statement of Assets and Liabilities, Profit and Loss and Cash Flow (Annexure IV);

ii. Restated Unconsolidated Statement of Share Capital (Annexure V)

iii. Restated Unconsolidated Statement of Share Application Money pending Allotment (Annexure VI)

iv. Restated Unconsolidated Statement of Non-Current Investment (Annexure VII)

v. Restated Unconsolidated Statement of Long Term Loans & Advances (Annexure VIII)

vi. Restated Unconsolidated Statement of Other Non-current Assets (Annexure IX)

vii. Restated Unconsolidated Statement of Trade Receivables (Annexure X)

viii. Restated Unconsolidated Statement of Short-term Loans and Advances (Annexure XI)

ix. Restated Unconsolidated Statement of Other Current Assets (Annexure XII)

x. Restated Unconsolidated Statement of Long-term Borrowings (Annexure XIII)

xi. Restated Unconsolidated Statement of Short-term Borrowings (Annexure XIV)

xii. Restated Unconsolidated Statement of Other Current Liabilities (Annexure XV)

xiii. Restated Unconsolidated Statement of Tax Shelter (Annexure XVI)

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xiv. Capitalization Statement as at 31st December, 2012 (Annexure XVII)

xv. Restated Unconsolidated Statement of Accounting Ratios (Annexure XVIII)

xvi. Restated Unconsolidated Statement of Related Party Information (Annexure XIX)

xvii. Restated Unconsolidated Statement of Contingent Liabilities (Annexure XX)

xviii. Restated Unconsolidated Statement of Commitments (Annexure XXI)

xix. Restated Unconsolidated Statement of Revenue from Operation (Annexure XXII)

xx. Restated Unconsolidated Statement of Other Income (Annexure XXIII)

xxi. Restated Unconsolidated Statement of Employee Benefit Expenses (Annexure XXIV)

xxii. Restated Unconsolidated Statement of Finance Cost (Annexure XXV) and

xxiii. Reconciliation of Restated Profits to Profits as per Audited Financial Statements (Annexure XXVI);

The Company has not declared any dividend (whether interim or final) during nine months period ended 31st December, 2012 and each of the years ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 and hence the disclosure of information regarding rates of dividend in respect of each class of shares is not applicable. 4. This report should not, in any way, be construed as a reissuance or re-dating of any of the

previous audit reports, nor should this be construed as a new opinion on any of the financial statements referred to herein.

5. We have no responsibility to update our report for events and circumstances occurring after

the date of the report.

6. This report is intended solely for your information and for inclusion in the offer document in connection with the IPO of the equity shares of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.

For Kalaria & Sampat, Chartered Accountants (Firm Registration No. 104570W) Atul M. Kalaria Partner Membership No.: 41432 Place: Rajkot Date: 5th March, 2013

223

Annexure - I Restated Unconsolidated Summary Statement of Assets and Liabilities ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Non-Current Assets Fixed Assets Tangible Assets 1,944.05 1,734.69 1,701.23 1,572.16 1,252.31 1,167.85 Intangible Assets 14.07 9.93 5.20 5.31 2.51 3.84 Capital Work-in-

progress 0.10 120.61 - 38.60 102.50 -

Non Current Investment (VII)

288.29 288.29 288.29 2.06 2.06 2.06

Long Term Loans & Advances (VIII)

862.51 586.48 337.42 384.57 480.58 293.99

Other Non-current Assets(IX)

0.87 19.60 15.32 15.32 0.02 0.02


3,109.90 2,759.61 2,347.45 2,018.02 1,839.99 1,467.75

B Current Assets Inventories 2,339.74 1,884.35 1,743.32 1,254.03 889.68 520.75 Trade Receivables

(X) 1,377.47 887.45 500.61 323.30 386.74 282.19

Cash and Bank Balances

144.63 111.77 56.55 58.75 51.53 38.66

Short Term Loans & Advances (XI)

63.92 127.94 74.48 81.65 45.95 28.87

Other Current Assets (XII)

50.07 28.87 2.51 1.48 1.67 3.98

Total Current Assets

3,975.83 3,040.39 2,377.47 1,719.21 1,375.57 874.45

C Non-Current

Liabilities

Long Term Borrowings(XIII)

518.71 739.14 796.19 779.41 765.01 350.95


139.62 120.26 107.63 75.40 62.93 53.64

Long Term Provisions

11.26 4.97 99.85 55.54 71.93 47.28

Total Non-Current Liabilities

669.59 864.37 1,003.67 910.36 899.88 451.87


Borrowings (XIV)

2,273.21 1,433.87 990.61 631.11 613.30 587.38

Trade Payables 1,205.26 884.85 758.14 512.92 326.26 308.18 Other Current

Liabilities(XV) 880.51 832.55 832.21 709.43 400.43 339.45

Short Term Provisions

164.08 191.42 32.77 0.06 7.53 2.44

Total Current Liabilities

4,523.05 3,342.69 2,613.74 1,853.52 1,347.53 1,237.45

E Net-Worth (A+B-C-

D) 1,893.09 1,592.94 1,107.51 973.36 968.15 652.88

Net worth

Represented by :

F Shareholder's Fund Share Capital (V) 279.65 137.55 111.47 111.47 111.47 87.97 Share Application - - 128.30 129.50 108.00 132.19

224

Money(VI) Total Shareholder's

Fund 279.65 137.55 239.77 240.97 219.47 220.15

G Reserve & Surplus 1,613.44 1,455.39 867.74 732.39 748.68 432.72 Net-Worth (F+G) 1,893.09 1,592.94 1,107.51 973.36 968.15 652.89 Note: 1. The above statement should be read with notes to the Restated Unconsolidated Summary

Statement of Assets and Liabilities, Profit and Loss and Cash Flows as appearing in Annexure – IV


225

Annexure - II Restated Unconsolidated Summary Statement of Profit and Loss


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-


Operation (XXII) 2,938.76 4,126.95 3,021.68 1,562.18 1,444.39 1,473.17

Other Income (XXIII)

28.94 31.97 12.37 58.57 20.55 2.92

2,967.70 4,158.92 3,034.05 1,620.75 1,464.94 1,476.10

B EXPENSES Cost of Material

Consumed 1,875.51 2,511.56 1,965.30 1,096.87 989.58 965.90


(321.16) (54.22) (266.42) (205.73) (258.34) (67.67)

Employee Benefit Expenses (XXIV)

225.94 228.56 182.52 119.53 98.42 72.14

Finance Cost (XXV) 262.50 304.33 228.97 188.35 173.86 95.78 Depreciation

Expenses 110.59 134.77 118.48 107.98 83.83 62.48

Other Expenses 498.49 669.01 636.60 278.86 345.07 313.47 2,651.87 3,794.01 2,865.45 1,585.86 1,432.42 1,442.10 688.92 804.01 516.05 331.22 184.83 55.80

C PROFIT BEFORE TAX (A-B)

315.83 364.91 168.60 34.89 32.51 34.00

D TAX EXPENSES Current Tax 78.00 87.80 7.78 0.58 2.09 10.55 Deferred Tax 19.36 12.63 32.23 12.47 9.29 5.70 97.36 100.43 40.01 13.05 11.38 16.25

E PROFIT AFTER TAX (C-D)

218.47 264.49 128.59 21.84 21.13 17.74

Note : 1. The above statement should be read with the Notes to the Restated Unconsolidated Summary



226

Annexure - III Restated Unconsolidated Cash Flow Statement ` in Million

Particular 31-Dec- 12

31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A CASHFLOW FROM OPERATING ACTIVITIES Restated Profit

before Tax 315.83 364.91 168.60 34.89 32.51 34.00

Adjustment for: Depreciation

Expenses 110.59 134.77 118.48 107.98 83.83 62.48


0.37 0.04 0.20 0.27 - 0.21

Direct Tax Expenses 0.40 0.40 0.34 0.06 0.06 0.02 Finance Cost 262.50 304.33 228.97 188.35 173.86 95.78 Foreign Exchange

Loss/(Gain) on Cash Equivalents - Net

- - - (0.01) 0.01 0.01

Interest & Commission Income

(28.48) (29.87) (4.36) (3.00) (2.71) (2.37)

Operating Cash flow before Working Capital Change

661.21 774.59 512.23 328.54 287.56 190.12

Change in Working

Capital

Adjustment for: (Increase) / Decrease

in Trade Receivables (490.02) (386.84) (177.31) 63.93 (105.03) (223.35)

(Increase) / Decrease in Inventories

(455.39) (141.03) (489.28) (364.35) (368.93) (118.34)

(Increase) / Decrease in Loans and Advances & Other Current Assets

55.87 (44.57) (0.81) (38.00) (17.97) 48.98

Increase / (Decrease) in Trade Payables & Other Current Liability

306.04 195.00 454.92 289.66 34.29 71.93

Increase / (Decrease) in Provisions

7.02 (93.28) 44.31 (16.39) 24.65 47.28

Cash generated

from Operation 84.73 303.86 344.05 263.38 (145.43) 16.63

Less : Direct Taxes

paid (16.98) (49.11) (13.31) (16.52) (12.91) (4.52)

Net Cash

Generated/Used from Operating Activities

67.75 254.75 330.74 246.86 (158.34) 12.11

B CASH FLOW USED IN INVESTING ACTIVITIES Investment in

Subsidiary - - - - - (2.06)

Loan given to Subsidiary

(242.76) (231.88) (188.02) (41.05) (54.43) (220.18)

(Increase)/Decrease in Deposits with

47.10 (64.97) 2.26 (30.70) (12.17) 32.71

227

Banks

Interest Received 7.28 3.50 3.33 3.18 5.01 (1.61) Purchase of Fixed

Assets Including Capital Advances & Payables for assets

(202.91) (298.26) (214.67) (304.70) (344.10) (455.44)

Sale of Fixed Asset 0.43 0.61 1.52 0.40 9.76 0.78 Net Cash flow

Generated/Used in Investing Activities

(390.85) (590.99) (395.58) (372.86) (395.93) (645.80)

C CASH FLOW FROM FINANCIAL ACTIVITIES Proceeds from Issue

of Equity Share Capital/(Refund of Share Application Money)

39.12 150.00 (1.20) 21.50 269.58 310.47


(225.45) 37.46 (69.42) 257.52 431.86 55.10


839.34 443.25 359.50 17.81 25.92 375.07

Finance Cost Paid (268.68) (299.94) (224.00) (178.53) (172.87) (97.62) Net Cash

Generated/Used in Financial Activities

384.33 330.77 64.88 118.31 554.50 643.03

D NET INCREASE/

(DECREASE) IN CASH & CASH EQUIVALENTS (A+B+C+D)

61.23 (5.48) 0.07 (7.70) 0.22 9.34

E CASH AND CASH

EQUIVALENTS AT THE BEGINNING OF THE YEAR

2.27 7.75 7.68 15.37 15.16 5.83

Less : Foreign Exchange Gain/(Loss) on Cash Equivalents [Net]

- - - 0.01 (0.01) (0.01)

F CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

63.51 2.27 7.73 7.69 15.38 15.16

Note: 1. The above statement should be read with the Notes to the Restated Unconsolidated Summary


2. Restated Unconsolidated Cash Flows statement of the company has been prepared under the ‘Indirect method’ as set out in Accounting Standard – 3 on Cash Flow Statements


228

Annexure – IV Notes to the Restated Unconsolidated Summary Statement of Assets & Liabilities, Profit & Loss and Cash Flows

OVERVIEW

Jyoti CNC Automation Limited “the company” was originally incorporated on 17th January 1991 under the name & style of “AMB Engineering Company Private Limited” under Companies Act, 1956. The name of the Company was subsequently changed to Jyoti CNC Automation Private Limited by passing necessary resolution in terms of section 21/31 of the Companies Act, 1956 and obtaining approval from Registrar of Companies, Gujarat vide their certificate of incorporation dated 8th May 2002.

The Company is engaged in manufacturing of CNC machines like CNC Turning Centers, Vertical Machining Centers, Oval Turning Centre i-SECT and VMC 40/70 Linear with innovative linear technology. The Restated Unconsolidated Summary Statement of the Assets and Liabilities of the Company as at 31st December 2012, 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008, the Restated Unconsolidated Summary Statement of Profits and Losses and the Restated Unconsolidated Statement of Cash Flows for nine months period ended 31st December 2012 and each of the year ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 (collectively referred to as Restated Unconsolidated Summary Statements) have been prepared specifically for the purpose of inclusion in the offer document to be filed by the Company with the Securities and Exchange Board of India (SEBI) in connection with the proposed Initial Public Offering (hereinafter referred to as IPO) of its equity shares. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES ADOPTED BY THE COMPANY IN THE PREPARATION OF FINANCIAL STATEMENTS A. Basis of Preparation of Financial Statement

The Restated Unconsolidated Summary Statements have been prepared by applying the necessary adjustments to the financial statements of Jyoti CNC Automation Limited. The financial statements have been prepared under the historical cost convention on the accrual basis of accounting in accordance with the Companies Act, 1956 and the accounting principles generally accepted in India (‘Indian GAAP’) and comply in all material respects with the accounting standards notified by Companies (Accounting Standards) Rules, 2006 (as amended), to the extent applicable. The accounting policies have been consistently applied by the Company. During the nine months period ended 31st December 2012 and year ended 31st March, 2012, the Revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company for the preparation and presentation of its financial statements, accordingly previous years figures have been re-grouped/re-classified wherever applicable. B. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of Assets and Liabilities on the date of the Financial Statements and the reported amount of Revenues and Expenses during the reporting period. Estimates and Assumptions used in the preparation of the Financial Statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the Financial Statements, which may differ from the actual results at a subsequent date. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized. C. Fixed Assets

Fixed Assets (including Assets acquired under lease and Intangible Assets) are stated at cost net of recoverable taxes less accumulated depreciation and impairment loss, if any. Cost includes purchase price, taxes and duties, labour cost and directly attributable costs for self-constructed assets and other direct costs incurred up to the date the asset is ready for its intended use. Borrowing cost incurred for qualifying assets is capitalized up to the date the asset is ready for

229

intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset. The cost of acquisition is further adjusted for exchange differences relating to long term foreign currency borrowings attributable to the acquisition of depreciable asset. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to Statement of Profit and Loss. D. Depreciation

The Company has provided depreciation on Straight Line Method basis as per the rates provided in Schedule XIV of the Companies Act, 1956. Depreciation on addition to fixed assets is provided on pro-rata basis from the date when the asset is put to use. E. Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when the asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. F. Inventories

Cost of Inventories comprise of all cost of purchase, conversion and other cost incurred in bringing the inventories to their present location and condition. Inventories are valued at cost or realizable value whichever is lower. G. Revenue

The Company recognizes revenue on sale of products when the products are delivered to the dealer/ customer, which is when the risks and rewards of ownership pass to the dealer /customer. Interest income is recognized on time proportion basis depending upon the amount outstanding and the rate applicable. Annual Maintenance Contract Income (AMC) is recognized on time proportion basis. Revenue on servicing income is recognized when services are rendered. H. Transactions in Foreign Currencies

(i) Exchange differences

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at period/year-end exchange rates.

(a) Exchange differences arising on settlement of transactions and translation of monetary

items other than those covered by (b) below are recognized as income or expense in the period/year in which they arise.

(b) Exchange differences relating to long term foreign currency monetary assets/liabilities are

accounted for with effect from April 1, 2007 in the following manner: Differences relating to borrowings attributable to the acquisition of the depreciable capital asset

are added to / deducted from the cost of such capital assets. Pursuant to notification issued by the Ministry of Corporate Affairs, on December 29, 2011, the

exchange differences on long term foreign currency monetary items (other than those relating to acquisition of depreciable asset) are amortized over the period till the date of maturity or March 31, 2020, whichever is earlier.

230

(ii) Forward Contract Any Premium or Discount arising at the inception of forward exchange contract is recognized as an income or expense over the life of the contract. I. Borrowing Cost

Interest on borrowings is recognized in the Statement of Profit and Loss except interest incurred on borrowings specifically raised for qualifying assets which are capitalized to the cost of the respective assets until such time that the asset is ready to be put to use for the intended purpose except where installation is extended beyond reasonable/normal time lines. J. Employee Benefits

1. Wages, salaries and bonus are accrued in the year in which the associated services are

rendered by employees of the Company. 2. Gratuity:

Gratuity for each year is arrived at as per actuarial valuation and is recognized and charged to the Profit and Loss Account in the year in which employee has rendered service. 3. Compensated absences:

Privilege compensated absences are considered as long term unfunded benefits and are recognized on the basis of an actuarial valuation using the projected unit credit method determined by an appointed actuary. 4. Provident Fund:

Company’s contribution to employee’s Provident fund is accounted for at actual Cost when the liability to contribute to the Provident Fund under the relevant act arises. K. Investments

Non-current Investments are carried at cost after providing for any diminution in value, if such diminution is of permanent nature. L. Income tax

Provision for current tax is made after taking into consideration benefits admissible under the provision of Income Tax Act, 1961. Deferred tax is recognized, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Such deferred tax assets and liabilities are computed separately for each taxable entity and for each taxable jurisdiction. Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the period when asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. Minimum Alternate Tax credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an assets in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said assets is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specified period. Fringe benefit tax up to March 31, 2009 has been determined in accordance with the provision of section 115WC of the Income-tax Act, 1961. No liability of the same has been recorded thereafter subsequent to the abolishment of the aforementioned tax.

231

M. Provisions A provision is recognized when an enterprise has a present obligating as a result of past event; it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. N. Contingent Liabilities and Assets

Contingent Liabilities are not recognized but disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements. O. Earnings per share

Basic earnings per share are calculated by dividing the restated net profit or loss for the period/year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period/year. The weighted average numbers of equity shares outstanding during the period/year are adjusted for events of bonus issue of shares. For the purpose of calculating diluted earnings per share, the restated net profit or loss for the period/year attributable to equity shareholders and the weighted average number of shares outstanding during the period/year are adjusted for the effects of all dilutive potential equity shares including the shares to be issued against share application money. Other Notes A. Auditor’s Emphasis under CARO, 2003

No adjustment is required for the following comments made by the auditors in the audit reports for the following financial years audit report. For the FY 2007-08 “In our opinion, and according to information and explanations given to us, the company has delayed in repayment of principal amount of ` 14.5 Million and interest of `38.1 Million to banks consisting of delays ranging from 1 day to 85 days, which have been paid before the year end. Delay in payment of installment of `11.4 Million and interest of `1.50 Million, which was outstanding at the year-end has since been paid.” For the FY 2008-09 “In our opinion, and according to information and explanations given to us, the company has delayed in repayment of some installment of Bank term loans. However there were no dues outstanding as on the Balance sheet date in view of the reschedulement approved by the lending bankers”. For the FY 2010-11 “In our opinion and according to the information and explanations given to us the company has not defaulted in repayment of the dues to banks and financial institution expect there was delay in repayment of dues ranging from 10 days to 22 days”. For the FY 2011-12 “In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to banks and financial institution except delay in some cases”. For the period April to December-2012 “In our opinion and according to the information and explanations given to us, during the period under review the Company has delayed in making the repayment of term loan installments amounting to Rs.31 million due on 31st December, 2012, which was subsequently paid on 04th March, 2013.” The Company had entered into a USD/JPY currency derivative deal with erstwhile Centurion Bank of Punjab (now HDFC Bank) on 7th March 2008. The Mark to Market difference was accounted for and charged to Profit & Loss account on respective Balance Sheet Dates in restated Accounts. The deal got unwound on 13th February, 2013 and an amount of `14.93 million was determined as payable by the Company on unwinding of the deal. The same was paid on 19th February, 2013.

232

B. Employee Benefits


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 The following table summarizes the component of Net Benefit Expenses recognized in the Statement of Profit and Loss and amounts recognized in the Balance Sheet as per Actuarial Valuation Report. 1

Amount to be recognized in Balance Sheet

Present Value of Funded Defined Benefit Obligations

5.34 5.06 3.74 3.43 - -

Fair value of Plan Assets

5.34 5.06 3.74 3.43 - -

Present Value of Unfunded Obligation

13.59 6.57 2.15 (0.12) 2.77 1.55

Net Assets/(Liability) in the Balance Sheet

(13.59) (6.57) (2.15) 0.12 (2.77) (1.55)

Particulars 31-Dec-

12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 2

Amount to be recognized in the Statement of Profit & Loss

Current Service Cost 3.36 4.18 1.67 0.45 0.94 0.64 Interest on Defined

Benefit Obligation 0.63 0.48 0.27 2.22 0.12 0.10

Expected return on Plan Assets

(0.34) (0.38) (0.27) (0.13) - -

Net Actuarial Losses/ (Gains) recognized in period/year

3.76 1.39 0.60 (0.22) 0.17 (0.41)

Expense recognized in the Statement of Profit & Loss

7.40 5.67 2.27 2.32 1.22 0.33

3

Change in Defined Benefit Obligations & Reconciliation thereof

Opening Defined Benefit Obligation

11.64 5.90 3.32 2.77 1.55 1.22

Service Cost 3.36 4.18 1.67 0.45 0.94 0.64 Interest Cost 0.63 0.48 0.27 0.22 0.12 0.10 Actuarial

Losses/(Gains) 3.65 1.33 0.64 (0.13) 0.17 (0.41)

Benefits Paid (0.35) (0.25) - (0.01) - - Closing Defined

Benefit Obligation 18.92 11.64 5.90 3.32 2.77 1.55

4

Change in Plan Assets

Opening Fair Value of Plan Assets

5.06 3.74 3.43 - - -

Expected Return - 0.38 0.27 0.13 - - Actuarial Gains

/(Losses) 0.34 (0.06) 0.03 0.09 - -

Contributions by Employer

(0.07) 1.00 - 3.22 - -

Benefits Paid - - - (0.01) - - Closing Fair Value of

Plan Assets 5.34 5.06 3.74 3.43 - -

5

Investment Details

Government of India Securities

- - - - - -

Corporate Bonds - - - - - -

233

Special Deposit Scheme

- - - - - -

Insurer Managed Funds

- - - - - -

Others 4.22 4.22 3.22 3.22 - - 6

Principal Actuarial Assumptions

Discount Rate 8.25% 8.50% 8.25% 8.00% 7.50% 8.50% Salary Escalation 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% Retirement Age 60.00 60.00 60.00 60.00 60.00 60.00 Attrition Rate 5% to

1% 5% to

1% 5% to

1% 5% to

1% 5% to

1% 5% to

1% The estimates of future salary increases, considered in actuarial valuation take account of

inflation, seniority, promotion and others. C. Segment reporting

1. Primary Segment:

The Company is exclusively engaged in the business of "CNC Machines". This in the context of Accounting Standard-17 “Segment Reporting”, notified under the Companies (Accounting Standard) Rules, 2006, constitutes one single primary segment. 2. Geographical Segment


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-

Mar-08 A Revenue from

operations

Within India 2451.05 3581.30 2698.64 1391.70 993.00 1188.60 Outside India 487.71 545.64 323.04 170.48 451.39 284.58 2,938.76 4,126.95 3,021.68

1,562.18 1,444.39 1,473.1

7 B Fixed Assets Within India 1,958.22 1,865.24 1,706.43 1,616.07 1,357.32 1,171.6

9 1,958.22 1,865.24 1,706.43 1,616.07 1,357.32 1,171.6

9 C Total Assets Within India 5,656.45 4,640.69 3,962.54 3,333.23 2,589.82 2,022.5

7 Outside India 1,429.28 1,159.30 762.39 404.00 625.74 319.63 7,085.73 5,799.99 4,724.93 3,737.23 3,215.56 2,342.2

0 D. Material Re-classifications/adjustments

During the nine months period ended 31st December 2012 and year ended 31st March, 2012, the Revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company for the preparation and presentation of its financial statements, accordingly previous years figures have been re-grouped/re-classified wherever applicable. E. All numbers have been rounded off to two decimals. Any discrepancies in any table

between the total and the sums of the amounts listed are due to rounding off.

234

Annexure - V Restated Unconsolidated Statement of Share Capital ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Authorized Share Capital Ordinary

Equity Shares of Rs.10/- each

450.00 150.00 120.00 120.00 120.00 120.00

No. of Shares 45,000,000 15,000,000 12,000,000 12,000,000 12,000,000 12,000,000

B Issued, Subscribed and Paid-up Share Capital

Ordinary Equity Shares of Rs.10/- each, fully paid-up

279.65 137.55 111.47 111.47 111.47 87.97

No. of Shares 27,964,916 13,754,583 11,146,808 11,146,808 11,146,808 8,796,700

279.65 137.55 111.47 111.47 111.47 87.97


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

Number of Shares 1 Number of

Shares at the beginning of the year

13,754,583 11,146,808 11,146,808 11,146,808 8,796,700 8,796,700

2 Shares issued during the year

2,62,750 2,607,775 - - 2,350,108 -

3 Issue of Bonus Shares 13,947,583 - - - - -

4 Number of Shares at the end of the year

27,964,916 13,754,583 11,146,808 11,146,808

11,146,808 8,796,700

235

Annexure - VI Restated Unconsolidated Statement of Share Application Money pending

Allotment ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Share Application Money

- - 128.30 129.50 108.00 132.19

- - 128.30 129.50 108.00 132.19

236

Annexure - VII Restated Unconsolidated Statement of Non-Current Investment


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-08

A Trade Investment in Subsidiary In Equity Shares - unquoted, fully paid up 49,07,000 shares of

1 Euro each fully paid up in Jyoti SAS, France

288.29 288.29 288.29 2.06 2.06 2.06

288.29 288.29 288.29 2.06 2.06 2.06

237

Annexure - VIII Restated Unconsolidated Statement of Long Term Loans & Advances ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

[Unsecured, considered good unless otherwise stated] A Capital Advance 2.72 3.65 0.05 1.15 108.22 13.98 B Security Deposits 8.93 5.80 12.69 14.93 12.83 11.94

C Loans to Related Party

775.02 490.22 234.59 326.51 322.18 249.18

D Advance to Related Party

17.98 17.96 17.94 17.93 17.96 17.86

E Advances to Employees

13.11 9.06 8.42 5.39 - -

F MAT Credit Entitlement

41.55 57.54 58.84 17.62 18.36 -

G Others 3.22 2.25 4.88 1.03 1.03 1.03 862.51 586.48 337.42 384.57 480.58 293.99 For details of loans & advances related to the directors or promoters or the issuer in any way,

please refer to Annexure XIX - Related Party Information

238

Annexure - IX Restated Unconsolidated Statement of Other Non-Current Assets ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Bank Deposits having maturity period of more than 12 months, maturing after 12 months from balance sheet date

0.87 18.32 14.32 14.32 0.02 0.02

B Interest Accrued on Bank Deposits

- 1.28 1.00 1.00 - -

0.87 19.60 15.32 15.32 0.02 0.02

239

Annexure - X Restated Unconsolidated Statement of Trade Receivables ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

[Unsecured, considered good unless otherwise stated] A Trade Receivable

outstanding for a period exceeding Six months from the date they were due for payment

149.90 134.67 89.01 88.86 142.42 49.89

B Other Trade Receivables

1227.57 752.79 411.61 234.44 244.32 232.31

1377.47 887.45 500.61 323.30 386.74 282.19 For details of receivables related to the directors or promoters or the issuer in any way, please

refer to Annexure XIX - Related Party Information

240

Annexure - XI Restated Unconsolidated Statement of Short Term Loans & Advances ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

[Unsecured, considered good unless otherwise stated] A Pre-paid Expense 6.29 4.73 6.02 3.61 1.08 1.80 B Advance to

Employees 2.46 5.74 4.25 2.09 6.01 4.82

C Advance to Suppliers 52.97 109.18 62.13 46.73 21.29 0.48 D Advance Tax [Net of

Provision] - - - 1.86 - -

E Balance with Statutory Authorities

2.21 8.28 2.08 27.36 17.57 21.77

63.92 127.94 74.48 81.65 45.95 28.87 For details of loans & advances related to the directors or promoters or the issuer in any way,

please refer to Annexure XIX - Related Party Information

241

Annexure - XII Restated Unconsolidated Statement of Other Current Assets ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Interest accrued on Bank Deposits

3.21 5.62 2.43 1.41 1.66 1.24

B Interest and Commission Receivable from Subsidiary

46.85 23.14 - - - -

C Others - 0.12 0.08 0.07 0.01 2.74 50.07 28.87 2.51 1.48 1.67 3.98

242

Annexure - XIII Restated Unconsolidated Statement of Long Term Borrowings


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A Secured Loans from Banks Term Loans* 388.67 616.55 598.71 562.29 544.34 347.40 Vehicle Loans 2.89 3.20 3.67 1.25 2.83 2.38 [Vehicle loans are secured by way of hypothecation of vehicles]

B Long Term Maturities of Finance Lease Obligations Secured 12.15 8.32 1.10 3.20 - - [Secured by leased Equipment]

C Loans and Advances from Others Unsecured 115.00 111.06 192.71 212.67 217.84 1.17 [Repayable after one year & Interest rate 15%] 518.71 739.14 796.19 779.41 765.01 350.95 * The above Loans are secured by first charge on pari passu basis on the Company's movable

assets and immovable assets, and second charge on inventory, receivables & other current assets, both present and future

The above Term Loans are also secured by personal guarantee of Promoter Directors and Mr. Ghanshyamsinh Jadeja and equitable mortgage of immovable property of Enterprise influenced by Key Management Personnel on pari passu basis.

Details of Terms of Repayment for the Long-term Borrowings

Particulars Term Loan &

Corporate Loan from Bank

Vehicle Loan from Bank

Finance Lease

Name of Bank Bank of Baroda HDFC Bank Hewlett -Packard Financial Service

India Pvt. Ltd. Corporation Bank ICICI Bank Bank of India IDBI State Bank of India Kotak Mahindra

Bank Interest Rate Base Rate + 2.50%

to 4.75% 10.5% to 15.10% 11% to 13%


15 to 45 Months 14 to 28 Months 3 to 31 Months

Repayment Schedule

No. of Installment/EMI

11 to 16 Quarterly Installment

36 Monthly Installments

36 Months Installments


30.04.2010 to 09.11.2012

05.02.2010 to 12.05.2012

07.11.2009 to 01.10.2012

Installment Amount 11 to 16 Quarterly Installments ranging from Rs.2.5 millions

to Rs.21 millions

36 EMI ranging from Rs.19,210 to

Rs,48,500

12 Quarterly installments ranging from Rs.34,700 to

Rs.6,87,002

243

Annexure - XIV Restated Unconsolidated Statement of Short Term Borrowings


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A Loan repayable on Demand From Banks Secured 2,273.20 1,433.87 990.61 631.11 613.30 587.38 2,273.20 1,433.87 990.61 631.11 613.30 587.38 Loan repayable on demand (working Capital limits) are secured by first charge on pari passu basis over company’s stock & book debts and second charge on pari passu basis over Company's movable and immovable assets. Above working capital loans are also secured by personal guarantee of Promoter Directors of the company and Mr. Ghanshyamsinh Jadeja and equitable mortgage of immovable property of Enterprise influenced by Key Management Personnel on pari passu basis.

244

Annexure - XV Restated Unconsolidated Statement of Other Current Liabilities ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Financial Liability Current Maturity of


369.17 377.21 334.44 420.90 179.51 161.71

Current Maturity of Finance Lease Obligations

9.08 6.07 2.00 1.73 - -

Interest accrued on Long Term Borrowings

15.97 19.24 17.67 12.60 3.09 2.16

Interest accrued but not due on Borrowings

1.12 4.04 1.22 1.31 0.99 0.93

Interest accrued on Trade Payables

0.21 0.21 0.37 0.43 - -

B Statutory

Liabilities 169.75 52.94 22.42 15.08 14.03 9.82

C Others Income received in

Advance 6.29 4.14 2.62 3.31 - -

Payables for Assets 30.43 28.89 28.82 34.51 81.46 55.48 Creditors for

Expenses 133.34 128.63 147.61 75.56 73.44 23.52

Advance received from Customers

114.43 181.79 249.14 125.03 35.83 36.14

Expenses Payable 30.72 29.40 25.91 18.96 12.08 49.68 880.51 832.55 832.21 709.43 400.43 339.45

245

Annexure - XVI Restated Unconsolidated Statement of Tax Shelter


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A Profit Before Tax

- As per Audited Financial Statement

307.82 388.26 210.44 21.39 55.42 79.58

B Normal Tax Rate 32.45% 32.45% 33.22% 33.99% 33.99% 33.99% C Tax As per

Normal Rate on Profit Before Tax

99.87 125.97 69.90 7.27 18.84 27.05

D Adjustments Permanent

Difference

Wealth Tax 0.12 0.11 - - - - Donation not

allowed as per the Provision of Income Tax Act,1961

0.50 0.64 0.96 1.42 1.23 1.51

Income Tax Expenses

- 0.28 1.64 0.08 0.12 0.02

Disallowance on Account of delay in deposit of Employee's Contribution to Provident Fund

- - - - - 0.85

Deduction U/s. 80G of the Income Tax Act

- (0.14) - - (0.33) (0.01)

Timing Difference Difference Between

Book & Tax Deprecation - Including Profit/(Loss) on sale of Assets

(39.82) (65.18) (68.45) (56.11) (51.93) (65.32)

Deduction U/s. 35 (2AB) – Net

(37.13) (70.00) (123.88) - - -

Disallowance/Allowance U/s. 40 - Net

- - - (0.45) 0.09 0.37

Disallowance/Allowance U/s. 43B - Net

8.62 (1.65) 2.17 1.21 1.97 1.25

Unabsorbed Deprecation Allowance

- (9.70) (22.76) - - (8.77)

Preliminary Expenditure

- - - - (0.26) -

E Total [A+D] 240.10 242.63 0.12 (32.46) 6.31 9.48 F Tax On Above - E

(Excluding Surcharge & Cess Due to Applicability of

72.03 72.79 - - 1.89 2.84

246

MAT - Sec. 115JB of IT Act)

G Other Adjustment Interest U/s. 234B

& 234C - 8.40 3.69 0.15 0.60 0.13

MAT Credit Entitlement

(16.31) (0.98) 38.16 3.21 3.49 4.95

Surcharge & Cess 5.97 5.93 4.09 0.43 0.73 1.05 Adjusted Tax

Liability - (F+G) 61.69 86.14 45.94 3.79 6.71 8.97

1 The Statement of tax shelter and adjustment have been prepared as per Restated

Unconsolidated Summary Statement of Profits and Loss, of the Company 2 Adjustment on account of restatement are not considered in the tax shelter based on

Return of Income filed for respective years. 3 The permanent / timing difference also considers the income-tax returns filed by the

Company.

247

Annexure - XVII Capitalization Statement

` in Million Particulars Pre Issue as at

31-Dec-12 Post Issue Position after adjustment*

A Borrowings I Short-term Debt 2,668.54 II Long-term Debt 518.71 Total Borrowing - A 3,187.26

B Shareholder's Fund I Share Capital – (V) 279.65 II Reserve & Surplus 1,613.44 Total Shareholder's Fund - B 1,893.09

C Long-term Debt/Equity Ratio ( A-II )/ B 0.27

D Total Debt/Equity Ratio ( A/B ) 1.68

1. Short Term Debt is debt repayable on demand and current maturity and interest accrued and due/not due on Long Term/Short Term Borrowings.

2. Long Term Debt are debt other than short term debt. 3. The Figures are based on Restated Unconsolidated Summary Statements.

* Post Issue Position is only possible to determine after final pricing of the issue based on book building process.

248

Annexure - XVIII Restated Unconsolidated Statement of Accounting Ratio


12 31-Mar-12 31-Mar-11 31-Mar-10 31-Mar-09 31-Mar-08

A Net Worth 1893.09 1,592.94 1,107.51 973.36 968.15 652.88 B Restated

Profit after Tax

218.47 264.49 128.59 21.84 21.13 17.74

C Weighted

No. of Equity shares outstanding during the period/year*

27,651,188 22,314,991 22,293,616 22,293,616 20,212,996 16,018,562

D Weighted

No. of Equity shares outstanding during the period/year including Share Application Money (Which should be considered for the calculation of Diluted Earning Per Share)*

27,651,188 22,314,991 23,320,016 23,329,616 21,076,996 17,076,082

E No. of

Shares Outstanding at the end of the period/year

27,964,916

13,754,583

11,146,808

11,146,808

11,146,808

8,796,700

F Basic

Earning per Share (B/C)

7.90 11.85 5.77 0.98 1.05 1.11

Diluted Earning Per Share (B/D)

7.90 11.85 5.51 0.94 1.00 1.04

G Return on

Net Worth (B/A)

11.54% 16.60% 11.61% 2.24% 2.18% 2.72%

H Net Asset

Value per share of Rs.10 each

67.70 115.81 99.36 87.32 86.85 74.22

249

(A/E)

Notes : The ratios has been computed as below:

a Basic

Earnings = per Share

Restated Net Profit after Tax attributable to Equity Shareholders Weighted Average number of Equity Shares outstanding during the period/year

(After considering impact of bonus shares, refer note “h” below) b Diluted

Earnings = per Share

Restated Net Profit after Tax attributable to Equity Shareholders Weighted Average number of Dilutive Equity Shares outstanding during the

period/year (After considering impact of bonus shares, refer note “h” below) c Return on =

Net Worth (%)

Restated Net Profit after Tax attributable to Equity Shareholders Net Worth at the end of the period/year

d Net Assets

Value = per Share

Net Worth at the end of the period/year Total number of Equity Shares outstanding at the end of the period/year

e Net Worth for ratio mentioned in above note “c” and “d” represents sum of equity share capital and reserves and surplus.

f Earnings per share calculations are in accordance with Accounting Standard 20 – “Earning per share”.

g

The figures disclosed above are based on the Restated Unconsolidated Summary Statement of the Company.

h

As per Accounting Standard 20 – “Earning per share”, in case of bonus shares, the number of shares outstanding before the event is adjusted for the proportionate change in the number of equity shares outstanding as if the event has occurred at the beginning of the earliest period reported. The Company on 24th September, 2012 issued bonus shares in the ratio of one share for every one share held, to the existing shareholders by way of capitalization of securities premium account. Weighted average number of equity shares outstanding during all the previous years have been considered accordingly.

250

Annexure - XIX Restated Unconsolidated Statement of Related Party information

As per Accounting Standard 18, the disclosures of transactions with related parties are given below: List of related parties and relationships

Related Party Nature of Relationship 1 Parakramsinh Jadeja Key Management Personnel (KMP) 2 Sahdevsinh Jadeja Key Management Personnel (KMP) 3 Vikramsinh Jadeja Key Management Personnel (KMP) 4 Bhavesh Jadeja Relative of Key Management Personnel (KMP) 5 Jagdishsinh Jadeja Relative of Key Management Personnel (KMP) 6 Jyoti SAS, France Wholly Owned Subsidiary 7 Huron Graffenstaden SAS, France Wholly Owned Subsidiary of Jyoti SAS 8 Huron Canada Inc. Canada Wholly Owned Subsidiary of Huron

Graffenstaden SAS, France 9 Huron Frasmaschinen Gmbh,

Germany Wholly Owned Subsidiary of Huron Graffenstaden SAS, France

10 Rollo & Huron, Portugal (Ceased as Associate from 24.03.2009)

Associate

11 Jyoti International Pvt. Ltd. Enterprise influenced by Key Management Personnel (KMP)

12 Jyoti Enterprise Enterprise influenced by Key Management Personnel (KMP)

`

` in Million B Details of Related Party Transactions during the period/year and balances outstanding

as at Nature of

Transaction 31-Dec-

12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 A With Subsidiaries I Transactions 1 Loan given 242.73 231.86 188.02 41.08 54.33 226.20 2 Investment - - 286.23 - - 2.06 3 Revenue from

Operations 445.63 412.19 267.96 154.93 373.06 161.65

4 Other Income 23.71 23.14 - - - - 5 Purchase of Revenue

Items 145.49 38.09 57.59 90.75 46.69 5.65

6 Purchase of Capital Items

0.77 1.50 1.80 211.80 125.34 -

7 Quality Assurance /Conformity Cost

48.15 47.73 63.53 - 34.44 -

8 Other Expenses 18.91 0.98 12.13 2.80 15.88 3.12 II

Balances outstanding at the end of the period/year

1 Investment 288.29 288.29 288.29 2.06 2.06 2.06 2 Trade Receivables 500.33 282.32 225.67 75.28 211.06 73.64 3 Loans and Advances 775.02 490.22 234.59 326.51 322.18 249.18 4 Other Income

Receivables/Accrued Income

46.85 23.14 - - - -

5 Capital Advances - 43.31 - - 104.44 - 6 Trade Payables 169.23 47.73 89.69 34.22 38.29 8.41 7 Guarantees and

Collateral Given € 5.06 € 6.75 € 8.44 € 11.25 € 11.25 € 11.25

B Enterprise influenced by Key Management Personnel (KMP) I

Transactions

1 Equity Contribution 29.12 95.50 - - 103.50 -

251

received 2 Advances given 0.02 0.02 0.01 - 0.55 6.26 3 Receipt towards

refund of advances - - - 0.03 0.45 12.27

II

Balances outstanding at the end of the period/year

1 Advances Given 17.98 17.96 17.94 17.93 17.96 17.86 C With Key Management

Personal

I

Transactions

1 Equity Contribution received

10.00 71.90 - - 0.17 10.11

2 Loans Given - - - - 7.96 1.25 3 Loans Recovered - - - - 8.43 1.00 4 Employee Benefit

Expenses 16.26 11.38 8.19 6.96 5.66 5.66

D With Relatives of Key Management Personal

I

Transactions

1 Employee Benefit Expenses

0.69 0.86 0.79 0.52 0.47 0.37

252

Annexure - XX Restated Unconsolidated Statement of Contingent Liabilities ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Contingent Liability on account of Outstanding Letter of Credit and Bank Guarantee

250.50 54.89 32.53 50.64 8.18 11.31

B Claim against

company not acknowledged as Debt

3.14 3.14 3.14 3.14 - -

C Corporate Guarantee to Banks on behalf of Jyoti SAS The company has given irrevocable and unconditional Corporate Guarantee to Bank of India,

Paris Branch and New Jersey Branch and Bank of Baroda, Paris Branch for and on behalf of Wholly owned Subsidiary Company "Jyoti SAS" in respect of term loan availed by Jyoti SAS to part finance the acquisition of 100% of the equity share capital in "Huron Graffenstaden SAS, France".


` 365.82

(€ 5.06)

` 461.29 (€ 6.75)

` 533.59 (€ 8.44)

` 681.30 (€ 11.25)

` 759.15 (€ 11.25)

` 709.76 (€ 11.25)

D Disputed Excise Duty and Service Tax Liabilities Disputed Excise

Duty and Service Tax liabilities

4.77 4.77 4.77 - - -


2.22 2.22 2.00 - - -

253

Annexure - XXI Restated Unconsolidated Statement of Commitments ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Export Obligation under EPCG Scheme The company is under obligation to export goods within a period of 6/8 years from the date of

issue of EPCG licenses. Details of Duty saved on Capital Goods imported under EPCG Scheme, Export Obligation

(excluding Export Obligation fulfilled but Export Obligation Discharge Certificate [EODC] is pending as mentioned above) and Number of years with in which Export Obligation to be fulfilled are as follow

Duty Saved on Import of Capital Goods during the period/year

6.78 13.37 8.56 68.67 28.98 4.21

Cumulative Export Obligation as on Balance Sheet date

9.09 68.92 259.71 527.84 190.44 235.31

Number of year within which Export Obligation to be fulfilled

6/8 Years

6/8 Years

6/8 Years

6/8 Years

6/8 Years

6/8 Years

Any default on part of the company in respect of the aforesaid export obligation will render the company liable for payment of full amount of custom duty saved and interest thereon as applicable.

B Estimated amount of

contract remaining to be executed on capital account and not provided as on Balance Sheet Date

1.00 27.54 4.66 4.49 192.83 453.46

254

Annexure - XXII Restated Unconsolidated Statement of Revenue from Operations ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Sale of Products 3,220.23 4,486.44 3,295.86 1,668.06 1,577.89 1,641.27 B Sale of Service 19.25 21.96 13.32 19.01 10.15 6.43 C Other Operating

Income 2.51 0.77 3.39 0.62 4.06 0.90

3,242.00 4,509.17 3,312.57 1,687.68 1,592.09 1,648.60 D Less : Excise Duty (303.24) (382.23) (290.89) (125.50) (147.71) (175.43) 2,938.76 4,126.95 3,021.68 1,562.18 1,444.39 1,473.17

255

` Annexure - XXIII Restated Unconsolidated Statement of Other Income


12 31-Mar-

12 31-Mar-

11 31-Mar-

10 31-Mar-

09 31-Mar-

08 Recurring A Guarantee

Commission 7.32 11.53 - - - -

B Interest Income 21.21 18.54 4.39 3.00 2.71 2.37 C Foreign Exchange

Fluctuation Gain [Net of Loss]

- - 4.81 37.57 13.33 -

D Discount 0.41 1.90 3.04 18.00 4.51 0.45 Non-Recurring E Profit on Sale of

Asset - - 0.13 - - -

F Insurance Claim on Finished Goods

- - - - - 0.11

28.94 31.97 12.37 58.57 20.55 2.92

1

The classification of "Other income" as Recurring / Non-recurring is based on the current operations and business activities of the Company as determined by the Management.

2

The figures disclosed above are based on the Restated Unconsolidated Summary Statement of Profits and Loss of the Company.

256

Annexure - XXIV Restated Unconsolidated Statement of Employee Benefit Expenses ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Salary and Wages Salary, Wages and

other personnel Expenses

190.92 199.09 158.12 106.98 83.37 61.16

B Contribution to Provident Fund and other Funds Contribution to

Provident Fund 10.61 10.39 7.03 3.57 3.25 3.07

Contribution to Other Funds

6.54 4.01 2.27 0.32 1.22 0.33

C Other Expenses 18.05 17.76 15.09 8.65 10.58 7.59 226.13 231.25 182.52 119.53 98.42 72.14 Less : Attributable

to Capital Expenditure

0.19 2.69 - - - -

225.94 228.56 182.52 119.53 98.42 72.14

257

Annexure - XXV Restated Unconsolidated Statement of Finance Cost ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Interest Expenses On Borrowings 224.48 271.04 200.68 170.72 149.58 88.73 On Trade Payable 2.69 1.96 2.61 1.28 0.71 - To Others 2.17 1.08 0.54 2.03 0.61 0.07 B Other Borrowing

Cost

Bank and Other Financial Charges

33.15 30.25 25.14 14.33 22.97 6.97

262.50 304.33 228.97 188.35 173.86 95.78

258

Annexure - XXVI Statement of Reconciliation of Restated Profits to

Profits as per Audited Financial Statements ` in Million


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Profit After Tax (as per Audited Financial Statement)

211.64 281.88 157.20 13.06 36.61 51.62

B Restatement Adjustment (Refer Note on Restatement given below) Miscellaneous

Expenditure not written off

- - 0.18 0.26 0.26 (0.25)

Mark to Market Gain/(Loss) on derivative contract

6.43 (21.55) (42.16) 13.62 (23.43) (45.73)

Excess Provision of Deprecation/Expenses

(0.02) (0.22) 0.22 (0.32) (0.08) 0.40

Provision for Compensated Absences

1.60 (1.60) -

-

-

-

Change in Deferred Tax Liability

(2.59) 7.48 13.10 (4.75) 7.76 15.95

Excess/Short Provision for Tax

1.42 (1.50) 0.05 (0.03) 0.01 (4.25)

C Profit After Tax as

per Restated Financial Statement

218.47 264.49 128.59 21.84 21.13 17.74

Figure in Bracket ( ) Represents charge to Profit & Loss accounts. Note on Restatement 1 Miscellaneous Expenditure has been written off in year in which the same is incurred while

in audited financial statements company has written-off the same over a period of 5 years. 2 Mark to market difference on derivative currency option contract has been charged to

Statement of Profit & Loss in the respective years. 3 Excess Provision for Depreciation/Expenses and Excess/short Provision for the tax has been

charged to respective years in Restated Statement of Profit & Loss. 4 Deferred tax liability has been duly restated for the above restatement adjustment.

259

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations is based on, and should be read in conjunction with, our audited restated consolidated financial statements and our audited restated standalone financial statements as at and for the nine months ended December 31, 2012 and year ended March 31, 2012, 2011 and 2010 including the schedules, annexures and notes thereto, included in the section titled “Financial Information” beginning on page 183 of this Draft Red Herring Prospectus. Unless otherwise stated, the financial information used in this section is derived from our audited restated consolidated financial statements. This discussion contains forward-looking statements and reflects the current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those set forth in the sections titled “Forward Looking Statements” and “Risk Factors”, which discuss a number of factors and contingencies that could impact our financial condition and results of operations. In this section, unless the context requires otherwise, reference to “our Company” is a reference to Jyoti CNC Automation Limited and reference to “we”, “our” and “us” is a reference to Jyoti CNC Automation Limited along with our subsidiaries; Jyoti SAS, Huron Graffenstaden S. A. S., Huron Fräsmaschinen GmbH and Huron Canada Inc on a consolidated basis. Overview of our Business We are a global player in the machine tools industry with market presence in India and 37 other countries in Asia, Europe, Middle East, North America, South America and Africa. We believe we are one of India’s largest CNC machine manufacturing companies in the metal cutting segment with a 12.7% share of the value of domestic production in FY 2012. We are a technology driven company and have been at the forefront of technological advances in the field of metal cutting in India. We share strategic and technical expertise across our global operations that we believe, allows research, operational and marketing synergies. We believe we are a one-stop metal cutting solutions provider. We offer a wide range of CNC metal cutting products for both Turning and Milling operations, from the entry level to high-end machines viz; CNC Turning Center, CNC Vertical Machining Center (3-4-5 Axes), CNC Horizontal Machining Center, Vertical Line CNC Machines and Multitasking Machines. We offer our customers a choice of 24 products in 81 variants.

We operate from 5 manufacturing facilities, 3 in Rajkot; India and 2 in Strasbourg; France. We are an integrated CNC machine manufacturer with design, development and manufacturing most of the critical components in-house. We have a captive foundry, machining, sheet metal unit, paint shop and assembly unit. We have a capacity to manufacture 2,500 machines p.a. in India and 150 machines p.a. in France. We have supplied over 6,582 machines to our customers across the globe since 2008.

We are a technology driven company with a R&D centre manned by 87 skilled and experienced personnel with many firsts to our credit. We have an Application Engineering Division manned by 28 engineers who specialise in designing and developing processes for customers seeking solutions to their manufacturing operations. We work with them continuously advising them on the optimum process, materials and provide them with customised CNC machines from our product range. We have in the past 3 years, worked with and successfully developed 92 customized solutions for our customers in the automobile, consumer durables, general engineering, textile and diamond jewellery sectors. Key Customer Relationships In FY12, 30.84%, 18.08%, 17.41%, 7.18% and 11.70% of our revenues came from Auto and Auto Ancillaries, Aerospace, General Engineering, Dies & Moulds and Government entities respectively. The corresponding figures for the nine months ended December 31, 2012 were 21.13%, 15.37%, 21.16%, 8.23% and 14.10% respectively.

Our customers include vehicle manufacturers like Volkswagen, Peugeot Citroen, Solomon and Sonalika Tractors; aviation sector companies like Safran, Dassault, and AVIC; Auto component

260

manufacturers like Amtek Auto, Sona Steering, Lucas TVS, Delphi-TVS, Mahindra Gears, Kalyani, Harsha Engineers, Vulcan and Rico Auto; General engineering companies like Larsen & Toubro, Siemens,, Sandvik, Paharpur Cooling Towers Limited, KEC Engineering and Shakti Pumps; Consumer companies like Titan, Godrej & Boyce, Rossignol; Defence companies like MBDA and Mahindra Defence Naval Systems and Government entities like HAL, Heavy Vehicle Factory, Ordnance Factory and Railways. We have catered to over 1,233 customers during the nine months ended December 31, 2012 and 1,705 customers in FY12.

Our Strategy The consumption of machine tools in India was ` 117.6 bn in 2012 and is expected to reach ` 293.0 bn in 2020. Our strategy revolves around tapping this opportunity by increasing our manufacturing capacity from 2,500 machines p.a. currently to 4,000 machines by FY14. Currently, 65% of domestic consumption of machine tools is met through imports, primarily in the high-end segment. We are well placed to replace imports in high end segment through our product portfolio of 24 products and 81 variants, solution based approach and technological capabilities. We intend to leverage the technological expertise of Huron and its experience in high end machines specifically in Aerospace, Heavy Engineering and Dies and Moulds space and the low cost manufacturing base of our Indian operations to consolidate our position as an international player. We intend to leverage the skills of our Application Engineering Division and our global sales network to target new sectors and geographies to broaden our customer base. We have commenced work on high precision micro Die-Mould and Medical Implants applications. We also intend to increase our revenue from after sales activities. Factors Affecting Our Results of Operations Set forth below is a discussion of some of the important factors affecting our results of operations: Macroeconomic Trends Our performance and the growth of the business are dependent on economic outlook of some of the key emerging economies like Brazil, China, India, Mexico, Russia and South Africa and European Union countries like France, Germany and Italy. The growth prospects of these countries are expected to improve significantly in 2013. The GDP growth estimates of these countries in 2013 according to IMF are 3.50%, 8.20%, 5.97%, 3.50%, 3.70%, 2.80%, 0.30%, 0.60% and -1.00% respectively. Italy’s growth is also expected to turn around to 0.50% in 2014. (Source: IMF website accessed as on February 16, 2013) India is one of the key geographies for us accounting for 58.91% of our sales during the nine months ended December 31, 2012 and 59.65% of our sales in FY12. The macro-economic outlook of India has a significant impact on the prospects of our Company. GDP growth rate of India in 2011, 2012 and growth estimates till 2017 is tabulated below: GDP growth 2011 2012 2013P 2014P 2015P 2016P 2017P India 7.90% 4.50% 5.97% 6.39% 6.74% 6.89% 6.95%

(Source: IMF website accessed as on February 16, 2013) We believe that the relative outperformance of Indian economy has resulted in better growth prospects for CNC machine tool industry in India. Demand for CNC machines in India Global machine tool industry recorded a growth rate of 34% over 2010 to reach $93.8 billion in 2011. China continued to remain as the world’s largest producer and consumer of machine tools in 2011. Indian machine tool Industry, the seventh largest consumer of machine tools in the world has grown at a CAGR of 31% over the last 10 years (2002-2012) to reach ` 117.6 billion while the production has grown at a CAGR of 24% in the similar time period to reach ` 43 billion by 2012. This has resulted in 65% market share for imports in FY12. (Source: Indian Machine Tool

261

Industry Vision Document & Perspective Plan 2010-2020, August 2010, by the Ministry of Heavy Industries & Public Enterprises and IMTMA Annual Report 2011-2012) Imports are predominantly seen in the high end segment. The key reasons for the imports are better technology, solution and customer centric operations, high precision, multi-tasking capability and reliability of machines supplied. Few Indian companies have started serving requirements in high end segment through home grown R&D and inorganic acquisition. The key growth drivers for Indian CNC machine manufacturers are:

• Governments’ focus to raise contribution from manufacturing sector to the GDP from 17% at present to 30-35% by 2020

• High growth in end user industries like Auto and Auto ancillaries, Aerospace, power equipment, defence and railways

• Increased technology spending, R&D focus, shift towards solution based approach by Indian companies resulting in imports replacement

Due to these factors, production of CNC machines in India is expected to grow at a CAGR of 25% till 2020 to reach ` 230.8 billion. Prospects of end user industries and composition of our order book The prospects of our industry are closely linked to the performance of end user industries such as automotive, auto components, industrial machinery, consumer durables, defence, aerospace and heavy engineering. The growth prospects of our business are dependent on the overall performance of the manufacturing sector. Historically we have derived higher realisation for our products in aerospace and defence sectors. The contribution from these sectors in our current order book is 46.81%, significantly higher than 29.78% contribution in FY 12. Higher volume has come from auto and auto ancillaries and general engineering sectors. Competition from Indian and international players Our results of operations are affected by the competition we face in our business. We compete with domestic machine tool manufacturers like Ace Designers Limited, Bharat Fritz Werner Limited and Lakshmi Machine Works in the entry-level segment and with international players like Makino, Yamazaki Mazak, Kennametal and DMG Mori Seiki in the high-end segment. Key factors influencing the purchase decision for entry level machines are price and after sales support whereas for high-end machines precision, customization and solution based approach for machining requirements play an important role. Procurement of raw materials at competitive rates Our operations are affected by the availability, cost and quality of the raw materials. The major raw materials used by us are CNC panels, Linear guide ways, electrical switchgear and bearings which we procure from Siemens AG, Fanuc, Bosch Rexroth, NSK and SKF. Although we generally provide for price contingencies in our purchase orders to limit our exposure, if our primary suppliers of raw materials, curtail or discontinue their delivery of such materials to us in the quantities we need or at prices that are competitive or expected by us, or supply materials of poor quality, our ability to meet our material requirements or quality standard for our products could be impaired. Exchange rate risk We face exchange rate risk owing to our income in currencies other than the Indian Rupee, or our expenditure in currencies other than the Indian Rupee which are subject to fluctuations against the Indian Rupee depending on market conditions. Our revenue earned in currencies other than the Indian Rupee as a percentage of our net sales constituted 41.09%, 40.35%, 38.14% and 49.90% for the nine months ended December 31, 2012, FY12, FY11 and FY10 respectively. Our revenue earned and expenditure incurred outside India is mostly denominated in Euro. Any fluctuation in the value of the rupee against such currencies may adversely affect our results of operations.

262

Basis and method of preparation of Consolidated Financial Statements The consolidated financial statements of our Company are prepared in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial statements prescribed by the Companies (Accounting Standards) Rules, 2006.

The Company has following direct & indirect subsidiaries and associate referred as the ‘Group’.

Name of the Subsidiary Company

Date of Acquisit

ion*

Country of

Incorpo-ration

% of holding either Directly or through subsidiary as at

31-Dec-12

31-Mar 2012 2011 2010 2009 2008

Direct Subsidiary

1 Jyoti SAS 06.09.2007 France 100% 100% 100

% 100%

100%

100%

Indirect Subsidiaries

2 Huron

Graffenstaden SAS

20.11.2007 France 100% 100% 100

% 100%

100%

100%

3 Huron

Frasmaschinen,GMBH

20.11.2007 Germany 100% 100% 100

% 100%

100%

100%

4 Huron Canada Inc.

20.11.2007 Canada 100% 100% 100

% 100%

100%

100%

Associate 5 Rolo & Huron

(Ceased as Associate from

24.03.2009)

20.11.2007 Portugal -- -- -- -- 47% 47%

Jyoti SAS was floated as a 100% subsidiary of Jyoti CNC Automation Ltd on 6th September, 2007. Jyoti SAS thereafter acquired 100% shareholding of Huron Graffenstaden SAS along with its marketing subsidiaries namely, Huron Frasmaschinen GmbH, Huron Canada Inc. and Rolo & Huron on 20th November, 2007. The Restated Consolidated Summary Statement of Assets and Liabilities of the Group as at 31st December 2012, 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 and the related Restated Consolidated Summary Statement of Profit and Loss and Restated Consolidated Statement of Cash Flows for nine months period ended 31st December 2012, and each of the year ended 31st March 2012, 31st March 2011, 31st March 2010, 31st March 2009 and 31st March 2008 (hereinafter collectively referred to as “Restated Consolidated Summary Statements” have been prepared specifically for inclusion in the Offer Document to be filed by the Company with the Securities and Exchange Board of India (“SEBI”) in connection with proposed Initial Public Offering of its equity shares. These Restated Consolidated Summary Statements have been prepared to comply in all material respects with the requirements of paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Issue of capital and disclosure requirements) Regulations, 2009 (“the SEBI Guidelines”) issued by SEBI and as amended from time to time.

263

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES ADOPTED BY THE GROUP IN THE PREPARATION OF FINANCIAL STATEMENTS A. Basis of Preparation of Financial Statement

The Restated Consolidated Summary Statements have been prepared by applying the necessary adjustments to the consolidated financial statements of Jyoti CNC Automation Limited. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in India (‘Indian GAAP’).

B. Principal for Consolidation

The Consolidated Financial Statements have been prepared to comply in all material reflect with notified accounting standard by Companies (Accounting Standards) Rules, 2006 (‘as amended’) and the relevant provision of the Companies Act, 1956 (hereinafter referred to as “Act”) to reflect the financial position and the results of operations of the Group. These Consolidated Financial Statements are prepared under the historical cost convention on the accrual basis of accounting and reporting requirements of Accounting Standard (‘AS-21’) ‘Consolidated Financial Statements’ notified under Companies (Accounting Standards) Rules, 2006, (‘as amended’). The accounting policies have been consistently applied by the Group and are consistent with those used for the purpose of preparation of consolidated financial statements as at 31st December 2012.

The financial statements of the Company and Consolidated Financial Statement of its direct subsidiary Jyoti SAS have been combined on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. The intra-group balances and intra-group transactions and unrealised profits have been fully eliminated. The excess of cost to the Company of its investments in the subsidiary company over its share of equity of the subsidiary company, at the dates on which the investments in the subsidiary company are made, is recognised as 'Goodwill' being an asset in the Consolidated Financial Statements. Alternatively, where the share of equity in the subsidiary company as on the date of investment is in excess of cost of investment of the Company, it is recognised as 'Capital Reserve' and shown under the head 'Reserves and Surplus', in the Consolidated Financial Statements. Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made by the Company in the subsidiary companies and further movements in their share in the equity, subsequent to the dates of investments as stated above. The Consolidated Financial Statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

C. Presentation and disclosure of Consolidated Financial Statements

During the nine months period ended 31st December 2012 and year ended 31st March, 2012, the Revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company for the preparation and presentation of its financial statements, accordingly previous year’s figures have been re-grouped/re-classified wherever applicable.

D. Use of Estimates

The preparation of Consolidated Financial Statements requires estimates and assumptions to be made that affect the reported amount of Assets and Liabilities on the date of the Consolidated Financial Statements and the reported amount of revenues and expenses during the reporting period. Estimates and Assumptions used in the preparation of the Consolidated Financial Statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the Consolidated Financial Statements, which may differ from the actual results at a subsequent date.

264

Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

E. Fixed Assets

Tangible & Intangible Assets are stated at cost net of recoverable taxes less accumulated depreciation and impairment loss, if any. Cost includes purchase price, taxes and duties, labour cost and directly attributable costs for self constructed assets and other direct costs incurred up to the date the asset is ready for its intended use. Borrowing cost incurred for qualifying assets is capitalized up to the date the asset is ready for intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset. The cost of acquisition is further adjusted for exchange differences relating to long term foreign currency borrowings attributable to the acquisition of depreciable asset. Fixed Assets acquired for research and development are included as part of fixed assets and depreciated on the same basis as other fixed assets. Finance leases, which effectively transfer to the Group substantially all the risks and benefits incidental to ownership of the leased asset, are capitalized at the inception of the lease term at the lower of the fair value of the leased asset and present value of minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as finance costs in the statement of profit and loss.

F. Depreciation/Amortisation

Depreciation / amortisation on fixed assets other than on freehold land and capital work in progress is charged so as to write-off the cost of the assets on the Straight Line Method basis at following rates.

Sr.No Types of Assets Parent Company

Subsidiary Companies

Period 1 Buildings

At rates prescribed in schedule XIV of the Act.

10 to 20 years 2 Plant & Machinery 3 to 6 years 3 Furniture & Fixture 3 to 6 years 4 Office Equipments 3 to 6 years 5 Dies & Tools 3 to 6 years 6 Electric Installation 3 to 6 years 7 Computer 3 to 6 years 8 Vehicles 3 to 6 years

G. Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when the asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

H. Inventories Cost of Inventories comprise of all cost of purchase, conversion and other cost incurred in bringing the inventories to their present location and condition. Inventories are valued at cost or realizable value whichever is lower.

I. Revenue recognition

265

The Company recognizes revenue on sale of products, when the products are delivered to the dealer / customer, which is when the risks and rewards of ownership pass to the dealer /customer. Interest income is recognized on time proportion basis depending upon the amount outstanding and the rate applicable. Annual Maintenance Contract Income (AMC) is recognized on time proportion basis. Revenue on servicing income is recognized when services are rendered.

J. Transactions in Foreign Currencies

(i) Exchange differences: Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates.

(a) Exchange differences arising on settlement of transactions and translation of

monetary items other than those covered by (b) below are recognized as income or expense in the year in which they arise.

(b) Exchange differences relating to long term foreign currency monetary

assets/liabilities are accounted for with effect from April 1, 2007 in the following manner:

Differences relating to borrowings attributable to the acquisition of the depreciable capital asset are added to / deducted from the cost of such capital assets. Pursuant to notification issued by the Ministry of Corporate Affairs, on December 29, 2011, the exchange differences on long term foreign currency monetary items (other than those relating to acquisition of depreciable asset) are amortized over the period till the date of maturity or March 31, 2020, whichever is earlier.

(c) On consolidation, the assets, liabilities and goodwill or capital reserve arising on the

acquisition, of the Group’s overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expenditure items are translated at the average exchange rates for the year/ period.

Exchange differences arising in case of non integral foreign operations are recognized in the Group’s Translation Reserve classified under Reserves and surplus.

(ii) Forward Contract:

Any Premium or discount arising at the inception of forward exchange contract is recognized as an income or expense in the statement of profit & loss over the life of the contract.

K. Borrowing Cost:

Interest on borrowings is recognized in the Profit and Loss account except interest incurred on borrowings specifically raised for projects which are capitalized to the cost of the respective assets until such time that the asset is ready to be put to use for the intended purpose except where installation is extended beyond reasonable/normal time lines.

L. Employee Benefits

(a) Jyoti CNC Automation Ltd.

Short term employee benefits are recognized in the period during which the services have been rendered.

Gratuity:

266

Gratuity for each year is arrived at as per actuarial valuation and is recognized and charged to the statemetnt of Profit and Loss in the year in which employee has rendered service. Provident Fund: Company’s contribution to employee’s Provident fund is accounted for at actual Cost when the liability to contribute to the Provident Fund under the relevant act arises. Compensated absences: Privilege compensated absences are considered as long term unfunded benefits and are recognized on the basis of an actuarial valuation using the projected unit credit method determined by an appointed actuary.

(b) Huron Graffenstaden SAS

Gratuity: Retirement gratuities provision was established according to a method including employees' length of service, the probability of presence in the company at retirement age (staff turnover and mortality) an annual salary adjustment of 0.75%, a discount rate of 3.17% for retirement at the employee’s own initiative at the age of 67.

M. Income tax:

Tax expense comprises current and deferred taxes. Current taxes are determined based on respective taxable income of each taxable entity and tax rules applicable for respective tax jurisdictions. Current tax is net of credit for entitlement for Minimum Alternative Tax. Minimum Alternate Tax credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an assets in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said assets is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specified period. Deferred tax is recognized, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Such deferred tax assets and liabilities are computed separately for each taxable entity and for each taxable jurisdiction. Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the period when asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date.

N. Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Huron Graffenstaden SAS Provision for Warranty & Commissioning: Each time a new machine is sold, a provision is made on the basis of a standard amount defined for each family of machines to cover any warranty costs and an amount is determined machine by machine for the costs of bringing into line with standards known at the end of the financial year.

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The costs of commissioning machines are provisioned each time a machine is sold on the basis of a standard amount defined for each family of machines. The standard amounts of the provision for warranty and commissioning are re-evaluated at the end of each year in view of the costs actually incurred (hours of labour, cost of parts and work entrusted to subcontractors, minus any reimbursements obtained from suppliers of components or their insurers) during the warranty period and exclusively for work carried out under the warranty or for commissioning machines. This revision is determined overall for all the machine stock. These provisions are followed machine by machine, the net costs incurred giving rise to a write-back of the provision originally constituted. At the end of the warranty period or on completion of the commissioning, the remainder of the provision is written back in full.

O. Earnings per Share The earnings considered in ascertaining the Company's Earnings per Share (EPS) comprise the net profit after tax. The number of shares used in computing Basic and diluted EPS is weighted average number of shares outstanding during the year. For the purpose of calculating diluted earnings per share, the restated net profit or loss for the year attributable to the equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares including shares to be issued against the share application money.

P. Contingent Liabilities and Assets Contingent Liabilities are not recognized but disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

Results of Operations The following table sets forth select financial data from the profit and loss account of our restated consolidated financial statements, for the nine months ended December 31, 2012 and the years ended March 31, 2012, 2011 and 2010, the components of which are also expressed as percentages of the total income for such periods:

9MFY13 FY12 FY11 FY10

` in million

% of Total Income

` in million

% of Total Income

` in million

% of Total Income

` in million

% of Total Income

INCOME Revenue from operations

4,160.48 99.83% 6,003.76 99.78% 4,362.50 98.48% 2,777.79 96.73%

Other income 6.90 0.17% 12.95 0.22% 67.30 1.52% 93.82 3.27%

Total income 4,167.37 100.00% 6,016.71 100.00% 4,429.81 100.00% 2,871.61 100.00%

EXPENDITURE

Cost of materials consumed

2,358.02

51.00%

3,248.07

54.13%

2,381.71

54.20%

1,469.29

52.34%

Change in Inventory of Work-in-progress and

(463.33) -11.12% 3.20 0.05% (32.07) -0.72% (29.34) -1.02%

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9MFY13 FY12 FY11 FY10

` in million

% of Total Income

` in million

% of Total Income

` in million

% of Total Income

` in million

% of Total Income

Finished Goods


621.21 14.91% 741.70 12.33% 639.16 14.43% 637.75 22.21%

Other Expenses 852.10 20.45% 1,179.93 19.61% 951.21 21.47% 691.63 24.09%

EBITDA 799.37 19.18% 843.82 14.02% 489.80 11.06% 102.28 3.56% Finance Cost 330.25 7.92% 389.82 6.48% 294.06 6.64% 269.43 9.38%

Depreciation & Amortization

166.98 4.01% 202.74 3.37% 206.06 4.65% 240.62 8.38%

Profit before tax

302.14 7.25% 251.26 4.18% (10.31) -0.23% (407.77) -14.20%

Tax expenses 92.57 2.22% 89.60 1.49% 31.51 0.71% 5.43 0.19%

Profit after tax 209.57 5.03% 161.66 2.69% (41.82) -0.94% (413.20) -14.39%

Income Our total income consists of income from operations and other income. Income from operations Our income from operations consists of the following:

• Income from sale of CNC machines manufactured by us such as CNC Turning Centres, Vertical Machining Centres, Horizontal Machining Centres and Special Purpose Machines

• Services provided in relation to sale of CNC machines such as AMC income, machine service income, jobwork income, calibration income and installation & commissioning income

• Operating income which primarily includes duty drawback income and proceeds from sale of scrap

The following table provides the breakup of our income from operations: (` in million, except percentages)

9MFY13

% of Gross Sales

FY12 % of Gross Sales

Y-o-Y Growth (%)


Y-o-Y Growth (%)


Sale of product 4,288.59 96.08 6,194.51 97.00 39.31 4,444.61 95.56 61.32 2,756.47 94.94

Sale of services 101.55 2.27 179.80 2.82 (9.60) 198.88 4.27 43.46 138.63 4.78

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9MFY13

% of Gross Sales


Y-o-Y Growth (%)


Y-o-Y Growth (%)


Other operating income

73.58 1.65 11.68 0.18 47.83 7.90 0.17 (3.40) 8.18 0.28

Gross Sales 4,463.72 100.00 6,385.98 100.00 37.23 4,653.39 100.00 60.28 2,903.29 100.00

Less: excise duty and service tax

(303.24) (382.23) (290.89) (125.50)

Revenue from Operations

4,160.48 6,003.76 37.62 4,362.50 57.05 2,777.79

Other income Our other income primarily includes profit on sale of assets, foreign exchange fluctuation gain (net of loss), and interest income. Expenditure Cost of materials consumed Cost of materials consumed relates to consumption of raw materials. Cost of materials consumed includes freight and transportation costs related to procurement of our raw materials including import costs and custom duties. Our raw materials include CNC panels, Electric harness, linear guideways, industrial switchgear, bearings and CR sheets. Change in inventory of work-in-progress and finished goods Inventory of work-in-progress and finished goods primarily includes finished CNC Turning Centres, Vertical Machining Centres, Horizontal Machining Centres and Special Purpose Machines and work in progress of the same machines. Employee benefit expenses Employee benefit expenses comprise of (1) salaries, wages and other personnel expenses, (2) remuneration to Directors (3) contributions to provident fund and other funds, (4) other expenses such as payment to temporary workers. Other expenses Other expenses comprise of manufacturing & direct expenses and administrative & selling expenses. Manufacturing & direct expenses mainly comprise of 1) consumption of stores & spares, 2) power & fuel expenses, 3) transportation expenses – inward, 4) job work expenses, 5) clearing, forwarding & agency expenses –import and 6) repairs & maintenance. Administrative & selling expenses mainly comprise of 1) advertisement, exhibition & marketing expenses, 2) freight outward, 3) quality assurance/product conformity expenses, 4) sales commission, 5) travelling, conveyance & vehicle expenses, 6) postage, stationery & telephone expenses, 7) rent, 8) office expenses 9) foreign exchange fluctuation loss (net of gain) and 10) insurance costs. Other expenses also include provision for mark to market losses on account of currency derivative transaction. The amounts were provided for in the accounts of the respective years and the period ended December 31, 2012 based on the certificates received from the bank. The table given below gives details of major heads under other expenses:

(` in million, except percentages)

9MFY13 FY12 FY11 FY10 Amoun % of Amoun % of Amoun % of Amoun % of

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t Total Income

t Total Income

t Total Income

t Total Income

Manufacturing & direct expenses 450.52 10.81 569.24 9.46 463.69 10.47 379.38 13.21 Job work expenses 146.23 3.51 169.50 2.82 139.00 3.14 137.42 4.79 Transportation expenses – inward 100.36 2.41 130.25 2.16 103.46 2.34 87.65 3.05 Power & fuel 86.43 2.07 103.01 1.71 71.04 1.60 62.61 2.18 Consumption of stores & spares 76.09 1.83 110.80 1.84 104.52 2.36 58.80 2.05 Administrative & selling expenses 401.58 9.64 610.69 10.15 487.53 11.01 312.25 10.87 Advertisement, exhibition & marketing expenses 79.17 1.90 96.33 1.60 80.11 1.81 69.82 2.43 Sales commission 68.28 1.64 170.16 2.83 90.50 2.04 57.47 2.00 Rent 48.06 1.15 42.24 0.70 36.92 0.83 44.53 1.55 Travelling, conveyance & vehicle expenses 43.67 1.05 54.36 0.90 39.82 0.90 35.81 1.25 Freight outward 36.40 0.87 52.02 0.86 41.82 0.94 18.40 0.64 Exchange Fluctuation loss(net of gain) 32.31 0.78 24.87 0.41 - - - -

Finance cost Finance cost includes interest expenses on account of borrowings, trade payables and bank and other financial charges. Depreciation expenses Depreciation expenses consist of depreciation on the fixed assets of our Company which primarily includes factory buildings, plant and machinery, furniture and fixtures vehicles, office equipment, dies and tools, electrical installations and software. Tax expenses Tax expenses include current and deferred tax Consolidated and standalone results of operations Consolidated results of operations refer to figures derived from the consolidated accounts of Jyoti CNC Automation Limited and Jyoti SAS, the holding company for our overseas operating companies Huron Graffenstaden S. A. S., Huron Fräsmaschinen GmbH and Huron Canada Inc. Standalone results of operations refer to the figures derived from the standalone results of Jyoti CNC Automation Limited. Nine months ended December 31, 2012 Total Income Consolidated Our total income was `4,167.37 million during the nine months ended December 31, 2012. Standalone

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Our total income was `2,967.70 million during the nine months ended December 31, 2012. Income from operations Consolidated Our income from operations was `4,160.48 million during the nine months ended December 31, 2012. This comprised of `4,288.59 million on account of sale of products, `101.55 million on account of sale of service and `73.58 million on account of other operating income. From the above, the attributable Excise duty and Service Tax is excluded to arrive at the Net Operating Income. Standalone Our income from operations was `2,938.76 million during the nine months ended December 31, 2012. This comprised of `3,220.23 million on account of sale of products, `19.25 million on account of sale of service and `2.51 million on account of other operating income. From the above, the attributable Excise duty and Service Tax is excluded to arrive at the Net Operating Income. Our realisation on machines sold improved during the period as a result of focus on high end machines and a higher proportion of government business. Other Income Consolidated Our other income was `6.90 million during the nine months ended December 31, 2012 which comprised 0.17% of our total income. This mainly comprised of `4.81 million of interest income and `1.67 million on account of profit on sale of assets. Standalone Our other income was `28.94 million during the nine months ended December 31, 2012. This mainly comprised of ` 21.21 million on account of interest income and `7.32 million on account of guarantee commission. Expenditure Cost of materials consumed Consolidated Our cost of materials consumed was `2,358.02 million during the nine months ended December 31, 2012. Material cost as a percentage of income from operations after adjusting for change in inventory in work-in-progress and finished goods was 51.00% which is lower than 57.53% in our domestic operations reflecting the higher contribution of high-end machines in our overseas subsidiary. Corresponding figure for FY12 was 54.13%. Standalone Our cost of materials consumed was `1,875.51 million during the nine months ended December 31, 2012. Material cost as a percentage of income from operations after adjusting for change in inventory in work-in-progress and finished goods was 57.53% Corresponding figure for FY12 was 60.07%. This is primarily on account of higher realisation on machines sold during the nine month period. Change in inventory of work-in-progress and finished goods Consolidated Inventory of finished goods and work-in-progress increased from ` 1,574.94 million at the beginning of the period to ` 2,063.70 million at the end of the nine months ended December 31, 2012. The work-in-progress inventory increased from ` 1,425.49 million at the beginning of the period to `1,908.57 million at the end of the nine months ended December 31, 2012. The finished goods inventory increased from ` 149.44 million at the beginning of the period to `155.13 million at the end of the nine months ended December 31, 2012. Standalone

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Inventory of finished goods and work-in-progress increased from ` 1,088.35 million at the beginning of the period to `1,406.26 million at the end of the nine months ended December 31, 2012. The work-in-progress inventory increased from ` 1,062.94 million at the beginning of the period to `1,403.64 million at the end of the nine months ended December 31, 2012. The finished goods inventory decreased from `25.41 million at the beginning of the period to `2.62 million at the end of the nine months ended December 31, 2012. Employee benefit expenses As of January 31, 2013 we had a total of 1,326 employees, 1,178 employees in India and 148 employees overseas. Consolidated Employee benefit expenses were ` 621.21 million during the nine months ended December 31, 2012. Employee cost as a % of total income is 14.91%. This rise was primarily due to increase in salary levels during the period. Standalone Employee benefit expenses were ` 225.94 million during the nine months ended December 31, 2012. This cost as percentage of total income was 7.61%. Other expenses Consolidated Other expenses were ` 852.10 million during the nine months ended December 31, 2012. Other expenses as a percentage of total income were 20.45%. Manufacturing & direct expenses were ` 450.52 million during the nine months ended December 31, 2012. These expenses as a percentage of total income were 10.81%. Manufacturing & direct expenses mainly comprised of job work expenses of ` 146.23 million, transportation expenses – inward of ` 100.36 million and power & fuel amounting to ` 86.43 million. Administration & selling expenses were ` 401.58 million which constituted 9.64% of the total income. Administration & selling expenses mainly comprised of advertising, exhibition & marketing expenses of `79.17 million and sales commission of `68.28 million. Standalone Other expenses were ` 498.49 million during the nine months ended December 31, 2012. Other expenses as a percentage of total income was 16.80%. Manufacturing & direct expenses were ` 274.86 million during the nine months ended December 31, 2012. These expenses as a percentage of total income were 9.26%. Manufacturing & direct expenses mainly comprised of power & fuel amounting to ` 73.80 million and consumption of stores & spares amounting to ` 72.15 million. Administration & selling expenses were ` 223.63 million which constituted 7.54% of the total income. Administration & selling expenses mainly comprised of advertising, exhibition & marketing expenses of `48.24 million, quality assurance expenses of ` 48.15 million and freight outward amounting to ` 36.40 million. It also includes a reversal of the mark to market provision on the currency derivative deal to the extent of ` 6.43 million. EBITDA Consolidated EBITDA was ` 799.37 million during the nine months ended December 31, 2012. EBITDA margin was 19.18% during the nine months ended December 31, 2012. The EBITDA margin was higher than 14.02% margin achieved in FY12 mainly due to a reduction in the material consumption ratio. Standalone

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EBITDA was ` 688.92 million during the nine months ended December 31, 2012. EBITDA margin was 23.21% during the nine months ended December 31, 2012. The EBITDA margin was higher than 19.33% in FY12 due to better price realisation. Finance cost Consolidated Finance expenses were ` 330.25 million during the nine months ended December 31, 2012 which constituted 7.92% of the total income. There was an increase of 43.00% in our short term borrowings. However our long term borrowings reduced by 23.87% Standalone Finance expenses were `262.50 million during the nine months ended December 31, 2012 which constituted 8.85% of the total income. There was an increase of 58.54% in our short term borrowings. However our long term borrowings reduced by 29.82%. Depreciation & amortization expenses Consolidated Depreciation & amortization expenses were `166.98 million during the nine months ended December 31, 2012. Standalone Depreciation & amortization expenses were `110.59 million during the nine months ended December 31, 2012. Tax expenses Consolidated Tax expenses were `92.57 million during the nine months ended December 31, 2012. Standalone Tax expenses were `97.36 million during the nine months ended December 31, 2012. Profit after Tax Consolidated Our company posted a profit after tax of `209.57 million during the nine months ended December 31, 2012. Net profit margin during the period was 5.03%. Standalone Our company posted a profit after tax of `218.47 million during the nine months ended December 31, 2012. Net Profit margin during the period was 7.36%. FY12 compared to FY11 Total Income Consolidated Our total income increased by 35.82% from ` 4,429.81 million in FY11 to `6,016.71 million in FY12. Standalone Total income grew by 37.07% from ` 3,034.05 million in FY11 to ` 4,158.92 million in FY12. Income from operations Consolidated Our income from operations increased by 37.62% from `4,362.50 million in FY11 to `6,003.76 million in FY12. This increase was primarily due to increase in the sales of CNC Turning centres and high-end Vertical and Horizontal machining centres. Standalone

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Income from operations grew by 36.58% from ` 3,021.68 million in FY11 to ` 4,126.95 million in FY12 driven mainly by growth in sales of CNC Turning centres and high-end Vertical and Horizontal machining centres. Other Income Consolidated Other income decreased by 80.75% from `67.30 million in FY11 to `12.95 million in FY12. Other Income in FY11 included profit on sale of asset of `55.68 million which was only `1.41 million in FY12. In addition, there was an increase in interest income from ` 5.70 million in FY11 to ` 9.64 million in FY12. Standalone Other Income grew by 158.51% from ` 12.37 million to ` 31.97 million. This increase was primarily due to interest income amounting to ` 18.54 million which was ` 4.39 million in FY11. In addition, guarantee commission increased to ` 11.53 million in FY12. Expenditure Cost of materials consumed Consolidated Our cost of materials consumed increased by 36.38% from `2,381. 71 million in FY11 to `3,248.07 million in FY12. This increase was in line with the sales growth and an increase in the prices of raw materials consumed. Cost of materials consumed as a percentage of income from operations after adjusting for change in inventory in work-in-progress and finished goods was 54.13% in FY 12 as compared to 54.20% in FY11. The percentage was much lower than the material consumption figure of 60.07% in our domestic operations reflecting the higher contribution of high-end machines in our overseas subsidiary. Standalone Cost of materials consumed increased by 27.79% from ` 1,965.30 million in FY11 to ` 2,511.56 million in FY12 mainly due to a 36.58% increase in income from operations. Cost of materials consumed as a percentage of income from operations after adjusting for change in inventory in work-in-progress and finished goods was 60.07% in FY12 as compared to 59.77% in FY11. Inspite of an increase in some of the raw material prices, the raw material cost to sales ratio remained at around the same level due to the higher contribution of high-end machines in our product mix. Change in inventory of work-in-progress and finished goods Consolidated Inventory of finished goods and work-in-progress increased by 1.05% from ` 1,558.64 million at the beginning of the year to ` 1,574.94 million at the end of the year. The work-in-progress inventory increased by 4.36% from ` 1,365.88 million in FY11 to ` 1,425.49 million in FY12 and the inventory of finished goods declined by 22.47% from ` 192.76 million in FY11 to ` 149.44 million in FY12. Standalone Inventory of finished goods and work-in-progress increased by 4.83% from ` 1,038.21 million at the beginning of the year to ` 1,088.35 million at the end of the year. Work-in-progress inventory increased by 9.16% from ` 973.72 million to ` 1,062.94 million and the inventory of finished goods declined by 60.61% from ` 64.50 million to ` 25.41 million. Employee benefit expenses Consolidated Employee benefit expenses increased by 16.04% from ` 639.16 million in FY11 to ` 741.70 million in FY12. This increase was primarily due to increase in salaries and contribution to

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provident fund payments to temporary workers. Employee cost as a percentage of total income was 12.33% primarily on account of higher manpower costs in our overseas subsidiaries and an increase in our workforce. Standalone Employee benefit expenses increased by 25.23% from ` 182.52 million in FY11 to ` 228.56 million in FY12 on account of employee addition and higher salaries. Employee cost as a percentage of total income was 5.50%. Other expenses Consolidated Other expenses increased by 24.04% from ` 951.21 million in FY11 to ` 1,179.93 million in FY12. Manufacturing & direct expenses increased by 22. 76% from ` 463.69 million in FY11 to ` 569.24 million in FY12 on account of increase in clearing and forwarding expenses, power and fuel expenses and repairs and maintenance expenses. These expenses as a percentage of total income were 9.46%. These expenses mainly comprised of job work expenses of ` 169.50 million, transportation expenses of ` 130.25 million, consumption of stores & spares of ` 110.80 million and power & fuel expenses of ` 103.01 million in FY12. Administration & selling expenses increased by 25.26% from ` 487.53 million in FY11 to ` 610.69 million due to higher sales commission, office expenses and increased advertising, exhibition and marketing expenses. These expenses as a percentage of total income were 10.15%. Administration & selling expenses mainly comprised of sales commission of ` 170.16 million and advertising, exhibition and marketing expenses of ` 96.33 million. Standalone Other expenses increased by 5.09% from ` 636.60 million in FY11 to ` 669.01 million in FY12. Manufacturing & direct expenses increased by 10.46% from ` 341.10 million in FY11 to ` 376.78 million in FY12 on account of increase in consumption of stores & spares, power & fuel and clearing, forwarding & transportation expenses. These expenses as a percentage of total income were 9.06%. These expenses mainly comprised of consumption of stores & spares of ` 103.18 million, and clearing, forwarding & transportation expenses of ` 89.77 million and power & fuel expenses of ` 86.84 million in FY12. Administration & selling expenses decreased marginally by 1.11% from ` 295.50 million in FY11 to ` 292.23 million in FY12 due to lower advertising, exhibition and marketing expenses and quality assurance related expenses. These expenses as a percentage of total income were 7.03%. Administration & selling expenses mainly comprised of advertising, exhibition and marketing expenses of ` 56.63 million, freight outward expenses of ` 52.02 million and quality assurance expenses of ` 47.73 million in FY12. The mark to market provision on currency derivative deal for the year was ` 21.55 million. EBITDA Consolidated EBITDA increased by 72.28% from ` 489.80 million in FY11 to ` 843.82 million in FY12. EBITDA margin for the year improved from 11.06% in FY11 to 14.02% in FY12. The improvement was driven primarily by topline growth, improved product-mix leading to better realisation and improved profitability of international operations. Standalone EBITDA increased by 55.80% from ` 516.05 million in FY11 to ` 804.01 million in FY12. EBITDA margin for the year improved from 17.01% in FY11 to 19.33% in FY12. The improvement was on account of higher revenue growth, improved product-mix and higher government business leading to better realisation. Finance cost Consolidated

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Finance expenses increased by 32.56% from `294.06 million in FY11 to `389.82 million in FY12. This increase was mainly due to increase in borrowings for our domestic operations. Higher interest rates also contributed to the higher interest expense for the year. Standalone Finance expenses increased by 32.91% from `228.97 million in FY11 to `304.33 million in FY12. The 7.17% decline in long term borrowings to ` 739.14 million in FY12 was offset by a 44.75% increase in short term borrowings to `1,433.87 million in FY12. Higher interest rates also contributed to the increase in interest outgo. Depreciation expenses Consolidated Depreciation expenses decreased by 1.61% from `206.06 million in FY11 to ` 202.74 million in FY12. This increase was primarily due to decrease in depreciation in the books of our overseas subsidiary owing to currency fluctuation. Standalone Depreciation increased by 13.75% from `118.48 million in FY11 to ` 134.77 million in FY12. Tax expenses Consolidated Tax expenses increased by 184.35% from `31.51 million in FY11 to `89.60 million in FY12. This increase was primarily due to higher profitability of Indian operations. Standalone Tax expenses increased by 151.03% from `40.01 million in FY11 to `100.43 million in FY12. Profit after Tax Consolidated Our company posted a profit after tax of `161.66 million in FY12 against a loss of ` 41.82 million in FY11. Net profit margin for FY12 was 2.69%. Standalone Profit after tax grew by 105. 68% from `128.59 million in FY11 to ` 264.49 million in FY12 as a result of better operating profits. Net profit margin for FY12 was 6.36% as compared to 4.24% in FY11. FY11 compared to FY10 Total Income Consolidated Total income increased by 54.26% from ` 2,871.61 million in FY10 to `4,429.81 million in FY11. Standalone Total income grew by 87.20% from ` 1,620.75 million in FY10 to ` 3,034.05 million in FY11. Income from operations Consolidated Our income from operations increased by 57.05% from ` 2,777.79 million in FY10 to ` 4,362.50 million in FY11. This increase was primarily due to increase in the sales of CNC Turning centres, high-end Horizontal machining centres and Special Purpose Machines. Standalone Income from operations grew by 93.43% from ` 1,562.18 million in FY10 to ` 3,021.68 million in FY11. This increase was primarily due to increase in the sales of CNC Turning centres, Vertical machining centres, Horizontal machining centres and Special Purpose Machines. Other Income

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Consolidated Other income decreased by 28.27% from ` 93.82 million in FY10 to ` 67.30 million in FY11 owing to a significant decline in gains from foreign exchange rate fluctuation. There was also a gain from the sale of certain assets in our overseas subsidiary. Standalone Other Income declined by 78.88% from ` 58.57 million in FY10 to ` 12.37 million in FY11 due to significant decline in gains from foreign exchange rate fluctuation. Expenditure Cost of materials consumed Consolidated Cost of materials consumed increased by 62.10% from ` 1,469.29 million in FY10 to ` 2,381.71 million in FY11. Cost of materials consumed as a percentage of income from operations after adjusting for change in inventory in work-in-progress and finished goods increased to 54.20% in FY11 as compared to 52.34% in FY10. Standalone Cost of materials consumed increased by 79.17% from ` 1,096.87 million in FY10 to ` 1,965.30 million in FY11. This increase was primarily driven by a 93.43% growth in income from operations. However Cost of materials consumed as a percentage of income from operations after adjusting for change in inventory in work-in-progress and finished goods declined from 62.04% in FY10 to 59.77% in FY11. Change in inventory of work-in-progress and finished goods Consolidated Inventory of finished goods and work-in-progress increased by 4.92% from ` 1,485.61 million at the beginning of the year to ` 1,558.64 million at the end of the year. The work-in-progress inventory increased by 17.23% from ` 1,165.09 million to ` 1,365.88 million and the inventory of finished goods declined by 39.86% from ` 320.52 million to ` 192.7 million. Standalone Inventory of finished goods and work-in-progress increased by 34.70% from ` 770.78 million at the beginning of the year to ` 1,038.21 million at the end of the year. Work-in-progress inventory increased by 36.75% from ` 712.04 million to ` 973.72 million and the inventory of finished goods increased by 9.80% from ` 58.74 million to ` 64.50 million. Employee benefit expenses Consolidated Employee benefit expenses increased by 0.22% from ` 637.75 million in FY10 to ` 639.16 million in FY11. The absolute increase was marginal in spite of a 52.70% increase in domestic employee expense, due to a reduction in the work force of our subsidiary. Employee cost as a percentage of total income has declined from 22.21% in FY10 to 14.43% in FY11. Standalone Employee cost grew by 52.70% from ` 119.53 million in FY10 to ` 182.52 million in FY11. Employee cost as a percentage of total income reduced from 7.37% in FY10 to 6.02% in FY11. Other expenses Consolidated Other expenses increased by 37.53% from ` 691.63 million in FY10 to ` 951.21 million in FY11. Manufacturing & direct expenses increased by 22.22% from ` 379.38 million in FY10 to ` 463.69 million in FY11on account of increase in consumption of stores and spares and transportation expenses – inward. These expenses as a percentage of total income were 10.47%. These expenses

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mainly comprised of job work expenses of ` 139.00 million, consumption of stores & spares of ` 104.52 million and transportation expenses – inward ` 103.46 million in FY11. Administration & selling expenses increased by 56.13% from ` 312.25 million in FY10 to ` 487.53 million in FY11, due to higher sales commission and freight cost. These expenses as a percentage of total income were 11.01%. Administration & selling expenses mainly comprised of sales commission of ` 90.50 million and advertisement, exhibition & marketing expenses of ` 80.11 million in FY11. Standalone Other expenses increased by 128.29% from ` 278.86 million in FY10 to ` 636.60 million in FY11. Manufacturing & direct expenses increased by 76.50% from ` 193.26 million in FY10 to ` 341.10 million in FY11on account of increase in job work costs, power and fuel, factory expenses and clearing and forwarding expenses. These expenses as a percentage of total income were 11.24%. These expenses mainly comprised of consumption of stores & spares of ` 85.22 million and clearing, forwarding and transportation expenses of ` 81.60 million in FY11. Administration & selling expenses increased by 245.20% from ` 85.60 million in FY10 to ` 295.50 million in FY11driven by increase in advertisement, exhibition & marketing expenses and quality assurance related expenses. These expenses as a percentage of total income were 9.74% as compared to 5.28% in FY10. Administration & selling expenses mainly comprised of advertisement, exhibition & marketing expenses of ` 63.58 million and quality assurance expenses of ` 63.53 million in FY11. The mark to market provision on currency derivative deal for the year was ` 42.16 million. EBITDA Consolidated EBITDA increased by 378.87% from ` 102.28 million in FY10 to ` 489.80 million in FY11. EBITDA margin for the year improved from 3.56% in FY10 to 11.06% in FY11. The increase in EBITDA margin was driven by higher operating income during the year. Standalone EBITDA increased by 55.80% from ` 331.22 million in FY10 to ` 516.05 million in FY11. EBITDA margin for the year declined from 20.44% in FY10 to 17.01% in FY11. Finance cost Consolidated Finance expenses increased by 9.14% from `269.43 million in FY10 to `294.06 million in FY11. This increase was primarily due to increase in short term borrowings by 26.39% to ` 1,699.02 million to finance domestic expansion and borrowings by our subsidiary. Standalone Finance expenses increased by 21.56% from `188.35 million in FY10 to `228.97 million in FY11. The increase is due to a 56.96% increase in short term borrowings to ` 990.61 million. Higher interest rates also contributed to the increase in interest outgo. Depreciation expenses Consolidated Depreciation expenses decreased by 14.37% from `240.62 million in FY10 to ` 206.06 million in FY11. This increase was primarily due to sale of assets at our subsidiary Standalone Depreciation increased by 9.73% from `107.98 million in FY10 to ` 118.48 million in FY11. Tax expenses Consolidated Tax expenses increased by 480.51% from `5.43 million in FY10 to `31.51 million in FY11.

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Standalone Tax expenses increased by 206.49% from `13.05 million in FY10 to `40.01 million in FY11. This increase was primarily due to higher profitability and higher deferred tax. Profit after tax Consolidated Losses reduced by 89.88% from ` 413.20 million in FY 10 to ` 41.82 million in FY11. This was a result of reduced losses in our subsidiaries and improved profitability of our domestic operations. Standalone Profit after tax grew by 488.86% from `21.84 million in FY10 to ` 128.59 million in FY11 as a result of better operating profits. The net profit margins improved from 1.35% in FY10 to 4.24% in FY11. Financial condition, liquidity and capital resources Liquidity We broadly define liquidity as our ability to generate sufficient funds from both internal and external sources to meet our obligations and commitments. Our primary liquidity requirements have been to finance our capital expenditures, working capital requirements for our operations and investments. We have financed our capital requirements primarily through funds generated from operations, an increase of share capital and borrowings. For further details of the working capital facilities currently availed by us, see the section titled “Financial Indebtedness” beginning on page 284 of the Draft Red Herring Prospectus. We believe that our cash flow from operations, the net proceeds of the Issue and our borrowings will be sufficient to provide us with the funds for our working capital and capital expenditure requirements for at least the next 18 months. In the future, as we expand our business, our capital needs will increase and we may need to raise additional capital through further debt finance and additional issues of Equity Shares. Cash Flows The following table sets forth selected items from our restated consolidated cash flow statement for the periods indicated:

(` in million) 9MFY13 FY12 FY11 FY10 Net cash provided by/(used in) operating activities (37.89) 355.59 289.35 90.11 Net cash provided by/(used in) investing activities (309.92) (992.29) (64.72) (392.76) Net cash provided by/(used in) financing activities 389.57 684.93 (237.32) 263.69 Net increase / (decrease) in cash 108.08 (11.65) 12.92 (29.58) Closing Cash and Cash Equivalents* 136.37 19.37 29.74 16.43

*Net of foreign exchange differences Cash flows from operating activities Our business of manufacturing and selling CNC machines to various industries involves long lead times and is working capital intensive. The machines are customised to needs of individual customers and are not standard products. Our net cash used in operating activities for the nine months ended December 31, 2012 was `37.89 million. Operating profit before working capital changes was ` 793.38 million. Total working capital requirement was `810.91 million contributed primarily by increase in inventory of ` 930.69 million and increase in trade receivables of ` 189.78 million. Trade payables increased by ` 251.69 million.

280

Our net cash provided by operating activities in FY12 was `355.59 million. Operating profit before working capital changes was ` 832.92 million. Total working capital requirement was `426.01 million contributed by primarily by increase in trade receivables of ` 500.09 million and inventory of ` 256.25 million. Trade payables increased by ` 329.82 million. Our net cash provided by operating activities in FY11 was `289.35 million. Operating profit before working capital changes was ` 428.71 million. Total working capital requirement was `150.43 million contributed primarily by increase in inventory of ` 312.02 million and increase in receivables of ` 148.86 million. Trade payables increased by ` 282.77 million. Our net cash provided by operating activities in FY10 was ` 90.11 million. Operating profit before working capital changes was ` 74.03 million. Working capital surplus was ` 29.81 million contributed primarily by decrease in loans & advances of ` 140.23 million and decrease in inventory of ` 158.51 million. Trade payables decreased by ` 224.48 million. Cash flows from investing activities Our net cash used in investing activities during the nine months ended December 31, 2012 was `309.92 million. This was mainly on account of purchase of fixed assets of ` 366.34 million. Our net cash used in investing activities in FY12 was ` 992.29 million. This was mainly on account of purchase of fixed assets of ` 935.81 million and investments of ` 64.97 million in bank deposits. Our net cash used in investing activities in FY11 was `64.72 million. This was mainly on account of purchase of fixed assets of ` 136.99 million and receipt of ` 65.34 million on account of sale of assets. Our net cash used in investing activities in FY10 was `392.76 million. This was primarily on account of purchase of fixed assets of ` 547.41 million, investments of ` 30.70 million in bank deposits and receipt of ` 179.39 million on account of sale of assets. Cash flows from financing activities Our net cash raised from financing activities during the nine months ended December 31, 2012 was ` 389.57 million which primarily consisted of increase in borrowings of ` 679.06 million. We incurred a financial expense of ` 328.61 million. We received ` 39.12 million from issue of equity shares. Our net cash raised from financing activities in FY12 was ` 684.93 million which primarily consisted of issue of equity shares amounting to ` 150.00 million, increase in borrowings of ` 912.33 million. We incurred a financial expense of ` 377.40 million. Our net cash outflow from financing activities in FY11 was ` 237.32 million mainly on account of financial expenses of ` 262.53 million. In FY10, we raised ` 263.69 million primarily through borrowings of ` 513.48 million and raised ` 21.50 million through issue of equity shares. We also incurred financial expense of ` 271.29 million. Indebtedness As at January 31, 2013 our total outstanding debt was ` 4,670.04 million comprising of ` 4,552.67 million in secured loans and `117.37 million in unsecured loans. For further details see the section titled “Financial Indebtedness” beginning on page 284 of the Draft Red Herring Prospectus. Contingent Liabilities


31-Mar-12

31-Mar-11

31-Mar-10

31-Mar-09

31-Mar-08

A Contingent Liability on account of Outstanding

250.50 54.89 32.53 50.64 8.18 11.31

281

Letter of Credit and Bank Guarantee

B Claim against company

not acknowledged as Debt

3.14 3.14 3.14 3.14 - -

C Corporate Guarantee to Banks on behalf of Jyoti SAS The company has given irrevocable and unconditional Corporate Guarantee to Bank of

India, Paris Branch and New Jersey Branch and Bank of Baroda, Paris Branch for and on behalf of Wholly owned Subsidiary Company "Jyoti SAS" in respect of term loan availed by Jyoti SAS to part finance the acquisition of 100% of the equity share capital in "Huron Graffenstaden SAS, France".


` 365.82

(€ 5.06)

` 461.29

(€ 6.75)

` 533.59

(€ 8.44)

` 681.30

(€ 11.25)

` 759.15

(€ 11.25)

` 709.76

(€ 11.25)

D Disputed Excise Duty and Service Tax Liabilities Disputed Excise Duty

and Service Tax liabilities

4.77 4.77 4.77 - - -


2.22 2.22 2.00 - - -

Quantitative and qualitative disclosure about market risks General Market risk is the risk of loss of future earnings, to fair values or to future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates, interest rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments, foreign currency payables and debt. Interest Rate Risk Our net profit is affected by changes in interest rates due to the impact such changes have on interest income and interest expense from short-term deposits and other interest-bearing financial assets and liabilities. In addition, an increase in the interest rates for our existing and future borrowings may adversely affect our ability to service long term debt and to finance development of new projects, all of which in turn may adversely affect our results of operations, financial conditions, planned capital expenditures and cash flows. Translation Risk The translation of the subsidiaries’ financials into Indian rupees during the process of consolidation is done at the average rate of conversion for the corresponding Fiscal. The conversion for the balance sheet items is done at year end rates for the Fiscal. The impact of such translation in the balance sheet between two Fiscals may be significant where the difference in the translation rates between two Fiscals is significant, on account of volatility of exchange rates. Foreign exchange rate risk We face exchange rate risk owing to our income and expenditure in currencies other than the Indian Rupee, which is subject to fluctuations against the Indian Rupee depending on market conditions. Commodity Price Risk We are exposed to fluctuations in the prices of raw materials and components used in our products which include commodities such as Pig iron and CR sheets. The costs of components and various small parts sourced from external manufacturers may also fluctuate based on their availability from suppliers.

282

Significant Developments after December 31, 2012 Our Company allotted 714,450 Equity Shares of `10 each at a premium of ` 205 on a preferential basis to Jyoti International Private Limited vide shareholders’ resolution dated November 29, 2012 approving the issue under section 81(1A) of the Act and board resolution dated February 16, 2013 for allotment of Equity Shares. Our Company unwound the USD/JPY cross currency derivative deal with HDFC Bank on February 13, 2013 and booked a loss of ` 14.93 million. Unusual or infrequent events or transactions Our Company had entered into a USD/JPY currency derivative deal with erstwhile Centurion Bank of Punjab (now HDFC Bank) on 7th March 2008. The Mark to Market difference was accounted for and charged to Profit & Loss account on respective Balance Sheet Date in the restated accounts. The deal got unwound on 13th Feb 2013 and amount of ` 14.93 million is determined as payable by our Company on unwinding of the deal. The provision for mark to market losses as adjusted for mark to market profits as of the Balance sheet date in the restated accounts for FY08, FY09, FY10, FY11, FY12 and the period ended December 31, 2012 amounting to `112.82 million will be reversed in the restated accounts for the year ending March 31, 2013. Except as mentioned above and disclosed in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as “unusual” or “infrequent”. Significant economic changes that materially affected or are likely to affect income from continuing operations Except as disclosed in this Draft Red Herring Prospectus, to our knowledge, there have been no significant economic changes that materially affected or are likely to affect income from continuing operations. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations Our business has been impacted and we expect will continue to be impacted by the trends identified in this section and the uncertainties described in the section titled “Risk Factors” beginning on page 13 of the Draft Red Herring Prospectus. To our knowledge, except as we have described in this Draft Red Herring Prospectus, there are no other known factors which we expect to have a material adverse impact on our revenues or income from continuing operations. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known Except as described in this section and in the sections titled “Risk Factors” and “Business” beginning on page 13 and 130 of the Draft Red Herring Prospectus, respectively, to the best of our knowledge, there is no future relationship between expenditure and income that will have a material adverse impact on the operations and finances of our Company. Extent to which material increases in net sales or revenue are due to increased sale volume, introduction of new products or services or increased sales prices The extent to which material increases in net sales or revenue are due to increased sale volume, introduction of new products or services or increased sales prices is discussed in this section above. Total turnover of each major industry segment in which the issuer company operates We operate in a single segment being manufacturing of CNC machines. Status of any publicly announced new products or business segment We have not recently announced any new products or business segments. The extent to which our business is seasonal

283

We believe, that our business is not seasonal. Any significant dependence on a single or few suppliers or customers We do not have significant dependence on a single or few suppliers or customers. Our diversified product offering has allowed us to develop a broad customer base across a range of industries and has reduced our dependence on any particular industry or market segment. All inputs our manufacturing operations are easily available at competitive prices from both domestic and overseas suppliers. Competitive conditions We face competition from other CNC metal cutting machine manufacturers in the Indian and overseas markets. In India, our competitors include Ace Designers Limited, Bharat Fritz Werner Limited, Lakshmi Machine Works and Indian operations of large global players like Makino, Yamazaki Mazak, Kennametal and DMG Mori Seiki. In the global markets we compete against the aforementioned global machine tool manufacturers and local players in respective markets.

For further details, see the section titled “Business-Competition” beginning on page 144 of the Draft Red Herring Prospectus.

284

FINANCIAL INDEBTEDNESS

Our Company and our Subsidiaries are enjoying various credit facilities as sanctioned by bankers and financial institutions for conducting their business operations.

This section has been broadly segregated as under:

I Details of Borrowings of our Company A. Secured Borrowings. B. Unsecured Borrowings. II Details of Borrowings of our Subsidiaries A. Secured Borrowings. B. Unsecured Borrowings.

I. Details of Borrowings of our Company

Set forth below is a brief summary of our Company’s secured and unsecured borrowings from banks and financial institutions together with a brief description of certain significant terms of such financing arrangements

A. Secured Borrowings

Our Company’s outstanding secured borrowing is ` 3,254.38 million as at January 31, 2013. 1. Facility sanctioned by a consortium of bankers namely Corporation Bank (“Lead

Banker”), Bank of India, State Bank of India, IDBI Bank and Bank of Baroda vide Working Capital Consortium Agreement dated January 15, 2013.

a) Facility of ` 1,270.00 million sanctioned by Corporation Bank

Facility* Fund Based: Cash Credit of ` 460.00 million PCL / PCFC / FDBN / FDBP / FDBD / PSCFC / RACB of ` 180.00 million (sub limit of ` 90.00 million for PCL / FDBN / FDBP / FDBD / RACB) Adhoc PCFC of ` 50.00 million** Non Fund Based: Import Letter of Credit cum Buyers Credit of ` 250.00 million Bank Guarantee of ` 170.00 million Letter of Comfort/Standby Letter of Credit of ` 160.00 million

Interest Rate / Commission charges

Cash Credit: CB BR + 3.10 % p.a. PCL: upto 270 days – 10.00 % p.a., beyond 270 days to 360 days – 15.40 % p.a. FDBN / FDBP / FDBD: demand bills – 11.00 % p.a., usance bills upto 180 days – 11.00 % p.a.

Purpose Cash Credit: Working capital (inventory / receivable) finance PCL / PCFC / FDBN / FDBP / FDBD / PSCFC / RACB: Pre shipment and post shipment finance Import Letter of Credit cum Buyers Credit: For procurement of raw materials / spares Bank Guarantee: To furnish bank guarantee to government departments against EMD / Bid bonds to customs Letter of Comfort/Standby Letter of Credit: To avail credit facility for Huron Graffendstaden SAS, France.

Tenor/ Repayment schedule

Cash Credit : repayable on demand PCL: repayable within a period not exceeding 180 days FDBN / FDBP / FDBD: tenor shall not exceed 180 days

Outstanding facility as on

` 1,067.60 million#

285

January 31, 2013 * The amount sanctioned vide letter dated December 29, 2012. ** The amount sanctioned vide letter dated November 10, 2012. #The amount includes interest accrued as of January 31, 2013. b) Facility of ` 253.00 million sanctioned by Bank of India. Facility*

Fund Based: Cash Credit of ` 170.00 million Temporary over limit of ` 23.00 million** EPC / PCFC / FBP / FCBD of ` 60.00 million


Cash Credit: BI BR + 3.50% p.a.

Purpose To meet working capital requirement Outstanding facility as on January 31, 2013

` 253.86 million#

* The amount sanctioned vide letter dated September 06, 2012. ** The amount sanctioned vide letter dated January 01, 2013. #The amount includes interest accrued as of January 31, 2013. c) Facility of ` 1,068.80 million sanctioned by State Bank of India. Facility

Fund Based: Cash Credit of ` 560.00 million Non Fund Based: Letter of credit of ` 190.00 million Bank guarantee of ` 50.00 million Letter of comfort / Stand by letter of credit of ` 260.00 million Credit exposure limit of ` 8.80 million


Cash Credit: SBI BR + 2.75 % p.a.

Purpose To meet working capital requirement Repayment schedule

Repayable on demand

Outstanding facility as on January 31, 2013

` 682.30 million

* The amount sanctioned vide letter dated November 28, 2012. d) Loan of ` 180.00 million sanctioned by IDBI Bank. Facility

Fund Based: Cash Credit of ` 150.00 million (sub limit of ` 40.00 million for EPC / PCFC / FBP / FBD) Non Fund Based: Letter of Credit / Buyers Credit / Bank Guarantee of ` 30.00 million (sub limit of ` 10.00 million for LER)


Cash Credit: IDBI BR + 4.00% p.a. Letter of Credit: 1.50 % p.a. plus service tax payable upfront Bank Guarantee: 2.00 % p.a. plus service tax payable upfront

Purpose To meet working capital requirement Repayment schedule

Cash Credit: Repayable on demand Letter of Credit: on due date Bank Guarantee: on or before the expiry


` 180.30 million#

* The amount sanctioned vide letter dated September 21, 2012. #The amount includes interest accrued as of January 31, 2012.

286

e) Loan of ` 350.00 million sanctioned by Bank of Baroda Facility*

Fund Based: Cash Credit of ` 320.00 million (sub-limit of ` 140.00 million for PC/PCFC/FBPFC/FBDFC) Adhoc Cash Credit of ` 30.00 million**


Cash Credit: BB BR + 3.50 % p.a. PC/PCFC/FBPFC/FBDFC: BB BR + 1.00 % p.a. Adhoc Cash Credit: BB BR + 7.00 % p.a.

Purpose For meeting working capital requirement Tenor 12 months or on demand subject to renewal after 12 months Outstanding facility as on January 31, 2013

` 355.69 million# (including PCFC of Euro 900,000##)

* The amount sanctioned vide letter dated September 26, 2012. ** The amount sanctioned vide letter dated December 26, 2012. #The amount includes interest accrued as of January 31, 2013. ##For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325. 2. Facility sanctioned by a consortium of bankers namely Corporation Bank (“Lead

Banker”), Bank of India, State Bank of India, IDBI Bank and Bank of Baroda vide Term Loan Consortium Agreement dated January 15, 2013.

a) Facility of ` 264.40 million sanctioned by Corporation Bank Facility* Term Loan (80012) of ` 91.50 million

Corporate Loan (110006) of ` 75.00 million Term Loan (110009) of ` 97.90 million

Interest Rate

Term Loan (80012) : CB BR + 3.50 % p.a. Corporate Loan (110006) : CB BR + 3.50 % p.a. Term Loan (110009) : CB BR + 3.50 % p.a.

Purpose Term Loan (80012) : To part finance the expansion project Corporate Loan (110006) : To augment long term sources to working capital Term Loan (110009) : To part finance the capex

Repayment schedule^

Term Loan (80012): 15 quarterly instalments of ` 15.20 million each from August 19, 2010 and last instalment of ` 15.50 million. Monthly interest shall be paid as and when due. Corporate Loan (110006): Repayable in 12 quarterly instalments. Interest to be paid separately as and when due. Term Loan (110009): Repayable in 16 quarterly instalments. Interest to be paid separately as and when due.


` 263.40 million#

* The amount outstanding as of sanction letter dated December 29, 2012 (except for term loan – 110009 wherein the amount is sanctioned amount as of December 29, 2012). ^The repayment schedule is based on the total sanctioned amount for each of the financing arrangements. #The amount includes interest accrued as of January 31, 2013. b) Facility of ` 63.10 million sanctioned by Bank of India Facility* Term loan of ` 63.10 million Interest Rate

BI BR+ 4% p.a.

Repayment schedule^

Repayable in 16 quarterly instalments of ` 12.50 million each from April 2010. Interest will be payable separately.


` 51.20 million#

* The amount outstanding as of sanction letter dated September 06, 2012. ^The repayment schedule is based on the total sanctioned amount for the financing arrangement. #The amount includes interest accrued as of January 31, 2013.

287

c) Facility of ` 82.50 million sanctioned by State Bank of India Facility*

Corporate Loan of ` 82.50 million

Interest Rate

SBI BR + 4.00 % p.a.

Repayment schedule^

Repayable in 12 quarterly instalments of ` 7.50 million each from June 2012


` 68.30 million#

* The amount outstanding as of sanction letter dated November 28, 2012. ^The repayment schedule is based on the total sanctioned amount for the financing arrangement. #The amount includes interest accrued as of January 31, 2013. d) Facility of ` 403.60 million sanctioned by Bank of Baroda Facility*

Term Loan - 2 of ` 5.30 million Term Loan - 3 of ` 19.30 million Term Loan – 4 of ` 150.00 million Corporate Loan of ` 229.00 million

Interest Rate Term Loan – 2: BB BR + 3.50 % p.a. Term Loan – 3: BB BR + 3.50 % p.a. Term Loan – 4: BB BR + 3.50 % p.a. Corporate Loan: BB BR + 3.50 % p.a.

Purpose Term Loan 2, Term Loan 3 and Term Loan 4: For capacity expansion / backward integration / Capex Corporate Loan: Working capital requirements of our Company

Repayment schedule^

Term Loan 2: 10 quarterly instalments of ` 2.80 million each from June 25, 2010 and last instalment of ` 2.50 million. Interest to be paid monthly on last day of the month. Term Loan 3: 15 quarterly instalments of ` 2.75 million each from September 10, 2010. Interest to be paid monthly on last day of the month. Term Loan 4: Repayable in 16 quarterly instalments of ` 10.00 million each from June 30, 2012. Interest to be paid monthly on last day of the month Corporate Loan: 11 quarterly instalments of ` 21.00 million each from June 30, 2012 and last instalment of `19.00 million. Interest to be paid monthly on last day of the month.


` 305.39 million#**

* The amount outstanding as of sanction letter dated September 26, 2012 (except for term loan – 4 wherein the amount is sanctioned amount as of September 26, 2012. Further, the undisbursed amount is ` 58.80 million). ^The repayment schedule is based on the total sanctioned amount for each of the financing arrangements. #The amount includes interest accrued as of January 31, 2013. ** The amount includes overdue of ` 31.00 million which was paid by our Company on March 04, 2013. e) Facility sanctioned by IDBI Bank

Nil

Security granted to consortium of bankers for working capital and term loan facility vide Joint Deed of Hypothecation dated January 15, 2013, Joint Deed of Equitable Mortgage dated January 15, 2013 and Deed of Guarantee dated January 15, 2013:

a) First pari passu charge for term loans and second pari passu charge for working capital on all moveable fixed assets and plant and machinery, both present and future and first pari passu charge for working capital and second pari passu charge for term loans on all current assets of our Company.

b) By equitable mortgage of immovable properties belonging to our Company located at (1) Plot no. 506, Lodhika Industrial Estate, GIDC, Taluka Lodhika, Rajkot (2) Plot no. 506/1, Lodhika Industrial Estate, GIDC, Taluka Lodhika, Rajkot (3) Plot no. 2839, Lodhika Industrial Estate, GIDC, Taluka Lodhika, Rajkot.

288

c) By equitable mortgage of immovable properties belonging to Jyoti Enterprise located at (1) Plot no. P/4, Lodhika Industrial Estate, GIDC, Taluka Lodhika, Rajkot (2) Plot no. 1125, Sub Plot no. 9, Gondal Road, Rajkot (3) Plot no. 2839, Lodhika Industrial Estate, GIDC, Taluka Lodhika, Rajkot.

d) Guarantee:

1) Individual Promoters and Ghanshyamsinh Jadeja

2) Jyoti Enterprise

Restrictive Covenants Our Company cannot, without the prior written consent of the Lead Banker, undertake, inter alia, any of the following 1. Effect any change in capital structure; 2. Formulate any scheme of amalgamation or re-construction; 3. Implement any scheme of expansion or diversification or modernisation other than

incurring routine capital expenditure; 4. Make any corporate investment by way of share capital or debentures and/ or advance

funds to or place deposits with, any other concern except give normal trade credits or on security deposits in the normal course of business or make advances to employees;

5. Undertake guarantee obligations on behalf of any third party or any other company. 3. Following are the details of other secured borrowings availed by our Company as on

January 31, 2013: Name of the Bank Amount borrowed (`

in million) Balance outstanding

as on January 31, 2013 (`

in million)

Purpose of the loan

HDFC Bank 10.13 4.80 Purchase of vehicles ICICI Bank 3.05 1.01 Purchase of vehicles IDBI Bank 1.13 0.46 Purchase of vehicles Kotak Mahindra Bank 0.55 0.22 Purchase of vehicles Hewlett Packard Financial Service (India) Private Limited

27.73 19.85 Finance for Computer systems & Software

Total 42.59 26.34

B. Unsecured Borrowings

Following are the details of unsecured borrowings availed by our Company as on January 31, 2013: Name of the lender Amount

borrowed (` in million)

Outstanding Balance as on January 31, 2013 (` in million)

Purpose of the loan

Basant Fulchand 10.00 10.67* -

Mahendra Fulchand 10.00 10.67* -

Popatlal Fulchand 20.00 21.34* -Regal Computer Systems Private Limited

60.00 64.02* -

Subhash Fulchand 10.00 10.67* - Total 110.00 117.37* * Outstanding amount includes interest.

289

II Details of Borrowings of our Subsidiaries

Set forth below is a brief summary of our Subsidiaries secured and unsecured borrowings from banks and financial institutions together with a brief description of certain significant terms of such financing arrangements

1. Jyoti S. A. S. A. Secured Borrowings

Facility agreement dated November 16, 2007 between Bank of Baroda, Bank of India (Jersey Branch) and Bank of India (Paris Branch) in relation to term loan facility of € 11.25 million and review letter of Bank of India (Paris Branch) dated April 09, 2009, November 19, 2010 and January 12, 2011. Name of the lenders

Bank of Baroda, Bank of India (Jersey Branch) and Bank of India (Paris Branch)

Facility

Bank of Baroda : Term Loan of € 5 million Bank of India (Jersey Branch): Term Loan of € 3.25 million Bank of India (Paris Branch): Term Loan of € 3.00 million

Interest Rate

Bank of Baroda - EURIBOR 6 months + 2.50 % p.a. Bank of India - EURIBOR 6 months + 3.50 % p.a.* *Revised pursuant to letter dated January 12, 2011

Purpose To acquire 100 % shareholding of Huron Graffenstaden S. A. S. Security Pledge of 100 % shareholding held by our Company in Jyoti S. A. S.

Pledge of 100 % shareholding held by Jyoti S. A. S. in Huron Graffenstaden S. A. S. Pledge on current accounts of Jyoti S. A. S. with State Bank of India and Bank of India Delegation to the bank of the representations and warranties granted by seller of Huron Graffenstaden S. A. S. to Jyoti S. A. S. Irrevocable Guarantee by our Company, the Promoters and Ghanshyamsinh Jadeja for the obligations of the Jyoti S. A. S. under the facility agreement


Repayment schedule - 20 equal quarterly instalments


€ 5.06 million (` 365.50 million)(1)

(1) For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325.


Our Subsidiaries’ outstanding unsecured borrowing is as follows: Name of borrower subsidiary

Name of the lender

Amount Disbursed (in million)

Outstanding Balance as on January 31, 2013( in million)

Purpose of the loan

Utilization of Loan

Jyoti SAS Jyoti CNC Automation Ltd.

€ 10.72 (` 774.33)(1)

€ 10.72 (` 774.33)(1)

Acquisition of Huron’s shares and repayment of term loan (including interest) availed from lenders for acquisition of Huron’s shares and other cost incidental thereto

Acquisition of Huron’s shares and repayment of term loan (including interest) availed from lenders for acquisition of Huron’s shares and other cost incidental thereto

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2. Huron Graffenstaden S. A. S.

A. Secured Borrowings

a) Facility sanctioned for an amount of € 10 million by State Bank of India vide credit arrangement letter dated April 23, 2009 and review letter dated May 20, 2010, April 11, 2011 and March 01, 2012.

Name of the lender

State Bank of India

Facility

Cash Credit of € 9 million Bank Guarantee / Letter of Credit of € 1 million* *Provided pursuant to letter dated May 05, 2010 and April 11, 2011

Interest Rate

EURIBOR + 3.00 % p.a.

Purpose To meet working capital requirements of Huron Graffenstaden S. A. S. Security Pledge on Huron Graffenstaden S. A. S.’s current assets including stocks and

debtors / receivables / invoices and business pledge for € 1 million Corporate Guarantee by our Company Personal Guarantee by our Promoters Negative lien on fixed assets of Huron Graffenstaden S. A. S.

Covenants Management control of Huron Graffenstaden S. A. S. shall remain with our Company during the duration of the facility Our Company will directly or indirectly continue to hold minimum 51 % of equity share capital in Huron Graffenstaden S. A. S Huron Graffenstaden S. A. S to obtain prior consent of the lender before embarking on merger / acquisitions


€ 8.99 million (` 649.37 million)(1)

(1) For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325. b) Facility sanctioned for an amount of € 2.65 million by Natixis vide Convention Cadre de

Cession de Créances Professionnelles, dated February 07, 2008 Name of the lender

Natixis

Facility

Cash Credit

Interest Rate

EONIA (daily fixing) + 4 % p.a.

Purpose To meet working capital requirements Security Pledge of equivalent amount in customer receivables Tenor/ Repayment schedule

Repayment based on payment of receivables pledged


€ 2.54 million (` 183.74 million)(1)

(1) For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325. c) Facility sanctioned for an amount of € 1.60 million by Banque Populaire d’Alsace vide

Convention cadre DAILLY, dated March 30, 1998 Name of the lender

Banque Populaire d’Alsace

Facility

Bill discounting


EURIBOR 3 months (monthly fixing) + 1.50 % p.a.


Repayment based on payments of the discounted bills

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€ 0.65 million (` 46.95 million)(1)

(1) For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325. d) Facility sanctioned for an amount of € 0.75 million by Le Credit Lyonnais vide Convention

cadre de Cession de Créances Professionnelles à titre d’escompte, dated November 03, 2008 Name of the lender

Le Credit Lyonnais

Facility

Bill discounting


EURIBOR 1 month (daily fixing) + 1.00 % p.a.


Repayment based on payments of the discounted bills



(1) For the purpose of conversion, we have considered RBI reference rate as on January 31, 2013: 1 Euro = ` 72.2325. e) Facility sanctioned for an amount of € 0.35 million by OSEO-Innovation vide Contrat

n°A06080001A dated January 30, 2007 and Amendment n° 1, dated September 17, 2010 Name of the lender

OSEO - Innovation

Facility

Corporate loan and research and development for new product


17 quarterly instalments according to a schedule from September 2009 to June 2014





Our Subsidiaries’ outstanding unsecured borrowing is as follows: Name of borrower subsidiary

Name of the lender

Amount Disbursed (in million)

Outstanding Balance as on January 31, 2013 (in million)

Purpose of the loan

Utilization of Loan

Huron Graffenstaden

Jyoti S. A. S. € 2.51 (`181.30)(1)

€ 2.51 (`181.30)(1)

Improvement of Equity

Equipment in the new plant in Eschau


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SECTION VI: LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS Except as stated below there are no outstanding litigation, suits, criminal or civil prosecutions, proceedings or tax liabilities against our Company, Directors, Promoters or Group Companies and there are no defaults, non payment or overdue of statutory dues, over-dues to banks or financial institutions, rollover/re-scheduling of loans or any other liability, dues payable to holders of any debentures, bonds and fixed deposits and arrears of preference shares of our Company defaults in creation of full security as per terms of issue/other liabilities, proceedings initiated for economic, civil or any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act) other than unclaimed liabilities of our Company. Our Company, our Directors, our Promoters and/or our Group Companies have not been declared as wilful defaulters by the RBI, have not been debarred from dealing in securities and/or accessing capital markets by the SEBI and no disciplinary action has been taken by the SEBI or any stock exchanges against our Company, our Promoters, our Group Companies or our Directors, that may have a material adverse effect on our business or financial position, nor, so far as we are aware, are there any such proceedings pending or threatened. Our Company does not owe any small scale industries any amounts exceeding ` 0.1 million. A. Litigation involving our Company

Litigation against our Company ConnectM Technology Solutions Private Limited (“ConnectM”) has alleged that they have entered into a consulting contract with our Company on October 01, 2007 to provide certain services and our Company issued a purchase order in relation to development of remote monitoring and diagnosis system for CNC machines. ConnectM raised invoice for ` 0.30 million dated September 29, 2007 and ` 2.84 million dated February 25, 2008. ConnectM had filed a petition before the High Court of Gujarat at Ahmedabad for winding up of our Company vide Company Petition no. 228 of 2009 on August 21, 2009 under the provisions of the Act for non-payment of invoices. Our Company filed an affidavit-in-reply before the High Court of Gujarat against the petition filed by ConnectM disputing its liability to pay the invoices. High Court of Gujarat vide order dated August 10, 2011 has disposed of the petition filed by ConnectM as withdrawn based on the consensus between ConnectM and our Company that our Company shall deposit ` 0.30 million before the registry of the Court and provide receipt of the deposit to the counsel of ConnectM and ConnectM will file a suit in appropriate court to raise the claim against our Company and the matter is pending. Tax proceedings Service Tax

1) The Assistant Commissioner of Central Excise, Rajkot, conducted audit of our Company

for the period from March 2007 to March 2009 and raised objections, inter-alia, on non payment of service tax and consequently, interest aggregating to ` 1.99 million on overseas payment made by our Company for business exhibition charges and erection, commissioning and installation charges. Our Company filed reply vide letter dated January 27, 2010 and paid ` 1.99 million under protest. Our Company received final audit report no. H-240/2009-10 dated March 19, 2010 from the Assistant Commissioner of Central Excise, Rajkot, inter-alia, on the said liability. Subsequently, the Joint Commissioner of Central Excise, Rajkot, issued show case notice no. V.ST/AR-II/RJT/JC/215/ 2012 dated October 01, 2012 to our Company, inter-alia, on appropriation of ` 1.99 million, vacation of protest and imposition of penalty. Our Company has filed reply to show cause notice on December 17, 2012. Joint Commissioner vide order dated February 11, 2013 appropriated ` 0.38 million in aggregate towards demand and interest and imposed penalty of ` 0.10 million provided the amount is paid within 30 days from the receipt of the order. Our Company is in process of filing reply to the said order and the matter is currently pending.

2) The Assistant Commissioner of Service Tax, Rajkot, issued notice dated October 25,

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2012 to our Company for supply of information in respect of remittance made in foreign currency for import of services (in the nature of inspection and supervision charges and commission) amounting to ` 158.72 million in view of said services being subject to service tax. The service tax amount involved is not quantifiable. Our Company is in process of filing reply to the said notice and the matter is currently pending.

Excise

The Additional Commissioner of Customs & Central Excise, Rajkot, issued show cause notice no. V/AR.VI/RJT-I/ADC/151/2011 dated August 05, 2011 in relation to (a) wrongly utilised cenvat credit amounting to ` 1.33 million for the period from April 2009 to September 2010; (b) wrongly availed exemption under notification no. 67 / 95 – CE on the five machines and consequently liable to excise duty amounting to ` 1.41 million and (c) imposition of interest and penalty. Our Company filed reply to the said show cause notice vide letter dated December 15, 2011 to annul both the demands and the interest and penalty. The Additional Commissioner of Customs & Central Excise, Rajkot, issued an order dated January 13, 2012 confirmed demand of ` 1.33 million in respect of wrongly utilised cenvat credit and imposed penalty of ` 0.45 million in relation thereto. Further, the Additional Commissioner of Customs & Central Excise, Rajkot, confirm demand (including interest) of ` 0.18 million on wrongly availed exemption under notification no. 67 / 95 – CE only on one machine and imposed penalty of ` 0.18 million in relation thereto. Our Company filed an appeal before the Commissioner (Appeals), Customs & Central Excise, Rajkot, in respect of denial of exemption granted under notification no. 67 / 95 – CE in respect one of the machines used for captive consumption and denial of utilisation of cenvat credit for payment of education cess and secondary and higher education cess. The Assistant Commissioner, Central Excise, Rajkot also filed an appeal no. 25/EA2/RAJ/2012 before the Commissioner (Appeals), Customs & Central Excise, Rajkot in respect of exemption granted under notification no. 67 / 95 – CE on four machines. Our Company filed a memorandum of cross objection on May 05, 2012 against the appeal filed by the Commissioner, Central Excise & Customs, Rajkot. The Commissioner (Appeals), Custom & Central Excise, Rajkot vide order dated July 17, 2012 dismissed the appeal filed by our Company and allowed the appeal filed by the Assistant Commissioner, Central Excise, Rajkot and directed that Our Company shall be liable to excise duty in terms of show cause notice dated August 05, 2011. Our Company has filed an appeal no. E/765/2012 on October 15, 2012 before Customs Excise and Service Tax Tribunal against order of Commissioner (Appeals), Custom & Central Excise, Rajkot. The Assistant Commissioner, Central Excise, Rajkot, has also filed an appeal no. E/770/2012 dated October 17, 2012, before Customs, Excise and Service Tax Appellate Tribunal against order of Commissioner (Appeals), Custom & Central Excise, Rajkot for non charging of interest on duty confirmed on five machines.The Customs, Excise and Service Tax Appellate Tribunal vide order dated November 01, 2012 granted waiver of pre-deposit of amount involved to our Company and the matter is currently pending.

The Additional Commissioner of Central Excise, Rajkot, issued show cause notice no. V.84/RJT-I/AR-VI/ADC/50/2012 dated March 16, 2012 in relation to (a) wrongly utilised cenvat credit amounting to ` 0.09 million for the month of March 2011; (b) wrongly availed exemption under notification no. 67 / 95 – CE on the five machines and consequently liable to excise duty amounting to ` 1.74 million and (c) imposition of interest and penalty. Our Company filed reply to the said show cause notice vide its letter dated May 10, 2012 to annul both the demands and the interest and penalty. The Additional Commissioner of Central Excise, Rajkot, issued an order dated January 10, 2013 confirming demand of ` 0.09 million in respect of wrongly utilised cenvat credit and imposed penalty of ` 0.02 million in relation thereto. Further, the Additional Commissioner of Central Excise, Rajkot, confirmed demand of ` 1.58 million on wrongly availed exemption under notification no. 67 / 95 – CE and imposed penalty of ` 0.10 million in relation thereto. Our Company is in process of filing appeal against the said order and the matter is currently pending.

The Superintendent of Central Excise, Rajkot issued notice dated January 17, 2013 to our Company in respect of pass on of excess cenvat credit by our supplier amounting to ` 0.16 million. The notice provides that such excess cenvat credit may be recovered from our Company if it has been availed by us. Our Company has filed reply to the said notice vide letter dated February 05, 2013 and the matter is currently pending.

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FEMA The Reserve Bank of India has issued a letter dated August 29, 2012 in response to reporting of conversion of loan into equity share capital in our subsidiary, Jyoti S. A. S., France in Form ODI on May 23, 2011 submitted by our Company. In terms of the said letter, there has been delay of over one to three years in reporting of remittances made during the period from September 13, 2007 to February 17, 2010 and there is contravention of provisions of regulation 6(2) of notification no. FEMA 120/RB-2004 dated July 07, 2004, as amended and such contravention may be compounded on receipt of application from our Company. Accordingly, our Company has filed compounding application on October 15, 2012. RBI has in its letter dated December 4, 2012 advised our Company to submit Annual Performance Reports (APRs) for the years 2008 and 2009 which our Company has submitted on December 19, 2012. The amount involved is not quantifiable and the matter is pending. Stamp Duty The account general conducted audit of documents registered at sub-registrar office in relation to creation of charge on assets of our Company in favour of banks pursuant to the consortium loan agreement and raised objections on short payment of stamp duty on the documents amounting to ` 1.68 million. Accordingly, the deputy collector, Rajkot issued notice dated July 24, 2012 and reminder notice dated October 10, 2012 in relation to short payment of stamp duty and imposition of penalty for violation of the Gujarat Stamp Act, 1958 and the matter is pending. Litigation by our Company Income Tax

1) Our Company has filed an appeal no. 32/07-08 dated April 18, 2009 before the Commissioner of Income-tax (Appeals), Rajkot against the assessment order passed for the assessment year 2005-06 in respect of disallowance of expenses amounting to ` 0.30 million for vehicles and travelling expenses involving personal use and unexplained cash credit. There is no tax demand in respect of above disallowances in view of carry forward business losses / unabsorbed depreciation of our Company and the matter is pending.

2) Our Company has filed an appeal no. 84 of 2010-11 dated November 15, 2010 before the Commissioner of Income-tax (Appeals), Rajkot against the assessment order passed for the assessment year 2008-09 in respect of disallowance of expenses amounting to ` 0.20 million in relation to advertisement, marketing and exhibition. The tax amount involved is ` 0.08 million and the matter is pending.

3) The Joint Commissioner of Income Tax, Rajkot passed an assessment order dated February 12, 2013 for the assessment year 2009-2010, wherein an upward adjustment of income aggregating to ` 46.08 million is made pursuant to draft assessment order dated January 24, 2013 for non charging of interest on loan granted and corporate guarantee commission for guarantee provided by our Company to Jyoti SAS, France, our subsidiary. The tax amount involved is ` 10.33 million. Our Company is in process of filing appeal against the said order and the matter is pending.

A. Litigation involving our Directors Parakramsinh Jadeja Parakramsinh Jadeja has filed an application no. 1671119 on April 01, 2008 for registration of trade mark ‘Jyoti’ with associated logo under class 7 of the Trade Marks Act, 1999. An objection filed by Intzar Hussain against registration of trade mark was received from the office of the Trade Mark Registry, Ahmedabad on October 27, 2010. In response to opposition received from the Trade Mark Registry, an affidavit in support of the application was filed by Parakramsinh Jadeja on May 29, 2012.

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C. Litigation involving our Subsidiaries Litigation against Huron Ludovic Petit, employee of Huron has contested his dismissal before the Court of Saint-Nazaire. First court has given its decision in favour of Huron, dated May 15, 2012. Ludovic Petit appealed against the said order of the First Court. The appeal is pending hearing.

A machine manufactured by Huron caught fire in a customer’s factory in October 2005. The cause for the same was not clear, and the insurance companies of both the customer as well as Huron have asked the Court of Angers to fix an indemnity. The decision of the First Court decisions was in favour of Huron, in February and November 2011. The opponent has requested for an appeal which is pending.

D. Litigation involving our Group Companies

Jyoti Enterprise

Jyoti Enterprise has received a notice ref: AGTP/Rajkot – 1/7899/08/731/13 dated February 25, 2013 from the Chief Collector of Stamp, Rajkot pursuant to an audit query in connection with the execution and registration of a Memorandum of Agreement for Extension of Mortgage vide nos. 7898 dated September 10, 2008 (Mortgage Extension Agreement) in favour of the banks for further credit facility of ` 1,690.96 million availed by our Company. The audit query has observed that the Mortgage Extension Agreement attracts stamp duty of ` 0.30 million as per article 27(b)(ii) of the Gujarat Stamp Act, 1958 against payment of ` 100/- at the time of registration. Accordingly, an audit observation is made for short payment of stamp duty to the extent of ` 0.30 million and the matter is pending.

E. Material Developments

There have been no material developments, since the date of the last balance sheet otherwise than as disclosed hereunder and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 259. Our Company allotted 714,450 equity shares of ` 10/- each at a premium of ` 205/- on preferential basis to Jyoti International Private Limited vide shareholders resolution dated November 29, 2012 approving the issue u/s 81 (1A) of the Act and board resolution dated February 16, 2013 for allotment of equity shares.

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GOVERNMENT APPROVALS

Our Company has received the necessary consents, licenses, permissions and approvals from the Government and various governmental agencies required for the present business of our Company, and except as mentioned below, no further approvals are required for carrying on our Company’s present business. In view of the approvals listed below, our Company can undertake this Issue and its current business activities and no further major approvals from any governmental or regulatory authority or any other entity are required to undertake the Issue or continue its business activities. Our Company will also apply to the concerned governmental authorities for approvals as required to be obtained to continue the activities of our Company. Unless otherwise stated, these approvals are valid as of the date of this Draft Red Herring Prospectus. Further, pursuant to a special resolution of the shareholders of our Company at an annual general meeting held on September 17, 2012, our Company became a public limited company and the word “private” was deleted from its name. However, necessary consents, licenses, permissions and approvals required for the present business of our Company continue in the name of Jyoti CNC Automation Private Limited. Our Company has made application before governmental agencies for change of name to Jyoti CNC Automation Limited. I. Approvals in relation to the Issue Corporate Approvals 1. The Board of Directors has, pursuant to a resolution dated September 17, 2012,

authorised the Issue, subject to the approval by the shareholders of our Company under Section 81(1A) of the Companies Act.

2. The shareholders have, pursuant to a resolution dated September 22, 2012, under Section

81(1A) of the Companies Act, authorised the Issue.

Approval from the Stock Exchanges 1. In-principle approval from the BSE dated [●]. 2. In-principle approval from the NSE dated [●]. Approval from the Lenders 1. Pursuant to letter dated February 16, 2013, Bank of Baroda has given the consent to our

Company to undertake the Issue. 2. Pursuant to letters dated February 02, 2013, State Bank of India has given the consent to

our Company to undertake the Issue. 3. Pursuant to letters dated February 07, 2013, IDBI Bank has given the consent to our

Company to undertake the Issue. 4. Pursuant to letters dated March 04, 2013, Corporation Bank has given the consent to our

Company to undertake the Issue.

5. Pursuant to letters dated February 15, 2013, Bank of India has given the consent to our Company to undertake the Issue.

II. Approvals for our Company’s business Our Company requires various approvals to carry on its business in India. The approvals that our Company requires include the following.

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Approvals and Registrations Company’s Incorporation and Commencement of Business • Certificate of incorporation bearing no. 04-14914 of 1990-91 from the Registrar of

Companies, Gujarat, Dadra & Nagar Haveli, dated January 17, 1991 under the Companies Act as “AMB Engineering Company Private Limited”.

• Change of Name Approval vide Letter No 04 14914/S.T.A/2002-2003 dated May 08, 2002 issued in the name of our Company by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli, pursuant to change of name from AMB Engineering Company Private Limited to Jyoti CNC Automations Private Limited.

• Fresh Certificate of Incorporation bearing CIN U29221GJ1991PTC014914 dated April 28, 2008 issued in the name of our Company by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli, pursuant to change of name from “Jyoti CNC Automations Private Limited” to “Jyoti CNC Automation Private Limited”.

• Fresh Certificate of Incorporation bearing CIN U29221GJ1991PLC014914 dated November 30, 2012 consequent upon change of name on conversion to public limited company was issued by the Registrar of Companies, Gujarat, Dadra and Nagar Haveli.

• Importer Exporter Code No. 2403001261 issued on June 11, 2003 by the Office of Joint

Directorate General of Foreign Trade, Ministry of Commerce, Government of India. The same is valid until cancelled.

Tax Registrations and Licenses • Permanent Account Number – AABCJ1947R issued by Chief Commissioner of Income Tax,

Rajkot. The same is valid until cancelled.

• Tax Deduction Account Number – RKTJ00293G under section 203A of the Income Tax Act, 1961 issued by the Office of the ITO TDS -1, Rajkot vide letter dated February 07, 2003. The same is valid until cancelled.

• Service Tax Number – AABCJ1947JST001 issued vide letter dated September 03, 2009 by

the Superintendent, Service Tax Division, Rajkot. The same is valid until cancelled. • Certificate of Registration under the Central Sales Tax Act, 1957 and taxpayer identification

number 24592400412 valid from June 06, 2003. The same is valid until cancelled. • Certificate of Registration under rule 9 of the Central Excise Rules, 2002 and taxpayer

identification number AABCJ1947RXM002 valid from March 01, 2007 for manufacturing of excisable goods at Plot no. 2839, Kalawad Road, Lodhika GIDC, Lodhika, Rajkot – 360 035, Gujarat, India. The same is valid until cancelled.

• Certificate of Registration under the Gujarat Value Added Tax Act, 2003 and taxpayer

identification number 24092400412 valid from June 06, 2003. The same is valid until cancelled.

Shops and Establishment Licenses • Establishment Registration Certificate dated July 04, 2008 bearing number

760057545/Commercial II issued by the Office of the Inspector, as per the provisions of the Bombay Shops and Establishments Act, 1948 and the Maharashtra Shops and Establishments Rules, 1961 for the Branch Office (Marketing) of our Company. The certification is valid till December 31, 2013.

• Establishment Registration Certificate dated June 05, 2008 bearing number Bhosari/II/24209

issued by the Office of the Inspector, as per the provisions of the Bombay Shops and Establishments Act, 1948 and the Maharashtra Shops and Establishments Rules, 1961 for the Branch Office (Marketing) of our Company.

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Licenses and Registrations under Factories Act • Factory license number 347 (FIN: R17000347A) issued on December 22, 2011 by

Directorate Industrial Safety and Health, Gujarat State subject to the provisions of the Factories Act 1948 and the Rules made hereunder for the Unit No. 3 on Plot no. 2839, Lodhika GIDC Estate, Metoda, District Rajkot . This certificate is valid up to December 31, 2016.

• Factory license number 2590 (FIN: R17002585A) issued on December 22, 2011 by Directorate Industrial Safety and Health, Gujarat State subject to the provisions of the Factories Act 1948 and the Rules made hereunder for the Unit No. 1 on Plot no. G-506, Lodhika GIDC, Kalawad Road, Metoda, District Rajkot. This certificate is valid up to December 31, 2016.

• Factory license number 12067 (FIN: R17012067A) issued on January 04, 2012 by

Directorate Industrial Safety and Health, Gujarat State subject to the provisions of the Factories Act 1948 and the Rules made hereunder for the Unit No. 2 on Plot no. P-4, Lodhika GIDC, Kalawad Road, Metoda, District Rajkot. This certificate is valid up to December 31, 2016.

• Certificate of Stability issued on May 13, 2011 by a competent person, under the Factories

Act, 1948 for the Unit No. 3 on Plot No 2839, GIDC, Metoda, Rajkot.

• Certificate of Stability issued on October 26, 2010 by a competent person, under the Factories Act, 1948 for the Unit No. 1 on Plot No G-506, Lodhika GIDC, Kalawad Road, Village Metoda, Rajkot.

• Certificate of Stability issued on October 26, 2010 by a competent person, under the Factories Act, 1948 for Unit No. 2 on Plot No P-4, Lodhika GIDC, Kalawad Road, Village Metoda, Rajkot.

• Report of examination of the lifting machines, ropes and lifting tackles with certificates issued on by a competent person under Section 29 of the Factories Act, 1948 with respect to the following equipment at Unit No. 1 on Plot No. G-506, Lodhika GIDC, Kalawad Road, Metoda, Rajkot:

Description (Equipment) Certificate No. Date of Issue Jib Crane (2 MT) F10/2012/JYOTI-CNC-1/01 April 08, 2012 Jib Crane (2 MT) F10/2012/JYOTI-CNC-1/02 April 08, 2012 Jib Crane (2 MT) F10/2012/JYOTI-CNC-1/03 April 08, 2012 EOT Crane (5,000 Kgs) F10/2012/JYOTI-CNC-1/04 April 08, 2012 Jib Crane (2 MT) F10/2012/JYOTI-CNC-1/05 April 08, 2012 Jib Crane (2 MT) F10/2012/JYOTI-CNC-1/06 April 08, 2012 Jib Crane (2 MT) F10/2012/JYOTI-CNC-1/07 April 08, 2012 EOT Crane (5,000 Kgs) F10/2012/JYOTI-CNC-1/08 April 08, 2012 EOT Crane (5,000 Kgs) F10/2012/JYOTI-CNC-1/09 April 08, 2012 Jib Crane (500 Kgs) F10/2012/JYOTI-CNC-1/10 April 08, 2012 Jib Crane (1,000 Kgs) F10/2012/JYOTI-CNC-1/11 April 08, 2012 EOT Crane (3,000 Kgs) F10/2012/JYOTI-CNC-1/12 April 08, 2012 EOT Crane (5,000 Kgs) F10/2012/JYOTI-CNC-1/13 April 08, 2012 EOT Crane (15,000 Kgs) F10/2012/JYOTI-CNC-1/14 April 08, 2012 EOT Crane (5,000 Kgs) F10/2012/JYOTI-CNC-1/15 April 08, 2012 EOT Crane (10,000 Kgs) F10/2012/JYOTI-CNC-1/16 April 08, 2012

• Report of examination of the lifting machines, ropes and lifting tackles with certificates issued

by a competent person under Section 29 of the Factories Act, 1948 with respect to the following equipment at Unit No. 2 on Plot No. P-4, Lodhika GIDC, Kalawad Road, Metoda, Rajkot:

Description (Equipment) Certificate No. Date of Issue EOT Crane (2 MT) F10/2012/JYOTI-CNC-2/01 April 07, 2012

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EOT Crane (7,500 Kgs) F10/2012/JYOTI-CNC-2/02 April 07, 2012 Electric Hoist Chain (1,000 Kgs) F10/2012/JYOTI-CNC-2/03 April 07, 2012

• Report of examination of the lifting machines, ropes and lifting tackles with certificates issued

by a competent person under Section 29 of the Factories Act, 1948 with respect to the following equipment at Unit No. 3 on Plot No. 2839, Lodhika GIDC, Metoda, Rajkot:

Description (Equipment) Certificate No. Date of Issue EOT Crane (1 MT) F10/2012/JYOTICNC-3/01 October 16, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/02 October 16, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/03 October 16, 2012 EOT Crane (10 MT) F10/2012/JYOTICNC-3/04 October 16, 2012 EOT Crane (3 MT) F10/2012/JYOTICNC-3/05 October 16, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/06 October 16, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/07 October 16, 2012 EOT Crane (5MT) F10/2012/JYOTICNC-3/08 October 16, 2012 EOT Crane (15 MT) F10/2012/JYOTICNC-3/09 October 16, 2012 EOT Crane (3 MT) F10/2012/JYOTICNC-3/10 October 16, 2012 EOT Crane (2 MT) F10/2012/JYOTICNC-3/11 October 16, 2012 EOT Crane (1 MT) F10/2012/JYOTICNC-3/12 October 16, 2012 EOT Crane (1 MT) F10/2012/JYOTICNC-3/13 October 16, 2012 EOT Crane (2 MT) F10/2012/JYOTICNC-3/14 October 16, 2012 Double Girder Jib Crane (5 MT) F10/2012/JYOTICNC-3/15 October 16, 2012 Double Girder Jib Crane (5 MT) F10/2012/JYOTICNC-3/16 October 16, 2012 Double Girder Jib Crane (5 MT) F10/2012/JYOTICNC-3/17 October 16, 2012 Double Girder Jib Crane (5 MT) F10/2012/JYOTICNC-3/18 October 16, 2012 EOT Crane (10 MT) F10/2012/JYOTICNC-3/19 October 16, 2012 EOT Crane (15 MT) F10/2012/JYOTICNC-3/20 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/21 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/22 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/23 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/24 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/25 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/26 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/27 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/28 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/29 October 16, 2012 Single Girder Jib Crane (2.5 MT) F10/2012/JYOTICNC-3/30 October 16, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/31 October 18, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/32 October 18, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/33 October 18, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/34 October 18, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/35 October 18, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/36 October 18, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/37 October 18, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/38 October 18, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/39 October 18, 2012 Single Girder Jib Crane (2 MT) F10/2012/JYOTICNC-3/40 October 18, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/41 October 18, 2012 EOT Crane (10 MT) F10/2012/JYOTICNC-3/42 October 18, 2012 EOT Crane (15 MT) F10/2012/JYOTICNC-3/43 October 18, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/44 October 18, 2012 Jib Crane (1 MT) F10/2012/JYOTICNC-3/45 October 18, 2012 Jib Crane (1 MT) F10/2012/JYOTICNC-3/46 October 18, 2012 Jib Crane (1 MT) F10/2012/JYOTICNC-3/47 October 18, 2012 Jib Crane (1 MT) F10/2012/JYOTICNC-3/48 October 18, 2012 Jib Crane (1 MT) F10/2012/JYOTICNC-3/49 October 18, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/50 October 18, 2012 EOT Crane (3 MT) F10/2012/JYOTICNC-3/51 October 18, 2012 EOT Crane (10 MT) F10/2012/JYOTICNC-3/52 October 18, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/53 October 19, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/54 October 19, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/55 October 19, 2012 EOT Crane (25 MT) F10/2012/JYOTICNC-3/56 October 19, 2012 EOT Crane (3 MT) F10/2012/JYOTICNC-3/57 October 19, 2012 EOT Crane (10 MT) F10/2012/JYOTICNC-3/58 October 19, 2012

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EOT Crane (3 MT) F10/2012/JYOTICNC-3/59 October 19, 2012 Jib Crane (2 MT) F10/2012/JYOTICNC-3/60 October 19, 2012 Monorail Crane (1 MT) F10/2012/JYOTICNC-3/61 October 19, 2012 EOT Crane (5 MT) F10/2012/JYOTICNC-3/62 October 19, 2012 EOT Crane (2 MT) F10/2012/JYOTICNC-3/63 October 19, 2012

• Report of examination or test of pressure vessel or plant with certificates issued on by a

competent person under Section 29 of the Factories Act, 1948 with respect to the following equipment at Unit No. 1 on Plot No. G-506, Lodhika GIDC, Kalawad Road, Metoda, Rajkot:

Description (Equipment) Certificate No. Date of Issue Air Receiver for compressor PV/2012/JYOTI-CNC-1/01 April 07, 2012 Air Receiver for compressor PV/2012/JYOTI-CNC-1/02 April 08, 2012 Air Receiver for compressor PV/2012/JYOTI-CNC-1/03 April 08, 2012 Air Receiver for compressor PV/2012/JYOTI-CNC-1/04 April 08, 2012 Air Receiver for compressor PV/2012/JYOTI-CNC-1/05 April 08, 2012 Air Receiver for compressor PV/2012/JYOTI-CNC-1/06 May 28, 2012 Air Receiver for compressor PV/2012/JYOTI-CNC-1/07 May 28, 2012

• Report of examination or test of pressure vessel or plant with certificates issued by a

competent person under Section 29 of the Factories Act, 1948 with respect to the following equipment at Unit No. 2 on Plot No. P-4, Lodhika GIDC, Kalawad Road, Metoda, Rajkot:

Description (Equipment) Certificate No. Date of Issue Air Receiver for compressor PV/2012/JYOTI-CNC-2/01 April 07, 2012 Air Receiver for compressor PV/2012/JYOTI-CNC-2/02 April 07, 2012

• Report of examination or test of pressure vessel or plant with certificates issued by a

competent person under Section 29 of the Factories Act, 1948 with respect to the following equipment at Unit No. 3 on Plot No. 2839, Lodhika GIDC, Metoda, Rajkot:

Description (Equipment) Certificate No. Date of Issue Vertical Air Receiver for Compressor F11/JYOTICNC-3/2012/01 October 16, 2012 Vertical Air Receiver for Compressor F11/JYOTICNC-3/2012/02 October 16, 2012 Vertical Air Receiver for Compressor F11/JYOTICNC-3/2012/03 October 16, 2012 Vertical Air Receiver for Compressor F11/JYOTICNC-3/2012/04 October 17, 2012 Vertical Air Receiver for Compressor F11/JYOTICNC-3/2012/05 October 17, 2012 Vertical Air Receiver for Compressor F11/JYOTICNC-3/2012/06 October 18, 2012 Vertical Air Receiver for Compressor F11/JYOTICNC-3/2012/07 October 19, 2012 Vertical Air Receiver for Compressor F11/JYOTICNC-3/2012/08 October 19, 2012

Environmental Law Consents • Consolidated consents and authorisation number AWH – 35532 issued on December 03, 2009

and amended vide letter no GPCB/CCA-RJ-809/ID 26744/86359 dated July 11, 2011 by Gujarat Pollution Control Board for use of outlet for the discharge of treated wastewater and air emission at Unit No. 3 on Plot no. G – 2839, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India and valid until October 06, 2013.

• Consent to establish number 44921 issued vide Letter No: PC/CCA/RJ-809ID-26744/10/331

dated January 09, 2012 by Gujarat Pollution Control Board for manufacturing of CNC machine at Unit No. 3 on Plot no. G – 2839, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India and valid until August 22, 2016.

Licenses under Labour Law and related documents

• PTRC number R - 0924000012 issued on March 24, 2008 under the Gujarat State Tax on

Professions Trade, Callings and Employment Act, 1976. The same is valid until cancelled. • Letter dated December 10, 2003 bearing number GJ/RFC/RJT/41229/2698 issued by the

Regional Provident Fund Commissioner, Employees’ Provident Fund Organization under the Provident Fund and Miscellaneous Provisions Act, 1952 and the Schemes framed thereunder, allotting the code number GJ/RJ/41229 to our Company. The same is valid until cancelled.

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• License bearing number 21/2007 issued on November 03, 2007 issued by the Assistant

Commissioner of Labour, Registering and Licensing Officer to Sun Environment Services and National Security Services under the Contract Labour (Regulation and Abolition) Act, 1970 and the rules enacted thereunder. The same is valid until cancelled.

Sanctions under Indian Electricity Act, 1910 as amended from time to time • Approval from Paschim Gujarat Vij Company Limited vide letter no: PGVCL/Comm/2010-

11/PG-171/3571 dated May 25, 2011 for release of 1000 KVA additional HT power supply from 2500 KVA to 3500 KVA to a Unit No. 1 on Plot No. G - 506, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India. The same is valid until cancellation.

• Approval from Paschim Gujarat Vij Company Limited vide letter no: PGVCL/TECH/HT/2007-08/PG-226/1116 dated March 15, 2008 for release of 1000 KVA additional HT power supply from 1500 KVA to 2500 KVA to a Unit No. 3 on Plot No. 2839, Lodhika GIDC, Metoda, Rajkot, Gujarat, India. The same is valid until cancellation.

• Approval No E.I./RJT/Certificate/D.G./2130 vide certificate dated June 03, 2008 from the Office of Electrical Inspector, Rajkot to our Company granting permission for commission of diesel generator set of 320 KVA at Unit No. 1 on Plot No. G-506, Lodhika GIDC, Kalawad Road, Metoda, Rajkot, as per the provisions of the Indian Electricity Rules, 1956.

• Approval No E.I./RJT/Certificate/D.G./2133 vide certificate dated June 03, 2008 from the

Office of Electrical Inspector, Rajkot to our Company granting permission for commission of diesel generator set of 320 KVA at Unit No. 3 on Plot No. 2839, Lodhika GIDC, Metoda, Rajkot, as per the provisions of the Indian Electricity Rules, 1956.

EPCG Licenses • EPCG licenses issued by the Foreign Trade Development Officer, Regional Director under the

Foreign Trade (Development and Regulation) Act, 1992 to our Company to fulfill the export obligation of ` 94.82 million towards the export of various items (Vertical machining centers, CNC turning centers, Precision machine tools and tailor made machines plant equipments, Special purpose machine tool plants and Horizontal machining structures) thereby the duty saved value is of ` 13.98 million. The export obligation is for a period of 6 or 8 years from the date of issue of the license, details of which are stated below:

Certificate No: Date of Issue Export

Obligation (` in million)

Duty Saved (` in

million)

Obligation Period (Years)

2430001527/3/12/00 December 15, 2011 4.80 0.80 6 2430001572/3/12/00 February 6, 2012 36.96 6.16 6 2430001603/3/12/00 March 14, 2012 1.36 0.23 6 2430001627/3/11/00 April 13, 2012 44.04 5.51 8 2430001702/3/12/00 August 1, 2012 2.86 0.48 6 2430001732/3/12/00 September 19, 2012 4.80 0.80 6 TOTAL 94.82 13.98

Industrial Entrepreneur’s Memorandum(s) (“IEM”) approved by the MCI The details of IEMs approved by the MCI on June 11, 2003 and amended on January 12, 2007 are as given below (such acknowledgements are subject to the provisions of Press Note 6 dated July 29, 1993 and Press Note 17 dated November 28, 1997): Description (Proposed Item of Manufacture)

Registration/Reference No Date of Issue

Vertical Machining Center 1553/SIA/IMO/2003 June 11, 2003 CNC Turning Center 1553/SIA/IMO/2003 June 11, 2003 Precision Machine Tools and Tailor Made Machines Plants Equipments

1553/SIA/IMO/2003 June 11, 2003

Special Purpose Machine Tools Plants 1553/SIA/IMO/2003 June 11, 2003

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Horizontal Machining Centers 1553/SIA/IMO/2003 June 11, 2003 Quality Certifications • Certificate No: 99 100 11664 dated April 15, 2010 issued by TUV SUD South Asia Private

Limited certifying that the design, manufacturing and servicing of CNC turning centers, CNC vertical machining centers and CNC horizontal machining centers meets the requirements according to ISO 9001:2008. The same is valid up to April 14, 2013.

Other Approvals • One Star Export House Certificate number A – 002425 issued on March 24, 2006 by the Joint

Director General of Foreign Trade, Ministry of Commerce and Industry, Government of India under the Foreign Trade Policy, 2004 – 2009 and valid until March 31, 2013 vide letter dated March 30, 2009.

• Registration cum Membership Certificate number RCMC:B:MFG:8458:2009-10 issued on

May 02, 2000 by EEPC India (formerly Engineering Export Promotion Council) and valid until March 31, 2014.

• Registration certificate no: TU/IV-RD/2774/2011 dated June 17, 2011 issued by the

Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India for Approval of in-house R&D facilities under section 35(2AB) of Income Tax Act, 1961 for the R&D facility located at Unit No. 3 on Plot No. 2839, GIDC Lodhika, Metoda, Kalawad Road, Rajkot. The same is valid up to March 31, 2015.

Approvals related to Warehouses and Depots • Taxpayers Identification Number (TIN): 33661324700 issued under Tamil Nadu Value Added

Tax Act, 2006 by Commercial Tax Officer, Commercial Taxes department, Government of Tamil Nadu vide certificate dated August 09, 2007 for warehouse located at No. 115, Developed Plot, Ambattur Industrial Estate, Chennai, Tamil Nadu 600 058. The same is valid until cancelled.

• Central Sales Tax no. 894823 issued under Central Sales Tax (Registration and Turnover Rules), 1957 by Commercial Tax Officer, Ambattur Assessment Circle vide certificate dated August 09, 2007 for warehouse located at No. 115, Developed Plot, Ambattur Industrial Estate, Chennai, Tamil Nadu 600 058. The same is valid until cancelled.

II. Approvals for our Subsidiary’s business Our Subsidiaries have obtained all approvals as applicable, and the same are valid as of the date of the Draft Red Herring Prospectus. We undertake to obtain all approvals, licenses, registrations and permissions required to operate our business through our Subsidiaries. III. Material Licenses/Approvals yet to be applied Nil IV. Material Licenses/Approvals applied but not yet approved Nil

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OTHER REGULATORY AND STATUTORY DISCLOSURES Authority for the Issue Corporate Approvals • Our Board of Directors has, pursuant to its resolution dated September 17, 2012, authorized the Issue, subject to the approval by the shareholders of our Company under Section 81(1A) of the Companies Act. • Our shareholders have, pursuant to a resolution dated September 22, 2012, under Section 81(1A) of the Companies Act, authorized the Issue. • Resolution dated March 05, 2013 of our committee of Directors, approving this Draft Red Herring Prospectus. In-principle Listing Approval • Οur Company has received an in-principle approval from the BSE and the NSE for the listing of our Equity Shares pursuant to a letters dated [●] and [●], respectively. Prohibition by SEBI Our Company, Promoters, Directors, Promoter Group, Group Companies and persons in control of our Promoters 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 or any other authorities. Ketan Marwadi, an Independent Director of our Company, is on the board of directors of Marwadi Shares and Finance Limited, Marwadi Commodity Broker Private Limited and Marwadi Stock Broking Limited. He is also the Chairman of the Association of National Exchanges Members of India, Western Region. Except Ketan Marwadi, none of our Directors are in any manner associated with the securities market. Except as stated below, SEBI has not initiated any action against the entities associated with the securities market and with which our Directors are associated. SEBI conducted investigation in the trading in the scrip of Rajoo Engineers Limited for the period from July 02, 2007 to January 21, 2008 and the findings led to the allegation that Marwadi Shares and Finance Limited violated para 8, 9 and 2.2 of the SEBI Circular No. ISD/CIR/RR/AML/1/06 dated January 18, 2006 read with Para 4, sub-clause (c) of Suspicious Transactions Report mentioned under Para 6 of SEBI Circular No. ISD/CIR/RR/AML/2/06 dated March 20, 2006. The adjudicating officer appointed under SEBI (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 established that Marwadi Share and Finance Limited has violated the provision para 8, 9 and 2.2 of the SEBI Circular No. ISD/CIR/RR/AML/1/06 dated January 18, 2006 and accordingly, imposed a penalty of ` 0.03 million under section 15HB of the SEBI Act which was paid by Marwadi Share and Finance Limited. The companies, with which our Promoters, Directors or persons in control of our Company were or are associated as promoters, directors or persons in control have not been prohibited from accessing or operating in capital markets under any order or direction passed by SEBI. Prohibition by RBI Neither our Company nor our Promoters, the relatives of our Promoters (as defined under the Companies Act) or the Group Companies have been identified as wilful defaulters by the RBI or any other governmental authority. There are no violations of securities laws committed by any of them in the past or pending against them.

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Eligibility for the Issue Our Company is eligible for the Issue in accordance with Regulation 26(2) of the SEBI ICDR Regulations, which states as follows: "26 (2) An issuer not satisfying the condition stipulated in sub-regulation (1) may make an initial public offer if the issue is made through the book-building process and the issuer undertakes to allot, at least seventy five percent of the net offer to public, to qualified institutional buyers and to refund full subscription money if it fails to make the said minimum allotment to qualified institutional buyers.”

Accordingly in compliance with Regulation 26(2) of the SEBI Regulations, this Issue is being made through the Book-Building process, with at least 75% of the Issue being allotted to QIBs, failing which the entire subscription monies shall be refunded. Our Company will comply with the second proviso to Regulation 43(2A) of the SEBI Regulations and not more than 15% and 10% of the Net Issue shall be available for allocation to Non-Institutional Bidders and Retail Individual Bidders, respectively.

Further, in accordance with Regulation 26(4) of the SEBI Regulations, our Company shall ensure that the number of Allottees under the Issue shall be not less than 1,000, otherwise, the entire application money will be refunded forthwith. If such money is not repaid within eight days from the date our Company becomes liable to repay it, then our Company and every officer in default (‘officer who is in default’ shall include all officers as defined under Section 5 of the Companies Act) shall, on and from expiry of eight days, be liable to repay such application money, with interest at the rate prescribed under Section 73 of the Companies Act. This Issue is being made for at least 25% of the post-Issue capital. Our Company is eligible for the Issue in accordance with Regulation 26(2) of the SEBI Regulations. Further, this Issue is being made through the Book Building Process wherein at least 75% of the Net Issue shall be Allotted to QIBs on a proportionate basis out of which 5% of the QIB Portion (excluding the Anchor Investor Portion, which shall be allocated on a discretionary basis) shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not more than 15% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not more than 10% of the Net Issue will be available for allocation to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Our Company may allocate up to 30% of the QIB Portion to the Anchor Investors on a discretionary basis. One third of the Anchor Investor Portion shall be reserved for allocation to domestic Mutual Funds, subject to valid bids being received from domestic Mutual Funds at or above the Anchor Investor Allocation Price. For further details, see section titled “Issue Procedure” on page 323. DISCLAIMER CLAUSE OF SEBI AS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT 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 DRAFT RED HERRING PROSPECTUS. THE BOOK RUNNING LEAD MANAGERS HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING AN INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND

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DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT RED HERRING PROSPECTUS, THE BOOK RUNNING LEAD MANAGERS ARE 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 MANAGERS, HAVE FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED MARCH 05, 2013 WHICH READS AS FOLLOWS: THE BRLMS STATE AND CONFIRM AS FOLLOWS:

1. 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 FINALISATION OF THE DRAFT RED HERRING PROSPECTUS DATED MARCH 05, 2013 (“DRHP”) PERTAINING TO THE ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE

COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS AND OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:

(A) THE DRHP FILED WITH THE SECURITIES AND EXCHANGE BOARD OF

INDIA (“SEBI”) IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

(B) ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE AS ALSO

THE REGULATIONS GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY SEBI, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

(C) THE DISCLOSURES MADE IN THE DRHP ARE TRUE, FAIR AND

ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (“SEBI ICDR REGULATIONS”), AND OTHER APPLICABLE LEGAL REQUIREMENTS.

3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES

NAMED IN THE DRHP ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATION IS VALID.

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE

UNDERWRITERS TO FULFILL THEIR UNDERWRITING COMMITMENTS – NOTED FOR COMPLIANCE.

5. WE CERTIFY THAT WRITTEN CONSENT FROM THE PROMOTERS HAS BEEN

OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED / SOLD / TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRHP WITH SEBI TILL THE DATE OF COMMENCEMENT OF THE LOCK-IN PERIOD AS STATED IN THE DRHP.

6. WE CERTIFY THAT REGULATION 33 OF THE SEBI ICDR REGULATIONS,

WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS’ CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRHP.

7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND

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CLAUSE (C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SEBI ICDR REGULATIONS SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO SEBI. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE COMPANY ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. NOTED FOR COMPLIANCE

8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE COMPANY FOR

WHICH THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE COMPANY AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO

ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE PROSPECTUS. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE COMPANY SPECIFICALLY CONTAINS THIS CONDITION. NOTED FOR COMPLIANCE.

10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRHP THAT

THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE. NOT APPLICABLE.

11. WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN

THE SEBI ICDR REGULATIONS HAVE BEEN MADE IN ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.

12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN

THE DRHP:

(A) AN UNDERTAKING FROM THE COMPANY THAT AT ANY GIVEN TIME, THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE COMPANY AND

(B) AN UNDERTAKING FROM THE COMPANY THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY SEBI FROM TIME TO TIME.

13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO

ADVERTISEMENT IN TERMS OF THE SEBI ICDR REGULATIONS WHILE MAKING THE ISSUE.

14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE

HAS BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OF THE COMPANY, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTER’S EXPERIENCE, ETC.

15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE

COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE SEBI ICDR REGULATIONS, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRHP WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR

307

COMMENTS, IF ANY.

16. WE ENCLOSE STATEMENT ON ‘PRICE INFORMATION OF PAST ISSUES HANDLED BY THE MERCHANT BANKERS (WHO ARE RESPONSIBLE FOR PRICING THE ISSUE)’, AS PER FORMAT SPECIFIED BY THE SECURITIES AND EXCHANGE BOARD OF INDIA THROUGH CIRCULAR.

17. WE CERTIFY THAT PROFITS FROM RELATED PARTY TRANSACTIONS

HAVE ARISEN FROM LEGITIMATE BUSINESS TRANSACTIONS.

THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY AND/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 MANAGERS, ANY IRREGULARITIES OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS. All legal requirements pertaining to the issue will be complied with at the time of filing of the Red Herring Prospectus with the Registrar of Companies, Ahmedabad at Gujarat, in terms of Section 56, Section 60 and Section 60B of the Companies Act. Caution - Disclaimer from our Company, our Directors and the BRLMs Our Company, our Directors and the BRLMs accept no responsibility for statements made otherwise than in this Draft Red Herring Prospectus or in the advertisements or any other material issued by or at our instance and anyone placing reliance on any other source of information, including our Company’s website, would be doing so at his or her own risk. The BRLMs accept no responsibility, save to the limited extent as provided in the Issue Agreement entered into between the BRLMs and our Company and the Underwriting Agreement to be entered into between the Underwriters and our Company. All information shall be made available by our Company and the BRLMs to the public and investors at large and no selective or additional information would be made available for a section of the investors in any manner whatsoever including at road show presentations, in research or sales reports, at bidding centres or elsewhere. Neither our Company, our Directors and officers nor any member of the Syndicate are liable to the Bidders for any failure in downloading the Bids due to faults in any software/hardware system or otherwise. Investors that Bid in the Issue will be required to confirm and will be deemed to have represented to our Company, the Underwriters and their respective directors, officers, agents, affiliates, and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company and will not Issue, sell, pledge, or transfer the Equity Shares of our Company to any person who is not eligible under any applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company. Our Company, the Underwriters and their respective directors, officers, agents, affiliates, and representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to acquire Equity Shares of our Company. The BRLMs and their respective associates and affiliates may engage in transactions with, and perform services for, our Company, affiliates or associates or third parties in the ordinary course of business and have engaged, or may in future engage, in commercial banking and investment banking transactions with our Company, affiliates or associates or third parties, for which they have received, and may in future receive, compensation. Price Information of Past Issues handled by BRLMs

1. Price information of past issues handled by Avendus

308

Sr. No.

Issue Name Issue

size (`

Mn.)

Issue price (`)

Listing

date

Opening

price on listing date

Closing

price on listing date

% Change in

Price on listing

date (Closing) vs. Issu

e Pric

e

Benchmar

k index

on listin

g date (Closing)

Closing price as on 10th

calenda

r day from

listing day

Benchmar

k index as on 10th calendar day

from listing day (Closing)


calenda

r day from

listing day

Benchmar




calenda

r day from

listing day

Benchmar



1 IL&FS Transportation Network Limited

7,000

258

30-Mar-

10 266.

60 274.65 6%

5,262.45

281.00

5,361.75

272.00

5,203.65

286.20

5,254.15

2

Shree Ganesh Jewellery House Limited

3,710

260

09-Apr-

10 258.

85 163.25

-37%

17,933.14

153.95

17,400.68

139.60

17,503.47

122.85

17,330.55

3 Parabolic Drugs Limited

2,000 75

01-Jul-10

76.00

64.80

-15%

17,509.33

61.50

17,937.20

61.85

17,977.23

54.30

18,081.21

4

PTC India Financial Services Ltd

4,333

28 for QIBs & NIBs 27 for Retail

30-Mar-

11 26.7

5 24.90

-11%

5,787.65

23.00

5,785.70

21.50

5,740.75

21.65

5,749.50

5 Innoventive Industries Limited

2,174

117

13-May-

11 111.

95 94.05

-20%

5,544.75

85.85

5,386.55

91.05

5,550.35

96.05

5,482.80

6

Tribhovandas Bhimji Zaveri Limited

2,000

120

09-May-

12 115.

00 111.20 -7%

16,479.58

120.30

16,183.26

116.00

16,438.58

110.00

16,718.87

Notes:

i. In case the 10th, 20th or 30th calendar day from listing day falls on a holiday, the next trading day is taken for the purpose of providing share price and benchmark index data.

ii. Price information and benchmark index values has been shown only for designated stock exchange for the issuers. 2. Summary statement of price information of past issues handled by Avendus

Fiscal Year

Total No. of IPOs

Total Funds Raised (` Mn.)

No. of IPOs trading at discount on listing date

No. of IPOs trading at premium on listing date

No. of IPOs trading at discount as on 30th calendar day from listing day

No. of IPOs trading at premium as on 30th calendar day from listing day

Over 50%

Between 25-50%

Less than 25%

Over 50%

Between 25-50%

Less than 25%

Over 50%

Between 25-50%

Less than 25%

Over 50%

Between 25-50%

Less than 25%

FY10

1 7,000

1 1

FY11

3 10,043

1 2 1 1 1

FY12

1 2,174

1 1

FY13

1 2,000

1 1

3. Price information of past issues handled by SBICAP

DISCLOSURE OF PRICE INFORMATION OF PAST ISSUES HANDLED BY MERCHANT BANKER

S.No Issue Name

Issue Size (`. Mn)

Issue price

Listing date

Opening price on listing date

Closing price on listing date

% Change in price on listing date (Closing) Vs

Benchmark index on listing date (closing)

Closing price as on 10th calendar day

Benchmark index as on 10th calendar day from listin





309

Issue price

from listing day

g day (closing)

from listing day

g day (closing)

from listing day

g day (closing)

1 SJVN Limited

10,627.3

7

26.00(1

)

20-May-10

27.10

25.10

-3.46

% 4,947.60

24.70

5,086.30

24.10

4,987.10

24.10

5,262.60

2 Jaypee Infratech Limited

22,576.0

0

102.00(

2)

21-May-10

98.00

91.45

-10.34%

4,931.15

83.50

5,086.30

76.20

5,000.30

86.30

5,353.30

3 Microsec Financial Services Limited

1,475.00

118.00

05-Oct-

10 135.10

110.90

-6.02

%

20,407.7

1 91.00

20,497.6

4 88.60

20,303.1

2 79.40

20,465.7

4

4 Electrosteel Steels Limited

2,852.77

11.00

08-Oct-

10 12.35

11.25

2.27%

20,250.2

6 10.80

20,168.8

9 10.95

20,005.3

7 11.12

20,852.3

8

5 Tecpro Systems Limited

2,679.05

355.00(

3)

12-Oct-

10 399.40

407.85

14.89%

20,203.3

4 399.95

20,260.5

8 425.50

20,355.6

3 418.20

20,875.7

1

6

A2Z Maintenance & Engineering services limited

7,762.47

400.00(

4)

23-Dec-

10 390.00

328.90

-17.78%

19,982.8

8 327.35

20,561.0

5 302.85

19,196.3

4 302.85

19,007.5

3

7 Punjab & Sind Bank 4,708.20

120.00

30-Dec-

10 146.10

127.05

5.88%

20,389.0

7 118.55

19,224.1

2 119.85

19,092.0

5 110.20

18,395.9

7

8 PTC India Financial Services Limited

4,334.79

28.00(5

)

30-Mar-

11 26.75

24.90

-11.07%

5,787.65

23.40

5,842.00

22.05

5,729.10

22.20

5,785.45

9 Credit Analysis and Research Limited

5,399.77

750.00

26-Dec-

12 949.00

923.95

23.19%

19,417.4

6 934.45

19,784.0

8 924.15

19,906.4

1 916.60

19,923.7

8

10 PC Jeweller Limited

6,013.08

135.00(

6)

27-Dec-

12 135.50

149.00

10.37%

19,323.8

0 181.90

19,691.4

2 169.00

19,986.8

2 157.80

20,103.5

3 Note: The 10th, 20th and 30th calendar day computation includes the listing day. If either of the 10th, 20th or 30th calendar days is a trading holiday, the next trading day is considered for the computation.

1. Issue price for employees and retail individual bidders was ` 24.70 2. Issue price for retail individual bidders was ` 96.90 3. Issue price for bidding employee was ` 338.00 4. Issue price for bidding employee was ` 380.00 5. Issue price for retail individual bidders was ` 27.00 6. Issue price for employees and retail individual bidders was ` 130.00

4. Summary statement of price information of past issues handled by SBICAP

SUMMARY STATEMENT OF DISCLOSURE

Financial year

Total no. Of

IPOs

Total funds raised

(`. Mn)

Number of IPOs trading at a discount on

listing date

Number of IPOs trading at a premium on

listing date

Number of IPOs trading at a discount as on 30th calendar day

from listing day

Number of IPOs trading at a premium as

on 30th calendar day from listing day

Over 50%

Between 25% and 50%

Less than 25%

Over 50%

Between 25% and 50%

Less than 25%

Over 50%

Between 25% and 50%

Less than 25%

Over 50%

Between 25% and 50%

Less than 25%

2010-11 9.00

57,015.65 0 0 6 0 0 3 0 2 5 0 0 2

2011-12 0.00 0.00 0 0 0 0 0 0 0 0 0 0 0 0 2012-13 2.00

11,412.85 0 0 0 0 0 2 0 0 0 0 0 2

Note: The 30th calendar day computation includes the listing day. If the 30th calendar day is a trading holiday, the next trading day is considered for the computation.

Track record of past issues handled by BRLMs In terms of the circular dated January 10, 2012 issued by SEBI, we confirm that the BRLMs to the Issue have managed public issue of debt or equity securities which have been listed on or after January 10, 2012. Further, in terms of the circular, the BRLMs are required to disclose the track record for issues handled by them for the previous three years by March 31, 2012. The same will be made available on the respective websites at www.avendus.com (http://www.avendus.com/Services/FinancialAdvisory/offerdocuments.aspx) and www.sbicaps.com (http://www.sbicaps.com/Main/TrackRecordEquity.aspx). Disclaimer in respect of Jurisdiction

310

This Issue is being made in India to persons resident in India (including Indian nationals resident in India who are not minors, 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), or trusts under applicable trust law and who are authorised under their constitution to hold and invest in shares, permitted insurance companies and pension funds) and to FIIs, Eligible OFIs and Eligible NRIs applying under the “portfolio investment scheme” set out in the relevant schedules to the FEMA Regulations. This Draft Red Herring Prospectus does not, however, constitute an invitation to purchase shares offered hereby in any jurisdiction other than India to any person to whom it is unlawful to make an offer 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 Mumbai, India 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 the Draft Red Herring Prospectus has been filed with SEBI for its observations and SEBI shall give its observations in due course. 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. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. The Equity Shares have not been and will not be registered under the US Securities Act of 1933 (“Securities Act”) and may not be offered or sold within the United States (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares are only being offered and sold outside the United States in offshore transactions in compliance with Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. Disclaimer Clause of the BSE As required, a copy of the Draft Red Herring Prospectus has been submitted to BSE. The disclaimer clause as intimated by BSE to our Company, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to the RoC filing. Disclaimer Clause of the NSE As required, a copy of the Draft Red Herring Prospectus has been submitted to NSE. The disclaimer clause as intimated by NSE to our Company, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to the RoC filing. Filing A copy of this Draft Red Herring Prospectus will be filed with SEBI at Western Regional Office, Unit No.002, Ground Floor, SAKAR I, Near Gandhigram Railway Station, Opposite Nehru Bridge, Ashram Road, Ahmedabad – 380009. 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 and a copy of the Prospectus to be filed under Section 60 of the Companies Act would be delivered for registration with the RoC at the address mentioned below. RoC Bhavan, Opp Rupal Park Society,

311

Behind Ankur Bus Stop, Naranpura, Ahmedabad – 380 013, Gujarat, India. Listing Applications have been made to the BSE and NSE for permission to deal in and for an official quotation of the Equity Shares, [●] will be the Designated Stock Exchange with which the Basis of Allotment will be finalised. If the permission to deal in and for an official quotation of the Equity Shares is not granted by the Stock Exchange, our Company shall forthwith repay, without interest, all moneys received from the applicants in reliance of the Red Herring Prospectus. If such money is not repaid within eight days from the date our Company becomes liable to repay it, then our Company and every officer in default shall, on and from expiry of eight days, be liable to repay such application money, with interest at the rate prescribed under Section 73 of the Companies Act. Our Company shall ensure that all steps for the completion of the necessary formalities for listing and commencement of trading at the Stock Exchange are taken within 12 Working Days of the Bid/Issue Closing Date. Consents Consents in writing of: (a) the Directors, the Company Secretary and Compliance Officer, the Auditors, Bankers to the Company and Bankers to the Issue; and (b) Book Running Lead Managers and Syndicate Members, Escrow Collection Bankers, Registrar , the Legal Advisor to the Issue, to act in their respective capacities, will be obtained and will be filed along with a copy of the Red Herring Prospectus with the RoC, as required under Sections 60 and 60B of the Companies Act and such consents shall not be withdrawn up to the time of delivery of the Red Herring Prospectus for registration with the RoC. In accordance with the Companies Act and SEBI Regulations, Kalaria & Sampat, Chartered Accountants, our Company’s statutory auditors, have given their written consent to the inclusion of the report on the standalone and consolidated financial statement dated March 05, 2013 and statement of the tax benefits dated February 12, 2013 in the form and context in which it appears in this Draft Red Herring Prospectus and such consent has not be withdrawn up to the time of submission of the Draft Red Herring Prospectus with SEBI. Expert Opinion Except for the report of [●] in respect of the IPO Grading of the Issue (a copy of which will be annexed to the Red Herring Prospectus as “Annexure I”), furnishing the rationale for its grading, and except for the reports of the Auditors of our Company on the restated financial statements and the “Statement of Tax Benefits”, included in this Draft Red Herring Prospectus, our Company has not obtained any expert opinions. Expenses of the Issue The total expenses of the Issue are estimated to be approximately ` [●] million. The expenses of this Issue include, among others, underwriting and management fees, selling commission, printing and distribution expenses, legal fees, statutory advertisement expenses and listing fees. The estimated Issue expenses are as under:

Particulars Amount(1) As a percentage

of total expenses(1)

As a percentage

of Issue size(1)

Lead management fee, underwriting and selling commission

[●] [●] [●]

Commission payable to Non Syndicate Stock Brokers (2)

[●] [●] [●]

Advertising and marketing expenses [●] [●] [●]

312

Particulars Amount(1) As a percentage

of total expenses(1)

As a percentage

of Issue size(1)

Printing and stationery [●] [●] [●]

Others (including legal fees, listing fee, Registrar’s fee) [●] [●] [●] Total

[●] [●] [●] (1)Will be incorporated after finalisation of Issue Price (2) Disclosure of commission and processing fees will be incorporated at the time of filing the Red Herring Prospectus Fees Payable to the BRLMs and the Syndicate The total fees payable to the BRLMs and the Syndicate will be as per the letter of appointment issued by our Company, a copy of which will be made available for inspection at the Registered Office from 10.00 a.m. to 4.00 p.m. on Working Days from the date of the Red Herring Prospectus until the Bid/Issue Closing Date. Fees Payable to the Registrar The fees payable by our Company to the Registrar including fees for processing of Bid cum Application Forms, data entry, printing of Allotment Advice, refund order, preparation of refund data on magnetic tape, printing of bulk mailing register will be as per the agreement between our Company and the Registrar dated September 24, 2012, a copy of which is available for inspection at our Registered Office. The Registrar will be reimbursed for all out of pocket expenses including cost of stationery, postage, stamp duty, and communication expenses. Adequate funds will be provided to the Registrar to enable them to send refund orders or Allotment Advice by registered post/speed post (subject to postal rules). Particulars regarding public or rights issue during the last five years There have been no public or rights issues undertaken by our Company during the five years preceding the date of this Draft Red Herring Prospectus. Commission or brokerage on previous issues Since this is the initial public offering of the Equity Shares of our Company, no sum has been paid or has been payable as commission or brokerage for subscribing to or procuring or agreeing to procure public subscription for any of our Equity Shares since the incorporation of our Company. Previous issues of shares otherwise than for cash Except as stated in the section titled “Capital Structure” on page 65, our Company has not issued Equity Shares for consideration otherwise than for cash. Capital Issues in the Preceding Three Years Our Company and our Group Companies have not made any capital issues during the three years preceding the date of this Draft Red Herring Prospectus. Performance vis-à-vis objects Our Company has not completed any public or rights issue in the 10 years preceding the date of the Draft Red Herring Prospectus.

313

Performance vis-a-vis objects: Last Issue of Group Companies or associate companies None of our Group Companies or our associate companies have made any public or rights issues in the 10 years preceding the date of the Draft Red Herring Prospectus. Outstanding Debentures, Bonds or Redeemable Preference Shares As on the date of this Draft Red Herring Prospectus, our Company does not have any outstanding debentures, bonds or redeemable preference shares. Partly Paid-Up Shares As on the date of this Draft Red Herring Prospectus, there are no partly paid-up Equity Shares of our Company. Stock Market Data for the Equity Shares This being the initial public offering of the Equity Shares of our Company, the Equity Shares of our Company is not listed on any stock exchange and hence no stock market data is available. Mechanism for Redressal of Investor Grievances The agreement dated September 24, 2012 between the Registrar to the Issue and our Company, provides for retention of records with the Registrar to the Issue for a minimum period of three years from the last date of dispatch of letters of Allotment, demat credit or refund orders to enable the investors to approach the Registrar to the Issue for redressal of their grievances. All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such name of the sole or first Bidder, Bid cum Application Form number, Bidders’ DP ID, Client ID, PAN, number of Equity Shares applied for, date of Bid cum Application Form, name and address of the Syndicate Member or the Non Syndicate Stock Broker, as the case may be, where the Bid was submitted and cheque or draft number and issuing bank thereof. All grievances relating to the ASBA may be addressed to the Registrar to the Issue, with a copy to the relevant SCSBs or the member of the Syndicate if the Bid was submitted to a member of the Syndicate at any of the Syndicate ASBA Bidding Locations or the Non Syndicate Stock Broker if the Bid was submitted to the Non Syndicate Stock Broker at any of the Non Syndicate Broker Centres, as the case may be, giving full details such as name of the sole or first Bidder, Bid cum Application Form number, Bidders’ DP ID, Client ID, PAN, number of Equity Shares applied for, date of Bid cum Application Form, name and address of the member of the Syndicate or the Designated Branch, as the case may be, where the ASBA Bid was submitted and ASBA Account number in which the amount equivalent to the Bid Amount was blocked. Our Company shall obtain the necessary SEBI Complaints Redress System (SCORES) authentication, in terms of the applicable law, from SEBI. Disposal of Investor Grievances Our Company estimates that the average time required by our Company or the Registrar to the Issue for the redressal of routine investor grievances shall be seven Working Days from the date of receipt of the complaint. In case of non-routine complaints and complaints where external agencies are involved, our Company will seek to redress these complaints as expeditiously as possible. Our Company has appointed a Shareholders/Investors Grievance Committee for the redressal of investor grievances. The constitution of the Shareholders and Investors Grievance Committee is as follows:

S.No Name Nature of Directorship 1. Mansingh Bhakta Independent Director2. Ketan Marwadi Independent Director3. Sahdevsinh Jadeja Wholetime Director

Our Company has also appointed Maulik Gandhi, Company Secretary of our Company as the Compliance Officer for this Issue and he may be contacted in case of any pre-Issue or post-Issue related problems, at the following address:

314

Maulik Gandhi G - 506, Lodhika GIDC, Village Metoda, Rajkot – 360 021, Gujarat, India Tel: +91 (02827) 306 100 Fax: +91 (02827) 306 161 Email: [email protected] Changes in Auditors in the last three years Our Company has not changed the Auditors in the last three years. Capitalisation of Reserves or Profits Except as stated in “Capital Structure” on page 65, our Company has not capitalised our reserves or profits at any time during the five years preceding the date of this Draft Red Herring Prospectus. Revaluation of Assets Our Company has not revalued its assets since its incorporation.

315

SECTION VII: ISSUE INFORMATION

TERMS OF THE ISSUE The Equity Shares being issued are subject to the provisions of the Companies Act, the SCRR, the Memorandum and Articles of Association, the terms of this Draft Red Herring Prospectus and the Prospectus, Bid cum Application Form, the Revision Form, 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, 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, Stock Exchanges, RoC, RBI and/or other authorities, as in force on the date of the Issue and to the extent applicable or such other conditions as may be prescribed by SEBI, the RBI and/or any other authorities while granting its approval for the Issue. Ranking of Equity Shares The Equity Shares being issued shall be subject to the provisions of the Companies Act and Memorandum and Articles of Association and shall rank paripassu with the existing Equity Shares of the Company including rights in respect of dividend. The Allotees in receipt of Allotment of Equity Shares under this Issue will be entitled to dividends and other corporate benefits, if any, declared by the Company after the date of Allotment. For further details, see section titled “Main Provisions of the Articles of Association” on page 365. Mode of Payment of Dividend The Company shall pay dividends, if declared, to the shareholders in accordance with the provisions of the Companies Act, the Memorandum and Articles and the provision of the Listing Agreements. Face value and Issue Price The face value of the Equity Shares is ` 10 each and the Issue Price is ` [●] per Equity Share. The Anchor Investor Issue Price is ` [●] per Equity Share. At any given point of time there shall be only one denomination for the Equity Shares. Compliance with SEBI Regulations The Company shall comply with all disclosure and accounting norms as specified by SEBI from time to time. Rights of the Equity Shareholder Subject to applicable laws, the equity shareholders shall have the following rights:

• Right to receive dividend, if declared; • Right to attend general meetings and exercise voting powers, unless prohibited by law; • Right to vote on a poll either in person or by proxy; • Right to receive offers for rights shares and be allotted bonus shares, if announced; • Right to receive surplus on liquidation, subject to any statutory and preferential claim

being satisfied; • Right of free transferability, subject to applicable law, including any RBI rules and

regulations; and • Such other rights, as may be available to a shareholder of a listed public company under

the Companies Act, the terms of the Listing Agreement executed with the Stock Exchanges, and the Company’s Memorandum and Articles of Association.

For a detailed description of the main provisions of the Articles relating to voting rights, dividend, forfeiture and lien and/or consolidation/splitting, see section titled “Main Provisions of the

316

Articles of Association” on page 365.

Market Lot and Trading Lot In terms of Section 68B of the Companies Act, the Equity Shares shall be Allotted only in dematerialised form. Allotment in the Issue will be in multiples of one subject to a minimum Allotment of [●] Equity Shares. As per the SEBI Regulations, the trading of the Equity Shares shall only be in dematerialised form. Since trading of the Equity Shares is in dematerialised form, the tradable lot is one Equity Share. The Price Band and the minimum Bid lot size for the Issue will be decided by the Company, in consultation with the BRLMs, and will be advertised in [●] edition of English national daily [●], [●] edition of Hindi national daily [●] and [●] edition of Gujarati daily [●], each with wide circulation, and on the website of the Stock Exchanges at least five Working Days prior to the Bid/Issue Opening Date and shall be made available to the Stock Exchanges for the purpose of upload on their website. The Price Band along with certain financial ratios shall be pre-filled in the electronic Bid cum Application Forms available on the website of the Stock Exchanges. Jurisdiction Exclusive jurisdiction for the purpose of this Issue is with the competent courts/authorities in Mumbai. The Equity Shares have not been and will not be registered under the Securities Act or any state securities laws in the United States and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable US state securities laws. Accordingly, the Equity Shares are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdictions. 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 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/transfer/alienation 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 the Registered Office or to the Registrar. Further, any person who becomes a nominee shall, upon the production of such evidence as may be required by the Board, elect either: • To register himself or herself as the holder of the Equity Shares; or • 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 90 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.

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Since the Allotment of Equity Shares in the Issue will be made only in dematerialised form, there is no need to make a separate nomination with the Company. Nominations registered with respective depository participants of the applicant would prevail. If the investors want to change their nomination, they are requested to inform their respective depository participant. Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Issue, subject to the Issue being made for at least 25% of the post-Issue paid-up Equity Share capital of our Company, in accordance with Rule 19 (2) (b) (i) of the SCRR, including through devolvement of the Underwriters, as applicable, within 60 days from the Bid/Issue Closing Date, our Company will forthwith refund the entire subscription amount received within 70 days from the Bid/Issue Closing Date. If there is a delay beyond eight days after our Company becomes liable to pay the amount, our Company and every officer in default will, on and from the expiry of this period, be jointly and severally liable to pay interest prescribed under section 73 of the Companies Act. Further in terms of Regulation 26(4) of the SEBI Regulations, our Company will ensure that the number of Bidders to whom the Equity Shares are allotted in the Issue will be not less than 1,000. Arrangement for disposal of Odd Lots There is no arrangement for the disposal of odd lots. Restriction on transfer of shares Except for lock-in of the pre-Issue Equity Shares and Promoters minimum contribution in the Issue as detailed in the section titled “Capital Structure” on page 65 and Allotment made to Anchor Investor pursuant to the Issue, and except as provided in the Articles of Association, there are no restrictions on transfers of Equity Shares. There are no restrictions on transfers of debentures except as provided in the Articles of Association. There are no restrictions on transmission of shares/ debentures and on their consolidation/ splitting except as provided in the Articles of Association. For further details, see section titled “Main Provisions of the Articles of Association” on page 365. Option to receive Equity Shares in dematerialized form Allotment of Equity Shares will only be in dematerialized form. The Equity Shares will be traded on the dematerialized segment of the Stock Exchange. Joint Holders Subject to provisions contained in our Articles, where two or more persons are registered as the holders of any Equity Shares, they will be deemed to hold such Equity Shares as joint-holders with benefits of survivorship.

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ISSUE STRUCTURE

Public issue of 13,384,826 Equity Shares of face value of ` 10 each of our Company for cash at a price of ` [●] per Equity Share (including share premium of ` [●] per Equity Share) aggregating to ` [●] million. The Issue will constitute 31.82 % of the post-Issue paid-up capital of our Company. Our Company is considering a Pre-IPO Placement of upto 2,790,000 Equity Shares and / or aggregating upto ` 600 million with certain investors. The Pre-IPO Placement is at the discretion of our Company. Our Company will complete the issuance and allotment of Equity Shares pursuant to the Pre-IPO Placement, if any, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is completed, the Issue size will be reduced to the extent of such Pre-IPO Placement, subject to the Issue size constituting at least 25 % of the post-Issue paid-up equity share capital of our Company.

The Issue is being made through the 100% Book Building Process. QIBs# Non-Institutional

Bidders Retail

Individual Bidders

Number of Equity Shares##

At least [●] Equity Shares Not more than [●] Equity Shares available for allocation or Issue less allocation to QIB Bidders and Retail Individual Bidders.

Not more than [●] Equity Shares available for allocation or Issue less allocation to QIB Bidders and Non-Institutional Bidders.

Percentage of Issue Size available for Allotment/allocation

At least 75% of the Issue Size shall be allotted to QIB bidders. However, 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation proportionately to Mutual Funds only.

Not more than 15% of the Issue.

Not more than 10% of the Issue.

Basis of Allotment/Allocation if respective category is oversubscribed

Proportionate as follows: (a) [●] Equity Shares shall be allocated on a proportionate basis to Mutual Funds; and (b) [●] Equity Shares shall be Allotted on a proportionate basis to all QIBs including Mutual Funds receiving allocation as per (a) above.

Proportionate The allotment to each Retail Individual Bidder shall not be less than the minimum Bid lot size, subject to availability of Equity Shares in the Retail Portion, and the remaining available Equity Shares, if any, shall be allotted on a proportionate basis. For the method of proportionate Basis of Allotment to Retail Individual Bidders, see “Issue Procedure –

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QIBs# Non-Institutional Bidders

Retail Individual

Bidders Illustration of Allotment to Retail Individual Bidders” on page 359.

Minimum Bid Such number of Equity Shares that the Bid Amount exceeds ` 200,000 and in multiples of [●] Equity Shares thereafter.

Such number of Equity Shares that the Bid Amount exceeds ` 200,000 and in multiples of [●] Equity Shares thereafter.

[●] Equity Shares and in multiples of [●] Equity Shares thereafter.

Maximum Bid Such number of Equity Shares not exceeding the Issue, subject to applicable limits.

Such number of Equity Shares not exceeding the Issue subject to applicable limits.

Such number of Equity Shares whereby the Bid Amount does not exceed ` 200,000.

Mode of Allotment Compulsorily in dematerialised form.

Compulsorily in dematerialised form.

Compulsorily in dematerialised form.

Bid Lot [●] Equity Shares and in multiples of [●] Equity Shares thereafter.



Allotment Lot [●] Equity Shares and in multiples of one Equity Share thereafter.

[●] Equity Shares and in multiples of one Equity Share thereafter.

[●] Equity Shares which shall not be less than the minimum Bid lot size, subject to availability of Equity Shares in the Retail Portion and in multiples of one Equity Share thereafter.

Trading Lot One Equity Share

One Equity Share One Equity Share

Who can Apply* Public financial institutions as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual fund registered with SEBI, FII and sub-account registered with SEBI (other than a sub-account which is a foreign corporate or foreign individual), scheduled commercial banks, mutual funds and venture capital funds registered with SEBI, FVCIs, Alternative Investment Funds, multilateral and bilateral

Resident Indian individuals, Eligible NRIs, HUFs (in the name of Karta), companies, corporate bodies, scientific institutions societies and trusts, sub-accounts of FIIs registered with SEBI, which are foreign corporates or foreign individuals and Eligible QFIs.

Resident Indian individuals, Eligible NRIs and HUFs (in the name of Karta)

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QIBs# Non-Institutional Bidders

Retail Individual

Bidders development financial institutions, state industrial development corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with minimum corpus of ` 250 million, pension funds with minimum corpus of ` 250 million, the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the GoI published in the Gazette of India, insurance funds set up and managed by the army, navy or air force of the Union of India and insurance funds set up and managed by Department of Posts, GoI.

Terms of Payment The entire Bid Amount will be payable at the time of submission of Bid cum Application Form to the SCSB or the member of the Syndicate at the Syndicate ASBA Bidding Location or the Syndicate, as the case may be. In case of ASBA Bidders, SCSBs will be authorized to block funds equivalent to the Bid Amount in the relevant ASBA Account as detailed in the Bid cum Application Form**.

# The Company may allocate up to 30% of the QIB Portion to Anchor Investors on a discretionary

basis. One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to Anchor Investors. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Portion. For further details, see section titled “Issue Procedure” on page 323.

## Subject to valid Bids being received at or above the Issue Price. The Issue is being made in accordance with Rule 19(2)(b)(i) of the SCRR, as amended and under the SEBI Regulations, where the Issue is being made through the Book Building Process. At least 75% of the Issue will be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs”) (the “QIB Portion”), provided that our Company may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis (the “Anchor Investor Portion”), of which one-third shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Issue Price. Further, 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to all QIBs including Mutual Funds, subject to valid Bids being received from them at or above the Issue Price. If at least 75% of the Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not more than 15% of the Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not more than 10% of the Issue will be available for allocation to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. The allotment to each Retail Individual Bidders shall not be less than the minimum Bid lot size, subject to availability of Equity Shares in the Retail Portion, and the remaining available Equity Shares, if any, shall be allotted on a proportionate basis.

If at least 75% of the Issue cannot be allotted to QIBs, the entire application money shall be refunded. In the event aggregate demand in the QIB Portion has been met, under subscription, if any, in the Non-Institutional Portion and Retail Portion would be allowed to be met with spill-over from other categories or combination of categories at the discretion of our Company in consultation with the BRLMs and the Designated Stock Exchange.

* In case of joint Bids, the Bid cum Application Form should contain only the name of the first Bidder

whose name should also appear as the first holder of the beneficiary account held in joint names. The signature of only such first Bidder would be required in the Bid cum Application Form and such first Bidder would be deemed to have signed on behalf of the joint holders.

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** Bid Amount shall be payable by the Anchor Investors at the time of submission of the Bid cum

Application Forms. The balance, if any, shall be paid within the two Working Days of the Bid/Issue Closing Date.

Withdrawal of the Issue Our Company, in consultation with the BRLMs, reserves the right not to proceed with the Issue anytime after the Bid/Issue Opening Date but before the Allotment of Equity Shares. In such an event the Company would issue a public notice in the newspapers, in which the pre-Issue advertisements were published, within two days of the Bid/ Issue Closing Date, providing reasons for not proceeding with the Issue. The BRLMs, through the Registrar, shall notify the SCSBs to unblock the bank accounts of the ASBA Bidders within one day of receipt of such notification. The Company shall also inform the Stock Exchanges on which the Equity Shares are proposed to be listed. Any further issue of Equity Shares by the Company shall be in compliance with applicable laws. Notwithstanding the foregoing, this Issue is also subject to obtaining the final listing and trading approvals of the Stock Exchanges, which our Company shall apply for after Allotment, and the final RoC approval of the Prospectus. Bid/ Issue Programme

BID/ISSUE OPENS ON* [●] BID/ISSUE CLOSES ON** [●]

*The Company may consider participation by Anchor Investors. The Anchor Investor Bidding date shall be one Working Day prior to the Bid/ Issue Opening Date. ** The Company may consider closing the Bid/Issue Period for the QIB Bidders one Working Day prior to the Bid/Issue Closing date. An indicative timetable in respect of this Issue is set out below: Event Indicative Date Bid/ Issue Closing Date [●] Finalization of basis of allotment with the Designated Stock Exchange On or about [●] Credit of Equity Shares to demat accounts of Allottees On or about [●] Initiation of refunds On or about [●] Commencement of trading of the Equity Shares on the Stock Exchanges On or about [●]

The above timetable is indicative and does not constitute any obligation on the Company or the BRLMs. Whilst the Company shall ensure that all steps for the completion of the necessary formalities for the listing and the commencement of trading of the Equity Shares on the Stock Exchanges are taken within 12 Working Days of the Bid/Issue Closing Date, the timetable may change due to various factors, such as extension of the Bid/ Issue Period by the Company, revision of the Price Band or any delays in receiving the final listing and trading approval from the Stock Exchanges. The commencement of trading of the Equity Shares will be entirely at the discretion of the Stock Exchanges and in accordance with the applicable law. Except in relation to the Bids received from Anchor Investors, Bids and any revision in Bids shall be accepted only between 10.00 a.m. and 5.00 p.m. (Indian Standard Time, “IST”) during the Bid/ Issue Period as mentioned above at the bidding centres mentioned on the Bid cum Application Form except on Bid/Issue Closing Date. On the Bid/ Issue Closing Date, the Bids and any revision in the Bids shall be accepted only between 10.00 p.m. and 3.00 p.m. (IST) and shall be uploaded until (i) 4.00 p.m. (IST) in case of Bids by QIB Bidders and Non-Institutional Bidders, and (ii) until 5.00 p.m. (IST) or such extended time as permitted by the Stock Exchanges, in case of Bids by Retail Individual Bidders, after taking into account the total number of applications received up to the closure of timings and reported by the BRLMs to the Stock Exchanges. It is clarified that the Bids not uploaded on the electronic bidding system would be rejected. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical Bid cum Application Form, for a particular Bidder, the details as per the Bid file received

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from the Stock Exchanges may be taken as the final data for the purpose of Allotment. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical or electronic Bid cum Application Form, for a particular Bidder applying through ASBA process, the Registrar shall ask for rectified data from the SCSBs. Due to limitation of time available for uploading the Bids on the Bid/ Issue Closing Date, the Bidders are advised to submit their Bids one day prior to the Bid/ Issue Closing Date and, in any case, no later than 3.00 p.m. (IST) on the Bid/ Issue Closing Date. All times mentioned in this Draft Red Herring Prospectus are Indian Standard Times. Bidders are cautioned that in the event a large number of Bids are received on the Bid/ Issue Closing Date, as is typically experienced in public offerings, some Bids may not get uploaded due to lack of sufficient time. Such Bids that cannot be uploaded will not be considered for allocation under the Issue. Bids will be accepted only on Working Days. Neither the Company nor any member of the Syndicate is liable for any failure in uploading the Bids due to faults in any software/hardware system or otherwise. On the Bid/ Issue Closing Date, extension of time may be granted by the Stock Exchanges only for uploading the Bids received by Retail Individual Bidders after taking into account the total number of Bids received up to the closure of time period for acceptance of Bid cum Application Forms as stated herein and reported by the BRLMs to the Stock Exchange within half an hour of such closure. The Company, in consultation with the BRLMs, reserves the right to revise the Price Band during the Bid/ Issue Period, provided that the Cap Price shall be less than or equal to 120% of the Floor Price and the Floor Price shall not be less than the face value of the Equity Shares. The revision in Price Band shall not exceed 20% on the either side i.e. the floor price can move up or down to the extent of 20% of the floor price disclosed at least two Working Days prior to the Bid/ Issue Opening Date and the Cap Price will be revised accordingly. In case of revision of the Price Band, the Bid/Issue Period will be extended for at least three additional Working Days after revision of Price Band subject to the Bid/ Issue Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/ Issue Period, if applicable, will be widely disseminated by notification to the Stock Exchanges, by issuing a press release and also by indicating the changes on the websites of the BRLMs and at the terminals of the Syndicate.

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ISSUE PROCEDURE This section applies to all Bidders. Please note that QIBs and Non-Institutional Bidders must participate in the Issue through the ASBA Process. Retail Individual Bidders can participate in the Issue through the ASBA process as well as the Non-ASBA process. ASBA Bidders should note that the ASBA process involves application procedures that are different from the procedure applicable to Bidders other than the ASBA Bidders. Bidders applying through the ASBA process should carefully read the provisions applicable to such applications before making their application through the ASBA process. Please note that all the Bidders are required to make payment of the full Bid Amount along with the Bid cum Application Form. In case of ASBA Bidders, an amount equivalent to the full Bid Amount will be blocked by the SCSBs. Bidders are advised to make their independent investigations and ensure that their Bids do not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or as specified in this Draft Red Herring Prospectus, and as will be specified in the Red Herring Prospectus and the Prospectus. Pursuant to SEBI circular no. CIR/CFD/14/2012 dated October 4, 2012, the investors can submit the Bid cum Application Forms using the stock broker network of Stock Exchanges, who may not be syndicate members in an issue. This mechanism can be used to submit ASBA as well as Non-ASBA applications. The details of the locations where the Bid cum Application Forms shall be collected are available on the website of BSE and NSE i.e. www.bseindia.com and www.nseindia.com respectively. Book Building Procedure The Issue is being made through the Book Building Process wherein at least 75% of the Issue shall be allocated to QIBs on a proportionate basis, provided that our Company may allocate up to 30% of the QIB Portion to Anchor Investors, on a discretionary basis of which one-third shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Issue Price.. Out of the QIB Portion (excluding the Anchor Investor Portion), 5% shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to QIBs and Mutual Funds, subject to valid Bids being received from them at or above the Issue Price. Further, not more than 15% of the Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not more than 10% of the Issue will be available for allocation to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. The allotment to each Retail Individual Bidder shall not be less than the minimum Bid Lot, subject to availability of Equity Shares in the Retail Portion, and the remaining available Equity Shares, if any, shall be Allotted on a proportionate basis. Allocation to Anchor Investors shall be on a discretionary basis and not on a proportionate basis. If at least 75% of the Issue cannot be allotted to QIBs, the entire application money will be refunded. In the event aggregate demand in the QIB Portion has been met, under-subscription, if any, in the Non-Institutional Portion and Retail Portion would be allowed to be met with spill over from other categories or combination of categories at the discretion of our Company in consultation with the BRLMs and the Designated Stock Exchange. Investors should note that the Equity Shares will be Allotted to all successful Bidders only in dematerialised form. The Bid cum Application Forms which do not have the details of the Bidders’ depository account including DP ID, Client ID and PAN shall be treated as incomplete and rejected. Bidders will not have the option of being Allotted Equity Shares in physical form. On Allotment, the Equity Shares will be traded only on the dematerialized segment of the Stock Exchanges Bidders are required to ensure that the PAN (of the sole/first Bidder) provided in the Bid cum Application Form is exactly the same as the PAN of the sole/first Bidder in whose name the relevant beneficiary account is held. In case of joint Bids, the Bid cum Application Form should contain only the name of the first Bidder whose name should also appear as the first holder of the beneficiary account held in joint names. The signature of only such first Bidder would be required in the Bid cum Application Form and such first Bidder would be deemed to have signed on behalf of the joint holders.

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Bid cum Application Form Pursuant to SEBI circular CIR/CFD/DIL/4/2011 dated September 27, 2011, Bid cum Application Forms have been standardized and it has been decided that henceforth there would only be a single form for ASBA and non-ASBA Bidders. It has also been decided that the Bid cum Application Form (accompanied with abridged prospectus) would be printed in a booklet form of A4 size paper. The prescribed colour of the Bid cum Application Form for the various categories is as follows:

Category Colour of Bid cum Application Form*

Resident Indians and Eligible NRIs applying on a non-repatriation basis (ASBA as well as non-ASBA Bidders)**

White

Eligible NRIs, Eligible QFIs, FIIs or Foreign Venture Capital Funds, registered Multilateral and Bilateral Development Financial Institutions applying on a repatriation basis (ASBA as well as non-ASBA Bidders)**

Blue

Anchor Investors*** White * Excluding electronic Bid cum Application Forms ** Bid cum Application forms will also be available on the website of the NSE (www.nseindia.com) and BSE (www.bseindia.com) at least one day prior to the Bid/Issue Opening Date. Same Bid cum Application Form applies to all ASBA Bids irrespective of whether they are submitted to the SCSBs, to the Non Syndicate Stock Brokers, or to the Syndicate at Syndicate ASBA Bidding Locations.A hyperlink to the website of the Stock Exchanges for the facility will be provided on the website of the BRLMs and SCSBs. ***Bid cum Application forms for Anchor Investors shall be made available at the offices of the BRLMs. Copies of the Bid cum Application Form and copies of the Red Herring Prospectus will be available for all categories of Bidders, other than Anchor Investors, with the Syndicate and at our Registered and Corporate Office. Copies of the Bid cum Application Form for Anchor Investors can be obtained from the BRLMs. For ASBA Bidders, the physical Bid cum Application Forms will be available with the Designated Branches of the SCSBs, Syndicate (at the Syndicate ASBA Bidding Locations) and at the Registered and Corporate Office of our Company. Electronic Bid cum Application Forms will be available on the websites of the Stock Exchanges and on the websites of the SCSBs at least one day prior to the Bid/Issue Opening Date. Copies of the Red Herring Prospectus shall, on a request being made by any Bidder, be furnished to such Bidder at our Registered and Corporate Office and the Designated Branches. Non-ASBA Bidders are required to submit their Bids to the Syndicate or to the Non Syndicate Stock Brokers. ASBA Bidders are required to submit their Bids through the SCSBs (in physical or electronic form) or with the Syndicate at the Syndicate ASBA Bidding Locations or to the Non Syndicate Stock Brokers, authorising SCSBs to block funds that are available in the ASBA Account specified in the Bid cum Application Form. Bid cum Application Forms (other than in respect of ASBA Bids) should bear the stamp of the members of the Syndicate or the Non Registered Stock Brokers, otherwise they are liable to be rejected. Bid cum Application Forms submitted directly to the SCSBs should bear the stamp of the SCSBs and/or the Designated Branch and/or the Syndicate Member at the Syndicate ASBA Bidding Locations or the Non Registered Stock Brokers, if not, the same are liable to be rejected. Before being issued to the Bidders, the Bid cum Application Form shall be serially numbered. The Bid Cum Application Form shall contain information about the Bidders, the price and the number of Equity Shares Bid for. Bidders shall have the option to make a maximum of three Bids (in terms of number of Equity Shares and respective Bid Amount) in the Bid cum Application Form and such options shall not be considered as multiple Bids. The collection centre of the Syndicate, the Non Syndicate Stock Brokers or the SCSBs, as the case maybe, 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. The Bidder should preserve this acknowledgment slip and should provide the same for any queries relating to non-Allotment of Equity Shares in the Issue. ASBA Bidders can submit their Bid cum Application Forms, either in physical or electronic mode, to the SCSBs with whom the ASBA Account is maintained, or through the Syndicate, or the Non Syndicate Stock Brokers. However, ASBA Bids through the Syndicate or the Non Syndicate

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Stock Brokers is permitted only at the Syndicate ASBA Bidding Locations and Non Syndicate Broker Centres, respectively. Kindly note that Bid cum Application Forms submitted by ASBA Bidders to the Syndicate at the Syndicate ASBA Bidding Locations or to the Non Syndicate Stock Brokers at the Non Syndicate Broker Centres, will not be accepted if the SCSB with which the ASBA Account, as specified in the Bid cum Application Form, is maintained has not named at least one branch at that location for the members of the Syndicate or the Non Syndicate Stock Brokers to deposit the Bid cum Application Form (A list of such branches is available at http://www.sebi.gov.in/pmd/scsb-asba.html). ASBA Bidders can submit their Bids, either in physical or electronic mode. In case of application in physical mode, the ASBA Bidder shall submit the Bid cum Application Form, which shall be stamped, at the relevant Designated Branch. Bid cum Application Form in physical mode, which shall be stamped, can also be submitted to be members of the Syndicate at Syndicate ASBA Bidding Locations or the Non Syndicate Stock Brokers at the Non Syndicate Broker Centres. In case of application in electronic form, the ASBA Bidder shall submit the Bid cum Application Form either through the internet banking facility available with the SCSBs or such other electronically enabled mechanism for Bidding and blocking funds in the ASBA Account held with SCSB, and accordingly registering such Bids. The SCSB shall block an amount in the ASBA Account equal to the Payment Amount specified in the Bid cum Application Form. Upon completion and submission of the Bid cum Application Form to a Syndicate or the SCSB or a Non Syndicate Stock Broker, the Bidder is deemed to have authorized our Company to make the necessary changes in the Red Herring Prospectus as would be required for filing the Prospectus with the RoC and as would be required by RoC after such filing, without prior or subsequent notice of such changes to the Bidder. Upon the filing of the Prospectus with the RoC, the Bid cum Application Form shall be considered as the Application Form. To supplement the foregoing, the mode and manner of Bidding is illustrated in the following chart. Category of bidder

Mode of Bidding Application form to be used for Bidding

To whom the application form has to be submitted

Retail Individual Bidders

Either (i) ASBA or (ii) non-ASBA


In case of an ASBA Bidder: (i) If using physical Bid cum Application Form, to the members of the Syndicate only at Syndicate ASBA Bidding Location, to the Designated Branches of the SCSBs where the SCSB account is maintained, or to the Non Syndicate Stock Brokers at the Non Syndicate Broker Centres ; or (ii) If using electronic Bid cum Application Form, to the SCSBs, electronically through internet banking facility, where the SCSB account is maintained. In case of a non-ASBA Bidder: (i) If using physical Bid cum Application Form, to the members of the Syndicate at the Bidding Centres or the Non Syndicate Stock Brokers at the Non Syndicate Broker Centres. (ii) If using electronic Bid cum Application Form, electronically through internet banking facility.

Non-Institutional Bidders and QIBs (excluding Anchor Investors)

ASBA (Kindly note that ASBA is mandatory and no other mode of Bidding


(i) If using physical Bid cum Application Form, to the members of the Syndicate only at Syndicate ASBA Bidding Locations, to the Designated Branches of the SCSBs where the SCSB account is maintained, or to the Non

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is permitted) Syndicate Stock Brokers at the Non Syndicate Broker Centres ; or (ii) If using electronic Bid cum Application Form, to the SCSBs, electronically through internet banking facility, where the SCSB account is maintained.

Anchor Investors Non- ASBA Bid cum Application Form

To the BRLMs

Who can Bid? • Indian nationals resident in India and competent to contract under the Indian Contract

Act, 1872, as amended, in single or as a joint bid including minors having valid depository accounts as per Demographic Details provided by Depositories;

• Hindu Undivided Families or 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;

• Companies, corporate bodies and societies registered under the applicable laws in India and authorised to invest in equity shares under their respective constitutional or charter documents;

• Mutual Funds registered with SEBI;

• Eligible NRIs on a repatriation basis or on a non repatriation basis subject to applicable laws. NRIs other than eligible NRIs are not eligible to participate in the Issue;

• Indian financial institutions, scheduled commercial banks (excluding foreign banks), regional rural banks, co-operative banks (subject to RBI regulations and the SEBI Regulations and other laws, as applicable);

• FIIs and sub-accounts registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual under the QIB category;

• Sub-accounts of FIIs registered with SEBI, which are foreign corporates or foreign individuals only under the Non-Institutional Bidders category.

• Venture Capital Funds and Alternative Investment Funds registered with SEBI;

• Foreign Venture Capital Investors registered with SEBI;

• Eligible QFIs;

• Multilateral and bilateral development financial institutions;

• State Industrial Development Corporations;

• Trusts/societies registered under the Societies Registration Act, 1860, as amended, or under any other law relating to trusts/societies and who are authorised under their respective constitutions to hold and invest in equity shares;

• Scientific and/or industrial research organisations authorised in India to invest in equity shares;

• Insurance companies registered with Insurance Regulatory and Development Authority;

• Provident Funds with a minimum corpus of ` 250 million and who are authorised under their constitution to hold and invest in equity shares;

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• Pension Funds with a minimum corpus of ` 250 million and who are authorised under their constitution to hold and invest in equity shares;

• National Investment Fund;

• Limited liability partnerships registered under the Limited Liability Partnership Act, 2008;

• Insurance funds set up and managed by the army, navy or air force of the Union of India; and

• Insurance funds set up and managed by Department of Posts, India.

• Any other person eligible to Bid in the Issue, under the laws, rules, regulations, guidelines and policies applicable to them and under Indian laws.

As per the existing regulations, OCBs cannot participate in this Issue. Participation by associates and affiliates of BRLMs and Syndicate Members The BRLMs and the Syndicate Members shall not be allowed to subscribe to this Issue in any manner except towards fulfilling their underwriting obligations. However, the associates and affiliates of the BRLMs and Syndicate Members may subscribe to or purchase Equity Shares in the Issue, either in the QIB Portion or in Non-Institutional Portion as may be applicable to such Bidders, where the allocation is on a proportionate basis and such subscription may be on their account or on behalf of their clients. The BRLMs and any persons related to the BRLMs or the Promoters and the Promoter Group cannot apply in the Issue under the Anchor Investor Portion. Bids by Mutual Funds An eligible Bid by a Mutual Fund shall first be considered for allocation proportionately in the Mutual Fund Portion. In the event that the demand is greater than [●] Equity Shares, allocation shall be made to Mutual Funds proportionately, to the extent of the Mutual Fund Portion. The remaining demand by the Mutual Funds shall, as part of the aggregate demand by QIBs, be available for allocation proportionately out of the remainder of the QIB Portion, after excluding the allocation in the Mutual Fund Portion. With respect to Bids by Mutual Funds, a certified copy of their SEBI registration certificate must be lodged with the Bid cum Application Form. Failing this, the Company, in consultation with the BRLMs, reserves the right to reject any Bid without assigning any reason thereof. Bids made by asset management companies or custodians of Mutual Funds shall specifically state names of the concerned schemes for which such Bids are made. One-third of the Anchor Investor Portion shall be reserved for allocation to domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to other Anchor Investors. 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. No Mutual Fund scheme shall invest more than 10% of its net asset value in equity shares or equity related instruments of any single company provided that the limit of 10% shall not be applicable for investments in 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 share capital carrying voting rights. Bids by Eligible NRIs Only Bids accompanied by payment in Indian Rupees or freely convertible foreign exchange will be considered for Allotment.

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NRIs Bidding on repatriation basis may make payments by inward remittance in foreign exchange through normal banking channels or by debits to the Non-Resident External (“NRE”) or Foreign Currency Non Resident (Bank) (“FCNR”) accounts maintained with authorised dealers registered with RBI under the Foreign Exchange Management (Foreign Currency Accounts) Regulations, 2000, as amended (“Authorised Dealer”). NRIs Bidding on repatriation basis are advised to use the Bid cum Application Form for Non-Residents which is Blue in colour, accompanied by a bank certificate confirming that the payment has been made by debiting to the NRE or FCNR account, as the case may be. NRIs Bidding on non-repatriation basis may make payments by inward remittance in foreign exchange through normal banking channels or by debits to NRE/FCNR accounts as well as the Non-Resident Ordinary Rupee Account (“NRO”)/Non-Resident (Special) Rupee Account (“NRSR”)/ Non-Resident Non-Repatriable Term Deposit Account (“NRNR”) accounts. NRIs Bidding on non-repatriation basis are advised to use the Bid cum Application Form for Residents which is [●] in colour. Bids by FIIs In case of Bids made by SEBI-registered FIIs, a certified copy of the certificate of registration issued by SEBI is required to be attached to the Bid cum Application Form, failing which our Company reserves the right to reject any Bid without assigning any reason. The issue of Equity Shares to a single FII should not exceed 10% of the post-Issue paid-up capital (i.e. 10% of 42,064,192 Equity Shares) 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 paid-up capital or 5% of the total paid-up capital of the Company in case such sub-account is a foreign corporate or an individual. The aggregate FII holding in the Company cannot exceed 24% of its total issued capital. Subject to compliance with all applicable Indian laws, rules, regulations guidelines and approvals in terms of regulation 15A(1) of the SEBI FII Regulations, an FII, as defined in the SEBI FII Regulations, or its sub-account may issue, deal or hold, offshore derivative instruments (defined under the SEBI FII Regulations as any instrument, by whatever name called, which is issued overseas by an FII against securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, as its underlying) directly or indirectly, only in the event (i) such offshore derivative instruments are issued only to persons who are regulated by an appropriate regulatory authority; and (ii) such offshore derivative instruments are issued after compliance with ‘know your client’ norms. The FII or sub-account is also required to ensure that no further issue or transfer of any offshore derivative instrument is made by or on behalf of it to any persons that are not regulated by an appropriate foreign regulatory authority as defined under the SEBI FII Regulations. Associates and affiliates of the underwriters including the BRLMs and the Syndicate Members that are FIIs may issue offshore derivative instruments against Equity Shares Allotted to them in the Issue. Any such Offshore Derivative Instrument does not constitute any obligation of claim on or an interest in, the Company. Bids by Anchor Investors Our Company, in consultation with the BRLMs, may consider participation by Anchor Investors in the Issue for up to 30% of the QIB Portion in accordance with the SEBI Regulations. Anchor Investors are allowed to participate in the QIB Portion for up to 30% of the QIB Portion in accordance with the SEBI ICDR Regulations. Only QIBs as defined in Regulation 2(1) (zd) of the SEBI ICDR Regulations and not otherwise excluded pursuant to Schedule XI of the SEBI ICDR Regulations are eligible to invest. The QIB Portion will be reduced in proportion to allocation under the Anchor Investor Portion. In the event of under-subscription in the Anchor Investor Portion, the balance Equity Shares will be added to the QIB Portion. In accordance with the SEBI ICDR Regulations, the key terms for participation in the Anchor Investor Portion are provided below. (i) Anchor Investor Bid cum Application Forms will be made available for the Anchor

Investor Portion at the offices of the BRLMs. (ii) The Bid must be for a minimum of such number of Equity Shares so that the Bid Amount

exceeds ` 100 million. A Bid cannot be submitted for over 30% of the QIB Portion. In

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case of a Mutual Fund, separate Bids by individual schemes of a Mutual Fund will be aggregated to determine the minimum application size of ` 100 million.

(iii) One-third of the Anchor Investor Portion will be reserved for allocation to domestic

Mutual Funds. (iv) Bidding for Anchor Investors will open one Working Day before the Bid/Issue Opening

Date and be completed on the same day. (v) Our Company in consultation with the BRLMs will finalise allocation to the Anchor

Investors on a discretionary basis, provided that the minimum number of Allottees in the Anchor Investor Portion will not be less than:

• a maximum of two Anchor Investors, where allocation under Anchor Investor

Portion is up to ` 100 million; and • minimum of two and maximum of 15 Anchor Investors, where the allocation under

Anchor Investor Portion is more than ` 100 million but up to ` 2,500 million, subject to a minimum Allotment of ` 50 million per Anchor Investor; and

• minimum of five and maximum of 25 Anchor Investors, where the allocation under Anchor Investor Portion is more than ` 2,500 million, subject to a minimum Allotment of ` 50 million per Anchor Investor.

(vi) Allocation to Anchor Investors will be completed on the Anchor Investor Bidding Date.

The number of Equity Shares allocated to Anchor Investors and the price at which the allocation is made will be made available in the public domain by the BRLMs before the Bid/Issue Opening Date, through intimation to the Stock Exchanges.

(vii) Anchor Investors cannot withdraw or lower the size of their Bids at any stage after

submission of the Bid. (viii) If the Issue Price is greater than the Anchor Investor Issue Price, the additional amount

being the difference between the Issue Price and the Anchor Investor Issue Price will be payable by the Anchor Investors within two Working Days from the Bid/Issue Closing Date. If the Issue Price is lower than the Anchor Investor Issue Price, Allotment to successful Anchor Investors will be at the higher price, i.e., the Anchor Investor Issue Price.

(ix) Equity Shares Allotted in the Anchor Investor Portion will be locked in for a period of 30

days from the date of Allotment. (x) The BRLMs or our Promoter or Promoter Group or any person related to them will not

participate in the Anchor Investor Portion. The parameters for selection of Anchor Investors will be clearly identified by the BRLMs and made available as part of the records of the BRLMs for inspection by SEBI.

(xi) Bids made by QIBs under both the Anchor Investor Portion and the QIB Portion will not

be considered multiple Bids. (xii) For more information, see “- Payment into Escrow Account for non-ASBA Bidders” on

page 348. Anchor Investors are not permitted to Bid in the Issue through the ASBA process. Bids by Eligible QFIs Eligible QFIs are permitted to invest in the equity shares of Indian companies on a repatriation basis subject to certain terms and conditions. Eligible QFIs have also been permitted to invest in equity shares of Indian companies which are offered to the public in India in accordance with the SEBI Regulations. The individual and aggregate investment limits for Eligible QFIs in an Indian company are 5% and 10% of the paid up capital of the Indian company respectively. These limits are in addition to the investment limits prescribed under the portfolio investment scheme for FIIs and NRIs. However, in cases of those sectors which have composite foreign investment caps, Eligible QFI investment limits are required to be considered within such composite foreign investment cap. An Eligible QFI may make investments in the equity shares of an Indian company

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through both the FDI route and the QFI route. However, the aggregate holding of such Eligible QFI shall not exceed 5% of the paid-up capital of the Indian company at any point of time. QFIs shall be eligible to Bid under the Non-Institutional Bidders category. Further, SEBI in its circular dated January 13, 2012 has specified, amongst other things, eligible transactions for Eligible QFIs (which includes investment in equity shares in public issues to be listed on recognised stock exchanges and sale of equity shares held by Eligible QFIs in their demat account through SEBI registered brokers), manner of operation of demat accounts by Eligible QFIs, transaction processes and investment restrictions. SEBI has specified that transactions by Eligible QFIs shall be treated at par with those made by Indian non-institutional investors. Eligible QFIs shall open a single non interest bearing Rupee account with an AD category-I bank in India for routing the payment for transactions relating to purchase of equity shares (including investment in equity shares in public issues) subject to the conditions as may be prescribed by the RBI from time to time. Eligible QFIs who wish to participate in the Issue are advised to use the Bid cum Application Form meant for Non-Residents which is blue in colour. Eligible QFIs shall compulsorily Bid through the ASBA process to participate in the Issue. Eligible QFIs are not permitted to issue off-shore derivative instruments or participatory notes. Bids by SEBI registered Venture Capital Funds, Alternative Investment Funds and Foreign Venture Capital Investors The SEBI (Venture Capital Funds) Regulations, 1996 and SEBI (Foreign Venture Capital Investors) Regulations, 2000, as amended inter alia prescribe the investment restrictions on venture capital funds and foreign venture capital investors registered with SEBI. Further, the SEBI (Alternative Investment Funds) Regulations, 2012 prescribe, amongst others, the investment restrictions on AIFs. Accordingly, the holding by any individual Venture Capital fund registered with SEBI in one company should not exceed 25% of the corpus of the Venture Capital Fund. Further, venture capital funds and foreign venture capital funds can invest only up to 33.33% of the investible funds by way of subscription to an initial public offering of a venture capital undertaking whose shares are proposed to be listed. The category I and II AIFs cannot invest more than 25% of the corpus in one investee company. A category III AIF cannot invest more than 10% of the corpus in one investee company. A venture capital fund registered as a category I AIF, as defined in the SEBI AIF Regulations, cannot invest more than 1/3rd of its corpus by way of subscription to an initial public offering of a venture capital undertaking. Additionally, the VCFs which have not re-registered as an AIF under the SEBI AIF Regulations shall continue to be regulated by the SEBI (Venture Capital Funds) Regulations, 1996. All Non-Resident Bidders including Eligible NRIs, Eligible QFIs, FIIs and FVCIs should note that refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and net of bank charges and / or commission. There is no reservation for Eligible NRIs, Eligible QFIs, FIIs and FVCIs and all Bidders will be treated on the same basis with other categories for the purpose of allocation. Bids by limited liability partnerships In case of Bids made by limited liability partnerships registered under the Limited Liability Partnership Act, 2008, a certified copy of certificate of registration issued under the Limited Liability Partnership Act, 2008, must be attached to the Bid cum Application Form. Failing this, the Company reserves the right to reject any Bid without assigning any reason thereof. Bids by insurance companies In case of Bids made by insurance companies registered with the IRDA, a certified copy of certificate of registration issued by IRDA must be attached to the Bid cum Application Form. Failing this, the Company reserve the right to reject any Bid without assigning any reason thereof.

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The exposure norms for insurers, prescribed under the Insurance Regulatory and Development Authority (Investment) Regulations, 2000, as amended, are broadly set forth below:

(a) equity shares of a company: the least of 10% of the investee company’s subscribed capital (face value) or 10% of the respective fund in case of life insurer or 10% of investment assets in case of general insurer or reinsurer;

(b) the entire group of the investee company: the least of 10% of the respective fund in case of a life insurer or 10% of investment assets in case of a general insurer or reinsurer (25% in case of ULIPs); and

(c) the industry sector in which the investee company operates: 10% of the insurer’s total investment exposure to the industry sector (25% in case of ULIPs).

Further, with effect from August 1, 2008, no investment may be made in an IPO if the issue size, including offer for sale, is less than ` 2,000 million. In addition, the IRDA partially amended the exposure limits applicable to investments in public limited companies in the infrastructure and housing sectors, with effect from December 26, 2008, providing, among other things, that the exposure of an insurer to an infrastructure company may be increased to not more than 20%, provided that in case of equity investment, a dividend of not less than 4% including bonus should have been declared for at least five preceding years. In case of an IPO of a wholly owned subsidiary of a corporate or public sector enterprise, the above track record would be applied to the holding company. This limit of 20% would be combined for debt and equity taken together, without sub-ceilings. Further, investments in equity including preference shares and the convertible part of debentures shall not exceed 50% of the exposure norms specified under the IRDA Investment Regulations. Bids by Banking Companies In case of Bids made by banking companies registered with RBI, certified copies of: (i) the certificate of registration issued by RBI, and (ii) the approval of such banking company’s investment committee are required to be attached to the Bid cum Application Form, failing which our Company reserves the right to reject any Bid without assigning any reason. The investment limit for banking companies as per the Banking Regulation Act, 1949, as amended, is 30% of the paid-up share capital of the investee company or 30% of the banks’ own paid-up share capital and reserves, whichever is less (except in certain specified exceptions, such as setting up or investing in a subsidiary, which requires RBI approval). Further, the RBI Master Circular of July 2, 2012 sets forth prudential norms required to be followed for classification, valuation and operation of investment portfolio of banking companies. Bids by provident funds/pension funds In case of Bids made by provident funds/pension funds, subject to applicable laws, with minimum corpus of ` 250 million, a certified copy of certificate from a chartered accountant certifying the corpus of the provident fund/ pension fund must be attached to the Bid cum Application Form. Failing this, the Company reserves the right to reject any Bid, without assigning any reason thereof. The above information is given for the benefit of the Bidders. Our Company, Our Directors and the BRLMs are not liable for any amendments or modification or changes in applicable laws or regulations, which may occur after the date of this Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and 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 or regulation or as specified in this Draft Red Herring Prospectus. Maximum and Minimum Bid Size (a) For Retail Individual Bidders: The Bid must be for a minimum of [●] Equity Shares

and in multiples of [●] Equity Shares thereafter, so as to ensure that the Bid Amount payable by the Bidder does not exceed ` 200,000. Retail Individual Bidders may revise their Bids during the Bid/Issue Period and may withdraw their Bids until the finalisation of the Basis of Allotment. In case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Amount does not exceed ` 200,000. In case the Bid Amount is over ` 200,000 due to revision of the Bid or revision of the Price Band or on exercise of Cut-

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off option, the Bid would be considered for allocation under the Non-Institutional Portion and such Bidders must ensure that they apply only through the ASBA process. Further, in case of non-ASBA Bids, if the Bid Amount exceeds ` 200,000, the Bid is liable to be rejected. 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.

(b) For Other Bidders (Non-Institutional Bidders and QIBs, excluding Anchor

Investors): The Bid must be for a minimum of such number of Equity Shares in multiples of [●] such that the Bid Amount exceeds ` 200,000. A Bid cannot be submitted for more than the Issue Size. However, the maximum Bid by a QIB investor should not exceed the investment limits prescribed for them by applicable laws. QIBs and Non Institutional Bidders cannot withdraw or lower the size of their Bids at any stage after submission of the Bid and are required to pay the Bid Amount upon submission of the Bid. QIBs and Non-Institutional Bidders are mandatorily required to submit their Bids using the ASBA process.

In case of revision in Bids (i.e. increase in the Bid size), the Non-Institutional Bidders, who are individuals, have to ensure that the Bid Amount is greater than ` 200,000 for being considered for allocation in the Non-Institutional Portion. In case the Bid Amount reduces to ` 200,000 or less due to a downward revision of the Price Band, Bids by Non-Institutional Bidders who are eligible for allocation in the Retail Portion would be considered for allocation under the Retail Portion. Non-Institutional Bidders and QIBs are not allowed to Bid at ‘Cut-off’ Price.

(c) For Bidders in the Anchor Investor Portion: The Bid must be for a minimum of such

number of Equity Shares in multiples of [●] such that the Bid Amount exceeds ` 100 million and in multiples of [●] Equity Shares thereafter. Bids by various schemes of a Mutual Fund shall be aggregated to determine the Bid Amount. Bids by Anchor Investors under the Anchor Investor Portion and the QIB Portion shall not be considered as multiple Bids. A Bid cannot be submitted for more than 30% of the QIB Portion under the Anchor Investor Portion. Anchor Investors are not allowed to submit their Bids through the ASBA process. Anchor Investors cannot withdraw or lower the size of their Bids and are required to pay the Bid Amount at the time of submission of the Bid. In case the Anchor Investor Issue Price is lower than the Issue Price, the balance amount shall be payable within two Working Days from the Bid/Issue Closing Date. In case the Issue Price is lower than the Anchor Investor Issue Price, the amount in excess of the Issue Price paid by the Anchor Investor shall not be refunded to them.

Information for the Bidders: (a) The Company and the BRLMs shall declare the Bid/Issue Opening Date and Bid/Issue

Closing Date in the Red Herring Prospectus to be registered with the RoC and also publish the same in two daily national newspapers, one each in English and Hindi and in one Gujarati newspaper, each with wide circulation. This advertisement shall be in the prescribed format.

(b) The Company will file the Red Herring Prospectus with the RoC at least three Working Days before the Bid/Issue Opening Date.

(c) The Company in consultation with the BRLMs will decide the Price Band and the minimum Bid Lot and these shall be advertised in [●] edition of English national daily [●],[●] edition of Hindi national daily [●] and [●] edition of Gujarati daily [●], each with wide circulation, at least five Working Days prior to the Bid/Issue Opening Date and shall be available to the Stock Exchanges for the purpose of upload on their website. The Syndicate, Non Syndicate Stock Brokers and the SCSBs shall accept Bids from the Bidders during the Bid/Issue Period.

(d) The Bid/Issue Period shall be for a minimum of three Working Days and shall not exceed 10 Working Days. The Bid/Issue Period may be extended, if required, by an additional three Working Days, subject to the total Bid/Issue Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be published in two national newspapers, one each in English and Hindi and one in Gujarati newspaper, each with wide circulation and also by indicating the change on the

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websites of the BRLMs and at the terminals of the Syndicate.

(e) Copies of the Bid cum Application Form and copies of the Red Herring Prospectus will be available for all categories of Bidders,other than Anchor Investors, with the Syndicate and at our Registered and Corporate Office . Copies of the Bid cum Application Form for Anchor Investors can be obtained from the BRLMs. For ASBA Bidders, the physical Bid cum Application Forms will be available with the Designated Branches of the SCSBs, Syndicate (at the Syndicate ASBA Bidding Locations) and at the Registered and Corporate Office of our Company. Electronic Bid cum Application Forms will be available on the websites of the Stock Exchanges and on the websites of the SCSBs at least one day prior to the Bid/Issue Opening Date.

(f) QIBs (other than Anchor Investors) and Non Institutional Bidders can participate in the

Issue only through the ASBA process. Retail Individual Bidders have the option to Bid through the ASBA process or non ASBA process.

(g) Eligible Bidders who are interested in subscribing for the Equity Shares should approach any of the BRLMs or Syndicate Members or their authorised agent(s) or the Non Syndicate Stock Brokers to register their Bids. Bidders (other than Anchor Investors) who wish to use the ASBA process should approach the Designated Branches of the SCSBs or the Syndicate (only at the Syndicate ASBA Bidding Locations) or the Non Syndicate Stock Brokers to register their Bids.

(h) Bidders applying through the ASBA process also have an option to (i) submit the Bid

cum Application Form in electronic form; or (ii) submit Bids through the Syndicate at the Syndicate ASBA Bidding Locations or to the Non Syndicate Stock Brokers. ASBA Bids in electronic mode can be submitted only to the SCSBs with whom the ASBA Account is maintained and not to the Syndicate. SCSBs may provide the electronic mode of bidding either through an internet enabled bidding and banking facility or such other secured, electronically enabled mechanism for bidding and blocking funds in the ASBA Account.

(i) The Bids should be submitted on the prescribed Bid cum Application Form only. Bid cum Application Forms (other than in respect of ASBA Bids) should bear the stamp of the members of the Syndicate or the Non Registered Stock Brokers, otherwise they are liable to be rejected. Bid cum Application Forms submitted directly to the SCSBs should bear the stamp of the SCSBs and/or the Designated Branch and/or the Syndicate Member at the Syndicate ASBA Bidding Locations or the Non Registered Stock Brokers, if not, the same are liable to be rejected. Bid cum Application Forms submitted by Bidders whose beneficiary account is inactive shall be rejected.

(j) ASBA Bidders should also ensure that Bid cum Application Forms submitted to the Syndicate Members at the Syndicate ASBA Bidding Locations or to the Non Syndicate Stock Brokers at the Non Syndicate Broker Centres will not be accepted if the SCSB where the ASBA Account, as specified in the Bid cum Application Form, is maintained has not named at least one branch at that location for the members of the Syndicate or the Non Syndicate Stock Brokers to deposit Bid cum Application Forms (a list of such branches is available at http://www.sebi.gov.in/pmd/scsb-asba.html). The relevant branch of the SCSB shall block an amount in the ASBA Account equal to the Bid Amount specified in the Bid cum Application Form. ASBA Bidders bidding directly through the SCSBs should ensure that the Bid cum Application Form is submitted to a Designated Branch of a SCSB where the ASBA Account is maintained. For ASBA Bids submitted to the SCSBs, the relevant SCSB shall block an amount in the ASBA Account equal to the Bid Amount specified in the Bid cum Application Form, before entering the ASBA Bid into the electronic bidding system.

(k) Except for Bids by or on behalf of the Central or State Government and the officials

appointed by the courts and by investors residing in the State of Sikkim, the Bidders, or in the case of a Bid in joint names, the first Bidder, should mention his/ her PAN allotted under the Income Tax Act. In accordance with the SEBI Regulations, the PAN would be the sole identification number for participants transacting in the securities market, irrespective of the amount of transaction. Any Bid cum Application Form without the PAN is liable to be rejected. The beneficiary accounts of Bidders for whom PAN details have not been verified will be “suspended for credit” by the Depositories, and no credit of Equity Shares pursuant to the Issue will be made in the accounts of such Bidders.

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(l) Only Bids that are uploaded on the online system of the Stock Exchanges shall be considered for allocation/Allotment. The members of the Syndicate, the Non Syndicate Stock Brokers and the SCSBs shall capture all data relevant for the purposes of finalizing the Basis of Allotment while uploading Bid data in the electronic Bidding systems of the Stock Exchanges. In order that the data so captured is accurate, the members of the Syndicate, the Non Syndicate Stock Brokers and the SCSBs will be given up to one Working Day after the Bid Closing Date to modify/ verify certain selected fields uploaded in the online system during the Bidding Period after which the data will be sent to the Registrar for reconciliation with the data available with the NSDL and CDSL.

(m) Pursuant to SEBI Circular No. CIR/CFD/14/2012 dated October 4, 2012 all investors can submit their application forms through the nationwide broker network of Stock Exchanges (i.e. around 400 broker centres to be covered by January 01, 2013 and 1000 broker centres to be covered by March 01, 2013). The details of locations including name of the broker, contact details such as name of the contact person, postal address, telephone number, e-mail address of the broker, etc. where the application forms shall be collected will be disclosed by the Stock Exchanges on their websites.

(n) Application forms can be downloaded from the Stock Exchanges websites/broker terminals, so that any eligible investor or stock broker can download/print the forms directly.

(o) Eligible investors may submit the Bid cum Application Form, indicating the mode of

payment to the Non Syndicate Stock Brokers (p) All accepted applications shall be stamped and thereby acknowledged by the Non

Syndicate Stock Brokers at the time of receipt and will be uploaded on the Stock Exchange platform

(q) The Non Syndicate Stock Brokers shall be responsible for uploading the bids on the

Stock Exchange platform, banking the cheque / submitting the Bid cum Application Form to SCSBs, etc. and liable for any failure in this regard

(r) In case of non-ASBA applications, the Non Syndicate Stock Brokers will deposit the

cheque, prepare electronic schedule and send it to Bankers to the Issue. All Bankers to the Issue, which have branches in a broker centre, shall ensure that at least one of its branches in the broker centre accepts cheques. The Non Syndicate Stock Brokers shall deposit the cheque(s) in any of the bank branch of the collecting bank in the broker centre. The Non Syndicate Stock Brokers shall also update the electronic schedule (containing application details including the application amount) as downloaded from Stock Exchange platform and send it to local branch of the collecting bank. The Non Syndicate Stock Brokers shall retain all physical applications initially and send it to the Registrar after 6 months

(s) In case of ASBA applications, the Non Syndicate Stock Brokers shall also forward a

schedule (containing application number and amount) along with the Bid cum Application Forms to the branch named for ASBA of the respective SCSBs for blocking of fund.

The Bidders should note that in case the PAN, the DP ID and Client ID mentioned in the Bid cum Application form and entered into the electronic bidding system of the Stock Exchanges by the Syndicate Members do not match with PAN, the DP ID and Client ID available in the database of Depositories, the Bid cum Application form is liable to be rejected and the Company and members of the Synidicate shall not be liable for losses, if any. Method and Process of Bidding (a) The Company, in consultation with the BRLMs, will decide the Price Band and the

minimum Bid lot size for the Issue and these shall be advertised in [●] edition of English national daily [●],[●] edition of Hindi national daily [●] and [●] edition of Gujarati daily [●], each with wide circulation, at least five Working Days prior to the Bid/Issue Opening Date and shall be available to the Stock Exchanges for the purpose of upload on their website. The members of the Syndicate, the Non Syndicate Stock Brokers and the SCSBs shall accept Bids from the Bidders during the Bid/Issue Period.

(b) The Bid/Issue Period shall be for a minimum of three Working Days and shall not exceed

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10 Working Days. The Bid/ Issue Period may be extended, if required, by an additional three Working Days, subject to the total Bid/Issue Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/ Issue Period, if applicable, will be published in two daily national newspapers (one each in English and Hindi) and in one Gujarati newspaper, each with wide circulation and also by indicating the change on the websites of the BRLMs and at the terminals of the members of the Syndicate.

(c) During the Bid/Issue Period, non-ASBA Bidders should approach the Syndicate or their

authorised agents or the Non Syndicate Stock Brokers to register their Bids. The Syndicate and the Non Syndicate Stock Brokers shall have the right to vet the Bids during the Bid/ Issue Period in accordance with the terms of the Red Herring Prospectus. ASBA Bidders should approach the Designated Branches of the SCSBs or the Syndicate (for the Bids to be submitted at the Syndicate ASBA Bidding Locations) or the Non Syndicate Stock Brokers (for the Bids to be submitted at the Non Syndicate Broker Centres) to register their Bids.

(d) 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 “Bids at Different Price Levels and Revision of Bids” below) 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/Allotment and the rest of the Bid(s), irrespective of the Bid Amount, will become automatically invalid.

(e) 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, or the Non Syndicate Stock Brokersor the SCSBs. Submission of a second Bid cum Application Form to either the same or to another member of the Syndicate, or Non Syndicate Stock Brokers or SCSBs will be treated as multiple Bids 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 allocation or Allotment of Equity Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the procedure for which is detailed under the paragraph “Build up of the Book and Revision of Bids”. However, QIBs and Non Institutional Bidders are not permitted to withdraw or lower the size of their Bids at any stage after submission of the Bid.

(f) Except in relation to Bids received from the Anchor Investors, the members of the

Syndicate, the Non Syndicate Stock Brokers or the SCSBs will enter each Bid 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 TRSs for each Bid cum Application Form.

(g) Along with the Bid cum Application Form, all non-ASBA Bidders will make payment in the manner described in the section titled “Issue Procedure - Escrow Mechanism, terms of payment and payment into the Escrow Accounts” on page 337.

(h) With regard to ASBA Bid submitted to Syndicate Members at the Syndicate ASBA Bidding Locations or to a Non Syndicate Stock Broker, upon receipt of the Bid cum Application Form by a member of the Syndicate or a Non Syndicate Stock Broker, as the case may be, the concerned member of the Syndicate or Non Syndicate Stock Broker shall issue an acknowledgement by giving the counter foil of the Bid cum Application Form to the ASBA Bidder as proof of having accepted the Bid. Thereafter, the member of the Syndicate or Non Syndicate Stock Broker, as the case may be, shall upload the details of the Bid in the electronic Bidding system of the Stock Exchanges and forward the Bid cum Application Form to the concerned SCSB. The SCSB shall carry out further action for such Bid cum Application Forms such as signature verification and blocking of funds.

(i) With regard to ASBA Bidders Bidding through the SCSBs, upon receipt of the Bid cum Application Form, submitted whether in physical or electronic mode, the respective Designated Branch shall verify if sufficient funds equal to the Bid Amount are available in the ASBA Account, as mentioned in the Bid cum Application Form, prior to uploading such Bids with the Stock Exchanges.

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(j) If sufficient funds are not available in the ASBA Account, the Designated Branch of the SCSBs shall reject such Bids and shall not upload such Bids with the Stock Exchanges.

(k) If sufficient funds are available in the ASBA Account, the SCSBs shall block an amount

equivalent to the Bid Amount mentioned in the Bid cum Application Form and will enter each Bid option into the electronic bidding system as a separate Bid and generate a TRS for each price and demand option. The TRS shall be furnished to the ASBA Bidder on request.

(l) The Bid Amount shall remain blocked in the aforesaid ASBA Account until finalisation of the Basis of Allotment and consequent transfer of the Bid Amount against the Allotted Equity Shares to the Public Issue Account, or until withdrawal/failure of the Issue or until withdrawal (by Retail Individual Bidders) or rejection of the Bid cum Application Form, as the case may be. Once the Basis of Allotment is finalized, the Registrar shall send an appropriate request to the SCSBs for unblocking the relevant ASBA Accounts and for transferring the amount allocable to the successful Bidders to the Public Issue Account. In case of withdrawal/failure of the Issue, the blocked amount shall be unblocked on receipt of such information from the Registrar.

INVESTORS ARE ADVISED NOT TO SUBMIT THE BID CUM APPLICATION FORMS TO THE ESCROW COLLECTION BANKS, EXCEPT IN THE CASE OF ASBA BIDS IN THE EVENT SUCH ESCROW COLLECTION BANKS ARE ALSO SCSBs. BIDS SUBMITTED TO THE ESCROW COLLECTION BANKS SHALL BE REJECTED AND SUCH BIDDERS SHALL NOT BE ENTITLED TO ANY COMPENSATION ON ACCOUNT OF SUCH REJECTION. Bids at Different Price Levels and Revision of Bids (a) The Company, in consultation with the BRLMs, reserves the right to revise the Price

Band during the Bid/ Issue Period without the prior approval of, or intimation, to the Bidders, provided that the Cap Price shall be less than or equal to 120% of the Floor Price and the Floor Price shall not be less than the face value of the Equity Shares. The revision in Price Band shall not exceed 20% on either side i.e. the floor price can move up or down to the extent of 20% of the floor price disclosed at least two Working Days prior to the Bid/ Issue Opening Date and the Cap Price will be revised accordingly.

(b) The Company, in consultation with the BRLMs, will finalise the Issue Price within the Price Band in accordance with this clause, without the prior approval of, or intimation, to the Bidders.

(c) The Company, in consultation with the BRLMs, can finalise the Anchor Investor Issue Price within the Price Band, without the prior approval of, or intimation, to the Anchor Investors.

(d) 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 Bidders may bid at the Cut-off Price. However, bidding at Cut-off Price is prohibited for QIB and Non-Institutional Bidders and such Bids from QIB and Non-Institutional Bidders shall be rejected.

(e) Retail Individual Bidders, who Bid at Cut-off Price agree that they shall purchase the

Equity Shares at any price within the Price Band. Retail Individual Bidders, shall submit the Bid cum Application Form along with a cheque/demand draft for the Bid Amount based on the Cap Price with the members of the Syndicate. In case of ASBA Bidders (other than Non-Institutional Bidders and QIB Bidders) bidding at Cut-off Price, the ASBA Bidders shall instruct the SCSBs to block an amount based on the Cap Price.

(f) In the event the Bid Amount is higher than the subscription amount payable by the Retail

Individual Bidders who Bid at the Cut-off Price, such Retail Individual Bidders will receive refunds of the excess amounts in the manner provided in the Red Herring Prospectus.

(g) In accordance with the SEBI Regulations, QIB Bidders and Non-Institutional Bidders are not permitted to withdraw or lower the size of their Bids at any stage. QIB Bidders and

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Non-Institutional Bidders may revise their Bids upwards during the Bid/Issue Period. Such upward revision must be made using the Revision Form. Retail Individual Bidders may revise their Bids during the Bid/Issue Period and may withdraw their Bids until the finalization of the Basis of Allotment.

Escrow mechanism, terms of payment and payment into the Escrow Accounts For details of the escrow mechanism and payment instructions, see section titled “Issue Procedure - Payment Instructions” on page 347. Electronic Registration of Bids (a) The members of the Syndicate, the Non Syndicate Stock Brokers and the SCSBs will

register the Bids using the on-line facilities of the Stock Exchanges. There will be at least one on-line connectivity facility in each city, where a stock exchange is located in India and where Bids are being accepted.

(b) The BRLMs, the Company and the Registrar are not responsible for any acts, mistakes or errors or omission and commissions in relation to, (i) the Bids accepted by the Syndicate Members, the Non Syndicate Stock Brokers and the SCSBs, (ii) the Bids uploaded by the Syndicate Members, the Non Syndicate Stock Brokers and the SCSBs, (iii) the Bids accepted but not uploaded by the Syndicate Members, the Non Syndicate Stock Brokers and the SCSBs or (iv) with respect to Bids by ASBA Bidders, Bids accepted and uploaded without blocking funds in the ASBA Accounts.

(c) The Syndicate, the Non Syndicate Stock Brokers and the SCSBs will undertake

modification of selected fields in the Bid details already uploaded within one Working Day from the Bid/Issue Closing Date.

(d) The Stock Exchanges will offer an electronic facility for registering Bids for the Issue. This facility will be available with the Syndicate and their authorised agents, the Non Syndicate Stock Brokers and the SCSBs during the Bid/ Issue Period. The Syndicate Members and the Designated Branches can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently upload the off-line data file into the on-line facilities for Book Building on a regular basis. On the Bid/ Issue Closing Date, the members of the Syndicate, the Non Syndicate Stock Brokers and the Designated Branches shall upload the Bids till such time as may be permitted by the Stock Exchanges.

(e) Based on the aggregate demand and price for Bids registered on the electronic facilities of

the Stock Exchanges, a graphical representation of consolidated demand and price as available on the websites of the Stock Exchanges would be made available at the bidding centres during the Bid/Issue Period.

(f) At the time of registering each Bid other than ASBA bids, the members of the Syndicate

and the Non Syndicate Stock Brokers shall enter the following details of the Bidder in the on-line system:

1. Bid cum Application Form number; 2. Investor Category and sub category; 3. PAN (of the sole/first Bidder); 4. DP ID and Client ID; 5. Numbers of Equity Shares Bid for; 6. Bid Price; 7. Bid Amount; and 8. Cheque Details.

With respect to Bids by ASBA Bidders, at the time of registering such Bids, the Designated Branches of the SCSBs shall enter the following information pertaining to the ASBA Bidders in the on-line system:

1. Bid cum Application Form number; 2. Investor Category and sub category; 3. PAN (of the sole/first Bidder);

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4. DP ID and Client ID; 5. Number of Equity Shares bid for; 6. Bid Price; 7. Bid Amount; and 8. Bank account number.

With respect to Bids by ASBA Bidders submitted to the members of Syndicate at the Syndicate ASBA Bidding Locations and the Non Syndicate Stock Brokers, at the time of registering each Bid, the members of Syndicate and the Non Syndicate Stock Brokers shall enter the following details in the on-line system:

1. Bid cum Application Form number; 2. PAN (of the sole/first Bidder); 3. Investor category and sub-category; 4. DP ID and Client ID; 5. Number of Equity Shares bid for; 6. Bid Price; 7. Bid Amount; 8. Bank account number; 9. Bank code for the SCSB where the ASBA Account is maintained; and 10. Name of Syndicate ASBA Bidding Location/Non Syndicate Broker Centre.

(g) TRS will be generated for each of the bidding options when the Bid is registered. It is the

Bidder’s responsibility to obtain the TRS from the members of the Syndicate or the Designated Branches of the SCSBs. The registration of the Bid by the member of the Syndicate or the Non Syndicate Stock Brokers or the Designated Branches of the SCSBs does not guarantee that the Equity Shares shall be allocated/Allotted either by the members of the Syndicate or the Company.

(h) Such TRS will be non-negotiable and by itself will not create any obligation of any kind. (i) In case of QIBs, other than Anchor Investors, Bidding through the Syndicate, the BRLMs

and their affiliate members of the Syndicate, may reject Bids at the time of acceptance of the Bid cum Application Form provided that the reasons for such rejection shall be disclosed to such Bidder in writing. In case of Non-Institutional Bidders and Retail Individual Bidders, Bids will be rejected on technical grounds listed herein. The members of the Syndicate may also reject Bids if all the information required is not provided and the Bid cum Application Form is incomplete in any respect. The SCSBs and the Non Syndicate Stock Brokers shall have no right to reject Bids, except on technical grounds or in the event that if at the time of blocking the Payment Amount in the ASBA Account, the SCSB ascertains that sufficient funds are not available in the Bidder’s ASBA Account.

(j) The permission given by the Stock Exchanges 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 and/or the BRLMs are cleared or approved by the Stock Exchanges; 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, the management or any scheme or project of the Company; 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 Stock Exchanges.

(k) Only Bids that are uploaded on the online IPO system of the Stock Exchanges shall be

considered for allocation/Allotment. Members of the Syndicate, the Non Syndicate Stock Brokers and the SCSBs will be given up to one Working Day after the Bid/Issue Closing Date to verify the DP ID and Client ID uploaded in the online IPO system during the Bid/Issue Period, after which the Registrar will receive this data from the Stock Exchanges and will validate the electronic bid details with depository’s records. In case no corresponding record is available with the Depositories, which matches the three parameters, namely, DP ID, Client ID and PAN, then such Bids are liable to be rejected.

(l) The details uploaded in the online IPO system shall be considered as final and Allotment

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will be based on such details.

(m) Details of Bids in the Anchor Investor Portion will not be registered on the on-line facilities of electronic facilities of the Stock Exchanges.

Build up of the Book and revision of Bids (a) Bids received from various Bidders through the members of the Syndicate, the Non

Syndicate Stock Brokers and the SCSBs shall be electronically uploaded to the Stock Exchanges’ mainframe on a regular basis.

(b) The book gets built up at various price levels. This information will be available with the

BRLMs at the end of the Bid/Issue Period. (c) During the Bid/Issue 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. However, QIBs and Non Institutional Bidders cannot lower the size of their Bids at any stage after submission of the Bid. Retail Individual Bidders may revise their Bids during the Bid/Issue Period and may withdraw their Bids until finalization of the Basis of Allotment.

(d) Revisions can be made in both the desired number of Equity Shares and the Bid Amount

by using the Revision Form except in case of QIB Bidders and Non Instituitional Bidders who are not permitted to lower the size of their Bids at any stage. 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 such Bidder is changing only one of the options in the Revision Form, the Bidder must still fill the details of the other two options that are not being revised, in the Revision Form. The members of the Syndicate, the Non Syndicate Stock Brokers and the Designated Branches of the SCSBs will not accept incomplete or inaccurate Revision Forms.

(e) The Bidder can make this revision any number of times during the Bid/Issue Period.

However, for any revision(s) in the Bid, the Bidders will have to use the services of the same member of the Syndicate or the Non Syndicate Stock Broker or the SCSB through whom such Bidder 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) 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) shall make additional payment based on the cap of the revised Price Band (such that the total amount i.e., original Bid Amount plus additional payment does not exceed ` 200,000 if the Bidder wants to continue to Bid at Cut-off Price), 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 ` 200,000, the Bid will be considered for allocation under the Non-Institutional Portion 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 downwards 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 Price.

(g) 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 or unblocked by the SCSBs, as the case may be.

(h) The Company, in consultation with the BRLMs, shall decide the minimum number of

Equity Shares for each Bid to ensure that the minimum application value is within the range of ` 10,000 to ` 15,000.

(i) Any revision of the Bid shall be accompanied by payment in the form of cheque or

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demand draft for the incremental amount, if any, to be paid on account of the upward revision of the Bid. With respect to the ASBA Bids registered with SCSBs, if revision of the Bids results in an incremental amount, the relevant SCSB shall block the additional Bid Amount. In case of Bids, other than ASBA Bids, the members of the Syndicate or the Non Syndicate Stock Brokers shall collect the payment in the form of cheque or demand draft if any, to be paid on account of the upward revision of the Bid at the time of one or more revisions by the Bidders. In such cases, the members of the Syndicate or the Non Syndicate Stock Brokers will revise the earlier Bid details with the revised Bid and provide the cheque or demand draft number of the new payment instrument in the electronic book. The Registrar will reconcile the Bid data and consider the revised Bid data for preparing the Basis of Allotment.

(j) When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and may get a revised TRS from the members of the Syndicate or the Non Syndicate Stock Brokers or the SCSBs, as applicable. 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.

Price Discovery and Allocation (a) Based on the demand generated at various price levels, the Company, in consultation with

the BRLMs, shall finalise the Issue Price and the Anchor Investor Issue Price.

(b) If at least 75% of the Issue cannot be allotted to QIBs, the entire application money shall be refunded. In the event aggregate demand in the QIB Portion has been met, under subscription, if any, in the Non-Institutional Portion and Retail Portion would be allowed to be met with spill-over from other categories or combination of categories at the discretion of our Company in consultation with the BRLMs and the Designated Stock Exchange.

(c) Allocation to Non-Residents, including Eligible NRIs, Eligible QFIs and FIIs registered

with SEBI, applying on repatriation basis will be subject to applicable laws, rules, regulations, guidelines and approvals.

(d) Allocation to Anchor investors shall be at the discretion of the Company, in consultation

with the BRLMs, subject to compliance with the SEBI Regulations

(e) QIBs (including QIBs Bidding in the Anchor Investor Portion) and Non Institutional Bidders shall not be allowed to withdraw or lower the size of their Bids at any stage after submission of the Bid. Retail Individual Bidders may revise their Bids during the Bid/Issue Period and may withdraw their Bids until the finalization of the Basis of Allotment.

(f) The Basis of Allotment shall be put up on the website of the Registrar to the Issue. Signing of Underwriting Agreement and RoC Filing (a) The Company, the BRLMs and the Syndicate Members shall enter into an Underwriting

Agreement on or immediately after the finalisation of the Issue Price. (b) After signing the Underwriting Agreement, the Company will update and file the updated

Red Herring Prospectus with the RoC in accordance with the applicable law, which then would be termed as the ‘Prospectus’. The Prospectus will contain details of the Issue Price, Anchor Investor Issue Price, Issue size and underwriting arrangements and will be complete in all material respects.

Public announcement upon filing of this Draft Red Herring Prospectus Our Company has either on the date of filing the Draft Red Herring Prospectus with SEBI or on the next day made a public announcement in one English national daily newspaper, one Hindi national daily newspaper and one Gujarati newspaper, each with wide circulation, disclosing that the Draft Red Herring Prospectus has been filed with SEBI and inviting the public to give their comments to SEBI in respect of disclosures made in the Draft Red Herring Prospectus. Pre-Issue Advertisement

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Subject to Section 66 of the Companies Act, the Company shall, after registering the Red Herring Prospectus with the RoC, publish a pre-Issue advertisement, in the form prescribed by the SEBI Regulations, in one English language national daily newspaper, one Hindi language national daily newspaper and one Gujarati language daily newspaper, each with wide circulation. Advertisement regarding Issue Price and Prospectus The Company will issue a statutory advertisement after the filing of the Prospectus with the RoC. This advertisement, in addition to the information that has to be set out in the statutory advertisement, shall indicate the Issue Price and the Anchor Investor Issue Price. Any material updates between the date of the Red Herring Prospectus and the date of Prospectus will be included in such statutory advertisement. Notice to Anchor Investors: Allotment Reconciliation A physical book will be prepared by the Registrar on the basis of the Bid cum Application Forms received from Anchor Investors. Based on the physical book and at the discretion of the Company and the BRLMs, select Anchor Investors may be sent Allotment Advice indicating the number of Equity Shares that may be allocated to them post the Anchor Investor Bidding Date If the Issue Price is higher than the Anchor Investor Issue Price, the Anchor Investors will be sent a revised Allotment Advice indicating the number of Equity Shares allocated to such Anchor Investor and the date for payment of the balance amount (which shall be two Working Days from Bid/Issue Closing Date. Anchor Investors will be required to pay any additional amounts, being the difference between the Issue Price and the Anchor Investor Issue Price, as indicated in the revised Allotment Advice within the date referred to in the revised Allotment Advice. The dispatch of an Allotment Advice or any revision thereof will constitute a valid, binding and irrevocable contract for the Anchor Investor to pay the difference between the Issue Price and the Anchor Investor Issue Price to such Anchor Investors. Final allocation is subject to the Bid cum Application Form being valid in all respect with receipt of stipulated documents, Issue Price being finalized at a price not higher than the Anchor Investor Issue Price and Allotment by the Board. Designated Date and Allotment of Equity Shares (a) The Company will ensure that (i) the Allotment of Equity Shares; and (ii) credit to the

successful Bidder’s depositary account will be completed within 12 Working 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, the Company will ensure the credit to the successful Bidder’s depository account is completed within two Working Days from the date of Allotment.

(b) In accordance with the SEBI Regulations, Equity Shares will be issued and Allotment

shall be made only in the dematerialised form to the Allottees. (c) Allottees will have the option to re-materialise the Equity Shares so Allotted 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/ Allotted to them pursuant to this Issue. Issuance of Allotment Advice (a) Upon approval of the Basis of Allotment by the Designated Stock Exchange, the

Registrar shall upload the same on its website. Based on the approved Basis of Allotment, the Company shall pass necessary corporate action for Allotment of Equity Shares.

(b) Pursuant to confirmation of corporate actions with respect to Allotment of Equity Shares, the Registrar will then dispatch Allotment Advice to their Bidders who have been Allotted Equity Shares in the Issue.

(c) The dispatch of Allotment Advice shall be deemed a valid, binding and irrevocable contract for the Bidder.

(d) The Issuance of Allotment Advice is subject to “Notice to Anchor Investors - Allotment

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Reconciliation” as set forth under section titled “Issue Procedure” on page 323.

GENERAL INSTRUCTIONS Do’s: (a) Check if you are eligible to apply to apply as per the terms of the Red Herring Prospectus

and under applicable law; (b) Ensure that you have Bid within the Price Band;

(c) Read all the instructions carefully and complete the Bid cum Application Form; (d) Ensure that the details about PAN, DP ID and Client ID are correct as Allotment of

Equity Shares will be in the dematerialised form only; (e) Ensure that the Bids are submitted at the bidding centres only on Bid cum Application

Forms bearing the stamp of a member of the Syndicate or the Non Syndicate Stock Broker or with respect to ASBA Bidders, ensure that your Bid is submitted to a Syndicate Member (only at the Syndicate ASBA Bidding Locations) or the Non Syndicate Stock Broker or at a Designated Branch of the SCSBs where the ASBA Bidder or the person whose bank account will be utilised by the ASBA Bidder for bidding has a bank account;

(f) QIBs (other than Anchor Investors) and Non Institutional Bidders should submit their

Bids through the ASBA process only; (g) With respect to ASBA Bids ensure that the Bid cum Application Form is signed by the

account holder in case the applicant is not the account holder. Ensure that you have mentioned the correct bank account number in the Bid cum Application Form;

(h) Ensure that you request for and receive a TRS for all your Bid options;

(i) Ensure that you have funds equal to the Bid Amount in your bank account maintained

with SCSB before submitting the Bid cum Application Form under the ASBA process to the respective Designated Branch of the SCSB or a Member of the Syndicate (only at the Syndicate ASBA Bidding Locations) or the Non Syndicate Stock Broker;

(j) Ensure that you have funds equal to the Bid Amount in your bank account before submitting the Bid cum Application Form to the Syndicate or the Non Syndicate Stock Broker;

(k) Ensure that the category and sub category are indicated;

(l) Instruct your respective banks to not release the funds blocked in the bank account under the ASBA process;

(m) Submit revised Bids to the same member of the Syndicate or the Non Syndicate Stock

Broker or SCSBs through whom the original Bid was placed and obtain a revised TRS; (n) Except for Bids (i) on behalf of the Central or State Governments and the officials

appointed by the courts, who, in terms of a SEBI circular dated June 30, 2008, may be exempt from specifying their PAN for transacting in the securities market, and (ii) Bids by persons resident in the state of Sikkim, who, in terms of a SEBI circular dated July 20, 2006, may be exempted from specifying their PAN for transacting in the securities market, all Bidders should mention their PAN allotted under the IT Act. The exemption for the Central or State Government and officials appointed by the courts and for investors residing in the State of Sikkim is subject to (a) the Demographic Details received from the respective depositories confirming the exemption granted to the beneficiary owner by a suitable description in the PAN field and the beneficiary account remaining in “active status”; and (b) in the case of residents of Sikkim, the address as per the Demographic Details evidencing the same;

(o) Ensure that the Demographic Details are updated, true and correct in all respects;

(p) Ensure that thumb impressions and signatures other than in the languages specified in the

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Eighth Schedule to the Constitution of India are attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.

(q) Ensure that the name(s) given in the Bid cum Application Form is exactly the same as the

name(s) in which the beneficiary account is held with the Depository Participant. In case the Bid cum Application Form is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the Bid cum Application Form;

(r) Ensure that DP ID, Client ID and PAN mentioned in the Bid cum Application Form and entered into the electronic bidding system of the Stock Exchanges by the Syndicate Members or the Non Syndicate Stock Brokers or Designated Branches of the SCSBs, as the case may be, matches with the DP ID, Client ID and PAN available in the Depository database. The Bidders should note that in case the DP ID, Client ID and the PAN mentioned in their Bid cum Application Form and entered into the electronic bidding system of the Stock Exchanges by the Syndicate Members or the Non Syndicate Stock Brokers or the Designated Branches of the SCSBs, as the case may be, do not match with the DP ID, Client ID and PAN available in the Depository database, then such Bids are liable to be rejected;

(s) In relation to the ASBA Bids, ensure that you use the Bid cum Application Form specified for the purposes of ASBA bearing the stamp of the relevant SCSB and/ or the Designated Branch and/ or the Syndicate Member (except in case of electronic ASBA Forms) and/or the Non Syndicate Stock Broker;

(t) In relation to the ASBA Bids, ensure that your Bid cum Application Form is submitted either at a Designated Branch of a SCSB where the ASBA Account is maintained or with the Syndicate Member at the Syndicate ASBA Bidding Locations or to the Non Syndicate Stock Brokers, and not to the Escrow Collecting Banks (assuming that such bank is not a SCSB) or to our Company or the Registrar to the Issue;

(u) ASBA Bidders should ensure that the Bid cum Application Form is submitted to a Syndicate Member only at the Syndicate ASBA Bidding Locations or to the Non Syndicate Stock Brokers at the Non Syndicate Broker Centres and that the SCSB where the ASBA Account, as specified in the Bid cum Application Form, is maintained has named at-least one branch at the Syndicate ASBA Bidding Locations for the Syndicate Members or at the Non Syndicate Broker Centre for the Non Syndicate Stock Broker, as the case may be, to deposit Bid cum Application Forms (A list of such branches is available at http://www.sebi.gov.in/pmd/scsb-asba.html);

(v) Ensure that you have mentioned the correct ASBA Account number in the Bid cum Application Form;

(w) Ensure that in case of Bids under power of attorney or by limited companies, corporate, trust etc., relevant documents are submitted;

(x) Ensure that Bids submitted by any person outside India should be in compliance with applicable foreign and Indian Laws;

(y) In relation to the ASBA Bids, ensure that you have correctly signed the authorization/undertaking box in the Bid cum Application Form, or have otherwise provided an authorisation to the SCSB via the electronic mode, for blocking funds in the ASBA Account equivalent to the Bid Amount mentioned in the Bid cum Application Form; and

(z) In relation to the ASBA Bids, ensure that you receive an acknowledgement from the Designated Branch or from the Syndicate Member at the Syndicate ASBA Bidding Locations or the Non Syndicate Stock Brokers, as the case may be, for the submission of your Bid cum Application Form.

Dont’s: (a) Do not Bid for lower than the minimum Bid size;

(b) Do not Bid/ revise Bid Amount to less than the Floor Price or Higher than the Cap Price ;

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(c) Do not Bid on another Bid cum Application Form after you have submitted a Bid to the

members of the Syndicate or the Non Syndicate Stock Brokers or the SCSBs, as applicable.

(d) Do not pay the Bid Amount in cash, by money order or by postal order or by stockinvest; (e) Do not send Bid cum Application Forms by post; instead submit the same to a member of

the Syndicate or the Non Syndicate Stock Brokers or the SCSBs only; (f) Do not submit the Bid cum Application Form to Escrow Collection Banks;

(g) Do not Bid on Bid cum Application Form that does not have the stamp of the BRLMs or

Syndicate Members or the Non Syndicate Stock Brokers or the SCSBs;

(h) Do not bid at Cut-off Price (for QIB Bidders and Non-Institutional Bidders); (i) Do not Bid for a Bid Amount exceeding ` 200,000 (for Bids by Retail Individual

Bidders); (j) Do not fill up the Bid cum Application Form such that the Equity Shares bid for exceeds

the Issue Size and/ or investment limit or maximum number of Equity Shares that can be held under the applicable laws or regulations or maximum amount permissible under the applicable regulations;

(k) Do not submit incorrect details of the DP ID, Client ID and PAN or provide details for a beneficiary account which is suspended or for which details cannot be verified by the Registrar to the Issue;

(l) Do not submit Bids on plain paper or on incomplete or illegible Bid cum Application Forms, or on Bid cum application Forms in a color prescribed for another category of Bidder;

(m) Do not Bid if you are not competent to contract under the Indian Contract Act, 1872; (n) Do not submit more than five Bid cum Application Forms per ASBA Account;

(o) Do not submit ASBA Bids to a Syndicate Member at the Syndicate ASBA Bidding

Locations or to the Non Syndicate Stock Brokers at the Non Syndicate Broker Centres unless the SCSB where the ASBA Account is maintained, as specified in the Bid cum Application Form, has named at-least one branch at the Syndicate ASBA Bidding Locations for the Syndicate Members or at the Non Syndicate Broker Centre for the Non Syndicate Stock Broker, as the case may be, to deposit Bid cum Application Forms (A list of such branches is available at http://www.sebi.gov.in/pmd/scsb-asba.html).

(p) Do not make payments in any mode other than through blocking of Bid Amounts in the

ASBA Accounts in case of ASBA Bidders;

(q) Do not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground;

(r) Anchor Investors should not Bid through ASBA process; and

(s) Do not submit the Bids without the full Bid Amount.

INSTRUCTIONS FOR COMPLETING THE BID CUM APPLICATION FORM Bids must be: 1. Made only in the prescribed Bid cum Application Form or Revision Form, as applicable. 2. 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. Bidders should note that the members of the Syndicate or the Non Syndicate Stock

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Brokers or the SCSBs, as appropriate, will not be liable for errors in data entry due to incomplete or illegible Bid cum Application Forms or Revision Forms.

3. Information provided by the Bidders will be uploaded in the online IPO system by the members of the Syndicate, the Non Syndicate Stock Brokers and the SCSBs, as the case may be, and the electronic data will be used to make allocation/ Allotment. Please ensure that the details are correct and legible.

4. For Retail Individual Bidders, the Bid must be for a minimum of [●] Equity Shares and in multiples of [●] thereafter subject to a maximum Bid Amount of ` 200,000. Retail Individual Bidders may Bid at the Cut-off Price.

5. For Non-Institutional Bidders and QIB Bidders, Bids must be for a minimum of such

number of Equity Shares in multiples of [●] that the Bid Amount exceeds ` 200,000. Bids cannot be made for more than 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 the applicable laws or regulations. Bids should be submitted only using the ASBA process.

6. For Anchor Investors, Bids must be for a minimum of such number of Equity Shares that the Bid Amount exceeds or equals ` 100 million and in mul tiples of [●] Equity Shares thereafter. Bids by various schemes of a Mutual Fund in the Anchor Investor Category shall be considered together for the purpose of calculation of the minimum Bid Amount of ` 100 million.

7. In single name or as joint Bids, In case of joint Bids, the Bid cum Application Form

should contain only the name of the first Bidder whose name should also appear as the first holder of the beneficiary account held in joint names. The signature of only such first Bidder would be required in the Bid cum Application Form and such first Bidder would be deemed to have signed on behalf of the joint holders.

8. Thumb impressions and signatures other than in the languages specified in the Eighth

Schedule to the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.

Bidder’s PAN, Depository Account and Bank Account Details Bidders should note that on the basis of PAN of the Bidders, DP ID and Client ID provided by them in the Bid cum Application Form, the Registrar will obtain from the Depository the Demographic Details including category, age, address, Bidders bank account details, MICR code and occupation (hereinafter referred to as “Demographic Details”). These Bank Account details would be used for giving refunds allocation advice (including through physical refund warrants, direct credit, NECS, NEFT and RTGS) to the Bidders or unblocking of ASBA Account. 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 despatch/ credit of refunds to Bidders or unblocking of ASBA Account at the Bidders sole risk and neither the BRLMs or the Registrar or the Escrow Collection Banks or the SCSBs nor the Company shall have any responsibility and undertake any liability for the same. Hence, Bidders should carefully fill in their Depository Account details in the Bid cum Application Form. IT IS MANDATORY FOR ALL THE BIDDERS TO GET THEIR EQUITY SHARES IN DEMATERIALIZED FORM. ALL BIDDERS SHOULD MENTION THEIR DP ID, CLIENT ID AND PAN IN THE BID CUM APPLICATION FORM. INVESTORS MUST ENSURE THAT THE DP ID, CLIENT ID AND PAN GIVEN IN THE BID CUM APPLICATION FORM ARE EXACTLY THE SAME AS THE DP ID, CLIENT ID AND PAN AVAILABLE IN THE DEPOSITORY DATABASE. IN CASE OF JOINT BIDS, THE BID CUM APPLICATION FORM SHOULD CONTAIN ONLY THE NAME OF THE FIRST BIDDER WHOSE NAME SHOULD ALSO APPEAR AS THE FIRST HOLDER OF THE BENEFICIARY ACCOUNT HELD IN JOINT NAMES. THE SIGNATURE OF ONLY SUCH FIRST BIDDER WOULD BE REQUIRED IN THE BID CUM APPLICATION FORM AND SUCH FIRST BIDDER WOULD BE DEEMED TO HAVE SIGNED ON BEHALF OF THE JOINT HOLDERS. Bidders may note that in case the DP ID, Client ID and PAN mentioned in the Bid cum

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Application Form, as the case may be and entered into the electronic bidding system of the stock exchange by the members of the Syndicate or the Non Syndicate Stock Brokers or the SCSBs do not match with the DP ID, Client ID and PAN available in the Depository database, the Bid cum Application Form is liable to be rejected. These Demographic Details would be used for all correspondence with the Bidders including mailing of the refund orders /allocation advice and printing of bank particulars on the refund orders or for refunds through electronic transfer of funds, as applicable. The Demographic Details given by Bidders in the Bid cum Application Form would not be used for any other purpose by the Registrar. By signing the Bid cum Application Form, the Bidder would be deemed to have authorised the depositories to provide, upon request, to the Registrar, the required Demographic Details as available on its records. Refund Orders/Allocation Advice 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 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 non-ASBA Bidder 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 such Bidders sole risk and neither the Company, the Escrow Collection Banks nor the BRLMs nor the Registrar shall be liable to compensate the Bidder for any losses caused to the Bidder due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories, which matches the two parameters, namely, PAN of the Bidder and DP ID and Client ID, then such Bids are liable to be rejected. Bids by Non Residents including Eligible NRIs, FIIs registered with SEBI Bids and revision to Bids must be made in the following manner: 1. On the Bid cum Application Form or the Revision Form, as applicable (Blue in colour),

and completed in full in BLOCK LETTERS in ENGLISH in accordance with the instructions contained therein.

2. In a single name or joint names (not more than three and in the same order as their

Depositary Participant Details).

3. Bids on a repatriation basis shall be in the names of individuals, or in the name of FIIs but not in the names of minors, OCBs, firms or partnerships, foreign nationals (excluding NRIs) or their nominees.

Bids by Eligible NRIs for a Bid Amount of up to ` 200,000 would be considered under the Retail Portion for the purposes of allocation and Bids for a Bid Amount of more than ` 200,000 would be considered under Non-Institutional Portion for the purposes of allocation. 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 US 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 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. The Company will not be responsible for loss, if any, incurred by the Bidder on account of conversion of foreign currency. There is no reservation for Eligible NRIs, Eligible QFIs and FIIs and all Bidders will be treated on the same basis with other categories for the purpose of allocation. Bids under Power of Attorney In case of Bids (including Bids by ASBA Bidders) made pursuant to a power of attorney or by limited companies, corporate bodies, registered societies, Eligible QFIs, FIIs, Mutual Funds,

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insurance companies and provident funds with a minimum corpus of ` 250 million (subject to applicable law) and pension funds with a minimum corpus of ` 250 million, 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 of association and articles of association and/or bye laws must be lodged along with the Bid cum Application Form. In addition to the above, certain additional documents are required to be submitted by the following entities: (a) With respect to Bids by FIIs and Mutual Funds, a certified copy of their SEBI registration

certificate must be lodged along with the Bid cum Application Form.

(b) With respect to Bids by insurance companies registered with the Insurance Regulatory and Development Authority, in addition to the above, a certified copy of the certificate of registration issued by the Insurance Regulatory and Development Authority must be lodged along with the Bid cum Application Form.

(c) With respect to Bids made by provident funds with a minimum corpus of ` 250 million

(subject to applicable law) and pension funds with a minimum corpus of ` 250 million, a certified copy of a certificate from a chartered accountant certifying the corpus of the provident fund/pension fund must be lodged along with the Bid cum Application Form.

With respect to Bids made by limited liability partnerships registered under the Limited Liability Partnership Act, 2008, a certified copy of certificate of registration issued under the Limited Liability Partnership Act, 2008, must be attached to the Bid cum Application Form. Submission of Bid cum Application Forms or Revision Forms With respect to non-ASBA Bidders, the Bid cum Application Form or Revision Form duly completed and accompanied by account payee cheques or drafts shall be submitted to the Syndicate or the Non Syndicate Stock Brokers at the time of submission of the Bid. With respect to ASBA Bidders, the Bid cum Application Form or the Revision Form shall be submitted (i) either in physical form to the Designated Branches or in electronic form through the internet banking facility available with the SCSBs or any other electronically enabled mechanism for bidding; or (ii) to the Syndicate at the Syndicate ASBA Bidding Locations or to the Non Syndicate Stock Brokers. PAYMENT INSTRUCTIONS Escrow Mechanism for non-ASBA Bidders The Company and the Syndicate shall open Escrow Accounts with one or more Escrow Collection Bank(s) in whose favour the Bidders (other than ASBA 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 full Bid Amount from Bidders in a certain category would be deposited in the Escrow Account. The Escrow Collection Banks will act in terms of the Red Herring Prospectus and the Escrow Agreement. The Escrow Collection Banks for and on behalf of the Bidders shall maintain the monies in the Escrow Account until the Designated Date. The Escrow Collection Banks 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 funds represented by allocation of Equity Shares (other than ASBA funds with the SCSBs) from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account with the Bankers to the Issue. The balance amount after transfer to the Public Issue Account shall be transferred to the Refund Account. Payments of refund to the Bidders shall also be made from the Refund Account as per the terms of the Escrow Agreement and the Red Herring Prospectus. The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established as an arrangement between the Company, the Syndicate, the Escrow Collection Banks and the Registrar to facilitate collection from the Bidders. Payment mechanism for ASBA Bidders

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The ASBA Bidders shall specify the bank account number in the Bid cum Application Form and the SCSBs shall block an amount equivalent to the Bid Amount in the bank account specified in the Bid cum Application Form. The SCSBs shall keep the Bid Amount in the relevant bank account blocked until withdrawal/ rejection of the ASBA Bid or receipt of instructions from the Registrar to unblock the Bid Amount. In the event of withdrawal or rejection of the Bid cum Application Form or for unsuccessful Bid cum Application Forms, the Registrar shall give instructions to the SCSBs to unblock the application money in the relevant bank account within one day of receipt of such instruction. The Bid Amount shall remain blocked in the ASBA Account until finalisation of the Basis of Allotment in the Issue and consequent transfer of the Bid Amount to the Public Issue Account, or until withdrawal/ failure of the Issue or until rejection of the ASBA Bid, as the case may be. In case of Bids by FIIs, a special Rupee Account should be mentioned in the Bid cum Application Form, for blocking of funds, along with documentary evidence in support of the remittance. In case of Bids by Eligible NRIs applying on repatriation basis, a NRE Account or a FCNR Account, maintained with banks authorized to deal in foreign exchange in India, should be mentioned in the Bid cum Application Form for blocking of funds, along with documentary evidence in support of the remittance. In case of Bids by Eligible NRIs applying on a non-repatriation basis, a NRE Account or a FCNR Account maintained with banks authorized to deal in foreign exchange in India or a NRO Account, should be mentioned in the Bid cum Application Form for blocking of funds, along with documentary evidence in support of the remittance. Pursuant to SEBI circular bearing no. CIR/CFD/DIL/1/2013 dated January 2, 2013, ASBA Bidders being banks should have a separate ASBA Account in its own name with any other SEBI registered SCSB. Such ASBA Account shall be used solely for the purpose of making application in the Issue and clear demarcated funds should be available in such ASBA Account for Bids under ASBA. Payment into Escrow Account for non-ASBA Bidders Each Bidder shall draw a cheque or demand draft or, remit the funds electronically through the RTGS mechanism for the Bid Amount payable on the Bid and/or on allocation/Allotment as per the following terms: 1. All Bidders would be required to pay the full Bid Amount at the time of the submission of

the Bid cum Application Form.

2. The Bidders shall, with the submission of the Bid cum Application Form, draw a payment instrument for the Bid Amount in favour of the Escrow Account and submit the same to the members of the Syndicate or the Non Syndicate Stock Brokers. If the payment is not made favouring the Escrow Account along with the Bid cum Application Form, the Bid of the Bidder shall be rejected.

3. The payment instruments for payment into the Escrow Account should be drawn in favour of:

(a) In case of Resident Retail: “Escrow Account - [●] IPO – R” (b) In case of Non-Resident Retail: “Escrow Account - [●] IPO – NR”

4. Anchor Investors would be required to submit the Bid using the ASBA process and the Bid Amount at the time of submission of the Bid cum Application Form. In the event of the Issue Price being higher than the price at which allocation is made to Anchor Investors, the Anchor Investors shall be required to pay such additional amount to the extent of shortfall between the price at which allocation is made to them and the Issue Price as per the pay-in date mentioned in the revised CAN. If the Issue Price is lower than the price at which allocation is made to Anchor Investors, the amount in excess of the Issue Price paid by Anchor Investors shall not be refunded to them.

5. For Anchor Investors, the payment instruments for payment into the Escrow Account should be drawn in favour of:

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(a) In case of resident Anchor Investors: “Escrow Account - [●] IPO - Anchor

Investor – R”

(b) In case of non-resident Anchor Investors: “Escrow Account - [●] IPO - Anchor Investor – NR”

6. 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 Non-Resident Ordinary (NRO) Account of Non-Resident Bidder bidding on a repatriation basis. Payment by drafts should be accompanied by bank certificate confirming that the draft has been issued by debiting to NRE Account or FCNR Account.

7. In case of Bids by NRIs applying on non-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 or out of a Non-Resident Ordinary (NRO) Account of a Non-Resident Bidder bidding on a non-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 or NRO Account.

8. 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. 9. The monies deposited in the Escrow Account will be held for the benefit of the non-

ASBA Bidders till the Designated Date. 10. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the

Escrow Account as per the terms of the Escrow Agreement into the Public Issue Account with the Bankers to the Issue.

11. Payments should be made by cheque, or a demand draft 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 cheques/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.

12. Bidders are advised to provide the number of the Bid cum Application Form on the reverse of the cheque or bank draft to avoid misuse of instruments submitted with the Bid cum Application Form.

OTHER INSTRUCTIONS Joint Bids in the case of Individuals Bids may be made in single or joint names. In the case of joint Bids, the Bid cum Application Form should contain only the name of the first Bidder whose name should also appear as the first holder of the beneficiary account held in joint names. The signature of only such first Bidders would be required in the Bid cum Application Form and such first Bidder would be deemed to have signed on behalf of the joint holders. All communications will be addressed to the First Bidder and will be dispatched to his or her address as per the Demographic Details received from the Depository. 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 will be deemed to be multiple Bids if the sole or First Bidder is one and the same.

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In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund 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. Bids by QIBs under the Anchor Investor Portion and QIB Portion (excluding Anchor Investor Portion) will not be considered as multiple Bids. After submitting a bid using an Bid cum Application Form either in physical or electronic mode, where such ASBA Bid has been uploaded with the Stock Exchanges, an ASBA Bidder cannot Bid, either in physical or electronic mode, whether on another Bid cum Application Form, to either the same or another Designated Branch of the SCSBs or members of the Syndicate or the Non Syndicate Stock Brokers. Submission of a second Bid in such manner will be deemed a multiple Bid and would be rejected either before entering the Bid into the electronic Bidding system or at any point of time prior to the allocation or Allotment of the Equity Shares in the Issue. However, ASBA Bidders may revise their Bids through the Revision Form, the procedure for which is described in “– Build up of the Book and Revision of Bids” on page 339. However QIBs and Non Institutional Bidders cannot withdraw or lower the size of their Bids at any stage after submission of the Bid. More than one ASBA Bidder may Bid for Equity Shares using the same ASBA Account, provided that the SCSBs will not accept a total of more than five Bid cum Application Forms with respect to any single ASBA Account. Duplicate copies of Bid cum Application Forms downloaded and printed from the website of the Stock Exchanges bearing the same application number shall be treated as multiple Bids and are liable to be rejected. The Company, in consultation with the BRLMs, reserves the right to reject, in its absolute discretion, all or all except one of such multiple Bids in any or all categories. All Bids will be checked for common PAN as per the records of Depository. For Bidders other than Mutual Funds and FII sub-accounts, Bids bearing the same PAN will be treated as multiple Bids and will be rejected. The Registrar will obtain, from the depositories, details of the applicant’s address based on the DP ID and Client ID provided in the Bid data. All instances where more than 20 Bid cum Application Forms as the case maybe, have the same address, such Equity Shares shall be kept in abeyance subsequent to finalization of the Basis of Allotment and shall be credited to such Bidder’s demat account upon receipt of appropriate confirmation from the concerned Depository Participant that the know your client process has been adequately conducted by it in all such cases. Permanent Account Number or PAN Except for Bids on behalf of the Central or State Government and the officials appointed by the courts, the Bidders, or in the case of a Bid in joint names, each of the Bidders, should mention his/ her PAN allotted under the I.T. Act. In accordance with the SEBI Regulations, the PAN would be the sole identification number for participants transacting in the securities market, irrespective of the amount of transaction. Any Bid cum Application Form without the PAN is liable to be rejected, except for residents in the state of Sikkim, who may be exempted from specifying their PAN for transactions in the securities market. 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. However, the exemption for the Central or State Government and the officials appointed by the courts and for investors residing in the State of Sikkim is subject to the Depository Participants’ verifying the veracity of such claims of the investors by collecting sufficient documentary evidence in support of their claims. At the time of ascertaining the validity of these Bids, the Registrar will check under the Depository records for the appropriate description under the PAN field i.e. either Sikkim category or exempt category. With effect from August 16, 2010, the beneficiary accounts of Bidders for whom PAN details have not been verified will be “suspended for credit” and no credit of Equity Shares pursuant to the Issue will be made in the accounts of such Bidders.

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Withdrawal of Bids Withdrawal by Retail Individual Bidders Retail Individual Bidders may withdraw their Bids until the finalisation of the Basis of Allotment. ASBA Bidders can withdraw their Bids during the Bid/Issue Period by submitting a request for the same to the concerned SCSB or the concerned member of the Syndicate or the Non Syndicate Stock Broker, as applicable, who shall do the requisite, including deletion of details of the withdrawn Bid cum Application Form from the electronic bidding system of the Stock Exchange. Further, the SCSBs shall unblock the funds in the ASBA Account either directly or at the instruction of the member of the Syndicate or the Non Syndicate Stock Broker which had forwarded the Bid cum Application Form to it. In case such an ASBA Bidder wishes to withdraw the Bid after the Bid/Issue Closing Date, the same can be done by submitting a withdrawal request to the Registrar to the Issue prior to the finalization of Allotment. The Registrar to the Issue shall delete the withdrawn Bid from the Bid file and give instruction to the SCSB for unblocking the ASBA Account after approval of the ‘Basis of Allotment’. Withdrawal by QIBs and Non-Institutional Bidders QIBs (including QIBs Bidding in the Anchor Investor Portion) and Non-Institutional Bidders are not permitted to withdraw or lower the size of their Bids at any stage after submission of the Bid. REJECTION OF BIDS Our Company has a right to reject Bids based on technical grounds. In case of QIBs, other than Anchor Investors, Bidding through the Syndicate, the BRLMs and their affiliate members of the Syndicate, may reject Bids at the time of acceptance of the Bid cum Application Form provided that the reasons for such rejection shall be disclosed to such Bidder in writing. In case of Non-Institutional Bidders and Retail Individual Bidders, Bids will be rejected on technical grounds listed herein. The members of the Syndicate may also reject Bids if all the information required is not provided and the Bid cum Application Form is incomplete in any respect. The SCSBs and the Non Syndicate Stock Brokers shall have no right to reject Bids, except on technical grounds or in the event that if at the time of blocking the Payment Amount in the ASBA Account, the SCSB ascertains that sufficient funds are not available in the Bidder’s ASBA Account. Further, in case any DP ID, Client ID or PAN mentioned in the Bid cum Application Form and as entered into the electronic Bidding system of the Stock Exchanges by the members of the Syndicate, the SCSBs or the Non Syndicate Registered Brokers, as the case may be, does not match with one available in the depository’s database, such ASBA Bid shall be rejected by the Registrar to the Issue. Subsequent to the acceptance of a Bid by way of ASBA by the SCSB, our Company would have a right to reject such Bids by way of ASBA only on technical grounds. Grounds for Technical Rejections Bidders should note that incomplete Bid cum Application Forms and Bid cum Application Forms that are not legible will be rejected by the members of the Syndicate or the Non Syndicate Stock Brokers or the SCSBs. Bidders are advised to note that Bids are liable to be rejected inter alia on the following technical grounds: • DP ID and Client ID not mentioned in the Bid cum Application Form

• Amount paid does not tally with the amount payable for the highest value of Equity

Shares Bid for. With respect to ASBA Bids, the amounts mentioned in the Bid cum Application Form does not tally with the amount payable for the value of the Equity Shares Bid for;

• In case of partnership firms, Equity Shares may be registered in the names of the

individual partners and no firm as such shall be entitled to apply. However, a limited liability partnership can apply in its own name.;

• Bid by persons not competent to contract under the Indian Contract Act, 1872 including

minors and insane persons;

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• PAN not mentioned in the Bid cum Application Form (except for Bids from Central or State Government or officials appointed by a court or residents of Sikkim);

• PAN details not being verified with demat accounts. The demat accounts for such Bidders

is “suspended for credit”;

• GIR number furnished instead of PAN;

• Bids for lower number of Equity Shares than specified for that category of investors;

• Bids at a price less than the lower end of the Price Band;

• Bids at a price more than the higher end of the Price Band;

• Signature of sole or first Bidder missing;

• Submission of more than five Bid cum Application Forms per ASBA account;

• Submission of Bids by Bid cum Application Forms by QIBs and Non-Institutional Bidders without the ASBA mechanism;

• Bids at Cut-off Price by Non-Institutional and QIB Bidders;

• Bids for number of Equity Shares which are not in multiples of [●];

• Category not indicated;

• Multiple Bids as defined in the Red Herring Prospectus;

• In case of Bids under power of attorney or by limited companies, corporate, trust etc., if relevant documents are not submitted;

• Bids accompanied by stockinvest/money order/postal order/cash;

• Bid cum Application Forms does not have the stamp of the BRLMs or Syndicate

Members or the Non Syndicate Stock Brokers or the SCSBs;

• Bid cum Application Form does not have the Bidder’s depository account details;

• Bids by Bidders whose demat accounts have been ‘suspended for credit’ pursuant to the circular issued by SEBI on July 29, 2010 bearing number CIR/MRD/DP/22/2010;

• Bid cum Application Forms not being signed by the ASBA account holder, if the account

holder is different from the ASBA Bidder;

• Bid cum Application Forms submitted under the ASBA process not having details of the ASBA Account to be blocked;

• Bid cum Application Forms submitted under the ASBA process not containing the authorization for blocking the Bid Amount in the bank account specified in the Bid cum Application Form;

• Bid cum Application Forms are not delivered by the Bidders within the time prescribed as

per the Bid cum Application Forms, Bid/Issue Opening Date advertisement and the Red Herring Prospectus and as per the instructions in the Red Herring Prospectus and the Bid cum Application Forms;

• In case no corresponding record is available with the Depositories that matches the DP ID

Client ID and PAN;

• With respect to ASBA Bids, inadequate funds in the bank account to block the Bid Amount specified in the Bid cum Application Form at the time of blocking such Bid Amount in the bank account;

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• Bids for amounts greater than the maximum permissible amounts prescribed by the

regulations; • Bids where clear funds are not available in Escrow Accounts as per final certificate from

the Escrow Collection Banks;

• Bids by QIBs (other than Anchor Investors) and Non Institutional Bidders not submitted through ASBA process;

• ASBA Bids submitted to a Syndicate Member at locations other than the Syndicate ASBA Bidding Locations or to the Non Syndicate Stock Brokers at locations other than Non Syndicate Broker Centres and Bid cum Application Forms submitted to the Escrow Collecting Banks (assuming that such bank is not a SCSB), to our Company or the Registrar to the Issue;

• Bids by persons in the United States; • Bids not uploaded on the terminals of the Stock Exchanges

• Bids by any person outside India if not in compliance with applicable foreign and Indian

laws; and

• Bids by persons prohibited from buying, selling or dealing in the shares directly or indirectly by SEBI or any other regulatory authority.

• ASBA Bids by SCSBs on their own account, through an ASBA Account maintained in its own name with itself.

BIDDERS SHOULD NOTE THAT IN CASE THE PAN, THE DP ID AND CLIENT ID MENTIONED IN THE BID CUM APPLICATION FORM AND ENTERED INTO THE ELECTRONIC BIDDING SYSTEM OF THE STOCK EXCHANGES BY THE SYNDICATE MEMBERS OR THE NON SYNDICATE STOCK BROKERS OR THE SCSBS DO NOT MATCH WITH PAN, THE DP ID AND CLIENT ID AVAILABLE IN THE DEPOSITORY DATABASE, THE BID CUM APPLICATION FORM IS LIABLE TO BE REJECTED. EQUITY SHARES IN DEMATERIALISED FORM WITH NSDL OR CDSL As per the provisions of Section 68B of the Companies Act, the Allotment of Equity Shares in this Issue shall be only in de-materialised 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 agreements have been signed among the Company, the respective Depositories and the Registrar: • Agreement dated [●] between NSDL, the Company and the Registrar; • Agreement dated [●], between CDSL, the Company and the Registrar. All Bidders can seek Allotment only in dematerialised mode. Bids from any Bidder without relevant details of his or her depository account are liable to be rejected. (a) A Bidder applying for Equity Shares must have at least one beneficiary account with

either of the Depository Participants of either NSDL or CDSL prior to making the Bid. (b) The Bidder must necessarily fill in the details (including the PAN, the DP ID and Client

ID) appearing in the Bid cum Application Form or Revision Form. (c) Allotment to a successful Bidder will be credited in electronic form directly to the

beneficiary account (with the Depository Participant) of the Bidder. (d) 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 Bids, the Bid cum

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Application Form should contain only the name of the first Bidder whose name should also appear as the first holder of the beneficiary account held in joint names. The signature of only such first Bidder would be required in the Bid cum Application Form and such first Bidder would be deemed to have signed on behalf of the joint holders.

(e) 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.

(f) 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 or her Depository Participant. (g) Equity Shares in electronic form can be traded only on the Stock Exchanges having

electronic connectivity with NSDL and CDSL. All the Stock Exchanges where the Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL.

(h) The trading of the Equity Shares of the Company would be in dematerialised form only

for all Bidders in the demat segment of the respective Stock Exchanges. (i) Non-transferable advice or refund orders will be directly sent to the Bidders by the

Registrar to the Issue. Communications All future communications in connection with Bids made in this Issue should be addressed to the Registrar quoting the full name of the sole or First Bidder, Bid cum Application Form number, the Bidders’ Depository Account Details, number of Equity Shares applied for, date of Bid cum Application Form, name and address of the member of the Syndicate or the Non Syndicate Stock Broker or the Designated Branch of the SCSBs where the Bid was submitted and cheque or draft number and issuing bank thereof or with respect to ASBA Bids, bank account number in which the amount equivalent to the Bid Amount was blocked. Bidders 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 Allotment, credit of allotted shares in the respective beneficiary accounts, refund orders etc. In case of ASBA Bids submitted with the Designated Branches of the SCSBs or the Non Syndicate Stock Brokers, Bidders can contact the Designated Branches of the SCSBs or the Non Syndicate Stock Brokers. PAYMENT OF REFUND Non-ASBA Bidders must note that on the basis of the names of the Bidders DP ID and Client ID provided by them in the Bid cum Application Form, the Registrar will obtain, from the Depositories, the Bidders’ bank account details, including the nine digit Magnetic Ink Character Recognition (“MICR”) code as appearing on a cheque leaf to make refunds. Accordingly, Bidders are advised to immediately update their details as appearing on the records of their Depository Participants. Failure to do so may result in delays in dispatch of refund orders or refunds through electronic transfer of funds, as applicable, and any such delay will be at the Bidders’ sole risk and neither our Company, the Registrar, the Escrow Collection Banks, or the members of the Syndicate, will be liable to compensate the Bidders for any losses caused to them due to any such delay, or liable to pay any interest for such delay. On the Designated Date and no later than 12 Working Days from the Bid/Issue Closing Date, the Escrow Collection Banks shall despatch refund orders for all amounts payable to unsuccessful non-ASBA Bidders and also the excess amount paid on bidding, if any, after adjusting for allocation/Allotment to such Bidders. Mode of making refunds for non-ASBA Bidders The payment of refund, if any, for non-ASBA Bidders would be done through various modes in the following order of preference: 1. NECS – Payment of refund would be done through NECS for applicants having an

account at any of the centres where such facility has been made available. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories.

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2. Direct Credit – Applicants having bank accounts with the Refund Bank(s), shall be

eligible to receive refunds through direct credit. Charges, if any, levied by the Refund Bank(s) for the same would be borne by the Company.

3. RTGS – Applicants having a bank account at any of the centres where such facility is

available and whose refund amount exceeds ` 200,000 will be considered to receive refund through RTGS. For such eligible applicants, IFSC code will be derived based on MICR code of the Bidder as per depository records. In the event the same is not available as per depository’s records, refund shall be made through NECS. Charges, if any, levied by the Refund Bank(s) for the same would be borne by the Company. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant.

4. NEFT – Payment of refund shall be undertaken through NEFT wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a MICR code, if any, available to that particular bank branch. IFSC will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method.

5. For all other applicants, including those who have not updated their bank particulars with the MICR code, the refund orders will be despatched through Speed Post/ Registered Post. Such refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection Banks 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.

Mode of making refunds for ASBA Bidders In case of ASBA Bidders, the Registrar shall instruct the relevant SCSB to unblock the funds in the relevant ASBA Account to the extent of the Bid Amount specified in the Bid cum Application Forms for withdrawn, rejected or unsuccessful or partially successful ASBA Bids within 12 Working Days of the Bid/Issue Closing Date. DISPOSAL OF APPLICATIONS AND APPLICATION MONEYS AND INTEREST IN CASE OF DELAY With respect to non-ASBA Bidders, the Company shall ensure dispatch of Allotment advice, refund orders (except for Bidders who receive refunds through electronic transfer of funds) and give benefit to the beneficiary account with Depository Participants and submit the documents pertaining to the Allotment to the Stock Exchanges within 12 Working Days from the date of Allotment of Equity Shares. In case of applicants who receive refunds through NECS, direct credit or RTGS, the refund instructions will be given to the clearing system within 12 Working Days from the Bid/ Issue Closing Date. A suitable communication shall be sent to the Bidders receiving refunds through this mode within 12 Working Days of Bid Closing Date, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund. The Company shall use best efforts to ensure that all steps for completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed, are taken within 12 Working Days of the Bid/Issue Closing Date. In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI Regulations, the Company further undertakes that: • Allotment of Equity Shares shall be made only in dematerialised form within 12 Working

Days of the Bid/Issue Closing Date; • With respect to non-ASBA Bidders, dispatch of refund orders or in a case where the

refund or portion thereof is made in electronic manner, the refund instructions are given to the clearing system within 12 Working Days of the Bid/Issue Closing Date would be

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ensured. With respect to the ASBA Bidders, instructions for unblocking of the ASBA Bidder’s Bank Account shall be made within 12 Working Days from the Bid/Issue Closing Date; and

• The Company shall pay interest at 15% per annum for any delay beyond the 15 days from

the Bid/Issue Closing Date, if Allotment is not made and refund orders are not dispatched 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 and/or demat credits are not made to investors within the 12 Working Days prescribed above. If such money is not repaid within eight days from the day the Company becomes liable to repay, the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under the applicable law.

IMPERSONATION Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Companies Act, which is reproduced below: “Any person who: (a) makes in a fictitious name, an application to a company for acquiring or subscribing

for, any shares therein, or (b) otherwise induces a company to allot, or register any transfer of shares, therein to him,

or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years.” BASIS OF ALLOTMENT A. For Retail Individual Bidders

• Bids received from the Retail Individual Bidders at or above the Issue Price shall

be grouped together to determine the total demand under this category. The Allotment to all the successful Retail Individual Bidders will be made at the Issue Price.

• Not more than 10% of the Issue size shall be available for Allotment to Retail Individual Bidders who have Bid in the Issue at a price that is equal to or greater than the Issue Price.

• 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 Retail Individual Bidders to the extent of their valid Bids.

• In the event, the Bids received from Retail Individual Bidders exceeds [●]

Equity Shares, then the maximum number of Retail Individual Bidders who can be allocated/Allotted the minimum Bid Lot will be computed by dividing the total number of Equity Shares available for allocation/Allotment to Retail Individual Investors by the minimum Bid Lot (“Maximum RII Allottees”). The allocation/Allotment to Retail Individual Investors will then be made in the following manner:

o In the event the number of Retail Individual Bidders who have

submitted valid Bids in the Issue is equal to or less than Maximum RII Allottees, (i) Retail Individual Bidders shall be allocated / Allotted the minimum Bid Lot; and (ii) the balance Equity Shares, if any, remaining in the Retail Portion shall be allocated/ Allotted to the Retail Individual Bidders who have received allocation/Allotment as per (i) above for less than the Equity Shares Bid by them (i.e. who have Bid for more than the minimum Bid Lot).

o In the event the number of Retail Individual Bidders who have submitted valid Bids in the Issue is more than Maximum RII Allottees, the Retail

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Individual Bidders (in that category) who will then be allocated/ Allotted minimum Bid Lot shall be determined on draw of lots basis.

• For the method of proportionate Basis of Allotment to Retail Individual Bidders,

see “Illustration of Allotment to Retail Individual Bidders” in this section.

B. For Non-Institutional Bidders • Bids received from Non-Institutional Bidders at or above the Issue Price shall be

grouped together to determine the total demand under this category. The Allotment to all successful Non-Institutional Bidders will be made at the Issue Price.

• The Issue size less Allotment to QIBs and Retail Portion shall be available for Allotment to Non-Institutional Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

• If the aggregate demand in this category is less than or equal [●] Equity Shares at or above the Issue Price, full Allotment shall be made to Non-Institutional Bidders to the extent of their demand.

• In case the aggregate demand in this category is greater than [●] Equity Shares at or above the Issue Price, Allotment shall be made on a proportionate basis up to a minimum of [●] Equity Shares. For the method of proportionate Basis of Allotment refer below.

C. For QIBs (other than Anchor Investors)

• 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 Allotment to all the QIB Bidders will be made at the Issue Price.

• The QIB Portion shall be available for Allotment to QIB Bidders who have bid

in the Issue at a price that is equal to or greater than the Issue Price. • Allotment shall be undertaken in the following manner:

(a) In the first instance allocation to Mutual Funds for up to 5% of the QIB Portion (excluding Anchor Investor Portion) shall be determined as follows:

(i) In the event that Mutual Fund Bids exceeds 5% of the QIB

Portion (excluding Anchor Investor Portion), allocation to Mutual Funds shall be done on a proportionate basis for up to 5% of the QIB Portion (excluding Anchor Investor Portion).

(ii) In the event that the aggregate demand from Mutual Funds is

less than 5% of the QIB Portion (excluding Anchor Investor 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 for Allotment to all QIB Bidders as set out in (b) below;

(b) In the second instance Allotment to all QIBs shall be determined as

follows:

1. In the event that the oversubscription in the QIB Portion, all QIB Bidders (excluding Anchor Investors) 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.

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2. 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 Shares on a proportionate basis along with other QIB Bidders (excluding Anchor Investors).

3. Under-subscription below 5% of the QIB Portion (excluding

Anchor Investor Portion), if any, from Mutual Funds, would be included for allocation to the remaining QIB Bidders on a proportionate basis.

• The aggregate Allotment to QIB Bidders shall be at least 75 % of the Issue or at

least [●] Equity Shares. D. For Anchor Investor Portion

• Allocation of Equity Shares to Anchor Investors at the Anchor Investor Issue Price will be at the discretion of the Company, in consultation with the BRLMs, subject to compliance with the following requirements:

(a) not more than 30% of the QIB Portion will be allocated to Anchor

Investors;

(b) one-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to other Anchor Investors;

(c) allocation to Anchor Investors shall be on a discretionary basis and

subject to: • a maximum number of two Anchor Investors for allocation upto `

100 million; • a minimum number of two Anchor Investors and maximum

number of 15 Anchor Investors for allocation of more than ` 100 million and up to ` 2,500 million subject to minimum allotment of ` 50 million per such Anchor Investor;

• a minimum number of five Anchor Investors and maximum number of 25 Anchor Investors for allocation of more than ` 2,500 million subject to minimum allotment of ` 50 million per such Anchor Investor.

• The number of Equity Shares Allotted to Anchor Investors and the Anchor

Investor Issue Price, shall be made available in the public domain by the BRLMs before the Bid/ Issue Opening Date by intimating the same to the Stock Exchanges.

Method of Proportionate Basis of Allotment in the Issue Allotment to Anchor Investors shall be on a discretionary basis and not on a proportionate basis. Subject to valid Bids being received, allocation of Equity Shares to each Retail Individual Bidder shall not be less than the minimum Bid Lot, subject to availability of Equity Shares in the Retail Portion and the remaining available Equity Shares, if any, shall be allotted on a proportionate basis. In the event of the Issue being over-subscribed, the Company shall finalise the Basis of Allotment in consultation with the BRLMs and the Designated Stock Exchange. The executive Director (or any other senior official nominated by them) of the Designated Stock Exchange along with the BRLMs and the Registrar shall be responsible for ensuring that the Basis of Allotment is finalised in a fair and proper manner. The Allotment to QIB Bidders and Non Institutional Bidders shall be made in marketable lots on a proportionate basis as explained below:

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a) Bidders will be categorised according to the number of Equity Shares applied for. b) The total number of Equity Shares to be allotted to each category as a whole shall be

arrived at on a proportionate basis, which is the total number of Equity Shares applied for in that category (number of Bidders in the category multiplied by the number of Equity Shares applied for) multiplied by the inverse of the over-subscription ratio.

c) Number of Equity Shares to be allotted to the successful Bidders will be arrived at on a

proportionate basis, which is total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse of the over-subscription ratio.

d) In all Bids where the proportionate Allotment is less than [●] Equity Shares per Bidder,

the Allotment shall be made as follows: • The successful Bidders out of the total Bidders for a category shall be

determined by draw of lots in a manner such that the total number of Equity Shares allotted in that category is equal to the number of Equity Shares calculated in accordance with (b) above; and

• Each successful Bidder shall be allotted a minimum of [●] Equity Shares.

e) If the proportionate Allotment to a Bidder is a number that is more than [●] 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 lower than 0.5 it would be rounded off to the lower whole number. Allotment to all in such categories would be arrived at after such rounding off.

f) 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 Equity 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.

Illustration of Allotment to Retail Individual Bidders (Investors should note that this example is solely for illustrative purposes and is not specific to the Issue) A. (1) Total no. of specified securities on offer at ` 600 per equity share: 10 million specified

securities. (2) Specified securities on offer for retail individual investors' category: 3.5 million specified

securities. (3) The issue is over-subscribed 2.5 times whereas the retail individual investors' category is

oversubscribed 4 times. (4) Issuer decides to fix the minimum application / bid size as 20 specified securities (falling

within the range of ` 10,000 - 15,000). Application can be made for a minimum of 20 specified securities and in multiples thereof.

(5) Assume that a total of 100,000 retail individual investors have applied in the issue, in

varying number of bid lots i.e. between 1 - 16 bid lots, based on the maximum application size of up to ` 200,000.

(6) Out of the 100,000 investors, there are five retail individual investors A, B, C, D and E

who have applied as follows: A has applied for 320 specified securities. B has applied for 220 specified securities. C has applied for 120 specified securities. D has applied for 60 specified securities and E has applied for 20 specified securities.

(7) As per allotment procedure, the allotment to retail individual investors shall not be less

than the minimum bid lot, subject to availability of shares, and the remaining available

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shares, if any, shall be allotted on a proportionate basis.

The actual entitlement shall be as follows: Sr. No. Name of Investor Total Number of

specified securities applied for

Total number of specified securities eligible to be allotted

1 A 320 20 specified securities (i.e. the minimum bid lot) + 38 specified

securities [{35,00,000 - (1,00,000 * 20)} / {140,00,000 - (1,00,000 *

20)}] * 300 (i.e. 320-20) 2 B 220 20 specified securities (i.e. the

minimum bid lot) + 25 specified securities [{35,00,000 - (1,00,000 *

20) / {140,00,000 - (1,00,000 * 20)}] * 200 (i.e. 220-20)

3 C 120 20 specified securities (i.e. the minimum bid lot) + 13 specified

securities [{35,00,000 - (1,00,000 * 20)} / {(140,00,000 - (1,00,000

* 20)}] * 100 (i.e. 120-20) 4 D 60 20 specified securities (i.e. the

minimum bid lot) + 5 specified securities [{(35,00,000 - 1,00,000 *

20)} / {(140,00,000 - (1,00,000 * 20)}] * 40 (i.e. 60-20)

5 E 20 20 specified securities (i.e. the minimum bid lot)

B. (1) Total no. of specified securities on offer at ` 600 per share: 10 million specified

securities. (2) Specified securities on offer for retail individual investors' category: 3.5 million specified

securities. (3) The issue is over subscribed 7 times whereas the retail individual investors' category is

over subscribed 9.37 times. (4) Issuer decides to fix the minimum application / bid size as 20 specified securities (falling

within the range of ` 10,000 - 15,000). Application can be made for a minimum of 20 specified securities and in multiples thereof.

(5) Assume that a total of 200,000 retail individual investors have applied in the issue, in

varying number of bid lots i.e. between 1 - 16 bid lots, based on the maximum application size of up to ` 200,000, as per the table shown below.

(6) As per allotment procedure, the allotment to retail individual investors shall not be less

than the minimum bid lot, subject to availability of shares. (7) Since the total number of shares on offer to retail individual investors is 3,500,000 and the

minimum bid lot is 20 shares, the maximum no. of investors who can be allotted this minimum bid lot will be 175,000. In other words, 175,000 retail applicants will get the minimum bid lot and the remaining 25,000 retail applicants will not get allotment.

The actual entitlement shall be as follows:

No. of Lots

No. of Shares at each lot

No. of retail Investors

applying at each lot

Total No. of Shares applied for at each

lot

No. of investors who shall receive minimum bid-lot (to be selected on lottery)

A B C D=(B*C) E 1 20 10,000 2,00,000 8,750 =

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(175,000/2,00,000)*10,000 2 40 10,000 4,00,000 8,750 3 60 10,000 6,00,000 8,750 4 80 10,000 8,00,000 8,750 5 100 20,000 20,00,000 17,500 6 120 20,000 24,00,000 17,500 7 140 15,000 21,00,000 13,125 8 160 20,000 32,00,000 17,500 9 180 10,000 18,00,000 8,750

10 200 15,000 30,00,000 13,125 11 220 10,000 22,00,000 8,750 12 240 10,000 24,00,000 8,750 13 260 10,000 26,00,000 8,750 14 280 5,000 14,00,000 4,375 15 300 15,000 45,00,000 13,125 16 320 10,000 32,00,000 8,750

Total 2,00,000 328,00,000 1,75,000

Letters of Allotment or Refund Orders or instructions to the SCSBs The Registrar to the Issue shall give instructions for credit to the beneficiary account with depository participants within 12 Working Days from the Bid/Issue Closing Date. Applicants residing at the centres where clearing houses are managed by the RBI, will get refunds through NECS only except where applicant is otherwise disclosed as eligible to get refunds through direct credit or RTGS. The Company shall dispatch refund orders above ` 1,500, if any, by registered post or speed post at the sole or First Bidder’s sole risk within 12 Working Days of the Bid/Issue Closing Date. Bidders to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post, intimating them about the mode of credit of refund within 12 Working Days of closure of Bid/ Issue Closing Date. In case of ASBA Bidders, the Registrar shall instruct the relevant SCSBs to, on the receipt of such instructions from the Registrar, unblock the funds in the relevant ASBA Account to the extent of the Bid Amount specified in the Bid cum Application Forms for withdrawn, rejected or unsuccessful or partially successful ASBA Bids within 12 Working Days of the Bid/Issue Closing Date. Interest in case of delay in despatch of Allotment Letters or Refund Orders/ instruction to the SCSBs by the Registrar to the Issue. The Company will ensure that (i) the Allotment of Equity Shares; and (ii) credit to the successful Bidders’ depositary accounts will be completed within 12 Working Days of the Bid/ Issue Closing Date. The Company further agrees that it shall pay interest at the rate of 15% p.a. if the Allotment letters or 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 in the disclosed manner within 15 days from the Bid/ Issue Closing Date, whichever is later. 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 cheques, pay-orders or demand drafts drawn on a bank appointed by the Company as a Refund 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. UNDERTAKINGS BY THE COMPANY The Company undertakes the following: • That if the Company does not proceed with the Issue after the Bid/Issue Closing Date, the

reason thereof shall be given as a public notice within two days of the Bid/issue Closing Date. The public notice shall be issued in the same newspaper where the pre-Issue advertisements were published. The stock exchange on which the Equity Shares are proposed to be listed shall also be informed promptly;

• That the complaints received in respect of this Issue shall be attended to by the Company expeditiously and satisfactorily;

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• That all steps for completion of the necessary formalities for listing and commencement

of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed within 12 Working Days of the Bid/Issue Closing Date;

• That funds required for making refunds to unsuccessful applicants as per the mode(s)

disclosed shall be made available to the Registrar by the Issuer; • That where refunds are made through electronic transfer of funds, a suitable

communication shall be sent to the applicant within 15 days from the Bid/ Issue Closing Date, as the case may be, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund;

• That the Promoters’ contribution in full, wherever required, shall be brought in advance before the Issue opens for public subscription;

• That the certificates of the securities/ refund orders to Eligible NRIs shall be despatched within specified time;

• That no further issue of Equity Shares shall be made till the Equity Shares offered through the Red Herring Prospectus are listed or until the Bid monies are refunded on account of non-listing, under-subscription etc.; and

• That adequate arrangements shall be made to collect all Bid cum Application Forms and to consider them similar to non-ASBA applications while finalising the Basis of Allotment.

The Company shall not have recourse to the Issue proceeds until the final approval for listing and trading of the Equity Shares from all the Stock Exchanges where listing is sought, has been received. Any further issue of Equity Shares by the Company shall be in compliance with applicable laws. Utilisation of Issue Proceeds The Board of Directors certifies that:

• All monies received out of the Issue shall be credited/transferred to a separate bank account other than the bank account referred to in sub-section (3) of Section 73 of the Companies Act;

• Details of all monies utilised out of Issue shall be disclosed, and continue to be disclosed till the time any part of the issue proceeds remains unutilised, under an appropriate head in the balance sheet of the Company indicating the purpose for which such monies have been utilised; and

• Details of all unutilised monies out of the Issue, if any shall be disclosed under an appropriate separate head in the balance sheet indicating the form in which such unutilised monies have been invested.

• The utilization of monies received under Promoter’s contribution shall be disclosed, and continue to be disclosed till the time any part of the Issue proceeds remains unutilized, under an appropriate head in the balance sheet of the Company indicating the purpose for which such monies have been utilized; and

• The details of all unutilized monies out of the funds received under Promoter’s contribution shall be disclosed under a separate head in the balance sheet of the Company indicating the form 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, 1991 of the GoI, as notified through press notes and press releases issued from time to time, and FEMA and circulars and notifications issued thereunder. 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 the Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures and reporting requirements for making such investment. The government bodies responsible for granting foreign investment approvals are FIPB and the RBI. The Government has from time to time made policy pronouncements on FDI through press notes and press releases. The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India (“DIPP”), issued Circular 1 of 2012 (“Circular 1 of 2012”), which with effect from April 10, 2012, consolidates and supersedes all previous press notes, press releases and clarifications on FDI issued by the DIPP that were in force and effect as on April 9, 2012. The Government proposes to update the consolidated circular on FDI Policy once every year and therefore, Circular 1 of 2012 will be valid until the DIPP issues an updated circular (expected on April 10, 2013 and effective from April 10, 2013). Subscription by foreign investors (NRIs/FVCIs/QFIs/FIIs) The Company is engaged in the manufacturing sector, in which 100% FDI is permitted. 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 Foreign Exchange Management Act, 2000. FIIs must also comply with the provisions of the SEBI FII Regulations. The initial registration and the RBI’s general permission together enable a 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 on 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 approval of the shareholders of the company by way of a special resolution. The holding of equity shares of 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. As per the existing policy of the Government of India, OCBs cannot participate in this Issue. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. The Equity Shares have not been and will not be registered under the Securities Act and may not be offered or sold within the United States (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares are only being offered and sold outside the United States in offshore transactions in compliance with

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Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. The above information is given for the benefit of the Bidders. The Company and the BRLMs not liable for any amendments or modification or changes in applicable laws or regulations, which may occur after the date of this Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the Bids are not in violation of laws or regulations applicable to them.

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SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION Capitalised terms used in this section have the meaning that has been given to such terms in the Articles of Association of our Company. Pursuant to Schedule II of the Companies Act and the SEBI Regulations, the main provisions of the Articles of Association relating to voting rights, dividend, lien, forfeiture, restrictions on transfer and transmission of Equity Shares or debentures and/or on their consolidation/splitting are detailed below. Please note that the each provision herein below is numbered as per the corresponding article number in the Articles of Association and defined terms herein have the meaning given to them in the Articles of Association. PART A Article 1: The Regulations contained in Table A in the first schedule to the Companies Act, 1956, shall apply to this Company, to the extent they are not inconsistent with the Regulations contained herein CAPITAL AND CHANGE IN CAPITAL: Article 3: Authorised Share Capital: The Share capital of the Company shall be as set out in clause V of the Memorandum of Association. The company may from time to time by Ordinary Resolution increase its authorised share capital by such sum and to be divided into shares of such amount as may specified in the resolution. Article 4(a) Shares at the disposal of the directors Subject to the provisions of Section 81 of the Act and these Articles, the shares in the capital of the Company for the time being shall be under the control of the Directors who may issue, allot or otherwise dispose of the same or any of them to such persons in such proportions and on such terms and conditions and either at a premium or at par or (subject to the compliance with the provisions of section 79 of the Act) at a discount and at such time as they may from time to time think fit and with the sanction of the Company in the general Meeting to give to any person or persons the option or right to call for any shares either at par or premium during such time and for such consideration as the directors think fit and may issue and allot shares in the capital of the Company on payment in full or part of any property sold and transferred or for any services rendered to the Company in the conduct of its business and any shares which may so be allotted may be issued as fully paid up shares and if so issued, shall be deemed to be fully paid shares. Provided that opinion or right to call of shares shall not be given to any person or persons without the sanction of the Company in the General Meeting. Article 6 (a) Share Certificate

Every member shall be entitled, without payment, to one or more certificates in marketable lots, for all the shares of each class or denomination registered in the name, or if the Directors so approve (upon paying such fee as the Directors may from time to time determine) to several certificates, each for one or more of such shares and the Company shall complete and have ready for delivery such certificates within three months from the date of allotment, unless the conditions of issue thereof otherwise provide, or within one month of the receipt of application of registration of transfer, transmission, sub-division, consolidation or renewal of any of its shares as the case may be. Every certificate of shares shall be under the seal of the Company and shall specify the number and distinctive numbers of shares in respect of which it is issued and amount paid-up thereon and shall be in such form as the directors may prescribe or approve. If any share stands in the names of two or more persons all the joint holder of the share shall be severally as well as jointly liable for the payment of all deposits, instalments, and calls due in respect of such shares, and for all incidents thereof according to the Company’s regulations but the person first named in the Register shall, as regards service of notice, and all other matters connected with the Company, except the transfer of the share and any other matter by the said Act or herein otherwise provided, be deemed the sole holder thereof.

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Article 6(b) Issue of new certificate in place of one defaced, lost or destroyed

If any certificate be worn out, defaced, mutilated, or torn or if there be no further space on the back thereof for endorsement of transfer, then upon production and surrender thereof to the Company, a new certificate may be issued in lieu thereof and if any certificate lost or destroyed then upon proof thereof to the satisfaction of the Company and on execution of such indemnity as the Company deem adequate, being given, and a new certificate in lieu thereof shall be given to the person entitled to such lost or destroyed certificate, every certificates under the Article shall be issued without payment of fees. Articles 7(b) Dematerialization of Securities: Notwithstanding anything contained in these Articles, the Company shall be entitled to dematerialise its securities and to offer securities in a dematerialisation form pursuant to the Depositories Act, 1996 Article 7(c) Option to receive security certificates or hold securities with depository Every person subscribing to securities offered by the Company shall have the option to receive Security certificates to hold the securities with a depository. Such a person who is the beneficial owner of the securities can at any time opt out of a depository, if permitted by the law, in respect of any security in the manner provided by the Depositories Act, 1996 and the Company, shall in manner and within the time prescribed, issue to the beneficial owner the required certificate of Securities. If a person opts to hold his security with a depository, the Company shall intimate such depository the detail of allotment of the security. Articles 8 (a) Increase, Consolidation and Sub-Division in capital by the company how carried into effect: The Company may, from time to time by passing an ordinary resolution increase the share capital by such sum to be divided into shares of such amount, as may be specified in the resolution. Further, the Company may also by ordinary resolution:

i. Consolidate and divide all or any part of its share capital into shares of larger amount than the existing share;

ii. Sub-divide its existing shares or any of them into shares of smaller amounts than is fixed by the memorandum subject nevertheless to the provisions of the Act;

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.

Article 8 (b) Further Issue of Shares:

Where at the time after the expiry of two years from the formation of the Company or at any time after the expiry of one year from the allotment of shares in the Company made for the first time after its formation, whichever is earlier, it is proposed to increase the subscribed capital of the Company by allotment of further shares either out of the un issued capital or out of the increased share capital then:

i. Such further shares shall be offered to the persons who at the date of the offer, are holders of the equity shares of the Company, in proportion, as near as circumstances admit, to the capital paid up on those shares at the date.

ii. Such offer shall be made by a notice specifying the number of shares offered and limiting a time not less than thirty days from the date of the offer and the offer if not accepted, will be deemed to have been declined.

iii. The offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to them in favour of any other person and the notice referred to in sub clause (b) hereof shall contain a statement of this right. Provided that the Directors may decline, without assigning any reason to allot any shares to any person in whose favour any member may, renounce the shares offered to him.

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iv. After expiry of the time specified in the aforesaid notice or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose off them in such manner and to such person(s) as they may think in their sole discretion fit.

Article 8 (c) Further Issue of Shares:

Notwithstanding anything contained in sub-clause (b) thereof, the further shares aforesaid may be offered to any persons (whether or not those persons include the persons referred to in clause (i) of sub-clause (b) hereof) in any manner whatsoever.

i. If a special resolution to that effect is passed by the company in General Meeting, or

ii. Where no such special resolution is passed, if the votes cast (whether on a show of hands or on a poll as the case may be) in favour of the proposal contained in the resolution moved in the general meeting (including the casting vote, if any, of the chairman) by the members who, being entitled to do so, vote in person, or, where proxies are allowed, by proxy, exceed the votes, if any, cast against the proposal by members, so entitled and voting and the Central Government is satisfied, on an application made by the Board of Directors in this behalf that the proposal is most beneficial to the company.

Article 8 (d) Further Issue of Shares:

Nothing in sub-clause (iii) of (b) hereof shall be deemed:

i. To extend the time within which the offer should be accepted; or Article 8 (e) Further Issue of Shares:

Nothing in this Article shall apply to the increase of the subscribed capital of the company caused by the exercise of an option attached to the debenture issued or loans raised by the company:

i) To convert such debentures or loans into shares in the company; or

ii) To subscribe for shares in the company (whether such option is conferred in these Articles or otherwise)

PROVIDED THAT the terms of issue of such debentures or the terms of such loans include a term providing for such option and such term:

(a) Either has been approved by the Central Government before the issue of the debentures or the raising of the loans or is in conformity with Rules, if any, made by that Government in this behalf; and

(b) In the case of debentures or loans or other than debentures issued to or loans obtained from Government or any institution specified by the Central Government in this behalf, has also been approved by a special resolution passed by the company in General Meeting before the issue of the debentures or raising of the loans.

Article 8 (f) Terms of Issue of Debentures:

Any debentures, debenture-stock or other securities may be issued at a discount, premium or otherwise and may be issued on condition that they shall be convertible into shares of any denomination and with any privileges and condition as to redemption, surrender, drawing, allotment of Directors and otherwise Debentures with the right to conversion into or allotment of shares shall be issued only with the consent of the Company in the General Meeting by a Special Resolution. Article 9 Reduction in Capital

The Company may subject to section 100 to 103 of the Companies Act, 1956, by special resolution reduce by any manner authorized by law:

(a) Its share capital;

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(b) Any capital redemption reserve account;

(c) Any share premium account

Article 10 Directors may make calls

The Board may from time to time, subject to the terms on which any shares may have been issued and subject to the conditions of allotment make such calls as it thinks fit upon the members in respect of all monies unpaid on the shares held by them respectively and each member shall pay the amount of every call so made on him to the persons and at the times and places appointed by the Board.

Article 11 Director may extend time

The Board may from time to time, at its discretion extend the time fixed for the payment of any call and may extend such time as to all or any of the members, whom by reason of their residing at a distance or other cause, the Board may deem fairly entitled to such extension but no member shall be entitled to such extension as a matter of right. Article 19 Division of profits:

The profits of the Company, subject to the provisions of these Articles, shall be divisible among the members in proportion to the amount of capital paid upon the shares held by them respectively. Provided always that any capital paid up or credited as paid up on a share during the period in respect of which a dividend is declared shall, unless the terms of issue otherwise provide, only entitle the holder of such shares to an apportioned amount of such Dividend proportionate to the capital from time to time paid up during such period on such share. Article 21 Dividends in proportion to amount paid up

The Company may pay dividends in proportion to the amount paid up or credited as paid up one each share. Article 22 The Company in general Meeting may declare a dividend The Company in General meeting may, subject to the provisions of Section 205 of the act, declare dividend to be paid to the members according to their respective rights and interests in the profit and subject to the provisions of the Act, may fix the time for payment. When a dividend has been so declared, subject to the provisions of Section 207 of the Act, either the dividend shall be paid or the warrant in respect thereof shall be posted within 30 days of the date of the declaration to the shareholders entitled to the payment of the same. Article 24 Interim dividend

Subject to the provisions of the Act, the Directors may, from time to time, pay to the members such interim dividends as in their judgment the position of the Company justifies. Article 25 Effect of transfer of shares

Wherein an instrument of transfer of shares of the Company has been delivered to the Company for the registration and the transfer of such shares has not been registered by the Company, it shall comply with the provisions of Section 206A of the Act in respect of the dividend right, shares and bonus share in relation to such shares. No member to receive dividend whilst indebted to the Company and Company’s right of reimbursement there out.

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Article 28 Dividend how paid

.a) Unless otherwise directed any dividend may be paid by cheque or warrant sent through post to the Registered address of the member or person entitled or in case of joint holders to that one of them first named in the Register in respect of the joint holding. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. The Company shall not be liable or responsible for any cheque or warrant lost in transmission or for any dividend lost to the member or other person entitled thereto by the forged endorsement of any cheque or warrant or the fraudulent or improper recovery, there of by any other means.

b) Further, the dividend may be paid directly to bank accounts of holders of shares y electronic fund transfer in case of those holders who had opted to receive payment as such and provided requisite information to the depository. The company shall not be responsible for any wrong credit in bank account of holders in cases where the requisite information provided by holders is false/incorrect or the same has not been updated with the company/depository after the holder of share has made any change in his/her/their bank account.

Article 30 Dividend and Call together Any General Meeting declaring a dividend may on the recommendation of the Directors makes a call on the members for such amounts as the meeting fixes, but so that the call to 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 may, if so warranted between the Company and the members be set off against the call. Article 31 If money payable on shares not paid notice to be given

If any member fails to pay the whole or any part of any call instalment or any money due in respect of any shares either by way of principal or interest on or before the day appointed for the payment of the same, the Directors may at any time thereafter, during such time as the call or instalment or any part thereof or other money as aforesaid remain unpaid or a judgment or decree in respect there of remains unsatisfied in whole or in part, serve a notice on such member or on the person (if any) entitled to the shares by transmission; requiring him to pay such call or instalment or such part thereof or other moneys as remain unpaid together with any interest that may have accrued and all expenses (Legal or otherwise) that may have been incurred by the Company by reason of such non-payment. Article 32 Term of Notice

The Notice shall name a day (not being less than 14 days from the date of the notice) on or before which and the place or places at which such call, instalment or such part thereof and such other moneys as aforesaid and such interest and expenses as aforesaid are to be paid, and if payable to any person other than the Company, the person to whom such payment is to be made. The notice shall also state that in the event of non-payment at or before the time and (if payable to any person other than the Company) at the place appointed, the shares in respect of which the call was made or instalment is payable will be liable to be forfeited.

Article 33 Shares to be forfeited in default of payment

If the requirements of any such notice as aforesaid shall not be complied with, any of the shares in respect of which notice has been given may, at any time thereafter but before payment of all calls or instalments interest and expenses and other moneys due in respect thereof, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture.

Article 34 Notice of forfeiture to a Member

When any shares shall have been so forfeited, an entry of the forfeiture, with the date thereof, shall be made in the Register of Members and notice of the forfeiture shall be given to the member in

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whose name they stood immediately prior to the forfeiture but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or to make any entry as aforesaid. Article 35 Forfeited Shares to be the property of the company and may be sold etc.

Any share so forfeited shall be deemed to be the property of the Company and may be sold, re-allotted or otherwise disposed of upon such terms and in such manner as the Board shall think fit. Article 36 Power to annual forfeiture

The Directors may, at any time before any shares so forfeited shall have been sold, re-allotted or otherwise disposed of, annul the forfeiture thereof upon such conditions as they think fit. Article 37 Member still liable for money owning at the time of forfeiture and interest

Any person whose shares have been forfeited shall notwithstanding the forfeiture, be liable to pay and shall forthwith pay to the Company all calls, instalments interest, expenses and other moneys owing upon or in respect of such shares at the time of the forfeiture together with interest thereon from the time of the forfeiture until payment at such rates the Directors may determine and the Directors may enforce the payment of the whole or a portion thereof as if it were a new call made at the date of the forfeiture but shall not be under any obligation to do so. Article 38 Effect of forfeiture

The forfeiture of a share shall involve the extinction, at the time of the forfeiture of all interest in and all claims and demands against the Company in respect of the shares forfeited and all other rights incidental to the share, except only such of those rights as by these presents are expressly saved. Article 39 Surrender of Shares

The Directors may, subject to the provisions of the Act, accept a surrender of any share from or by any member desirous of surrendering those on such terms as they think fit. Article 40 Company’s Lien on Shares / Debentures

The Company shall have a first and paramount lien upon all the shares/ debentures (Other than fully paid-up shares/debentures) registered in the name of each member (Whether solely or jointly with others) and upon the proceeds of sale thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares/debentures and no equitable interest in any share shall be created except upon the footing and condition that this Article will have full lien. And such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares/debentures. Unless otherwise agreed the registration of a transfer of shares/debentures shall operate as a waiver of the Company’s lien if any, on such shares/debentures. The Directors may at any time declare any shares/debentures wholly or in part to be exempt from the provisions of this clause. Article 41 Enforcing lien by sale

For the purpose of enforcing such lien, the Board of Directors may sell the shares subject thereto in such manner as they shall think fit, but no sale shall be made unless the sum in respect of which the lien exists is presently payable and until notice in writing of the intention to sell shall have been served on such member, his executors or administrators or his committee, or other legal representatives as the case may be, and default shall have been made by him or them in the payment of the sum payable as aforesaid, the certificates in respect of the shares sold shall stand cancelled and become null and void and have no effect and the Directors shall be entitled to issue a new certificate(s) in lieu thereof to the purchaser or purchasers concerned.

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Article 42 Application of proceeds of sale

The net proceeds of any such sale, after payment of the costs of such sale, shall be applied towards the satisfaction of such debts, liabilities or engagements of such member and 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 such member or the person (if any) entitled by transmission to the shares so sold. Articles 46 Modification of Rights

If at any time the share capital is divided into different classes, the rights attached to any calls of shares (unless otherwise provided by the terms of issue of the shares of the class) may, subject to the provision of sections 106 and 107 of the Act, be modified, commuted, affected, abrogated or varied (whether or not the Company is being wound up) with the consent in writing of the holders of not less than three-fourth of the issued shares of that class, or with meeting of the holders of that class of shares and all the provisions herein after contained as to General Meeting shall mutatis-mutandis apply to every such meeting.

TRANSFER AND TRANSMISSION OF SHARES Article 48 Form of Transfer

The instrument of transfer of any shares shall be in writing and all the provisions of section 108 of the Act and of any statutory modifications thereof for the time being in force shall be duly complied with in respect of all transfers of shares and the registrations. Nothing contained in Section 108 of the Act or these Articles shall apply to a transfer of securities affected by a transferor and transferee both of whom are entered as beneficial owners in the records of depository. Article 49 Execution of Transfer

Every such instrument of transfer shall be signed by or on behalf of the transferor and by or on behalf of the transferee and the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the Register of Members in respect thereof. Article 51 Directors may refuse to register transfer

Subject to the provisions of Section 111 of the Act and Section 22A of the Securities Contracts (Regulation) Act, 1956, the Directors may, at their own absolute and uncontrolled discretion and by giving reasons, decline to register or acknowledge any transfer of shares whether fully paid or not and the right of refusal, shall not be affected by the circumstances that the proposed transferee is already a member of the Company but in such cases, the Directors shall within one month from the date on which the instrument of transfer was lodged with the Company, send to the transferee and transferor notice of the refusal to register such transfer provided that registration of transfer shall not be refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the Company on any account whatsoever except when the Company has a lien on the shares. Transfer of shares / debentures in whatever lot shall not be refused. Article 54 Transfer by legal representative

A transfer of a share in the Company of a deceased member thereof made by his legal representative shall although the legal representative is not himself a member be valid as if he had been a member at the time of the execution of the instrument of transfer. Article 56 Register of Member, etc. when closed

The Directors shall have power, on giving not less than seven days previous notice by advertisement as required by section 154 of the Act, to close the transfer books of the Company, the Register of Members or the Register of Debentures holders at such time or times and for such period(s) of time(s) not exceeding 30 days at a time, as to them may seem fit.

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Article 57 Titles of Shares of deceased Member

The executor or administrators or a holder of a succession certificate in respect of the estate of deceased member, not being one or two or more joint holders shall be the only persons recognised by the Company as having any title to the shares registered in the name of such deceased member and the Company shall not be bound to recognise such executors or administrators unless such executors or administrators shall have first obtained probate or letters of Administration as the case may be, from a duly constituted court in India, provided that in any case where the Directors in their absolute discretion think fit, the Directors may dispense with the production of probate or letters of Administration or Succession Certificate and register the name of any person who claims to be absolutely entitled to the shares standing in the name of deceased member, as member. Article 58 Registration of persons entitled to shares otherwise than by transfer (Transmission Clause)

Subject to the provisions contained in Article 57 hereof, any person becoming entitled to a share in consequence of the death, lunacy or insolvency of any member, upon producing proper evidence of the grant of probate or Letter of Administration or Succession Certificate or such other evidence that he sustains the character in respect of which he purports to act under this Article or of his title to the shares as the Board thinks sufficient may, with the consent of Board (which it shall not be under any obligation to give), be registered as member in respect of such shares, or may, subject to the regulations as to transfer herein before contained, transfer such shares. This Article is herein referred to as transmission Article. Article 59 Refusal to register in case of transmission

Subject to the provision of the Act and these Articles the Directors shall have the same right to refuse to register any such transmission until the same be so verified or until or unless as indemnity be given to the Company with regard to such registration which the Directors at their discretion shall consider sufficient. Article 60 Person entitled may receive dividend without being registered as a Member

A person entitled to a share by transmission shall, subject to the right of the Directors to retain such dividends or moneys as hereinafter provided, be entitled to receive any dividends or other moneys payable in respect of the shares. Article 61 No fee on Transfer or Transmission

No fee shall be charged for transfer and transmission of shares or for the registration of any Power of attorney, probate, letter of administration or any other similar documents. No fee shall also be charged for issue of new share certificates in replacement of those which are old, decrepit, and worn-out or where the cages on the reverse of the share certificates for recording transfers have been fully utilised. Article 62 Company not liable for disregard of a notice prohibiting registration of transfer

The Company shall incur no liability or responsibility whatsoever in consequence of their registering or giving effect to any transfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing in the register of members) to the prejudice of persons having or claiming any equitable right title or interest to or in such shares notwithstanding that the Company may have received a notice prohibiting registration of such transfer and may have entered such notices referred thereto in any book of the Company, and save as provided by Section187-C of the Act, the Company shall not be bound or required to be given to it of any equitable right, title or interest or be under any liability whatsoever for refusing or neglecting so to do though it may have been entered or referred to in some books of the Company but attend to any such notice and give effect thereto, if the Directors so think fit.

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Article 66 Employees Stock Options Scheme / Plan The Directors are hereby authorised to issue Equity shares or Debentures (whether or not convertible into equity shares) for offer and allotment to such of the officers, employees and workers of the Company as the Directors may select or the trustees of such trust as may be set up for the benefit of the Officers, Employees and workers in accordance with the terms and conditions of such scheme, plan or proposal as the Directors may formulate. Subject to the consent of the Stock Exchanges and of the Securities and Exchange Board of India, the Directors may impose the condition that the shares in or debentures of the Company so allotted shall not be transferable for a specified period. Article 67 Buy – Back of Shares The Company shall have a power subject to and in accordance with all other applicable provisions of the Companies Act, 1956, to acquire/purchase any of its fully paid shares on such terms and conditions and up to such limits as may be prescribed by the law from time to time and may be determined by the Board from time to time and may make payment out of free Reserves and Surplus and/or Securities Premium Account and/or proceeds of any shares or other specified securities or such other funds as may be prescribed by the law in respect of such acquisition/purchase. Article 68 Power to borrow

Subject to the provision of the Act and these Articles and without prejudice to the other powers conferred by these Articles the Directors shall have the power from time to time at their discretion, by a resolution passed at a meeting of the Board and not by circular Resolution, to accept deposits from members either in advance of calls or other wise and generally raise or borrow from members either in advance of calls or otherwise and generally raise or borrower secure the payment of any sum or sums of moneys for the purposes of the Company provided that the total amount borrowed at any time together with the moneys already borrowed by the Company from banks and/or financial institutions (apart from temporary loans obtained from consent of the Company General Meeting, 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 purpose. Such consent shall be obtained by an ordinary resolution, which shall provide for the total amount upto which, moneys may be borrowed by the Board. The expression Temporary loans in this Articles means loan repayable on demand or within six months from the date of the loans such as short term loans, cash credit arrangements, discounting of bills and the issue of other short-term loans of seasonable character but does not include loans raised for the purpose of financing expenditure of a capital nature. Article 69 Conditions on which moneys may be borrowed

Subject to the provisions of the Act and these Articles, the Director may, by a resolution passed at a meeting of the Board and not by circular resolution raise or secure the payment of such sum in such manner and upon such issue of bonds, perpetual or redeemable debentures or debentures-stock, or any mortgage or charge or other security on the undertaking of the whole or any part of the property of the Company (both present and future) including its uncalled capital for the time being. Article 70 Power to issue share warrants The Company may issue share warrants subject to, and in accordance with, the provisions of sections 114 and 115; and accordingly the Board may in its discretion, with respect to any share which is fully paid-up, on application in writing signed by the person registered as holder of the share, and authenticated by such evidence (if any) as the Board may, from time to time, require as to the identity of the person signing the application, and on receiving the certificate (if any) of the share, and the amount of the stamp duty on the warrant and such fee as the Board may from time to time requires to issue a share warrant.

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Article 71 (a) to (c) Deposit of Share Warrants

(a) The bearer of a share warrant may at any time deposit the warrant at the office of the Company, and so long as the warrant remains so deposited, the depositor shall have the same right of signing a requisition for calling a meeting of the Company, and of attending, and voting and exercising the other privileges of a member at any meeting held after the expiry of two clear days from the time of deposit, as if his name were inserted in the register of members as the holder of the shares included in the deposited warrant.

(b) Not more than one person shall be recognised as depositor of the share warrant. (c) The Company shall, on two days’ written notice, return the deposited share warrant to the

depositor. Article 71 (d) Privileges and disabilities of the holders of share warrants Subject as herein otherwise expressly provided, no person shall, as bearer of a share warrant, sign a requisition for calling a meeting of the Company, or attend, or vote or exercise any other privilege of a member at the meeting of the Company, or be entitled to receive any notices from the Company. Article 71 (e) Right of stock holders The bearer of a share warrant shall be entitled in all other respects to the same privileges and advantages as if he were named in the register of members as the holder of the shares included in the warrant, and he shall be a member of the Company. Article 71 (f) Issue of new share warrant coupons The Board may, from time to time, make rules as to the terms on which (if it shall think fit) a new share warrant or coupon may be issued by way of renewal in case of defacement, loss or destruction. Article 72 Number of Directors Subject to the provision of Section 252 of the Act, the number of Directors shall not be less than three, and unless otherwise determined by the Company in General Meeting not more than 12 (twelve). Article 73 Existing Directors

The persons hereinafter named are the existing Directors of the Company on date of adoption of this set of Articles of Association of Company:

(1) Shri Parakramsinh Jadeja (2) Shri Sahdevsinh Jadeja (3) Shri Vikram Rana

Article 73(c) Director liable to retire by rotation The Directors of the Company, except the permanent Directors, shall be retiring by rotation as per provisions of Section 256 of the Companies Act, 1956.

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Article 73(d) Director need not to hold qualification shares A Director need not hold any shares in the capital of the Company to qualify him to be a Director of the Company Article 74 Nominee Director The Company may agree with any financial institution or any authority or person or State Government that in consideration of any loan or financial assistance of any kind whatsoever, which may be rendered by it to the Company, it shall till such time as the loan or financial assistance is outstanding have power to nominate one or more Directors on the Board of the Company and from time to time remove and reappoint such Directors and to fill in any vacancy caused by the death or resignation of such Directors otherwise ceasing to hold office. Such financial Directors shall not be required to hold any qualification shares nor shall they be liable to retire by rotation. Article 75 Debenture Director Any trust deed for securing debentures or debenture-stock may if so arranged provide for the appointment from time to time by the Trustees thereof or by the holders, of the debentures or debenture-stock of some person to be Director of the Company and may empower such trustee or holders of debenture or debenture-stock from time to time to remove any Director so appointed. The Director appointed under these Articles here in referred to as the “Debenture Director” means the Director for the time being in office under this Article. The Debenture Director shall not be bound to hold any qualification shares and shall not be liable to retire by rotation or, subject to the provision of the Act, be removed by the Company. The Trust Deed may contain such ancillary provisions as may be arranged between the Company and the Trustees and all such provisions shall have effect notwithstanding any of the other provisions herein contained. Article 76 Alternate Director The Board of Directors of the Company may appoint an alternate Director to act for a Director (hereinafter called “the Original Director”) during his absence for a period of not less than three months from the state in which the meetings of the Board are ordinarily held and such appointment shall have effect and such appointee, whilst he ordinarily held and such appointment shall have effect and such appointee, whilst he holds office as an Alternate Director, shall be entitled to receive notice of meetings of the Directors and to attend and vote thereat accordingly. Article 77 Directors may fill in vacancies

Subject to the provisions of Section 262(2), 284(6) and other applicable provision (if any) of the Act, any casual vacancy occurring in the office of a Director whose period of office is liable to determine by retirement by rotation may be filled up by the Directors at a meeting of the Board. Any person so appointed would have held office, if the vacancy had not occurred. Article 78 Appointment of Additional Director Subject to the provisions of section 260, 284(6) and other applicable provisions (if any) of the Act, the Director shall have power at any time to appoint a person(s) as Additional Director. Such Additional Director shall hold office only up to the date of the next Annual General Meeting of the Company, but shall be eligible for re-election at that meeting as a Director, provided that the number of Directors and the Additional Director together shall not exceed the maximum strength fixed by the Articles hereof.

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Article 79 Directors may act notwithstanding vacancy.

The continuing Directors may act notwithstanding any vacancy in their body but subject to the provisions of the Act, if the number falls below the minimum number fixed and notwithstanding the absence of a quorum, the Directors may act for the purpose of filling up vacancies or for summoning General Meeting of the Company. Article 80 (a) Vacation of office by Directors

Subject to the provisions of Section 283(2) of the Act, the office of a Director shall become vacant if:

1. he is found to be of unsound mind by a Court of competent jurisdiction, or

2. he applies to be adjudicated an insolvent or

3. he is adjudged an insolvent; or

4. he fails to pay any call made on him in respect of shares of the Company held by him, whether alone or jointly with others, within six months from the last date fixed for the payment of call unless the Central Government has by notification in the official Gazette, removed the disqualification incurred by such failure.

5. he holds any office or place of profit under the Company or any subsidiary thereof in contravention of section 314 of the Act; or

6. he absents himself from three consecutive meetings of the Board of Directors or from all meetings of the Board of Directors for a continuous period of three months, whichever is longer, without obtaining leave of absence from the Board of Directors; or

7. he becomes disqualified by an order of the Court under Section 203 of the Act; or

8. he is removed in pursuance of Section 284 of the Act; or

9. he (whether he himself or by any person for his benefit or on his account) or any firm in which he is a partner or any private Company of which he is a Director accepts a loan, or any guarantee or security for a land, from the Company in contravention of Section 295 of the Act; or

10. he acts in contravention of section 299 of the Act and by virtue of such contravention shall have been deemed under the Act to have vacated office, or

11. he is convicted by a court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months; or

12. he, having been appointed a Director by virtue of his holding any office or other employment in the Company ceases to hold such office or other employment in the Company.

Article 81 Directors may contract With Company

Subject to the provisions of the Act and these Articles no director shall be disqualified by his office from contracting with the Company for any purpose and in any capacity whatsoever including either as Vendor, purchaser, agent, broker, underwriter of shares and debentures of the Company or otherwise, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such holding of that office, or of the fiduciary relationship thereby established, but it is hereby declared that nature of his interest must be disclosed by him and required approvals or sanctions be taken as required by the Act and these Articles. Article 83 Directors may be Directors of companies promoted by the Company.

Director of the Company may be or may become a Director of any Company promoted by the Company or in which it may be interested as a Vendor, member or otherwise and subject to the provisions of the Act and these Articles, no such Director shall be accountable for any benefits received as a Director or member of such Company.

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PROCEEDING OF THE BOARD OF DIRECTORS Article 84 Meeting of Directors

The Directors may meet together as a Board from time to time and shall so meet at least once in every three months and at least four such meetings shall be held in every year, and they may adjourn and otherwise regulate their meetings as they deem fit. The provisions of this Article shall not be deemed to be contravened merely by reason of the fact that a meeting of the Board, which had been called in compliance with the terms herein, mentioned could not be held for want of quorum. Article 86 Quorum Subject to the provisions of Section 287 and other applicable provisions (if any) of the Act, the quorum for the meeting of the Board of Directors shall be one third of the total strength of the Board of Directors(excluding Directors, if any, whose places may be vacant at the time, and any fraction contained that one third being rounded off as one) or two Directors, whichever is higher, provided that where at any time the number of interested Directors exceeds or is equal to two-thirds of the total strength, the number of remaining Directors, that is to say, the number of Directors who are not interested and are present at the meeting, not being less than two shall be the quorum during such meeting. A meeting of the Directors for the time being at which a quorum is present shall be competent to exercise all or any of the authorities powers and discretion by or under the Act or the Articles of the Company, for the time being vested in or exercisable by the Board of Directors generally. Article 90 Questions at Board meeting how decided (casting vote) Questions arising at any meeting of the Board shall be decided by the majority of votes, and in case of equality of votes, the Chairman of the meeting, whether the Chairman appointed by virtue of these Articles or the Director presiding at such meeting shall have second or casting vote. Article 91 Directors may appoint committees

Subject to the provisions of Section 292 of the Act, the Directors may delegate any of their powers to committee consisting of such member or members of their body, as they think fit and they may from time to time revoke and discharge any such committee either wholly or in part and either as to person or purposes, but every committee so formed shall, in the exercise of the powers so delegated to strictly conform to any regulations that may from time to time be imposed on it by the Directors.

All acts done by any such committee in conformity with such regulations and in fulfilment of the purpose of their appointment but not otherwise, shall have the like force and effect as if done by the Board. Subject to the provisions of the Act the Board may from time to time fix the remuneration to be paid to any member or members of their body constituting a Committee appointed by board in terms of these Articles and may pay the same. Article 92 Meetings of committees how to be convened The meetings and proceedings of any such committee consisting of two or more Directors shall be governed by the provisions herein contained in respect of the meetings and proceedings of the Directors, so far as the same are applicable thereto and are not superseded by any regulations made by the Directors under the last proceeding Article. Article 93 Minutes of proceedings of Board of Directors and Committees to be kept

The Company shall cause minutes of the meeting of the Board of Directors and of Committees of the board to be duly entered in a book(s) provided for the purpose in accordance with the relevant provisions of Section 193 of the Act.

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MEETING OF MEMBERS Article 96 Meeting of Members & Length of Notice Annual General meeting and any other general meeting of the Company may be convened subject to Section 166 and Section 210 of the act by giving not less than 21 days notice in writing. Subject to the provisions of section 171(2) a meeting may be convened after giving a shorter notice. Article 97 Quorum

Five members entitled to vote and present in person shall be a quorum in the General Meeting. No business shall be transacted at any General Meeting unless the quorum of the members is present at the time when the meeting proceeds to business. Article 98 Chairman of the General Meeting The chairman of the Board of Directors or in his absence one of the Directors chosen by the Directors present shall preside as chairman at every General Meeting of the Company. If no Directors is present or if the Director present is not willing to act as Chairman, the members present shall choose one of the members to be a chairman. Article 99 Number of votes to which Member entitled On a show of hands, every member present in person shall have one vote. On a poll every member shall have one vote in respect of one share held by him. Article 100 Demand of Poll At any General Meeting a resolution put to vote at the meeting shall be decided on show of hands unless the poll is (before or on the declaration of result of the show of hands) demanded by a member or members present in person or by proxy and holding shares in the Company which confer a power to vote on the resolution not being less than 1/10th of the total voting power in respect of the resolution or on which an aggregate sum of not less than `50,000/- has been paid up. The demand for poll may be withdrawn at any time by the person who made the demand. Article 102 Chairman’s Casting Vote

In the case of an equality of votes whether on a show of hands or on a poll, the Chairman of the meeting shall be entitled to a second or casting vote. Article 103 Voting in person or by proxy

Votes may be given either personally or by proxy. No member shall be entitled to be present or to vote either personally or otherwise at any General Meeting or upon a poll or to be reckoned in a quorum unless all calls or other sums presently payable by him in respect of the shares in the Company have been paid 21 days prior to the date of General Meeting. Article 104 Instrument of Proxy when to be deposited

The instrument appointing a proxy shall be in the form prescribed by the Act or a form as near thereto as circumstances admit and shall be signed by the appointer or his attorney duly authorised in writing or under its common seal if the appointer is a Corporation. The instrument shall be deposited at the Registered Office of the Company not less than 48 hours before the time for holding of the General Meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid.

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Article 107 Power to appoint Managing Director and whole time Director

Subject to the provisions of Section 197A, 198, 267, 268, 269, 309, 310, 311, 314, 316 and 317 and other applicable provisions of the Act or these Articles, the Directors may from time to time appoint a Executive Chairman, Managing Director or Whole-time Directors with any designation, of the Company on such terms and conditions as may be decided by the Board or the Shareholders or any statutory authorities. The Executive Chairman or the Managing Director or the Whole-time Director will be eligible to exercise such powers as may be delegated by the Board or Shareholders. Payment of remuneration to the Whole time Directors shall be subject to the provisions of Section 198, 309, 310, 311 and Schedule XIII of the Companies Act 1956. Article 110 Winding up and Distribution of assets in specie or kind

(a) If the Company shall be wound up, whether voluntarily or otherwise, the liquidators may, with ,the sanction of a special resolution but subject to the rights attached to any preference share capital, divide amongst the contributories, in specie or kind, any part of the assets of the Company and may, with the like sanction, sanction of a special resolution but subject to the rights attached to any preference shares capital, divide amongst the contributories, in specie or kind, any part of the assets of the Company and may, with the like sanction, vest any part of the assets of the Company in trustees upon such trusts for the benefit of the Contributories or any of them, as the liquidators, with the like sanction shall think fit.

(b) If thought expedient any such division may, subject to the provisions of the Act, be otherwise than in accordance with the legal rights of the contributories (except where unalterably fixed by the Memorandum of Association) and in particular any class may be given preferential or special rights or may be excluded altogether or in part but in case any such division shall be determined, any contributory who would be prejudiced thereby shall have right to dissent and ancillary rights as if such determination were a special resolution passed pursuant to Section 494 of the Act.

(c) In case any shares to be divided as aforesaid involve a liability to calls or otherwise any person entitled under such division to any of the said shares may within ten days after the passing of the special resolution, by notice in writing, intimate to the liquidator to sell his proportion and pay him the net proceeds and the liquidator shall, if practicable, act accordingly.

Article 111 Right of shareholders in case of the sale A Special resolution sanctioning a sale to any other Company duly passed pursuant to Section 494 of the Act may, subject to the provisions of the Act, in like manner as aforesaid determined that any shares or other consideration receivable by the liquidator be distributed amongst the members otherwise than in accordance with their existing rights and any such determination shall be binding upon all the members subject to the rights of dissent and consequential rights conferred by the said section. Article 112 Directors and others right to indemnity

(a) Subject to the provisions of Section 201 of the Act every Director of the Company or the Managing Director, Manager, Secretary and other officer or employee of the Company and the Trustee (if any) for the time being acting in relation to any of the affairs of the Company and every one of them shall be indemnified by the Company against, and it shall be the duty of the Directors out of the funds of the Company to pay all costs, losses and expenses (including travelling expenses) which any such Director, Managing Director, Manager, Secretary or other officer or employee and the trustees (if any) for the Company may incur or become liable to by reason of any contract entered in to or any act, deed or thing done by him as such Director, officer, employee or trustees or in any way in the discharge of his duties.

(b) Subject as aforesaid every Director, Managing Director ,Manager, Secretary or other Officer or Employee of the Company or the Trustees (if any) for the time being acting in relation to any of the affairs of the Company and every one of them shall be indemnified against any liability incurred by him in defending any proceedings whether civil or criminal in which judgments given in his favour or in which he is acquitted or in

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connection with any application under section 633 of the Act in which relief is given to him by the Court.

Article 113 Directors and others not responsible for acts of others

Subject to the provisions of section 201 of the Act no Director, the Managing Director or other officer of the Company shall be liable for the acts, omissions, neglects or defaults of any Director or officer or for joining in any omission or other act for conformity or for any loss or expenses suffered by the Company through insufficiency or deficiency, of title to any property acquired by order of the Directors for or on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising from the bankruptcy, insolvency, or tortuous act of any person Company or corporation, with whom any moneys, securities or effects shall be entrusted or deposited, or for any loss occasioned by any error of judgment or oversight on his part.

Article 114 SECRECY CLAUSE

a) Every director, manager, auditor, trustee, member of a committee, officer, servant agent, accountant or other person employed in the business of the Company shall if so required by the Directors, before entering upon his duties, sign a declaration pledging himself observe strict secrecy respecting all transactions and affairs of the Company with individuals and in relation thereto, and shall by such declaration pledge himself not to reveal the discharge of his duties except when required so to do by the Directors or by law or by the person to whom such matters relate and except so far as may be necessary in order to comply with any of the provisions in these presents contained.

b) No member shall be entitled to visit or inspect the Company’s works without the permission of the Directors or the Managing Director or to require discovery of or any information respecting any detail of the Company’s trading or any matter which is or may be in the nature of a trade secret, mystery of trade, or secret process, which may relate to the conduct of the business of the Company and which in the opinion of the Director or the Managing Director it will be inexpedient in the interest of the members of the Company to communicate it to the public.

Article 117 Managing Director/s not liable to retire by rotation A Managing Director shall not while he continues to hold that office, be subject to retirement by rotation and he shall not be reckoned as a director for the purpose of determining the rotation of retirement of Directors or in fixing the number of Directors to retire but he shall be subject to the same provisions as to resignation and removal as the other Directors of the Company and he shall, ipso facto and immediately, cease to be a Managing Director if he ceases to hold the office of Director for any cause. Article 118 Remuneration of Managing Director/s

The remuneration of a Managing Director, shall subject to the provisions of any contract between him and the Company from time to time, be fixed by the Directors in accordance with and within the limits prescribed by law and may be by way of fixed salary and/or commission on profit of the Company and he may be paid any gratuity, pension or allowance on retirement and may be given the benefit of any provident fund or bonus or allowance or any perquisites or benefits. Article 119 Powers of Managing Director/s

The Directors may from time to time entrust to and confer upon a Managing Director or the Managing Directors for the time being such of the powers exercisable by them as they 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 restriction as they think fit and they may confer such powers either collaterally with or to the exclusion of, and in substitution for, all or any of the

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powers of the Directors in that behalf, and may from time to time revoke, withdraw, alter, or vary all or any of such powers. Article 124 Directors’ sitting fees Every Director shall be paid out of the funds of the Company such sum not exceeding the limits specified under Section 310 of the Companies Act, 1956 and as the Directors may from time to time determine for attending every meeting of the Board or any Committee of the Board. Article 125 Special Remuneration to Directors

If any Director, being willing, shall be called upon to perform extra services which expression shall include work done by the Directors as a member of any committee formed by the Directors or to make any special exertions in going or residing abroad,, or otherwise for any of the purposes of the Company, the Board may resolve to remunerate such Director either by a fixed sum or by a percentage of profits or otherwise as may be determined by the Directors and such remuneration may be in addition to the remuneration above provided.

In addition to the remuneration payable to them in pursuance of the aforesaid Articles, the Directors may be paid taxi or air or Railway return fare, hotel and other incidental expenses incurred by them for the purposes of attending and returning from meeting of the Board of Directors or any committee thereof or any general meeting of the Company or in connection with the business of the Company.

Article 126 The Seal, its Custody and use

The Directors shall provide a Common Seal for the purpose of the Company and shall have power from time to time to destroy the same and substitute a new seal in lieu thereof and shall provide for the safe custody of the Seal for the time being. Unless otherwise determined, the Common Seal of the Company shall be affixed to any instrument or document in presence of at least one Director, or Secretary of the Company or such other person as may be authorised in that behalf by the Directors, who shall sign the instrument or document to which the seal is affixed, provided nevertheless that certificates of shares may be under the signatures of such persons as provided by the Companies (Issues of Share Certificates) Rules in force from time to time.

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SECTION IX: OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The following contracts which are or may be deemed material have been entered into or will be entered into by our Company. These contracts, copies of which have been attached to the copy of this Draft Red Herring Prospectus, will be delivered to the RoC for registration and also the documents for inspection referred to hereunder, will be available for inspection at the Registered Office of our Company from 10.00 am to 4.00 pm on Working Days from the date of this Draft Red Herring Prospectus until the Bid/Issue Closing Date.

Material Contracts 1. Engagement Letters between our Company and the BRLMs dated September 26, 2012.

2. Issue Agreement between our Company and the BRLMs dated March 05, 2013. 3. Agreement between our Company and the Registrar dated September 24, 2012. 4. Escrow Agreement dated [●] between our Company, the BRLMs, the Escrow Banks and

the Registrar. 5. Syndicate Agreement dated [●] between our Company, the BRLMs and the Syndicate

Members. 6. Underwriting Agreement dated [●] between our Company, the BRLMs and the Syndicate

Members. Material Documents for inspection 1. The Memorandum and Articles of Association, as amended. 2. Certificate of incorporation of our Company incorporated as “AMB Engineering

Company Private Limited” dated January 17, 1991, and Certificate of Incorporation consequent to change of name to “Jyoti CNC Automations Private Limited” dated May 08, 2002 and Certificate of Incorporation consequent to change of name to “Jyoti CNC Automation Private Limited” dated April 28, 2008 and Certificate of Incorporation consequent to change of name to “Jyoti CNC Automation Limited” dated November 30, 2012.

3. Board resolution and shareholders’ resolution of our Company, dated September 17, 2012

and September 22, 2012, respectively, authorizing the Issue and other related matters.

4. Resolution of the IPO Committee of the Board of Directors dated March 05, 2013 approving the Draft Red Herring Prospectus.

5. Statement of Tax Benefits from Auditors dated February 12, 2013. 6. Copies of annual reports of our Company for the years ended March 31, 2008, 2009,

2010, 2011 and 2012 and financial statements for the nine months ended on December 31, 2012.

7. Trade Mark License Agreement dated September 27, 2012 between our Company and

Parakramsinh Jadeja.

8. Use of Premises Agreement dated September 27, 2012 between our Company and Jyoti Enterprise.

9. Share Purchase Agreement dated September 13, 2007 between HT2I SA, Gilbert Fischer and Jyoti SAS.

10. Consent of the Auditors for inclusion of their report on accounts and statement of tax benefits in the form and context in which they appear in this Draft Red Herring Prospectus.

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11. Consents of Bankers to our Company, BRLMs, Syndicate Members, Registrar, Escrow

Collection Bank(s), Bankers to the Issue, Legal Advisors to the Issue, IPO Grading Agency, Directors of our Company, the Company Secretary and Compliance Officer, as referred to, in their respective capacities.

12. Initial listing applications dated [●] filed with BSE and NSE respectively. 13. In-principle listing approval dated [●] and [●] from BSE and NSE respectively. 14. Tripartite Agreement between NSDL, our Company and the Registrar dated [●]. 15. Tripartite Agreement between CDSL, our Company and the Registrar dated [●]. 16. Due diligence certificates dated [●] to SEBI from the BRLMs.

17. IPO Grading Report by [●] dated [●].

Any of the contracts or documents mentioned in this Draft Red Herring Prospectus may be amended or modified at any time if so required in the interest of our Company or if required by the other parties, without reference to the shareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.

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DECLARATION We, the Directors of our Company, hereby declare that, all the relevant provisions of the Companies Act, 1956, and the guidelines issued by the Government of India or the regulations issued by the Securities and Exchange Board of India, as the case may be, have been complied with and no statement made in this DRHP is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992, each as amended or rules made there under or guidelines / regulations issued, as the case may be. We further certify that all the disclosures and statements made in this DRHP are true and correct. SIGNED BY THE DIRECTORS OF OUR COMPANY

Name Signature

Parakramsinh Jadeja Managing Director _____________________ Vikramsinh Rana Whole Time Director _____________________ Sahdevsinh Jadeja Whole Time Director _____________________ Vijay Paranjape Independent Director _____________________ Mansingh Bhakta Independent Director _____________________ Ketan Marwadi Independent Director ______________________

SIGNED BY THE CHIEF FINANCIAL OFFICER Name: Signature

Kamlesh Solanki Chief Financial Officer

_____________________ Date: March 05, 2013 Place: Rajkot

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ANNEXURE I

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Crystal (022) - 6614 [email protected]