draft letter of offer

DRAFT LETTER OF OFFER

(Private & Confidential)

(Incorporated as “Elpro International Limited” vide certificate of incorporation dated 27/04/1962 under the Companies Act, 1956.)

Registered Office : ”Nirmal” th Floor, Nariman Point Mumbai 400 021

Tel: (022) 22023075 ; Fax: (022) 22027995

(for details regarding changes in registered office of the Company in past please refer page no.36)

Email: sambhaw@elpro.co.in; Website: www.elpro.co.in

Contact person: Mr. Sambhaw Jain, Compliance Officer

ISSUE OF [•] EQUITY SHARES OF RS. 10/- EACH AT A PREMIUM OF RS.

[•] PER SHARE (I.E. AT A PRICE

OF RS.

[•] PER SHARE) AGGREGATING RS. 13800 LACS ON RIGHTS BASIS TO THE EXISTING EQUITY

SHAREHOLDERS OF THE COMPANY IN THE RATIO OF [•] EQUITY SHARE FOR EVERY [•] EQUITY

SHARES (I.E. [•] ) HELD ON RECORD DATE I.E. [•] .

THE ISSUE PRICE IS [•] TIMES THE FACE VALUE

GENERAL RISKS

Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does

SEBI guarantee the accuracy or the adequacy of this document.

The attention of investors is drawn to the statement of Risk Factors beginning on page no. vi of this Letter of

Offer.

ISSUER’S ABSOLUTE RESPONSIBILITY

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

LISTING

The existing Equity shares of the company are listed on Bombay Stock Exchange Limited (BSE), (the Designated

Stock Exchange). The Company has received in-principle approval from BSE vide its letter no. [•] dated [•] for listing of the equity shares being issued in terms of this Letter of Offer.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

KEYNOTE CORPORATE SERVICES LIMITED

4 th Floor, Balmer Lawrie Building,

5, J. N. Heredia Marg, Ballard Estate, Mumbai – 400 001

Tel : +91-022-3026 6000-3;

Fax: + 91-022-2269 4323

E-mail: mbd@keynoteindia.net

Website: www.keynoteindia.net

SEBI Regn. No.: INM 000003606

AMBI Regn No: AMBI/040

SHAREX DYNAMIC (INDIA) PVT.LTD.

Unit no.1, Luthra Ind. Premises, Safed Pool,

Andheri Kurla Road, Andheri (E), Mumbai – 400 072

Tel : +91-022- 28515606/5644;

Fax : +91-22- 28512885

Website : www.sharexindia.com

E-Mail : sharexindia@vsnl.com

Contact person: Mr. B.S. Baliga

ISSUE OPENS ON

ISSUE PROGRAMME

LAST DATE FOR RECEIVING

REQUESTS FOR SPLIT FORMS

ISSUE CLOSES ON

[•] [•]

[•]

I. TABLE OF CONTENTS

SECTION CONTENTS

Definitions and Abbreviations

Page Nos. i

Certain Conventions; Use of Market Data

Forward Looking Statements

I RISK

PART I iv v vi

II INTRODUCTION

Summary 1

Issue 11

General Information 12

Capital Structure 16

Objects of the Issue

Statement of Tax Benefits

III ABOUT COMPANY

22

26

History 34

Management 42

IV FINANCIAL

PART II

INFORMATION

Auditors’ Report for the year ended 31/03/2009 48

V

VI

Limited Review Report for the period ended 30/09/2009

LEGAL AND OTHER INFORMATION

Outstanding Litigations and Defaults

Material Developments after the date of last Balance Sheet

Government Approvals

REGULATORY AND STATUTORY DISCLOSURES

103

140

147

148

151

157 A. Terms of the Issue

B. Issue Procedure

Material Contracts and Documents for Inspections

PART III

159

181

Declaration 183

ELPRO INTERNATIONAL LIMITED _____________________________________

______________________

DEFINITIONS/ABBREVIATIONS

CONVENTIONAL / GENERAL TERMS

Term Description

Act

Depositories Act

Depository

The Companies Act, 1956 and subsequent amendments thereto

The Depositories Act, 1996 as amended from time to time

A Depository registered with SEBI under the SEBI (Depositories &

Participant) Regulations, 1996 as amended from time to time

FY/ Financial year or Fiscal Year The twelve months ended March 31 st of a particular year

Security Certificate Equity Share Certificate

SE/ Stock Exchange(s)

ISSUE RELATED TERMS

Term

ASBA

Bombay Stock Exchange Ltd. & Pune Stock Exchange

Description

Application Supported by Blocked Amount

Abridged Letter of Offer

Articles

Abridged Letter of Offer circulated to the Equity shareholders whose names appear as Beneficial owners as per the list to be furnished by the depositories in respect of the shares held in the electronic form and on the Register of Members of the Company in respect of the shares held in physical form at the close of business hours on the Record Date i.e.,

[•], and to whom this Offer is being made

Articles of Association of Elpro International Limited

Board Board of Directors, of Elpro International Limited

BSE/Designated Stock Exchange Bombay Stock Exchange Limited

CAF

Directors

Equity Shareholders

Composite Application Form

Directors on the Board of Elpro International Limited

Equity Shareholders of the Company whose name appear as:

3 Beneficial Owners as per the list furnished by the depositories in respect of Equity Shares held in electronic form and

3 On the Register of Members of the Company in respect of the

Equity Shares held in Physical form

Equity Shares of the Company of Rs.10/- each Equity Shares

Lead Manager/ LM

Issue/ Rights Issue

Issue Price

Lead Manager to the Issue i.e. Keynote Corporate Services Ltd.

The issue of [•] Equity Shares of Rs.10/- each for cash a premium of Rs.

[•]/- per equity share (Issue Price Rs. [•]) per Equity Share on rights basis to existing Equity Shareholders of the Company in the ratio of [•]

Equity Share for every [•] Equity Shares held on Record Date i.e., [•]

(Record Date) aggregating Rs. 13800 lacs as per this Letter of Offer.

The price at which the equity shares will be issued by the Company under this Letter of Offer i.e. Rs. [•] per share.

Elpro International Limited Issuer/ Company/ EIL

Letter of Offer/ LOO/ Offer

Document

This Letter of Offer dated [•] circulated to the Equity Shareholders and filed with the Stock Exchanges containing inter alia the Issue price and the number of equity shares to be issued and other incidental information.

PSE

Company

Pune Stock Exchange Limited

Statutory Auditors of the Price Waterhouse, Chartered Accountants having its office located at

252, Veer Savarkar Marg, Shivaji Park, Dadar ,Mumbai -28 .

The Registration Number of the Firm is 012754N

SCSBs Self Certified Syndicate Banks

i


______________________

ABBREVIATIONS

Abbreviations

AGM

CDSL

CIT

CLB

DCA

Full Form

Annual General Meeting

Central Depository Services (India) Limited

Commissioner of Income Tax

Company Law Board

Department of Company Affairs

FCNR Account

FDI

FEMA

FII (s)

GIR Number

GOI

ITAT

SEBI (ICDR), Regulations 2009/

ICDR

Foreign Currency Non Resident Account

Foreign Direct Investment

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

Foreign Institutional Investors registered with SEBI under applicable laws.

General Index Registry Number

Government of India

Income Tax Appellate Tribunal

Securities and Exchange Board of India (Issue of Capital and

Disclosure Requirements), Regulations 2009

NPA

NRE Account

NRO Account

MOU

PAT

PBDT

PBIDT

PAT

P/E Ratio

ROC

RBI

SCRR

SEBI

Non Performing Assets

Non Resident External Account

Non Resident Ordinary Account

Memorandum of Understanding

Profit After Tax

Profit Before Depreciation and Tax

Profit Before Interest Depreciation and Tax

Profit After Tax

Price/Earnings Ratio

Registrar of Companies

The Reserve Bank of India

Securities Contracts (Regulations) Rules, 1957 as amended from time to time.

Securities and Exchange Board of India

ii


______________________

COMPANY/INDUSTRY RELATED TERMS

Term

ISO

Description

International Organization for Standardization

USA United States of America

CESI – Italy

KEMA – Netherlands

CPRI – India

IEC

IRDA

ANSI Standards

ALPHA Switzerland

KWPA Iran

2H type

IEEE

MOGARD

IEC 60099-4 standards

SICOM

OEMs

Centro Electrotechnico Sperimentintesa Sanaolo S.P.A –Italy

Keuring Electrotechnisch Materijeel Arnhem

Central Power Research Institute

Import Export Code

Insurance Regulatory and Development Authority

American National Standards Institute

Name of the company established in Switzerland who provided know-how for manufacture of 400 KVA isolators

Name of the company established in Iran

Type of valve type arrester

Institute for Electrical and Electronic Engineers

Name of Elpro make Zinc oxide/ metal oxide arrester

International standard of International Electrotechnical Commission for metal oxide surge arresters without gaps for AC systems.

State Industrial & Investment Corporation of Maharashtra

Original Equipment Manufacturers

iii


______________________

CERTAIN CONVENTIONS; USE OF MARKET DATA

In this Letter of Offer, unless the context otherwise requires, all references to one gender also refers to another gender and the word "Lakh" or "Lac" means "one hundred thousand" and the word "million" means

"ten lac" and the word "Crore" means "ten million" and the word “One hundred crore” means “Billion”. In this Letter of Offer, any discrepancies in any table between total and the sum of the amounts listed are due to rounding-off.

Throughout this Letter of Offer, all figures have been expressed in Lacs unless otherwise stated . All references to “India” contained in this Letter of Offer are to the Republic of India.

For additional definitions used in this Letter of Offer, see the section “Definitions and Abbreviations” on page i of this Letter of Offer. Industry data used throughout this Letter of Offer has been obtained from industry publications and other authenticated published data. 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. Although the

Company believes that the industry data used in this Letter of Offer is reliable, it has not been independently verified. Similarly, internal Company reports, while believed by the Company to be reliable, have not been verified by any independent sources.

CURRENCY OF PRESENTATION

In this Letter of Offer, all references to “Rupees” and “Rs.” are to the legal currency of India.

iv


______________________

FORWARD-LOOKING STATEMENTS

This Letter of Offer contains certain “forward-looking statements”. These forward looking statements can generally be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”,

“intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe the objectives, plans or goals also are forwardlooking statements.

All forward looking statements are subject to risks, uncertainties and assumptions about the company 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 the expectations include, among others:

♦ General economic and business conditions in India and other countries.

♦ Regulatory changes relating to our industry / sector in India and our ability to respond to them;

♦ Fluctuation in operating costs;

♦ The ability to successfully implement the strategy, growth and expansion plans and technological changes;

♦ Changes in laws and regulations that apply to the customers of the Company;

♦ Increasing competition in and the conditions of the customers of the Company;

♦ The monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, changes in domestic and foreign laws, regulations and taxes.

♦ Occurrence of natural disaster or calamities;

♦ Changes in political conditions in India.

For further discussion of factors that could cause actual results to differ, please see the section titled “Risk

Factors” beginning on page no. vi of this Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither the Company, the Directors, any member of the Lead Manager team nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, the Company and the Lead Manager will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges.

v


______________________

SECTION I - RISK FACTORS

An investment in equity shares involves a high degree of risk. The investors should carefully consider all of the information in this Letter of Offer, in evaluating the Company and its business, including the risks and uncertainties described below, before making any investment decision. If any of the following risks actually occur, the business, financial condition and results of operations could suffer, the trading price of the Equity Shares could decline, and the investors might lose all or part of their investment.

Unless specified or quantified in the relevant risk factors below, the financial or other implications of any of the risks described in this section cannot be quantified

Materiality

The risk factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality:

Some events may not be material individually, but may be found material collectively.

Some events may have material impact qualitatively instead of quantitatively.

Some events may not be material at present but may have material impact in the future.

The risk factors are as envisaged by the management. Wherever possible, the financial impact of the risk factors has been quantified

A. INTERNAL RISK FACTORS

1.

Outstanding Litigations/disputes/cases pending against the Company/ Promoter / Directors and subsidiary company : a) The Company is involved in certain legal proceedings, incidental to its business and operations, which if determined against the Company, could have an adverse impact on the results of its operations and financial condition. The summary of the litigations is as follows:

Sr. no. Particulars No. of cases/ disputes

Approx. amount involved wherever quantifiable

(Rs. in lacs)

1.

5.

Income Act

2.

Sales

3.

Central Excise Act (Excise Duty)

4.

Central Excise Act (Service Tax)

Labour and industrial matters

6

4

4

1

15

237.13

34.09

9.75

4.75

1.78*

* to the extent ascertainable in one case.

There are no outstanding legal proceedings against the promoters/ directors and the subsidiary of the company.

For more information please refer to “Legal and other Information” commencing on page no. 140 of this Letter of Offer.

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______________________ b) There are certain legal proceedings filed by the company. The summary of these proceedings is as follows:

Sr. no.

1.

Particulars

Criminal case

2.

Civil

3.

Octroi matter

No. of cases/ disputes

1

3

1

Approx. amount involved wherever quantifiable (Rs. in lacs)

Amount not quantifiable

225.33

Amount not quantifiable

4.

Arbitration proceedings 2 Amount not quantifiable

For more information please refer to “Legal and other Information” commencing on page no. 140 of this Letter of Offer.

2.

Contingent Liabilities

The details of contingent liabilities as per the audited balance sheet for the period ended 31/03/2009

(on standalone basis) are as follows:

Particulars

2008-09

Rs. Lacs

(a)

(b)

(c)

Contingent liabilities not provided for:

Income tax matters in dispute at various stages of appeal

Excise

Service

(d) Employee related matters

(e) Sales tax matters

237.13

9.75

4.75

Amount not ascertainable

34.09

(f) Other

(g) Bank guarantees (secured by hypothecation of current assets)

37.58

167.55

(h) Corporate

(i) Claims against the company not acknowledged as debts

6500.00

267.00

For details of contingent liabilities as per the audited Balance sheet for the period ended 31/03/2009

(on consolidated basis) and as per the limited review report for the period from 01/04/2009 to

30/09/2009 (on standalone basis and consolidated basis) please refer to page no. 97, 112 and 127 respectively.

* The Corporate Guarantee of Rs. 5000 lacs has been provided to State Bank of India, Park Street ,

Kolkata against sanction of loan by the said bank to group company IGE (India ) Limited. The said loan has been taken against lease rental discounting of property rentals receivable by IGE (India)

Limited for its property situated at Penninsula Corporate Park, Parel, Mumbai. The balance

Corporate Guarantee of Rs. 1500 lacs has been provided to Yes Bank Limited for Term Loan granted to IGE (India) Limited for its General Corporate Purposes including expansion of its Wind Power

Generation business.

In the event such contingent liabilities materlise it may have an adverse effect on the financial condition and future financial performance of the company.

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3.

The company has suffered losses in past three out of five years as per the consolidated financial results.

As per the audited consolidated financial results, the company has suffered losses in previous three financial years ended on 31 st March 2007, 2008 and 2009. The losses amounted to Rs. 13.38, Rs.

1753.93 and Rs. 325.90 lacs respectively.

The company had consolidated its manufacturing operation in May 2006 by selling off the Isolator divion of Hyderabad to Siemens Limited which affected the operations of the company. The losses for the year 2008 and 2009 are mainly attributed to increase in the interest cost on account of real estate loan of Rs. 10000 lacs taken by the company. There has been no revenue in relation to its real estate activities till Sept. 09 as the construction has not progressed substantially to the total estimated cost. In the financial year 2008-09 the loss has been reduced as there was a reversal of provision for diminution in the value of investment made in MetLife Investment.

4.

A few of our group companies have incurred losses in the past financial years.

The following companies promoted by the promoters of Elpro International Ltd. have incurred losses in the last financial year as below:

Name of the company

Elpro Estates Ltd.

2006-07

(74.82)

2007-08

(43.20)

(Rs. In lacs)

2008-09

(46.25)

I.G.E. India Ltd.

Faridabad Investment Company Ltd.

219.16

(13.58)

(750.27)

(391.31)

(1747.25)

(179.95)

First Apartment Pvt. Ltd. (0.07) (0.59) (0.08)

5.

The subsidiary company has made a delay in making allotment to the shareholders of the company inturn attracting penalty from Reserve Bank of India.

During the year 2008-09 the Subsidiary Company has received Rs.3, 025.82 lacs (Previous Year Rs.7,

543.40 lacs) as share application money from M/s Expania Investments Limited, Cyprus against which no allotment of equity shares has been done during the year. As per RBI - AP DIR Circular

No.20 dated 14 December 2007 the time limit for allotment of equity shares has been restricted to 180 days from the date of foreign inward remittance. The limit of 180 days has expired in the case of the foreign inward remittance of Rs.7, 543.40 lacs, which was received in the month of February 2008.

The Company has applied to RBI vide letter RBI/FC-GPR/08-09/67 dated 27-02-2009 through its authorized bank – HDFC Bank Limited, Pune requesting approval for issue of Equity shares upto

31st March, 2009. Hence, allotment of equity shares was not done during the year. However, the company has made an application for compounding of contravention under FEMA 1999 vide its letter dated 27 th October 2009 and has allotted the equity shares to the shareholders on 7 th December

2009.

6.

The company has made certain delays in repayment of installments which may lead to difficulties in borrowings for the company.

According the auditors report the company has not defaulted in repayment of dues to any banks or financial institution except for delays ranging from 1 to 49 days in respect of all installments of

Rs.11.30 lacs each due to Saraswat Co-Operative Bank, delays ranging from 1 to 28 days in respect of four quarterly installments of Rs.350 lacs each due to Bank of India, delays ranging from 1 to 62 days in respect of ten installments of Rs.4.40 lacs each due to Bank of India, delays ranging from 1 to 7 days in respect of ten installments of Rs.4.50 lacs each due to Bank of India, delay of 27 days in

viii


______________________ respect of one installment of Rs. 200 lacs each due to State Bank of Patiyala and a delay of 5 days in respect of one installment of Rs.250 lacs due to SICOM. However, the said defaults have been made good by the company during the year.

The company cannot provide and assurance that there would be no delays in the repayment of loans.

7.

De-listing of equity shares of the company from Pune Stock Exchange Ltd. (PSE) is not effective.

The company had passed a resolution dated 27/09/2007 authorizing voluntary delisting of equity shares of the company from PSE in terms of the then existing SEBI (Delisting of Securities) Guidelines

2003. The required papers/documents in this regard were submitted by the company to PSE. The company has not received any response in this regard from PSE. The company has not been complying with various provisions of listing agreements vis-à-vis PSE except payment of listing fees.

8.

The company is operating in many different business segments not related to each other viz; electrical equipments, real estate, investment activity and others. Such segmentation may lead to lack of focus on the business activity by the management and may have adverse effect on the operations of the company.

INTERNAL RISK FACTORS RELATING TO INVESTMENTS BUSINESS

9.

The company has substantial amount of its capital invested in MetLife India Insurance Company

Limited. Any downfall in these investments made by the company would in turn affect the profits/ business of the company.

The company has substantial amount of capital invested in the shares of MetLife India Insurance

Company Limited an affiliate of MetLife, Inc. based in USA which is listed on New York Stock

Exchange. One of our promoters is also a director in MetLife India Insurance Company Limited. In the opinion of the management the realizable value of these investments is more than the book value as at March 31, 2009.As investment in MetLife is very substantial which form a part of approximately 90 per cent of the total asset of the company. Any downturn or loss from these shares can hit the profitability of the company.

10.

The company has not provided for the decline in the value of the investments held by the company.

Investments’ being made in MetLife India Insurance Company Limited are long term in nature. In the opinion of the management the realizable value of these investments is more than the book value as at

March 31, 2009. During the year, the Company reviewed the provision made in an earlier year for diminution in value of investments in MetLife India Insurance Company Limited. Accordingly, the said provision was written back fully as considered no longer required and disclosed as an exceptional item.

11.

There are certain restriction on transferability on the investment made in MetLife India Insurance

Company Limited.

The company has invested substantial amount in the equity capital of MetLife India Insurance

Company Ltd. and has entered into a share subscription agreement in this regard. The said agreement was executed in the financial year 2000 -2001. In terms of the said agreement, the company is required to give offer notice to MetLife USA, who holds 26% in MetLife India Insurance

Company Ltd. about its intention to sell/ transfer of holding in part or full. MetLife USA has absolute right to excerise its option to buy the shares intended to be sold by the company within a

ix


______________________ stipulated time. Only if MetLife USA fails to exercise the said option within stipulated time the company has liberty and right to sell it sholding in part/ full to any third party. Thus the transferability of investments in MetLife India Insurance Company Ltd. is resticted to that extent.

12.

Registration with Reserve Bank of India (RBI) as Non Banking Finance Company (NBFC)

In recent years the company has focused on investment activities and has made substantial investment in quoted / unquoted shares with majority of investments in MetLife. Such investments may require the company to register itself as NBFC with RBI and follow/comply the rules and regulations prescribed in respect of NBFCs.

Management Perception

In terms of registration criteria of NBFCs with RBI if the financial assets of the company are more than 50% of the total assets and income from such financial assets exceeds 50% of total income then the registration is compulsory. Presently the company is not falling under the said criteria. The company will initiate appropriate steps as and when required.

INTERNAL RISK FACTORS RELATING TO REAL ESTATE BUSINESS

13.

Our real estate project is adversely affected on account of global slowdowns and its implementation is depended on performance of the real estate market in India.

We are in the process of implementing a real estate project at Chinchwad with an estimated cost of

Rs.16000 lacs scheduled to be completed by March 2012. On account of corrections in real estate sector due to global slowdown its implementation has slowdown. Though we have rescheduled some of the funds borrowed for the said activity, any further delay may affect our business.

Moreover, our business is dependent on the performance of the real estate market in India, and our operations could be adversely affected if market conditions deteriorate. Real estate projects take a substantial amount of time to develop, and we could incur losses if we purchase land at high prices and we have to sell our developed projects during weaker economic periods. Further, the real estate market, both for land and developed properties is relatively illiquid, which may limit our ability to respond promptly to market events and our financial results are more sensitive to changes and downturns within real estate industry.

14.

It is difficult to predict our future performance, or compare our historical performance between periods, as our revenue fluctuates from period to period.

Under the percentage of completion method of revenue recognition, our revenue sales would depends upon the volume of bookings we are able to obtain for our development as well as the rate of progress of construction of our projects. Our bookings would depend on our ability to market and sell, pre-sell our projects and the willingness of our customers to pay for the developments or enter into sale agreements well in advance of receiving possession of the properties. Construction progress depends on various factors, including the availability of labour and raw materials and the presence of contingencies such as litigation and adverse weather conditions. The occurrence of any such contingencies could case our revenues and profits to fluctuate significantly.

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______________________

INTERNAL RISK FACTORS RELATING TO ELECTRICAL EQUIPMENT BUSINESS

15.

The products of the company have to meet international standards and comply with the Indian standards. Any noncompliance with the same would lead to inferior quality products resulting into low sales volume.

The equipments manufactured by the company are standard equipments and have to meet the standards set by the (International standard organizations) ISO. Failure to meet these standards may lead the products of the company for non-recognition or less demand which may affect the profits of the company.

16.

If the company is unable to adapt to technological changes, its business could suffer

The products/equipments manufactured by the company are generally used to control the excess power and further supply the power constantly and efficiently. To manufacture these products a good amount of advanced technology is needed and to stand in the competition these equipments have to be updated according to the changing industry demand. The company’s future success will depend in part on its ability to respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. The development and implementation of such technology entails technical and business risks.

17.

The company has neither branded the products nor patented any of its products or Processes

The Company does not own any brand names/ trademarks for any of its products. The characteristic of the industry in which the Company operates is that the clients depend on quality of the products and not on brands or trademarks.

18.

Improper handling of materials and machines used in construction and electrical business of the company can result into accidents; and our company could face significant liabilities that would lower its profits.

The company has been executing a variety of projects using modern techniques and state-of-the-art plant and equipment, which have minimized the loss of men, material and machines. The company makes it compulsory for all the site engineers and laborers to wear safety gadgets. Moreover, no incident resulting into fatal accident has occurred since inception of the company. However such measures do not guaranty prevention of accidents etc and our operations may affect adversely.

INTERNAL RISK FACTORS - OTHERS

19.

The proposed objects of the issue for which funds are being raised have not been appraised by any bank or financial institution.

The proposed project and the objects of the issue for which part of the fund are being raised have not been appraised by any bank or financial institution. In the absence of such independent appraisal, the requirement of funds raised through this issue, as specified in the section titled “objects of the issue” are based on the company’s estimates and deployment of these funds is at the discretion of the management and the Board of Directors of the company.

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______________________

20.

The company may continue to be controlled by the promoter, who by virtue of their aggregate shareholding collectively own a substantial portion of our issued equity shares, as a result of which, the remaining shareholders may not be able to affect the outcome of shareholder voting.

As on date of this offer document, the promoter shareholding stands at 54.50%. The promoter will continue to own a substantial portion of the issued equity shares. Further, the promoters have also undertaken to subscribe to the unsubscribed portion, if any, of this issue atleast to the extent of 90% of the issue size. Consequently, the collective holding of the promoter may increase above its current holdings. Consequently, the promoter and group companies may be in a position to influence the result of the shareholders voting and may cause to take actions that may conflict with the interests of some of the shareholders.

21.

The company’s success is largely dependent on our ability to recruit, train and retain qualified employees.

The success of the company depends on its ability to attract, retain and motivate highly skilled and qualified employees. An increasing attrition level amongst such people and our inability to attract, hire, train and retain employees could have a material adverse effect on our business and operation. The company is having paid up capital of Rs.461.17 lacs. On completion of the proposed rights issue the company will be required to appoint a Company Secretary in terms of Section 383(A) of Companies

Act, 1956.

22.

The company may be adversely affected by labour unrest.

Based on the past experiences of the company, the company had certain issues relating to the labour laws. If there are work stoppages or lockouts at the facilities or at the facilities of the major suppliers’ occur or continue for a long period of time, the business, financial condition or results of operations may be adversely affected.

23.

The company’s insurance coverage may not adequately protect it against certain operating hazards and this may have a material adverse effect on the company’s business.

The company generally takes insurance policies to cover fire, earthquake, floods etc in respect of its projects. While the company believes that the insurance coverage that it maintains would be reasonably adequate to cover the risks, there can be no assurance that any claim under the insurance policies maintained by the company will be honored fully, in part or on time. To the extent that the company suffers loss or damage that is not covered by insurance or which exceeds the insurance coverage, the results of operations or cash flows may be affected.

24.

If the company is unable to manage the growth strategy effectively, the business and financial results may be adversely affected.

The company’s business strategy includes development of commercial and residential real estate and manufacture of surge arrestors. As the company grows and diversifies, it may not be able to execute its projects efficiently on such increased scale, which would result in delays and increased costs adversely affecting its reputation. This future growth may strain the managerial, operational, financial and other resources. If the company is unable to manage its growth strategy effectively, its business, financial condition and results of operations may be adversely affected.

25.

The Company’s ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

The amount of future dividend payments of the Company, if any, will depend upon its future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

There can be no assurance that it will be able to pay dividends.

xii


______________________

B. EXTERNAL RISK FACTORS

1.

Globally competitive business environment

The Company operates in a globally competitive business environment. Growing competition may force it to reduce the price of its products which may reduce its revenues and margins and/ or decrease its market share, either of which could have a materially adverse effect on its business, financial condition and results of operations.

2.

The company’s business is substantially affected by prevailing economic conditions in India.

The company performs its business activities viz; real estate development, investment activities and manufacturing of surge arrestors in India, all its projects are located in India and the predominant portion of its customers are Indian companies or Indian nationals. As a result, the copany is highly dependent on prevailing economic conditions in India and its results of operation are significantly affected by factors influencing the Indian economy. Factors that may adversely affect the Indian economy, and hence the results of operations, may include:

• Any increase in Indian rates or inflation;

• Any scarcity of credit or other financing in India, resulting in an adverse impact on economic conditions in India and scarcity of financing of our real estate developments and the purchase thereof by our customers;

• Prevailing income conditions among Indian consumers and Indian corporations;

• Changes in India’s present tax, trade, fiscal or monetary policies;

• Political instability, terrorism or military conflict in India or in countries in the region or globally, including in India’s various neighboring countries.

• Conditions in other emerging market nations, which nations may compete for finite global capital development or improvement resources with Indian companies;

• Other significant regulatory or economic developments in or affecting India or its real estate development sector or manufacture of surge arrestors.

3.

Changes in the Government of India policies

A significant change in the Indian governments or the state governments economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and the business and financial condition and prospects in particular of the Company.

4.

Risk relating to changes in laws and regulations

Any change in the laws and regulations governing the industry may adversely affect the business and financial condition of the Company.

5.

The Equity Shareholders will not be able to sell immediately on an Indian stock exchange any of the Rights Equity Shares purchased in the Issue.

The Equity Shares issued through this Rights Issue will be listed on BSE. Pursuant to Indian regulations, certain actions must be completed before the Rights Equity Shares can be listed and trading may commence. Investors’ book entry or “demat” accounts with depository participants in

India are expected to be credited within two working days of the date of allotment. Thereafter, upon receipt of final approval from the stock exchanges, trading in the Rights Equity Shares is expected to commence within seven working days of the date on which the basis of allotment is approved by the

Designated Stock Exchange. The Company cannot assure that the Rights Equity Shares will be credited to investors’ demat accounts, or that trading in the Rights Equity Shares will commence, within the time periods specified above.

xiii


______________________

6.

Volatility of share price

After the Rights Issue, the price of the Equity Shares may be highly volatile and may fluctuate significantly due to many factors, including variations in the operations of the Company and changes in the regulatory environment. The prices of the Equity Shares may fluctuate as a result of several factors, including:

• volatility in the Indian and global securities market.

• results of operations and performance in terms of market share;

• contracts, acquisitions, strategic partnerships, joint ventures, or capital commitments;

• changes in the estimates of Company performance or recommendations by financial analysts;

• significant developments in India economic liberalization and deregulation policies;

• significant developments in India fiscal and environmental regulations;

7.

Factors beyond Management Control

Wars, natural disasters and terrorist attacks may adversely affect the markets, investors’ confidence, exchange rates and world economy in general and may result in loss of business and assets.

NOTES

1.

The networth of the company as on March 31, 2009 is Rs. 6103.29 lacs and as on September 30, 2009 is

Rs.

6871.02

lacs .The issue size Rs. 13,800 lacs.

2.

The Book value per share as on March 31, 2009 is Rs. 143.54 (standalone basis) and Rs. 408.84 (on

Consolidated basis) . The book value per share as on September 30, 2009 is Rs. 152.89 (on Standalone basis) and Rs. 382.08 (on Consolidated basis) per equity share.

3.

There is no interest of promoters/directors/ key management personnel other than reimbursement of expenses incurred or normal remuneration or benefits.

4.

For details on transaction by the group company during the last year and the nature of transaction has refer to page 19 and for Related party disclosures refer page nos. 112 (on Standalone basis) and 127 (on

Consolidated basis) for period ended September 2009 of this Letter of Offer.

5.

There has been no financing arrangement whereby the Promoter Group, the Directors of the

Company and their relatives have financed the purchase by any other person of securities of the

Company other than in the normal course of business of the financing entity during the period of six months immediately preceding the date of filing of the Draft Letter of Offer with SEBI.

6.

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

7.

Investors are free to contact the Lead Manager for any complaints/ information/ clarification pertaining to this Issue. For contact details of the Lead Manager, please refer to the cover page of this

Offer Document.

8 The Company satisfies the following conditions as prescribed under Regulation 57(2) (b) of Part E of

Schedule VIII of the ICDR Regulations.

xiv


______________________ a.

The Company has been filing periodic reports, statements and information in compliance with the listing agreement for the last three years immediately preceding the date of filing this letter of offer with the designated stock exchange. b.

The reports, statements and information referred to sub-clause (a) above are available on the website of Bombay Stock Exchange Limited (BSE) one of the recognized stock exchange with nationwide trading terminals c.

The Company has investor grievance – handling mechanism which includes meeting of the

Shareholder’s or Investor’s Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the Company as regards share transfer and have clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.

9. The Lead Manager and the Company shall update this Letter of Offer and keep the shareholders/public informed of any material changes till the listing and trading commencement

xv


___________________________

PART I

SECTION II - INTRODUCTION

The industry information presented in this section has been extracted from publicly available documents from various sources, including officially prepared materials and has not been prepared or independently verified by the Issuer or Lead

Manager.

INDUSTRY SUMMARY

TRANSMISSION AND DISTRIBUTION

Transmission & Distribution is an important part of Power Generation Industry. The power from the generating stations are evacuated and sent over long distances to the consumers through transmission lines

& distributing stations. Sub stations en-route ensures efficient transmission and distribution of the power to the consumers. Surge Arrestors or Lightning Arrestors role is to protect the equipments in the sub stations from the sudden surge or lightning. This is a specialized technology available with very few companies in the world. Surge Arrestors play an important role in protecting the expensive equipments in the substations. It self destroys to protect the equipments and the system.

INSURANCE

The US$ 41-billion Indian insurance industry is the fifth largest life insurance market in the emerging insurance economies globally, growing at 32-34 per cent annually. Life insurance in India has the First Year

Premium (inclusive of Single Premium) segment accounting for US$ 24 billion and Non-Life Insurance—US$

5.6-billion industry—with motor and health segments accounting for 56 per cent of total business.

Currently, there are 22 life insurance firms operating in India and as per industry estimates, the life category constitutes about 4 per cent of the total GDP in the country. The foreign direct investment (FDI) limit in the insurance space for foreign players is capped at 26 per cent—permissible under the automatic route subject to obtain a license from the official regulator, Insurance Regulatory and Development Authority (IRDA)— but the government is planning to raise it to 49 per cent and a bill to give effect to the proposal is pending in the Rajya Sabha.

The life insurance industry has contributed more than four per cent to the country’s gross domestic product

(GDP) since liberalization and non-life’s contribution has been at 0.6 per cent for the last nine years.

SBI Life Insurance has been ranked the no. 1 life insurer across the globe, by the Million Dollar Round Table

(MDRT) members. MDRT is an association of the world’s best life insurance sales professionals.

The country's largest life insurance player, Life Insurance Corporation of India (LIC), is celebrating its 53rd anniversary week starting September 1, 2009 and has grown to 35.8 million policies and a sum assured of

US$ 80.3 billion in 2008-09. It has collected US$ 325.27 million through alternate channels in the first four months of the current fiscal.

MetLife India Insurance became the first private sector life insurer to provide guaranteed monthly income along with other regular benefits like tax incentives and bonuses with the launch of 'Met Monthly Income

Plan' in August 2009. MetLife has been among the top three fastest growing life insurance companies consecutively for the last 30 months.

1


___________________________

Currently, there are at least 18 third party agents (TPAs) empanelled with the four PSU insurers. Insurers have also begun mulling setting up their own TPA mechanism to rectify the current weaknesses.

In June 2009, the general insurance industry grew at 7.4 per cent. Gross underwritten premiums (GWP) of the public sector insurers stood at US$ 319 million, up by eight per cent. The growth in GWP of private sector players was to the tune of 6.5 per cent at US$ 214.72 million. United India Insurance was the best performer, among public sector players, growing its business by around 17 per cent. New India Assurance grew at 8.5 per cent.

Overall growth in the life insurance industry remained moderate, with private insurers reporting a decline of

20 per cent in the category. They clocked US$ 1.12 billion during the first three months of the fiscal, while public sector player LIC posted a 20 per cent growth in first year premiums. Among the larger, Reliance Life is the only private player that has recorded a positive growth at 20 per cent in its first year premium collections. According to the data compiled by the insurance regulator, in June 2009, LIC’s new business premiums were up 10 per cent.

Cumulative assets managed by the private insurance players stood at US$ 31.7 billion as on June 30, 2009, while LIC managed over US$ 167.37 billion (March 2009).

Source extracts from: http://www.ibef.org/industry/insurance_industry.aspx

REAL ESTATE

The Indian real estate sector plays a significant role in the country's economy. The real estate sector is second only to agriculture in terms of employment generation and contributes heavily towards the gross domestic product (GDP). Almost five per cent of the country's GDP is contributed to by the housing sector. In the next five years, this contribution to the GDP is expected to rise to 6 per cent.

According to Jones Lang LaSalle, faster economic growth in Brazil, Russia, India and China (BRIC) could result in the property markets of those nations recovering at a faster rate than the UK and US real estate markets. It has also been suggested that India's property sector could begin to improve from late 2009 and may attract up to US$ 12.11 billion in real estate investment over a five-year period.

The IT and ITES sector alone is estimated to require 150 million sq ft of office space across urban India by

2010. Organized retail is also responsible for the growth in commercial office space requirement. The organized retail industry is likely to require an additional 220 million sq ft by 2010. Moreover, growth is not restricted to a few towns and cities but is pan-India, covering nearly all tier-I and tier-II cities.

Almost 80 per cent of real estate developed in India is residential space, the rest comprising of offices, shopping malls, hotels and hospitals. According to the Tenth Five-Year-Plan, there is a shortage of 22.4 million dwelling units. Thus, over the next 10 to 15 years, 80 to 90 million housing dwelling units will have to be constructed with a majority of them catering to middle- and lower-income groups.

Moreover, a report by leading international property consultants, Jones Lang LaSalle Meghraj and Cushman

& Wakefield India in association with Shopping Centers Association of India, named Mall Realities India

2010, states that over 100 malls of over 30 million sq feet of new shopping centre space are projected to open in India between 2009 and end-2010.

Apart from the huge demand, India also scores on the construction front. A McKinsey report reveals that the average profit from construction in India is 18 per cent, which is double the profitability for a construction project undertaken in the US.

2


___________________________

Foreign institutional investors (FIIs) have also shown confidence in the country’s construction sector and are shoring up investment. With the BSE Sensex touching a 15-month high, the market capitalization of FII investment in construction has gone up a whopping 422 per cent in the past six months.

The real estate sector is also likely to get a boost from Real Estate Mutual Funds (REMFs) and Real Estate

Investment Trusts (REITs). In fact, according to a CRISIL paper, the REITs would have the potential to hold at least 5 per cent share of the total global real estate market by 2010, the size of which would turn to US$

1,400 billion in the next 3 years. The paper titled, ‘Indian REITs; Are We Prepared', says that by 2010, REITs alone would hold a market size of US$ 70 billion of the total real estate market as its concept is gaining ground in countries like India and other developing nations.

Foreign direct investment (FDI) into India in the real estate sector for the fiscal year 2008-09 has been US$

12.62 billion approximately, according to the latest data given by the Department of Policy and Promotion

(DIPP).

Source: extracts from http://www.ibef.org/industry/realestate.aspx

COMPANY SUMMARY

Elpro International Limited was incorporated in July 1962 as a public limited company, in technical and financial collaboration with General Electric (GE), USA.

An ISO 9001-2000 company, Elpro International is the number one manufacturer of Surge Arresters in Asia manufactured with technical know how from GE USA. It is the only manufacturer outside the United States manufacturing Surge Arresters and Zinc Oxide Discs with GE technology acknowledged to be the best in the world.

Elpro’s constant adherence to Excellence in Quality and Expertise in Marketing has ensured a reliable brand image and a dominant market share in each of its product lines in India. It is the first company to introduce

& produce Surge Arresters as well as Metal Oxide Gapless Surge Arresters in India. Elpro won the ELCINA award in the “Research & Development” category in 1987and its products have been successfully type tested in renowned laboratories like CESI - Italy, KEMA - Netherlands and CPRI India. Elpro International is the only manufacturer outside the US that meets IEC as well as ANSI standards.

Elpro International set up a metal oxide varistor manufacturing plant in its Pune facility in 1986 with technical expertise from GE. To enhance its capabilities further, Elpro acquired a Disconnecting Switch

(Isolators) manufacturing company in 1994, Switchgear Manufacturing Company, which was set up in

Hyderabad via a technical collaboration with ALPHA Switzerland.

Today, Elpro has a presence in international markets including USA, Mexico, Brazil, Columbia, Peru, Italy,

France, Turkey, Russia, Ghana, Nigeria, Kenya, Iran, Iraq, Saudi Arabia, Bangladesh, Bhutan, Thailand,

Philippines, Vietnam, Taiwan, and Korea.

As part of its corporate vision to emerge as the leader in surge arresters, Elpro International acquired the

Zinc Oxide Disc (active elements of surge arresters) manufacturing line from M/s Harris, Ireland in 2001 and the same was installed in the company’s Pune facilities in the year 2002.

M/s. Harris and Elpro, both use GEo’s technical expertise. As a result, the two companies share great synergy, which has translated in speedy absorption of technology and processes. At full operation the plant has an annual capacity to process 300 tonnes of Zinc Oxide Powder. With this new facility, Elpro has a combined annual capacity to produce 450 tonnes of Zinc Oxide Discs, making the Company the leading manufacturer and supplier of Zinc Oxide Discs in Asia.

3


___________________________

Elpro continues to be on the fast track to growth with a strong focus on developing niche products and strategic acquisitions in existing, or new-product areas, with potential for global marketing. Some of Elpro’s national clients include ABB India; Bharat Heavy Electricals Limited (BHEL); National Thermal Power

Corporation of India (NTPC); Reliance Industries; Siemens India; Tata Power Company and international clients include GE USA; KWPA Iran; Saudi Electric Company and Taiwan Power Company.

Elpro International is committed to leading the "next generation" for superior protection of system equipments.

The company executed JDA with its subsidiary for development of one small commercial project admeasuring approximately 34000 sq. ft at Chinchwad, Pune. This was the first real estate project undertaken by the company.

During the year 2006, the company decided to sell its isolator division situated in Hyderabad to Siemens Ltd. at a total consideration of Rs.2500 lacs. The surplus land of factory premises held by the company situated in

Chinchwad is put to use for real estate activities and was converted into residential land. Since then the company is engaged in developing two projects viz; the commercial mall and residential towers. The projects are under implementation as on date and the estimated date of completion is during the year of 2012.

In the recent past the company has identified “Insurance” sector as one of the important investment destination. The company believes that insurance is a big opportunity in the country like India with large population and untapped potential. Growth in insurance industry has been spurred by product innovation, vibrant distribution channels coupled with targeted publicity and promotional campaigns by insurers. With gradual opening up of insurance sector and large sector specifics reforms on anvil, investment in insurance sector is considered as best long term potential opportunity by the management.

The company has identified an opportunity for investment in insurance sector through MetLife India

Insurance Company Limited. The company has been consistently increasing its investment in MetLife by contributing to its equity share capital. The company commenced investment in MetLife from 26/07/2001.

The company has been enhancing its stake in MetLife from time to time and has entered into a share subscription agreement with the company. As on 31st March, 2009 the company holds 22,66,71,247 equity shares of Rs.10/- each of MetLife for total consideration of Rs.238.68 crores.

4


___________________________

I

SUMMARY OF FINANCIAL DATA

Please read the following data in conjunction with the detailed Auditors’ Report commencing on page no.48 under the heading ‘FINANCIAL INFORMATION’

STANDALONE BALANCE SHEET

(Rs. in lacs)

PARTICULARS

As at March

31, 2009

As at March 31,

2008

SOURCES OF FUNDS

Shareholders’ Funds

Share capital

Share Warrants

Share Application Money

Reserves and surplus

Loan Funds

Secured loans

Unsecured loans

Deferred Tax Liability

Less: Deferred Tax Asset

Deferred Tax - Net

II APPLICATION OF FUNDS

Fixed assets

Gross block

Less : Accumulated Depreciation

Net block

Capital work in progress including advances

Investments

Current assets, loans and advances

Stocks

Sundry debtors

Cash and bank balances

Other current assets

Loans and advances

Less : Current liabilities and Provisions

Current Liabilities

Provisions

Net current assets / (current liabilities)

Miscellaneous Expenditure

(To the extent not written off)

(311.36)

-

16,270.23

3,892.13

2,106.53

1,785.60

187.71

1,973.31

25,115.34

1,457.48

230.98

559.08

30.10

3,122.30

5,399.94

16,381.27

10.77

16,392.04

(10,992.10)

173.68

16,270.23

395.17

430.76

2,007.14

3,270.22

6,103.29

8,723.31

1,443.63

311.36

(311.75)

-

13,654.91

3,998.38

2,055.88

1,942.50

2,205.56

4,148.06

8,624.16

1,520.88

511.99

261.29

165.30

7,838.79

10,298.25

9,426.39

19.59

9,445.98

852.27

30.42

13,654.91

355.67

--

--

1,180.21

1,535.88

11,428.07

690.96

311.75

5


___________________________

STANDALONE PROFIT AND LOSS ACCOUNT

PARTICULARS

I INCOME

Sales and Services - Gross

Less: Excise Duty

Sales and Services - Net

(Rs. in Lacs)

For the year ended

March 31,

2009


March 31,

2008

1,303.11

58.22

1,244.89

2,966.92

254.58

2,712.34

Other income

II EXPENDITURE

Materials / Direct cost

Employee costs

Depreciation

Interest

68.32 182.76

1,313.21 2,895.10

297.48

166.41

157.51

1,677.22

1,445.09

305.96

189.34

1,780.31

483.22 1,018.87

2,781.84 4,739.57

Other expenses

PROFIT/(LOSS) BEFORE TAX AND EXCEPTIONAL ITEMS

Exceptional Item :

Provision for diminution in value of investment no longer

(1,468.63) (1,844.47) required written back 1,191.93 –

PROFIT/(LOSS) BEFORE TAXATION (276.70)

Less: Provision for tax

– Prior Period Tax

– MAT credit

– Deferred tax reversal

18.01

(14.10)

–

–

–

(135.99)

– Fringe benefit tax 3.33 5.71

NET PROFIT/(LOSS) FOR THE YEAR (283.94)

- Balance of Profit and Loss Account (brought forward)

BALANCE CARRIED TO BALANCE SHEET

(1,369.15) 345.04

Basic and Diluted Earnings per equity share of face value of Rs. 10/- each

(1,653.09)

(7.27)

(1,369.15)

(48.20)

6

I


___________________________

CONSOLIDATED BALANCE SHEET


Shareholders’ Funds

Share capital

Share Warrants

Share Application Money


Minority interest

Capital reserve on consolidation

Loan Funds

Secured loans

Unsecured loans


Goodwill on consolidation

Fixed assets

Gross block

Less : Accumulated Depreciation

Net block


Investments

Deferred tax

Deferred tax asset

Less : Deferred tax liability

Deferred tax - Net

Current assets, loans and advances

Stocks

Sundry debtors



Loans and advances

Less : Current liabilities and Provisions

Current Liabilities

Provisions

Net current assets / (current liabilities)

Miscellaneous Expenditure

(To the extent not written off)

As at March

31, 2009

3274.84

5549.34

9922.89

12.59

9935.48

(4,386.14)

173.69

26767.13

1445.78

10172.98

26767.13

73.68

4096.46

2261.47

1834.99

4042.05

5877.04

24976.21

372.72

(320.07)

52.65

1457.48

224.15

562.77

30.1

395.17

430.76

12576.35

3184.52

16586.8

—

7.35

8727.2

(Rs. in Lacs)

As at March 31,

2008

21099.42

81.35

4202.37

2185.27

2017.1

2205.55

4222.65

8477.25

373.11

(320.46)

52.65

1520.84

516.55

262.45

165.3

355.67

—

7543.4

1140.47

9039.54

—

7.35

11439.44

613.09

12052.53

11032.96

13498.1

5241.59

21.41

5263

8235.1

30.42

21099.42

7


___________________________

CONSOLIDATED PROFIT AND LOSS ACCOUNT


(Rs. in Lacs)


I INCOME

Sales and Services – Gross

BALANCE CARRIED TO BALANCE SHEET

Basic and Diluted Earnings per equity share of face value of Rs. 10/- each

March 31, 2009 March 31, 2008

1321.35 3004.46

Less: Excise Duty

Sales and Services - Net

Other income

II EXPENDITURE

Materials / Direct cost

Employee costs

Depreciation

58.21

1263.14

166.35

183.06

254.59

2749.87

78.39 230.75

1341.53 2980.62

320.28 1481.18

321.49

229.87

Interest 1677.76 1795.48

Other expenses 508.89 1060.16

2856.34 4888.18

PROFIT/(LOSS) BEFORE TAX AND EXCEPTIONAL

(1,907.56)

Exceptional Item :

Provision for diminution in value of investment no longer required written back 1191.93 –

PROFIT/(LOSS) BEFORE TAXATION (322.88)

Less: Provision for tax

– Current tax – –

– MAT credit

– Deferred tax reversal

– Fringe benefit tax

(14.10)

–

3.33

–

(157.70)

7.53

– Prior Period Tax

PROFIT / (LOSS) AFTER TAXATION

17.91

(330.02)

(0.10)

(1,757.29)

Add : Share of profits of associate 0.12 3.34

NET PROFIT/(LOSS) FOR THE YEAR (329.90)

- Balance of Profit and Loss Account (brought forward) (1,408.89) 345.06

(1,738.79)

(8.44)

(1,408.89)

(49.31)

8


___________________________

Un-audited Condensed Balance sheet as at September 30, 2009

I SOURCES OF FUNDS

Shareholders' funds

Share capital

Share warrants

Share application money


Loan funds

Secured loans

Unsecured loans

Deferred tax

Deferred tax liability

Less: Deferred tax asset

Deferred tax - net


Fixed assets

Gross block

Less : Accumulated depreciation

Net block


Investments

Current assets, loans and advances

Stocks

Sundry debtors



Loans and advances

Less : Current liabilities and provisions

Current liabilities

Provisions

Net current assets / (current liabilities)

Miscellaneous expenditure

(To the extent not written off or adjusted)

Debit balance in profit and loss account

Schedule

As at September 30,

2009

461.17

27.50

-

6,589.91

(Rs. in lacs)

As at March

31, 2009

395.17

430.76

2,007.14

3,270.22

7,078.58

7,035.08

12,002.45

19,037.53

276.67

(276.67)

6,103.29

8,723.31

1,443.64

10,166.95

311.36

(311.36)

- -

26,116.11 16,270.23

3,891.81

2,182.97

1,708.84

183.69

1,634.87

258.23

530.10

36.94

6,122.19

1,892.53

24,065.34

8,582.33

8,617.31

14.32

8,631.63

(49.30)

3,892.13

2,106.53

1,785.60

187.71

1,973.31

25,115.34

1,457.48

230.98

559.08

30.10

3,122.30

5,399.94

16,381.27

10.77

16,392.04

(10,992.10)

26,116.11

86.83

120.71

173.68

--

16,270.23

9


___________________________

Un-audited Condensed Profit and loss account for the six months ended September 30, 2009

I Net sales / Income from operations

II Expenditure a) (Increase)/ Decrease in stock in trade and work in progress b) Consumption of Raw Material c) Purchase of traded goods d) Employee cost e) Depreciation f) Miscellaneous Expense Written off g) Other Expenditure h) Compensation and Interest thereon

Total

III Profit / (loss) from Operations before interest and exceptional items

IV Other income

V Profit / (loss) before interest and exceptional items

VI Interest

VII Profit / (loss) after interest but before exceptional items

VIII Exceptional items

IX Profit / (loss) before tax

XI Profit / (loss) from ordinary activities after tax

XII Extraordinary items

XIII Profit / (loss) for the period

XIV Balance of Profit and loss account (brought forward)

XIII Balance of Profit and loss account carried to Balance sheet

XIV Earnings Per Share (EPS)

Basic and Diluted Earnings per equity share for the period

Rs. In Lacs

For the six months ended

September 30, 2009

635.81

21.75

61.21

-

37.68

78.45

86.85

151.84

83.49

521.27

114.54

55.94

170.48

937.76

(767.28)

-

(767.28)

0.34

(767.62)

-

(767.62)

(1,653.09)

(2,420.71)

(17.64)

10


___________________________

ISSUE

Type of Issue Type of

Instrument

No. of equity shares

Face Value

(Rs.)

Issue Price

(Rs.)

Consideration

Rights Issue Equity Shares [•] 10/- [•] Cash

The ratio and price per equity share will be decided by the Board prior to the issue at the appropriate time as per applicable rules/regulations.

ISSUE BREAK-UP

Particulars No. of Equity Shares

Equity Shares offered (Issue Size)

Entitlement Ratio

Market Lot

Equity shares outstanding prior to the Issue

Equity shares outstanding after the issue

[•] Equity Shares

The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the ratio of [•] Equity Shares for every [•] Equity

Shares held as on the Record Date.

The market lot for the Equity Shares in dematerialized mode is one. In case of physical certificates, the

Company would issue one certificate for the Equity

Shares allotted to one folio (“Consolidated

Certificate”).

46,11,677 Equity Shares

[•] Equity Shares

Use of proceeds:

Please see section titled “Objects of the Issue” on page 22 of this Offer Document

BOOK CLOSURE & OTHER DETAILS

Particulars

Book Closure

From [•] to [•]

Date(s)

Purpose [•]

No Delivery Period on BSE/ PSE [•] to [•]

Ex-right /Ex-dividend

[•]

ISSUE SCHEDULE

ISSUE OPENS ON LAST DATE FOR RECEIVING

REQUESTS FOR SPLIT FORMS

ISSUE CLOSES ON

[•] [•] [•]

11


___________________________

GENERAL INFORMATION

Dear shareholder(s),

The Board of Directors in their meeting held on 12/01/2010 decided to make the rights issue of equity shares under Section 81(1) of the Companies Act, to the extent of Rs.13800 lacs and accordingly the draft letter of offer was approved. The details of the Rights Issue to the existing shareholders of the company are as follows:

Issue of [•] Equity Shares of Rs. 10/- each at a premium of Rs. [•] per equity share (Issue Price of Rs. [•]) aggregating Rs. 13800 lacs on rights basis to the existing Equity Shareholders of the Company in the ratio of [•]

Equity Share for every [•] Equity Share held on [•] (Record Date).

The ratio and price per equity share will be decided by the Board prior to the issue at the appropriate time as per applicable rules/regulations.

Name of the Company

Registered Office

: Elpro International Limited

: “Nirmal” 17th, Floor, Nariman Point, Mumbai 400 021

Tel: (022) 22023057; Fax: (022) 22027995

Plant : P.O Chinchwadgaon,

Pune-411 033

Tel: ; (020) 27352961 Fax: (020) 27353037

Company Identification Number

Registration No.

Contact person:

Email: sambhaw@elpro.co.in; Website: www.elpro.co.in

: L51505MH1962PLC012425

: 012425

: Mr. Sambhaw Jain, Compliance Officer

Registrar of Companies : 100, Everest, Marine Drive, Mumbai - 400 002

* for change in registered office of the company please ref page no. 36.

IMPORTANT

1.

This Issue is applicable to such Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the electronic form and on the Register of Members of the Company at the close of business hours on [•] (Record Date).

2.

Your attention is drawn to the section on risk factors starting from page no. vi of this Letter of Offer.

3.

Please ensure that you have received the CAF with this Letter of Offer.

4.

Please read the Letter of Offer and the instructions contained herein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are an integral part of this Letter of Offer and must be carefully followed. An application is liable to be rejected for any non compliance of the Letter of Offer/

Abridged Letter of Offer or the CAF.

5.

All enquiries in connection with this Letter of Offer or CAFs should be addressed to the Registrar to the

Issue, quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned in the CAFs.

6.

The Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective or additional information would be made available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of the Letter of Offer with SEBI.

7.

All the legal requirements as applicable till the filing of the Letter of Offer with the Designated Stock

Exchange have been complied with.

12


___________________________

BOARD OF DIRECTORS

The Board of Directors of the Company is comprised of:

Name of the Director Designation

Mr. R.K. Dabriwala Chairman

Mr. R.K. Choudhury

Mr. Anil Poddar

Mr. Sharat Anand

Director

Director

Director

Status

Non-executive Director

Non-executive Independent Director

Executive Director


Mr. Narayan T Atal

Mr. Surbhit Dabriwala

Director

Director


Non-executive Director

For further details of the Board of Directors of EIL, please refer to the chapter titled “Management” on page.

42 of this Letter of Offer

ISSUE MANAGEMENT TEAM

Compliance Officer Legal Advisors to the Issue

Mr. Sambhaw Jain

Compliance Officer

”Nirmal“ 17th Floor,

Nariman Point, Mumbai 400 021

Khaitan & Co.

Meher Chambers, R.K. Marg,

Ballard Estate, Mumbai 400 001

Tel : (022) 6636 5000, Fax : (022) 6636 5050

Tel: (022) 40299000 ; Fax: (022) 22027995

Email : sambhaw@elpro.co.in

E mail: project.elpro@khaitanco.com

Contact Person: Ms. Vibhava Sawant

Investors can contact the Compliance Officer or the Registrar to the issue in case of any pre-Issue or post-

Issue related problems such as non-receipt of letters of allotment, credit of allotted Equity Shares in the respective beneficiary account or refund orders, etc.

SELF CERTIFIED SYNDICATE BANKS

As on date following banks are registered with SEBI for collection of ASBA forms:

1 Axis Bank Limited 9 Deutsche Bank

2 State Bank of Hyderabad 10 Union Bank of India

3 Corporation Bank

4 State Bank of Travancore

5 IDBI Bank Limited

11 HDFC Bank Limited

12 Bank of Baroda

13 ICICI Bank Limited

6 State Bank of Bikaner & Jaipur

7 Yes Bank

14

15

Vijaya Bank

Bank of Maharashtra

8 Punjab National Bank 16 State Bank of India

For the details of list of controlling banks along with its branches for ASBA please visit the website of

SEBI and BSE at www.sebi.gov.in and www.bseindia.com respectively.

Bankers to the Company

Bank of India

Pune Corporate Banking Branch,

State Bank of Patiala

Commercial Branch,

1162/6, Shivaji Nagar,

University Road,

First Floor, Atlanta,

Nariman Point, Mumbai - 21

Pune 411 005

Tel no: 020 25510396

Tel no: 022 22047021

13


___________________________

Bankers to the Issue

[•]

Lead Managers to the issue Registrars to the issue

KEYNOTE CORPORATE SERVICES LIMITED

4th Floor, Balmer Lawrie Building,

5, J. N. Heredia Marg, Ballard Estate,

Mumbai – 400 001

SEBI Regn No: INM 000003606

Tel : +91-022-3026 6000-3; Fax: + 91 022 22694323

Website: www.keynoteindia.net

E-mail: mbd@keynoteindia.net

Contact Person: Ms. Swati Sinha

INTER SE ALLOCATION OF RESPONSIBILITIES

SHAREX DYNAMIC (INDIA) PVT.LTD.

Unit no.1, Luthra Ind. Premises, Safed Pool,

Andheri Kurla Road, Andheri (E),

Mumbai – 400 072

Tel : +91-022-28515606/28515644;

Fax : +91-22- 28512885

Website :

E-Mail :

www.sharexindia.com

sharexindia@vvsnl.com

Contact Person: Mr. B.S. Baliga

Keynote Corporate Services Limited is the sole Lead Manager to this issue, however the list of major responsibilities of Keynote Corporate Services Limited inter alia, is as follows:

Sr.

No.

Activity

A. Capital Structuring with relative components and formalities such as composition of

Structuring of the offer document.

B. Drafting and design of the offer document and of the advertisement or publicity material including newspaper advertisement and brochure or memorandum containing salient features of the offer document.

C. Selection of various agencies connected with issue, such as registrars to the issue, printers, advertising agencies, etc.

D. Marketing of the issue, which shall cover, inter alia , formulating marketing strategies, preparation of publicity budget, arrangements for selection of (i) ad-media, (ii) centers for holding conferences of shareholders, investors, etc., (iii) bankers to the issue, (iv) collection centers as per schedule III of ICDR, distribution of publicity and issue material, Letter of

Offer.

E. Post-issue activities, which shall involve essential follow-up steps including follow-up with bankers to the issue and Self Certified Syndicate Banks to get quick estimates of collection and advising the issuer about the closure of the issue, based on correct figures, finalization of the basis of allotment or weeding out of multiple applications, listing of instruments, despatch of certificates or demat credit and refunds and coordination with various agencies connected with the post-issue activity such as Registrar to the issue, Bankers to the issue,

Self Certified Syndicate Banks, etc.

CREDIT RATING/DEBENTURE TRUSTEE

This being Rights Issue of equity shares, neither Credit Rating nor appointment of Debenture Trustee is required.

MONITORING AGENCY

Not Applicable

14


___________________________

APPRAISING ENTITY

Not Applicable

MINIMUM SUBSCRIPTION i.

If the Company does not receive the minimum subscription of 90% of the issue, the entire subscription shall be refunded to the applicants within fifteen days from the date of closure of the issue. ii.

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

Act, 1956.

UNDERWRITING/ STANDBY SUPPORT

This issue of equity shares is not being underwritten and/or no standby support is being sought for the said issue.

15


___________________________

CAPITAL STRUCTURE OF THE COMPANY

Details as on the date of Letter of Offer

Aggregate

Nominal Value

(Rs. in Lacs)

Aggregate

Value at Issue

Price

(Rs.in lacs)

A.

Authorized Capital

1,00,00,000 Equity Shares of Rs. 10/- each 1000.00 1000.00

B.

Issued, Subscribed & Paid-up Capital

46,11,677 Equity Shares of Rs. 10/- each

C.

Present Rights Issue

[•]Equity shares of Rs. 10/- each for cash at a premium of Rs. [•] per share

461.17

[•]

461.17

138.00

D.

Post Issue Capital

[•] Equity shares of Rs. 10/- each

Share Premium Account

Before the offer

After the offer

1.

Group

Faridabad

Investment

Company Limited

[•]

6411.95

[•]

-

[•]

Notes to Capital Structure:

1.

The details of Locked-in, pledged and encumbered shares of Promoter and Promoter Group

S. No. Name of the

Promoter/Promoter /Pledged/encumbered

Total shareholding as on date of letter of

Number of shares locked in/pledged/encumbered as offer on date of letter of offer

Pledged 18,84,880 7,000

Except as mentioned above, none of the Equity Shares held by the Promoters and/or Promoter Group are pledged/locked-in/encumbered.

2.

Promoters’ Contribution and Lock-in for the present issue

The present issue being a rights issue, provisions of promoters’ contribution and lock-in are not applicable.

3.

Present Rights Issue:

Type of

Instrument

Equity

Shares

Ratio

[•] ([•] Equity shares for every

[•] equity shares held)

Face Value

(Rs.)

No. of shares

Issue Price

(Rs.)

10/- [•] [•]

Consideration

Cash

The ratio and price per equity share will be decided by the Board prior to the issue at the appropriate time as per applicable rules/regulations.

16


___________________________

4.

Pre & Post issue shareholding pattern of the Company assuming full subscription in the present rights issue is given below:-

Sr. no No. of

Shareh olders

Pre-issue

Number of Shares

% of preissue capital

(A) Shareholding of Promoter and Promoter

Group

1 Indian

Post-issue

Number of

Shares

% of post issue capital

Individuals / Hindu Undivided Family 2 170324

3 2354123

3.69 [•]

51.02

[•]

2

Sub Total

Foreign

Total shareholding of Promoter and

Promoter Group (A)

(B) Public Shareholding

1 Institutions

Mutual Funds / UTI

Financial Institutions / Banks

Central Government/ State Government(s)

Foreign Institutional Investors

Any Others (Specify)

Sub Total

2 Non-Institutions

Bodies Corporate

Individuals

Individual shareholders holding nominal share capital up to Rs. 1 lakh

Individual shareholders holding nominal share capital in excess of Rs. 1 lakh

5 2524447

--

2

4

1

11

59

2651

4

2524447

550

718

5000

4 1110000

1116268

396606

439685

56100

54.74 [•]

--

54.74

0.01

0.02 [•]

0.11 [•]

24.06 [•]

24.21

8.60 [•]

9.53

1.22

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

Any Others (Specify)

Clearing Members

NRI

Sub Total

Total Public shareholding (B)

Total (A)+(B)

(C) Shares held by Custodians and against which Depository Receipts have been issued

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

2

23

29

65100

13471

134671

2739 2087230

2755 4611677

2755

-

4611677

1.41 [•]

0.30 [•]

2.91

45.26

100.00

-

100.00

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

[•]

17


___________________________

5.

The preissue and post issue shareholding of Promoter and Promoter Group are as follows:

Particulars a) Promoters

Mr. Rajendra Kumar Dabriwala

Present

No. of equity shares of Rs.

10/- each

84259

% of present capital

1.82

No. of equity shares of Rs. 10/- each

Post Rights

% of post issue capital

[•] [•]

--

3.69

--

[•] [•]

[•] [•]

Mr. Surbhit Dabriwala

SUB – TOTAL b) Immediate relatives of promoters/ directors (Spouse,

Parent, Child, Brother, Sister):

Ms. Yamini Dabriwala

SUB – TOTAL c) Company in which 10% or more of the share capital is held by the promoter/his immediate relative, firm or

HUF in which the promoter or his immediate relative is a member.

--

170324

--

86065

170324

Faridabad Investment Company

Ltd. 1884880

R.C.A. Ltd.

International Conveyors Ltd.

IGE (India) Ltd.

d) Company in which the

Company mentioned in (c) above holds 10% or more of the share capital

122185

347058

--

-- e) HUF in which aggregate share of the promoter and his immediate relatives is equal or more than 10% of the total.

GRAND TOTAL

--

2524447

1.87

3.69

40.87

2.65

7.53

--

--

--

54.74

[•] [•]

[•] [•]

[•] [•]

[•] [•]

[•] [•]

The entities belonging to the Promoter/Promoter Group collectively intend to subscribe to their rights entitlement in full as well as the undersubscribed portion in the present rights issue from other shareholders, if any, to such an extent that minimum subscription to the extent of 90% of the rights issue amount is received.

Some of the promoter (s)/ promoter group companies have brought in unsecured loans/ share application money in the company to finance the objects of the issue. The promoters(s)/ promoter group companies who have brought in unsecured loans have consented to adjust the same towards their rights entitlement and subscription towards unsubscribed portion if any, atleast to the extent of 90% of the size of the rights issue.

The details of the unsecured loan/ share application money brought in as on date can be adjusted towards their rights entitlement and/ or towards unsubscribed portion of rights issue is as follows:

18


___________________________

Sr. no.

Names

(Rs. in lacs)

Unsecured Loans from promoter/ promoter group companies

1.

Faridabad Investment Company Limited

2.

IGE (India) Limited

3.

International Limited

4.

RCA Limited

Share application money

5.

Ms. Yamini Dabriwala

6.

Mr.

Amount

6200.00

2500.00

2600.00

400.00

590.00

225.00

Presuming no subscription is received from other shareholders and promoters(s)/promoter group as mentioned above subscribing to the unsubscribed portion as mentioned above, their shareholding may increase to [•] % of the post rights issue equity capital of the Company. As a result of this subscription and consequent allotment, the promoter(s)/promoter group may acquire shares over and above their entitlement in the issue which may result in their shareholding in the Company being above their current holding. This subscription and acquisition of additional equity shares by the promoter(s)/promoter group, if any, will not result in change of control in the management of the Company and shall be exempt from the requirements of making a public offer in terms of provision to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of

Shares and Takeover) Regulations, 1997.

In the event the entities belonging to the promoter(s)/promoter group mentioned above subscribe to the unsubscribed portion over and above their entitlement the allotment to them shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous Listing requirements.

The Company has confirmed that if the public shareholding in the Company after the proposed rights issue falls below the permissible minimum level as specified in the Listing Agreement, the Company shall take necessary steps to facilitate the compliance with the provisions of Clause 40 A of the Listing Agreement within the time period stipulated therein. The Company further confirms that it will be in compliance with

Clause 40 A of the Listing Agreement on a continuous basis

6.

Details of shares acquired by promoters and promoter group in the last one year immediately preceding the date of filing the letter of offer with the designated stock exchange and SEBI:

Except as disclosed below, the promoters and the promoters group entities have not acquired any shares of the company in the immediately preceding one year from the date hereof.

Faridabad Investment Company Limited

S. No. Date of transaction Nature and consideration Equity

Shares acquired

1.

16 Jan 2009

2.

21 Jan 2009

Market Purchase Cash


16,000

16,000

Acquisition (Rs.)

10 49,60,000

10 49,92,000

3.

23 Jan 2009

4.

26 May 2009

5.

29 May 2009

6.

3 June 2009

7.

4 June 2009

8.

11 June 2009







14,000

15,000

14,000

13000

20,238

25,000

10 41,02,700

10 49,77,500

10 48,30,000

10 4,85,000

10 75,28,536

10 1,14,27,500

19


___________________________

Faridabad Investment Company Limited

S.

No.

Date of transaction Nature and consideration

9.

12 June 2009

10.

15 June 2009

11.

16 June 2009

12.

17 June 2009

13.

22 June 2009






No. of

Equity

Shares acquired

25,000

12,000

25,000

19,000

20,000

Face Value Amount of

Acquisition (Rs.)

10 1,19,13,750

10 57,12,000

10 1,19,000

10 91,39,000

10 1,11,40,000

7.

The details of the shareholders holding more than one percent of the share capital of the Company as on date of this letter of offer are as follows:

Sr. No.

7

8

4

5

6

1

2

3

Name of the Shareholder

Mavi Investment Fund Ltd

Elara India Opportunities Fund Ltd

Royal Bank Of Scotland Plc

Keynote Commodities Limited

Goel Fintrade Private Ltd

Peninsular South Asia Inv Company Ltd

No. of Shares Shares as % of Total

No. of Shares

415000 9.00

405000

180000

155000

149331

110000

Gagandeep Credit Capital Pvt Ltd

Keynote Capitals Limited

78779

65000

Total 1558110

8.78

3.90

3.36

3.24

2.39

1.71

1.41

33.79

8.

The Company has not issued any warrant, option, convertible loan, debenture or any other securities convertible at a later date into equity, which would entitle the holders to acquire further equity shares of the

Company. The company does not have any outstanding instruments as on the date of filing of the offer document.

9.

Equity shares of the Company are being traded in compulsory dematerialized mode. The market lot of the equity shares is 1 (one).

10.

The Company/Promoters/Directors/Lead Manager has not entered into buy back or similar arrangements for purchase of securities issued by the Company.

11.

As on the date of filing the letter of offer there are no partly paid up shares in the Company. The entire issue price is to be paid on application hence there will be no partly paid up shares arising out of this issue.

12.

The equity shares of the Company are of face value of Rs.10/- and marketable lot is 1 (one). At any given time there shall be only one denomination for the shares of the Company and the disclosures and accounting norms specified by SEBI from time to time will be complied with.

13.

The Company shall not make any further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or public issue or in any other manner during the period commencing from the submission of the Draft Letter of Offer to SEBI for the Rights Issue till the equity shares referred in the Letter of Offer have been listed or application money refunded, if any.

20


___________________________

14.

Further, presently the Company does not have any proposal, intention, negotiation or consideration to alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of Equity Shares or any other securities within a period of six months from the date of opening of the present issue. However, if business needs of the

Company so require, the Company may alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities whether in India or abroad during the period of six months from the date of listing of the equity shares issued under this offer document or from the date the application moneys are refunded on account of failure of the issue, after seeking and obtaining all the approvals which may be required for such alternation.

21


___________________________

OBJECTS OF THE ISSUE

The objects of the proposed Right Issues are to

1.

Enhance investment in MetLife India Insurance Company Ltd. ( MetLife )

2.

Repay high cost debts

3.

Meet expenses of the issue

The main object clause of the ‘Memorandum & Articles of Association’ of the company enables the company to undertake the existing activities and the activities for which the funds are being raised through the present rights issue.

Cost of project

Particulars

Investment in MetLife

Repayment of High Cost Debts

Amount

(Rs. in lacs)

10000.00

5000.00

Issue expenses 53.50

Total 15053.50

Means of Finance

Proceeds of the Rights Issue

Particulars Amount

(Rs. in lacs)

13800.00

Internal Accruals 1053.50

Total 15053.50

Break up of Cost of Project

1.

Investment in MetLife

The Board of Directors of the company have been closely examining opportunities to consolidate the presence of the company in the field of investment activities.




The company has been enhancing its stake in MetLife from time to time and has entered into a share subscription agreement with the company. As on 31st March, 2009 the company holds 22,66,71,247 equity shares of Rs.10/- each of MetLife for total consideration of Rs.23868.00 lacs.

22


___________________________

The company has identified investment in MetLife as good long term growth opportunity and strongly believes that the same will yield good results in future. The amount proposed to be raised through this rights issue will be utilized to further enhance the investment in ‘MetLife’ in order to strengthen the investment.

The company has invested Rs.8175 lacs in MetLife from the funds brought in by the promoter(s)/ promoter group.

About ‘MetLife’ and Rationale for Investment

MetLife was incorporated in India as ‘MetLife India Insurance Co. Pvt. Ltd.’ on 11/04/2001. MetLife has been established to engage in the business of Life Insurance. On 6/08/2001 MetLife obtained certificate of registration from Insurance Regulatory & Development Authority, India (IRDA). MetLife became a public limited company w.e.f. 09/01/2008.

As on 31/03/2009, the major shareholders of MetLife includes MetLife International Holdings Inc USA

(26%), Jammu & Kashmir Bank Ltd. (13.94%), M. Pallonji & Co. Pvt. Ltd. (13.93%), M. Pallonji Enterprises

Pvt. Ltd. (10.01%), Elpro International Ltd. (14.35%).

The company offers life insurance and pension products to individuals and group life insurance and retirement and savings products to corporations. The products sold under these businesses comprise participating, non-participating, pension products and unit linked products. Some of these policies have riders attached to them such as Accident and Disability Benefit, Waiver of Premium, Level Term and Critical

Illness.

MetLife is one of the fastest growing life insurance companies in the country. It serves its customers by offering a range of innovative products to individuals and to group customers at more than 700 locations through its bank partners and company owned offices.

The management of Elpro believes that the investment in MetLife will yield rich rewards in future as

MetLife has established itself in the business segment in which it operates. The insurance sector is expected to register a robust growth in years to come and Met Life will be one of the significant players. The strategic investment of Elpro in MetLife is expected to get capital appreciation as well as steady returns in years to come. Mr. Surbhit Dabriwala, a Director of the company is also on the Board of Directors of MetLife. With the participation in the management of MetLife through Board Membership, the investment is being monitored. The management of Elpro proposes to continue its association/investment in MetLife as one of the focus area of operation.

2.

Repayment of High Cost Debts

Presently the company is in the process of implementing a real estate project at Chinchwad, Pune. The total construction area of the said commercial building /mall and residential township is about 12 lacs sq.ft. at an estimated cost of Rs.16,000 lacs which is scheduled to be completed by March 2012. The said real estate development consists of commercial building/mall with a total built up area of 7.25 lacs sq.ft. and residential premises in the form of 12 storyed 10 towers with an area of 4.75 lacs sq.ft. For the purposes of funding the said project a financial assistance in the form of term loan to the extent of Rs.10,000 lacs was availed from

DSP Merrill Lynch Capital with interest cost of 15% p.a. in October 2007. In March 2008 said term loan was replaced by availing term loan from State Bank of Patiala (Rs.4,000 lacs), Bank of India (Rs.3,500 lacs) and

SICOM (Rs.2500 lacs) at same interest cost by assigning the security and loan to these Banks/Financial

Institutions from DSP Merrill Lynch Capital. The implementation of the said project is under progress. Real

Estate sector passed through the corrections on account of global slowdown and hence implementation of the project slowed down. The company has been making the repayment of installments from June 2008 and has paid up-to-date interest. While SICOM debt has been repaid in full, the repayment schedule in respect of State Bank of Patiala and Bank of India has been restructured.

23


___________________________

In terms of said restructuring the installment payable to these Banks will commence from September 2010 onwards. In order to reduce the interest burden on account of these high cost debts the company has been striving to reduce/repay the same at the earliest. The company proposes to repay the high cost debt atleast to the extent of about Rs.5000 lacs which will go a long way in reducing the interest burden. The company has repaid high cost debts to the extent of Rs. 3750 lacs out of the unsecured loans from the promoter(s)/ promoter group.

3.

Issue Expenses

The break up of estimated issue expenses is as under :

Sr. No. Particulars Amount

(Rs. in lacs)

1

2

Fees to Intermediaries

Fees to SEBI and Stock Exchanges

25.00

4.50

3 Printing and Stationary (includes Postage and Desptach)

4 Advertisement

6 Miscellaneous Expenses

Total

5.00

6.00

10.00

3.00

53.50

Sources and Deployment of Funds

The company has been deploying the funds on the above objects from time to time. The same is being funded through unsecured loans/ share application money brought in by the promoters(s)/promoter group from time to time and also through internal sources of the company. The sources and deployment of funds as on 08/01/2010 as certified by V. Singhi & Associates, Chartered Accountants (Membership no: 063785) vide their certificate dated 08/01/2010 certifying the amount brought in by the promoter(s)/promoter group as unsecured loans and internal accruals spent towards the object of the issue is as follows:


Particulars

Unsecured Loans from promoter/promoter group companies viz,

Amount

(Rs. in lacs)

¾ Faridabad Investment Company Limited

¾ IGE (India) Limited

¾ International Conveyors Limited

6200.00

2500.00

2600.00

¾ RCA Limited


¾ Yamini Dabriwala

400.00

590.00

¾ R.K.Dabriwala 225.00

Internal sources 65.00

TOTAL 12580.00

24


___________________________

DEPLOYMENT OF FUNDS

Particulars Amount

(Rs. in lacs)

Objects of right issue

¾ Investment in Met Life India Insurance Company Ltd.

¾ Repayment of Secured Debts

¾ Share issue expenses

8810.00

3750.00

20.00

TOTAL 12580.00

The company has deployed funds towards the objects of the issue as mentioned above from the unsecured loan brought in by the promoters/promoter group and from the internal accruals. The promoters/ promoter group have consented to adjust their unsecured loan towards their rights entitlement and towards unsubscribed portion if any in the proposed rights issue of equity shares. For further details of the unsecured loan brought in and consent of the promoters refer to page no. 18 and 19 (Capital Structure) of this Letter of Offer.

BRIDGE LOAN

The company has not raised any bridge loan which will be repaid from the issue proceeds.

INTERIM USE OF FUNDS

Pending utilization for the purposes described in “objects of the issue” above, we intend to temporarily invest the funds in high quality interest or dividend bearing liquid instruments including deposits with banks for the necessary duration. Such investments would be in accordance with any investment criteria approved by our Board of Directors from time to time.

BASIC TERMS OF THE ISSUE

The Equity shares being offered are subject to the provisions of the Companies Act, 1956, the Memorandum and Articles of Association of the Company, the terms of this Draft Letter of Offer 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 subjected to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, GOI, RBI, ROC and/or other authorities as in force on the date of issue and to the extent applicable

25


___________________________

STATEMENT OF TAX BENEFITS

To

The Board of Directors

Elpro International Limited

“Nirmal” 17 th Floor,

Nariman Point

Mumbai – 400 021

SUB: STATEMENT OF TAX BENEFITS

Dear Sirs,

We hereby report that the enclosed annexure states the tax benefits available to M/s. Elpro International

Limited (the “Company”) and to the Shareholders for the Company under the provisions of the Income Tax

Act, 1961 (‘the Act’) and other direct 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. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives the Company faces in future, the Company may or may not choose to fulfill.

The benefits discussed in enclosed annexure are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and changing tax laws, each investor is advised to consult his own tax consultant with respect to specific tax implications arising out of their participation in the issue, particularly in view of the fact that there could be different interpretations of legislation.

Unless otherwise specified, sections referred to in the annexure are sections of Income Tax Act, 1961. All the provisions set out in the annexure are subject to conditions specified in the respective sections.

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 have been or would be met.

The contents of this annexure are based on information, explanations and representations obtained from the

Company and on the basis of our understanding of the business activities and operations of the Company.

While all reasonable care has been taken in preparation of this statement, we accept no responsibility for any errors or omissions therein or for any loss sustained by any person who relies on it.

Vilas Y. Rane

Partner

Membership

Place: Mumbai For and on behalf of

Date: January 12, 2010

Price Waterhouse

Chartered Accountants

252, Veer Savarkar Marg,

Shivaji Park, Dadar,

Mumbai – 400 028.

26


___________________________

The Auditors of the Company, Price Waterhouse, Chartered Accountants have advised the Company vide their letter dated January 12, 2010 that under the current Direct Tax Law, the following tax benefits interalia will be available to the Company and the shareholders of the Company. A shareholder is advised to consider in his own case the tax implication of an investment in the shares. The Statement of tax benefits certificate from the Auditors of the Company is reproduced below:

SPECIAL TAX BENEFIT AVAILABLE TO THE ELPRO INTERNATIONAL LIMITED AND ITS

SHAREHOLDERS

The Company does not enjoy any “Special Tax Benefits “. All the benefits as mentioned in the statement are as per the current tax laws amended by the Finance Act (No. 2) of 2009 and will be available only to the sole/first named holder in case the shares are held by joint holders.

BENEFITS UNDER THE INCOME TAX ACT, 1961

I.

TO THE COMPANY

A.

Business Income

1.

The Company is entitled to claim depreciation under section 32 of the Act, on specified tangible and intangible assets owned by it and used for the purpose of its business. It is also entitled to claim one time additional depreciation @ 20% of the actual cost of specified new plant and machinery acquired and put to use during a year.

2.

The Company is entitled for a weighted deduction of 1.5 times of expenditure incurred on scientific research (except cost of land or building) or in-house research as per Section 35(2AB) of the Act. It is also eligible for a weighted deduction of 1.25 times of any sum paid to a company to be used by it for scientific purpose, subject to fulfillment of the conditions provided in Section 35(1)(iia) of the Act.

3.

The Company shall be eligible for amortization of preliminary expenditure as specified in section 35D of the Act including expenditure on public issue of shares, subject to meeting the conditions and limits specified in that section.

4.

As per section 35DDA, the company is eligible for deduction in respect of payments made to its employees in connection with their voluntary retirement of an amount equal to 1/5th of such expenses over 5 successive Assessment Years (‘AY’) subject to conditions specified in that section.

5.

Business losses, if any, for any AY which cannot be set off against income of the year under any other head, can be carried forward and set off against business profits for eight subsequent AYs. Similarly, it shall also be entitled to carry forward unabsorbed depreciation of the year for set off in subsequent years for unlimited period.

6.

The Company shall be liable to pay Minimum Alternative Tax (‘MAT’) as per section 115JB of the Act if the taxes payable under the normal provisions of the Act is less than 15% of the Book Profits computed in accordance with the provisions of Section 115JB of the Act.

Further, as per Section 115JAA(1A) of the Act, the Company is eligible to claim credit for MAT paid for any AY commencing on or after April 1, 2006 against normal income-tax payable in subsequent AYs.

MAT credit shall be allowed for any AY to the extent of difference of the tax paid for any AY under

115JB and the amount of tax payable as per the normal provisions of the Act for that AY. Such MAT credit will be available for set-off upto 10 years succeeding the AY in which the MAT credit becomes allowable.

27


___________________________

B.

Dividend Income

1.

As per section 10(34) of the Act, any income by way of dividends referred to in Section 115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received on the shares of any company is except from tax

2.

As per section 10(35) of the Act, the following income shall be exempt in the hands of the company. a.

income received in respect of the units of Mutual Fund specified under clause (23D) of section 10; or b.

income received in respect of units from the Administrator of the specified undertaking; or c.

income received in respect of units from the specified company.

However, this exemption does not apply to any income arising from transfer of units of the

Administrator of the specified undertaking or of the specified company or of a mutual fund, as the case may be.

For this purpose (i) Administrator means the Administrator as referred to in section 2(a) of the Unit

Trust of India (Transfer of Undertaking and Repeal) Act, 2002 and (ii) Specified Company means a company as referred to in section 2(h) of the said Act.

3.

The Company shall, be subject to disallowance, if any, under section 14A of the Act , for expenditure incurred in relation to earning aforesaid tax free dividend income

C.

Capital Gains

1.

As per Section 10(38) of the Act, long term capital gains arising to the company from the transfer of a long term capital asset being an equity share in a company or a unit of an equity oriented fund where such transaction is chargeable to securities transaction tax would not be liable to tax in the hands of the company.

For this purpose: Equity Oriented Fund: means a fund – i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than sixty five percent of the total proceeds of such fund; and ii) which has been set up under a scheme of a Mutual Fund specified under section 10(23D) of the Act

2.

Under section 48 of the Act, the long term capital gains (in cases not covered under section 10(38) of the

Act) arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition/ improvement.

3.

As per section 54EC of the Act and subject to the conditions and to the extent specified therein, longterm capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a longterm capital asset will be exempt from tax if the capital gains are invested in a “long term specified asset” within a period of six months after the date of such transfer.

If only part of the capital gains is so reinvested, the exemption shall be proportionately reduced.

However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money.

A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1 st day of April 2007:

28


___________________________

(i) by the National Highways Authority of India constituted under section 3 of the National Highways

Authority of India Act, 1988; or

(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the

Companies Act, 1956.

As per 1 st Proviso to Section 54EC(1), the investments made in the Long Term Specified Asset on or after

April 1, 2007 by any assessee during the financial year should not exceed 50 Lakhs rupees.

4.

As per section 112 of the Act, long-term capital gains on sale of listed securities or units or zero coupon bonds (in cases not covered under section 10(38) of the Act) will be charged to tax at the lower of:

• 20% (plus applicable surcharge and education cess) after considering indexation benefits in accordance with and subject to the provisions of section 48 of the Act; or

• 10% (plus applicable surcharge and education cess) without indexation benefits.

5.

As per section 111A of the Act, short term capital gains arising to the Company from the sale of equity shares or units of an equity oriented mutual fund transacted through a recognized stock exchange in

India, where such transaction is chargeable to STT, will be taxable at the rate of 15% (plus applicable surcharge and education cess). All other short term capital gains shall be taxable at normal rates.

6.

As per section 71 read with section 74, short term capital loss arising during a year is allowed to be setoff only against other capital gains including long term capital gains. Balance loss, if any, should be carried forward for subsequent 8 years and set-off against subsequent year’s short term as well as long term capital gains

7.

As per section 71 read with section 74, long term capital loss arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, should be carried forward for subsequent 8 years and set-off against subsequent year’s long term capital gains.

D.

Credit for Dividend Distribution Tax (‘DDT’) paid by a subsidiary company

As per Section 115-O of the Act to provide that, in order to compute the DDT payable by a domestic company, the amount of dividend paid by it would be reduced by the dividend received by it from its subsidiary company during the financial year, if:

• the subsidiary company has paid DDT on such dividend; and

• the domestic company is itself not a subsidiary of any company.

For this purpose, a company would be considered as a subsidiary if the domestic company holds more than half its nominal equity capital.

II.

Benefits to the Resident Shareholders of the Company:

A.

Dividend Income

As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received on the shares of the Company is exempt from tax, subject to disallowance, if any, under section 14A, for expenditure incurred in relation to earning such dividend.

29


___________________________

B.

Capital Gains

1.

Benefits outlined in Paragraph 1.C above are also applicable to resident shareholders. In addition to the same, the following benefits are also available to resident shareholders.

2.

As per section 54F of the Act, long term capital gains (in cases not covered under section 10(38)) arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family will be exempt from tax if the net consideration is utilised as under:

• in the purchase of a residential house within a period of one year before, or two years after the date of transfer; or

• for construction of a residential house within three years.

Such benefit will not be available:

(a) if the individual or Hindu Undivided Family-

− owns more than one residential house, other than the new residential house, on the date of transfer of the shares; or

− purchases another residential house within a period of one year after the date of transfer of the shares; or

− constructs another residential house within a period of three years after the date of transfer of the shares; and

(b) if the income from such new residential house is chargeable under the head “Income from house property”.

If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new residential house bears to the net consideration will be exempt.

If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be income chargeable under the head “capital gains” of the year in which the residential house is transferred.

C.

Deduction for STT paid

1.

As per Section 36(xv) of the Act, the STT paid by the shareholder in respect of taxable securities transactions entered into in the course of the business will be allowed as deduction if the income arising from taxable securities transactions is chargeable under the head “Profits and Gains of Business or

Profession”.

2.

In respect of other shareholders, the STT paid shall be treated as expenses incidental to transfer to be reduced from the sale value of shares sold while computing Capital Gains.

Benefits available to Non-Resident Indians/Non Resident Shareholders (other than FIIs and Foreign venture capital investors)

A.

Dividend Income

As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received on the shares of the Company is exempt from tax, subject to disallowance, if any, under section 14A, for expenditure incurred in relation to earning such dividend.

30


___________________________

B.

Capital Gains

Benefits outlined in Paragraph II.B above are also available to a non-resident shareholder except that as per first proviso to Section 48 of the Act, the capital gains arising on transfer of capital assets being shares of an Indian Company, acquired in convertible foreign exchange, need to be computed by converting the cost of acquisition, expenditure in connection with such transfer and full value of the consideration received 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.

C.


Benefits outlined in Paragraph II.C above are also applicable to the non-resident shareholders.

III.

Special provision in respect of income / LTCG from specified foreign exchange assets available to non-resident Indians under Chapter XII-A

1.

As per section 115E of the Act, in the case of a shareholder being a non-resident Indian, and subscribing to the shares of the Company in convertible foreign exchange, in accordance with and subject to the prescribed conditions, long term capital gains arising on transfer of the shares of the Company (in cases not covered under section 10(38) of the Act) will be subject to tax at the rate of 10% (plus applicable surcharge and education cess), without any indexation benefit.

2.

As per section 115F of the Act and subject to the conditions specified therein, in the case of a shareholder being a non-resident Indian, gains arising on transfer of a long term capital asset being shares of the

Company will not be chargeable to tax if the entire net consideration received on such transfer is invested within a period of six months in any specified asset or savings certificates referred to in section

10(4B) of the Act. If part of such net consideration is invested within the period of six months in any specified asset or savings certificates referred to in section 10(4B) of the Act, then such gains would not be chargeable to tax on a proportionate basis. Further, if the specified asset or savings certificate in which the investment has been made is transferred within a period of three years from the date of investment, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified asset or savings certificates are transferred.

3.

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

4.

As per section 115I of the Act, a non-resident Indian may elect not to be governed by the provisions of

Chapter XII-A for any assessment year by furnishing a declaration along with his return of income for that assessment year under section 139 of the Act, that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Act.

5.

Tax Treaty Benefits

The tax rates and consequent taxation mentioned above will be further subject to any benefits available under the Tax Treaty, if any, between India and the country in which the non-resident has fiscal domicile. As per the provisions of section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the non-resident. In case the non resident has fiscal domicile in a country with which no Tax Treaty exists, then due relief under Section 91 of the Act may, in given circumstances, be available.

31


___________________________

V. Benefits available to Foreign Institutional Investors (‘FIIs’)

A.

Dividend Income

As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received on the shares of the Company is exempt from tax.

B.

Capital Gains

1.

As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term capital asset being an equity share of the Company, where such transaction is chargeable to STT, will be exempt in the hands of the FIIs.

2.

As per section 115AD read with section 111A of the Act, short term capital gains arising from the sale of equity shares of the Company transacted through a recognized stock exchange in India, where such transaction is chargeable to STT, will be taxable at the rate of 15% (plus applicable surcharge and education cess).

3.

As per section 115AD of the Act, FIIs will be taxed on the capital gains that are not exempt under the provisions of section 10(38) of the Act at the following rates:

Nature of income Rate of tax (%)

Long term capital gains

Short term capital gains (other than referred to in section 111A)

10

30

The above tax rates will be increased by the applicable surcharge and education cess.

In case of long term capital gains, (in cases not covered under section 10(38) of the Act), the tax is levied on the capital gains computed without considering the cost indexation and without considering foreign exchange fluctuation.

4.

Benefit of exemption under Section 54EC shall be available as outlined in Paragraph 1.C.7 above.

C.


Benefits outlined in Paragraph II.C above are also applicable to the non-resident shareholders

D.

Tax Treaty Benefits

Benefits of Tax Treaty as outlined in Paragraph IV.5 above are also available to FIIs

VI. Venture Capital Companies/Funds

As per section 10(23FB) of the Act, all venture capital companies/funds registered with the Securities and

Exchange Board of India, subject to the conditions are eligible for exemption from income tax on all other income, including income from sale of shares of the company. However, income received by a person out of investment made in a venture capital company or in a venture capital fund shall be chargeable to tax in the hands of such person.

32


___________________________

VII. Mutual Funds

As per 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 would be exempt from income tax, subject to such conditions as the Central Government may be notification in the Official

Gazette specify in this behalf.

VIII. Benefits to shareholders of the Company under the Wealth Tax, Act, 1967

Shares of the company held by the shareholder will not be treated as an asset within the meaning of section

2(ea) of Wealth Tax Act, 1957. Hence the shares are not liable to Wealth Tax.

IX. Benefits to shareholders of the Company under the Gift Tax Act.

Gift Tax is not leviable in respect of any gifts made on or after 1 st October, 1998. Therefore, any gift of Shares will not attract gift – tax.

Notes:

In respect of non residents, taxability of capital gains mentioned above shall be further subject to any benefits available under the Double Taxation Avoidance Agreements if any, between India and the country in which the non-residents has fiscal domicile.

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

The above Statement of Tax Benefits sets out the provisions of law in a summary manner only and is not a compete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of shares.

This statement is only intended to provide general information to the investor and is neither designed nor intended to be a substitute for professional tax advise. In view of the individual nature of the tax consequences, each investor is advised to consult their own consultant with respect to the specific tax implications arising out due to their participation in the issue.

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;

• The conditions prescribed for availing the benefits have been / or would be met with.

Place: Mumbai

Vilas Y. Rane

Partner

Membership

For and on behalf of


Date: January 12, 2010 Chartered Accountants

252, Veer Savarkar Marg,

Shivaji Park, Dadar,

Mumbai – 400 028.

33


___________________________

SECTION III - ABOUT COMPANY

HISTORY

Elpro International Limited was incorporated in July 1962 as a public limited company, in technical and financial collaboration with General Electric, USA.

Elpro International Limited was the number one manufacturer of Surge Arresters in Asia manufactured with technical know how from GE USA. It was the only manufacturer outside the United States manufacturing

Surge Arresters and Zinc Oxide Discs with GE technology acknowledged to be the best in the world.

Elpro’s constant adherence to Excellence in Quality and Expertise in Marketing has ensured a reliable brand image and a dominant market share in each of its product lines in India. It is the first company to introduce

& produce Surge Arresters as well as Metal Oxide Gapless Surge Arresters in India. Elpro won the ELCINA award in the “Research & Development” category in 1987and its products have been successfully type tested in renowned laboratories like CESI - Italy, KEMA - Netherlands and CPRI India. Elpro International Limited was the only manufacturer outside the US that meets IEC as well as ANSI standards.

Elpro International set up a metal oxide varistor manufacturing plant in its Pune facility in 1986 with technical expertise from GE. To enhance its capabilities further, Elpro acquired a Disconnecting Switch (Isolators) manufacturing company in 1994, Switchgear Manufacturing Company, which was set up in Hyderabad via a technical collaboration with ALPHA Switzerland.

Today, Elpro has a presence in international markets including USA, Mexico, Brazil, Columbia, Peru, Italy,

France, Turkey, Russia, Ghana, Nigeria, Kenya, Iran, Iraq, Saudi Arabia, Bangladesh, Bhutan, Thailand,

Philippines, Vietnam, Taiwan, and Korea.

As part of its corporate vision to emerge as the leader in surge arresters, Elpro International acquired the Zinc

Oxide Disc (active elements of surge arresters) manufacturing line from M/s Harris, Ireland in 2001 and the same was installed in the company’s Pune facilities in the year 2002.

M/s. Harris and Elpro, both use GE’s technical expertise. As a result, the two companies share great synergy, which has translated in speedy absorption of technology and processes. At full operation the plant has an annual capacity to process 300 tonnes of Zinc Oxide Powder. With this new facility, Elpro has a combined annual capacity to produce 450 tonnes of Zinc Oxide Discs, making the Company the leading manufacturer and supplier of Zinc Oxide Discs in Asia.

Elpro continues to be on the fast track to growth with a strong focus on developing niche products and strategic acquisitions in existing, or new-product areas, with potential for global marketing. Some of Elpro’s national clients include ABB India; Bharat Heavy Electricals Limited (BHEL); National Thermal Power

Corporation of India (NTPC); Reliance Industries; Siemens India; Tata Power Company and international clients include GE USA; KWPA Iran; Saudi Electric Company and Taiwan Power Company.

The company executed JDA with its subsidiary for development of one small commercial project admeasuring approximately 34000 sq. ft at Chinchwad, Pune. This was the first real estate project undertaken by the company.

During the year 2006, the company decided to sell its isolator division situated in Hyderabad to Siemens Ltd. at a total consideration of Rs.2500 lacs. The surplus land of factory premises held by the company situated in

Chinchwad is put to use for real estate activities and was converted into residential land. Since then the

34


___________________________ company is engaged in developing two projects viz; the commercial mall and residential towers. The projects are under implementation as on date and the estimated date of completion is during the year of 2012.




The company has been enhancing its stake in MetLife from time to time and has entered into a share subscription agreement with the company. As on 31st March, 2009 the company holds 22,66,71,247 equity shares of Rs.10/- each of MetLife for total consideration of Rs.238.68 crores.

Awards & Achievements

Sr. No. Date

1.

July 1962

2.

September 1963

Key Event

Incorporation of the Company

The Company was listed on the Bombay Stock Exchange

3.

February 1964 Industrial License No. L/5(7)/1/64 dated 25 January 1964 was granted to the Company for the manufacture of Fluoroscopic

Screens and Intensifying Screens.

4.

December 1995

5.

6.

7.

8.

9.

10.

11.

12.

2005 operations

September 2005

September 2007

2001-2002

December 2004

March 2007

June 2007

March 2009

Joint Venture Agreement and non Compete Agreement with

Control Techniques Limited and Control Techniques PLC, UK respectively.

The Company made strategic investment in MetLife India Insurance

Company Private Limited.

JV cum Development Agreement with Trump Properties Limited for development of residential and commercial property at

Chinchwadgaon, Pune, Maharashtra.

The Company entered into an exclusive and non-transferable agreement with Enercon India Limited to maintain and operate its wind farm at Panchpatta and Chitradurg in Maharashtra and GIM-2 in Karnataka for a period of 10 years.

Technology Transfer Agreements between the Company, Alpha

Electrotechnik AG/Alpha Electrical Technology Limited,

Switzerland and Alpha Limited dated 19 September 2005.

Environment clearance for construction of proposed residential and commercial property at Chinchwadgaon, Pune, Maharashtra.

Received the commencement certificate from Pimpri Chinchwad

Municipal Corporation (“ PCMC ”) for commencement of multiplex and commercial construction in Chinchwad.

Shareholders approval for voluntary delisting from Pune Stock

Exchange.

The Company received the commencement certificate from PCMC for commencement of construction of residential complex in

Chinchwad.

35


___________________________

Changes in Registered Office of the Company

At the time of incorporation of the company, the registered office address of the company was at 20, Graham

Road, Ballard Estate, Mumbai which was shifted to Nirmal, 17 th Floor, 241-242 Backbay Reclamation (Nariman

Point), Mumbai on 22-01-1968

MAIN OBJECTS OF THE COMPANY

The Main Objects of the Company are:

2.1

“To carry on the businesses of electricians and electrical, electronic, chemical, mechanical, metallurgical, nuclear, and genera! engineers and of manufacturing and assembling electrical, chemical, electronic, nuclear, metallurgical and mechanical appliances, apparatus, equipment and plant of all kinds and of buying, distributing, selling, exporting, importing, letting on hire, installing, repairing, servicing and dealing in such appliances, apparatus, equipment and plant.

2.2

To Manufacture and produce and trade and deal in any articles belonging to any such business and all apparatus, appliances and things used in connection therewith , or with any inventions, patents or privileges for the time being belonging to the Company or for which the Company has the right of user.

2.3

To acquire, buy, hold, own, sell, lease, exchange, dispose of, finance, deal in, construct, build, equip, improve, use, operate, maintain and work upon any and all kind of works, power plants, manufactories, structures, sub-stations, systems, tracks, machinery, generators, motors, means of surface, air and marine propulsion including jet engines and accessories therefore, lamps, poles, pipes, wires cables, conduits, apparatus, devices, equipment, supplies, articles and merchandise of every kind pertaining to or in anywise connected with the construction, operation or maintenance of telephone, telegraph, radio, wireless and other systems, facilities and devices for receipt and transmission of sounds and signals, railways, tramways and bus lines, or in anywise connected with or pertaining to the manufacture, production, generation, accumulation, purchase, use, sale, supply, transmission, distribution, regulation, control, employment or application of electricity, any other form of energy or power that can be used as a substitute therefore, natural or artificial gas, water, steam, ice, or refrigeration or any other purposes.

2.4

To carry on business as manufacturers, importers and exporters of and dealers in machinery articles and goods of ail classes and kinds whatsoever including electrical and engineering materials, goods, machinery and requisites and as manufacturers, contractors and workers in materials of any nature and kind.

2.5

To carry on business as manufacturers and makers of and dealers in metal, wood, enamel, aluminium, alloys, plastics and any other products, articles and things of every description and kind and to carry on and conduct workshops, engineering works of every description and kind and foundries of iron, brass and other metals, woods and any other substances and to buy, sell, manipulate and deal both wholesale and retail in such products, commodities, goods, articles and things.

2.6

To make experiments in, and public exhibitions and electrical machinery and appliances.

2.7

To let out on hire all or any of the property of the Company (whether real or personal) including every description of apparatus and appliances of the Company.

2.8

To carry on the business of suppliers of light, heat and power and carriers of passengers and goods.

2.9

To manufacture, put up and use telephones, telegraphs (wireless or other), phonographs, dynamos, accumulators, lamps, and all apparatus now known or that may hereafter be invented, connected with

36


___________________________ the generation, accumulation, distribution, supply and employment of electricity or any power that can be used as a substitute therefore, including all cables, wires or appliances for connecting apparatus at a distance with other apparatus, and including the information of exchanges or centers.

2.10

To acquire, be interested in, construct, maintain, carry out, improve, work, alter, control, and manage any tramways, railways, steam - boats, roads, tunnels, water - works, water rights, canals, irrigation works, gas - works-, electric works, reservoirs, water courses, furnaces, stamping works, smelting works, factories, warehouses and other works and conveniences which the Company may think conducive to any of its objects, and to contribute to and take part in the constructing, maintaining, carrying on, improving, working, controlling and managing of any such works or conveniences.

2.11

To undertake financial and commercial obligations, transactions and operations of all kinds.

2.12

To carry on business as Managing Agents or Secretaries and Treasurers of any public or private company.

2.13

To purchase or otherwise acquire any interests in any patents, brevets d'invention, licenses, concessions and the like, conferring an exclusive or nonexclusive or limited right to use, or any secret or other information or any invention and to use, exercise, develop, grant .licenses in respect of or otherwise to turn to account any such patents, brevets d'invention, licenses, concessions and the like and information aforesaid.

2.14

To acquire from any sovereign state or authority, supreme, municipal, local or otherwise, any concessions, grants, or decrees, rights, or privileges whatsoever, which may seem to the Company capable of being turned to account and to work, develop, carry out, exercise and turn to account the same.

2.15

To carry on any other trade or business whatsoever which can, in the opinion of the Company, be advantageously carried on by the Company in connection with or as ancillary to any of the above business or the general business of any Company.

2.16

To adopt such means of making known the business of the Company or its products as may seem expedient, and in particular by advertising in the press, by circulars, publication of books and periodicals and other means, and by granting prizes, awards and donations.

2.17

To purchase, take on lease or in exchange, hire or otherwise acquire and hold for and estate or interest in lands, buildings, easements, rights, privileges, concessions, patents, patent rights, licenses, secret processes, machinery, plant, stock - in - trade, and any real or personal property of any kind necessary or convenient for the purposes of or in connection with the Company's business or any branch or department thereof.

2.18

To erect, construct, lay down, enlarge, alter and maintain, any roads, railways, tramways, sidings, bridges, reservoirs,-shops, stores, experimental and other farms, factories, laboratories, buildings, works, plant and machinery necessary or convenient for the Company's business, and to contribute to or subsidies the erection, construction and maintenance of any of the above.

2.19

To borrow or raise or secure the payment of money in such manner as the Company shall think fit, and for those or other purposes to mortgage or charge the undertaking and all or any part of the property and rights of the Company, present and future/ including uncalled capital, and in particular to create and issue, perpetual or redeemable debentures or debenture stock, bonds or other obligations or securities of any description for such consideration and on such -terms as the Company shall think fit.

37


___________________________

2.20

To issue and deposit any securities which the Company has power to issue by way of mortgage to secure any sum less than the nominal amount of such securities, and also by way of security for the performance of any contracts or obligation of the Company or of its customers or other persons or corporations having dealings with the Company, or in whose business or undertakings the Company is interested, whether directly or indirectly.

2.21

To lend money or property with or-without security to such persons and upon such terms as the

Company may approve and in particular to customers and persons having dealings with the Company and generally to provide credit and facilities to customers and others provided that the Company shall not carry on the business of banking as defined by the Indian Banking Companies Act.

2.22

To provide for the welfare of directors or ex-employees of the Company or its predecessors in business, and the wives and families or the dependents or connections of t such persons by building or contributing to the building of houses, dwellings or quarters or by grants of money, pensions, gratuities, allowances, bonuses, profit-sharing bonuses or benefits or any other payments or by creating and from time to time subscribing for or contributing to provident and other associations, institutions, funds, profit sharing or other schemes, or trusts and by providing, subscribing, or contributing towards places of instruction and recreation, hospitals and dispensaries, medical and other attendance and other assistance as the Company shall think fit.

2.23

To subscribe or otherwise to assist or to guarantee money to charitable, benevolent, religious, scientific, national, public, political or other institutions or objects or for any exhibition.

2.24

To draw, make, accept, endorse, negotiate, discount, execute and issue promissory notes, bills of exchange and other negotiable instruments or transferable instruments.

2.25

To accumulate funds and to invest or otherwise employ money belonging to the Company upon any shares, securities or other investments whatsoever upon such terms as may be thought proper and from time to time to vary such investments in such manner as the Company may think fit.

2.26

To invest and deal with the moneys of the Company in any investments moveable or immovable in such manner as may from time to time seem expedient and be determined.

2.27

To pay for any property or rights acquired by the Company, either in cash or fully or partly paid-up shares, including shares with or without preferred or guaranteed rights in respect of dividend or repayment of capital or otherwise, or by the issue of any securities which the Company has power to issue, or partly in one mode and partly in another and generally on such terms as the Company may determine.

2.28

To accept payment for any property or rights sold or otherwise disposed of or dealt with by the

Company, either in cash, by installments or otherwise or in fully or partly paid-up spares of any company or corporation, including shares with or without preferred or guaranteed rights in respect of dividend or repayment of capital or otherwise or in debentures or mortgage debentures or debenture stock, mortgages or other securities of debentures or debenture stock, mortgages or other securities of any company or corporation, or partly in one mode and partly in another, and generally on such terms as the Company may determine, and to hold, dispose of or otherwise deal with any shares, stock or securities.

2.29

To enter into any partnership or joint-purse arrangement or arrangement for sharing or pooling profits, union of interests, co-operation, joint adventures, reciprocal concessions, or otherwise with any company, firm or person carrying on or proposing to carry on any business within the objects of this

Company, and to acquire and hold, sell, deal with or dispose of shares stock or securities of any such

38


___________________________ company, and to guarantee the contracts or liabilities of, or the payment of the dividends, interest or capital of any shares, stock or securities of and to subsidize or otherwise assist any such company.

2.30

To establish or promote or concur in establishing or promoting any other company whose objects shall include the acquisition and taking-over of ail' or any of the assets and liabilities of this company or the promotion of which shall be in any manner calculated to advance directly or indirectly the objects or interests of this Company, and to underwrite, place, acquire, hold or dispose of shares, stock or securities issued by or any other obligations of any such company.

2.31

To pay all expenses incidental to the formation, promotion registration or establishment of this or any other company and the issue of its capital, and to remunerate any person or company for services rendered or to be rendered in placing or assisting to place of guaranteeing the placing of any of the shares in or debentures or debenture stock or other securities or obligations of the Company or in or about the promotion, formation or business of the Company, or of any other company, promoted wholly or in part by this Company.

2.32

To purchase or otherwise acquire and undertake all or any part of the business, property, liabilities, and transactions of any person, firm or company carrying on any business which this Company is authorised to carry on, or the carrying on of which is deemed likely to benefit this Company or to advance its interests or possessed of property suitable for the purpose of the Company.

2.33

To purchase, subscribe for, underwrite, take or otherwise acquire and hold shares, stock, bonds, options, debentures, debenture stock or obligations in any other company or corporation, or of any

Government or State, and to give any guarantee or security for the payment of any principal sum, dividends or interest in relation thereto and to dispose of any such investments, or securities which may be surplus to the Company's requirements.

2.34

To sell, improve, manage, develop, turn to account, exchange, let on rent, royalty, shares of profits or otherwise grant licenses, easements and other rights in or over, and in any other manner deal with or dispose of the undertaking and all or any of the property, assets and rights (whether immoveable or moveable) for the time being of the Company for such consideration as the Company may think fit.

2.35

To establish, provide, maintain and conduct or otherwise subsidize research laboratories and experimental workshop for scientific and technical researches, experiments, to undertake and carry on scientific and technical researches, experiments and tests of all kinds to promote studies and researches both scientific and technical, investigations and inventions, by providing, subsidizing and endowing or assisting laboratories, workshops, libraries, lectures, meetings and conferences and by providing or contributing to the remunerations of scientific or technical professors or teachers and by providing or contributing to the award of scholarships prizes grants to students or otherwise and generally to encourage, promote and reward studies, researches, investigations, experiments, tests and inventions of any kind that may be considered likely to assist any business which the Company is authorized to carry on.

2.36

To aid, pecuniary or otherwise any association, body or movement having for an object the solutions, settlement or surmounting of industrial or labour problems or troubles or the promotion of industry or trade.

2.37

To undertake and execute any trust, the undertaking of which may seem to the Company desirable, either gratuitously or otherwise.

2.38

To amalgamate with any other company whose objects are or include objects similar to those of this

Company, whether by sale or purchase (for fully or partly paid-up shares or otherwise) of the

39


___________________________ undertaking, subject to the liabilities of this or any such other company as aforesaid, with or without winding up or by sale or purchase (for fully or partly paid-up shares or otherwise) of all or a controlling interest in the shares or stock of this or any other company as aforesaid or in any other manner.

2.39

To refer to arbitration any existing or future dispute or difference between the Company and any other person, firm, company or corporation.

2.40

To insure any of the properties, undertaking contracts, guarantees or obligations of the Company of every nature and kind in any manner whatsoever.

2.41

To create any depreciation fund, reserve fund, sinking fund, insurance fund, or any special or other fund whether for depreciation, or for repairing, improving, extending or maintaining any of the property of the Company or for redemption of debentures or redeemable preference shares or for any other purpose whatsoever conducive to the interest of the Company.

2.42

To obtain any Provisional Order or Act of Parliament for enabling the Company to carry any of its objects into effect, or for effecting any modification of the constitution of the Company or for any other purpose that may seem expedient, and to obtain from any government or authority and licenses, rights, concessions and privileges that may seem conducive to the Company's objects or any of them and to oppose the grant to any other person or company of similar licenses, rights, concessions and privileges.

2.43

To dedicate, present or otherwise dispose of either voluntarily or for value any property of the

Company deemed to be of national, public or local interest, to any national trust, public body museum, corporation or any authority or any trustees for or on behalf of any of the same or of the public.

2.44

To appropriate, use or lay out, land belonging to the Company for streets, parks, pleasure grounds, allotments and other conveniences and to present any such land so laid out to the public or to any persons or company conditionally or unconditionally as the Company may think fit.

2.45

To distribute among the members in specie any property of the Company, or any proceeds of sale or disposal of any property of the Company, but so that no distribution amounting to a reduction of capital be made except with the sanction (if any) for the time being required by law.

2.46

To establish and maintain agencies, branch places and local registers and to procure registration or recognition of the Company and to carry on business in any part of the world and to take such steps as may be necessary to give the Company such rights and privileges in any part of the world as are possessed by local companies or partnerships or as may be thought desirable.

2.47

To apply the assets of the Company in any way in or towards the establishment, maintenance or extension of any association, institution or fund in anywise connected with any particular trade or business or with scientific research, trade, industry or commerce generally and particularly with the business and activities of the Company including any association, institution or fund for the protection of the interests of masters, owners and employers against loss by bad debts, accidents or otherwise.

2.48

To do all or any of the above things in any part of the world, and either as principals, agents trustees, contractors, or otherwise, and either along or in conjunction with others, and either by a through agents, sub-contractors, trustees or otherwise.

2.49

To do all such other things are incidental or conducive to the above objects or any of them.

40


___________________________

2.50

To manufacture, process, buy, sell, import, export or otherwise deal in all kinds of cardboard packing, plastic packing, polyester packing, gunny bags, containers, bottles, hollow ware, whether made of leather, plastic, H. D. P.L D. P., Polypropylene plastic, PVC, and/or man made fibers material.

2.51

To carry on business of software development, service, selling software packages, research & development activities as regards to software development and computer systems and to carry on business as computer processing, data processing, system analyst and to provide service for establishing

MIS, software maintenance of existing compute applications, contract development resources, training and certification of Microsoft application, development of new product design, preparing and training including internet, website and related activities.

CHANGES IN MEMORANDUM

Dates on which some of the main clauses of the Memorandum of Association of the Company has been altered citing the details of Amendment as under:

Date of approval

Amendment

24 th August The Authorised share capital of the Issuer was sub-divided from 2,00,000 (Two lacs)

1990 Equity Shares of Rs 100.00 each to 20,00,000(Twenty Lacs) Equity Shares of Rs. 10.00 per

Equity Shares

23 rd

September

1994

The Authorised share capital of the Issuer was increased from Rs 20,000,000/- (Rupees

Two crores only) divided into 2,000,000 (Twenty lacs) Equity Shares of Rs. 10/- each to Rs.

50,000,000/- (Rupees Five crores only) divided into 5,000,000 (Fifty lacs) Equity Shares of

Rs. 10/- each

4 th April 2008 The Authorised share capital of the Issuer was increased from Rs 50,000,000/- (Rupees

Five crores only) divided into 5,000,000 (Fifty lacs) Equity Shares of Rs. 10/- each to Rs.

100,000,000/- (Rupees Hundred crores only) divided into 10,000,000 (Hundred lacs) Equity

Shares of Rs. 10/- each

41


_______________________

MANAGEMENT

The details of the board of directors of the company are given below:

S.

No.

Name, Father’s Name,

Designation, Address, Occupation,

Term and DIN

Qualification Age

(years)

Other directorships, partnerships and trusteeships

MBA from

Harvard university

1. Mr. R K Dabriwala s/o Mr. S Dabriwala

Chairman and Promoter Director

Address: 41/1A, Jhowtala road,

Kolkata 700 019

Occupation: Business Executive

Date of appointment: 21 April 1977

Date of Birth: 29 January 1941

DIN: 00086658

2. Mr. Ram Kishore Choudhury s/o Late Shri Madan Lal

Choudhury

Non-Executive Independent

Director

Address: 403, Surya Kiran,

4, Ashoka Road, Kolkata – 700 027

Occupation: Advocate

Date of appointment: 26 April 2003

Date of Birth: 26 January 1936

DIN: 0083192

LLB

68 Director:

1.

International Conveyors Limited

2.

International Belting Limited

3.

I.G.E (India) Limited

4.


Limited

5.

Dabri Properties and Trading

Company Limited

6.

R.C.A Limited

7.

GE Power Services (India) Private

Limited

8.

Faridabad Capital Holdings

Private Limited

Partner

1.

Calcutta Investors & Promoters

73 Director:

1.

Academic Foundation &

Publication Private Limited

2.

Balrampur Chini Mills Limited

3.

Digjam Limited

4.

Khaitan Consultants Limited

5.

Lynx Machinery & Commercials

Limited

6.

Puja Corporation Limited

7.

Puja Art Archive Limited

8.

Reliance Bengal Industries Limited

9.

Rajratan Impex Private Limited

10.

RKDK Publishers Private Limited

11.

Super Diamond Nirman Limited

12.

Travel Hub Private Limited

13.

Upper Ganges Sugar & Industries

Limited

14.

Concrete Builders Private Limited

15.

Maxgrow Merchandise Private

Limited

42


_______________________

S.

No.



Term and DIN

3. Mr. Surbhit Dabriwala s/o Mr. R K Dabriwala

Non-Executive Promoter Director

Address: 5B, Coolshanagh, 8,

Naoroji, Gamadia road, Mumbai –

400 026

Occupation: Business

Date of appointment: 14 December

1998

Date of Birth: 16 June 1975

DIN: 000083077

4. Mr. Sharat Anand s/o Mr. Kuldeep Anand


Director

Address: Flat 502, Royal Retreat

Apartments, Charmwood Village,

Suraj Kund Road, Faridabad,

Haryana

Occupation: Business Executive

Date of Appointment: 27 January

2006

Date of Birth: 16 October 1959

DIN: 0083237

Qualification

Bachelors of Arts and Science

Age

(years)


34 Director:

1.

First Apartments Private Limited

2.


Limited

3.

Dabri Properties & Trading

Company Limited

4.

MetLife India Insurance Company

Limited

5.

Faridabad Capital Holdings

Private Limited

Partner:

1.

Calcutta Investors & Promoters

Trustee:

Master in Business

Administration

1.

Seth Jaluram Dabriwala Charity

Trust

2.

Hind Charity Trust

3.

Gobind Charity Trust

4.

M.G Saraogi Foundation

50 Director:

1.

Flexitutt Industries Limited

2.

Parijat Consulting (P) Limited

3.

Parijat Financial Consulting (P)

Limited

4.

Parijat Industries (India) Private

Limited

Partner

1.

Parijat Consulting

43


_______________________

S.

No.



Term and DIN

5. Mr. Narayan T Atal

S/o Late Shri Tulsi Ram Atal


Director

Address: 13, Sri Vishnu Bhawan,

K.S. Subramanium Road, Kings

Circle, Matunga, Mumbai - 19

Occupation: Professional

Date of appointment: 16 January

2008

Date of Birth: 21 February 1956

DIN: 00237626

6. Mr. Anil Poddar

S/o Mr. Gopi Ram Poddar

Qualification

Chartered

Accountant

Master of Business

Administration

Age

(years)


53 Director:

1.

Ajcon Global Service Limited

2.

Shree Madhu Industrial Estate

Limited

3.

Gama Leafin Private Limited

4.

The Pratap Co Operative Bank

Limited

5.

Elpro Estates Limited

53 Director:

1.


Executive Independent Director

Address: IGE India Limited.,

17 th Floor, Nirmal, Nariman Point,

Mumbai.

Occupation: Service

Date of appointment: 17 November

2008

Date of Birth: 1 May 1959

DIN: 01627508

Expenditure on Directors

The remuneration payable to the executive director is recommended by the Remuneration Committee and then approved by the Board of Directors and members at general meeting of the Company. The remuneration of the executive director consists of fixed salary & allowances and perquisites whereas the remuneration of the nonexecutive directors consists of sitting fees only. The remuneration paid to the executive director during the financial year ended 31 March 2009 was Rs. 8,22,000 in lieu of salary & allowance. The remuneration paid to the non-executive directors consisted of sitting fees. Such sitting fees was Rs. 17,000; Rs. 12,750; Rs. 25,500; Rs. 17,000;

Rs. 29,750 and Rs. 8,500 for Mr. R.K .Dabriwala; Mr. R.K. Choudhury; Mr. R.A. Redkar; Mr. Sharat Anand; Mr.

Narayan T. Atal and Mr. Anil Poddar respectively for the period 1 April 2008 to 31 March 2009.

44


_______________________

No of equity shares held by the directors:

Name No. of shares held

R.K. Dabriwala

RELATIONSHIP AMONG DIRECTORS

84,259

Mr. R .K. Dabriwala is the father of Mr. Surbhit Dabriwala. No other family relationship exists between any of the Directors

There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which of the directors were selected as director or member of senior management.

As on date of filing of the offer document there is no service contracts entered into by the directors with the company providing benefits upon termination of employment.

INTEREST OF DIRECTORS

All the Directors of the company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board and its committees and reimbursement of expenses. All the directors may also be deemed to be interested to the extent of equity shares, if any, already held by them and /or by their friends /relatives in the Company that may be subscribed for or allotted to them in the present offer and also to the extent of any dividend payable to them and other distributions in respect of the said equity shares. All the directors may also be deemed to be interested to the extent of normal transactions, if any, with the company. The Directors may also be regarded as interested in the equity shares, if any, held or that may be allotted to the companies, firms and trust in which they are interested as directors, members, partners and or trustees.

Corporate Governance – Committees

Following three committees have been constituted: (i) Audit Committee, (ii) Remuneration Committee and (iii) Shareholders’/Investors Grievance Committee.

The details of each Committee, its scope, composition and meetings for the current year are given below:

1.

Audit Committee

The Audit Committee was constituted by the Board on October 25, 2001. It comprises of three Non-

Executive Independent Directors. The said committee was reconstituted on 31 January 2009. The members of the committee are: a.

Mr. R.K. Choudhury, Chairman b.

Mr. Anil Poddar - Member c.

Mr. Narayan T. Atal - Member d.

Mr. Sharat Anand - Member

As the Company does not have a Company Secretary as on date, the Audit Committee does not have a

Secretary. The CFO and Compliance Officer of the Company, Mr. Sambhaw Kumar Jain looks after the administrative work of this Committee.

The constitution of the Audit Committee is in accordance with Clause 49 of the Listing Agreement. The broad terms of reference were stated in detail by the Board on July 10, 2002 and include the following as is mandated in Clause 49 of listing agreement and Section 292A of Companies Act, 1956:

45


_______________________ a.

Oversight of our Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible; b.

Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the external auditors that is the statutory auditors, the fixation of audit fees and also approval for payment to statutory auditors for any other services rendered by the statutory auditors; c.

Reviewing, with the management, the annual financial statements before submission to the Board for approval, focusing primarily on: d.

Changes, if any, in accounting policies and practices and reasons for the same; e.

Major accounting entries based on estimates, sufficient and credible and on exercise of judgment by management; f.

Significant adjustments made in the financial statements arising out of the audit findings; g.

Compliance with listing and other legal requirements relating to financial statements; h.

Disclosure of any related party transactions; i.

Qualifications in the draft audit report; and j.

Any related party transactions that is, transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives etc that may have potential conflict with the interests of the Company at large. k.

Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; l.

To review with the management, the statement of uses / application of funds raised through an issue, the statement of funds utilized for purposes other than those stated in the offer document/ notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a issue, and making appropriate recommendations to the Board to take up steps in this matter. m.

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 overage and frequency of internal audit; n.

Discussion with internal auditors any significant findings and follow-up thereon; o.

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; p.

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; q.

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; and r.

Reviewing the Company’s financial and risk management policies.

The Audit Committee has met five times in the financial year ended March 31, 2009.

2.

Remuneration Committee

The Remuneration Committee was constituted on August 13, 2004. It comprises of three Independent

Directors. The said committee was reconstituted on 31 January 2009. The members of the committee are: a.

Mr. Sharat Anand, Chairman b.

Mr. Narayan T. Atal - Member c.

Mr. R.K. Choudhury - Member

The broad terms of reference includes the following:

To review, assess and recommend the appointment and remuneration of Executive Directors and employees at senior management level of the company from time to time, periodically review the

46


_______________________ remuneration package of the Executive Directors and employees at senior management level and recommend suitable revision of remuneration of the Board of Directors.

The Remuneration Committee had not met in the financial year ended March 31, 2009.

3.

Shareholders’/Investors' Grievance Committee

The Investors' Grievance Committee has been constituted for resolving investor grievance and the Board of Directors has delegated to this committee its power to resolve issues relating to transfers, transmissions etc. of the shares of the Company.

The Shareholders’/Investors' Grievance Committee was reconstituted on 30 June 2008 and the following are its members: a.

Mr. Anil Poddar- Member b.

Mr. Surbhit Dabriwala - Member c.

Mr. Narayan T. Atal - Member

Presently, there is no secretary to the Shareholders’/Investor Grievance Committee. The CFO and

Compliance Officer of the Company, Mr. Sambhaw Kumar Jain looks after the administrative work of this Committee.

The broad terms of reference includes the following: a.

Transfer, transmission, transition, dematerialization, rematerialisation of securities issued by our Company; b.

Splitting, consolidating, issuing duplicate share certificate on such term as may be beneficial to the interest of our Company; and c.

Redressal of investor/shareholder’s complaint relating to transfer/ transmission/ dematerialization/ rematerialisation of shares, non receipt of Balance Sheet/Notice/

Dividend and other mails and review the system of communication to shareholders and other services to the shareholders/investors and look after such other matter relating to the shareholders/investors and look after such other matter relating to the interest of shareholders/investors as may be referred by the Board of Directors from time to time.

The Shareholders’/Investors’ Grievance Committee had met twenty four times in the financial year ended March 31, 2009.

The Company did not have any investors complaint pending at the beginning of the quarter ended

September 30, 2009. It received 12 (Twelve) investors complaints during the quarter. Pending investors complaints at the end of the quarter was nil.

47


_______________________

PART II

SECTION IV - FINANCIAL INFORMATION

AUDITORS’ REPORT

A. Auditors’ report for the year ended 31/03/2009

Auditors’ report to the members of Elpro International Ltd. on Unconsolidated Financial Statements for the year ended 31/03/2009

1.

We have audited the attached Balance Sheet of Elpro International Limited (‘the Company’) as at

31 st March, 2009 and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date, (all together referred to as the ‘financial statements’) annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2.

We conducted our audit in accordance with Auditing Standards generally accepted in India.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3.

As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies

(Auditor’s Report) (Amendment) Order, 2004, (‘the Order’), issued by the Central Government of

India in terms of sub-section (4A) of Section 227 of ‘The Companies Act, 1956’ of India ( ‘the Act’), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the

Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4.

Further to our comments in the Annexure referred to in paragraph 3 above, we report that: a.

We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; b.

In our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of those books; c.

The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; d.

In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of

Section 211 of the Act; e.

On the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors are disqualified as at March 31, 2009 from being appointed as a director under clause (g) of sub-section (1) of Section 274 of the Act; f.

In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India: i.

in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March,

2009;

48


_______________________ ii.

in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date; and iii.

in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Sd/-

Vilas Y. Rane

Partner

Membership No. F-33220


Mumbai Price Waterhouse

June 30, 2009 Chartered Accountants

49


_______________________

( Referred to in Paragraph (3) of the Auditors’ Report of even date to the members of

Elpro International Limited on the financial statements for the year ended 31st March, 2009)

1.

a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has in place a program for conducting the physical verification of assets in a phased manner. As per the phased programme physical verification was not due to be carried out during the year. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

2. (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of its inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were not material.

3. (a) The Company has granted unsecured loans a company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year- end balance of such loan aggregates to Rs. 799.85 lacs and Rs. 7.15 lacs respectively.

(b) In our opinion, the rate of interest and other terms and conditions of such loans, are not prima facie prejudicial to the interest of the Company.

(c) The principal amount is repayable on demand and there is no repayment schedule. The interest is payable on demand.

(d) The loan given and the interest due thereon is repayable on demand and therefore question of overdue payment does not arise.

(e) The Company has taken unsecured loan from a company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year –end balance of such loan aggregates to Rs. 361.78 lacs and Rs. 14.32 lacs respectively.

(f) In our opinion, the rate of interest and other terms and conditions of loans are not prima facie prejudicial to the interest of the Company.

(g) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest.

50


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4. In our opinion and according to the information and explanations given to us, and having regard to the explanation that certain items purchased are of a special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services.

Further, on the basis of our examination of the books and records of the Company, and according to the information and explanation given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us and based on the disclosure of interest made by the directors of the Company, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered into the register required to be maintained under to that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time

6. The Company has not accepted any deposits from the public within the meaning of Sections

58A and 58AA of the Act and the rules framed there under. Accordingly, paragraph 4 (vi) of the

Order is not applicable.

7. In our opinion, the Company has an internal audit system commensurate with its size and nature

of its business.

8. The Company has been advised that the Central Government has prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 for generation of Electricity from wind power and for Varistors and Magnets for automotive parts and accessories, manufactured by the Company, for which, in our opinion, prima facie the prescribed accounts and records are being maintained, in so far as it relates to Varistors. To the best of our knowledge and according to the information given to us, the Central Government has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 for any other products manufactured by the Company.

9. (a) According to the information and explanations given to us and records of the Company examined by us, the Company is generally regular in depositing with the appropriate authorities

,undisputed statutory dues including provident fund, investor’s education and protection fund, employees’ state insurance, income tax, sales tax, service tax, wealth tax, customs duty, excise duty, cess and other material statutory dues applicable with the appropriate authorities during

the year and there were no such outstanding dues as at 31st March, 2009 for a period exceeding six months from the date they became payable except sales tax dues of Rs 1.78 lacs .

51


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(b) According to the information and explanations given to us and records of the Company examined by us, the particulars of excise duty, service tax, sales tax and income tax, which have not been deposited on account of dispute are as below:

Nature of the statute

Nature of dues

The Central excise

Act, 1944

Excise Duty

Amount under dispute & unpaid

1.00

0.10 the amount relates

1990-91

(Rs. in lacs)

Forum where dispute is pending

93-94 High Court –

Mumbai

2001-02 Commissioner

Central excise

(Appeals),

Hyderabad

The Central excise

Act, 1944

Bombay Sales Tax

Act, 1959

Service Tax

Sales Tax

6.42 2001-02 to 2-7002-

03

Joint

Commissioner –

Central excise

2.23

Court of India

4.75 2002-03 to 2004-05 Deputy

Commissioner

Central Excise

8.97 1999-00 to 2003-04 Deputy

Commissioner,

Sales Tax

Central Sales Tax

Act, 1956

Central Sales Tax

Act, 1956

Central Sales Tax

Act, 1956

Income Tax Act,

1961

Income Tax Act,

1961

6.90 1995-96 to 2001-02 Deputy

Commissioner of

Appellate

Tribunal,

Hyderabad

2.31 1998-99 to 1999-00 Deputy

Commissioner of

Appellate

Tribunal,

Hyderabad

15.91

12.51

Commissioner

(CT), Hyderabad

1998-99 Income Tax

Appellate,

Tribunal

13.68 2000-01 Income Tax

Appellate,

Tribunal

Income Tax Act,

1961

8.60 2003-04 Income Tax

Appellate,

Tribunal

TOTAL 83.38

10. The Company has accumulated losses which are less than fifty percent of its net worth as at the year end. The Company has incurred cash losses during the financial year ended on that date and in the immediately preceding financial year.

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11. According to the records of the Company examined by us and on the basis of information and explanations given to us, the Company has not defaulted in repayment of dues to any Banks or financial institution except for delays ranging from 1 to 49 days in respect of all installments of Rs

11.30 lacs each due to a bank, delays ranging from 1 to 28 days in respect of four quarterly installments of Rs 350 lacs each due to a bank, delays ranging from 1 to 62 days in respect of ten installments of Rs 4.40 lacs each due to a bank ,delays ranging from 1-7 days lacs in respect of ten installments of Rs 4.50 each due to a bank ,delay of 27 days in respect of one installment of Rs

200 lacs each due to a bank, delay of 7 days of Rs 400 lacs in respect of one installments each due to a bank and a delay of five days in respect of one installment of Rs. 250 lacs due to a financial institution. However the said defaults have been made good by the Company during the year.

The Company has not obtained any borrowing by way of debentures.

12. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, paragraph 4(xii) of the Order is not

applicable.

13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/society are not applicable to the Company. Accordingly, paragraph 4(xiii) of the Order is

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year except for guarantee given on behalf of one of the related party to the extent of Rs. 6,500

Lacs. In the absence of the audited financial statements of the party, we are unable to comment whether the terms and conditions are prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us on an overall basis, the term loans have been applied for the purpose for which they were obtained.

17. In our opinion and according to the information and explanations given to us, and on an overall examination of the balance sheet the Company as at March 31,2009, the Company has funded its fixed assets and long term investments of Rs 14,168.59 lacs out of short – term loans.

18. The Company has not made preferential allotment of shares to the parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(xviii) of the said Order is not applicable.

19. The Company did not have any outstanding debentures during the year. Accordingly, paragraph 4 (xix) of the said Order is not applicable.

20. The Company has made a preferential issue of share warrants and has also issued equity shares on conversion of share warrants during the year. The Company has disclosed the end use of money raised and the same has been verified by us.

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21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year, nor have we been informed of such case by the management.

Sd/-

Vilas Y. Rane

Partner

Membership No. F-33220


Mumbai Price Waterhouse

June 30, 2009 Chartered Accountants

54


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STANDALONE BALANCE SHEET AS AT 31ST MARCH, 2009

55


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STANDALONE PROFIT AND LOSS ACCOUNT FO THE YEAR ENDED AS 31 ST MARCH, 2009

56


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CASH FLOW STATEMENT FOR THE YEAR ENDED 31 ST MARCH, 2009

57


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58


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59


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SCHEDULES TO AND FORMING PART OF THE BALANCE SHEET AS 31 ST MARCH, 2009

60


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61


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62


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63


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64


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65


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66


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67


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68


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69


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70


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71


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73


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78


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79


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80


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81


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Auditors’ report to the Board of Directors of Elpro International Ltd. on Consolidated Financial

Statements for the year ended 31/03/2009

82


_______________________

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009

83


_______________________

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009

84


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85


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SCHEDULES TO AND FORMING PART OF CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2009

86


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87


_______________________

88


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89


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90


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91


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92


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93


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94


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95


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96


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97


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98


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99


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100


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101


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102


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B. LIMITED REVIEW REPORT FOR THE SIX MONTHS PERIOD ENDED 30/09/2009

Limited Review Report for the Period from April 1, 2009 to September 30, 2009 on the interim unconsolidated financial statements

To the Board of Directors of Elpro International Limited on the Un-audited Condensed Financial Statements of

Elpro International Limited

1.

We have reviewed the attached un-audited Condensed Balance Sheet of Elpro International Limited

(‘the Company’) as at September 30, 2009, the related un-audited Condensed Profit and Loss Account and the un-audited Condensed Cash Flow Statement for the six months ended on that date (all together referred as ‘un-audited Condensed Financial Statements’) annexed thereto, which we have initialled for identification purposes. These un-audited Condensed Financial Statements are the responsibility of the Company’s management and have been approved by the Board of Directors.

Our responsibility is to issue a report on these un-audited Condensed Financial Statements based on our review of such un-audited Condensed Financial Statements, which have been prepared in accordance with the recognition and measurement principles laid down in Accounting Standard (AS)

25, ‘Interim Financial Reporting’, as notified under the Companies (Accounting Standards) Rules,

2006 as per Section 211(3C) of the Companies Act, 1956 and other accounting principles generally accepted in India.

2.

We conducted our review in accordance with the Standard on Review Engagements (SRE) 2400 issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A limited review of interim financial information consists principally of applying analytical procedures to financial data and making enquiries of Company personnel responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards followed in India, the objective of which is the expression of an opinion regarding the financial statements as a whole.

Accordingly, we do not express such an opinion.

3.

Based on our review conducted as above, nothing has come to our attention that causes us to believe that the un-audited Condensed Financial Statements are not presented, fairly, in all material respects, in accordance with the Accounting Standards notified pursuant to the Companies

(Accounting Standards) Rules, 2006 as per Section 211(3C) of the Companies Act, 1956 and other recognised accounting practices and policies, or has not disclosed the information, including the manner in which it is to be disclosed, or that it contains any material misstatement.

4.

This report is intended solely for the use of management in connection with the proposed rights issue of equity shares, under Securities and Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations 2009, of the Company and should not be used for any other purposes except with our consent in writing.

Vilas Y. Rane

Place: Mumbai


Partner

Membership No.: F-33220

For and on behalf of

Price Waterhouse


252, Veer Savarkar Marg

Shivaji Park, Dadar

Mumbai-400 028.

103


_______________________

Un-audited Condensed Consolidated Balance sheet as at September 30, 200

I SOURCES OF FUNDS

Shareholders' funds

Share capital

Share warrants



Minority interest

Capital reserve on consolidation

Loan funds

Secured loans

Unsecured loans

As at September 30, 2009

Rs. In Lacs

461.17

27.50

10,569.22

6,589.91

7,035.08

12,004.59

Rs. In Lacs

As at March 31, 2009

Rs. In Lacs

395.17

430.76

12,576.35

3,184.52

17,647.80

-

7.35

16,586.80

-

7.35

8,727.20

1,445.78

19,039.67

36,694.82

10,172.98

26,767.13

4,096.13

2,345.68

1,750.45

73.68 73.68

4,096.46

2,261.47

1,834.99

Goodwill on consolidation

Fixed assets

Gross block

Less : Accumulated depreciation

Net block

Capital work in progress including

Investments

Deferred tax

Deferred tax assets

Less: Deferred tax liability

Deferred tax assets - net

Current assets,loans and advances

Stocks

Sundry debtors



Loans and advances

Less : Current liabilities and provisions

329.32

(276.67)

1,634.87

249.74

530.31

36.94

12,864.04

15,315.90

5,811.55

52.65

5,877.04

23,926.53 24,976.21

372.72

(320.07)

52.65

1,457.48

224.15

562.77

30.10

3,274.84

5,549.34

104


_______________________

Current liabilities

Provisions

Net current assets / (current liabilities)

Miscellaneous expenditure

(To the extent not written off or adjusted)

Debit balance in profit and loss account

8,784.15

14.32

8,798.47

6,517.43

86.84

226.14

9,922.89

12.59

9,935.48

36,694.82

(4,386.14)

173.69

-

26,767.13

Notes to accounts annexed hereto form part of the Condensed Consolidated Balance Sheet and Condensed

Consolidated Profit and Loss Account

Sd/-


For and on behalf of the Board

Anil Poddar

Director

Surbhit Dabriwala

Director


Place:

Mumbai

Date: January 12, 2010.

105


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Un-audited Condensed Consolidated Profit and loss account for the six months ended September 30, 2009



Rs. In Lacs


II Expenditure a) (Increase)/ Decrease in stock in trade and work in progress b) Consumption of Raw Material c) Purchase of traded goods d) Employee cost e) Depreciation f) Miscellaneous Expense Written off g) Other Expenditure h) Compensation and Interest thereon

Total

Profit / (loss) from Operations before interest and

III exceptional items

IV Other income


VI Interest




XI Profit / (loss) from ordinary activities after tax

XII Extraordinary items

Profit / (loss) for the period before share of profit of

XIII

643.11

21.75

70.51

-

37.75

86.20

86.85

159.45

83.49

546.00

97.11

53.38

150.49

937.81

(787.32)

-

(787.32)

0.34

(787.66)

-

106


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XIV Add: Share of profit of associate

XV Profit / (loss) for the period

XIV Balance of Profit and loss account brought forward




Refer Note 7 of Notes to accounts




Sd/-

0.31

(787.35)

(1,738.79)

(2,526.14)

(18.09)

For identification



Place: Mumbai


Director

Sd/-


Director

Place: Mumbai


107


_______________________

Un-audited Condensed Cash Flow Statement for the six months ended September 30, 2009



Rs. In Lacs

I Cash flows used in operating activities

II Cash flows from investing activities

III Cash flows from financing activities

IV Net increase / (decrease) in cash and cash equivalents

V Cash and cash equivalents at beginning of period

(7,995.62)

(1,623.82)

9,560.06

(59.38)

559.08

VI Cash and cash equivalents at end of period

Notes to the Condensed Cash Flow Statement

499.70

1. Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents included in the condensed cash flow statement comprise of the following Balance Sheet items.

Particulars

Cash on hand

Balance with scheduled banks:

In current accounts

In fixed and margin deposits

Less: Book overdraft

Total


(Rs. In Lacs)

0.62

231.35

298.13

(30.40)

499.70

2. The above Condensed Cash Flow Statement has been prepared as set out in Accounting Standard 25 (AS

25) Interim Financial Reporting' as specified in Companies (Accounting Standard) Rules, 2006.

For identification



Sd/-

Anil Poddar

Director

Sd/-

Subhit Dabriwala


Place: Mumbai


Director

Place: Mumbai


108


_______________________

1.

SIGNIFICANT ACCOUNTING POLICIES a.

Basis of preparation of un-audited condensed financial statements

The un-audited condensed financial statements are prepared in accordance with the recognition and measurement principles laid down in Accounting Standard (AS) 25, ‘Interim

Financial Reporting’, as notified under the Companies (Accounting Standards) Rules, 2006 as per Section 211(3C) of the Companies Act, 1956 and other accounting principles generally accepted in India. b.

Use of Estimates

The preparation of the un-audited condensed financial statements in conformity with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure relating to contingent liabilities as at the date of the un-audited condensed financial statements and reported amounts of income and expenses during the period. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes and the useful lives of fixed assets and intangible assets.

Management believes that the estimates used in the preparation of un-audited condensed financial statements are prudent and reasonable. Future results could differ from these estimates. c.

Fixed assets and depreciation i) Fixed assets are stated at cost of acquisition or construction less depreciation. Cost comprises of purchase price and other costs directly attributable to the purchase or acquisition of the assets and costs attributable to bringing the asset to its present location and condition for the intended use. ii) Depreciation is provided on straight line method, except for assets acquired prior to January

1, 1987 which are depreciated on reducing balance method, at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 as applicable from time to time, except for assets costing less than Rs. 5,000 each which are fully depreciated in the year of purchase. iii) Capital work in progress represents expenditure incurred in respect of capital projects under development and are carried at cost. Cost includes land, related acquisition expenses, construction costs, borrowing costs capitalized and other direct expenditure and advances to contractors and others. d.

Investments

Long-term investments are valued at cost. Provision for diminution, if any, in the value of investments is made to recognise a decline, other than temporary.

Current investments are stated at the lower of cost and fair value, computed individually for each investment. In case of investments in mutual funds which are unquoted, net assets value is taken as fair value.

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_______________________ e.

Inventories

Inventories are stated at the lower of cost and net realisable value. In determining the cost of loose tools, stores and spares, raw materials and components, the weighted average method is used. Cost of manufactured components, work in progress and manufactured finished goods include cost of conversion and other costs incurred in bringing the inventories to their present location and condition which is determined on absorption cost basis. f.

Inventories - Project in progress

Project in progress is valued at lower of cost or net realisable value. Cost includes cost of land, materials, construction, services, borrowing costs and other overheads relating to the particular projects. g.

Sundry Debtors and Loans and Advances

Specific debts and advances identified as irrecoverable or doubtful are written off or provided for, respectively. h.

Foreign exchange transactions

Transactions in foreign currencies are recorded at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognized in the profit and loss account, except those relating to fixed assets acquired from outside India till March 31, 2007, which were adjusted in the carrying cost of such fixed assets.

Foreign currency monetary assets and liabilities at the year end are translated at the year end exchange rates and resultant exchange differences are recognised in the profit and loss account. i.

Revenue recognition i) Sale of goods is recognised on despatch to customer and is recorded net of sales tax and excise duties and excludes export incentives such as duty drawbacks. ii) Rental income is recognised on accrual basis. iii) Income from Joint development of property will be recognized, when Sale Deed will be executed in favour of the third party. iv) Revenue from wind mill power project is recognised on the basis of actual power sold as per the terms of the power purchase agreements entered into with the respective parties. v) Income from projects is recognized on the transfer of all significant risks and rewards of ownership to the buyers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration. However, if at the time of transfer, substantial acts are yet to be performed under the agreement, revenue is recognized on proportionate basis as the acts are performed, i.e. on the percentage of completion basis. Determination of revenues under the percentage of completion method

110


_______________________ necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project and the foreseeable losses to completion. Such estimates have been relied upon by the auditors. j.

Research and development expenditure

Research and development expenditure, other than capital expenditure, is expensed out as and when incurred. k.

Retirement benefits

- Gratuity

Liabilities with regard to the gratuity benefits payable in future are determined by actuarial valuation at each Balance Sheet date using the Projected Unit Credit method and contributed to Employees Gratuity Fund managed by Life Insurance Corporation of India. Actuarial gains and losses arising from changes in actuarial assumptions are recognized in the Profit and Loss account in the period which they arise.

- Leave encashment

The Company provides for the encashment of leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment/availment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation.

- Provident fund

Provident fund contributions are made to a trust administered by the Company and are charged to the Profit and loss account. The Company has an obligation to make good the shortfall, if any, between return of investment by the trust and government administered interest rate. l.

Provisions

Provision is made when there is present obligation as a result of a past event that probably requires an outflow of economic resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made, when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. i) Liquidated damages/penalties are provided for meeting the obligations arising from delay in contractual delivery schedules. ii) Provision for probable warranty claim is based on Management’s estimate and judgment and is provided as a percentage of average claims of past three years for average warranty period of 18 months.

111


_______________________ m.

Miscellaneous expenditure (to the extent not written off or adjusted)

Compensation paid under Voluntary Retirement Scheme to be ammortised fully upto March

31, 2010, as per the provisions of Accounting Standard 15 – on Employee Benefits. n.

Assets Taken and Given on Lease

Assets taken on lease: a In respect of finance lease arrangements, the assets are capitalized and depreciated. Finance charges are charged off to the Profit and Loss account of the year in which they are incurred. b. Operating lease payments are recognized as expenditure in the Profit and Loss account on straight line basis, representative of the time pattern of benefits received from the use of the assets taken on lease.

Asset given on lease:

Lease rentals are accounted on accrual basis in accordance with the respective lease agreements. o.

Accounting for taxes on income

Provision for current tax is made, based on the tax payable under the Income Tax Act, 1961.

Minimum Alternative Tax (MAT) credit, which is equal to the excess of MAT (calculated in accordance with provisions of section 115JB of the Income tax Act, 1961) over normal incometax is recognized as an asset by crediting the Profit and Loss Account only when and to the extent there is convincing evidence that the Company will be able to avail the said credit against normal tax payable during the period of ten succeeding assessment years.

Deferred tax on timing differences between taxable income and accounting income is accounted for, using the tax rates and the tax laws enacted or substantially enacted as on the balance sheet date. Deferred tax assets on unabsorbed tax losses and unabsorbed tax depreciation are recognised only when there is a virtual certainty of their realisation. Other deferred tax assets are recognised only when there is a reasonable certainty of their realisation. p.

Impairment

The Company reviews the carrying value of tangible and intangible assets for any possible impairment at each balance sheet date. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rates. q.

Contingent liabilities

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non -occurrence of one or more uncertain future events not wholly within control of the Company. A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying

112


_______________________ economic benefits will be required to settle an obligation at the year end date. Contingent assets are not recognized or disclosed in the un-audited condensed financial statements. r.

Segment Reporting

Segments have been identified having regard to the dominant source and nature of risks and returns and the internal organisation and management structure. Inter-segment revenue is accounted on the basis of market price. Unallocated corporate expenses include revenue and expenses which relate to the enterprise as a whole and are not attributable to segments. s.

Borrowing Costs

Borrowing Costs that are attributable to the acquisition, construction or production of a qualifying asset is capitalized as part of the cost of that asset. Other borrowing costs are recognized as expense in the period in which they are incurred.

As on

September 30,

2009

Rs. In Lacs

As on

March 31, 2009

Rs. In Lacs

2.

i.

remaining to be executed on capital

account and not provided for ii. Contingent liabilities not provided for: a. Income tax matters in dispute at various stages of appeal d. Employee related matters

-- --

237.13 237.13

9.75

4.75


9.75

4.75

Amount not ascertainable e. Sales tax matters g. Bank guarantees (secured by hypothecation of current assets)

34.09 34.09

37.58 37.58

167.55 167.55

6,500.00 6,500.00

267.00 267.00 i. Claims against the company not acknowledged as debts

3.

As at September 30, 2009, the Company has carried forward losses under the Tax Laws. As a matter of prudence the Company has recognized deferred tax assets only to the extent of deferred tax liabilities as at September 30, 2009.

4.

During the previous year, the Company has entered into a ‘Joint development Agreement’ (JDA) with ‘Elpro Estates Limited’ (Formerly known as ‘Trump Properties Limited’), a subsidiary company for the Joint Development of the Commercial project. In terms of the JDA Provisions, the Company has transferred the Capital Work-In-Progress and the related liabilities on account of the commercial project to Elpro Estates Limited.

5.

Investments of Rs. 23,868.55 lacs and share application money of Rs. 4,886.22 lacs made in Met life

India Insurance Company Limited is long term in nature. In the opinion of the management the realisable value of these investments is more than the book value as at September 30, 2009. There are certain restrictions on transferability of these shares.

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6.

Changes in Share capital

(a) In the previous year, the Company has allotted 1,100,000 convertible Warrants issued on a preferential basis to foreign institutional investors carrying an entitlement to apply for allotment of one Equity share of Rs. 10 each at a premium of Rs 601 per share. During the period, 660,000 equity warrants has been converted into 660,000 equity shares on receipt of balance consideration of Rs. 549.90 per equity share.

(b) As on September 30, 2009, the Company has 45,000 convertible Warrants outstanding and subsequent to year end, the validity of the said warrants has been expired as on October 24,

2009.

7.

Earnings per share has been computed as under:

Particulars

Profit / (loss) after tax and exceptional item (Rs. In Lacs)

Weighted average number of shares for basic

Weighted average number of shares for diluted

Nominal value per share (Rupees)

Earnings per share – Basic (Rupees)

For the period ended

September 30,

2009

(767.62)

4,350,994

4,350,994

10

(17.64)

(17.64)

The share warrants outstanding as on September 30, 2009 are considered anti-dilutive as fair value of equity shares to be issued is less than the issue price

8.

Segment information a) Primary Business Information (Business Segments)

In accordance with the Accounting Standard 17, ‘Segment Reporting’, the Segment

Information for the period ended September 30, 2009 is given as follows:

Rs. In Lacs

Electrical equipments Real estate

Investment activity Others Elimination

SEGMENT

REVENUE

External Sales 258.29 313.13 -- 64.39 --

Total

635.81

Inter - segment Sales

Revenue

RESULT

Segment result

Unallocated corporate expenses

(net of unallocable income)

--

14.60

--

227.23

--

--

-- --

18.62

635.81

260.45

89.97

114


_______________________

Operating

Profit/(Loss) before

Exceptional item

Exceptional item

Operating

Profit/(Loss) after


Interest Expenses

Profit/(Loss) before tax

Tax expenses

Net Profit/ (Loss) after tax

Other information

Segment assets

Unallocated corporate assets

Total assets

Segment liabilities

Unallocated corporate liabilities

Total liabilities

Capital Expenditure

Unallocated capital

Expenditure

Total capital expenditure

Depreciation

Unallocated

Depreciation

Total Depreciation

Non cash expenses other than depreciation


Investment activity Others Elimination

170.48

--


743.18

(818.26)

2,449.00

(1,951.29)

Investment activity

28,951.56

(26,565.35)

362.64

(658.70)

8,009.04

(16,160.50)

--

(--)

--

(--)

--

(--)

--

(--)

21.38 4.76 --

Others

550.61

(551.01)

Eliminat ion

403.50

(424.05)

--

(--)

39.82

170.48

937.76

(767.28)

0.34

(767.62)

Total

32,694.35

(29,885.91)

1,845.85

(2,602.68)

34,540.20

(32,488.59)

8,775.18

(17,243.25)

18,893.98

(9,315.73)

27,669.16

(26,558.98)

--

(--)

4.88

(4.71)

4.88

(4.71)

65.96

12.49

78.45

-----

Total

--

115


_______________________ b) Secondary Segment – Geographical Segments

Particulars

Segment revenue by geographical area

Based on geographical location of customers

(Including net sales, services etc.)

Segment Assets by geographical area


Domestic

493.05

34,439.42

(32,411.32)

4.88

(4.71)

Export Total

142.76 635.81

100.78

(77.27)

--

--

34,540.20

(32,488.59)

Notes:

• Corresponding figures in bracket pertains to previous year.

• Segment assets include all operating assets used by the segment and consist primarily of debtors,

4.88

(4.71) current assets and fixed assets net of provisions and allowances. Segment liabilities include all operating liabilities and consist principally of creditors and other payables. Items that relate to the enterprise as a whole or at the corporate level not attributable to a particular segment are included under “unallocated”.

• The Real Estate segment includes Lease rental income and Development of Housing Projects.

• Electrical equipments segment includes manufacturing and sales of lightning arrester, varistor,

Secondary surge arresters, Discharge Counter. “Others” represents income generated from windmill.

• During the previous year the Company has reclassified Varistors from Segment – ‘Others’ to

Electrical Equipment Segment.

9.

Reserves and surplus is net of debit balance in Condensed Profit and loss account of Rs. 2,300.00 lacs and Rs. 1,653.09 lacs as on September 30, 2009 and March 31, 2009 respectively, set off against balance in general reserve of Rs. 2,300 lacs.

10.

The Company has its own Provident fund trust covering the employees of Elpro International

Limited and as the fund would have to meet any interest shortfall, it is to be construed as a defined benefit plan in terms of recent Accounting Standards Board (ASB) guidance on implementing AS 15

(Revised 2005) issued by the ICAI. However, in the absence of guidance note from the Actuarial

Society of India, the Company’s actuary has expressed his inability to reliably measure the provident fund liability. Accordingly, the Company has accounted for the same as a defined contribution plan.

11.

Comparative figures for previous periods in respect of the Condensed Profit and Loss account and

Condensed Cash Flow Statement have not been included as this is the first occasion that un-audited condensed financial statements as per AS 25 have been presented by the Company.

Signatures

For and on behalf of the board of directors

Sd/-

Anil Poddar Surbhit Dabriwala

Director Director

Mumbai: January 12, 2010

116


_______________________

Limited Review Report for the period from April 1, 2009 to September 30, 2009 on the interim consolidated financial statements

To the Board of Directors of Elpro International Limited on the Un-audited Condensed Consolidated

Financial Statements of Elpro International Limited

1.

We have reviewed the attached un-audited Condensed Consolidated Balance Sheet of Elpro

International Limited (‘the Company’) and its subsidiary (collectively referred to as ‘the Group’) as at September 30, 2009, the related un-audited Condensed Consolidated Profit and Loss

Account and un-audited Condensed Consolidated Cash Flow Statement for the six months ended on that date (all together referred as ‘un-audited Condensed Consolidated Financial Statements’) annexed thereto, which we have initialled for identification purposes. These un-audited

Condensed Consolidated Financial Statements are the responsibility of the Company’s management and have been approved by the Board of Directors. These un-audited Condensed

Consolidated Financial Statements have been prepared by the Management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to issue a report on these un-audited Condensed Consolidated Financial

Statements based on our review of such un-audited Condensed Consolidated Financial

Statements, which have been prepared in accordance with the recognition and measurement principles laid down in Accounting Standard (AS) 25, ‘Interim Financial Reporting’, as notified under the Companies (Accounting Standards) Rules, 2006 as per Section 211(3C) of the

Companies Act, 1956 and other accounting principles generally accepted in India.

2.

We conducted our review in accordance with the Standard on Review Engagements (SRE) 2400 issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A limited review of interim financial information consists principally of applying analytical procedures to financial data and making enquiries of Company personnel responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards followed in

India, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

3.

We did not review the un-audited condensed financial statements of the subsidiary company, whose un-audited condensed financial statements reflects the Group’s share of total assets of Rs.

11,064.25 lacs as at September 30, 2009, the Group’s share of total revenues of Rs. 12.06 lacs and net cash outflows amounting to Rs. 3.48 lacs for the six months then ended on that date as considered in the un-audited Condensed Consolidated Financial Statements. These un-audited condensed financial statements and other financial information of the subsidiary have been reviewed by other auditor whose report have been furnished to us, and our review, in so far as it related to the amounts included in respect of the subsidiary is based solely on the report of other auditor.

4.

We did not review the audited condensed financial statements of an associate company, whose audited condensed financial statements reflects the Group’s share of profit upto and for the six months ended September 30, 2009 of Rs. 11.11 lacs and Rs. 0.31 lacs respectively, as considered in the un-audited Condensed Consolidated Financial Statement. These audited condensed financial statements and other financial information of an associate have been audited by other auditor whose report have been furnished to us, and our review, in so far as it related to the amounts included in respect of an associate is based solely on the report of other auditor.

117


_______________________

5.

We report that the un-audited Condensed Consolidated Financial Statements have been prepared by the Company’s Management in accordance with the requirements of Accounting Standard 21 –

‘Consolidated Financial Statements’ and Accounting Standard 23 – ‘Accounting for Investments in Associates in Consolidated Financial Statements’ as notified under the Companies

(Accounting Standards) Rules, 2006.

6.

Based on our review conducted as above, and on the consideration of the reports of other auditors on separate condensed financial statements and on the other financial information of the components, as explained in the paragraph 3 and 4 above, nothing has come to our attention that causes us to believe that the un-audited Condensed Consolidated Financial Statements are not presented fairly, in all material respects, in accordance with the Accounting Standards notified pursuant to the Companies (Accounting Standards) Rules, 2006 as per Section 211(3C) of the Companies Act, 1956 and other recognised accounting practices and policies, or has not disclosed the information, including the manner in which it is to be disclosed, or that it contains any material misstatement.

7. This report is intended solely for the use of management in connection with the proposed rights issue of equity shares, under Securities and Exchange Board of India (Issue of Capital and

Disclosure Requirements) Regulations 2009, of the Company and should not be used for any other purposes except with our consent in writing.

Place: Mumbai


Vilas Y. Rane

Partner

Membership No.: F-33220

For and on behalf of

Price Waterhouse


252, Veer Savarkar Marg

Shivaji Park, Dadar

Mumbai-400 028.

118


_______________________

Un-audited Condensed Consolidated Profit and loss account for the six months ended September 30, 2009




II Expenditure a) (Increase)/ Decrease in stock in trade and work in progress b) Consumption of Raw Material c) Purchase of traded goods d) Employee cost e) Depreciation f) Miscellaneous Expense Written off g) Other Expenditure

Rs. In Lacs

643.11

21.75

70.51

-

37.75

86.20

86.85

159.45 h) Compensation and Interest thereon

Total

III Profit / (loss) from Operations before interest and exceptional items

IV Other income


VI Interest




XI

XII

Profit / (loss) from ordinary activities after tax

Extraordinary items

XIII Profit / (loss) for the period before share of profit of associate

XIV Add: Share of profit of associate

XV Profit / (loss) for the period

XIV Balance of Profit and loss account brought forward


83.49

546.00

97.11

53.38

150.49

937.81

(787.32)

-

(787.32)

0.34

(787.66)

-

(787.66)

0.31

(787.35)

(1,738.79)

(2,526.14)

119


_______________________



Refer Note 7 of Notes to accounts




Sd/-

(18.09)

For identification



Place: Mumbai


Director

Sd/-


Director

Place: Mumbai


120


_______________________

Un-audited Condensed Consolidated Cash Flow Statement for the six months ended September 30, 2009



Rs. In Lacs

III

IV

V

II

I Cash flows used in operating activities

Cash flows from investing activities

Cash flows from financing activities

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

(8,299.49)

(1,319.49)

9,556.12

(62.86)

562.77

VI Cash and cash equivalents at end of period

Notes to the Condensed Consolidated Cash Flow Statement

499.91

1. Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents included in the condensed cash flow statement comprise of the following Balance Sheet items.

Cash on hand

Particulars


(Rs. In Lacs)

0.62

2.

Balance with scheduled banks:

In current accounts

In fixed and margin deposits

Less: Book overdraft

231.56

298.13

(30.40)

Total 499.91

The above Condensed Cash Flow Statement has been prepared as set out in Accounting Standard 25

(AS 25) Interim Financial Reporting' as specified in Companies (Accounting Standard) Rules, 2006.

For identification




Place: Mumbai


Sd/-

Anil Poddar

Director

Sd/-


Director


Place: Mumbai

121


_______________________

Notes to Accounts on the un-audited condensed consolidated financial statements for the period ended September 30, 2009

1.

SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation of un-audited condensed consolidated financial statements

The un-audited condensed consolidated financial statements are prepared in accordance with the recognition and measurement principles laid down in Accounting Standard (AS) 25,

‘Interim Financial Reporting’, as notified under the Companies (Accounting Standards)

Rules, 2006 as per Section 211(3C) of the Companies Act, 1956 and other accounting principles generally accepted in India. b) Principles of consolidation

The un-audited condensed consolidated financial statements for the period ended September

30, 2009 comprise of the un-audited condensed financial statements of Elpro International

Limited (‘the Company’), its subsidiary Elpro Estates Limited (formerly known as “Trump

Properties Limited”) and un-audited condensed financial statements of an associate company - Dabri Properties & Trading Company Limited. The un-audited condensed consolidated financial statements have been prepared on the following basis. i) In respect of Subsidiary Company, the financial statements have been consolidated on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and unrealised profits / losses on intra-group transactions as per Accounting Standard

(AS – 21) “Consolidated Financial Statements”. The result of subsidiary is included from the date of acquisition of a controlling interest. ii) The excess of cost to the Company of its investment in the Subsidiary Company is recognised in the financial statements as Goodwill, which is tested for impairment on every balance sheet date. The excess of Company’s share of equity and reserves of the Subsidiary Company over the cost of acquisition is treated as Capital Reserve. iii) Minority interest in the net assets of consolidated subsidiary 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 company and further movements in their share in the equity, subsequent to the dates of investments. iv) The un-audited condensed consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the

Company’s separate financial statements, except in case of a subsidiary company,

Elpro Estates Limited (Formerly known as ‘Trump Properties Limited’), depreciation is provided on written down value basis instead of straight line basis as followed in

Elpro International Limited. The total amount of net block of these items of fixed assets represents 2.38% of the total consolidated fixed assets of the Group as at the period end.

122


_______________________ v) The un-audited condensed consolidated financial statements include the share of profit / loss of associate companies, which are accounted under the ‘Equity method’ as per which the share of profit of the associate company has been added to the cost of investment. An associate is an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture. vi) The difference between the cost of investment in the associates and the share of net assets at the time of acquisition of shares in the associate is identified in the unaudited condensed consolidated financial statement as Goodwill or Capital Reserve as the case may be. vii) Investment other than in subsidiary and associate have been accounted as per

Accounting Standard (AS) 13” Accounting for Investments”. c) Use of Estimates

The preparation of the un-audited condensed consolidated financial statements in conformity with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure relating to contingent liabilities as at the date of the un-audited condensed consolidated financial statements and reported amounts of income and expenses during the period. Examples of such estimates include provision for doubtful debts, future obligations under employee retirement benefit plans, income taxes and the useful lives of fixed assets and intangible assets.

Management believes that the estimates used in the preparation of un-audited condensed consolidated financial statements are prudent and reasonable. Future results could differ from these estimates. d) Fixed assets and depreciation iv) Fixed assets are stated at cost of acquisition or construction less depreciation. Cost comprises of purchase price and other costs directly attributable to the purchase or acquisition of the assets and costs attributable to bringing the asset to its present location and condition for the intended use. v) Depreciation is provided on straight line method, except for assets acquired prior to January

1, 1987 and all assets of subsidiary, which are depreciated on reducing balance method, at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 as applicable from time to time, except for assets costing less than Rs. 5,000 each which are fully depreciated in the year of purchase. vi) Capital work in progress represents expenditure incurred in respect of capital projects under development and are carried at cost. Cost includes land, related acquisition expenses, construction costs, borrowing costs capitalized and other direct expenditure and advances to contractors and others.

123


_______________________ e) Investments

Long-term investments are valued at cost. Provisions for diminution, if any, in the value of investments is made to recognise a decline, other than temporary.

Current investments are stated at the lower of cost and fair value, computed individually for each investment. In case of investments in mutual funds which are unquoted, net assets value is taken as fair value. f) Inventories

Inventories are stated at the lower of cost and net realisable value. In determining the cost of loose tools, stores and spares, raw materials and components, the weighted average method is used. Cost of manufactured components, work in progress and manufactured finished goods include cost of conversion and other costs incurred in bringing the inventories to their present location and condition which is determined on absorption cost basis. g) Inventories - Project in progress

Project in progress is valued at lower of cost or net realisable value. Cost includes cost of land, materials, construction, services, borrowing costs and other overheads relating to the particular projects. h) Sundry Debtors and Loans and Advances

Specific debts and advances identified as irrecoverable or doubtful are written off or provided for, respectively. i) Foreign exchange transactions

Transactions in foreign currencies are recorded at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognized in the profit and loss account, except those relating to fixed assets acquired from outside India till March 31, 2007, which were adjusted in the carrying cost of such fixed assets.

Foreign currency monetary assets and liabilities at the year end are translated at the year end exchange rates and resultant exchange differences are recognised in the profit and loss account. j) Revenue recognition vi) Sale of goods is recognised on despatch to customer and is recorded net of sales tax and excise duties and excludes export incentives such as duty drawbacks .Income from services rendered is recognized on completion of work. vii) Rental income is recognised on accrual basis. viii) Income from Joint development of property will be recognized, when Sale Deed will be executed in favour of the third party.

124


_______________________ ix) Revenue from wind mill power project is recognised on the basis of actual power sold as per the terms of the power purchase agreements entered into with the respective parties. x) Income from projects is recognized on the transfer of all significant risks and rewards of ownership to the buyers and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration. However, if at the time of transfer, substantial acts are yet to be performed under the agreement, revenue is recognized on proportionate basis as the acts are performed, i.e. on the percentage of completion basis. Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project and the foreseeable losses to completion. Such estimates have been relied upon by the auditors. k) Research and development expenditure

Research and development expenditure, other than capital expenditure, is expensed out as and when incurred. l) Retirement benefits

- Gratuity

Liabilities with regard to the gratuity benefits payable in future are determined by actuarial valuation at each Balance Sheet date using the Projected Unit Credit method and contributed to Employees Gratuity Fund managed by Life Insurance Corporation of India. Actuarial gains and losses arising from changes in actuarial assumptions are recognized in the Profit and Loss account in the period which they arise.

- Leave encashment

The Company provides for the encashment of leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment/availment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation.

- Provident fund

Provident fund contributions are made to a trust administered by the Company and are charged to the Profit and loss account. The Company has an obligation to make good the shortfall, if any, between return of investment by the trust and government administered interest rate. m) Provisions

Provision is made when there is present obligation as a result of a past event that probably requires an outflow of economic resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made, when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

125


_______________________ iii) Liquidated damages/penalties are provided for meeting the obligations arising from delay in contractual delivery schedules. iv) Provision for probable warranty claim is based on Management’s estimate and judgment and is provided as a percentage of average claims of past three years for average warranty period of 18 months. n) Miscellaneous expenditure (to the extent not written off or adjusted)

Compensation paid under Voluntary Retirement Scheme to be ammortised fully upto March

31, 2010, as per the provisions of Accounting Standard 15 – on Employee Benefits. o) Assets Taken and Given on Lease

Assets taken on lease: a In respect of finance lease arrangements, the assets are capitalized and depreciated. Finance charges are charged off to the Profit and Loss account of the year in which they are incurred. b. Operating lease payments are recognized as expenditure in the Profit and Loss account on straight line basis, representative of the time pattern of benefits received from the use of the assets taken on lease.

Asset given on lease:

Lease rentals are accounted on accrual basis in accordance with the respective lease agreements. p) Accounting for taxes on income

Provision for current tax is made, based on the tax payable under the Income Tax Act, 1961.

Minimum Alternative Tax (MAT) credit, which is equal to the excess of MAT (calculated in accordance with provisions of section 115JB of the Income tax Act, 1961) over normal incometax is recognized as an asset by crediting the Profit and Loss Account only when and to the extent there is convincing evidence that the Company will be able to avail the said credit against normal tax payable during the period of ten succeeding assessment years.

Deferred tax on timing differences between taxable income and accounting income is accounted for, using the tax rates and the tax laws enacted or substantially enacted as on the balance sheet date. Deferred tax assets on unabsorbed tax losses and unabsorbed tax depreciation are recognised only when there is a virtual certainty of their realisation. Other deferred tax assets are recognised only when there is a reasonable certainty of their realisation. q) Impairment

The Company reviews the carrying value of tangible and intangible assets for any possible impairment at each balance sheet date. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rates.

126


_______________________ r) Contingent liabilities

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non -occurrence of one or more uncertain future events not wholly within control of the Company. A provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation at the year end date. Contingent assets are not recognized or disclosed in the un-audited condensed consolidated financial statements. s) Segment Reporting

Segments have been identified having regard to the dominant source and nature of risks and returns and the internal organisation and management structure. Inter-segment revenue is accounted on the basis of market price. Unallocated corporate expenses include revenue and expenses which relate to the enterprise as a whole and are not attributable to segments. t) Borrowing Costs

Borrowing Costs that are attributable to the acquisition, construction or production of a qualifying asset is capitalized as part of the cost of that asset. Other borrowing costs are recognized as expense in the period in which they are incurred.

2.

Particulars of a subsidiary and associate:

Name of the Company Country of

Incorporation

Percentage of ownership interest as at March 31, 2009

Subsidiary (Held Directly)

Percentage of ownership interest as at September 30, 2009


(Formerly known as ‘Trump

Properties Limited’)

India 99.95% 99.95%

Country of

Incorporation

Percentage of ownership interest as at September 30, 2009

Percentage of ownership interest as at March 31, 2009

Associates

Dabri Properties & Trading

Company Limited

India 31.77% 31.77%

127


_______________________

As on

September 30,

2009

Rs. In Lacs

As on

March 31, 2009

Rs. In Lacs

9,164.36 9,164.36 3.

i. Estimated amount of contracts remaining to be executed on capital account and not provided for ii. Contingent liabilities not provided for: a. Income tax matters in dispute at various stages of appeal

237.13 237.13

Excise

c. d. Employee related matters e. Sales tax matters

f. g. Bank guarantees (secured by hypothecation of current assets)

h. i. Claims against the company not acknowledged as debts

9.75

4.75

Amount not

9.75

4.75


34.09

167.55 ascertainable

37.58

34.09

37.58

167.55

6,500.00 6,500.00

267.00 267.00

4.

As at September 30, 2009, the Company has carried forward losses under the Tax Laws. As a matter of prudence the Company has recognized deferred tax assets only to the extent of deferred tax liabilities as at September 30, 2009. However, in case of the subsidiary company, deferred tax asset has been recognized during the previous year, based on the estimate of the subsidiary company’s management, that there is a virtual certainty of its realization.

5.

Changes in Share capital

(a) In the previous year, the Company has allotted 1,100,000 convertible Warrants issued on a

preferential basis to foreign institutional investors carrying an entitlement to apply for allotment of one Equity share of Rs. 10 each at a premium of Rs 601 per share. During the period, 660,000 equity warrants has been converted into 660,000 equity shares on receipt balance consideration of Rs. 549.90 per equity share. of

(b) As on September 30, 2009, the Company has 45,000 convertible Warrants outstanding and subsequent to year end, the validity of the said warrants has been expired as on October 24,

2009.

(c) During the previous years, the subsidiary company has received Rs. 10,569.22 lacs as share application money from M/s Expania Investments Limited, Cyprus against which no allotment of equity share has been done during the period. As per RBI – AP DIR Circular No. 20 dated

December 14, 2007 the time limit for allotment of equity shares has been restricted to 180 days from the date of foreign inward remittance. The limit of 180 days expired as of September 30,

2009. The subsidiary company has applied to RBI vide letter RBI/FC-GPR/08-09/67 dated 27-02-

2009 through its authorized bank – HDFC Bank Limited, Pune requesting approval for issue of

Equity shares upto March 31, 2009. The subsidiary company has received reply from the RBI asking for submission of Investments agreement between the parties and definite plan for allotment of equity shares vide letter FED.MRO.CAP/15781/04.70.999/2008-09 dated May 20,

2009. In response of the same, the subsidiary company has submitted the details vide letter dated

128


_______________________

September 2, 2009. Based on the submission of these details, RBI has advised the subsidiary company to submit copy of compounding application under guidelines for compounding of contraventions under FEMA vide letter FED.MRO.CAP/5084/04.70.999/ 2009-10 dated

September 30, 2009. The subsidiary company has submitted the Application for compounding of contraventions under FEMA 1999 vide letter dated October 27, 2009. Further based on the letter

FED.MRO.CAP/7489/04.70.999/2009-10 dated November 23, 2009, the subsidiary company has refunded Rs. 7,543.39 lacs, without any interest, and issued equity shares for the balance amount of Rs. 3,025.83 lacs to M/s Expania Investments Limited, Cyprus. In view of the management of subsidiary company, no provision is required for pending settlement of their application for compounding of contraventions under FEMA 1999.

6.

Investments of Rs. 23,868.55 lacs and share application money of Rs. 4,886.22 lacs made in Met life

India Insurance Company Limited is long term in nature. In the opinion of the management the realisable value of these investments is more than the book value as at September 30, 2009. There are certain restrictions on transferability of these shares.

7.

Earnings per share has been computed as under:

Particulars

Profit / (loss) after tax and exceptional item (Rs. In Lacs)

Weighted average number of shares for basic

Weighted average number of shares for diluted

Nominal value per share (Rupees)

Earnings per share – Basic (Rupees)

For the period ended


(787.35)

4,350,994

4,350,994

10

(18.09)

(18.09)

The share warrants outstanding as on September 30, 2009 are considered anti-dilutive as fair value of equity shares to be issued is less than the issue price

8.

Segment information a) Primary Business Information (Business Segments)

In accordance with the Accounting Standard 17, ‘Segment Reporting’, the Segment

Information for the period ended September 30, 2009 is given as follows:

SEGMENT

REVENUE


Investment activity Others

Eliminatio n

External Sales 258.29 313.13 -- 71.69 --

Total

643.11

Inter - segment Sales

Revenue

RESULT

Segment result

--

14.60

--

227.23

--

--

-- --

16.62

643.11

258.45

129


_______________________

Unallocated corporate expenses

(net of unallocable income)

Operating

Profit/(Loss) before


Exceptional item

Operating

Profit/(Loss) after


Interest Expenses

Profit/(Loss) before tax

Income taxes /

Deferred tax Reversal

Net Profit/ (Loss) after tax before profit share of associate

Share of profit of associate

Net Profit/ (Loss) after tax for the period

Other information

Segment assets

Unallocated corporate assets

Total assets

Segment liabilities

Unallocated corporate liabilities

Total liabilities


Investment activity Others

Eliminatio n


743.18

(818.26)

6,379.18

(5,805.63)

362.64

(658.70)

8,130.76

(9,489.24)

Total

107.96

150.49

--

150.49

937.81

(787.32)

0.34

(787.66)

0.31


28,812.75

(26,426.22)

--

(--)

(787.35)

Others

559.02

(551.01)

Eliminati on

403.50

(424.05)

Total

36,494.13

(33,601.12)

8,686.18

(2,927.80)

45,180.31

(36,528.92)

8,896.90

(10,571.99)

18,941.24

(9,536.47)

27,838.14

(20,108.46)

130


_______________________


Unallocated capital

Expenditure

Total capital expenditure

Depreciation

Unallocated

Depreciation

Total Depreciation

Non cash expenses other than depreciation


--

(--)

--

(--)

21.38 4.76


--

(--)

--

Others

--

(--)

39.82

Eliminati on Total

--

(--)

4.88

(5.05)

4.88

(5.05)

65.96

20.24

86.20

----b) Secondary Segment – Geographical Segments

Particulars

Segment revenue by geographical area

Based on geographical location of customers

(Including net sales, services etc.)

Segment Assets by geographical area


Domestic

500.35

45,079.53

(36,377.97)

4.88

(5.05)

Export Total

142.76 643.11

100.78 45,180.31

(77.27)

--

--

(36,455.24)

4.88

(5.05)

Note:

•

•

Corresponding figures in bracket pertains to previous year.

Segment assets include all operating assets used by the segment and consist primarily of debtors, current assets and fixed assets net of provisions and allowances. Segment liabilities include all operating liabilities and consist principally of creditors and other payables. Items that relate to the enterprise as a whole or at the corporate level not attributable to a particular segment are included under “unallocated”.

• The Real Estate segment includes Lease rental income and Development of Housing and

Commercial Projects.

• Electrical equipments segment includes manufacturing and sales of lightning arrester, varistor,

Secondary surge arresters, Discharge Counter. “Others” represents income generated from windmill and other operation of the subsidiary.

• During the previous year the Company has reclassified Varistors from Segment – ‘Others’ to

Electrical Equipment Segment.

--

131


_______________________

9.

During the previous year, the Company has entered into a ‘Joint development Agreement’ (JDA) with ‘Elpro Estates Limited’ (Formerly known as ‘Trump Properties Limited’), a subsidiary company for the Joint Development of the Commercial project. In terms of the JDA Provisions, the Company has transferred the Capital Work-In-Progress and the related liabilities on account of the commercial project to Elpro Estates Limited.

10.

Reserves and surplus is net of debit balance in Condensed Consolidated Profit and loss account of Rs.

2,300.00 lacs and Rs. 1,653.09 lacs as on September 30, 2009 and March 31, 2009 respectively, set off against balance in general reserve of Rs. 2,300 lacs.

11.

The Company has its own Provident fund trust covering the employees of Elpro International

Limited and as the fund would have to meet any interest shortfall, it is to be construed as a defined benefit plan in terms of recent Accounting Standards Board (ASB) guidance on implementing AS 15

(Revised 2005) issued by the ICAI. However, in the absence of guidance note from the Actuarial

Society of India, the Company’s actuary has expressed his inability to reliably measure the provident fund liability. Accordingly, the Company has accounted for the same as a defined contribution plan.

As per the provisions of The Employee’s Provident Fund Act, 1952 employees of Elpro Estate Limited are not covered under provisions of the said Act.

12.

Comparative figures for previous periods in respect of the Condensed Consolidated Profit and Loss account and Condensed Consolidated Cash Flow Statement have not been included as this is the first occasion that un-audited condensed financial statements as per AS 25 have been presented by the

Company.

Signatures

For and on behalf of the board of directors

Sd/-

Anil Poddar Director

Sd/-

Surbhit Dabriwala Director

Mumbai: January 12, 2010

132


_______________________

WORKING RESULTS

Information relating to the Company sales, gross profit etc., as required by the Ministry of Finance

Circular No.F2/5/SE/ 76 dated February 5, 1977 read with the amendments of even no. dated March 8,

1977 is as under:

The Unaudited working results of the Company for the period from April 01, 2009 to November 30, 2009 are given hereunder:

(Rs. in lacs)

Sales

Other Income

Total Income

Particulars

Estimated Gross Profit (Before Depreciation and Taxes)

For the period

April 01, 2009 to

November 30, 2009

836.05

58.53

894.58

(749.99)

Provision for Depreciation

Provision for Taxes

104.59

.34

Estimated Net Profit (854.92)

Material Changes and Commitments

There are no material changes and commitments affecting the financial position of the Company

ACCOUNTING RATIOS

A.

Standalone

Particulars

Earning Per share (Rs.)

Net Asset Value Per Share (Rs.)

Return on Net Worth (%)

Weighted average number of equity shares in the period (in Nos.)

Year ended

March 31,2009

(7.27)

156.27

(4.65)

3905640

For the Half Year Ended

September 30 ,2009

(17.65)

162.68

(10.84)

4351275

* Not annualized

B. Consolidated

Particulars

Earning Per share (Rs.)

Net Asset Value Per Share (Rs.)


Year ended

March 31,2009

(8.44)

424.34

(1.99)

For Half Year Ended

September 30 ,2009

(18.09)

405.47

(4.46)

Weighted average number of equity shares in the period (in Nos.)

Notes: Definition of Ratios

Earning Per Share (Rs)

3908768

(Net Profit attributable to Equity Shareholders)

4352405

/ (Weighted average number of Equity Shares outstanding during the Period)

Net Asset Value Per Share (Rs)


(Net Worth excluding revaluation reserve at the end of the Period)

/(Weighted average number of Equity Shares outstanding during the Period)

(Net Profit attributable to Equity Shareholders) / (Net Worth excluding Revaluation Reserve at the end of the Period )

133


_______________________

CAPITALIZATION STATEMENT

Particulars

Particulars

Borrowings:

Short-term Debt **

Long-term Debt **

Total Debt

Shareholders' funds :

Share Capital

Reserves 6617.41

Total Shareholders' Funds 7078.58 of

India

Pre- Issue

As at September

30, 2009

(Rs. in lacs)

978.97

6056.11

7035.08

461.17

11/1/2006 265

As Adjusted

Post Issue

(Rs. in lacs)

978.97

3759.22

4738.19

[ ● ]

[ ● ]

[ ● ]

Total Capitalization

[ ● ] Long-term Debt/Equity ratio

Total Debt/Equity ratio of 4/21/2009

India

0.86

0.99 [ ● ]

* Will be updated in the Final Letter of Offer.

** Debts repayable within one year are adjusted and are treated as Short Term Debts

Principal Terms of Outstanding Loans

Sr. no.

Name of the bank/ lender

Date of sanction

Amount sanction ed (Rs. in lacs)

Amount outstanding/ availed as on 30 th

September

2009 (Rs. in lacs)

Rate of interest

(%)

Repayment

Terms

3500 2,481.28 13.25% 350 from

30/9/10 quarterly (4

Installment)

525 from


Installments)

195.42

12.50% EMI of 4.40 payable at the

Security

Primary Collateral

Hypothecation of stock of real estate all receivables present & future for real estate development of land mortgaged.

Hypothecation of Two Wind

Corporate

Guarantee of

Company,

Subsidiary , personal guarantee of R.K.

Dabriwala,

Surbhit

Dabriwala

& proportiona te mortgage of land

24.10 acre situated at

Chinchwad

1st pari passu EQM

134


_______________________

Sr. no.

Name of the bank/ lender of

India of

India

5 State

Bank of

Paityala




September

2009 (Rs. in lacs)


(%)

11/1/2006 270

6/12/2009 200

2/20/2009 4000

208.08

202.04

2,832.90

11.75

Repayment

Terms

Security

Primary Collateral end of each

Month

EMI of 4.50 payable at the end of each

Month


Installments)


Installment)

600 from


Installments)

Mills to be secured by the assets acquired out of Bank

Finance

Hypothecation of Two Wind

Mills to be secured by the assets acquired out of Bank

Finance

Hypothecation of stocks

/book debts on first pari passu basis

Hypothecation of stock of real estate all receivables present & future for real estate development of land mortgaged. charge of building and buildings at

Company's land part of total land at

CTS No.

4270

1st pari passu EQM charge of building and buildings at


CTS No.

4270



CTS No.

4270

Corporate

Guarantee of

Company,


Dabriwala,

Surbhit

Dabriwala

& proportiona te mortgage

135


_______________________

Sr. no.


6 SICOM 5/9/2008 2500

Ltd

7 Saraswat

Co operative

Bank Ltd.



1/16/2007 500 of 4/21/2009 200

India


September

2009 (Rs. in lacs)


(%)

Repayment

Terms limit for manufacturing

Security

Primary of stocks

/book debts on first pari passu basis

Collateral

632.71 every Hypothecation quarter till march 2010 of stock of real estate all receivables present & future for real estate development of land mortgaged. of land


Chinchwad

Corporate

Guarantee of

Company,


Dabriwala,

Surbhit

Dabriwala

& proportiona te mortgage of land


Chinchwad

286.59

13.50% EMI of 11.30 payable at the end of each

Month

Mortgage of

Company's flat situated at

Peddar Road,

Mumbai

191.70

Hypothecat ion of P& M of Pune

Unit excluding machinery of 100%

EOU unit ,



CTS No.

136


_______________________

Sr. no.


Bank

Limited




September

2009 (Rs. in lacs)


(%)

1.94 7.40%

Repayment

Terms

10 Kotak 5/29/2007 10.64

Mahindra

Prime

Limited

2.42 11.56%

Total 7,035.07

Security

Primary

Car Loan Hypothecation of assets acquired through Bank loan

Car Loan Hypothecation of assets acquired through Bank loan

Collateral

4270

137


_______________________

STOCK MARKET DATA FOR SHARES OF THE COMPANY

Stock Market Data for Shares of the Company

The equity shares of the company are listed on The Bombay Stock Exchange Ltd. (BSE).

The stock market data for the equity shares on the BSE are as follows

Preceding 3 Years

Particulars

High

(Rs)

High

Date Volume on date of high

(no of shares)

Low

(Rs)

Low

Date Volume on date of Low

(no of shares)

Average

Price

(Rs.)

Total

Volume

(no. of shares)

31/12/2007

3975

39336

2008 729.90 788579

6 Months

Particulars

July 09

Aug 09

Sept 09

Oct 09

Nov 09

High

(Rs)

High

Date

582.75 09/07/2009

588.75 28/08/2009

579.95 11/09/2009

579.75 17/10/2009

614.00 26/11/2009

684.70 08/12/2009

Volume on date of high

(no of shares)

Low

(Rs)

Low

Date Volume on date of Low

(no of shares)

Average

Price (Rs.)

Total

Volume

(no. of shares)

243 490.25 01/07/2009 225 536.50 19210

934 512.20 19/08/2009 8377 550.47 26219

703 540.20 04/09/2009 1810 560.07 52112

610 550.00 06/10/2009 759

15/10/2009

16/10/2009

20/10/2009

26/10/2009

27/10/2009

28/10/2009

29/10/2009

30/10/2009

1469

611

580

529

1474

1010

940

628

564.87 13830

1077 550.00 03/11/2009

04/11/2009

05/11/2009

06/11/2009

09/11/2009

10/11/2009

17/11/2009

18/11/2009

23/11/2009

1065 571.05 29/12/2009

1055

615

703

752

609

1848

1649

521

736

582.00 16072

Dec 09

138


_______________________

Week end price of equity Shares of Elpro International Limited on the BSE.

Week ended Price (Rs)

18/12/2009 606.45

24/12/2009 593.00

01/01/2010 614.60

08/01/2010 602.30

The equity shares of the company are not being traded on Pune Stock Exchange.

The market price of the equity shares of the company as on , 12/01/2010 (the date of meeting of Board of

Directors) was Rs. 682.00 .

•

•

The equity shares of the company were in no delivery period from to [ ● ] to [ ● ].

The cum-rights closing price of the shares of the company as on [ ● ] was Rs. [ ● ]on BSE

The ex-rights closing price of the shares of the company as on [ ● ] was Rs. [ ● ] on BSE. •

The issue price of Rs.

[ ● ] has been arrived at in consultation between the company and the lead manager to the issue.

139


_______________________

V- LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATIONS AND DEFAULTS

Except as described below, there are no outstanding litigations, suits or civil proceedings, or criminal proceedings, or prosecutions or tax liabilities, irrespective of whether specified in Schedule XIII of the

Act, against the Company or the Directors, or the Subsidiary or the Promoters or group companies, and there are no defaults, non-payment or overdues of statutory dues, overdues to banks / financial institutions, defaults against banks / financial institutions, defaults in dues payable to holders of any debentures, bonds, or fixed deposits, and arrears on preference shares issued by the Company, defaults in creation of full security as per terms of issue/ other liabilities, proceedings initiated for economic/ civil/ and other offences (including past cases where penalty may or may not have been awarded) that would result in a material adverse effect on the business.

None of the aforesaid persons/ companies is on RBI’s list of wilful defaulters. No disciplinary action has been taken by the SEBI/ Stock exchanges against the Company, Directors of the Company and

Promoters. Further the company confirms that that there are no pending matters which have arisen in the immediately preceding 10 years involving issues of moral turpitude or criminal liability on the part of the company, material violations of statutory regulations by the company and economic offences where proceedings have been initiated against the company

Materiality threshold for the purpose of disclosure:

In terms of Part E of Schedule VIII of ICDR, Regulations 2009, which sets out disclosure requirements the purpose of inclusion in the letter of offer, the following materiality tests have been applied:

1.1 For the outstanding litigations which may not have any impact on the future revenues:

(a) Where the aggregate amount involved in such individual litigation exceeds Rs. 61. 03 lacs i.e. one per cent of the net worth of the Company as per last completed financial year; or

(b) Where the decision in one case is likely to affect the decision in similar cases, even though the amount involved in single case individually may not exceed Rs. 61.03 i.e. one per cent of the net worth of the Company as per the last completed financial year.

1.2 For the outstanding litigations which may have any impact on the future revenues:

(a) Where the aggregate amount involved in such individual litigation is likely to exceed

Rs. 13.13 lacs i.e. one per cent of the total revenue of the Company as per last completed financial year; or

(b) Where the decision in one case is likely to affect the decision in similar cases, even though the amount involved in single case individually may not exceed Rs. 13.13 lacs i.e. one per cent of the total revenue of the Company, if similar cases put together collectively exceed one per cent of total revenue of the Company as per last completed financial year.

140


_______________________

1 Litigation involving the Company

Cases filed against the Company a.

Income tax related:

Assessment Previous

Year

1995-96 year

Subject

Matter

Appealed Tax Contingent Pending by Rate Liability

(Only Tax) before

% Rs.

Dept. unutilised portion of

REP Licence

(Rs.4,71,904/-) &

Disallowance of warranty Provision

(Rs. 2,12,000/-)

51.75 3.53 Pending before the

Hon'ble

Mumbai

High Court

1994-95 Allowance of Design, Dept.

Drawing and intellectual Property of

Rs. 192,00,000/- as capital asset AND receipt of non compete fee of Rs. 1,87,98,000/- as capital receipt.

46 174.79 Pending before the

Hon'ble

Mumbai

High Court

1999-00 1998-99 Penalty u/s 271(1) (c ) Dept 35 12.51 Pending before ITAT

Rs. in Lacs

Status/ Remarks

Matter yet to be heard.

Appeal filed before

Hon'ble High court as on 15.01.2008.

2001-02

2002-03

2000-01

2001-02

Penalty u/s 271(1) (c )

Penalty u/s 271(1) (c )

Co.

Co.

Co.

Credit (closing balance)-Rs13,98,543/-

Delayed ESI & PF payments - Rs.

4,58,771/-

Club membership fees-

35

35

35

13.68

24.00

8.60

Pending before ITAT

Pending before ITAT

CIT(A)

Capital Expenditure -

Rs. 6,00,000/-

TOTAL 237.13

Deptt. Has filed the appeal before Hon'ble

ITAT on Feb. 06, 2006.

No hearing done

Matter decided against us by CIT (A) vide order dated 29-10-

2007.We have filed the appeal before ITAT in

Dec, 2007

Matter decided against us by CIT (A) vide order dated 29-10-

2007.We have filed the appeal before ITAT in

Dec, 2007

Hence appeal filed before CIT(A) in

January 16, 2007. Last date of hearing was on

November 14 2007.

141


_______________________ b.

The particulars of excise duty, service tax, sales tax and income tax, which have not been deposited on account of dispute are as below:

Rs. in Lacs

Nature of the statute Nature of

Dues

Amount under dispute & unpaid

Period to which the amount relates

Forum where dispute is pending

The Central Excise Act,

1944

Excise Duty 1.00

0.10

1990-91 to 93-94

2001-02

High Court-Mumbai

Commissioner Central excise (Appeals),

Hyderabad

Sub total

6.42

2.23

9.75

2001-02 to 2002-03 Joint Commissioner -

Central excise

2003-04 The Supreme Court of

India.

The Central Excise Act,

1944

Service Tax

Sub total

4.75

4.75

2002-03 to 2004-05 Deputy Commissioner -

Central Excise

Bombay Sales Tax Act,

1959

Central Sales Tax Act,

1956


1956


1956

Total

Sales Tax 8.97

6.90

2.31

15.91

1999-00 to 2003-04 Deputy Commissioner,

Sales Tax

1995-96 to 2001-02 Deputy Commissioner of Appellate Tribunal,

Hyderabad

1998-99 to 1999-00 Deputy Commissioner of Appellate Tribunal,

Hyderabad

2004-2005 Deputy Appellate

Commissioner (CT),

Hyderabad.

Sub total c. Labour and industrial matters:

34.09

48.59 i.

Mr. Ashok Vinayak Deshpande filed a suit against the Company in the Court of Civil

Judge Senior Division, Pune being Civil Suit no 1094 of 2005 for payment of the amount Rs 1.78 lacs due to him as mentioned in the Company’s letter accepting his resignation letter. The suit was decided in his favour. The Company has filed an appeal before the District Judge, Pune being Civil Appeal no 157/2008 which is pending. ii.

Two Cases have been filed against the Company for reinstatement of service before the First Labour Court, Pune by Mr. Kondiram & Mr. K B Salvi. The subject matter was regarding dismissal on charges for illegal strike. His services were terminated owing to serious nature of misconduct. The Company forfeited the gratuity payable

142


_______________________ to Mr. Salvi, who then filed an application before the Controlling Authority under the Payment of Gratuity Act 1972 being APP (PGA) no 25/2006 which is currently pending. iii.

In Case No. 900/99, Mrs. K.B. Joshi, a former employee of the Company had submitted a statement of claim for reinstatement with continuity of service and full back wages. The Company filed its written statement praying for dismissal of the reference made by Mrs. K.B. Joshi. The matter is now pending for the cross examination of Mrs. Joshi. iv.

In Case No. 22/92, K.B. Joshi, a former employee of the Company has made a claim for leave travel allowance, medical and leave encashment difference for a period beginning 1979 and ending 1987. The said matter is pending for final argument on 20

January 2010. v.

In Case No. 19/06, Mr. Bhanudas Vaidya, a former employee of the Company had submitted a statement of claim for reinstatement with continuity of service and full back wages. Presently, a Miscellaneous Application (I.D.A.) No. 19/2006 has been filed by Mr. Bhanudas Vaidya against the Company for restoration of the ex-parte award dated 6 September 2005 to the files of First Labour Court, Pune is pending in the said reference before the Hon’ble Labour Court. vi.

In Case No. 304/03, Mr. A.I. Siddique, a former employee of the Company, who was dismissed on 8 October 2009, had submitted a statement of claim for reinstatement with continuity of service and full back wages. The Company filed its written statement praying for dismissal of the reference made by Mr. A.I. Siddique. vii.

In Case No. 98/03, Mr. R.A. Gawde, a former employee of the Company whose services were terminated on the grounds of gross misconduct had submitted a statement of claim for reinstatement with continuity of service and full back wages with effect from 25 May 2002. viii.

In Case No. 95/03, Mr. D.V.Khadke, a former employee of the Company whose services were terminated on the grounds of gross misconduct had submitted a statement of claim for reinstatement with continuity of service and full back wages with effect from 27 February 2002. ix.

In Case No. 170/04, J.N. Shaik, a former employee of the Company whose services were terminated on the grounds of gross misconduct and low productivity and had submitted a statement of claim before the Industrial Court, Pune for reinstatement with continuity of service and full back wages with effect from 23 June 2003. x.

In Case No. 17/08, P.R.Ranawade, a former employee of the Company whose services were terminated on the grounds of gross misconduct and low productivity and had submitted a statement of claim before the Industrial Court, Pune for reinstatement with continuity of service and full back wages with effect from 23 June

2003. xi.

In Case No. 93/09, Mr. S.H. Bhondve, a former employee of the Company whose services were terminated on the grounds of gross misconduct, by consuming liquor while on duty had submitted a statement of claim before the Second Labour Court,

Pune for reinstatement with continuity of service and full back wages with effect

143


_______________________ from 14 June 2002. The Company filed its written statement xii.

Mr. V.M. Bhosekar, a former employee of the Company whose services were terminated on the grounds of gross misconduct, had submitted a statement of claim before the Labour Court, Pune for reinstatement with continuity of service and full back wages with effect from 27 February 2002 in the reference matter bearing number Ref.(IDA) No. 96/03. The Company filed its written statement praying for dismissal of the said claim. xiii.

Case No. 159/04 Mr. D.B. Kadam, a former employee of the Company whose services were terminated on charges of illegal strike, had submitted a statement of claim for reinstatement with continuity of service and full back wages with effect from 23 June 2003. xiv.

Case No. 158/04 Mr. S.B.Darekar, a former employee of the Company whose services were terminated on charges of illegal strike, had submitted a statement of claim for reinstatement with continuity of service and full back wages with effect from 23

August 2003. xv.

Mr. K.C. Gore’s services were terminated by the Company with effect from 23 July

2008 as the Company no more required his services. Mr. Gore has sent a legal notice to the Company demanding reinstatement with continuity of service and full back wages with effect from 23 July 2008. Mr. Gore has sent a copy of said legal notice to the Competent Authority under Industrial Disputes Act, 1941 through Additional

Labour Officer. xvi.

In Case No. 72/08, N.M.Sisal, a former employee of the Company, who had resigned in March 2002 and subsequently relieved on 31 march 2002 has submitted a statement of claim for reinstatement with continuity of service.

Falcon Corporate Advisors Private Limited (Plaintiff) has filed a suit bearing number

1425 of 2006 in the Bombay High Court against the Company (Defendant No. 1) and

Siemens India Limited (Defendant No. 2) praying that the Defendant No.1 be ordered and directed to pay the sum of Rs. 25.00 lacs as on 31 March, 2006 plus further simple interest on the principal sum at the rate of 18% per annum from 31

March 2006 until payment and/or realisation and an interim relief of deposit of total consideration received from Defendant No. 2 with the Court. Defendant No. 1 had appointed the Plaintiff for mediation of the sale of SMC division, Hyderabad and lightening arresters division, Pune to Defendant No. 2 for an agreed fee. The appointment was valid till 31 December 2004. In January 2005, Defendant No. 1 terminated their services and informed that nothing was due or payable to them.

Thereupon the Plaintiff filed the present suit. On 26 September 2006 Defendant No. 1 had filed a written statement. Upon a notice for motion by Defendant No .2 and by order dated 10 June 2009 passed by the Bombay High Court, the name of the

Defendant No.2 was deleted. The suit is presently pending with the Bombay High

Court.

144


_______________________

2 Cases filed by the Company:

1 . Criminal i.

The Company has filed a criminal complaint, RCC No. 203/2003 under section

120(b), 417, 420 read with Section 34 of the Indian Penal Code, 1860 against GEA

Process Engineering (India) Private limited (formerly L&T Niro) (“ Accused

Company ”) and its officers (“ Accused Persons ”) before the Court of Judicial

Magistrate First Class at Pimpri, Pune. The Accused Company had allegedly sold a defective Spray Dryer to the Company for the manufacture of lightning arresters with the intention to obtain orders and sell products. The Accused Company did not carry out modifications or replace the product satisfactorily. The Hon’ble Judicial

Magistrate was pleased to issue process against the Accused Persons by order dated

17 May 2001. The Accused Persons have challenged this order by way of a writ petition, Criminal Writ Petition No 1257 of 2005 before the Hon’ble Bombay High

Court and prayed for quashing of proceedings and an ad-interim relief of staying the operation and implementation of the order for issue of process. By order dated 5 May

2005, the Hon’ble Bombay High Court has granted ad-interim relief to the Accused

Persons. The mater is pending at Bombay High Court.

2.

Civil i.

The Company has filed a civil suit against GEA Process Engineering (India) Private limited (formerly L&T Niro), Ballard Estate Mumbai, Kapil Kumar, CEO, L&T Niro and Mr. Pramod Dharmadhikari, Dy General Manager (Marketing), L&T Niro

(“Defendants”) before the Civil Judge, Senior Division, Pune, Special Civil Suit No

184/2003 for payment of Rs 120. 75 lacs towards refund and other costs incurred in relation to defective Spray Dryer purchased by the Company from the first

Defendant for the manufacture of lightning arresters. The amount involved is Rs

110.65 lacs. The matter is currently pending for filing of evidence. ii.

The Company filed a winding up petition being Company Petition no 13/2002 in the

Bangalore High Court against Baywest Power and Energy Private Limited and a recovery suit against Klenn and Marshalls Manufacturers and Exporters Private

Limited for non payment of dues amounting to Rs 71.79 lacs. The said dues were payments for supply of lightning arresters and supply of isolators. Baywest Power and Energy Private Limited was ordered by the High Court being Company

Application no 974/2006 to be wound up as per Section 433(e) of the Act. iii.

The Company filed a winding up petition being Company Petition no 38/2002 in the

Madras High Court against Wires and Cables (India) Private Limited for non payment of dues amounting to Rs 42.87 lacs. The said dues were payments for supply of isolators. Wires and Cables (India) Private Limited was ordered by the

High Court being Company Application no 264/2002 to be wound up as per section

433(e) of the Act.

3.

matters i.

The Company has filed a suit for declaration and permanent injunction being Special

Civil Suit No 920/2004 against (i) PCMC (for the purposes of this case, “Defendant

Corporation”), (ii) the Municipal Commissioner, PCMC and (iii) the Assistant

145


_______________________

Commissioner, Octroi, PCMC (together “Defendants”, for the purposes of this case).

The Defendant Corporation assessed an octroi liability to the tune of Rs 2.42 lacs for the period 1 April 2000 to 31 March 2001. The Company claimed by its letter dated 20

January 2004 addressed to the Defendant Corporation that the Company had under protest paid Rs 2.72 lacs for the period 1 April 2000 to 31 March 2001 and claimed a refund of this sum of Rs. 0.30 lacs as excess amount paid. However, the Defendant

Corporation did not refund the excess amounts as claimed by the Company inter-alia stating that excess count be claimed only within one month of the date of making the excess payment. Thereafter, on 31 July 2004, the Defendant Corporation raised a further demand of Rs 5.58 lacs alongwith interest at the rate of 12% from 1 April 2004 for the period 2002-03, which according to the Company is illegal and contrary to provisions of law. Therefore, the Company has sought a declaration that the said demand of Rs 5.58 lacs alongwith interest at the rate of 12% is illegal or if the same is found to be legal then Rs 2.72 lacs paid by the Company under protest be adjusted.

The Company has also prayed for restraining the Defendants from serving notices or recovering any amounts pertaining to any previous periods. The Company has also applied for grant of interim injunction. The Defendants have, in their written statement, have prayed for dismissal of suit and award of costs to the Defendant

Corporation. The suit is now pending for adducing evidence.

3. Arbitration Proceedings

1 The Company has filed a claim against TVS Logistics Services Limited (Respondent) for a sum of Rs. 42.3 Mn before the sole arbitrator for committing breach of Leave and License

Agreement dated 16 May 2005. The matter is pending before the sole arbitrator.

2 The Company has received a claim letter from Siemens Limited on 6 July 2006 for Rs. 26.7

Mn. The appointment of arbitrators has been recently completed.

3 The Company has received a notice under section 17 of the Arbitration and Conciliation Act,

1996 from Bhate & Raje Construction Company Private Limited praying for restraining the

Company from invoking bank guarantees in respect of an agreement for construction of a mall at Chinchwad, Pune.

Defaults

According the auditors report the company has not defaulted in repayment of dues to any banks or financial institution except for delays ranging from 1 to 49 days in respect of all installments of

Rs.11.30 lacs each due to Saraswat Co-Operative Bank, delays ranging from 1 to 28 days in respect of four quarterly installments of Rs.350 lacs each due to Bank of India, delays ranging from 1 to 62 days in respect of ten installments of Rs.4.40 lacs each due to Bank of India, delays ranging from 1 to 7 days in respect of ten installments of Rs.4.50 lacs each due to Bank of India, delay of 27 days in respect of one installment of Rs. 200 lacs each due to State Bank of Patiyala and a delay of 5 days in respect of one installment of Rs.250 lacs due to SICOM. However, the said defaults have been made good by the company during the year.

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4. Matters which are pending or which have arisen in the immediately preceding ten years involving :

There have been no matters which are pending or which have arisen in the immediately preceding ten years involving:

1.

2.

Issues of moral turpitude or criminal liability on the part of the Company

Material violations of statutory regulations by the Company

3.

Economic offences where proceeding have been initiated against the Company.

Litigation involving our subsidiaires

The subsidiaries of the Company are not involved in any legal proceedings.

MATERIAL DEVELOPMENTS AFTER THE DATE OF THE LAST BALANCE SHEET

There are no material developments after the date of the latest balance sheet that are likely to materially affect the performance and the prospects of the company. The company has not discontinued any of its existing business nor commenced any new business during past year.

ADVERSE EVENTS

There are no adverse events affecting the operations of the Company occurring within one year prior to the date of filing of the Letter of Offer with the Stock Exchange.

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GOVERNMENT APPROVALS OR LICENSING ARRANGEMENTS

The Company has received the necessary consents, licenses, permissions and approvals from the

Governments and various Governmental agencies required for our present business and except as mentioned below, no further materials approvals are required for our present business.

On the basis of the indicative list of approvals below, the Company is permitted to carry on business activities and no further approvals from any Government authorities are required by us to undertake the business of the Company. It must be distinctly understood that, in granting these licenses, the

Government of India does not take any responsibility for Company’s financial soundness or for the correctness of any of the statements made or opinions expressed in this behalf.

Registration required for the Company’s business:

1.

Provident Fund Registration Code No. MH/7287/EX under the Employees

Provident Fund & Miscellaneous Provisions Act,1952

2.

ESI Registration Code No. 33-4625-64 under the Employees State Insurance Act,

1948.

3.

Central Excise Registration No AAACE2506LXM006 under Rule 9 of the Central

Excise Rules, 2002 and the Central Excise Act, 1944s

4.

Service Tax Registration No. AAACE2506LST003 under The Finance Act, 1994 and

Service Tax Rules, 1994

5.

VAT Registration No. 27290002262V issued on 1 April 2006 under Maharashtra

Value Added Tax Act, 2005

6.

CST Registration No. 27290002262C issued on 1 April 2006 under Central Sales Tax,

1956

7.

Profession Tax Registration Certificate No. PT/R/Z/2/7/5B a.

Approvals/Licences obtained for our Bhosari Factory located at Plot No 5, Sector 10,

PCNTDA, Bhosari, Pune 411 026

Sl. No. Description of Licence/ consent/

Approval/ Regn.

Licence No. B/2/1439/09 under the Factories

Act, 1948

Date of Issue Valid Upto

06/05/2009 31/03/2010

Importer Exporter Code No. 0388054590 issued by the Ministry of Commerce

Government of India

29 December

1997

In case of any change in the name or address or constitution of the IEC holder, the IEC holder shall cease to be eligible to import or export against the

IEC after the expiry of 90 days from the date of such a change unless in the meantime, the consequential changes are effected in the IEC by the

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_______________________


Approval/ Regn.

Date of Issue Valid Upto

Agni/5/Kavi/167/2009 issued by Primpri

Chinchwad Municipal Corporation, for Elpro concerned licensing authority.

Renewal Fire NOC no. Due for renewal on 31 March every year. This NOC valid upto 31 st March 2010

International Limited, PCNIDA, Bhosari

Premises. b.

Approvals/Licences obtained for Chinchwad Factory

Sr. No. Description of Licence/ consent/

Approval/ Regn.

1.

Licence No. PNA/2(MI/36.360.9/4) under the

Factories Act, 1948

2.

Service Tax Registration No. AAACE2506LST002 under The Finance Act, 1994 and Service Tax

Rules, 1994 for the purpose of transport of goods by road, test , inspection, certification, market research agency, renting of immovable property services and business auxiliary service

3.

Importer Exporter Code No. 0388054590 issued by the Ministry of Commerce Government of

India

Date of Issue

09 April 2009

15 May 2008

29 December

1997

Valid Upto

31 December 2009

NA

1 April 2009

In case of any change in the name or address or constitution of the IEC holder, the IEC holder shall cease to be eligible to import or export against the IEC after the expiry of 90 days from the date of such a change unless in the meantime, the consequential changes are effected in the IEC by the concerned licensing authority.

31 March 2010 4.

Industrial License No. 05173/B Division/

Chinchwad/ Industrial License/1987/1990 under the Bombay Provincial Municipal Corporation

Act, 1949

5.

Renewal Fire NOC no. Agni/5/Kavi/167/2009 issued by Primpri Chinchwad Municipal

Corporation, for Elpro International Limited,

PCNIDA, Bhosari Premises.

2 September

2009

Due for renewal on 31 March every year. This NOC is valid upto 31 March 2010

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_______________________ c.

Approvals/Licences obtained for our real estate residential and commercial project


Approval/ Regn.

Date of Issue

1.

Commencement Certificate bearing number 1 June 2007

B.P./Chinch/56/2007 from the PCMC for commencement of building of the proposed Multiplex and commercial complex

2.

Commencement Certificate bearing number 11 April 2008

BP/Chinchwad/30/2008 from the PCMC for commencement of building of the proposed residential complex

Valid Upto

NA

NA

3.

Zoning certificate issued by the Vice President, Town

Planning and Development, PCMC certifying that the barring specified area at the edge of CTS No. 4270 in

Chinchwad belonging to the Company falls in the industrial zone

4.

Environmental clearance No. 21-456/2006-IA-III for construction of proposed residential and commercial project at chinchwadgaon, Pune d.

Approvals/Licences obtained for our Registered Office

5 September

2007

28 March 2007

NA

NA


Approval/ Registration

1.

Permanent Account Number AAACE2506L issued by the Commissioner of Income Tax,

Date of Issue

27 June 1962 NA

Valid Upto

2.

Tax Deduction Account Number PNEE01356F, issued by the Commissioner of Income Tax

[ ● ] NA

Licences / Approvals which the Company has newly applied for and is pending:

There are no new applications made by the Company which are pending as on date.

Licences / Approvals which have expired and have been applied for renewal:

There are no licenses/approvals which have expired and have been applied for renewal.

Material Development

There has not been any material development after the date of issue of the latest balance sheet and its impace on performance and prospects of the company.

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SECTION VI - REGULATORY AND STATUTORY DISCLOSURES

AUTHORITY FOR THE PRESENT ISSUE

The Board of Directors in their meeting held on 12/01/2010 decided to make the rights issue of equity shares under Section 81(1) of the Companies Act, to the extent of Rs.13800 lacs and accordingly the draft letter of offer was approved. The details of the Rights Issue to the existing shareholders of the company are as follows:

Issue of [•] Equity Shares of Rs. 10/- each at a premium of Rs. [•] per equity share (Issue Price of Rs. [•]) aggregating Rs. 13800 lacs on rights basis to the existing Equity Shareholders of the Company in the ratio of

[•] Equity Share for every [•] Equity Share held on [•] (Record Date).

The ratio and price per equity share will be decided by the Board prior to the issue at the appropriate time as per applicable rules/ regulations.

PROHIBITION BY SEBI

The Company, its Promoters, Directors or any of the Company’s associates or group companies with which the Directors of the Company are associated as Directors or Promoters have not been prohibited from accessing the capital market under any order or direction passed by SEBI.

ELIGIBILITY FOR THE ISSUE

Elpro International Limited is an existing listed Company. It is eligible to offer this Rights Issue in terms of

Chapter IV of ICDR Regulations 2009.

The promoters, their relatives, The Company, Group companies are not detained as willful defaulters by

RBI/Government authorities and there are no violations of securities laws committed by them in the past or pending against them.

The Company is in compliance as prescribed under Regulation 57(2) (b) of Part E of Schedule VIII of the

ICDR Regulations. It satisfies the following conditions a.

The Company has been filing periodic reports, statements and information in compliance with the listing agreement for the last three years immediately preceding the date of filing this letter of offer with the designated stock exchange. b.

The reports, statements and information referred to sub-clause (a) above are available on the website of Bombay Stock Exchange Limited (BSE) one of the recognized stock exchange with nationwide trading terminals c.

The Company has investor grievance – handling mechanism which includes meeting of the

Shareholder’s or Investor’s Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the Company as regards share transfer and have clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.

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_______________________

DISCLAIMER CLAUSE

AS REQUIRED, A COPY OF THIS DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO THE

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI).

“IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF DRAFT LETTER OF OFFER 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 OFFER DOCUMENT. LEAD MANAGER, KEYNOTE CORPORATE

SERVICES LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER

OF OFFER 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 INVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS

PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL

RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, LEAD MANAGER IS EXPECTED

TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS

RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD

MANAGER KEYNOTE CORPORATE SERVICES LIMITED HAS FURNISHED TO SEBI A DUE

DILIGENCE CERTIFICATE DATED 13/01/2010 WHICH READS AS FOLLOWS :

1.

WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO

LITIGATIONS LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH

COLLABORATORS ETC. AND OTHER MATERIAL IN CONNECTION WITH THE

FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;

2.

ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY,

ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION

OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION

AND THE CONTENTS OF THE DOCUMENTS OTHER PAPERS FURNISHED BY THE

COMPANY, WE CONFIRM THAT: a) THE DRAFT LETTER OF OFFER FILED WITH THE BOARD IS IN CONFORMITY WITH

THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; b) ALL THE LEGAL REQUIREMENTS TO THE SAID ISSUE AS ALSO THE GUIDELINES,

INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE BOARD, THE CENTRAL

GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE

BEEN DULY COMPLIED WITH; AND c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND

ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS

TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN

ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SEBI

(ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND

OTHER APPLICABLE LEGAL REQUIREMENTS.

3.

WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE

DRAFT LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE

SUCH REGISTRATION IS VALID EXCEPT THAT OF SHAREX DYNAMIC (INDIA) PVT. LTD.,

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_______________________

REGISTRAR TO THE ISSUE WHICH WAS VALID TILL DECEMBER 15, 2009 AND HAVE APPLIED

FOR THE RENEWAL OF REGISTRAATION VIDE THEIR LETTER DATED SEPTEMBER 09,2009.

4.

WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS TO

FULFIL THEIR UNDERWRITING COMMITMENTS – NOT APPLICABLE AS THE ISSUE IS NOT

UNDERWRITTEN.

5.

WE CERTIFY THAT WRITTEN CONSENT FROM 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 DRAFT LETTER OF OFFER WITH THE BOARD TILL THE DATE OF

COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF OFFER. –

NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.

6.

WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF

INDIA (ISSUES OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009,

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 DRAFT LETTER OF OFFER – NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS

ISSUE.

7.

WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C ) AND

(D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SEBI (ISSUE OF CAPITAL AND

DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 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 THE BOARD. 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

ISSUER ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. - NOT APPLICABLE AS THE

PRESENT ISSUE IS RIGHTS ISSUE.

8.

WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER 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 ISSUER 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 MONIES 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 MONIES SHALL BE RELEASED BY THE SAID BANK

ONLY AFTER PERMISSION IS OBTAINED FORM ALL THE STOCK EXCHANGES

MENTIONED IN THE DRAFT LETTER OF OFFER. WE FURHTER CONFIRM THAT THE

AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER

SPECIFICALLY CONTAINS THIS CONDITION.

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_______________________

10.

WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF OFFER

THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR

PHYSICAL MODE.

11.

WE CERTIFY THAT ALL APPLICABLE DISCLOSURES MANDATED IN SECURITIES AND

EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)

REGULATIONS, 2009 HAVE BEEN MADE IN THE 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 DRAFT

LETTER OF OFFER: a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE

ONLY ONE DENOMINATION FOR THE SHARES OF THE COMPANY AND b) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH

DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO

TIME.

13.

WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO THE

ADVERTISMENT IN TERMS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF

CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 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 ISSUER, SITUATION AT WHICH THE PROPOSED BUISNESS STANDS, THE RISK

FACTORS, PROMOTERS’ EXPERIENCE, ETC.

15.

WE ENCLOSE A CHECKLIST CONFIRMING REGULATIONWISE COMPLIANCE WITH THE

APPLICABLE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF

CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING

DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE,

PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN

COMPLIED WITH AND OUR COMMENTS, IF ANY.

THE FILING OF THE OFFER DOCUMENT DOES NOT, HOWEVER, ABSOLVE THE ISSUER FROM

ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT, 1956 OR FROM

THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE

REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE

RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER ANY

IRRREGULARITIES OR LAPSES IN OFFER DOCUMENT”.

CAUTION STATEMENT / DISCLAIMER CLAUSE OF THE ISSUER AND THE LEAD MANAGER

The Issuer Company and the Lead Manager accept no responsibility for statements made otherwise than in this Offer Document or in the advertisement or in any other material issued by or at the instance of the

Company and the Lead Manager and any one placing reliance on any other source of information would be doing so at his/her/their own risks.

DISCLAIMER IN RESPECT OF JURISDICTION

This offer is being made in India to persons resident in India (including Indian nationals resident in India who are majors, Hindu Undivided Families, companies, corporate bodies and societies registered under the

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_______________________ applicable laws in India and authorized to invest in shares, Indian mutual funds registered with SEBI,

Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), Trusts registered under the Societies Registration Act, 1860, or any other Trust law and who are authorized under their constitution to hold and invest in shares), Foreign Collaborators and to NRIs,

OCBs and FIIs as defined under the Indian laws. This Offer Document does not, however, constitute an offer to sell or an invitation to subscribe to securities issued hereby in any jurisdiction other than India. Any person into whose possession this Offer Document comes is required to inform himself about and to observe any such restrictions. Any dispute arising out of this Offer will be subject to the jurisdiction of appropriate court(s) in Mumbai, State of Maharashtra, 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 this Offer Document has been submitted to the SEBI. Accordingly, the equity shares represented thereby may not be offered or sold, directly or indirectly, and this Offer

Document may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of Offer Document nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Elpro

International Limited since the date hereof or that the information contained herein is correct as of any time subsequent to this date.

DISCLAIMER CLAUSE OF THE BOMBAY STOCK EXCHANGE LIMITED (BSE), THE DESIGNATED

STOCK EXCHANGE

Bombay Stock Exchange Limited (the Exchange) has given vide its letter dated [ ● ], permission to this

Company to use the Exchange’s name in this Letter of Offer as one of the Stock Exchanges on which this

Company’s securities are proposed to be listed. The Exchange has scrutinized this letter of offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Company.

The Exchange does not in any manner:

(i) Warrant, certify or endorse the correctness or completeness of any of the contents of this letter of offer; or

(ii) Warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or

(iii) Take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company;

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

FILING

A copy of this Letter of Offer has been filed with SEBI at SEBI Bhavan, Plot No. C-4A, G-Block, Bandra

Kurla Complex, Bandra (East), Mumbai – 400 051., Bombay Stock Exchange Ltd.

, (BSE) (Designated Stock

Exchange) Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai.

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EXPENSES OF THE ISSUE

The total expenses of the issue are estimated to be Rs. 53.50 Lacs. All expenses with respect to the issue would be met out of the proceeds of the issue. The split of issue expenses is as under: -

(Rs. in Lacs)

Sr.

No.

Particulars Amount % of the issue expenses

% of the issue size

1 Fees to Intermediaries

2 Fees to SEBI and Stock Exchanges

25.00

4.50

46.72 0.18

8.41 0.03

3 Printing and Stationary (includes Postage and Desptach)

4 Advertisement

5.00

6.00

10.00

9.35 0.04

11.23 0.05

18.69 0.07

6 Miscellaneous Expenses

Total

3.00

53.50

5.60 0.02

100.00 0.39

INVESTOR GRIEVANCE REDRESSAL SYSTEM

The investor grievances against the Company will be handled by the Registrars and Transfer Agent in consultation with the secretarial department of the Company. To handle the grievances received, the

Company has appointed Mr. Sambhaw Jain, as the Compliance Officer. He will supervise redressal of complaints received from the investors at the office of the Company as well as the Registrars to the Rights

Issue and ensure timely settlement.

All grievances related to the offer may be addressed to the Registrar to the Rights Issue quoting the application No. (Including prefix), Number of equity shares applied for, amount paid on application, date,

Bank and branch/ Collection center where application was submitted.

The normal time taken by the company for redressal of investor grievance is given below:-

Sr. No Type of Request Normal Time Taken

(No of Days)

1

2 Transfer of shares

4

5

6

7

8

Demat/remat of shares

Non receipt of dividend

Non receipt of Annual Report

Change of residential address/ Bank mandate

Consolidation/split of share certificates/ Remat

Within 30 days

Within 30 days

Within 30/21 days

Within 15 to 30 days

Within 7 to 15 days

Within 15 to 30 days

Within 30 days

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SECTION VII - OFFERING INFORMATION

A.

TERMS OF THE ISSUE

The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of this Letter of Offer, the CAF, the Memorandum and Articles of Association of the Company, the approvals from the Government of India, FIPB and RBI, if applicable, the provisions of the Act, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time, Listing

Agreements entered into by the Company with Stock Exchanges, terms and conditions as stipulated in the allotment advice or letter of allotment or Security Certificate and rules as may be applicable and introduced from time to time, the FEMA and the Letters of Allotment/Equity Shares to be issued. Over and above such terms and conditions, the Equity Shares shall also be subject to applicable laws, guidelines, notifications and regulations relating to issue of capital and listing of securities issued from time to time by SEBI, the

Government of India, RBI and or other authorities.

Ranking of equity shares

The new Equity Shares proposed to be issued shall rank in all respects pari-passu with existing fully paid up Equity Shares.

Mode of payment of dividend

The dividend is paid to all the eligible shareholders as per the provisions of Companies Act.

Face value & issue price

The Face Value of Equity Shares of the Company is Rs.10/-. The Equity Shares of Rs. 10/- each are being issued at a premium of Rs. [•] /- each i.e.; at a price of Rs. [•] /- in the present rights issue.

Rights of equity shareholders

The Shareholders are entitled to receive dividend, as and when declared and bonus and rights shares, as and when issued. Further, the rights of the above and other holders of shares are subject to the provisions of the Companies Act, 1956, the Memorandum and the Articles of Association of the Company, the terms of this Letter of Offer and other laws as applicable from time to time.

Market lot

The market lot for the Equity Shares held in the demat mode is one share. In case of physical certificate, the

Company would issue one certificate for the Equity Shares allotted to one person (“Consolidated

Certificate”). In respect of consolidated certificate, the Company will, only upon request from the equity shareholder, split & return such consolidated certificate into smaller denomination within 7 days time in conformity with the clause 3 of the Listing Agreement. No fee would be charged by the Company for splitting the consolidated certificate.

Nomination

In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose.

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The sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders (being individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the jointholders, as the case may be, shall become entitled to the Equity Shares. Person(s), being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same rights to which he would be entitled if he/she were the registered holder of the Equity

Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale/disposal of the Equity Share by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. When two or more persons hold the Equity Share(s), the nominee shall become entitled to receive the shares only on the demise of all the holders.

Fresh nominations can be made only in the prescribed form available on request at the office of the

Company located at Mumbai or such other place at such addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant portion in the CAF. Only one nomination would be applicable for one folio. Hence, in case the shareholder(s) has (have) already registered the nomination with the Company, no further nomination need to be made for Equity Shares to be allotted in this Issue under the same folio.

In case the allotment of Equity Shares is in dematerialized form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective

Depository Participant of the applicant would prevail. If the applicant requires to change the nomination, they are requested to inform their respective Depository Participant.

Minimum subscription i) If the Company does not receive the minimum subscription of 90% of the issue, the entire subscription shall be refunded to the applicants within fifteen days from the date of closure of the Issue. ii) If there is a delay in the refund of subscription by more than 8 days after the Company becomes liable to pay the subscription amount (i.e. fifteen days after closure of the issue), the Company shall pay interest for the delayed period at rates prescribed under sub-sections (2) and (2A) of Section 73 of the

Companies Act, 1956.

Disposal of odd lots

The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this

Issue. The Company will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity Shareholder.

Restrictions on transfer and transmission of shares and on their consolidation/ splitting

There are no restrictions on transfer and transmission and on their consolidation/splitting of shares issued pursuant to this issue.

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B. ISSUE PROCEDURE

BASIS OF THE OFFER

The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity

Shares held in the electronic form and on the Register of Members of the Company in respect of Equity

Shares held in the physical form at the close of business hours on the Record Date. The Company has in consultation with the Designated Stock Exchange fixed the Record Date for determining the shareholders who are entitled to receive this offer for Equity Shares on a rights basis. The Equity Shares are being offered for subscription in the ratio of [•] Equity Share for every [•] Equity Shares held by the Equity Shareholders.

The shareholders whose names appear as beneficial owners as per the list furnished by the depositories in respect of the Equity Shares held in electronic form and on the register of members of the Company in respect of the shares held in physical form on [•] at the close of business hours shall be entitled to the

Equity Shares on the Rights basis in the ratio of [•] equity share for every [ •] Equity Shares held by them.

OPTION TO SUBSCRIBE

Applicants to the Equity Shares of the Company issued through this Rights Issue shall be allotted the securities in dematerialized (electronic) form at the option of the applicant. The Company has signed a tripartite agreement with National Securities Depository Limited (NSDL) and Sharex Dynamic (India) Pvt.

Ltd. and 10/07/2000 with Central Depository Services (India) Limited (CDSL) and Sharex Dynamic (India)

Pvt. Ltd. 02/06/2000, which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates.

RIGHTS ENTITLEMENT

As your name appears as beneficial owner in respect of the shares held in the electronic form or appears in the register of members as an equity shareholder of the Company on the Record Date, you are entitled to this Rights Offer. The number of Equity Shares to which you are entitled is shown in Block I of Part A of the enclosed CAF and as shown in part A of the enclosed CAF.

FRACTIONAL ENTITLEMENT

Fractional entitlement if any will be rounded off to the next higher integer and the share required for the same to be adjusted from one of the promoter’s entitlement.

JOINT-HOLDERS

Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed (so far as the Company is concerned) to hold the same as joint-holders with benefits of survivorship subject to provisions contained in the Articles.

OFFER TO NON-RESIDENT EQUITY SHAREHOLDERS/ APPLICANTS

Applications received from NRIs and other NR shareholders for allotment of Equity Shares shall be, inter alia, subject to the conditions imposed from time to time by the RBI under the FEMA in the matter of refund of application moneys, allotment of Equity Shares, issue of Letter of Allotment / share certificates, payment of interest, dividends, etc. General permission has been granted to any person resident outside India to apply shares offered on rights basis by an Indian Company in terms of FEMA and the rules and regulations there under. Vide notification dated June 18, 2003, bearing number FEMA 94/2003, RBI has granted general permission to Indian companies to issue rights/bonus shares to existing non-resident shareholders. The existing non-resident shareholders may apply for issue of additional shares and the Company may allot the same subject to the condition that the overall issue of shares to non-residents in the total paid up capital does not exceed the sectoral cap. In other words, non-residents may subscribe for additional shares over

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_______________________ and above shares offered on rights basis by the Company and renounce the shares offered in full or part thereof in favour of a person named by them. Residents may subscribe for additional shares over and above the shares offered on rights basis by the Company and also renounce the shares offered either in full or part thereof in favour of a person named by them. The Equity Shares issued under the Rights Issue and purchased by NR shall be subject to the same conditions including restrictions in regard to the repatriability as are applicable to the previously held Equity Shares against which Equity Shares under the Rights Issue are issued.

However, as per the provisions of AP DIR circular No. 14 dated September 16, 2003 (issued by the RBI), such shareholders who have been allotted the Equity Shares as OCBs would not be permitted to participate in the Rights Issue. Accordingly, shareholders/ applicants who are OCBs and wishing to participate in the

Rights Issue would be required to submit approvals in relation thereto from the FIPB and the RBI. The

Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the allotment of Equity Shares, payment of dividend etc. to the Equity

Shareholders who are NR.

NOTICES

All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one

English national daily with wide circulation, one Hindi national daily with wide circulation and/or, will be sent by ordinary post to the registered holders of the Equity Share(s) from time to time.

ISSUE OF DUPLICATE EQUITY SHARE CERTIFICATE

If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity

Shares are fully utilized, the Company against the surrender of such Certificate(s) may replace the same, provided that the same will be replaced as aforesaid only if the Certificate numbers and the Distinctive numbers are legible.

If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the satisfaction of the Company and upon furnishing such indemnity/ surety and/or such other documents as the Company may deem adequate, duplicate Equity Share Certificate(s) shall be issued.

OPTIONS AVAILABLE TO THE EQUITY SHAREHOLDERS

The Equity Shareholders will be having the following five options:

• Apply for his entitlement in part

• Apply for his entitlement in part and renounce the other part

• Renounce his entire entitlement

• Apply for his entitlement in full

• Apply for his entitlement in full and apply for additional Equity Shares

IMPERSONATION

Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below:

"Any person who-

(a) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or

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(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."

HOW TO APPLY

For Resident Indian Shareholders

Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead Managers or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications as per instructions given in the Letter of Offer. Payment should be made in cash (not more than Rs.20,000/-) or by cheque/bank draft/ drawn on any bank (including a cooperative bank) which is situated at and is a member or a sub-member of the bankers clearing house located at the centre where the CAF is submitted and which is participating in the clearing at the time of submission of the application. Outstation cheques/money orders/postal orders will not be accepted and

CAFs accompanied by such cheques/money orders/postal orders are liable to be rejected.

For Non-Resident Shareholders

Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia , be subject to the conditions as may be imposed from time to time by the RBI, in the matter of refund of application moneys, allotment of Equity Shares, issue of letters of allotment/certificates/ payment of dividends etc. Letter of Offer and CAF shall be dispatched to non-resident Equity Shareholders in India only.

For Mutual Fund Shareholders

A separate application can be made in respect of rights entitlement if any for each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications.

The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made.

Investment by FIIs

In accordance with the current regulations, the following restrictions are applicable for investment by

FIIs:-

The Issue of Equity Shares under this Issue to a single FII should not exceed 10% of the post-issue paid up capital of the Company. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts the investment on behalf of each sub-account shall not exceed 5% of the total paid up capital of the

Company.

Investment by NRIs

Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India)

Regulations, 2000. NRI Investors should note that applications by ineligible non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided are liable to be rejected.

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For applicants residing at places other than designated Bank collecting branches.

Applicants residing at places other than the cities where the Bank collection centers have been opened should send their completed CAF by registered post/speed post to the Registrars to the Issue Sharex

Dynamic (India) Pvt. Ltd. alongwith demand drafts, net of demand draft and postal charges, payable at

Mumbai in favour of “EIL - Rights Issue” crossed “A/c Payee only” so that the same are received on or before closure of the Issue i.e. [•].

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

All application forms duly completed together with cash/cheque/demand draft for the application money must be submitted before the close of the subscription list to the Bankers to the Issue named herein or to any of its branches mentioned on the reverse of the CAF. The CAF alongwith application money must not be sent to the Company or the Lead Manager to the Issue or the Registrar to the Issue except as mentioned above. The applications are required to strictly adhere to these instructions. Failure to do so could result in the application being liable to be rejected by the Company, the Lead Manager and the Registrar not having any liabilities to such applicants.

The CAF consists of four parts:

Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares

Part B: Form for renunciation

Part C: Form for application for renouncees

Part D: Form for request for split application forms

You may exercise any one of the following options with regard to the Equity Shares offered to you, using the enclosed CAF:

Sr. No Options available

1. Accept whole or part of the Equity Shares offered to you without renouncing the balance

A you may apply for additional Equity Shares.

Indicate in Block IV the additional Equity Shares applied for.

Action Required

Fill in and sign Part A indicating in Block III of Part

A the number of Equity Shares accepted. If you accept all the equity share offered in Block II of Part

2. Renounce all the Equity Shares offered to you to one person (joint renouncees are deemed as one person) without your applying for any of the Equity Shares offered to you.

3. Accept a part of your entitlement and renounce the balance or part of it to one or more Renouncee(s).

OR

4. Renounce your entitlement or part of it to one or more persons (joint renouncees are deemed as one person).

Fill in and sign Part B indicating the number of

Equity Shares renounced in Block VII and handover the ENTIRE FORM to the renouncee. The renouncee/ joint renouncee(s) must fill in and sign

Part C of CAF.

Fill in and sign Part D for the Split Form and send the ENTIRE CAF to the Registrar to the Issue.

On receipt of Split Forms : a b

For the Equity Shares you are accepting, fill in and sign Part A.

For the Equity Shares you are renouncing fill in and sign Part B indicating the number of Equity

Shares renounced in Block VII. Each of the renouncees should fill in and sign Part C.

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Note: If application is made jointly with any other person(s) who is/are not already joint holders or change in the sequence of names of joint holders, it will amount to renunciation and the procedure mentioned in (2) above will have to be followed.

Acceptance of Offer

You may accept the Offer and apply for the Equity Shares offered, either in full or in part by filling Block III of Part A of the enclosed CAF and submit the same along with the application money payable to the bankers to the Issue or any of the branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board thereof in this regard. Applicants at centers not covered by the branches of collecting banks can send their

CAF together with the demand draft, net of demand draft and postal charges, payable at Mumbai to the

Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the

Issue are liable to be rejected.

You may apply for the Equity Shares offered wholly or in part by filling in the enclosed CAF and submitting the same along with the application money to the Bankers to the Issue or its designated branches on or before the closure of the subscription list. The CAF should be complete in all respects, as explained in the INSTRUCTIONS indicated in the CAF. The CAF should not be detached under any circumstances, otherwise the application(s) will be rejected forthwith.

Application for additional Equity Shares

You are also eligible to apply for additional Equity Shares over and above the number of Equity

Shares offered to you provided you have applied for all the shares offered to you without renouncing them in full or in part. However, the additional Equity Shares cannot be renounced in full or in part, in favour of any other person(s).

If you desire to apply for additional Equity Shares, you may fill in the number of additional Equity Shares in Part A of the CAF. The allotment of additional Equity Shares will be at the sole discretion of the Board on an equitable basis with reference to the number of Equity Shares held by you on the Record Date in consultation with The Designated Stock Exchange. In the case of requests for additional Equity Shares by

Non Residents, the allotment will be subject to the approval of Reserve Bank of India. The Board may reject any application for additional Equity Shares without assigning any reasons thereof. The renounces can also make an application for additional shares.

Renunciation

You may renounce all or any of the Equity Shares, you are entitled to in favour of any individual, limited companies, or statutory corporations / institutions. However renunciation in favour of more than three persons as joint holders, trust or society (unless the same is registered under the Societies Registration Act,

1860 or any other applicable trust laws and is authorized under its constitution to hold shares in a company), OCBs, minors (unless acting through natural or legal guardians), Partnership Firms, or their nominees, or any of them will not be accepted.

Any renunciation from Resident(s) to Non- Resident(s) is subject to the renouncer(s)/ renouncee(s) obtaining requisite approval(s) of the Reserve Bank of India (RBI) and the said permission must be attached to the CAF.

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Procedure for renunciation

(i) To Renounce in WHOLE

If you wish to renounce this offer in whole, please complete PART 'B' of the CAF enclosed with the Letter of

Offer for the number of Equity Shares renounced and deliver the CAF duly signed to the person(s) in whose favour the Equity Shares are so renounced. All joint holders must sign as per specimen signatures recorded with the Company at the place provided for the purpose and in the same order.

The person(s), in whose favour the offer has been renounced (renouncees) should complete and sign PART

C of the CAF. In case of joint renouncees, all joint renouncees must sign.

(ii) To Renounce in PART

If you wish to either accept this offer in part and renounce the balance of this offer the CAF must first be split into the requisite number of forms, by applying to the Registrar to the Issue. Please indicate your requirement of split forms in the space provided for this purpose in PART D of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on or before the last date for receiving requests for split forms i.e. [•].

If you wish to apply for Equity Shares jointly with any person(s) who is/are not already joint holder(s) with you, then it would amount to renunciation and the procedure of renunciation as mentioned above shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure as stated above shall have to be followed.

Further, this right of renunciation is subject to the express condition that the Board shall be entitled in its absolute and unqualified discretion to reject any such request for allotment of Equity Shares from renouncee(s) without assigning any reason thereof save where the Equity Shares have been renounced in favour of a person who is already a member of the Company.

Please note that: a) Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. b) Only the person to whom this Letter of Offer has been addressed and NOT the renouncees shall be entitled to split forms. Forms once split cannot be resplit.

Request for split forms:

• Request for Split Forms should be addressed to the Registrar to the Issue so as to reach them on or before the last date for receiving of request for split forms by filling in PART D of the CAF.

• Requests for Split Forms will be entertained only once.

Availability of duplicate CAF

In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the applicant violates any of these requirements,

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_______________________ he / she shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications.

Application on Plain Paper

An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Rights Issue on plain paper, along with a

Demand Draft payable at Mumbai which should be drawn in favour of “ EIL- Rights Issue ” crossed A/c

Payee Only and send the same by registered post directly to the Registrar to the Issue.

The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the

Issue Closing Date (i.e. [•]) and should contain the following particulars:

The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the

Issue Closing Date (i.e. [•]) and should contain the following particulars:

Name of Issuer, being Elpro International Limited.

Name and address of the Equity Shareholder including joint holders

Registered Folio Number/ DP and Client ID no.

Number of shares held as on [•], 2010 (Record Date).

Certificate numbers and distinctive numbers, if held in physical form

Number of Rights Equity Shares entitled

Number of Rights Equity Shares applied for out of entitlement

Number of additional Equity Shares applied for, if any

Total number of Equity Shares applied for

Total amount paid at the rate of Rs. [•]per Equity Share

Particulars of cheque/draft

Savings/Current Account Number and name and address of the Bank where the Equity Shareholder will be depositing the refund order

Each of the applicant should mention his/her Permanent Account Number (PAN) allotted under the IT

Act.

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

Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company

Payment in such cases, should be through a demand draft, net of demand draft and postal charges, payable at Mumbai be drawn in favour of “EIL - Rights Issue” crossed “A/c Payee only”.

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

Quoting of PAN/GIR no. in the application forms

Pursuant to the circular MRD/DoP/Circ-05/2007 dated April 27, 2007, SEBI has mandated Permanent

Account Number (PAN) to be the sole identification number for all participants transacting in the securities market, irrespective of the amount of the transaction with effect from July 2, 2007. Each of the applicants should mention his/her PAN allotted under the IT Act. Applications without this information will be

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It is to be specifically noted that applicants should not submit the GIR number instead of the PAN, as the Bid is liable to be rejected on this ground.

Last date for submission of CAF

The last date for receipt of CAF by the Bankers to the Issue together with the amount payable on application is [•], 2010. If the relevant CAF together with amount payable there under is not received by the

Bankers/Registrar to the Issue on or before the close of banking hours on the aforesaid last date the offer contained in this Letter of Offer shall be deemed to have been declined and the Board shall be at liberty to dispose of the Equity Shares hereby offered as provided under "Basis of Allotment".

Incomplete application

CAFs which are not complete or are not accompanied with the application money amount payable are liable to be rejected.

TERMS OF PAYMENT

The entire amount of Rs. [•]/- per share is payable on application by all shareholders/applicants.

MODE OF PAYMENT

For Resident Shareholders/Applicants

Payment(s) must be made by cheque/demand draft and drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the Bankers' Clearing House located at the centre where the CAF is submitted. A separate cheque/draft must accompany each CAF. Only one mode of payment should be used. Money orders, postal orders and outstation cheques will not be accepted and applications accompanied by any such instruments will be rejected.

Shareholders/Applicants residing at places other than those mentioned in the CAF and applicants who wish to send their applications but not having collection centers should send their application by Registered

Post, ONLY to the Registrar to the Issue enclosing a demand draft drawn on a clearing Bank and payable at

Mumbai ONLY net of bank charges and postal charges, before the closure of the issue.

Such cheque/drafts should be payable to "EIL - RIGHTS ISSUE". All cheques/ drafts must be crossed

'A/c Payee only’. No receipt will be issued for the application money received. However, the Collection

Centre receiving the application will acknowledge receipt of the application by stamping and returning the acknowledgement slip at the bottom of each CAF. The Company is not responsible for any postal delay/ loss in transit on this account.

For Non-Resident Shareholders/Applicants

As regards the application by non-resident equity shareholders, the following further conditions shall apply:

Application with repatriation benefits

Payment by NRIs/ FIIs/ foreign investors must be made by demand draft/cheque payable at Mumbai or funds remitted from abroad in any of the following ways:

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•

•

By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad

(submitted along with Foreign Inward Remittance Certificate); or

By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in

•

Mumbai; or

By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable

• in Mumbai; or

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

All cheques/drafts submitted by non-residents applying on repatriable basis should be drawn in favour of

"EIL - RIGHTS ISSUE - NR" payable at Mumbai and crossed ‘A/c Payee only’ for the amount payable.

A separate cheque or bank draft must accompany each application form. Applicants may note that where payment is made by drafts purchased from NRE/FCNR accounts as the case may be, an Account Debit

Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the

NRE/FCNR account should be enclosed with the CAF. In the absence of the above the application shall be considered incomplete and is liable to be rejected.

In the case of NRIs who remit their application money from funds held in FCNR/NRE Accounts, refunds and other disbursements, if any shall be credited to such account details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their application money through Indian

Rupee Drafts from abroad, refunds and other disbursements, if any will be made in US Dollars at the rate of exchange prevailing at such time subject to the permission of RBI. The Company will not be liable for any loss on account of exchange rate fluctuation for converting the Rupee amount into US Dollars or for collection charges charged by the applicant’s Bankers.

Application without repatriation benefits

As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the allotment of Equity Shares will be on non-repatriation basis.

All cheques/drafts submitted by non-residents applying on non-repatriation basis should be drawn in favour of "EIL - RIGHTS ISSUE” payable at Mumbai and must be crossed ‘A/c Payee only’ for the amount payable. The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the

Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

If the payment is made by a draft purchased from an NRO account, an Account Debit Certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NRO account, should be enclosed with the CAF. In the absence of the above, the application shall be considered incomplete and is liable to be rejected.

New demat account shall be opened for holders who have had a change in status from resident Indian to

NRI.

“Non-resident Indian Applicants may please note that only such application as are accompanied by payment in free foreign exchange shall be considered for allotment. The non-resident Indians who intend to make payment through Non- Resident Ordinary (NRO) accounts shall mention the details of the Bank Account from their payment is being made.”

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Note:

•

In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the

•

• investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to

Income Tax Act, 1961.

In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity

Shares cannot be remitted outside India.

The CAF duly completed together with the amount payable on application must be deposited with the

•

Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the

Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

In case of an application received from non-residents, allotment, refunds and other distribution, if any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.

PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED

AMOUNT (“ASBA”) PROCESS

This section is for the information of Equity Shareholders proposing to subscribe to the Issue through the ASBA Process. The Company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this

Letter of Offer. Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and ensure that the number of Equity Shares applied for by such

Shareholders do not exceed the applicable limits under laws or regulations. Shareholders applying under the ASBA Process are also advised to ensure that the CAF is correctly filled up, stating therein the bank account number maintained with the SCSB in which an amount equivalent to the amount payable on application as stated in the CAF will be blocked by the SCSB.

The list of banks who have been notified by SEBI to act as SCSB for the ASBA Process are provided on www.sebi.gov.in

. For details on designated branches of SCSB collecting the CAF, please refer the above mentioned SEBI website.

ASBA Process

The reach of ASBA has now been extended to all categories of investors except Qualified Institutional

Buyers. The bidders bidding through ASBA facility shall be herein after called ASBA Bidders which shall include retail individual investors, High Networth investors and corporate investors.

A Resident Retail Individual Investor, High Networth Investors and corporate investors shall submit his

Bid through an ASBA Form, either in physical or electronic mode, to the SCSB with whom the bank account of the ASBA Bidder or bank account utilised by the ASBA Bidder (ASBA Account) is maintained.

The SCSB shall block an amount equal to the Bid Amount in the bank account specified in the ASBA

Form, physical or electronic, on the basis of an authorisation to this effect given by the account holder at the time of submitting the Bid. The Bid Amount shall remain blocked in the aforesaid ASBA Account until finalisation of the Basis of Allotment in the Issue and consequent transfer of the Bid Amount against the allocated shares to the ASBA Public Issue Account, or until withdrawal/failure of the Issue or until withdrawal/rejection of the ASBA Bid, as the case may be. Once the Basis of Allotment is finalized, The

Registrar to the Issue shall send an appropriate request to the Controlling Branch of the SCSB for unblocking the relevant bank accounts and for transferring the amount allocable to the successful ASBA

Bidders to the ASBA Public Issue Account. In case of withdrawal/failure of the Issue, the blocked amount shall be unblocked on receipt of such information from the BRLM

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Equity Shareholders who are eligible to apply under the ASBA Process

The option of applying for Equity Shares in the Issue through the ASBA Process is only available to

Shareholders of the Company on the Record Date and who:

9 Is holding Equity Shares in dematerialized form and has applied for entitlements or additional

Securities in the Issue in dematerialized form;

9 Has not renounced his/her entitlements in full or in part;

9 Has not split the CAF;

9 Is not making an application on plain paper;

9 Is not a Renouncee to the Issue;

9 Applies through a bank account with one of the SCSBs.

CAF

The Registrar will despatch the CAF to all Equity Shareholders as per their entitlement on the Record

Date for the Issue. Those Equity Shareholders who wish to apply through the ASBA payment mechanism will have to select for this mechanism in Part A of the CAF and provide necessary details.

Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF only. The method of applying under ASBA process will not be available for Investors applying on plain paper. The Equity Shareholder shall submit the CAF to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB.

Acceptance of the Issue

You may accept the Issue and apply for the Equity Shares offered, either in full or in part, by filling Part

A of the respective CAFs sent by the Registrar, selecting the ASBA process option in Part A of the CAF and submit the same to the SCSB before the close of the banking hours on or before the Issue Closing

Date or such extended time as may be specified by the Board of Directors of the Company in this regard.

Mode of payment

The Shareholder applying under the ASBA Process agrees to block the entire amount payable on application (including for additional Equity Shares, if any) with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB.

After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrars. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per Registrar’s instruction allocable to the Shareholders applying under the ASBA

Process from bank account with the SCSB mentioned by the Shareholder in the CAF. This amount will be transferred in terms of the SEBI Guidelines, into the separate bank account maintained by the Company as per the provisions of section 73(3) of the Companies Act, 1956. The balance amount remaining after the finalization of the basis of allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Managers to the respective SCSB.

The Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF.

The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of

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Options available to the Shareholder applying under the ASBA Process

The summary of options available to the Shareholders is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the respective CAFs received from

Registrar:

Option Available Action Required

1. Accept whole or part of your entitlement without renouncing the balance.

Fill in and sign Part A of the CAF (All joint holders must sign)

2. Accept your entitlement in full and apply for Fill in and sign Part A of the CAF including Block additional Equity Shares III relating to the acceptance of entitlement and

Block IV relating to additional Equity Shares (All joint holders must sign)

The Shareholder applying under the ASBA Process will need to select the ASBA option process in the

CAF and provide required necessary details. However, in cases where this option is not selected, but the

CAF is tendered to the SCSB with the relevant details required under the ASBA process option and

SCSB blocks the requisite amount, then that CAF would be treated as if the Shareholder has selected to apply through the ASBA process option.

Additional Equity Shares

You are eligible to apply for additional Equity Shares over and above the number of Equity Shares that you are entitled too, provided that (i) you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, in consultation with the

Designated Stock Exchange and in the manner prescribed under the section entitled ‘Basis of Allotment’ on page no. 177 of this Letter of Offer.

If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF.

Renunciation under the ASBA Process

Renouncees cannot participate in the ASBA Process.

Application on Plain Paper

Applications on plain paper cannot be made by Equity Shareholders availing of the ASBA Process.

Last date of Application

The last date for submission of the duly filled in CAF is [•]. The Issue will be kept open for a minimum of

15 (fifteen) days and the Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 (thirty) days from the Issue Opening

Date.

If the CAF together with the amount payable is not received by the Banker to the Issue/Registrar to the

Issue or if the CAF is not received by the SCSB on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/Committee of Directors, the offer contained in this

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Letter of Offer shall be deemed to have been declined and the Board/Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under “Basis of Allotment”.

Option to receive Securities in Dematerialized Form

SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES

OF THE COMPANY UNDER THE ASBA PROCESS CAN ONLY BE ALLOTTED IN

DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY

SHARES ARE BEING HELD ON RECORD DATE.

General instructions for Shareholders applying under the ASBA Process

(a)

(b)

Please read the instructions printed on the respective CAF carefully.

Application should be made on the printed CAF only and should be completed in all respects. The

CAF found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of this Letter of Offer are liable to be rejected. The CAF must be filled in English .

(c) The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose bank account details are provided in the CAF and not to the Bankers to the Issue/Collecting Banks

(assuming that such Collecting Bank is not a SCSB), to the Company or Registrar or Lead Manager to the Issue.

(d) All applicants, and in the case of application in joint names, each of the joint applicants, should mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.

(e) All payments will be made by blocking the amount in the bank account maintained with the SCSB.

Cash payment is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

(f) Signatures should be either in English or Hindi or in any other language specified in the Eighth

Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company/or Depositories.

(g)

(h)

In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with the Company. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.

All communication in connection with application for the Equity Shares, including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole applicant Equity Shareholder, folio numbers and CAF number.

(i) Only the person or persons to whom Securities have been offered and not renouncee(s) shall be eligible to participate under the ASBA process.

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Do’s: a.

b.

c.

d.

e.

f.

g.

h.

i.

j.

Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled in.

Ensure that you submit your application in physical mode only. Electronic mode is only available with certain SCSBs and not all SCSBs and you should ensure that your SCSB offers such facility to you.

Ensure that the details about your Depository Participant and beneficiary account are correct and the beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only.

Ensure that the CAFs are submitted at the SCSBs whose details of bank account have been provided in the CAF.

Ensure that you have mentioned the correct bank account number in the CAF.

Ensure that there are sufficient funds (equal to {number of Equity Shares applied for} X {Issue

Price}] available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.

Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on application mentioned in the CAF, in the bank account maintained with the respective

SCSB, of which details are provided in the CAF and have signed the same.

Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form.

Each applicant should mention their Permanent Account Number (“PAN”) allotted under the I. T.

Act.

Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary account is held with the Depository Participant. In case the CAF 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 CAF.

Ensure that the Demographic Details are updated, true and correct, in all respects. k.

Don'ts:

1)

2)

3)

4)

Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the

SCSB.

Do not pay the amount payable on application in cash, by money order or by postal order.

Do not send your physical CAFs to the Lead Manager to Issue / Registrar / Collecting Banks

(assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a

Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the

SCSB only.

Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground.

Do not instruct their respective banks to release the funds blocked under the ASBA Process. 5)

Grounds for Technical Rejection for ASBA Process:

CAF in addition to the “Grounds of Technical Rejection” mentioned under [•] can be rejected on following additional grounds: a) Application on plain paper or on spilt form. b) Application for entitlements or additional shares in physical form. c) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available with the Registrar.

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_______________________ d) Sending CAF to a Lead Manager / Registrar / Collecting Bank (assuming that such Collecting Bank is not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company. e) Renouncee applying under the ASBA Process. f) Insufficient funds are available with the SCSB for blocking the amount. g) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen pursuant to regulatory orders. h) Account holder not signing the CAF or declaration mentioned therein.

Depository account and bank details for Shareholders applying under the ASBA Process

IT IS MANDATORY FOR ALL THE SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO

RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL SHAREHOLDERS

APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY

PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND

BENEFICIARY ACCOUNT NUMBER IN THE CAF. SHAREHOLDERS APPLYING UNDER THE ASBA

PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE

NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN

JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN

THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE

CAF.

Shareholders applying under the ASBA Process should note that on the basis of Depository

Participant’s name and identification number and beneficiary account number provided by them in the

CAF, the Registrar to the Issue will obtain from the Depository demographic details of these

Shareholders such as address, bank account details and occupation (“Demographic Details”). Hence,

Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF.

These Demographic Details would be used for all correspondence with such Shareholders including mailing of the letters intimating unblock of bank account of the respective Shareholder. The Demographic

Details given by Shareholders in the CAF would not be used for any other purposes by the Registrar.

Hence, Shareholders are advised to update their Demographic Details as provided to their Depository

Participants.

By signing the CAFs, the Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required

Demographic Details as available on its records.

Letters intimating allotment and unblocking would be mailed at the address of the Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories.

Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of bank account 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 Shareholder in the

CAF would be used only to ensure dispatch of letters intimating unblocking of bank account.

Note that any such delay shall be at the sole risk of the Shareholders applying under the ASBA Process and none of the Company, the SCSBs or the Lead Manager shall be liable to compensate the

Shareholder applying under the ASBA Process for any losses caused to such Shareholder due to any such delay or liable to pay any interest for such delay.

In case no corresponding record is available with the Depositories that match three parameters, namely, name(s) of the Shareholder(s) (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected.

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Application will not be accepted by the Lead Manager or by the Company.

Note on cash payment (section 269 SS)

Having regard to the provisions of Section 269 SS of the Income Tax Act, 1961, subscriptions against applications for securities should not be effected in cash and must be effected only by ‘Account Payee’ cheques or ‘Account Payee’ bank drafts, if the amount payable is Rs. 20,000/- or more. In case payment is effected in contravention of this provision, the application is liable to be rejected.

FORFEITURE

The allotment shall be made only on receipt of full application money as mentioned in “Terms of

Payment”. As such there will be no partly paid-up shares emerging from this issue and hence no requirement of any forfeiture.

APPLICATION UNDER POWER OF ATTORNEY

In case of applications under Power of Attorney or by Limited Companies or Bodies Corporate or Societies registered under the applicable laws, a certified copy of the Power of Attorney or the relevant authority, as the case may be, along with the certified copy of the Memorandum and Articles of Association or Bye-laws, as the case may be, must be lodged separately by registered post at the office of the Registrar to the Issue simultaneously with the submission of the CAF, indicating the serial number of the CAF and the name of the bank and the branch office where the application is submitted within 10 days of closure of the offer, failing which the application is liable to be rejected. In case the Power of Attorney is already registered with the Company, then the same need not be furnished again. However, the serial number of the Registration under which the Power of Attorney has been registered with the Company must be mentioned below the signature of the Applicant.

BANK DETAILS OF THE APPLICANT

The applicant must fill in the relevant column in the CAF giving particulars of Savings Bank/Current

Account Number and the name of the Bank with whom such accounts is held, to enable the Registrar to the

Issue to print the said details in the Refund Orders, if any, after the name of the payees. Please note that provision of Bank Account details has now been made mandatory and applications not containing such details are liable to be rejected.

APPLICATION NUMBER ON THE CHEQUE/DEMAND DRAFT

To avoid any misuse of instruments, the applicants are advised to write the application number and name of the first applicant on the reverse of the cheque / demand draft.

GROUNDS FOR TECHNICAL REJECTIONS

Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following:

) Amount paid does not tally with the amount payable for;

) In case of physical shareholders, bank account details (for refund) are not given;

) Age of first applicant not given in case of renouncee(s);

) PAN not stated. See the section titled “Issue Procedure – Permanent Account Number or PAN/

GIR;

) Cash applications for an amount exceeding Rs.20,000/-;

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) In case of Application under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted;

) If the signature of the existing shareholder does not match with the one given on the Application

Form and for renouncees if the signature does not match with the records available with their depositories;

) If the Applicant desires to have shares in electronic form, but the CAF does not have the

Applicant’s depository account details;

) CAFs are not submitted by the Applicants within the time prescribed as per the CAF and the Draft

Letter of Offer;

) Applications not duly signed by the sole/joint Applicants;

) Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to invest in the Issue;

) In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Applicants (including the order of names of joint holders), the Depositary

Participant’s identity (DP ID) and the beneficiary’s identity;

) Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local laws) and where last available address in India has not been provided;

) Multiple applications.

GENERAL

(a) All applications should be made on the printed CAF provided by the Company and should be complete in all respects. Applications which are not complete in all respects or are made otherwise than as herein provided or not accompanied by proper application money in respect thereof will be refunded without interest.

(b) Please read the instructions in the enclosed CAF carefully.

(c) ALL COMMUNICATIONS IN CONNECTION WITH YOUR APPLICATION FOR THE EQUITY

SHARES INCLUDING ANY CHANGE IN YOUR REGISTERED ADDRESS SHOULD BE

ADDRESSED TO THE REGISTRAR TO THE ISSUE.

(d) Application Forms must be filled in ENGLISH in BLOCK LETTERS.

(e) Signatures should be either in English or Hindi or the languages specified in the Eighth Schedule to the Constitution of India. Signatures other than in the aforementioned languages or thumb impressions must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal.

(f) In case of Joint Holders, all joint holders must sign the relevant parts of the Application Form in the same order and as per the specimen signatures recorded with the Company.

(g) In case of joint applicants, refunds and all payments will be made to the person whose name appears first on the application form and all communications will be addressed to him/her. To prevent any fraudulent encashment of refund orders by third parties, the Sole/First Applicant must indicate Saving / Current Account number and the name of the bank and its branch with whom such account is held in the space provided in the CAF for the purpose so that Refund Orders are printed with these details after the name. Applications without this information are liable to be rejected.

(h) The Application Form should be presented to the Bank in its entirety. If any of the Part(s) A,B,C and D of the Application Form(s) is /are detached or separated, such application will forthwith be rejected.

(i) All shareholders must submit the CAF along with remittance only to the Bankers to the Issue mentioned elsewhere in this Letter of Offer and not to the Company, the Registrar or the Lead

Manager.

(j) Any dispute or suit action or proceedings arising out of or in relation to this Letter of Offer or in respect of any matter or thing herein contained and claimed by either party against the other shall

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Office of the Company is situated.

(k) The last date for receipt of CAF along with the amount payable is [•]. However, the Board will have the right to extend the same for such period as it may determine from time to time, but not exceeding 30 days from the date of opening of the subscription list. If the CAF together with the amount payable there under is not received by the bankers to the issue on or before the closure of the banking hours on the aforesaid date, or such date as may be extended by the Board, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board shall be at liberty to dispose the Rights hereby offered.

For further instructions please read CAF carefully.

DEMATERIALISATION

As per the provisions of the Depositories Act, 1996, the shares of a body corporate may be held in dematerialized form i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through electronic mode. The equity shares of EIL are traded in the demat segment The

Company has entered into a tripartite agreement dated 10/07/2000 with the National Securities Depository

Ltd. (NSDL) for dematerialization of the equity shares of the Company. The Company has also entered into a tripartite agreement dated 02/06/2000 with the Central Depository Services Limited (CDSL) for dematerialization of the equity shares of the Company. The ISIN No. granted to the equity shares of the

Company is INE579B01013.

An applicant has the option to seek allotment in physical or demat mode. An applicant who seeks allotment in demat mode must have atleast one Beneficiary Account with any of the Depository Participants (DP) of

NSDL or CDSL registered with SEBI, prior to the application. Such applicants must necessarily fill in the details (including the Beneficiary Account Number and Depository Participant’s ID Number) appearing under the head “Request for shares in electronic form” in the CAF.

Applicant must indicate in the CAF, the number of shares they wish to receive in electronic form out of the total number of equity shares applied for. In case of partial allotment, shares will first be allotted in electronic form and the balance, if any, will be allotted in physical form.

Names in the CAF should be identical to those appearing in the account details in the Depository. In case of joint holders, the name should necessarily be in the same sequence as they appear in the account details in the Depository.

No separate application for demat and physical shares is to be made. If such applications are made the application for physical shares will be treated as multiple applications and rejected accordingly. It may be noted that electronic shares can be traded only on the stock exchanges having electronic connectivity with

NSDL and CDSL.

Non-transferable allotment letters/ refund orders will be directly sent to the applicant by the Registrar to the Issue

The applicant is responsible for the correctness of the applicant’s demographic details given in the share application form vis-à-vis those with his/her DP. Equity shares allotted in demat mode will be credited directly to the respective Beneficiary Account.

DISPOSAL OF APPLICATION AND APPLICATION MONEY

The Board reserves the right to reject applications in case the application concerned is not made in terms of this Letter of Offer. In case an application is rejected in full the whole of the application money received will

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_______________________ be refunded to the first named applicant and where an application is rejected in part, the excess application money will be refunded to the first named applicant within 15 days from the date of closure of the subscription list in accordance with Section 73 of the Act. If there is delay of refund of application money by more than 8 days after the Company becomes liable to pay (i.e. forty-two days after the closure of Issue), the Company will pay interest for the delayed period at the rate prescribed under sub-Section (2) and (2A) of Section 73 of the Act.

The subscription monies received in respect of this Issue will be kept in a separate bank account and the

Company will not have access to nor appropriate the funds until it has satisfied the Stock Exchange with suitable documentary evidence that minimum subscription of 90% of the application money for the Issue has been received.

No acknowledgment will be issued for the application monies received by the Company. However, the

Bankers to the Issue at its collection branches to the Issue receiving the CAF as applicable as per the terms of this Letter of Offer, will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. Except for the reasons stated under “Grounds for Technical Rejections” on page

174 of this Letter of Offer and subject to valid application, acknowledgement of receipt of application money given by the collection agent shall be valid and binding on issuer and other persons connected with the Issue.

BASIS OF ALLOTMENT

In the event of the issue being oversubscribed, the basis of allotment will be made only within the overall size of the Rights Issue, as stated in the Letter of Offer and the Board will proceed to allot the Equity Shares in consultation with the designated stock exchange (i.e.; BSE) in the following order of priority:

1.

Full allotment to the Shareholders who have applied for their Rights entitlement, either in full or in part and also the renouncee(s) who have applied for Equity Shares renounced in their favour either in full or in part (subject to the other provisions contained under the paragraph titled “Renunciation”).

2.

Allotment to the shareholders who have applied for additional Equity Shares provided that they have applied for all the Equity Shares offered to them, provided there is a surplus after making full allotment under (1) above. The allotment of such additional Equity Shares will be made as far as possible on the basis of the Equity Shares held as on the Record Date.

3.

Allotment to the renouncees who have applied for all the Equity Shares renounced in their favour and have applied for additional Equity Shares, as the Board may in its absolute discretion deem fit, provided there is a surplus after making full allotment (1) and (2) above.

4.

Allotment to any other person as the Board may in their absolute discretion deem fit, provided there is a surplus after making full allotment under (1), (2), (3) above.

The issue will become undersubscribed after considering the number of shares applied as per the entitlement plus additional shares. The undersubscribed portion can be applied for only after the close of the Issue.

LETTERS OF ALLOTMENT OR REFUND ORDERS

Company shall ensure dispatch of refund orders, if any, by under the Certificate of Posting or registered post or speed post or through modes as mentioned in section, Terms of the Issue clause “Mode of Payment” as stated below, as applicable, only at the sole or First Applicant’s sole risk within 15 days of closure of the

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Rights Issue, and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the issuer.

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

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

) Where applications are accompanied by Indian Rupee Drafts purchased abroad and payable at

Mumbai, India, refunds will be made in convertible foreign exchange equivalent to Indian Rupees to be refunded. Indian Rupees will be converted into foreign exchange at the rate of exchange, which is prevailing on the date of refund. The exchange rate risk on such refunds shall be borne by the concerned applicant and the Company shall not bear any part of the risk.

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

MODE OF PAYMENT OF REFUND

Applicants should note that on the basis of name of the applicant, Depository Participant’s name,

Depository Participant-Identification number and Beneficiary Account Number provided by them in the

Composite Application Form, the Registrar to the Issue will obtain from the depositories the applicant’s bank account details including nine digit MICR code. Hence, applicants are advised to immediately update their bank account details as appearing on the records of the depository participant. Please note that failure to do so could result in delays in credit of refunds to applicant at the applicant’s sole risk and neither the

Lead Manager nor the Company shall have any responsibility and undertake any liability for the same.

The payment of refund, if any, shall be undertaken in any of the following manners:

1.

NEFT: Payment of refund shall be undertaken through National Electronic Fund Transfer (NEFT) wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR) , if any, available to that particular bank branch. IFSC Code 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.

2.

ECS Payment of refund shall be undertaken through ECS for applicants having an account at any of the following 68 centers: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai,

Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram

(managed by RBI); Baroda, Dehradun, Nashik, Panaji, Surat, Trichy, Trichur, Jodhpur, Gwalior,

Jabalpur, Raipur, Calicut, Siliguri (Non-MICR), Pondicherry, Hubli, Shimla (Non-MICR), Tirupur,

Burdwan (Non-MICR), Durgapur (Non-MICR), Sholapur, Ranchi, Tirupati (Non-MICR), Dhanbad

(Non-MICR), Nellore (Non-MICR) and Kakinada (Non-MICR) (managed by State Bank of India); Agra,

Allahabad, Jalandhar, Lucknow, Ludhiana, Varanasi, Kolhapur, Aurangabad, Mysore, Erode, Udaipur,

Gorakpur and Jammu (managed by Punjab National Bank); Indore (managed by State Bank of Indore);

Pune, Salem and Jamshedpur (managed by Union Bank of India); Visakhapatnam (managed by Andhra

Bank); Mangalore (managed by Corporation Bank); Coimbatore and Rajkot (managed by Bank of

Baroda); Kochi/Ernakulum (managed by State Bank of Travancore); Bhopal (managed by Central Bank of India); Madurai (managed by Canara Bank); Amritsar (managed by Oriental Bank of Commerce);

178


_______________________

Haldia (Non-MICR) (managed by United Bank of India); Vijaywada (managed by State Bank of

Hyderabad); and Bhilwara (managed by State Bank of Bikaner and Jaipur). 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. One of the methods for payment of refund is through ECS for applicants having a bank account at any of the abovementioned 68 centers.

3.

Direct Credit: Applicants having bank accounts with the Banker(s) to the Issue / Refund Banker(s), as appointed by the Company, shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Banker(s) to the Issue / Refund Banker(s) for the same would be borne by the Issuer.

4.

RTGS: Applicants having a bank account at any of the abovementioned fifteen centers and whose refund amount exceeds Rs. 5 million, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive refund through RTGS are required to provide the

IFSC code in the CAF. In the event the same is not provided, refund shall be made through ECS.

Charges, if any, levied by the Banker(s) to the Issue / Refund Banker(s) for the same would be borne by such applicant opting for RTGS as a mode of refund. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant.

For all other applicants, including those who have not updated their bank particulars with the MICR code, the refund orders shall be dispatched under Certificate of Posting for value up to Rs. 1,500 and through

Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn on the refund banker as appointed by the Company, and payable at par.

INTEREST IN CASE OF DELAY IN ALLOTMENT / DESPATCH

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

Act, 1956.

UNDERTAKING

The Company undertakes that:

A) The complaints received in respect of the Issue shall be attended to by the issuer company expeditiously and satisfactorily.

B) All steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the securities are to be listed are taken within seven working days of finalization of basis of allotment.

C) Funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the issue by the issuer.

D) Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant after closure of the issue, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund;

E) Adequate arrangements shall be made to collect all Applications Supported by Blocked Amount

(ASBA) and to consider them similar to non-ASBA applications while finalizing the basis of allotment.

F) At any given time there shall be only one denomination for the shares of the Company

G) It shall comply with such disclosure and accounting norms specified by SEBI from time to time .

179


_______________________

The Issuer and Lead Manager shall update the Letter of Offer and keep the investors informed of any material changes till the listing and trading commences.

UTILISATION OF ISSUE PROCEEDS

The Board of Directors declares that:

(i) all monies received out of issue of shares or specified securities to public shall be transferred to separate bank account;

(ii) details of all monies utilized out of the issue referred to in sub-item(i) shall be disclosed under an appropriate separate head in the balance sheet of the issuer company indicating the purpose for which such monies had been utilized; and

(iii) details of all unutilized monies out of the issue of specified securities referred to in clause (i) shall be disclosed under an appropriate separate head in the balance sheet of the issuer indicating the form, if any, referred to in sub-item (i) shall be disclosed under an appropriate separate head in the balance sheet of the issuer company indicating the form in which such monies have been invested.

Utilization of funds raised in rights issue

The Company shall utilize the funds collected in rights issues after the finalization of the basis of allotment.

180


_______________________

SECTION IX - OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS

The Contracts referred to in para (A) below (not being contracts entered into in the ordinary course of the business carried on by the Company which are or may be deemed material, have been entered into by the

Company.

The contracts together with the documents referred to in paragraph (B) below, copies of all of which have been attached to the copy of this Letter of Offer may be inspected at the Registered Office of the Company between 11.00 a.m. - 4.00 p.m. on any working day from the date of this Letter of Offer until the closing of the subscription list.

A. MATERIAL CONTRACTS

1.

Copy of Memorandum of Understanding dated 24/12/2009 between Elpro International Limited and

Keynote Corporate Services Limited, Lead Manager to the Issue.

2.

Copy of Memorandum of Understanding dated 12/01/10 between Elpro International Limited and

Sharex Dynamic (India) Pvt. Ltd., Registrar to the Issue.

3.

Copy of tripartite agreement dated 10/07/2000 between Elpro International Limited, National

Securities Depository Limited (NSDL) and Sharex Dynamic (India) Pvt. Ltd.

4.

Copy of tripartite agreement dated 02/06/2000 between Elpro International Limited, Central

Depository Services (India) Limited (CDSL) and Sharex Dynamic (India) Pvt. Ltd.

B . DOCUMENTS FOR INSPECTION

1.

Memorandum and Articles of Association of Elpro International Limited as amended from time to time.

2.

Certificate of Incorporation of Elpro International Limited dated 27/07/1962.

3.

Copies of Annual Reports of the Company for the last 5 accounting periods i.e. 2004-05, 2005-06, 2006-

07 , 2007-08 and 2008- 09 the audited annual accounts for the financial year ended March 31, 2009.

4.

Resolution dated 12/01/2010 passed by the Board of Directors of the company in respect of the Rights

Issue.

5.

Copy of letter dated 12/01/2010 received from M/s PriceWaterhouse Chartered Accountants &

Statutory Auditors, regarding tax benefits accruing to the company and its shareholders.

6.

Copy of Sources and Deployment Certificate dated 08/01/2010 received from M/s V Singhi &

Associates Chartered Accountants.

7.

Copy of Letter of Offer dated 06/01/1995 in respect of the Rights Issues made by Elpro International

Limited.

8.

Copy of the Due Diligence report dated 06/01/2010 by Khaitan & Co., Advocates.

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_______________________

9.

Consent letters from Directors, Lead Manager to the Issue, Statutory Auditors of the Company, Legal

Counsel to the company, Registrar to the Issue and Compliance Officer to act in their respective capacities and for inclusion of their names in the Letter of Offer.

10.

Copies of in-principle approval received from BSE vide letter no. [•] dated [•].

11.

Copy of SEBI Observation letter no. [•] dated [•] and compliance thereof.

182

PART III

DECLARATION

All the relevant provisions of the Companies Act, 1956, and the guidelines issued by the Government of

India or the guidelines issued by Securities and Exchange Board of India, established under Section 3 of the

Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Letter of Offer is contrary to the provisions of the Companies Act, the Securities and

Exchange Board of India Act, 1992 or rules made there under or guidelines issued, as the case may be. We further certify that all statements in this Letter of Offer are true and correct.

By the Board of Directors

Elpro International Limited

Sd/-

R.K. Dabriwala

Chairman

Sd/-

R.K.Choudhury

Director

Sd/-

Sharat Anand

Director

Sd/-

Sambhaw Jain

Chief Financial Officer

Sd/-

Surbhit Dabriwala

Director

Sd/-

Anil Poddar

Director

Sd/-

Narayan T. Atal

Director

Place: Mumbai

Date: 13/01/2010

183

draft letter of offer

DRAFT LETTER OF OFFER

ISSUE OPENS ON

ISSUE PROGRAMME

LAST DATE FOR RECEIVING

REQUESTS FOR SPLIT FORMS

ISSUE CLOSES ON

[•] [•]

I. TABLE OF CONTENTS

SECTION CONTENTS

Definitions and Abbreviations

Page Nos. i

Certain Conventions; Use of Market Data

Forward Looking Statements

I RISK

PART I iv v vi

II INTRODUCTION

Summary 1

Issue 11

General Information 12

Capital Structure 16

Objects of the Issue

Statement of Tax Benefits

III ABOUT COMPANY

22

26

History 34

Management 42

IV FINANCIAL

PART II

INFORMATION

Auditors’ Report for the year ended 31/03/2009 48

V

VI

Limited Review Report for the period ended 30/09/2009

LEGAL AND OTHER INFORMATION

Outstanding Litigations and Defaults

Material Developments after the date of last Balance Sheet

Government Approvals

REGULATORY AND STATUTORY DISCLOSURES

103

140

147

148

151

157 A. Terms of the Issue

B. Issue Procedure

Material Contracts and Documents for Inspections

PART III

159

181

Declaration 183

CERTAIN CONVENTIONS; USE OF MARKET DATA

V- LEGAL AND OTHER INFORMATION

SECTION VI - REGULATORY AND STATUTORY DISCLOSURES

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