DRAFT LETTER OF OFFER

Dated January 28, 2011

For Equity Shareholders of the Company only

JK PAPER LIMITED
Our Company was incorporated as ‗The Central Pulp Mills‘ Limited on July 4, 1960 under the Companies Act, 1956, as amended in the State of Maharashtra.
For details of changes in the name and registered office of the Company, see ―History and Certain Corporate Matters‖ on page 87.
Registered Office: P.O. Central Pulp Mills - 394 660, Fort Songadh, District Tapi, Gujarat, India
Corporate Office: Nehru House, 4, Bahadur Shah Zafar Marg, New Delhi – 110 002, India
Tel No: (91 11) 3017 9100, Fax No: (91 11) 2373 9475
Contact Person: Mr. Suresh Chander Gupta, Company Secretary and Compliance Officer.
Email:jkpaper.rights@jkmail.com, Website: www.jkpaper.com

THE PROMOTER OF OUR COMPANY IS BENGAL & ASSAM COMPANY LIMITED.

FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF THE COMPANY ONLY

DRAFT LETTER OF OFFER
ISSUE OF [●] EQUITY SHARES OF FACE VALUE ` 10 EACH (“EQUITY SHARES”) OF JK PAPER LIMITED (THE “COMPANY” OR THE
“ISSUER”) FOR CASH AT A PRICE OF ` [●] EACH (INCLUDING A PREMIUM OF ` [●] EACH) AGGREGATING TO AN AMOUNT NOT
EXCEEDING ` 250 CRORES BY THE COMPANY TO THE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [●] EQUITY
SHARES FOR EVERY [●] EQUITY SHARES HELD ON THE RECORD DATE, i.e., [●] (THE “ISSUE”). THE ISSUE PRICE IS [●] TIMES THE
FACE VALUE OF THE EQUITY SHARES.
Our Company is considering issue of foreign currency convertible bonds for an amount aggregating upto ` 250 crores with certain investors, prior to filing of
the Letter Of Offer with the Stock Exchanges. The said issue of foreign currency convertible bonds is at the discretion of our Company. In the event such or any
other foreign currency convertible bonds are outstanding on the Record Date, the Company undertakes to make reservation of such number of Equity Shares to
which the holders of such outstanding foreign currency convertible bonds are entitled to as on the Record Date, in favour of such holders. Such Equity Shares,
pursuant to the reservation, will be issued on the same terms on which Equity Shares are issued under this Issue, in accordance with Regulation 53 of the SEBI
ICDR Regulations. See, “The Issue” and “Capital Structure” on pages 15 and 23, respectively.
This Draft Letter of Offer may not be sent to any person or any jurisdiction in which it would not be permissible to deliver the Equity Shares and
rights to purchase the Equity Shares, and the Equity Shares and rights to purchase the Equity Shares may not be offered, sold, resold, transferred or
delivered, directly or indirectly, to any such person or in any such jurisdiction. The Equity Shares and rights to purchase the Equity Shares have not
been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or under any securities law of any state or
other jurisdiction of the United States and may not be offered, sold, resold, Allotted, taken up, exercised, renounced, pledged, transferred or
delivered, directly or indirectly, within the United States or to or by U.S. Persons (as defined in Regulation S under the Securities Act (“Regulation
S”).
The Company is making this Issue on a rights basis to the Equity Shareholders of the Company and will dispatch the Letter of Offer/Abridged Letter
of Offer and Composite Application Form (“CAF”) to Equity Shareholders who have an Indian address.
GENERAL RISKS
Investments in equity 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 relation to 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 Equity Shares being offered in the Issue
have not been recommended or approved by the Securities and Exchange Board of India (the ―SEBI‖) nor does SEBI guarantee the accuracy or adequacy of
this document. Specific attention of investors is invited to the section on ―Risk Factors‖ on page ix.
ISSUER‟S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to
the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Draft Letter of Offer is true and correct in all
material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other
material facts, the omission of which makes this Draft Letter of Offer as a whole or any 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 the Bombay Stock Exchange Limited (―BSE‖) and the National Stock Exchange of India Limited
(―NSE‖). The Company has received ―in-principle‖ approvals from the BSE and the NSE for listing of the Equity Shares pursuant to letters dated [ ] and [ ],
respectively. For the purpose of the Issue, the Designated Stock Exchange shall be [●].
LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

ICICI SECURITIES LIMITED MCS Limited

ICICI Centre F-65, Okhla Industrial Area
H.T. Parekh Marg Phase I, New Delhi 110 020
Churchgate, Mumbai 400 020, Maharashtra Tel: (91 11) 4140 6149
Tel: (91 22) 2288 2460 Fax: (91 11) 4170 9881
Fax: (91 22) 2282 6580 E-mail id: admin@mcsdel.com
E-mail: jkpaper.rights @icicisecurities.com Website: www.mcsdel.com
Investor grievance id: Contact Person: S.K. Gupta
customercare@icicisecurities.com Registration No. INR000000056
Website: www.icicisecurities.com
Contact Person: Sumanth Rao
Registration No: INM000011179
ISSUE PROGRAMME
LAST DATE FOR REQUEST FOR SPLIT
ISSUE OPENS ON ISSUE CLOSES ON
APPLICATION FORMS
[] [] []
 TABLE OF CONTENTS
SECTION I - GENERAL ................................................................................................................................ i
DEFINITIONS AND ABBREVIATIONS ..................................................................................................... i
OVERSEAS SHAREHOLDERS .................................................................................................................. iv
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA ..................... vi
FORWARD LOOKING STATEMENTS .................................................................................................. viii
SECTION II - RISK FACTORS .................................................................................................................. ix
SECTION III - INTRODUCTION ................................................................................................................ 1
SUMMARY OF INDUSTRY OVERVIEW ................................................................................................. 1
SUMMARY OF OUR BUSINESS ................................................................................................................. 4
SUMMARY FINANCIAL INFORMATION ............................................................................................... 9
THE ISSUE ................................................................................................................................................... 15
GENERAL INFORMATION ...................................................................................................................... 16
CAPITAL STRUCTURE ............................................................................................................................. 23
OBJECTS OF THE ISSUE .......................................................................................................................... 34
BASIS FOR ISSUE PRICE.......................................................................................................................... 42
STATEMENT OF GENERAL AND SPECIAL TAX BENEFITS .......................................................... 45
SECTION IV – ABOUT THE COMPANY ................................................................................................ 51
INDUSTRY OVERVIEW ............................................................................................................................ 51
OUR BUSINESS ........................................................................................................................................... 62
REGULATIONS AND POLICIES ............................................................................................................. 83
HISTORY AND CERTAIN CORPORATE MATTERS .......................................................................... 87
DIVIDEND POLICY .................................................................................................................................... 98
OUR MANAGEMENT .............................................................................................................................. 100
OUR PROMOTER AND GROUP COMPANIES ................................................................................... 117
RELATED PARTY TRANSACTIONS .................................................................................................... 140
SECTION V – FINANCIAL INFORMATION ........................................................................................ 141
FINANCIAL STATEMENTS .................................................................................................................... 141
MANAGEMENT‟S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ..................................................................................................................................... 189
FINANCIAL INDEBTEDNESS ................................................................................................................ 213
STOCK MARKET DATA FOR EQUITY SHARES OF THE COMPANY ......................................... 222
SECTION VI – LEGAL AND OTHER INFORMATION ...................................................................... 224
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS............................................. 224
GOVERNMENT AND OTHER APPROVALS ....................................................................................... 257
STATUTORY AND OTHER INFORMATION ...................................................................................... 266
SECTION VII - TERMS OF THE PRESENT ISSUE ............................................................................ 276
SECTION VIII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION ..................................... 301
SECTION IX – OTHER INFORMATION .............................................................................................. 331
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................... 331
DECLARATION ........................................................................................................................................ 333

All terms defined have the meaning set forth below, unless otherwise specified in the context thereof.
Company Related Terms
Reference to any statutes or regulations shall include any amendments made from time to time.
Term
―JK Paper‖ or ―the Company‖ or
―our Company‖ or ―we‖ or ―us‖
or ―our‖
Articles/Articles of Association
Auditors
Corporate Office
Group Companies
Listing Agreement
Memorandum/Memorandum
Association
Promoter
Promoter Group
Registered Office
Scheme of Arrangement
Subsidiaries
Issue Related Terms
Term
Abridged Letter of Offer
Allot/Allotted/Allotment
Allottees
Application Money
Application Supported
Blocked Amount/ASBA
ASBA Applicants
Bankers to the Issue
Business Day/ Working Day
Compliance Officer
Composite Application
Form/CAF
Consolidated Certificate
Controlling Branches
SECTION I - GENERAL
DEFINITIONS AND ABBREVIATIONS
Description
JK Paper Limited, a public limited company incorporated under the provisions of
the Companies Act, 1956, and our Subsidiaries, unless the context otherwise
requires
The Articles of Association of our Company
The statutory auditors of our Company, Lodha & Co., Chartered Accountants
Nehru House, 4, Bahadur Shah Zafar Marg, New Delhi – 110 002, India
Includes those companies, firms and ventures disclosed in the section ―Our
Promoter and Group Companies‖ on page 117, promoted by our Promoter,
irrespective of whether such entities are covered under section 370(1)(B) of the
Companies Act
The equity listing agreement signed between our Company and the Stock Exchanges
of The Memorandum of Association of our Company
Bengal & Assam Company Limited
Includes such persons and entities constituting our promoter group pursuant to
Regulation 2(1)(zb) of the SEBI ICDR Regulations
P.O. Central Pulp Mills - 394 660, Fort Songadh, District Tapi, Gujarat, India
Scheme of arrangement between our Company, Songadh Infrastructure & Housing
Limited and Jaykaypur Infrastructure & Housing Limited and their respective
shareholders
The subsidiaries of our Company, namely Jaykaypur Infrastructure & Housing
Limited and Songadh Infrastructure & Housing Limited
Description
The abridged letter of offer to be sent to the eligible Equity Shareholders of our
Company with respect to this Issue, in accordance with the SEBI ICDR Regulations
Unless the context otherwise requires, the allotment of Equity Shares pursuant to
the Issue
Persons to whom Equity Shares of the Company are issued pursuant to the Issue
The aggregate amount payable in respect of the Equity Shares applied for in this
Issue at the Issue Price
by An application, whether physical or electronic, used by an ASBA Applicant to
apply for the Equity Shares in the Issue, together with an authorization to an SCSB
to block the Application Money in the specified bank account maintained with such
SCSB
Eligible Equity Shareholders who intend to apply through ASBA and (a) are
holding Equity Shares in dematerialised form as on the Record Date and have
applied for (i) their Rights Entitlement or (ii) their Rights Entitlement and Equity
Shares in addition to their Rights Entitlement, in dematerialised form; (b) have not
renounced their Rights Entitlement in full or in part; (c) are not renouncees; and (d)
are applying through blocking of funds in bank accounts maintained with SCSBs
[●]
All days other than a Sunday or a public holiday, on which commercial banks in
New Delhi are open for business
Mr. Suresh Chander Gupta, Company Secretary
The form used by an Investor to make an application for Allotment of Equity
Shares in this Issue
In case of holding of Equity Shares in physical form, the Company would issue one
certificate for the Equity Share Allotted to one folio
The branches of the SCSBs which shall co-ordinate with the Lead Manager, the
Registrar to the Issue, and the Stock Exchanges and a list which is available at
i
 Term Description
http://www.sebi.gov.in/pmd/scsb.pdf
Designated Branches Such branches of the SCSBs which shall collect application forms used by ASBA
Applicants and a list of which is available at http://www.sebi.gov.in/pmd/scsb.pdf
Designated Stock Exchange [●]
This Draft Letter of Offer dated January 28, 2011 filed with SEBI for its
Draft Letter of Offer
observations
Equity Shareholder(s) A holder(s) of Equity Shares of our Company
The period of 12 months ended March 31 of that particular year, unless otherwise
Financial Year/Fiscal
stated
Investor(s) The Equity Shareholders on the Record Date and the Renouncees
Issue The issue of [●] Equity Shares with a face value of ` 10 each for cash at a price of `
[●] each (including a premium of ` [●] each) aggregating to an amount not
exceeding ` 250 crores by the Company to the Equity Shareholders on rights basis
in the ratio of [●] Equity Shares for every [●] Equity Shares held on the Record
Date
Issue Closing Date [ ], 2011
Issue Opening Date [ ], 2011
Issue Price ` [●]
Lead Manager ICICI Securities Limited
Letter of Offer The letter of offer to be filed with the Stock Exchanges after incorporating
observations received from SEBI on this Draft Letter of Offer
Net Proceeds The Issue Proceeds less the Issue expenses. For further details, please see ―Objects
of the Issue‖ on page 34
Record Date [ ]
Registrar to the Issue or Registrar MCS Limited
Renouncees Persons who have acquired Rights Entitlements from Equity Shareholders
Rights Entitlement The number of Equity Shares that an Equity Shareholder is entitled to in proportion
to his/her shareholding in the Company on the Record Date
SAF(s) Split Application Form(s)
SCSB(s) The Self Certified Syndicate Banks which are registered with the SEBI under the
SEBI (Bankers to the Issue) Regulations, 1994, and are recognized as such by the
SEBI and offer services of ASBA, including blocking of funds in bank accounts. A
list of such banks are available at http://www.sebi.gov.in/pmd/scsb.pdf
Stock Exchange(s) The BSE and the NSE where the Equity Shares of the Company are presently listed

Industry Related Terms

Term Description
AOX Adsorbable Organic Halides
BDMT Bone Dry Metric Tonne
BOD Biochemical Oxygen Demand
DCS Distributed Control System
ECF Elementary Chlorine Free
IPMA Indian Paper Manufacturers Association
T d s/d Tonnes dry solid per day
TTT Time to Temperature
WGGC Wet Ground Calcium Carbonate
P.O.P. Point of purchase

Conventional and General Terms/ Abbreviations

Term Description
AGM Annual General Meeting
AS Accounting Standards, as issued by the ICAI
BSE The Bombay Stock Exchange Limited
CAGR Compounded Annual Growth Rate
CDSL Central Depository Services (India) Limited
CEO Chief Executive Officer
Companies Act The Companies Act, 1956
CRISIL Credit Rating Information Services of India Limited

ii
 Term Description
CRPS Cumulative Redeemable Preference Shares
CSE The Calcutta Stock Exchange Association Limited
Depositories Act The Depositories Act, 1996
DP Depository Participant
DSE Designated Stock Exchange
ECS Electronic Clearing Service
EGM Extraordinary General Meeting
EPS Earnings per share
FCCB Foreign Currency Convertible Bond
FEMA Foreign Exchange Management Act, 1999
FDI Foreign Direct Investment
FI Financial Institutions
FII(s) Foreign Institutional Investors registered with SEBI under applicable laws
FIPB Foreign Investment Promotion Board
GDP Gross Domestic Product
GDR Global Depository Receipts
GoI Government of India
HUF Hindu Undivided Family
ICAI The Institute of Chartered Accountants of India
IFSC Indian Financial System Code
I.T. Act, IT Act Income Tax Act, 1961
Indian GAAP The generally accepted accounting principles in India
Indian GAAS The generally accepted accounting standards in India
ITAT Income Tax Appellate Tribunal
MICR Magnetic Ink Character Recognition
MoU Memorandum of Understanding
NAV Net asset value
NEFT National Electronic Fund Transfer
NI Act Negotiable Instruments Act, 1881
NR Non Resident
NRI(s) Non Resident Indian(s)
NSDL National Securities Depository Limited
NSE The National Stock Exchange of India Limited
OCB Overseas Corporate Body
OCCRPS Optionally Convertible Cumulative Redeemable Preference Shares
PAN Permanent Account Number
RBI The Reserve Bank of India
RoC Registrar of Companies, Gujarat
Rs. or ` Indian Rupees
RTGS Real time gross settlement
SEBI Securities and Exchange Board of India
SEBI Act The Securities and Exchange Board of India Act, 1992
SEBI ICDR Regulations The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009
Securities Act The United States Securities Act of 1933
SME Small and Medium Enterprises
STT Securities Transaction Tax
Takeover Code The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997
US$ or USD United States Dollar
VSE Vadodara Stock Exchange Limited

The words and expressions used but not defined herein shall have the same meaning as is assigned to such terms
under the Companies Act, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 and the
rules and regulations made thereunder.

Notwithstanding the foregoing, terms in ―Main Provisions of Articles of Association‖, ―Statement of General
and Special Tax Benefits‖, ―Regulations and Policies‖ and ―Financial Statements‖ on pages 301, 45, 83 and
141 respectively, shall have the meanings given to such terms in these respective sections.

iii
 OVERSEAS SHAREHOLDERS

The distribution of this Draft Letter of Offer and the issue of the Equity Shares on a rights basis to persons in
certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions.
Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and
observe such restrictions. The Company is making this Issue on a rights basis to the Equity Shareholders of the
Company and will dispatch the Letter of Offer/Abridged Letter of Offer and Composite Application Form
(―CAF‖) to Equity Shareholders who have an Indian address.

No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for
that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the
Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be
distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction.
Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal
to make such an offer and, in those circumstances, this Draft Letter of Offer must be treated as sent for
information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft
Letter of Offer should not, in connection with the issue of the Equity Shares or the Rights Entitlements,
distribute or send the same in or into the United States or any other jurisdiction where to do so would or might
contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such
territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights
Entitlements referred to in this Draft Letter of Offer.

Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create
any implication that there has been no change in the Company‘s affairs from the date hereof or that the
information contained herein is correct as at any time subsequent to this date.

NO OFFER IN THE UNITED STATES

The rights and the Equity Shares of the Company have not been and will not be registered under the United
States Securities Act, 1933, as amended (the ―Securities Act‖), or any U.S. state securities laws and may not be
offered, sold, resold or otherwise transferred within the United States of America or the territories or
possessions thereof (the ‗‗United States‘‘ or ‗‗U.S.‘‘) or to, or for the account or benefit of, ―U.S. persons‖ (as
defined in Regulation S under the Securities Act (‗‗Regulation S‘‘)), except in a transaction exempt from the
registration requirements of the Securities Act. The rights referred to in this Draft Letter of Offer are being
offered in India, but not in the United States. The offering to which this Draft Letter of Offer relates is not, and
under no circumstances is to be construed as, an offering of any securities or rights for sale in the United States
or as a solicitation therein of an offer to buy any of the said securities or rights. Accordingly, the Draft Letter of
Offer/ Letter of Offer/ Abridged Letter of Offer and the enclosed CAF should not be forwarded to or transmitted
in or into the United States at any time.

Neither the Company nor any person acting on behalf of the Company will accept subscriptions or renunciation
from any person, or the agent of any person, who appears to be, or who the Company or any person acting on
behalf of the Company has reason to believe is, either a ―U.S. person‖ (as defined in Regulation S) or otherwise
in the United States when the buy order is made. Envelopes containing CAF should not be postmarked in the
United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal
to make an offer under the Letter of Offer, and all persons subscribing for the Equity Shares and wishing to hold
such Equity Shares in registered form must provide an address for registration of the Equity Shares in India. The
Company is making this issue of Equity Shares on a rights basis to the Equity Shareholders of the Company and
the Letter of Offer/Abridged Letter of Offer and CAF will be dispatched to Equity Shareholders who have an
Indian address. Any person who acquires rights and the Equity Shares will be deemed to have declared,
represented, warranted and agreed, (i) that it is not and that at the time of subscribing for the Equity Shares or
the rights entitlements, it will not be, in the United States when the buy order is made, (ii) it is not a ―U.S.
person‖ (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the
United States, and (iii) is authorized to acquire the rights and the Equity Shares in compliance with all
applicable laws and regulations.

The Company reserves the right to treat as invalid any CAF which: (i) does not include the certification set out
in the CAF to the effect that the subscriber is not a ―U.S. person‖ (as defined in Regulation S), and does not
have a registered address (and is not otherwise located) in the United States and is authorized to acquire the
rights and the Equity Shares in compliance with all applicable laws and regulations; (ii) appears to the Company

iv
or its agents to have been executed in or dispatched from the United States; (iii) where a registered Indian
address is not provided; or (iv) where the Company believes that CAF is incomplete or acceptance of such CAF
may infringe applicable legal or regulatory requirements; and the Company shall not be bound to Allot or issue
any Equity Shares or Rights Entitlement in respect of any such CAF. The Company is informed that there is no
objection to a United States shareholder selling its rights in India. Rights Entitlement may not be transferred or
sold to any U.S. Person.

European Economic Area Restrictions

In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a ―Relevant Member State‖), an offer of the Equity Shares to the public may not be made in
that Relevant Member State prior to the publication of a prospectus in relation to the Rights Entitlement or the
Equity Shares which has been approved by the competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the competent authority in that
Relevant Member State, all in accordance with the Prospectus Directive, except that an offer of Equity Shares or
Rights Entitlement to the public in that Relevant Member State from and including the Relevant Implementation
Date may be made:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized
or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last
Financial Year; (2) a total balance sheet of more than Euro 43,000,000 and (3) an annual net turnover of more
than Euro 50,000,000, as shown in its last annual or consolidated accounts; or
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive;

provided that no such offer of Equity Shares shall result in the requirement for the publication by the Company
or the Lead Manager pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an ―offer to the public‖ in relation to any Equity Shares in any
Relevant Member State means the communication in any form and by any means of sufficient information on
the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or
subscribe the Equity Shares, as the same may be varied in that Member State by any measure implementing the
Prospectus Directive in that Member State and the expression ―Prospectus Directive‖ means Directive 2003/7
1/EC and includes any relevant implementing measure in each Relevant Member State. In the case of any Rights
Entitlement or Equity Shares being offered to a financial intermediary as that term is used in Article 3(2) of the
Prospectus Directive, such financial intermediary will be deemed to have represented, acknowledged and agreed
that the Rights Entitlement or Equity Shares acquired by them in the Issue have not been acquired on a non-
discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in
circumstances which may give rise to an offer of any Rights Entitlement or Equity Shares acquired by them in
the Issue to the public other than their offer or resale in a Relevant Member State to qualified investors as so
defined who are not financial intermediaries or in circumstances in which the prior consent of the Lead Manager
has been obtained to each such proposed offer or resale.

United Kingdom Restrictions

This Draft Letter of Offer is only being distributed to and is only directed at (i) persons who are outside the
United Kingdom, or (ii) to investment professionals falling within Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 (the ―Order‖) or (iii) high net worth entities, and other
persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such
persons together being referred to as ―relevant persons‖). The Equity Shares are only available to, and any
invitation, offer or agreement to subscribe, purchase or otherwise acquire such Equity Shares will be engaged in
only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or
any of its contents.

v
 PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA

Unless stated otherwise, the financial information and data in this Draft Letter of Offer is derived from the
Company‘s consolidated restated audited financial statements, prepared in accordance with Indian GAAP and
SEBI ICDR Regulations, which are included in this Draft Letter of Offer and set out in the section titled
―Financial Statements‖ on page 141. The Fiscal Year of the Company commences on April 1 of every year and
ends on March 31 of the next year.

The Company is an Indian listed company and prepares its financial statements in accordance with Indian
GAAP and the Companies Act. There are changes in description and classification of certain amounts in the
presentation of the financial information included in this Draft Letter of Offer if compared to the presentation
and disclosures we have reported as a listed company in India. Neither the information set forth in our financial
statements nor the format in which it is presented should be viewed as comparable to information prepared in
accordance with IFRS or U.S. GAAP or any accounting principles other than Indian GAAP. We prepare our
financial statements in accordance with Indian GAAP and Indian GAAS. Indian GAAP differs significantly in
certain respects from IFRS and U.S. GAAP.

In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed
are due to rounding-off, and unless otherwise specified, all financial numbers in parenthesis represent negative
figures. Any percentage amounts, as set forth in the sections titled ―Risk Factors‖, ―Our Business‖,
―Management‟s Discussion and Analysis of Financial Condition and Results of Operations‖ on pages ix, 62
and 189, respectively, and elsewhere in this Draft Letter of Offer, unless otherwise indicated, have been
prepared on the basis of the financial statements included in this Draft Letter of Offer.

For definitions, see ―Definitions and Abbreviations‖ on page i. All references to ―India‖ contained in this Draft
Letter of Offer are to the Republic of India, all references to the ―US‖ or the ―U.S.‖ or the ―USA‖ or the
―U.S.A‖ or the ―United States‖ are to the United States of America, and all references to ―UK‖ or the ―U.K.‖ are
to the United Kingdom.

Currency and Units of Presentation

Except where specified, in this Draft Letter of Offer, all figures have been expressed in ―crores‖.

All references to ―Rupees‖, ―INR‖ or ―Rs.‖ or ―`” are to Indian Rupees, the official currency of the Republic of
India, all references to ―US$‖ or ―USD‖ are to United States Dollars, the official currency of the United States
of America, all references to ―GBP‖ or ―£‖ are to Great Britain Pounds, the official currency of the United
Kingdom, all references to ―EUR‖ or ―€‖ are to the official currency of the European Union, and all references
to ―SEK‖ are to Swedish Krona, the official currency of the Sweden.

Industry and Market Data

Unless stated otherwise, industry, demographic and market data used in this Draft Letter of Offer has been
obtained from industry publications, data on websites maintained by private and public entities, data appearing
in reports by market research firms and other publicly available information. These resources generally state that
the information contained therein has been obtained from sources believed to be reliable but that their accuracy
and completeness are not guaranteed and their reliability cannot be assured.

Neither we nor the Lead Manager have independently verified this data and neither we nor the Lead Manager
make any representation regarding the accuracy of such data. Accordingly, applicants should not place undue
reliance on this information.

Certain information in ―Industry Overview‖ has been obtained from CRISIL Limited which has issued the
following disclaimer:

CRISIL Limited has used due care and caution in preparing this report. Information has been obtained by
CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy
or completeness of any information and is not responsible for any errors or omissions or for the results obtained
from the use of such information. No part of the report may be published/reproduced in any form without
CRISIL‘s prior written approval. CRISIL is not liable for investment decisions which may be based on the

vi
views expressed in the report. CRISIL Research operates independently of, and does not have access to
information obtained by CRISIL‘s Rating Division, which may, in its regular operations, obtain information of a
confidential nature that is not available to CRISIL Research.

Exchange Rates

The exchange rates of the respective foreign currencies as on September 30, 2010, and March 31, 2010 are
provided below:

Currency Exchange rate into ` as on September 30, Exchange rate into ` as on March
2010 31, 2010
USD 44.92 45.14
EUR 61.00 60.56
GBP 71.14 68.03
Yen 0.54 0.48
SEK 6.67 6.20
Source:www.rbi.org.in, www.oanda.com (for SEK data)

vii
 FORWARD LOOKING STATEMENTS

Our Company has included statements in this Draft Letter of Offer which contain words or phrases such as
―aim‖, ―is likely to result‖, ―believe‖, ―expect‖, ―will continue‖, ―anticipate‖, ―estimate‖, ―intend‖, ―plan‖,
―contemplate‖, ―seek to‖, ―future‖, ―objective‖, ―goal‖, ―project‖, ―potential‖, ―will pursue‖ and similar
expressions or variations of such expressions, that are ―forward looking statements‖.

All forward looking statements, whether made by the Company or any third party, are subject to risks,
uncertainties and assumptions about our Company that could cause actual results to differ materially from those
contemplated by the relevant forward-looking statement. Actual results may differ materially from those
suggested by the forward looking statements due to risks or uncertainties associated with our expectations with
respect to, but not limited to, the following:

cost or availability of raw materials;

our Company‘s ability to successfully implement its strategy, its growth and expansion plans and
technological changes;
ability to obtain financing to expand our business;
inability to generate sufficient cash flow or secure sufficient credit to simultaneously fund our
operations, finance capital expenditures, and satisfy other obligations;
loss of or shutdown of operations at any of our manufacturing facilities;
general political economic and business conditions in India and other countries;
performance of the Indian debt and equity markets;
our exposure to market risks;
occurrence of natural calamities or natural disasters affecting the areas in which our Company has
operations;
changes in laws and regulations that apply to companies in India; and
changes in the foreign exchange control regulations in India.

For a further discussion of factors that could cause the Company‘s actual results to differ, see ―Risk Factors‖,
―Our Business‖ and ―Management‟s Discussion and Analysis of Financial Condition and Results of
Operations‖ on pages ix, 62 and 189, respectively. By their nature, certain market risk disclosures are only
estimates and could be materially different from what actually occurs in the future. As a result, actual future
gains or losses could materially differ from those that have been estimated. Neither our Company nor the Lead
Manager nor any of its respective affiliates or advisors 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 the SEBI / Stock
Exchanges‘ requirements, our Company and the Lead Manager will ensure that applicants are informed of
material developments until the time of the grant of listing and trading permission by the Stock Exchanges.

viii
 SECTION II - RISK FACTORS

An investment in equity securities involves a high degree of risk and investors should not invest any funds in this
Issue unless they can afford to take the risk of losing all or a part of their investment. You should carefully
consider all of the information in this Draft Letter of Offer, including the risks and uncertainties described
below, before making an investment. To obtain a complete understanding, you should read this section in
conjunction with “Our Business” and “Management‟s Discussion and Analysis of Financial Condition and
Results of Operation” on pages 62 and 189, respectively, as well as the other financial and statistical
information contained in this Draft Letter of Offer. In making an investment decision, prospective investor must
rely on their own examination of the Company and terms of the Issue, including the merits and risk involved. If
any of the following risks actually occur, our business, financial condition, results of operations and prospects
could suffer, the trading price of our Equity Shares could decline and you may lose all or part of your
investment. The risk and uncertainties described below are not the only risks that we currently face. Additional
risk and uncertainties not presently known to us or that we currently believe to be immaterial may also have an
adverse effect on our business, results of operations and financial condition. You should also pay particular
attention to the fact that we are governed in India by a legal and regulatory environment which in some
material respects may be different from that which prevails in other countries.

This Draft Letter of Offer also contains forward-looking statements that involve risks and uncertainties. Our
Company‟s actual results could differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including the considerations described below and elsewhere in this Draft Letter of
Offer. The financial and other implications of material impact of risks concerned, wherever quantifiable, have
been disclosed in the risk factors mentioned below. However there are a few risk factors where the impact is not
quantifiable and hence the same has not been disclosed in such risk factors.

Unless otherwise stated, the financial information of the Company used in this section is derived from our
audited consolidated financial statements, as restated.

Internal Risk Factors

1. Changes in the cost or availability of raw materials and energy could affect our profitability.

We rely significantly on certain raw materials (principally bamboo, wood, industrial chemicals and pulp)
and energy sources (principally water and electricity) for the manufacture of our products. In Fiscal 2010
and six months period ended September 30, 2010, raw materials comprised approximately 26.06% and
25.55% of our net sales.

We procure a significant portion of our bamboo / pulp wood from forest land allotted to us by the various
state governments, through long term agreements wherein quantity and price are fixed on an annual basis.
However, such supply by the relevant state governments is subject to numerous conditions including
achieving certain production targets and lifting the bamboo/ pulp wood within the periods specified. In the
event we are unable to comply with these conditions, the relevant state governments may terminate the
allotment of such lands to us or may impose penalties. Further, as a result of flowering and illegal felling of
bamboo in forest land allocated to us by the state government of Gujarat, we anticipate that only 15-20% of
our bamboo requirement would be met by such land allotted to us after Fiscal 2012. We have not entered
into any formal arrangements or commitments for the supply of our remaining bamboo/ pulp wood
requirements and procure such requirement from local farmers and the open market. In addition, due to
complicated land ownership structures, we may not be able to procure land within adequate time, or at all,
to plantation of bamboo/ pulp wood for captive requirements. Further, as a result of increase in prices of
bamboo, we use hardwood to cater our raw material requirements, as an alternative to bamboo. We may not
be able to procure adequate quantity of hardwood at a commercially acceptable price, or at all. Any
unavailability of hardwood at a competitive cost and timely manner would have a material adverse effect on
our business, operations and financial condition.

In addition, availability of pulp in the international markets affects prices of pulp. Events in past such as
earthquake in Chile, a major supplier of pulp, and increase in demand of pulp in China, led to increase in
price of pulp internationally. Raw material prices will change based on worldwide supply and demand and
there is no assurance that we will be able to procure our requirements from suppliers at reasonable costs and
in a timely manner. For trends in relation to raw material prices, see ―Industry Overview‖ on page 51.

ix
 Further, factors such as inclement weather and heavy monsoons may delay or disrupt the harvest of
hardwood or bamboo for the particular crop period, leading to unavailability of raw materials. Also, some
of our customers may have businesses which may be seasonal in nature and a downturn in demand for our
products by such customers could reduce our revenues during such periods.

We procure our entire industrial chemicals required for our operations from the open market on a spot basis,
and consequently are affected by variations in price of such industrial chemicals. Any adverse variation in
price of industrial chemicals may adversely affect our raw material costs. Further, we may not be able to
pass increased cost for industrial chemicals to our customers.

To meet our power requirements, while we own and operate thermal captive power plants, energy costs
may fluctuate significantly due to increase in coal prices or decreased production capacity. Further, we
purchased approximately 28.43% and 60.10% of our coal requirements for Unit JKPM and Unit CPM,
respectively, from the open market, during Fiscal 2010. Coal prices have fluctuated dramatically in the past
and may continue to fluctuate in the future. Any inability to source our coal requirements at a competitive
cost and in a timely manner would have a material adverse affect on our business, operations and financial
condition.

We may not be able to pass increased cost for raw materials or energy to our customers if the market or
existing agreements with our customers do not allow us to raise the prices of our finished products. Even if
we are able to pass through increased cost of raw materials or energy, the resulting increase in the selling
prices for our products could reduce the volume of products we sell and decrease our revenues. While we
may try, from time to time, to hedge against increase in prices of raw materials, we may not be successful in
doing so. Any failure of our suppliers to deliver the raw materials or coal in the necessary quantities or to
adhere to delivery schedules or specified quality standards and technical specifications would adversely
affect our production processes and our ability to manufacture our products on time and at the desired level
of quality, which could have a material adverse effect on our business, financial condition and results of
operations.

2. Outbreaks of diseases can significantly affect availability of raw materials for our products.

Outbreak of diseases can significantly affect availability of raw materials for our products. From time to
time, there have been outbreaks of certain diseases in plants, such as gall disease on eucalyptus trees in the
Fiscal 2007, which led to damage of saplings and adversely affected growth of eucalyptus plant. As a result
of outbreak of gall disease, farmers were reluctant to plant eucalyptus, leading to significant reduction in
rate of increase of acreage of eucalyptus in the states of Andhra Pradesh and Odisha. Damage to existing
eucalyptus plants and reluctance to plant new eucalyptus led to reduction in availability of raw materials
required to manufacture paper and paper products. Outbreak of any such disease in future can adversely
affect availability of raw materials, affect our plantation initiative and lead to waste of cost incurred in
plantation.

3. The segments of the paper industry in which we operate are highly competitive and increased
competition could reduce our sales and profitability.

We compete in different markets within the paper industry on the basis of the quality of our products,
customer service, product development activities, price, and distribution. All of our markets are highly
competitive. Factors affecting our competitive success include, among other things, price, availability of
products, brand recognition, customer service, ease of use, and reliability. Our competitors vary in size, and
may have greater financial, marketing, personnel and other resources than us and certain of our competitors
have a longer history of established businesses and reputations in the Indian paper and packaging board
market as compared with us. Competitive conditions in some of our segments have caused us to incur lower
net selling prices and reduced gross margins and net earnings. These conditions may continue indefinitely.

Changes in the identity, ownership structure, and strategic goals of our competitors and the emergence of
new competitors in our target markets may impact our financial performance. New competitors may
include foreign-based companies and commodity-based domestic producers who could enter our specialty
markets.

In addition to competition with different players in the paper industry, industrial paper products compete
with products such as polymers, wood and steel for packaging. The writing and printing paper faces limited

x
 substitution threat from the increased tendency of storage of data in soft form, which may affect demand of
our writing and printing paper products.

4. Any inability to raise adequate financing to fund the expansion and upgrading of our facilities may have
a material adverse effect on our business, prospects, financial condition and results of operations.

We will need significant additional capital to finance our business and in particular, our plans for expansion
of Unit JKPM. Our expansion of Unit JKPM requires capital expenditure of an aggregate amount of
approximately ` 1,653.37 crores, which we intend to finance through a combination of equity capital, debt,
internal accruals and equity linked securities. Further, we may intend to expand in our coated paper and
packaging board segments in future. The expansion and upgradation of our facilities require significant
capital expenditure. Our ability to finance our capital expenditure plans is subject to a number of risks,
contingencies and other factors, some of which are beyond our control, including borrowing or lending
restrictions imposed by applicable government regulations and general economic and capital market
conditions. We cannot assure you that we will be able to obtain sufficient funds to meet our capital
expenditure requirements and on terms acceptable to us, or at all.

While in the past, we have been able to finance our projects on competitive terms due in part to our
Company achieving a favorable credit rating, there can be no assurance that we will achieve such financing
in a timely manner and on favorable terms, or at all, or maintain a favorable credit rating. Future debt
financing, if available, may result in increased finance charges, increased financial leverage, decreased
income available to fund further acquisition and expansions and the imposition of restrictive covenants on
our business and operations. In addition, future debt financing may limit our ability to withstand
competitive pressures and render us more vulnerable to economic downturns. If we fail to generate or
obtain sufficient additional capital in the future, we could be forced to reduce or delay the planned
expansion projects or other capital expenditures.

In addition, domestic funds may not be available or be available to us on unattractive terms, which may
require us to seek funding internationally, resulting in unattractive terms and conditions and exposure to
higher interest rates and foreign exchange risks. If the funding requirements of a particular expansion
project increase, we will need to look for additional sources of finance, which may not be readily available,
or may not be available on attractive terms, which may have an adverse effect on the profitability of that
project. We may face cost overruns during the expansion of our facilities, which may require us to revise
our cost estimates. Any significant change in the estimated funding requirements and development costs of
the facilities may have an adverse effect on our cash flows, financial condition and results of operations.
Our business, financial condition, results of operations and prospects may be adversely affected by any
delay or failure to successfully commission these projects.

5. We have incurred significant indebtedness and intend to incur additional substantial borrowings in
connection with the expansion of our facilities. The indebtedness incurred and the conditions and
restrictions imposed by our financing arrangements could adversely impact our ability to conduct our
business operations and we may not be able to meet our obligations under these debt financing
arrangements.

As of September 30, 2010, we had total outstanding indebtedness of ` 497.80 crores. Our debt-to-equity
ratio as at September 30, 2010, was 0.89:1. For further details regarding our indebtedness, see ―Financial
Statements‖ and ―Financial Indebtedness‖ on pages 141 and 213, respectively. We expect to incur
substantial additional indebtedness in order to finance the expansion of our manufacturing facilities. The
indebtedness incurred and expected to be incurred and the restrictions imposed on us by our current or
future loan arrangements could adversely impact our ability to conduct our business operations and result in
other significant adverse consequences, including, but not limited to, the following:

we may be required to dedicate a significant portion of our cash flow towards repayment of our
existing debt, which will reduce the availability of cash flow to fund working capital, capital
expenditures, acquisitions and other general corporate requirements;

we may also be required to maintain certain specified financial ratios;

our ability to obtain additional financing through debt or equity instruments in the future may be
impaired;

xi
 we may be required to obtain approval from our lenders regarding, among other things, expansion, our
incurrence of additional indebtedness and the disposition of assets and we cannot assure you that we
will receive such approvals in a timely manner or at all;

increase our vulnerability to general adverse economic, industry and competitive conditions; and

it could limit our flexibility in planning for, or reacting to, changes in our business and the industry.

Additionally, we have availed of unsecured loans amounting to ` 73.66 crores, as on September 30, 2010,
and such loans may be recalled by the lenders at any time. For details, see ―Financial Indebtedness‖ on
page 213. Our ability to meet our debt service obligations and to repay our outstanding borrowings will
depend primarily upon the cash flow generated by our business over time, as well as our ability to tap the
capital markets as a source of capital.

Some of our financing documents require us to comply with certain information and financial covenants.
Further, we are required to obtain consent of certain lenders for undertaking certain actions such as change
in capital structure and issue of further securities. We have applied to International Finance Corporation
(―IFC‖) to obtain its consent for issue of Equity Shares under the Issue, but have not received its consent as
yet.

We cannot assure you that we will generate sufficient cash to enable us to service our existing or future
borrowings, comply with covenants or fund other liquidity needs. If we fail to meet our debt service
obligations or financial covenants required under the financing documents, the relevant lenders could
declare us to be in default under the terms of our borrowings, accelerate the maturity of our obligations or
take over the financed project. Further, a default by us under the terms of any financing document may also
constitute a cross-default under other financing documents, which may individually or in aggregate, have a
material and adverse effect on our results of operations and financial position. We cannot assure you that, in
the event of any such acceleration, we will have sufficient resources to repay these borrowings. Failure to
meet our obligations under the debt financing arrangements could have a material adverse effect on our
cash flows, business and results of operations.

Future debt financing, if available, may result in increased finance charges, increased financial leverage,
decreased income available to fund further acquisitions and expansions, decreased working capital and the
imposition of restrictive covenants on our business and operations. Our planned and any proposed future
expansions may be materially and adversely affected if we are unable to obtain funding for such capital
expenditures on satisfactory terms, or at all, including as a result of any of our existing facilities becoming
repayable before its due date.

6. Orders placed by customers may be delayed, modified, cancelled or not fully paid for by our customers,
which may have an adverse effect on our business, financial condition and results of operations.

We may encounter problems in executing the orders in relation to our products, or executing it on a timely
basis. Moreover, factors beyond our control or the control of our customers may postpone the delivery of
such products or cause its cancellation, including delays or failure to obtain necessary permits,
authorizations, permissions and other types of difficulties or obstructions. Due to the possibility of
cancellations or changes in scope and schedule of delivery of such products, resulting from our customers‘
discretion or problems we encounter in the delivery of such products or reasons outside our control or the
control of our customers, we cannot predict with certainty when, if or to what extent we may be able to
deliver the orders placed. Additionally, delays in the delivery of such products can lead to customers
delaying or refusing to pay the amount, in part or full, that we expect to be paid in respect of such products.
In addition, even where a delivery proceeds as scheduled, it is possible that the contracting parties may
default or otherwise fail to pay amounts owed. While we have not yet experienced any material delay,
reduction in scope, cancellation, execution difficulty, payment postponement or payment default with
regard to the orders placed with us, or disputes with customers in respect of any of the foregoing, any such
adverse event in the future could materially harm our cash flow position and income.

Further, we operate in highly competitive markets in relation to our products where it is difficult to predict
whether and when we will receive such awards. As a result, our results of operations can fluctuate from
quarter to quarter and year to year depending on whether and when such orders are awarded to us and the

xii
 commencement and progress of work under the orders placed.

7. We may be unable to generate sufficient cash flow or secure sufficient credit to simultaneously fund our
operations, finance capital expenditures, and satisfy other obligations.

Our business is capital intensive and requires significant expenditures for equipment maintenance and new
or enhanced equipment for environmental compliance matters, and to support our business strategies. We
expect to meet all of our near-and longer-term cash needs from a combination of operating cash flows, cash
and cash equivalents, our existing credit facilities or other bank lines of credit, and other long-term debt. If
we are unable to generate sufficient cash flow from these sources or if we are unable to secure needed credit
due to our performance or tighter credit markets, we could be unable to meet our near-and longer-term cash
needs.

8. The Appraisal Report specifies certain risks in relation to our proposed expansion and development plan
for the Unit JKPM.

The expansion and development plan of our Unit JKPM has been appraised by Poyry Management
Consulting Oy. The Appraisal Report sets forth certain risks in relation to our proposed expansion and
development plan for the Unit JKPM, including:

Market risks such as increase in local and international competition that may impact sales volumes as
well as sales prices.
As significant part of the machinery required for the proposed expansion would be imported and quoted
in foreign currency, we may not be able to hedge against increase in our costs as a result of depreciation
of Rupee.
Volatility in steel prices may affect our civil costs. Further, we may be required to incur additional
costs as a result of inaccurate estimates or increase in civil, construction costs and other costs during the
expansion period.
Contracts entered into for the proposed expansion are on fixed price basis and we may not be in a
position to negotiate the price or take benefit of a low cost alternative that may emerge in future.
Delayed start up would create additional costs due to interest during construction.
In the event a new capacity is built in the same region by our competitor(s), raw material costs may rise
and we may not be able to procure raw materials, including wood and water, at commercially
acceptable price or quantity, or at all. Further, availability of water may be limited in case of
insufficient monsoon.

In case any of the above risks materializes, we may not be able to successfully implement our proposed
expansion and development plan for our Unit JKPM or may not be able to achieve expected benefits out of
it, leading to unproductive expenditure of capital and resources, which may have an adverse impact on our
business, results of operations and financial condition.

9. Capacity additions by other players could lead to temporary supply side and pricing pressures for a short
term.

With the steady growth in domestic consumption, many players in the industry have expanded their
capacities during past few years, specifically in the copier paper segment. While demand growth could meet
the extra capacity additions, bunching of these capacities may result in temporary supply side and pricing
pressures in near term. This may impact our selling prices of our products and consequently our
profitability as well. See, ―Industry Overview‖, on page 51.

10. An inability to manage our growth may disrupt our business and reduce our profitability.

We have experienced year-on-year growth in our income from own manufacturing operations (gross sales)
of approximately 9.18% in Fiscal 2010. Our growth will place significant demands on us and require us to
continuously evolve and improve our operational, financial and internal controls across our organisation. In
particular, continued expansion increases the challenges involved in:

maintaining high levels of customer satisfaction;

recruiting, training and retaining sufficient skilled management, technical and marketing personnel;
adhering to health, safety and environment and quality and process execution standards that meet
xiii
 customer expectations;
preserving a uniform culture, values and work environment in operations; and
developing and improving our internal administrative infrastructure, particularly our financial,
operational, communications and other internal systems.

Any inability to manage our growth may have an adverse effect on our business, results of operations and
financial condition.

11. Our business requires the services of third parties, including technology licensors, suppliers and sub-
contractors, which entail certain risks.

Our business generally requires the services of third parties, including technology licensors, contractors and
suppliers of labour, materials and equipment. For instance, for our manufacturing units, we enter into
annual maintenance contracts with third party service providers in relation to DCS system of pulp mill,
DCS system recovery boiler and maintenance and repairing of electronic instruments. The timing and
quality of completion of our products depends on the availability and skill of such third parties, as well as
contingencies affecting them, including labour and raw material shortages and industrial action, such as
strikes and lock-outs. We cannot assure you that skilled third parties will continue to be available at
reasonable rates and will be able to provide their support in the areas in which we conduct our business. As
a result, any delay in this respect could adversely affect our ability to continue to operate our manufacturing
facility optimally and have an adverse effect on our business, financial condition and result of operations.

There is also a risk that we may have disputes with our sub-contractors arising from, among other things,
the quality and timeliness of work performed by the sub-contractor, customer concerns about the sub-
contractor, or our failure to extend existing orders or issue new orders under a sub-contract. In addition, if
any of our sub-contractors fail to deliver on a timely basis the agreed-upon supplies and/or perform the
agreed-upon services, our ability to manufacture our products may be jeopardized. Consequently, we would
have to seek remedies from our suppliers, sub-contractors or technology licensors, as the case may be,
should any product liability claim be made by our customers against us. In case of any such claim against
us, even if it is not proven, our reputation may suffer and our business may be materially and adversely
affected. We cannot assure you that claims of such nature will not be brought against us, which could have
a material adverse effect on our reputation, business and financial performance.

12. Our business is dependent on our manufacturing facilities. The loss of or shutdown of operations at any
of our manufacturing facilities may have a material adverse effect on our business, financial condition
and results of operations.

Our manufacturing facilities at Songadh, Gujarat and Jaykaypur, Odisha are subject to operating risks, such
as the breakdown or failure of equipment, power supply or processes, performance below expected levels of
output or efficiency, obsolescence, labour disputes, continued availability of services of our external
contractors, earthquakes and other natural disasters, industrial accidents and the need to comply with the
directives of relevant government authorities. The occurrence of any of these risks could significantly affect
our operating results. Although we take precautions to minimize the risk of any significant operational
problems at our facilities, including insurance coverage, our business, financial condition and results of
operations may be adversely affected by any disruption of operations at our facilities, including due to any
of the factors mentioned above.

13. If we have any operational problems at any of our facilities, it could have a material adverse effect on
our business and results of operations.

Our manufacturing and distribution warehouses may suffer loss or damage due to fire, flood, terrorism,
mechanical failure, or other natural or man-made events. If any of these facilities were to experience a loss
or damage, it could disrupt our operations, delay production, delay or reduce shipments, reduce revenue,
and result in significant expenses to repair or replace the facility. These expenses and losses may not be
adequately covered by property or business interruption insurance. Even if covered by insurance, our
inability to deliver our products to customers, even on a short-term basis, may cause us to lose market share
on a more permanent basis, which could have a material adverse effect on our business and results of
operations.

14. We require a number of approvals, licenses, registrations and permits for our business, and the failure to

xiv
 obtain or renew them in a timely manner may adversely affect our operations.

Our business is subject to extensive government regulation. To conduct our business we must obtain
various approvals, licenses, registrations and permits. Certain approvals that we have applied for in
connection with our business and operations are currently pending. These include applications in relation to
registration of certain trademarks.

Further, ten applications are pending in relation to our manufacturing units. These include, amongst others,
approvals regarding proposed expansion of our Unit JKPM.

For more information, see ―Government and Other Approvals‖ on page 257. Further, some of these
approvals are subject to certain conditions, the non-fulfillment of which may result in revocation of such
approvals.

Even after we have obtained the required licenses, permits and approvals, our operations are subject to
continued review and the governing regulations may change. Further, certain of our contractors and other
counter-parties are required to obtain approvals, licenses, registrations and permits with respect to the
services they provide to us. We cannot assure you that such contractors or counterparties have obtained and
will maintain the validity of such approvals, licenses, registrations and permits. We cannot assure you that
we or any other party will be able to obtain or comply with all necessary licenses, permits and approvals
required for our business in a timely manner to allow for the uninterrupted construction or operation of our
facilities, or at all.

Furthermore, our government approvals and licenses, including environmental approvals are subject to
numerous conditions, some of which are onerous and require us to incur substantial expenditure,
specifically with respect to compliance with environmental laws. We cannot assure you that the approvals,
licenses, registrations and permits issued to us would not be suspended or revoked in the event of non-
compliance or alleged non-compliance with any terms or conditions thereof, or pursuant to any regulatory
action. If we fail to comply with all applicable regulations or if the regulations governing our business or
their implementation change, we may incur increased costs, be subject to penalties or suffer a disruption in
our operations, any of which could materially and adversely affect our business and results of operations.
Any failure to renew the approvals that have expired or apply for and obtain the required approvals,
licenses, registrations or permits, or any suspension or revocation of any of the approvals, licenses,
registrations and permits that have been or may be issued to us, may adversely affect our operations.

15. We have experienced negative cash flows in the past which could adversely affect our financial condition
and the trading price of our Equity Shares.

We have recently experienced negative cash flows (on consolidated basis) as set forth in the table below:

(In ` crores)
Particulars Six Month Period Fiscal 2010 Fiscal 2009 Nine Month
Ended September Period Ended
30, 2010 March 31, 2008
Net cash from / 156.35 243.80 202.77 93.85
(used in)
operating
activities
Net cash from / (49.44) (66.03) (25.18) (93.67)
(used in)
investing
activities
Net cash from / (101.11) (204.05) (146.87) (1.51)
(used in)
financing
activities
Increase / 5.80 (26.28) 30.72 (1.33)
(decrease) in cash
and cash
equivalents
Cash and cash 7.94 34.22 3.50 4.83
equivalents at the

xv
 Particulars Six Month Period Fiscal 2010 Fiscal 2009 Nine Month
Ended September Period Ended
30, 2010 March 31, 2008
beginning of the
year
Cash and cash 13.74 7.94 34.22 3.50
equivalents as at
the end of the
year

Our net cash used in investing activities for the six month period ended September 30, 2010 was primarily
on account of the purchase of our investments in our Subsidiaries as well as investment of surplus cash in
certain mutual funds, and the payment made towards the purchase of fixed assets in the normal course of
business of our Company. Our net cash used in investing activities for the Fiscal 2010 was primarily on
account of purchase of our investments in certain mutual funds with surplus cash and payment made
towards the purchase of fixed assets in the normal course of business of our Company. Our net cash used in
investing activities for the Fiscal 2009 was primarily on account payment made towards the purchase of
fixed assets in the normal course of business of our Company. Our net cash used in investing activities for
the nine month period ended March 31, 2008 was primarily on account of payment of made towards the
purchase of fixed assets which primarily consist of assets purchased for the purpose of our packaging board
plant in our Unit CPM, which commenced operations in October 2007, as well as purchase of fixed assets
in the normal course of business of our Company, and the payment made towards the purchase of our
investments in JK Enviro-tech Limited (our associate company).

Our net cash used in financing activities for the six month period ended September 30, 2010, Fiscal 2010
and Fiscal 2009 was primarily on account of repayment of certain long-term borrowings, payment as
interest and financial charges towards our short-term and long-term loans, payments made as dividend
(including dividend tax) on our Equity Shares and preference shares issued, repayment of certain short-term
borrowings availed for our working capital requirements, and payment made towards redemption of certain
series of 10% CRPS issued to lenders of JK Lakshmi Cement Limited (―JKLC‖) on November 29, 2001,
pursuant to the order of the High Court of Gujarat dated August 30, 2001, approving the Scheme of
Compromise. Our net cash used in financing activities for the nine month period ended March 31, 2008 was
primarily on account of repayment of certain long-term borrowings, payment as interest and financial
charges towards our short-term and long-term loans and payments made as dividend (including dividend
tax) on our Equity Shares and preference shares issued.

For details, see ―Financial Statements‖ and ―Management‟s Discussion and Analysis of Financial
Condition and Results of Operations‖ on pages 141 and 189, respectively.

Any negative cash flows in the future could adversely affect our financial condition and the trading price of
our Equity Shares. During the course of our business, we have entered into various capital commitments. In
the event that the proposed Issue is not completed or is delayed and we may be unable to make other
alternative arrangements to raise funds to meet our cash flows requirements, and it may have an adverse
effect on our business, financial condition and results of operations.

16. Our costs of compliance with environmental laws are expected to be significant, and the failure to
comply with existing and new environmental laws could adversely affect our results of operations.

Our operations are subject to national and state environmental laws and regulations, which govern the
discharge, emission, storage, handling and disposal of a variety of substances that may be used in or result
from our operations. Environmental regulation of industrial activities in India may become more stringent,
and the scope and extent of new environmental regulations, including their effect on our operations, cannot
be predicted with any certainty. Governments may take steps towards the adoption of more stringent
environmental, health and safety regulations, and we cannot assure you that we will be at all times in full
compliance with these regulatory requirements. For example, these regulations can often require us to
purchase and install expensive pollution control equipment or make changes to our existing operations to
limit any adverse impact or potential adverse impact on the environment or the health and safety of our
employees, and any violation of these regulations, whether or not accidental, may result in substantial fines,
criminal sanctions, revocations of operating permits or a shutdown of our facilities. Due to the possibility of
unanticipated regulatory developments, the amount and timing of future expenditures to comply with
regulatory requirements may vary substantially from those currently anticipated. If there is any

xvi
 unanticipated change in the environmental, health and safety regulations we are subject to, we may need to
incur substantial capital expenditures to comply with such new regulations. Our costs of complying with
current and future environmental, health and safety laws and our liabilities arising from failure to comply
with applicable regulatory requirements may adversely affect our business, financial condition and results
of operations.

We could be subject to substantial civil and criminal liability and other regulatory consequences in the
event that any environmental hazards are found at the site of any of our facilities, or if the operation of any
of our facilities results in contamination of the environment. We may be the subject of public interest
litigation in India relating to allegations of environmental pollution by our facilities, as well as in cases
having potential criminal and civil liability filed by state pollution control authorities. If such cases are
determined against us, there could be an adverse effect on our business, including the suspension of our
operations, and results of operations.

17. Our results of operations could be adversely affected by strikes, work stoppages or increased wage
demands by our or our contractors‟ work force or any other kind of disputes involving our work force.

India has stringent labor legislation that protects the interests of workers, including legislation that sets forth
detailed procedures for discharge of employees and dispute resolution and imposes financial obligations on
employers upon employee layoffs. As a result of such stringent labor regulations, it is difficult for us to
maintain flexible human resource policies, discharge employees or downsize, which may adversely affect
our business, financial condition and results of operations.

We employ significant number of employees and contract labourers at our facilities. Substantial number of
our permanent employees and contract labourers are represented by labour unions and staff associations. In
1998-1999, we faced a 90 days lockout at our Unit JKPM, leading to loss of production. While we have
entered into settlement agreements with our labour unions and believe that we enjoy satisfactory
relationships with all of the labor organizations that represent our employees, we cannot guarantee that
labor-related disputes will not arise. Further, we may not be able to satisfactorily renegotiate our wage
settlement agreements when they expire and may face tougher negotiations or higher wage demands. In
addition, existing labor agreements may not prevent a strike or work stoppage in the future. Such incidents
or strikes and work stoppage by our employees could have an adverse effect on our business, financial
operation and results of operations.

Furthermore, in the event our or our contractors‘ work force (including contract labourers) unionize in the
future, collective bargaining efforts by labour unions may divert management‘s attention and result in
increased costs. We may be unable to negotiate acceptable collective bargaining agreements with those
employees who have chosen to be represented by unions, which could lead to union-initiated work
stoppages, including strikes, thereby adversely affecting our business and results of operations. Any
shortage of skilled personnel or work stoppages caused by disagreements with our work force could have an
adverse effect on our business, and results of operations. We have entered into contracts with independent
contractors to complete specified assignments and these contractors may be required to source the labour
necessary to complete such assignments. Although we do not engage these labourers directly, it is possible
under Indian laws that we may be held responsible for wage payments, or benefits and amenities to
labourers engaged by our independent contractors should such contractors default on wage payments or in
providing benefits and amenities. Any requirement to fund such payments may adversely affect our
business, financial condition and results of operations. Furthermore, under Indian law, we may be required
to absorb a portion of such contract labourers as our employees. Any such order from a court or any other
regulatory authority may adversely affect our business and results of our operations.

18. Activities at the facilities can be dangerous and can cause injury to people or property in certain
circumstances. This could subject us to significant disruptions in our business, legal and regulatory
actions, any of which could adversely affect our business, financial condition and results of operations.

Our operations require our work force to work under potentially dangerous circumstances, with highly
flammable and explosive materials. Despite compliance with requisite safety requirements and standards,
our operations are subject to hazards associated with handling of such dangerous materials. If improperly
handled or subjected to unsuitable conditions, these materials could hurt our employees or other persons,
cause damage to our properties and properties of others or harm the environment. Due to the nature of these
materials, we may be liable for certain costs related to hazardous materials, including cost for health related

xvii
 claims, or removal or treatment of such substances, including claims and litigation from our current or
former employees for injuries arising from occupational exposure to materials or other hazards at our
facilities. This could subject us to significant disruption in our business, legal and regulatory actions, which
could adversely affect our business, financial condition and results of operations.

19. Our insurance coverage may prove inadequate to satisfy future claims against us or against all material
hazards. In the event that we suffer loss or damage that is not covered by or exceeds our insurance
coverage, the loss would have to be borne by us and our results of operations and financial performance
could be adversely affected.

Our operations carry inherent risks of personal injury and loss of life, damage to or destruction of property,
plant and equipment and damage to the environment, and are subject to risks such as fire, theft, flood,
earthquakes and terrorism. We believe that we have insured our facilities, plant and equipment in a way
which we believe is typical in our industry and in amounts which we believe to be commercially
appropriate. See ―Our Business- Insurance‖ on page 80. However, we may become subject to liabilities
against which our property are not insured adequately or at all or cannot insure, including when the loss
suffered is not easily quantifiable and in the event of severe damage to our reputation. Even if a claim is
made under an existing insurance policy, due to exclusions and limitations on coverage, we may not be able
to successfully assert our claim for any liability or loss under such insurance policy.

In addition, in the future, we may not be able to maintain insurance of the types or in the amounts which we
deem necessary or adequate or at premiums which we consider acceptable. The occurrence of an event for
which we are not adequately or sufficiently insured or the successful assertion of one or more large claims
against us that exceed available insurance coverage, or changes in our insurance policies (including
premium increases or the imposition of large deductible or co-insurance requirements), could have a
material and adverse effect on our business, results of operations, financial condition and cash flows.

20. If we do not continue to invest in new technologies and equipment, our technologies and equipment may
become obsolete and our cost of production may increase relative to our competitors, which would have a
material adverse effect on our ability to compete, results of operations, financial condition and prospects.

Our profitability and competitiveness are in large part dependent on our ability to maintain a low cost of
production and upgrade our facilities with the latest technology. Changes in technology may require us to
make additional capital expenditures to upgrade our facilities to remain competitive. We need to continue to
invest in new and more advanced technologies and equipment to enable us to respond to emerging
technology, standards and practices in a cost-effective and timely manner that is competitive with our
existing and potential competitors. If we are unable to adapt in a timely manner to changing market
conditions, customer requirements or technological changes, our business and financial performance could
be adversely affected.

21. Our success will depend on our ability to attract and retain our key personnel. If we are unable to do so,
it would adversely affect our business and results of operations.

Our future success substantially depends on the continued service and performance of the members of our
senior management team and other key personnel in our business for the management and running of our
daily operations, and the planning and execution of our business strategy.

There is intense competition for experienced senior management and other key personnel with technical and
industry expertise in the paper business and if we lose the services of any of these or other key individuals
and are unable to find suitable replacements in a timely manner, our ability to realize our strategic
objectives could be impaired. Loss of key members of our senior management or other key team members,
particularly to competitors, could have an adverse effect on our business and results of operations.

22. There is outstanding litigation against us, our Directors, our Promoter and our Group Companies, which
if determined adversely, could affect our results of operations and reputation.

We are defendants in legal proceedings incidental to our business and operations. These legal proceedings
are pending at different levels of adjudication before various courts and tribunals. The amounts claimed in
these proceedings have been disclosed to the extent ascertainable, excluding contingent liabilities and
include amounts claimed jointly and severally from us and other parties. Further, our Promoter, Directors

xviii
 and Group Companies are defendants in certain legal proceedings which may result in a material adverse
effect on the consolidated results of operations or financial condition of such entity if determined against
them. Should any new developments arise, such as a change in Indian law or rulings against us by appellate
courts or tribunals, we may need to make provisions in our financial statements that could increase
expenses and current liabilities.

Litigation against the Company

S. No. Nature of the litigation No. of outstanding litigations Aggregate approximate amount involved (in `
crores)
1. Civil 3 7.56
2. Labour 21 0.56
3. Excise 47 40.94
4. Income tax 7 13.44
5. Sales and entry tax 9 4.39
6. Other tax 21 2.24
7. Notices 34 7.5

Litigation against the Directors

S. No. Name of the Nature of the No. of outstanding Aggregate approximate amount
Director litigation litigations involved
(in ` crores)
1. M.H. Dalmia Violation of securities 1 -
law
2. Shailesh Vishnu Civil 1 -
Haribhakti

Litigation against the Promoter

S. No. Nature of the litigation No. of outstanding Aggregate approximate amount involved
litigations (in ` crores)
1. Income tax 7 0.37

Litigation against the Group Companies

S. Name of the Nature of the litigation No. of outstanding Aggregate approximate

No. Group Company litigations amount involved (in `
crores)
1. JK Tyres & Civil cases 9 11.29
Industries Limited Land acquisition/ compensation 47 1.15
and land encroachment cases
Labour disputes 65 5.13
Arbitration matters* 2 10.13
Consumer cases 22 0.15
Motor vehicle compensation 1 0.02
cases
Income tax cases 31 614.71
Service tax cases 37 4.75
Excise cases 128 21.51
Sales tax cases 11 17.15
Customs cases 2 0.14
Anti-dumping cases 3 -

2. JK Lakshmi Civil cases 10 28.11

Cement Limited Labour cases 3 0.16
Income tax cases 12 32.59
Excise and service tax 5 16.32
Sales and entry tax cases 26 50.33

3. JK Agri Genetics Criminal cases 5 -

Limited Civil cases 4 0.06
Consumer cases 295 2.76

xix
 S. Name of the Nature of the litigation No. of outstanding Aggregate approximate
No. Group Company litigations amount involved (in `
crores)

4. Fenner (India) Civil 1 3.27

Limited Income tax cases 2 4.24
Excise cases 1 1.17

5. Udaipur Cement Civil cases 1 8.04

Works Limited

6. JK Sugar Limited Criminal cases 5 -

Civil cases 6 0.89
Labour cases 18 0.02
Income tax cases 1 0.40
Trade tax cases 4 0.94
Excise duty 3 8.43
Entry tax cases 7 2.28

7. Umang Dairies Civil cases 1 0.21

Limited

* In addition, JK Tyres and Industries Limited is involved in an arbitration proceedings in which aggregate amount involved
is USD 0.31 crore.

For further details of outstanding litigation against us, our Directors, our Promoter and our Group
Companies, see ―Outstanding Litigation and Material Developments‖ on page 224.

23. Our Promoter together with our Promoter Group will continue to retain control of our Company after
the Issue. We cannot assure you that our Promoter and/or our Promoter Group will always act in our
Company‟s or your best interest.

Subsequent to the Issue, our Promoter and Promoter Group will continue to exercise significant influence
over our business policies and affairs and all matters requiring shareholders approval, including the
composition of our Board of Directors, the adoption of amendments to our MoA and AoA, the approval of
mergers, strategic acquisitions or joint ventures or the sales of substantially all of our assets, and the
policies for dividends, lending, investments and capital expenditures. This concentration of control also
may delay, defer or even prevent a change in control of our company and may make some transactions
more difficult or impossible without the support of these stockholders. The interests of our Promoter and
Promoter Group as our Company‘s controlling shareholders could conflict with our Company‘s interests or
the interests of our other shareholders. We cannot assure you that our Promoter and Promoter Group will
act to resolve any conflicts of interest in our Company‘s or your favour.

24. The development and construction costs of our projects in relation to the Net Proceeds of the Issue are
subject to change. This could affect our profitability and cause the price of our Equity Shares to decline.

Our allocation of the Net Proceeds to be received by us from this Issue is based on current plans and
business conditions. In view of the highly competitive nature of the paper industry and owing to factors
such as exchange or interest rate fluctuations and other external factors which may not be within the control
of management of the Company, the estimated cost of expansion of our facilities may need be revised from
time to time and consequently our funding requirements may also change. Significant revisions to our
funding requirements or the deployment of the Net Proceeds of the Issue may result in the rescheduling of
our project expenditure programmes and an increase or decrease in our proposed expenditure for a
particular project or other delays with respect to our expansion, which could have a material and adverse
effect on our business, results of operation and financial condition.

Further, we intend to use part of the Net Proceeds for general corporate purposes that may not necessarily
improve our profitability or increase our market value, and may cause the price of our Equity Shares to
decline. Our management will have considerable discretion in the application of the Net Proceeds, and you
may not have the opportunity, as part of your investment decision, to assess whether we are using the Net
Proceeds in a manner that you believe enhances our market value.

xx
25. We may become involved in claims concerning intellectual property rights, and we could suffer
significant litigation or related expenses in defending our own intellectual property rights or defending
claims that we infringed the rights of others.

We have six trademarks registered in our name, including ‗JK Copier Plus‘ and ‗JK Bond‘. Further, we
have filed 11 applications in relation to change in name from ‗J.K. Corp. Limited‘ to ‗The Central Pulp
Mills Limited‘ and from ‗The Central Pulp Mills Limited‘ to ‗JK Paper Limited‘, for trademarks such as
‗JK Paper Limited‘ (logo) and ‗JK Copier‘. In addition, eight applications are pending for registration of
our trademarks such as ‗JK TuffPac‘ before Registrar of Trade Marks. We cannot assure you that we will
be able to obtain such registrations within reasonable time or at all. We may lose market share and suffer a
decline in our revenue and net earnings if we cannot successfully defend one or more trademarks.

We do not believe that any of our products infringe the valid intellectual property rights of third parties.
However, we may be unaware of intellectual property rights of others that may cover some of our products
or services. In that event, we may be subject to significant claims for damages.

Any litigation regarding our intellectual property could be costly and time-consuming and could divert our
management and key personnel from our business operations. Claims of intellectual property infringement
might also require us to enter into license agreements, which would reduce our operating margins, or in
some cases, we may not be able to obtain license agreements on terms acceptable to us.

26. We have entered into certain transactions with related parties for an aggregate amount of ` 48.81 crores
in Fiscal 2010. These transactions or any future transactions with our related parties could potentially
involve conflicts of interest. Further, we benefit from and continue to rely on our Promoter, Group
Companies and members of our Promoter Group for certain key development and support activities and
our business and growth prospects may decline if we cannot benefit from our relationships with them in
the future.

We have entered into certain transactions with related parties, and our Promoter, Group Companies and
associates and may continue to do so in future. In Fiscals 2010, 2009 and nine months period ended March
31, 2008, we entered into related party transactions for an aggregate of ` 48.81 crores, ` 84.34 crores and `
8.04 crores, respectively. These transactions or any future transactions with our related parties could
potentially involve conflicts of interest. For further information, see ―Related Party Transactions‖ on page
140. Further, we have entered into and may continue to enter into a number of related party transactions
with our Promoter, Group Companies and associates. For details, see ―Our Promoters and Group
Companies‖, ―Management‟s Discussion and Analysis of Financial Condition and Results of
Operations‖ and ―Financial Statements‖ on pages 117, 189 and 141, respectively.

While we believe that all our related party transactions have been conducted in an ordinary course and on
an arm‘s length basis, we cannot assure you that we could not have achieved more favourable terms had
such transactions been entered into with unrelated parties. There can be no assurance that such transactions,
individually or in the aggregate, will not have an adverse effect on our business, prospects, results of
operations and financial condition, including because of potential conflicts of interest or otherwise. In
addition, our business and growth prospects may decline if we cannot benefit from our relationships with
them in the future.

27. Our ability to pay dividends in the future will depend upon future earnings, financial condition, cash
flows, working capital requirements, capital expenditures and restrictive covenants in our financing
arrangements.

We may retain all future earnings, if any, for use in the operations and expansion of the business. As a
result, we may not declare dividends in the foreseeable future. Any future determination as to the
declaration and payment of dividends will be at the discretion of our Board of Directors and will depend on
factors that our Board of Directors deems relevant, including among others, our results of operations,
financial condition, cash requirements, business prospects and any other financing arrangements.
Accordingly, realisation of a gain on shareholders investments will depend on the appreciation of the price
of the Equity Shares. There is no guarantee that our Equity Shares will appreciate in value.

28. Contingent liabilities which have not been provided for could adversely affect our financial conditions.

xxi
 As of September 30, 2010, we had the following contingent liabilities that have not been provided for in our
consolidated restated financial statements:
(In ` crores)
S. No. Description As of September 30, 2010
1. Excise duty liability in respect of matters in appeal 8.12
2. Sales tax liability in respect of matters in appeal 2.44
3. Forest matters 5.73
4. Income tax matters 1.79
5. Other matters 3.34
Total 21.42

In addition to the above, the following have also been classified as a contingent liability as of September 30,
2010:

1. In respect of certain disallowances and additions made by the Income Tax Authorities, appeals are
pending before the Appellate Authorities and adjustment, if any, will be made after the same are finally
determined.

2. The Company has entered into a Take or Pay agreement for the purpose of sourcing lime from JK
Enviro-tech Limited. The Company has given an undertaking that on the happening of certain events, it
will takeover Loan taken by JK Enviro-tech Limited from IDFC Limited of the value of ` 40 Crore.

If any or all of these contingent liabilities materialize, it could have an adverse effect on our business,
financial condition and results of operation.

29. Some of the properties from which we are operating are not registered in our name.

Our Corporate Office has been leased to us by Children‘s Book Trust, for a period up to November 15,
2016. Further, our Unit JKPM is located on a total land measuring 686 acres, of which 636.97 acres has
been leased to us on 99 years‘ lease by State of Odisha. The lease agreements executed in our favour by
third parties may not be renewed at commercially acceptable terms, or at all, which may have a material
adverse effect on our business and results of operations.

30. We do not have access to records and data pertaining to certain historical legal and secretarial
information, including with respect to issuance of shares and amendments in our MoA.

We have been unable to locate certain of our corporate records with respect to issuance of certain Equity
Shares to various persons and with respect to certain amendments which have been made to our MoA. Our
Company was incorporated on July 4, 1960, and the management of our Company was transferred from the
erstwhile promoters of our Company to JK group and its associates in 1992. Disclosures in this Draft Letter
of Offer pertaining to equity share capital history of our Company between the years 1960 to 1992 and the
year 1994 are based on the minutes of the Board/shareholders‘ meetings of our Company. Additionally, for
the years 1960 to 1992, relevant records and forms filed, at that time, evidencing the amendments to our
MoA, are also not available. Whilst we believe material information required for Investors to make their
investment decision in this Issue has been disclosed in this Draft Letter of Offer, we are unable to make
certain disclosures required under the SEBI ICDR Regulations in this Draft Letter of Offer, such as
disclosures pertaining to initial listing of Equity Shares by our Company and disclosures pertaining to issue
of Equity Shares by the Company for consideration other than cash or out of revaluation reserves. For more
information see ―Capital Structure‖ and ―History and Certain Corporate Matters‖ on pages 23 and 87
respectively.

31. Certain lease and other commercial agreements entered into by our Company may not be duly stamped
or registered. Any inability to enforce our rights under the said agreements in the event of a breach by
the other party may have an adverse effect on our business and financial condition.

Certain lease and other commercial agreements entered into by our Company may not be duly stamped or
registered. Accordingly, we may not be able to enforce any of our rights under the said agreements in any
court of law in India, in the event of a breach of the said agreements. Further, in case any of the parties to
such agreements refuse to perform as per their obligations under such agreements, it may have an adverse
effect on our business and financial condition.

xxii
32. Some of our Group Companies have incurred losses in the preceding Fiscals. We cannot assure you that
these companies or any of our other Group Companies will not incur losses in the future, or that there
will not be an adverse effect on our reputation or business as a result of such losses.

Some of our Group Companies have incurred losses during the preceding Fiscal Year, as set forth below:

Group Companies which have incurred loss

(In ` crores, unless otherwise stated)

Name of Group
Company Fiscal 2010 Fiscal 2009 Fiscal 2008
J.K. Risk Managers & (1.34) (1.94) (2.20)
Insurance Brokers Limited
Udaipur Cement Works (1.87)* (7.47) ** (7.47) **
Limited
JK Sugar Limited (2.70) (1.37) (1.98)
Modern Cotton Yarn
(1.51) (2.36) (0.63)
Spinners Limited
* For 15 months period from January 2009 to March 2010.
** For 12 months period from January to December.

There is no assurance that these companies or any other ventures promoted by our Promoter will not incur
losses in any future periods, or that there will not be an adverse effect on our reputation or business as a
result of such losses.

33. Some of our Group Companies have not complied with provisions of the equity listing agreement. We
cannot assure you that these companies or any of our other Group Companies will comply with equity
listing agreements in the future, or that there will not be an adverse effect on our reputation or business
as a result of such non compliance.

Pranav Investment (M.P) Company Limited, our Group Company, is not in compliance with certain
requirements of equity listing agreement with Madhya Pradesh Stock Exchange and Uttar Pradesh Stock
Exchange. Further, trading in equity shares of Udaipur Cements Works Limited, our Group Company, was
suspended at BSE with effect from February 3, 2003 due to non payment of listing fees by Udaipur
Cements Works Limited. There is no assurance that any Group Company will be in compliance with
regulatory and statutory requirements in future, or that there will not be an adverse effect on our reputation
or business as a result of such non-compliances.

External Risk Factors

34. Volatility in the Rupee against foreign currencies may have an adverse effect on our results of
operations.

We exported 2.60% of our writing and printing paper products and 3.62% of our packaging board products
in Fiscal 2010. Further, we import hydrogen peroxide, sodium sulphate and clay from various countries
such as China, USA and Brazil for manufacture of our various brands of paper. Pulp of different varieties is
imported from countries such as Indonesia, Sweden, Finland and USA, for manufacturing high strength
virgin packaging board. As on September 30, 2010, our net unhedged foreign currency exposure is ` 7.42
crores. Accordingly, any depreciation of the Rupee against these currencies will significantly increase the
Rupee cost to us of servicing and repaying our foreign currency payables. For example, the US$ / Rupee
exchange rate was US$ 1 = ` 39.97 as of March 31, 2008 and depreciated to US$ 1 = ` 50.95 as of March
31, 2009 and appreciated to US$ 1 = ` 45.14 as of March 31, 2010. If we are unable to recover the costs of
foreign exchange variations through our tariffs, depreciation of the Rupee against foreign currencies may
adversely affect our results of operations and financial condition.

35. Our business and financial performance may be adversely affected by downturns in the target markets
that we serve or reduced demand for the types of products we sell.

Demand for our products is often affected by general economic conditions as well as product-use trends in

xxiii
 our target markets. These changes may result in decreased demand for our products. For example, our
specialty products business usually declines during periods of economic slowdowns. There may be periods
during which demand for our products is insufficient to enable us to operate our production facilities in an
economical manner. The occurrence of these conditions is beyond our ability to control and, when they
occur, they may have a significant impact on our sales and results of operations.

36. Our raw material availability depends to a major extent on monsoon and weather conditions. Any lack of
or an abnormal monsoon could negatively impact harvests and in turn have a material adverse effect on
our business growth and prospects, financial condition and results of operations.

Our raw materials are agricultural produce. Further, we substantially depend on activities such as farm
forestry for our raw materials. Agricultural and farm forestry is largely dependent on monsoon and
favorable weather conditions. Meteorologically, our country has different weather conditions prevalent in
different geographical areas. The geography of the country is also diversified into irrigable and non
irrigable areas. The extent of monsoons and other seasonal conditions determine the quantity as well as
quality of our raw materials. Scanty or abnormal level of monsoon may damage the crops and reduce the
availability of our raw materials. This could have a material adverse effect on our business growth and
prospects, financial condition and results of operations.

37. Wage increases in India may reduce our profit margins and negatively impact our financial condition
and results of operations.

We are highly dependent upon availability of skilled and semi-skilled labour. Wages and other
compensation paid to our employees is one of our significant operating costs, and an increase in the wages
or employee benefit costs will significantly increase our operating costs. Because of rapid economic growth
in India and increased competition for skilled and semi-skilled employees in India, wages for comparable
employees in India are increasing at a fast rate. We may need to increase the levels of employee
compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and
number of skilled and semi-skilled employees that our business requires. Further, many of our employees
receive salaries that are linked to minimum wage laws in India and any increase in the minimum wage in
any state in which we operate could significantly increase our operating costs. In addition, a shortage in the
labour pool or other general inflationary pressures or changes will also increase our labour costs. Wage
increases in the long-term may reduce our competitiveness and our profitability.

38. Valuation methodology and accounting practice in paper related businesses may change.

There is no standard valuation methodology or accounting practices in paper related industries.

Additionally, current valuations may also not be reflective of future valuations within the industry. Current
valuations of other listed companies, in our industry, may not be comparable with our Company.

39. Political instability or changes in the Government could adversely affect economic conditions in India
and consequently our business.

Our performance and the market price and liquidity of the Equity Shares may be affected by changes in
exchange rates and controls, interest rates, government policies, taxation, social and ethnic instability and
other political and economic developments affecting India. The GoI has traditionally exercised and
continues to exercise a significant influence over many aspects of the economy. The business of our
Company, and the market price and liquidity of the Equity Shares may be affected by changes in GoI
policy, taxation, social and civil unrest and other political, economic or other developments in or affecting
India. There has been a secular reduction in import duties on paper and packaging products over the years.
Further, pursuant to ASEAN free trade agreement, import duties on pulp paper would be reduced to ‗nil‘ by
January 2013. This may lead to preference of imported paper and packaging products, over our products.

Since 1991, successive Indian governments have pursued policies of economic liberalisation, including
significantly relaxing restrictions on the private sector. The governments have usually been multi-party
coalitions with differing agendas. Any political instability could affect the rate of economic liberalisation
and the specific laws and policies affecting foreign investment, the paper industry. Other matters affecting
investment in the Equity Shares could change as well. A significant change in India‘s economic
liberalisation and deregulation policies could adversely affect business and economic conditions in India
generally, and our business in particular, if new restrictions on the private sector are introduced or if

xxiv
 existing restrictions are increased.

40. A slowdown in economic growth in India could cause our business to suffer.

Our performance and the growth of our business are necessarily dependent on the health of the overall
Indian economy. As a result, a slowdown in the Indian economy could adversely affect our business.
India‘s economy could be adversely affected by a general rise in interest rates, inflation, natural calamities,
such as earthquakes, tsunamis, floods and droughts, increases in commodity and energy prices, and
protectionist efforts in other countries or various other factors. In addition, the Indian economy is in a state
of transition. It is difficult to gauge the impact of these fundamental economic changes on our business.
Any slowdown in the Indian economy or future volatility in global commodity prices could adversely affect
our business.

41. Recent global economic conditions have been unprecedented and challenging and have had, and
continue to have, an adverse effect on the Indian financial markets and the Indian economy in general,
which has had, and may continue to have, a material adverse effect on our business and our financial
performance and may have an impact on the price of our Equity Shares.

Recent global market and economic conditions have been unprecedented and challenging with tighter credit
conditions and recession in most major economies continuing into the year 2009. Continued concerns about
the systemic impact of potential long-term and wide-spread recession, energy costs, geopolitical issues, the
availability and cost of credit, and the global housing and mortgage markets have contributed to increased
market volatility and diminished expectations for western and emerging economies. In the second half of
2008, added concerns fuelled by the United States government conservatorship of the Federal Home Loan
Mortgage Corporation and the Federal National Mortgage Association, the declared bankruptcy of Lehman
Brothers Holdings Inc., the United States government financial assistance to American International Group
Inc., Citigroup Inc., Bank of America and other federal government interventions in the United States
financial system led to increased market uncertainty and instability in both United States and international
capital and credit markets. These conditions, combined with volatile oil prices, declining business and
consumer confidence and increased unemployment, have contributed to volatility of unprecedented levels.

As a result of these market conditions, the cost and availability of credit has been and may continue to be
adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the
markets generally and the strength of counterparties specifically has led many lenders and institutional
investors to reduce, and in some cases, cease to provide credit to businesses and consumers. These factors
have led to a decrease in spending by businesses and consumers alike and corresponding decreases in global
infrastructure spending and commodity prices. Continued turbulence in the United States and international
markets and economies and prolonged declines in business consumer spending may adversely affect our
liquidity and financial condition, and the liquidity and financial condition of our customers, including our
ability to refinance maturing liabilities and access the capital markets to meet liquidity needs. These global
market and economic conditions have had, and continue to have, an adverse effect on the Indian financial
markets and the Indian economy in general, which has had, and may continue to have, a material adverse
effect on our business, our financial performance and may adversely affect the prices of our Equity Shares.

42. Increases in interest rates may affect our results of operations.

Increases in interest rates will adversely affect the cost of our borrowings, as borrowings amounting to `
390.98 crores, out of our total outstanding borrowings of ` 497.80 crores, as on September 30, 2010, have a
floating rate of interest. While we have entered into interest rate hedging transactions in connection with
our loan agreements, we cannot assure you that we will be able to enter into interest hedging contracts or
other financial arrangements on commercially reasonable terms, or that any of such agreements will protect
us fully against our interest rate risk. Any increase in interest expense may have an adverse effect on our
business, prospects, financial condition and results of operations.

43. Any downgrading of India‟s debt rating by an international rating agency could have a negative impact
on our business.

Any adverse revisions to India‘s credit ratings for domestic and international debt by international rating
agencies may adversely impact our ability to raise additional financing, and the interest rates and other
commercial terms at which such additional financing may be available. This could have an adverse effect

xxv
 on our business and future financial performance, our ability to obtain financing for capital expenditures
and the price of our Equity Shares.

44. Instability in the Indian financial markets could materially and adversely affect our results of operations
and financial condition.

The Indian financial market and the Indian economy are influenced by economic and market conditions in
other countries, particularly in Asian emerging market countries. Financial turmoil in Asia, Europe and
elsewhere in the world in recent years and more recently in the United States has affected the Indian
economy. Although economic conditions are different in each country, investors‘ reactions to developments
in one country can have adverse effects on the securities of companies in other countries, including India. A
loss in investor confidence in the financial systems of other emerging markets may cause increased
volatility in Indian financial markets and, indirectly, in the Indian economy in general. Any worldwide
financial instability could also have a negative impact on the Indian economy. Financial disruptions may
occur again and could harm our results of operations and financial condition.

45. Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries could
adversely affect financial markets and our business.

Terrorist attacks and other acts of violence or war may negatively affect the Indian markets on which our
Equity Shares trade and also adversely affect the worldwide financial markets. These acts may also result in
a loss of business confidence, making travel and other services more difficult and ultimately adversely
affecting our business.

India has also witnessed civil disturbances in recent years and it is possible that future civil unrest as well as
other adverse social, economic and political events in India could have a negative impact on our business.
Such incidents could also create a greater perception that investment in Indian companies involves a higher
degree of risk and could have an adverse impact on our business and the price of our Equity Shares.

Other acts of violence or war outside India, including those involving the United States, the United
Kingdom or other countries, may adversely affect worldwide financial markets and could adversely affect
the world economic environment, which could adversely affect our business, results of operations, financial
condition and cash flows, and more generally, any of these events could lower confidence in India. South
Asia has, from time to time, experienced instances of civil unrest and hostilities among other neighbouring
countries.

46. The extent and reliability of Indian infrastructure could adversely affect our results of operations and
financial condition.

India‘s physical infrastructure is less developed than that of many developed nations. Any congestion or
disruption in its port, rail and road networks, electricity grid, communication systems or any other public
facility could disrupt our normal business activity. Any deterioration of India‘s physical infrastructure
would harm the national economy, disrupt the transportation of goods and supplies, and add costs to doing
business in India. These problems could interrupt our business operations, which could have an adverse
effect on our results of operations and financial condition.

47. The proposed adoption of IFRS, which we expect to have to adopt effective April 1, 2011, could have a
material adverse effect on the price of the Equity Shares.

Public companies in India, including our Company, may be required to prepare annual and interim financial
statements under IFRS in accordance with the roadmap for the adoption of, and convergence with, IFRS
announced by the Ministry of Corporate Affairs, GoI, through the press note dated January 22, 2010 (the
―MCA Press Release‖) and the clarification thereto dated May 4, 2010 (together with the MCA Press
Release, the ―IFRS Convergence Note‖). Pursuant to the IFRS Convergence Note, all companies in India
whose shares or other securities are listed on stock exchanges outside India will be required to prepare their
annual and interim financial statements under converged accounting standards in a phased manner
beginning with the Fiscal commencing April 1, 2011. Our financial condition, results of operations, cash
flows or changes in shareholders‘ equity may appear materially different under IFRS than under Indian
GAAP. This may have a material adverse effect on the amount of income recognised during that period and
in the corresponding (restated) period in the comparative Fiscal Year/period.

xxvi
 In addition, in our transition to IFRS reporting, we may encounter difficulties in the ongoing process of
implementing and enhancing our management information systems. Moreover, our transition may be
hampered by increasing competition and increased costs for the relatively small number of IFRS-
experienced accounting personnel available as more Indian companies begin to prepare IFRS financial
statements.

48. Our business and activities will be regulated by the Competition Act, 2002.

The Competition Act, 2002 (the ―Competition Act‖), several provisions of which have recently been
brought into effect, is designed to prevent business practices that have an appreciable adverse effect on
competition in India. Under the Competition Act, any arrangement, understanding or action in concert
between enterprises, whether formal or informal, which causes or is likely to cause an appreciable adverse
effect on competition in India is void and attracts substantial monetary penalties. Any agreement which
directly or indirectly determines purchase or sale prices, limits or controls production, shares the market by
way of geographical area or market or number of customers in the market is presumed to have an adverse
effect on competition. Further, if it is proved that the contravention committed by a company took place
with the consent or connivance or is attributable to any neglect on the part of, any director, manager,
secretary or other officer of such company, that person shall be guilty of the contravention and liable to be
punished.

The effect of the Competition Act on the business environment in India is as yet unclear. If we are affected,
directly or indirectly, by any provision of the Competition Act, or its application or interpretation, including
any enforcement proceedings initiated by the Competition Commission and any adverse publicity that may
be generated due to scrutiny or prosecution by the Competition Commission, it may have a material adverse
effect on our business, financial condition and results of operations.

49. There is no guarantee that the Equity Shares offered under this Issue, will be listed on the Stock
Exchanges in a timely manner or at all, and any trading closures at the Stock Exchanges may adversely
affect the trading price of our Equity Shares.

In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted
until after those Equity Shares have been issued and Allotted. Approval will require all other relevant
documents authorizing the issuing of Equity Shares to be submitted. There could be a failure or delay in
listing the Equity Shares on the Stock Exchanges. Any failure or delay in obtaining the approval would
restrict your ability to dispose of your Equity Shares.

50. An active market for our Equity Shares may not be sustained, which may cause the price of our Equity
Shares to fall.

While our Equity Shares are traded on the Stock Exchanges, there can be no assurance regarding the
continuity of the existing active or liquid market for our Equity Shares, the ability of investors to sell their
Equity Shares or the prices at which investors may be able to sell their Equity Shares. The price of our
Equity Shares on the Stock Exchanges may fluctuate after this Issue as a result of several factors, including:
volatility in the Indian and global securities market; our operations and performance; performance of our
competitors; the perception of the market with respect to investments in the materials handling industry;
adverse media reports about us or the paper manufacturing industry; changes in the estimates of our
performance or recommendations by financial analysts; significant developments in India‘s economic
liberalisation and deregulation policies; and significant developments in India‘s fiscal regulations. There
can be no assurance that an active trading market for our Equity Shares will develop or be sustained after
this Issue, or that the prices at which our Equity Shares are initially traded will correspond to the prices at
which our Equity Shares will trade in the market subsequent to this Issue.

51. Any future issuance of Equity Shares may dilute your shareholding, and sales of our Equity Shares by
our Promoter or other major shareholders may adversely affect the trading price of our Equity Shares.

Any future equity issuances by us, including a primary offering, may lead to the dilution of investors‘
shareholdings in our Company. Further, as on the date of this Draft Letter of Offer, the Company had 50
FCCBs outstanding, convertible into 23,52,105 Equity Shares. Further, the Company is contemplating, is,
subject to market conditions and applicable statutory and regulatory requirements, contemplating to offer,

xxvii
 issue and allot additional FCCBs. Any future equity issuances by the Company either in the form of
qualified institutions placement or conversion of FCCBs or pursuant to a preferential allotment shall lead to
the dilution of your shareholding in the Company. Any future equity issuances by us or sales of our Equity
Shares by our Promoter or other major shareholders may adversely affect the trading price of our Equity
Shares. In addition, any perception by potential investors that such issuances or sales might occur could also
affect the trading price of our Equity Shares.

52. There are restrictions on daily movements in the price of our Equity Shares, which may adversely affect
a shareholder‟s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.

We are subject to a daily ‗circuit breaker‘ imposed by the Stock Exchanges, which may not allow
transactions beyond specified increases or decreases in the price of our Equity Shares. This circuit breaker
operates independently of the index-based, market-wide circuit breakers generally imposed by SEBI on
Indian stock exchanges. The percentage limit on our circuit breakers is set by the Stock Exchanges based on
the historical volatility in the price and trading volume of our Equity Shares.

The Stock Exchanges will not inform us of the percentage limit of the circuit breaker in effect from time to
time and may change it without our knowledge. This circuit breaker will limit the upward and downward
movements in the price of our Equity Shares. As a result of this circuit breaker, no assurance may be given
regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity
Shares at any particular time.

Prominent Notes

1. Our Company‘s net worth on a restated and standalone basis as at September 30, 2010 was ` 557.19
crores and the Company‘s net worth on a restated and consolidated basis as at September 30, 2010 was
` 557.00 crores. The Issue is for an aggregate amount not exceeding ` 250.00 crores

2. The net asset value per Equity Share as at September 30, 2010, was ` 71.29, as per our restated
standalone financial statements and the net asset value per Equity Share as at September 30, 2010, was
` 71.26, as per our restated consolidated financial statements.

3. The Promoter of our Company acquired 1,43,44,407 shares in our Company for consideration other
than cash in terms of BACL Scheme of Amalgamation. For details see the section titled ―Capital
Structure‖ and ―History and Certain Corporate Matters‖ on pages 23 and 87.

4. Except as disclosed otherwise in ―Our Promoter and Group Companies‖ on page 117, and in ―Related
Party Transactions‖ on page 140, and to the extent of any Equity Shares held by them and to the
extent of the benefits arising out of such shareholding, none of the Group Companies have any business
or other interests in the Company.

5. There have been no financing arrangements whereby the Promoter Group, the directors of the Promoter
of our Company, the Directors of our Company and their relatives have financed the purchase by any
other person of Equity Shares of our 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. In addition to disclosures under ―Related Party Transactions‖ on page 140, the details of transactions
between the Company and the Group Companies or Subsidiaries during the last Fiscal year, are set
forth below:

(` in crores)
S. No Name of the company Nature of transaction Cumulative value
1. JK Lakshmi Cement Limited Sale of cement to Company 0.66
Purchase of paper products from 0.07
Company
Reimbursement of expenses received 2.06
from Company
Reimbursement of expenses paid to 0.87
Company
2. JK Tyre and Industries Limited Reimbursement of expenses received 0.31

xxviii
 S. No Name of the company Nature of transaction Cumulative value
from the Company
Reimbursement of expenses paid to 0.18
the Company
Purchase of paper products from the 0.004
Company
3. Fenner (India) Limited Purchase of V-belts and other items 0.02
4. Pranav Investment (M.P.) Dividend paid on 3,108 10% CRPS 0.004
Company Limited Premium paid on 3,108 10% CRPS 0.81
Redemption of 3,108 10% CRPS 0.031
5. Umang Dairies Limited Interest received on inter-corporate 0.06
loan

7. The investors may contact the Lead Manager, for any complaint pertaining to the Issue.

8. Except as disclosed in ―Financial Statements-[•]‖, there are no related party transactions entered into
by our Company.

xxix
 SECTION III - INTRODUCTION

SUMMARY OF INDUSTRY OVERVIEW

I) Global Paper Industry Overview

The total consumption of paper globally in 2009 was estimated as 364.0 million tonnes. Asia contributed the
maximum to this consumption pattern with a total consumption of 155.7 million tonnes, followed by Europe and
North America at 93.5 and 78.1 million tonnes respectively

II) Domestic Paper Industry Overview

India consumed only about 3% of global paper production. India‘s per capita consumption of paper averaged
around 8.4 kgs in 2009, as compared to a global average of 54.3 kgs (Source: CRISIL Research Paper Annual
Review November 2010). Indian consumption has also lagged the global averages in past years. However, the
per capital consumption in India has shown a persistent rising trend over the past years.

Domestic Demand-Supply Situation:

The stable economic growth in India has led to a gradual but persistent rise in the consumption of paper and
board. The demand for paper has grown at a CAGR of 6.7% from 2004-05 to 2009-10. The total demand in
2009-10 was approximately 8.14 mn tonnes in 2009-10 which has risen from approximately 5.89 mn tonnes in
2004-05.( Source: CRISIL Research Paper Annual Review November 2010). Domestic capacity increases have
not kept pace with the growth in demand, showing a CAGR of just 5.6%. This has meant that there has been a
steady increase in imports.

Structure of Indian Paper Industry:

The domestic Indian paper industry can be divided into four broad segments namely Writing and Printing Paper
(WPP), Industrial Paper (IP), Newsprint (NP) and Speciality Paper (SP). The IP segment contributed the largest
proportion of demand in 2009-10, at 49% of total demand in volume terms. The total paper industry market size
in 2009-10 has been estimated at Rs 317 bn and the WPP segment is the highest value segment and accounts for
43.5% of the total market size.

Our company operates in the WPP and IP segments, details of which are provided below

Writing and Printing Paper:

The WPP segment accounts for almost 32% of the total demand of paper in the country. This segment consists
of varieties of paper, normally under 120 GSM used primarily for writing (stationery) and printing (textbooks
and notebooks). The various varieties of WPP starting from the lower end of the value chain are creamwove,
maplitho, copier and coated paper.

1
In terms of market size for 2009-10, creamwove accounted for Rs. 56.9 bn, maplitho for Rs. 35.4 bn. coated
paper for Rs. 23.0 bn and branded copier for Rs. 22.6 bn.

The branded copier paper and coated paper segments have grown at a cumulative annual average rate of 17.5%
and 18.1%, respectively, from Fiscal 2006 to Fiscal 2010 (Source: IPMA Report, March 2010)

Industrial Paper

This segment caters to the packaging of manufactured goods. It may be classified into tertiary packaging (which
includes kraft paper) and consumer packaging (which includes greyback paperboard, whiteback paperboard,
folding box board (FBB) and solid bleached board (SBB)).

Tertiary packaging mainly refers to the packaging for the containment and safeguard of goods during storage,
handling and transportation. Such paperboards are made mainly from kraft paper. Kraft paper is usually the
brown paper used for manufacturing brown bags and cartons. Corrugated boxes account for about 90% of the
total demand for kraft paper.

Consumer packaging refer to secondary packaging of goods. It is done not only for protection of goods but also
as a brand building and marketing measure. The primary varieties in this segment include Greyback, Whiteback,
Folding box board and Solid bleached board.

Kraft paper accounts for nearly 55% of demand, followed by Greyback and Whiteback at 37% and
FBB/SBB/Others at 8%. Demand for paperboard has increased at a CAGR of 6.7% to an estimated 4.7 mn
tonnes in 2009-10 from 3.4 mn tonnes in 2004-05.

III) Costs and Prices

Costs:
The primary inputs for the manufacture of paper are the fiber (derived from wood, waste paper, agri residues
etc) and the power and fuel expenses. While actual costs may vary based upon individual company product
profiles and locations, these two together typically account for almost 70% of the total costs.

Fiber Costs

The three main sources of fiber are:

a) Wood or bamboo
b) Waste paper
c) Agri- residue such as Bagasse
Wood accounts for 37% of production, while wastepaper and agri residue account for 32% and 31%
respectively

Described below are the key raw materials in use by Our Company:

Wood / Bamboo:

Softwood is not used in India given its unavailability. High end products require the use of imported pulp.
Hardwood prices depend upon the location from where a company sources its requirements. Prices of hardwood
and bamboo have been increasing in recent years to over 3500 Rs/tonne (2009-10) from approximately 2500
Rs/tonne (2004-05) for hardwood and from approximately 1700 Rs/tonne (2004-05) to approximately 3250
Rs/tonne (2009-10) for bamboo.

Pulp:

Pulp prices for imported pulp have also seen an increase in recent years. Since April 2005, pulp prices for US
and Indonesian hardwood pulp have increased from around 550 USD per tonne to close to 750 USD per tonne in
July 2010. Along similar lines, the prices of US softwood pulp have increased from 550 USD per tonne to close
to 800 USD per tonne.

2
Paper Prices:

The prices of most varieties in the WPP and IP segments have been growing in the recent years. Prices reduced
on a y-o-y basis in 2009-10 owing to the general economic conditions that prevailed in 2009-10, however,
excluding this, prices have seen a secular uptrend since 2004-05 as shown below:

IV) Characteristics and concerns for the industry

Characteristics of the industry:

a) The industry is fragmented in nature with between 500 to 1000 mills in India. Further, paper mills are
largely of small size in India with nearly 45% of paper mills in India being small units (less than 7500 tpa)
with only about 15% with capacities in excess of 33,000 tpa (large mills)

b) Raw material availability decides location of plants with most paper mills in India are located close to the
source of the raw materials (forests and coal pit heads) and skilled labour

c) High entry barriers preventing entry of new players since setting up a paper mill calls for a substantial
capital outlay.

Concerns:

a) Raw material availability is a key concern with wood and wood based pulp being limited by availability of
forest resources and the use of wood for alternate purposes leading to competition.

b) Substitution of paper products by other products, while not threatening is on the rise with products in the IP
segment competing with products such as polymers, wood and steel for packaging.

c) Reducing import duty levels over the years is also a concern given the increase in imports

d) Capacity Additions by other players in the industry owing to the growth in demand could lead to temporary
pricing pressures

V) Growth Expectations:

The information provided below should be read in conjunction with ―Risk Factors‖ on page ix.

Estimates indicate that the Indian paper industry will grow at a CAGR of 10.7% from its current levels of Rs.
317 bn in 2009-10 to Rs. 526 bn in 2014-15, the demand being driven by strong industrial and economic
growth. WPP is likely to be the largest segment with a market share of around 42% followed by paperboard at
39%. The shares of speciality paper and newsprint are expected to be around 7% and 13% respectively.

Among the segments, demand for paperboard is expected to increase as 7.8% CAGR to reach 6.7 mn tonnes in
2014-15 driven by a healthy growth in industrial production and a sustained demand for consumer goods. The
WPP segment is expected to increase in demand at a 7.6% CAGR till 2014-15 as compared to a 6.5% CAGR in
the preceding 5 years.

3
 SUMMARY OF OUR BUSINESS

Overview

We are the largest producer of branded paper in terms of production and a leading player in the ‗fine papers‘ and
‗virgin packaging board‘ segments, in terms of market share, in India. We are a market leader in the branded
copier paper segment in India where we had a market share of approximately 28.8% (Source: CRISIL Research
Paper Annual Review, November 2010). We manufacture and sell a diverse and multi-application range of
papers, specialty papers, allied stationery and virgin packaging board products and are focused in the production
and marketing of high-end paper and virgin packaging board products. As on September 30, 2010, our
distribution network of paper and virgin packaging board products comprises of four regional offices, six
warehouses, 134 wholesalers and various dealers, enabling us to have a pan-India presence. Additionally, we
export our paper and virgin packaging board to over 40 countries including in Brazil, UK, Turkey, Middle East,
Sri Lanka, Bangladesh, Singapore, Malaysia and several African nations. We are a part of the JK Group, one of
the leading business brands in India, with a significant presence in automotive tyres and tubes, cement, power
transmission including V-belts, oil seals, hybrid agricultural seeds, system engineering, sugar, dairy products,
textiles, health care, clinical research and the paper and pulp brand segments, among others, with presence in
India as well as several other countries.

We operate two integrated manufacturing facilities, the JK Paper Mills Unit at Rayagada, Odisha (―Unit
JKPM‖) and the Central Pulp Mills Unit at Songadh, Gujarat (―Unit CPM‖), for the production of paper and
virgin packaging boards, with a combined manufacturing capacity of 240,000 TPA. Our Unit JKPM presently
has an installed capacity of 125,000 TPA for manufacturing paper and saleable pulp. In addition, our blade
coating facility was commissioned at the Unit JKPM in July 2005 to produce quality coated paper, enabling us
to move up the value chain and capitalize on the growing market of coating paper. The capacity of the coating
plant at the Unit JKPM is 46,000 TPA. We are the second largest producer of coated paper in India. (Source:
IPMA Report, March 2010) Further, we commissioned a pulp drying plant at our Unit JKPM, in 2001 to
increase the output and realization of market pulp. Our Unit CPM presently has an installed capacity of 55,000
TPA for manufacturing paper and saleable pulp. Additionally, we have set up a packaging board plant at our
Unit CPM, which was commissioned in October 2007, with an installed capacity of 60,000 TPA, which is
equipped with contemporary technology sourced from global leaders in the paper board machinery sector.

We were incorporated as ‗The Central Pulp Mills Limited‘ in 1960, as a pulp manufacturing facility, at
Songadh, in Gujarat, and started paper production in 1975. We were subsequently referred to the BIFR in 1988
due to accumulated losses. We were declared a sick industrial company in terms of the Sick Industrial
Companies (Special Provisions) Act, 1985 in 1989. The JK Group, as part of its strategy to strengthen its
position in the paper manufacturing market, acquired our Company in 1992, pursuant to a rehabilitation scheme
sanctioned by the BIFR. In 2000, as part of a restructuring exercise undertaken by JK Lakshmi Cement Limited,
the Unit JKPM, which was operating as a division of JK Lakshmi Cement Limited for its paper manufacturing
business, was consolidated with our Company, which was subsequently renamed as ‗JK Paper Limited‘.

Our Company and our manufacturing units have received numerous awards and recognitions, such as, the ‗Good
Corporate Citizen Award-2006‘ by PHD Chambers of Commerce & Industry, ‗Certificate of Appreciation for
Excellence in Energy Management – 2008‘ by Bureau of Energy, GoI, for our Unit JKPM, the ‗Paper Mill of
the Year‘ award from Indian Paper Manufacturers Association, for our Unit CPM in 2004 and the ‗Greentech
Environment Excellence Award 2010 - Winner of Gold Award in Paper Sector‘ to our Unit CPM, among others.
Further, we were awarded the ‗TPM Excellence First Category Award‘ for the year 2006 by the Japan Institute
of Plant Maintenance for both our manufacturing units.

We have been conscious in addressing environmental and safety concerns and have regularly introduced cleaner
and environment-friendly technologies in our manufacturing units. Both our manufacturing units are ISO 9001 –
2008 compliant, operating at over 100% capacity utilization and are equipped with all of the requisite facilities
for end-to-end environmentally compliant operations ranging from production of pulp to finishing and
packaging of our paper, virgin packaging board and stationery products. Our Unit JKPM has been adjudged as
the ‗First Greenest Paper Mill‘ in 1999 and ‗Second Greenest Paper Mill‘ in 2004 by Centre for Science &
Environment (CSE) Additionally, both our manufacturing units are ISO 14001 certified for their eco-friendly
operations and OHSAS 18001:2007 certified for occupational health and safety management system standards.

Our Equity Shares re-admitted for trading on the BSE in 1992. Our Equity Shares were listed on the VSE and
the NSE in 1995 and 2005 respectively. However, our Equity Shares were delisted from the VSE in 2007.

4
For the six month period ending September 30, 2010 and Fiscal 2010, based on our restated consolidated
financial statements, our net sales were ` 613.16 crores and ` 1,122.34 crores, respectively, and our adjusted
profit after tax was ` 57.75 crores and ` 91.98 crores, respectively, and for the Fiscal 2009, based on our
restated standalone financial statements, our net sales were ` 1,092.85 crores and our adjusted profit after tax
was ` 37.46 crores.

Our Strengths

Our business is characterized by the following key strengths:

Established „JK‟ brand recognition in the paper industry

We believe the ―JK Paper‘ brand has an established reputation in the Indian market. This is reflected in our
market share of approximately 28.8%, in the branded copier paper segment in India. In virgin packaging board
segment, out of the total production of 3,87,000 tonnes during Fiscal 2010 in India, our Company produced
66,135 tonnes. We are the largest producer of branded papers in India in terms of production, second largest
producer of virgin board, and a leading player in the ‗fine papers‘ segment, in terms of market share. (Source:
CRISIL Research Paper Annual Review, November 2010) We believe that our brand commands respect and
credibility and offers us competitive advantages, enabling us to maintain our leadership position in the branded
market along with strengthening the brand equity of our leading products such as ‗JK Copier‘, ‗JK Excel Bond‘
and ‗JK Easy Copier‘.

Both our manufacturing units are ISO 9001 – 2008 compliant. In Fiscal 2010, our Unit JKPM operated at
110.14% capacity utilization and Unit CPM operated at 118.33% capacity utilization. The paper manufacturing
unit at Unit CPM operated at 118.60% capacity utilization and the virgin packaging board manufacturing unit at
Unit CPM operated at 118.09% capacity utilization. Both our manufacturing units are equipped with the
requisite facilities for end-to-end environmentally compliant operations ranging from production of pulp to
finishing and packaging of our paper, stationery and virgin packaging board products. Additionally, both our
manufacturing units are ISO 14001 certified for their eco-friendly operations and OHSAS 18001:2007 certified
for occupational health and safety management system standard.

Diverse product range and ability to identify customer requirements

We manufacture and sell a diverse and multi-application range of papers, specialty papers, allied stationery and
virgin packaging board products to serve and satisfy the growing requirements of customers. We produce paper
under several brands which are used for varied purposes, including in diaries, notepads, letterheads, calendars,
balance sheets, book printing, labels, photocopying, project reports, resumes, inkjet, laserjet and colour printers,
office stationary, envelopes, mark sheets, share certificates and financial instruments, among others. Our
speciality papers are used for MICR cheques and other premium printing applications such as P.O.P materials,
catalogues, brochures, books and calendars. Additionally, our virgin packaging board products serve a diverse
range of customer requirements, including in packaging of FMCG products such as cosmetics, food,
pharmaceuticals and garments, personal care products, greeting cards, life style products, book covers, beverage
cups and playing cards, among others. We strive to identify specific customer needs and to increase our products
range, from economy to premium segment, varying in terms of brightness, smoothness, opacity, stiffness while
at the same time ensuring quality of printability and runnability in printing machines.

Our Company introduced high quality bond paper ‗Finesse‘ in A4 size consumer friendly retails packs of 100
sheets in 1998 and also laser paper in 1999. In recent times, our Company has introduced ‗Cedar‘ in 2009, a
high quality paper for use in colour printers and for making corporate presentations, developed the high value
MICR cheque paper and branded ‗JK Savannah‘ in A4 packs, which have been well received in the market. We
believe our dedicated effort towards increasing our products range and the ability to identify varying customer
requirements contribute significantly to our position as one of the leading players of the pulp and paper industry
in India.

Locational advantages of our manufacturing units

Our manufacturing units are strategically located to meet our requirements with respect to raw materials as well
as to ensure timely delivery of our products to our customers. Both our units are connected to rail and road
networks. Our Company has a competitive advantage of location with respect to sourcing of raw materials as we

5
source bamboo and hardwood within an average distance of 325 kms from Unit JKPM and 500 kms from Unit
CPM.

Our Unit JKPM at Rayagada, Odisha procures privately grown bamboo from North Odisha as and when
required in addition to sourcing bamboo from the forests under the control of the state government of Odisha,
where the Company has long term extraction concessions. Our Unit JKPM meets its water requirement from the
Nagavali river, a perennial river flowing within one km distance from the unit. Hardwood is procured mainly
from Odisha and the neighbouring states of Andhra Pradesh and West Bengal.

Our Unit CPM at Songadh, Gujarat procures bamboo for its paper production primarily from the forests leased
from the Government of Gujarat. Further, our Unit CPM, equipped with manufacturing facilities for our virgin
packaging board products, is located on the western coast of India near the main consumption markets in the
states of Maharashtra and Gujarat. This gives us significant cost as well as time advantage in reaching supplies
to the customers. The location also facilitates faster imports logistics since the ports are nearer to our Unit CPM
compared to the facilities of our competitors.

Additionally, our manufacturing units are favorably located to effectively cover geographically dispersed
demand centers like Mumbai, Ahmedabad, Chennai, Bangalore, Hyderabad, Cochin, Kolkata, New Delhi,
Varanasi, Patna, Guwahati, Bhubaneshwar, Nagpur, Madurai, Sivakasi, Vijaywada, Raipur and Cuttack through
our distribution network.

Strong relationships with key customers

We have long-standing relationships with leading publishers, wholesalers, commercial printers and retailers. We
believe our sales strategy, which includes both direct sales to our larger customers and sales to wholesalers and
retailers, who then resell our products, has enabled us to reduce our sales costs and enhance customer service. In
relation to our paper products, our relationships with our five largest customers, which contributed
approximately 20.30% and 21.20% of our net sales for the six month period ended September 30, 2010 and
Fiscal 2010, respectively, is more than 10 years old. In relation to our virgin packaging board products, our
relationships with our five largest customers, which contributed approximately 9.62% and 9.31% of our net
sales for the six month period ended September 30, 2010 and Fiscal 2010, respectively, is since the beginning of
commercial production of our virgin packaging board products, i.e.; October 2007. We seek to continue to
enhance our relationships with our key customers by providing them with a high level of value-added customer
service.

Our plantation initiatives ensure strong backward linkages for sourcing raw materials

Our plantation initiative was started in 1990 at our Unit JKPM and later extended to our Unit CPM. Our
Company has been aggressively promoting social and farm forestry and high yielding clones developed by our
in-house research and development institutions in the areas close to our manufacturing units, i.e., in Odisha and
Andhra Pradesh for our Unit JKPM and in Gujarat and Maharashtra for our CPM Plant, to provide for
sustainable supply of raw materials and increasing benefit to the villagers. Under this programme, carried out on
the land owned by people residing in villages near to our manufacturing units, villagers are educated to adopt
scientific methods of growing trees besides being supplied with high quality seeds, seedlings and high yielding
clones. During Fiscal 2010, an additional area of 4,200 hectares of land was covered under this programme by
utilising over 2 crore seedlings/plants. Procurement of wood from farm forestry sources now accounts for over
70-75% of our Company‘s raw materials consumption. Our Company has developed seed orchards of high
yielding strains of various species including Eucalyptus and Casuarina. We are presently operating such social
and farm forestry programs in Koraput, Rayagada, Ganjam, Gajpati and Kalahandi districts of Odisha, Dhule,
Nandurbar, Jalgaon and Nashik districts of Maharashtra, Tapi, Surat, Bharuch, Baroda, Kheda and Valsad
districts of Gujarat and Vizianagram, Srikakulam and Vishakhapatnam districts of Andhra Pradesh.
Additionally, the location and proximity of our manufacturing units to the areas in which are plantation
initiatives are carried out, in comparison to our competitors, benefits our Company by assisting in the
continuous procurement of raw materials in the long term.

Modern and advanced manufacturing technology and infrastructure

Our manufacturing units are equipped with modern and advanced manufacturing technology and infrastructure,
enabling us to maintain our position amongst leaders in quality paper segment in India. Our modern and
advanced manufacturing technology includes, amongst others, efficient chip washing system, implementation of

6
DCS control and oxygen delignification plant that helps in reduction of chlorine consumption. Further, we are
the exclusive licensee of ‗colorlok technology‘ and ‗colorlok trademark‘ in India, for manufacture of high
quality copier paper. We believe that our dedicated effort towards use and continuous upgradation of
manufacturing technology and infrastructure contributes significantly to our position as one of the leading
players of the pulp and paper industry in India.

Our Business Strategies

Our aim is to further strengthen our position as one of India‘s leading paper manufacturing and selling
companies, to enhance our manufacturing capacity and increase our products range and to increase our
geographical reach in India and abroad to complement our brand. In order to achieve our aim, we intend to
follow the key business strategies described below:

Increase our market share in the paper and virgin packaging board segments

We seek to take advantage of our competitive strengths to further increase our market share in the paper and
virgin packaging board business segments. The branded copier paper and coated paper segments are market
segments that, in addition to being more stable than other market segments, have grown at a cumulative annual
average rate of 17.5% and 18.1%, respectively, from Fiscal 2006 to Fiscal 2010 (Source: IPMA Report, March
2010). We intend to continue our focus and our marketing efforts on the sale of our copier paper products,
coated paper products (especially in higher gsm range) and virgin packaging board products. We seek to further
increase our market share by enhancing our manufacturing capacity at our Unit JKPM. For details, see ―Objects
of the Issue‖ on page 34.

Maintain our focus on increasing our products range and moving up the value chain

Our Company has consistently focused on increasing its product range, particularly in the high value added
segment like branded copier paper, for instance, ‗JK Copier Plus‘, premium watermark bond, for instance, ‗JK
Excel Bond‘, premium digital coated paper, ‗Cedar‘, and virgin packaging board, for instance, ‗JK TuffCote‘
and ‗JK Ultima‘. We seek to identify specific customer needs and to increase our products range, from economy
to premium segment, by employing a combination of innovative and creative marketing initiatives such as
advertising in the print media, trade and consumer campaigns at the national level, road shows and select
customer meets. We believe that this will contribute towards enhancing our reputation as one the leading players
in the Indian pulp and paper manufacturing industry.

Expanding operations and our distribution network in new markets

We are actively involved in market expansion beyond the Indian market to ultimately have a global footprint for
our paper and virgin packaging board products. Our Company is presently exporting paper and virgin packaging
board to over 40 countries including in Brazil, UK, Turkey, Middle East, Sri Lanka, Bangladesh, Singapore,
Malaysia and several African nations. We intend to capitalize on our established global network and further
expand the reach of our paper and virgin packaging board products in international markets.

Further, our wholesalers and retailers form an important part of our distribution network and help us reach the
end-use customers of our paper, allied stationery and virgin packaging board products. We believe that our wide
distribution network, consisting of four regional offices, six warehouses, 134 wholesalers and various dealers, as
of September 30, 2010, enables us to have a pan-India presence. We intend to further expand our distribution
network across our geographies, by identifying pockets of opportunities and ensure a direct or indirect presence
in these areas.

Ensuring continuous raw material supply

Our Company is focused on ensuring long-term continuous supply of pulp wood, primary raw material used in
manufacturing of our products, by promoting farm forestry activities. We provide high quality seedlings/clones
to private farmers located within the vicinity of our manufacturing units, and source wood back from such
farmers. During Fiscal 2010, an additional area of 4,200 hectares of land was covered under this programme by
utilising over 2 crore seedlings/plants. At present, procurement of wood from farm forestry sources accounts for
over 70-75% of our raw material consumption. We seek to further increase our dependency on farm forestry
sources and consequently decrease our dependency on government and other sources. We believe that this
would reduce uncertainty in availability of raw materials and also assist us in arresting significant increase in

7
costs of raw materials.

8
 SUMMARY FINANCIAL INFORMATION

The following tables set forth our selected historical financial information derived from our consolidated
financial statements for the six months period ended September 30, 2010, Fiscal 2010, Fiscal 2009, nine-months
period ended March 31, 2008, Fiscal 2007 and Fiscal 2006, all prepared in accordance with Indian GAAP, the
Companies Act and the SEBI ICDR Regulations as described in the Report of the Auditor included in
―Financial Statements‖ on page 141, and this table should be read in conjunction with the financial statements
mentioned therein and the notes thereto.

SUMMARY FINANCIAL INFORMATION FROM OUR RESTATED STANDALONE FINANCIAL

STATEMENTS

9
10
11
SUMMARY FINANCIAL INFORMATION FROM OUR RESTATED CONSOLIDATED FINANCIAL
STATEMENTS

12
13
14
 THE ISSUE

Rights Entitlement [●] Equity Shares for every [●] fully paid-up Equity Shares held on
the Record Date
Record Date [●], 2011
Issue Price per Equity Share ` [●]
Face value per Equity Share ` 10
Equity Shares outstanding prior to the Issue* 7,81,49,939 Equity Shares
Equity Shares outstanding after the Issue [●] Equity Shares
(assuming full subscription for and Allotment of
the Rights Entitlement)
Terms of the Issue For more information see, ―Terms of the Present Issue‖ on page
276
Use of Issue Proceeds For more information see, ―Objects of the Issue‖ on page 34

In April 2006, our Company issued 50 FCCBs for an aggregate value of USD 50,00,000, due for redemption on March 30, 2011 (“2006
FCCBs”). The 2006 FCCBs are convertible into such number of Equity Shares, as determined in accordance with the terms of the
Offering Circular dated March 30, 2006, at any time on or prior to March 17, 2011. In the event the Record Date is on or before March
17, 2011, our Company shall make reservation of such number of Equity Shares to which the holders of the outstanding 2006 FCCBs
are entitled to as on the Record Date, in favour of such holders.

In terms of a resolution passed by the Board on October 29, 2010 and a special resolution passed by the Shareholders on
December 1, 2010, the Company has been authorized to issue securities, including foreign currency convertible bonds,
for an amount aggregating up to ` 250 crores. Our Company is, subject to market conditions and applicable statutory and
regulatory requirements, contemplating to issue and allot foreign currency convertible bonds (“2011 FCCBs”). In the
event the Company proceeds with the allotment of 2011 FCCBs before the Record Date, our Company shall make
reservation of such number of Equity Shares to which the holders of the 2011 FCCB are entitled, in favour of such
holders.

The Equity Shares reserved for the holders of the outstanding 2006 FCCBs and 2011 FCCBs, if any, shall be issued at the time of
conversion of such foreign currency convertible bonds or Allotment under this Issue, whichever is later, on the same terms on which
Equity Shares are issued under this Issue, in accordance with Regulation 53 of SEBI ICDR Regulations.

15
 GENERAL INFORMATION

Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on January 28,
2011, it has been decided to make the following offer to the Equity Shareholders of the Company, with a right to
renounce:

The issue of [●] Equity Shares with a face value of ` 10 each for cash at a price of ` [●] each (including a
premium of ` [●] each) aggregating to an amount not exceeding ` 250 crores by the Company to the
Equity Shareholders on rights basis in the ratio of [●] Equity Shares for every [●] Equity Shares held on
the record date, i.e., [●]. The issue price for the Equity Shares is [●] times the face value of the Equity
Shares.

Registered Office of the Company

P.O. Central Pulp Mills - 394 660

Fort Songadh
District Tapi,
Gujarat

Corporate Office

Nehru House
4, Bahadur Shah Zafar Marg
New Delhi - 110 002

Registration No. 04-18099

Corporate Identification No. L21010GJ1960PLC018099

Address of the RoC

Office of the Registrar of Companies, Gujarat

Dadra and Nagar
RoC Bhawan
Opposite Rupal Park Society
Naranpura
Ahmedabad 380 013, Gujarat, India

The Equity Shares of the Company are listed on the Stock Exchanges.

Board of Directors

Name, Fathers Name, Designation Occupation, Age, DIN and Term, Address
Mr. Hari Shankar Singhania Occupation: Industrialist

S/o Late Mr. Lakshmipat Singhania Age: 78 years

Designation: Chairman DIN: 00051324

Term: Five years with effect from January 1, 2007

Address: 19, Prithviraj Road, New Delhi 110 011, India

Mr. Harsh Pati Singhania Occupation: Industrialist

S/o Mr. Bharat Hari Singhania Age: 50 years

Designation: Managing Director (Executive DIN: 00086742

Non-Independent)
Term: Five years with effect from January 1, 2007

Address: 19, Prithviraj Road, New Delhi 110 011, India

Mr. Om Prakash Goyal Occupation: Company Executive

16
 Name, Fathers Name, Designation Occupation, Age, DIN and Term, Address
S/o Late Mr. B.D.Goyal Age: 68 years

Designation: Whole-time Director (Executive Non- DIN: 00030115

Independent)
Term: Three years with effect from September 7, 2009

Address: B-50, Sector-XIV, Noida, Uttar Pradesh 201 301, India

Mr. Dhirendra Kumar Occupation: Business

S/o Late Mr. Bhagwat Prasad Age: 67 years

Designation: Non-Executive Non- Independent DIN: 00153773

Director
Term: Liable to retire by rotation

Address: 11, Mandevilla Gardens, Kolkata 700 019, West

Bengal, India
Mrs. Vinita Singhania Occupation: Industrialist

W/o Late Mr. Shripati Singhania Age: 58 years

Designation: Non Executive Non-Independent DIN: 00042983

Director
Term: Liable to retire by rotation

Address: 101, Friends Colony (East), New Delhi 110 065, India
Mr. Arun Bharat Ram Occupation: Industrialist

S/o Late Dr. Bharat Ram Age: 70 years

Designation: Non-Executive Independent Director DIN: 00694766

Term: Liable to retire by rotation

Address: 1, Silver Oak Avenue, Westend Green Farms, Rajokari,

New Delhi 110 038, India
Mr. M.H. Dalmia Occupation: Industrialist

S/o Late Mr. Jaidayal Dalmia Age: 69 years

Designation: Non- DIN: 00009529

Executive Independent Director
Term: Liable to retire by rotation

Address: Dalmia House 20 F, Prithviraj Road, New Delhi 110

011, India
Mr. R.V. Kanoria Occupation: Industrialist

S/o Mr. Shyam Sundar Kanoria Age: 56 years

Designation: Non- DIN: 00003792

Executive Independent Director
Term: Liable to retire by rotation

Address: A-45, Vasant Marg, Vasant Vihar, New Delhi 110 057,
India
Mr. Shailesh Vishnu Haribhakti Occupation: Chartered Accountant

S/o Mr. Vishnu Bhagwandas Haribhakti Age: 54 years

Designation: Non- DIN: 00007347

Executive Independent Director
Term: Liable to retire by rotation

Address: 228, Kalpataru Habitat, B Wing, 22nd & 23rd Floor, Dr.

17
 Name, Fathers Name, Designation Occupation, Age, DIN and Term, Address
S.S.Road, Parel, Mumbai 400 012, Maharashtra, India
Mr. S.K. Pathak Occupation: Industrialist

S/o Late Mr. J.P. Pathak Age: 76 years

Designation: Non- DIN: 00928630

Executive Independent Director
Term: Liable to retire by rotation

Address: Villa no. 19, Umm Al Sheif Street, Jumeirah-3, Dubai,

United Arab Emirates
Mr. Udayan Bose Occupation: Banker

S/o Late Mr. Prabhas Chandra Bose Age: 61 years

Designation: Non- Executive Independent Director DIN: 00004533

Term: Liable to retire by rotation

Address: 34 A Sterling Apartments, Pedder Road, Mumbai 400

026, Maharashtra, India

For further details of our Directors, see ―Our Management‖ on page 100.

Company Secretary and Compliance Officer

Mr. Suresh Chander Gupta

Nehru House
4, Bahadur Shah Zafar Marg
New Delhi- 110 002, India
Tel: (91 11) 41509716
Fax: (91 11) 2373 9475
Email: jkpaper.rights@jkmail.com

Bankers to the Company

State Bank of India Axis Bank Limited

Corporate Account Group Branch Statesman House, 2nd Floor
Reliance House, 2nd Floor 148, Barakhamba Road
34, Jawahar Lal Nehru Road New Delhi 110 001, India
Kolkata 700 071, India Tel.: (91 11) 4368 2400
Contact Person: Mr. Uttam Chowdhury Fax: (91 11) 4368 2447
Tel.: (91 33) 2288 8117 Email:shaleen.verma@axisbank.com
Fax: (91 33) 2288 7037 Website: www.axisbank.com
Email:cagkol@sbi.co.in
Website: www.statebankofindia.com

IDBI Bank Limited Canara Bank

IRCS Building, 1 74, Janpath
Red Cross Road New Delhi 110 001
New Delhi 110 001 Tel.: (91 11) 2332 3594
Tel.: (91 11) 6628 1900 Fax: (91 11) 2332 3991
Fax: (91 11) 2375 2730 Email:lbadel0307@canbank.co.in
Email: sc.bhatt@idbi.co.in Website: www.canarabank.com
Website: www.idbi.com

ICICI Bank Limited

NBCC Place, Bhishm Pitamah Marg
Pragati Vihar, Lodhi Road
New Delhi- 110 003, India
Contact Person: Mr. Raman Aggarwal

18
Tel.: (91 11) 2439 0000
Fax: (91 11) 2439 0070
Email:raman.aggarwal@icicibank.com
Website: www.icicibank.com

Bankers to the Issue:

[●]
Tel: [●]
Fax: [●]
E-mail: [●]
Contact Person: [●]
Website: [●]

Self Certified Syndicate Banks

The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on
www.sebi.gov.in/pmd/scsb.html.

Issue Management Team

Lead Manager to the Issue

ICICI Securities Limited

ICICI Centre
H.T. Parekh Marg
Churchgate, Mumbai 400 020, India
Tel: (91 22) 2288 2460
Fax: (91 22) 2282 6580
E-mail: jkpaper.rights@icicisecurities.com
Website: www.icicisecurities.com
Contact Person: Sumanth Rao
Registration No: INM000011179

Legal Advisor to the Issue

Amarchand & Mangaldas & Suresh A. Shroff & Co.

Amarchand Towers
216, Okhla Industrial Estate, Phase III
New Delhi 110 020, India
Tel: (91 11) 2692 0500
Fax: (91 11) 2692 4900

Auditors of the Company

Lodha & Co.

12, Bhagat Singh Marg
New Delhi 110 001, India
Tel: (91 11) 2371 0176
Fax: (91 11) 4372 4461
Email: delhi@lodhaco.com
Firm Registration Number: 301051E

Registrar to the Issue

MCS Limited
F-65, Okhla Industrial Area
Phase I, New Delhi 110 020
Tel: (91 11) 4140 6149
Fax: (91 11) 4170 9881

19
E-mail id: admin@mcsdel.com
Website: www.mcsdel.com
Contact Person: S.K. Gupta
Registration No. INR000000056

Note: Investors are advised to contact the Registrar to the Issue/Compliance Officer in case of any pre-
Issue/post Issue related problems such as non-receipt of Letter of Offer/Abridged Letter of
Offer/CAF/Allotment advice/share certificate(s) / refund orders.

Monitoring Agency

As this is an Issue for less than ` 500 crore, there is no requirement for the appointment of a monitoring agency.
The Audit Committee will monitor the utilization of the proceeds of the Issue.

Project Appraisal

In terms of the letter dated January 14, 2011, Poyry Management Consulting Oy, appraising entity for the
expansion and development of Unit JKPM, has given its consent to disclose its details as ‗Appraisal Entity‘ and
to disclose the contents of the feasibility report dated December 19, 2010 prepared by it, in the Draft Letter of
Offer and the Letter of Offer. The details of the ‗Appraisal Entity‘ are given below.

Poyry Management Consulting Oy

P.O. Box 4 (Jaakonkatu 3)
FI-01621 Vantaa
Finland
Domicile Vantaa, Finland
Business ID. F123022763
Tel: (358 10) 33 22655
Fax: (358 10) 33 21031
Email: pekka.niku@poyry.com
Website: http://www.poyry.com

Statement of responsibilities of the Lead Manager

ICICI Securities Limited is the sole Lead Manager to the Issue and all the responsibilities relating to
coordination and other activities in relation to the Issue shall be performed by it. The various activities have
been set forth below:

S. No. Activities
1. Capital structuring with the relative components and formalities such as composition of debt and equity, type of
instruments, etc. in conformity with SEBI ICDR Regulations. Undertaking liaison with the Stock Exchanges, as
may be required under the prevailing framework of guidelines issued by SEBI and the Stock Exchanges.
2. Undertaking due diligence activities and together with the legal counsels assist in drafting and design of the
Draft Letter of Offer and of the advertisement or publicity material including newspaper advertisement and
brochure or memorandum containing salient features of the Draft Letter of Offer.
3. Selection of various agencies connected with the Issue, such as registrars to the Issue, printers, advertising
agencies, etc.
4. Assisting, together with other advisors and legal counsels in securing all necessary regulatory approvals for the
Issue and assisting in filing of the Issue related documents with SEBI, Stock Exchanges or any other authority
whatsoever.
5. 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 stock brokers,
investors, etc., (iii) bankers to the Issue, (iv) collection centers as per Schedule III of the SEBI ICDR
Regulations, (v) brokers to the Issue, and (vi) distribution of publicity and Issue material including application
form, Draft Letter of Offer and brochure and deciding upon the quantum of Issue material.
6. Post-Issue activities, which shall involve essential follow-up steps including follow-up with bankers to the Issue
and SCSBs to get quick estimates of collection and advising the Issuer about the closure of the Issue, based on
correct figures, finalisation of the basis of allotment or weeding out of multiple applications, listing of
instruments, dispatch of certificates or de-mat credit and refunds and coordination with various agencies
connected with the post-Issue activity such as registrars to the issue, bankers to the issue, SCSBs, etc.

20
Credit rating

As this is a rights issue of Equity Shares and no convertible or debt instruments are being issued, a credit rating
is not required.

Listing of Equity Shares

The existing Equity Shares are listed on the Stock Exchanges. We have applied for in-principle approvals for
listing of the Equity Shares to be issued pursuant to this Issue from the BSE and the NSE by letters dated [●]
and [●], respectively. We will make applications to the Stock Exchanges for permission to deal in and for an
official quotation in respect of the Equity Shares being offered in terms of the Letter of Offer. If the permission
to deal in and for an official quotation is not granted for the Equity Shares by the Stock Exchanges, our
Company shall forthwith repay, without interest, all monies received from the applicants pursuant to the Letter
of Offer within a period of 15 days from the Issue Closing Date.

Issue Schedule

The subscription will open upon the commencement of the banking hours and will close upon the close of
banking hours on the dates mentioned below:

Issue Opening Date: [●]

Last date for receiving requests for SAFs: [●]
Issue Closing Date: [●]

The Board or a duly authorised committee thereof may however decide to extend the Issue period, as it may
determine from time to time, but not exceeding 30 days from the Issue Opening Date.

Impersonation

As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub-section
(1) of Section 68A of the Companies Act which is reproduced below:

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

Allotment Letters / Refund Orders

The Company will issue and dispatch Allotment advice/ share certificates/demat credit and/or letters of regret
along with refund order or credit the Allotted Equity Shares to the respective beneficiary accounts, if any, within
a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day the
Company becomes liable to repay it, the Company and every Director of the Company who is an officer in
default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as
prescribed under Section 73 of the Companies Act.

In case of those applicants who have opted to receive their Rights Entitlement in physical form, the Company
will issue the corresponding share certificates under section 113 of the Companies Act or other applicable
provisions if any. Investors are requested to preserve such letters of Allotment, which would be exchanged later
for the share certificates. For more information see ―Terms of the Present Issue‖ on page 276.

Declaration by Board on creation of separate account

The Board declare that funds received against this Issue will be transferred to a separate bank account, subject of
compliance with Regulation 56 of the SEBI ICDR Regulations.

Minimum Subscription

If the Company does not receive the minimum subscription of 90% of the Issue on the Issue Closing Date, the
Company shall forthwith refund the entire subscription amount received within 15 days from the Issue Closing

21
Date. If such money is not repaid within eight days from the day the Company becomes liable to repay it, the
Company and every Director of the Company who is an officer in default shall, on and from expiry of eight
days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the
Companies Act.

Principal Terms of Loans and Assets charged as security

For details of the principal terms of loans and assets charged as security, see ―Financial Indebtedness‖ on page
213.

Underwriting

The Company has not entered into any underwriting agreement with the Lead Manager in connection with the
Issue.

22
 CAPITAL STRUCTURE

Our share capital as on the date of filing of this Draft Letter of Offer is set forth below.

(In ` )

Aggregate Value at Aggregate Value at

Face Value Issue Price
A. Authorized Share Capital*
20,00,00,000 Equity Shares of face value of ` 10 each 2,00,00,00,000 -
3,00,00,000 Redeemable Preference Shares of ` 100 each 3,00,00,00,000 -

B. Issued, Subscribed and Paid-up Capital before the Issue**

7,81,49,939 Equity Shares of ` 10 each fully paid-up 78,14,99,390
9,000 Preference Shares of ` 100 each fully paid-up 9,00,000

C. Present Issue to the existing Equity Shareholders in terms of this Draft Letter of Offer**
[●] Equity Shares at an Issue Price of ` [●] per Equity Share [●] [●]

D. Issued, subscribed and paid-up Equity Capital after the Issue (assuming full subscription for and Allotment
of the Rights Entitlement)
[●] Equity Shares of ` 10 each fully paid-up [●]

F. Securities Premium Account

Before the Issue 1,81,68,34,747
After the Issue [●]
*
For details of changes in the authorized share capital of the Company, please see “History and Certain Corporate Matters” on page 87.
**
The present Issue has been authorized through a resolution of the Board of Directors in their meeting on January 28, 2011.
As on the date of the Draft Letter of Offer, 50 FCCBs are outstanding, due for conversion into 23,52,105 Equity Shares of the Company.

Notes to the Capital Structure

1. Share Capital History of our Company:

The following is the history of the Equity Share capital of our Company:

Date of Number of Issue Price Face value Consideration Nature of Cumulative

Allotment Equity per Equity per Equity Allotment Equity Share
Shares Share / Share (In Capital (In `)
Conversion `)
Price (In `)
August 22, 2,200 100 100 Cash Preferential 2,20,000
1960* allotment
August 26, 100 100 100 Cash Preferential 2,30,000
1960* allotment
September 6, 50 100 100 Cash Preferential 2,35,000
1960* allotment
May 31, 2,350 100 100 Cash Preferential 4,70,000
1962* allotment
September 29, 300 100 100 Cash Preferential 5,00,000
1962* allotment
August 21, 2,950 100 100 Cash Preferential 7,95,000
1964* allotment
September 30, 2,050 100 100 Cash Preferential 10,00,000
1964* allotment
March 6, 97,280 100 100 Cash Initial Public 1,07,28,000
1965* Offer
April 9, 1965* 1,660 100 100 Cash Preferential 1,08,94,000
allotment
August 3, 72,310 100 100 Cash Follow on Public 1,81,25,000
1965* Offer
March 29, 3,808 100 100 Cash Preferential 1,85,05,800
1969* allotment

23
 Date of Number of Issue Price Face value Consideration Nature of Cumulative
Allotment Equity per Equity per Equity Allotment Equity Share
Shares Share / Share (In Capital (In `)
Conversion `)
Price (In `)
April 28, 10,226 100 100 Cash Preferential 1,95,28,400
1969* allotment
September 22, 1,054 100 100 Cash Preferential 1,96,33,800
1970* allotment
September 6, 500 100 100 Cash Preferential 1,96,83,800
1972* allotment
March 29, 2,537 100 100 Cash Preferential 1,99,37,500
1974* allotment
February 15, 41,188 100 100 Cash Rights issue 2,40,56,300
1977*
April 27, 58,500 100 100 Cash Rights issue 2,99,06,300
1978*
July 9, 1992 81,250 100 100 Cash Conversion of 3,80,31,300
81,250
preference shares
of ` 100 each
into equity shares
of ` 100 each
pursuant to the
BIFR order dated
May 13, 1992**
July 9, 1992 5,00,000 100 100 Cash Allotment 8,80,31,300
pursuant to the
BIFR order dated
May 13, 1992**
December 3, 5,00,000 100 100 Cash Allotment 13,80,31,300
1992 pursuant to the
BIFR order dated
May 13, 1992**
May 29, 1993 10,00,000 100 100 Cash Allotment 23,80,31,300
pursuant to the
BIFR order dated
May 13, 1992**
May 10, 50,00,000 100 100 Cash Allotment 73,80,31,300
1994* pursuant to the
BIFR order dated
May 13, 1992**
January 23, 1,43,000 100 100 Cash Allotment 75,23,31,300
1995 pursuant to the
BIFR order dated
May 13, 1992**
June 26, 1996 Reduction of the issued, subscribed paid-up capital of the Company by 70%, i.e. from ` 75,23,31,300 to
` 22,56,99,390 and sub- division of the face value of each equity share from ` 100 each to 10 Equity
Shares of ` 10 each, pursuant to the order of the BIFR dated June 24, 1996.
June 26, 1997 50,00,000 10 10 Cash Conversion of 27,56,99,390
warrants
April 28, 2,75,00,000 40 10 Cash Conversion of 55,06,99,390
2004 1,10,00,000
CPRS of ` 100
each
March 14, 1,53,80,000 65 10 Cash Preferential 70,44,99,390
2006 allotment
March 30, 77,00,000 69 10 Cash Issue of 78,14,99,390
2006 underlying
Equity Shares for
issue of GDRs
*
For details, see “Risk Factors- Internal Risk Factors no. 30 - We do not have access to records and data pertaining to certain historical
legal and secretarial information, including with respect to issuance of shares and amendments in our MoA” on page xxii.
** For details, see “Scheme of Rehabilitation” under the section titled “History and certain Corporate Matters” on page 87.

24
The following is the preference share capital history of the Company:

Date Number of Issue Face value Consideration Nature Cumulative

Preference /Conversion/ per (Allotment/ Preference
Shares Redemption Preference Conversion/ Share Capital
Price per Share (In Redemption) (In `)
Preference `)
Share (In `)
January 6, 1965 81,250 100.00 100.00 Cash Allotment of 81,25,000
81,250 9.30%
Redeemable
Cumulative
Preference Shares
July 9, 1992 (81,250) 100.00 100.00 Cash Conversion of Nil
81,250 9.30%
Redeemable
Cumulative
Preference Shares
into 81,250 Equity
Shares of ` 100
each, pursuant to
pursuant to the
BIFR order dated
May 13, 1992*
November 29, 1,62,00,000 100.00 100.00 Other than Allotment of 2,62,00,00,000
2001** cash 1,62,00,000 8%
Optionally
Convertible
Cumulative
Redeemable
Preference Shares
(―OCCRPS‖)
1,00,00,000 100.00 100.00 Other than Allotment of
cash 1,00,00,000 10%
Cumulative
Redeemable
Preference Shares
(―CRPS‖)
April 28, 2004 (1,10,00,000) 40.00 100.00 Cash Conversion of 1,52,00,00,000
1,10,00,000 8%
OCCRPS into
2,75,00,000 Equity
Shares of ` 10 each
and variation in
terms of remaining
52,00,000
OCCRPS to carry a
fixed cumulative
preferential
dividend of 3.75%,
to be redeemed in
three installments
of ` 30, ` 30 and `
40, respectively, on
November 29,
2017, November
29, 2018 and
November 29,
2019***
July 1, 2004 (97,00,000) N.A. 100.00 N.A. Pursuant to order 55,00,00,000
of Gujarat High
Court, 97,00,000
10% CRPS were
converted into term
loans
June 30, 2006 (1,43,000) 481.12 100.00 Cash Redemption of 53,57,00,000

25
 Date Number of Issue Face value Consideration Nature Cumulative
Preference /Conversion/ per (Allotment/ Preference
Shares Redemption Preference Conversion/ Share Capital
Price per Share (In Redemption) (In `)
Preference `)
Share (In `)
1,43,000 10%
CRPS Series A
July 1, 2006 (52,00,000) N.A 100.00 N.A. Pursuant to order 1,57,00,000
of Gujarat High
Court confirming
reduction of share
capital, the
remaining
52,00,000 3.75%
CRPS were
converted into
unsecured loans
June 30, 2007 (76,000) 817.11 100.00 Cash Redemption of 81,00,000
76,000 10% CRPS
Series B
June 30, 2008 (40,000) 1,462.51 100.00 Cash Redemption of 41,00,000
40,000 10% CRPS
Series C
June 30, 2009 (21,000) 2,695.25 100.00 Cash Redemption of 20,00,000
21,000 10% CRPS
Series D
June 30, 2010 (11,000) 5,063.62 100.00 Cash Redemption of 9,00,000
11,000 10% CRPS
Series E
* For details, see “Scheme of Rehabilitation” under the section titled “History and certain Corporate Matters” on page 87.

**The High Court of Gujarat by its order dated August 30, 2001, in Company Petition No. 313 of 2000, under Section
391(2) of the Companies Act, approved the Scheme of Compromise between JK Lakshmi Cement Limited (“JKLC”), the
lenders, bankers and shareholders of JKLC, our Company and the shareholders of our Company, for restructuring of debts
of JKLC due to its lenders and bankers and for reconstruction of JKLC and our Company by transfer of the Unit JKPM to
our Company. Pursuant to this scheme our Company allotted, 1,62,00,000 8% OCCRPS and 1,00,00,000 10% CRPS to
lenders of JKLC on November 29, 2001. For further details on the Scheme of Compromise see, “History and Certain
Corporate Matters” on page 87.

***The 27,50,00,000 Equity Shares were listed on the BSE and the VSE and admitted for trading with effect from May 31,
2004. Our Equity Shares were subsequently delisted from VSE on March 30, 2007.

6,000 10% CRPS as part of Series F are required to be redeemed on June 30, 2011 and the remaining 3,000 10%
CRPS as part of Series G are required to be redeemed on June 30, 2012, as per the terms of issuance of the 10%
CRPS.

Details of issue of preference shares for consideration other than cash is set forth below.

Date Number of Issue Face value Consideration Nature Cumulative

Preference /Conversion/ per (Allotment/ Preference
Shares Redemption Preference Conversion/ Share Capital
Price per Share (In Redemption) (In `)
Preference `)
Share (In `)
November 29, 1,62,00,000 100.00 100.00 Other than Allotment of 2,62,00,00,000
2001 cash 1,62,00,000 8%
Optionally
Convertible
Cumulative
Redeemable
Preference Shares
(―OCCRPS‖)
1,00,00,000 100.00 100.00 Other than Allotment of
cash 1,00,00,000 10%
Cumulative

26
 Date Number of Issue Face value Consideration Nature Cumulative
Preference /Conversion/ per (Allotment/ Preference
Shares Redemption Preference Conversion/ Share Capital
Price per Share (In Redemption) (In `)
Preference `)
Share (In `)
Redeemable
Preference Shares
(―CRPS‖)

Further, our Company by way of an Offering Circular dated March 30, 2006, issued 50 1.25% unsecured foreign
currency convertible bonds for an aggregate value of USD 50,00,000 due for redemption on March 30, 2011 at
130.441% of their principal amount of US$ 1,00,000 (the ―2006 FCCBs‖), and 77,00,000 global depositary
receipts (the ―GDRs‖). The FCCBs are listed on the Luxembourg Stock Exchange. As of the date of this Draft
Letter of Offer, none of the FCCBs have been redeemed, cancelled or converted. Further the Company issued
77,00,000 GDRs at an issue price of USD 1.544 (i.e. ` 69 at the conversion rate of ` 44.69 based on the
conversion rates prevailing on March 29, 2006) which were held by the Bank of New York, 101 Barclay Street,
22nd floor, New York, NY 10286 (the ―Depositary‖). On January 16, 2008, the holder(s) of the GDRs acquired
the underlying Equity Shares representing the GDRs from the Depositary.

The 2006 FCCBs are convertible into such number of Equity Shares, as determined in accordance with
the terms of the Offering Circular, at any time on or prior to March 17, 2011. In the event the Record
Date is on or before March 17, 2011, our Company shall make reservation of such number of Equity
Shares to which the holders of the outstanding 2006 FCCBs are entitled to as on the Record Date, in
favour of such holders.

In terms of a resolution passed by the Board on October 29, 2010 and a special resolution passed by the
Shareholders on December 1, 2010, the Company has been authorized to issue securities, including
foreign currency convertible bonds, for an amount aggregating up to ` 250 crores. Our Company is,
subject to market conditions and applicable statutory and regulatory requirements, contemplating to
offer, issue and allot foreign currency convertible bonds (“2011 FCCBs”). In the event the Company
proceeds with the allotment of 2011 FCCBs, our Company shall make reservation of such number of
Equity Shares to which the holders of the 2011 FCCB, are entitled to as on the Record Date, in favour of
such holders.

The Equity Shares reserved for the holders of the outstanding 2006 FCCBs and 2011 FCCBs, if any, shall
be issued at the time of conversion of such foreign currency convertible bonds or Allotment under the
Issue, whichever is later, on the same terms on which Equity Shares are issued under the Issue.

2. Shareholding Pattern of our Company

Shareholding pattern of our Company as on December 31, 2010 is as follows:

Category Category of Number of Total no. No. of Shares Total shareholding as a Shares pledged or
Code Shareholders Shareholders of Shares held in percentage of total otherwise
Demateralised shares encumbered
form As a As a Number As a
percentage percentage of percentage
of (A+B) of Shares
(A+B+C)
A Shareholding of
Promoter and
Promoter Group
1 Indian
A Individuals/Hindu 11 6,00,000 6,00,000 0.77 0.77
Undivided Family
B Central
Government/State
Government(s)
C Bodies Corporate 4 3,02,99,539 3,02,99,539 38.77 38.77
D Financial - - - - -
Institutions/Banks
e Any other (Specify) - - - - -
i Trust
ii Society - - - - -

27
Category Category of Number of Total no. No. of Shares Total shareholding as a Shares pledged or
Code Shareholders Shareholders of Shares held in percentage of total otherwise
Demateralised shares encumbered
form As a As a Number As a
percentage percentage of percentage
of (A+B) of Shares
(A+B+C)
iii Educational - - - - -
Institutions
Sub Total (A) (1) : 15 3,08,99,539 3,08,99,539 39.54 39.54
2 Foreign
A Individuals (Non - - - - -
Resident Indians /
Foreign Individuals)
B Bodies Corporate - - - - -
C Institutions - - - - -
D Any Other (Specify) - - - - -
Sub Total (A) (2) : - - - - -
Total Shareholding 15 3,08,99,539 3,08,99,539 39.54 39.54
of Promoter and
Promoter Group
(A) = (A)(1) + (A)
(2) :
B Public Shareholding N.A. N.A.
1 Institutions N.A. N.A.
A Mutual Funds/UTI 2 3,41,286 3,41,286 0.44 0.44
B Financial 2 57,000 57,000 0.07 0.07
Institutions/Banks
C Central - - - - -
Government/State
Government(s)
D Venture Capital 0 - - - -
Funds
E Insurance 4 35,13,855 35,13,855 4.50 4.50
Companies
F Foreign Institutional 2 5,36,104 5,36,104 0.69 0.69
Investors
G Foreign Venture - - - - -
Capital Investors
H Any Other 1 76,90,000 76,90,000 9.84 9.84
(International
Finance
Corporation)
Sub Total (B)(1) 11 1,21,38,245 1,21,38,245 15.53 15.53
2 Non-Institutions NA NA
A Bodies Corporate 656 34,78,793 34,78,643 4.46 4.46
b Individuals
i Individual 15,814 73,80,582 73,48,129 9.44 9.44
Shareholder Holding
Nominal Share
Capital Upto ` 1
Lakh.
ii Individual 201 75,15,021 75,15,021 9.62 9.62
Shareholders
Holding Nominal
Share Capital in
excess of ` 1 Lakh.
c Any Other (Specify)
i Trust & Foundations 4 1,11,23,909 1,11,23,909 14.23 14.23
ii Cooperative - - - - -
Societies
iii Educational - - - - -
Institutions
iv Non Resident 165 31,13,850 31,13,850 3.98 3.98
Individual
v Foreign Companies - - - - -
vi OCB 1 25,00,000 25,00,000 3.20 3.20
Sub Total (B)(2) 16,841 3,51,12,155 3,50,79,552 44.93 44.93
Total Public 16,852 4,72,50,400 4,72,17,797 60.46 60.46
Shareholding (B) =
(B)(1) + (B)(2) :
Total (A) + (B) : 16,867 7,81,49,939 7,81,17,336 100.00 100.00
C Shares held by NA NA

28
Category Category of Number of Total no. No. of Shares Total shareholding as a Shares pledged or
Code Shareholders Shareholders of Shares held in percentage of total otherwise
Demateralised shares encumbered
form As a As a Number As a
percentage percentage of percentage
of (A+B) of Shares
(A+B+C)
Custodians and
against which
Depository Receipts
have been issued
1 Promoter and - - - - -
Promoter Group
2 Public - - - - -
GRAND TOTAL 16,867 7,81,49,939 7,81,17,336 100.00 100.00
(A) + (B) + (C) :

3. Except as provided otherwise in this Draft Letter of Offer, since our incorporation and subject to Risk
Factor no. 30, ―We do not have access to records and data pertaining to certain historical legal and
secretarial information, including with respect to issuance of shares and amendments in our MoA” on
page xxii, we have not allotted equity or preference shares for consideration other than cash or out of
revaluation of assets.

4. In terms of the letter dated January 28, 2011, our Promoter has confirmed that it intends to subscribe to
the full extent of its Rights Entitlement in the Issue. Subject to compliance with the Securities and
Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as
amended (the ―Takeover Code‖) and other applicable rules and regulations, our Promoter reserves its
right to subscribe for Equity Shares in this Issue by subscribing for renunciations, if any, made by the
Promoter Group or any other shareholder in its favour.

Our Promoter has further confirmed that it, along with the Promoter Group entities shall subscribe to
additional Equity Shares in the Issue to the extent of such unsubscribed portion of the Issue, subject to
applicable laws. As a result of this subscription and consequent Allotment, our Promoter and the
Promoter Group entities may acquire Equity Shares over and above their Rights Entitlement in the
Issue, which may result in an increase of their shareholding being above their current shareholding.
This subscription and acquisition of additional Equity Shares by our Promoter and the Promoter Group
entities, if any, shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code.

Our Promoter undertakes that, subscription by it and the Promoter Group entities for the Equity Shares
in the Issue and the Allotment of the Equity Shares in the Issue will be in continuous compliance with
the minimum public shareholding requirement specified under Clause 40A of the Equity Listing
Agreement with the Stock Exchanges and other applicable laws.

6. The details of the shareholding of the Promoter and our Promoter Group as on December 31, 2010:

Name of companies Pre Issue Post Issue**

Number of Equity Percentage Number of Percentage
Shares Equity
Shares
Promoter
Bengal & Assam Company 1,43,44,407 18.36 [●] [●]
Limited
Total (A) 1,43,44,407 18.36 [●] [●]
Promoter Group*
Fenner (India) Limited 76,90,000 9.84 [●] [●]
JK Agri Genetics Limited 66,75,248 8.54 [●] [●]
BMF Investments Limited 15,89,884 2.03 [●] [●]
Mrs. Sharda Singhania 1,00,000 0.13 [●] [●]
Mr. Hari Shankar Singhania 1,00,000 0.13 [●] [●]
Mr. Harsh Pati Singhania 75,000 0.10 [●] [●]
Mr. Raghupati Singhania 75,000 0.10 [●] [●]
Mr. Vikram Pati Singhania 75,000 0.10 [●] [●]
Mrs. Vinita Singhania 50,000 0.06 [●] [●]
Mr. Anshuman Singhania 25,000 0.03 [●] [●]

29
 Name of companies Pre Issue Post Issue**
Number of Equity Percentage Number of Percentage
Shares Equity
Shares
Mrs. Sunanda Singhania 25,000 0.03 [●] [●]
Mrs. Mamta Singhania 25,000 0.03 [●] [●]
Mr. Shrivats Singhania 25,000 0.03 [●] [●]
Mrs. Swati Singhania 25,000 0.03 [●] [●]
Total (B) 1,65,55,132 21.18 [●] [●]
Total Shareholding of the 3,08,99,539 39.54 [●] [●]
Promoter Group (A + B)
Directors
Mr. Hari Shankar Singhania 1,00,000 0.13 [●] [●]
Mr. Harsh Pati Singhania 75,000 0.10 [●] [●]
Mr. Om Prakash Goyal 15 0.00 [●] [●]
Mrs. Vinita Singhania 50,000 0.06 [●] [●]
* In terms of the SEBI ICDR Regulations (other than Promoter).
** To be included at the time of filing the Letter of Offer.

Preference shareholding of BACL in our Company is set forth below:

Particulars Number
10% CRPS – Series F 888
10% CRPS – Series G 444
Total 1,332

7. Shareholders holding more than 1% of the equity share capital of the Company as of December 31, 2010
are as follows:

Name of shareholders Number of Equity Shares % of Equity Shares

held
Bengal & Assam Company Limited 1,43,44,407 18.35
Bharat Hari Singhania – JK Paper Employees Welfare 1,04,14,493 13.33
Trust
International Finance Corporation 76,90,000 9.84
Fenner (India) Limited 76,90,000 9.84
JK Agri Genetics Limited 66,75,248 8.54
Edgefield Securities Limited 25,00,000 3.20
Life Insurance Corporation of India 18,75,889 2.40
BMF Investments Limited 15,89,884 2.03
Keswani Haresh 15,27,698 1.95
General Insurance Corporation of India 11,96,959 1.53
Ricky Ishwardas Kriplani 11,81,567 1.51
Total 5,66,86,145 72.54

a. History of Equity Share Capital held by the Promoter:

Date of No. of Equity Cumulative Face Issue / Nature of Nature of Transaction

Allotment / Shares No. of Value Acquisition Consideration
Transfer acquired/allotted/ Equity (In `) /Transfer
Transferred Shares Price per
Equity Share
(In `)
January 16, 35,000 35,000 10 40 Other than cash Acquisition pursuant to
2006 scheme of arrangement
between BACL and
Sthenic Investment
Limited*
January 24, 17,000 52,000 10 41.28 Other than cash Acquisition pursuant to
2008 scheme of arrangement
and demerger between
BACL and J.K. Udyog
Limited*
January 24, 25,000 77,000 10 55.27 Other than cash Acquisition pursuant to

30
 Date of No. of Equity Cumulative Face Issue / Nature of Nature of Transaction
Allotment / Shares No. of Value Acquisition Consideration
Transfer acquired/allotted/ Equity (In `) /Transfer
Transferred Shares Price per
Equity Share
(In `)
2008 scheme of arrangement
and demerger between
BACL and Nav Bharat
Vanijya Limited*
January 24, 25,000 1,02,000 10 40.00 Other than cash Acquisition pursuant to
2008 scheme of arrangement
and demerger between
BACL and Pranav
Investment (M.P.)
Company Limited *
April 18, 74,57,159 75,59,159 10 29.21 Other than cash Acquisition from
2009 Ashim Investment
Company Limited,
pursuant to the Bengal
and Assam Scheme of
Amalgamation*
April 18, 1,10,000 76,69,159 10 40.01 Other than cash Acquisition from
2009 Radial Finance
Limited, pursuant to
the Bengal and Assam
Scheme of
Amalgamation*
April 18, 66,75,248 1,43,44,407 10 28.54 Other than cash Acquisition from
2009 Netflier Finco Limited,
pursuant to the Bengal
and Assam Scheme of
Amalgamation *
Total 1,43,44,407
*For details of schemes of arrangement, scheme of arrangement and demerger and Bengal and Assam Scheme of Amalgamation, see, “Our
Promoter and Group Companies – Our Promoter” on page 117.

8. None of our Promoter, directors of our Promoter, our Directors (or their immediate relatives as defined
in sub clause (ii) of clause (zc) of sub regulation (1) of regulation (2) of the SEBI ICDR Regulations)
or our Promoter Group have purchased or sold our Equity Shares or financed the purchase of our
Equity Shares by any other person (other than in the normal course of business of the financing entity)
in the last six months preceding filing of this Draft Letter of Offer, except as stated below:

S. Particulars Number Details of transaction with Details of transaction with minimum

n of Shares maximum price price
o
1. Sale of Equity Shares by 10,000 10,000 Equity Shares sold on September 29, 2010 at the rate of ` 66.33
Mr. Shailesh Vishnu per Equity Share
Haribhakti (as karta of SV
Haribhakti HUF)
2. Purchase of Equity Shares 7,000 820 Equity Shares purchased 1,000 Equity Shares purchased on
by Mrs. Sangeeta Goyal* on November 23, 2010 at the January 11, 2011 at the rate of ` 53.16
rate of ` 60.18 per Equity per Equity Share
Share
3. Sale of Equity Shares by 9,000 1,000 Equity Shares sold on 300 Equity Shares sold on November
Mrs. Sangeeta Goyal October 11, 2010 at the rate 30, 2010 at the rate of ` 58.08 per
of ` 72.78 per Equity Share Equity Share
4. Sale of Equity Shares by 17,351 1,000 Equity Shares sold on 1,000 Equity Shares and 3,000 Equity
Mr. Sunil Goyal* October 27, 2010 at the rate Shares sold on August 19, 2010 and
of ` 72.78 per Equity Share August 3, 2010, respectively, at the rate
of ` 59.82 per Equity Share
5. Purchase of Equity Shares 2,000 1,000 Equity Shares 1,000 Equity Shares purchased on
by Mr. Sunil Goyal purchased on September 29, August 26, 2010 at the rate of ` 60.53
2010 at the rate of ` 64.69 per Equity Share
per Equity Share
* Immediate relative of Mr. O.P. Goyal

31
9. None of the Equity Shares or Preference Shares of our Company held by our Promoter and our
Promoter Group, are currently pledged.

10. The list of our top 10 shareholders and the number of Equity Shares held by them is set forth below.

a. The top 10 equity shareholders of our Company as on the date of filing this Draft Letter of
Offer, January 31, 2011 and 10 days prior to the date of filing this Draft Letter of Offer with
SEBI, January 21, 2011, are as follows:

Name of Shareholder Number of Equity Shares Percentage

Bengal & Assam Company Limited 1,43,44,407 18.35
Bharat Hari Singhania – JK Paper Employees Welfare 1,04,14,493 13.33
Trust
International Finance Corporation 76,90,000 9.84
Fenner (India) Limited 76,90,000 9.84
JK Agri Genetics Limited 66,75,248 8.54
Edgefield Securities Limited 25,00,000 3.20
Life Insurance Corporation of India 18,75,889 2.40
BMF Investments Limited 15,89,884 2.03
Keswani Haresh 15,37,926 1.98
Ricky Ishwardas Kirpalani 12,08,956 1.55
Total 5,55,26,803 71.06

b. The top 10 equity shareholders of our Company two years before the date of filing of this Draft
Letter of Offer with SEBI, January 31, 2009, are as follows:

Name of Shareholder Number of Equity Shares Percentage

Bharat Hari Singhania – JK Paper Employees Welfare 1,04,14,493 13.33
Trust
International Finance Corporation 76,90,000 9.84
Fenner (India) Limited 76,90,000 9.84
Ashim Investment Company Limited 74,57,159 9.54
JK Agri Genetics Limited 66,75,248 8.54
Netflier Finco Limited 66,75,248 8.54
Edgefield Securities Limited 25,00,000 3.20
Life Insurance Corporation of India 18,75,889 2.40
BMF Investments Limited 15,89,884 2.03
Ricky Ishwardas Kirpalani 13,35,737 1.71
Total 5,39,03,658 68.97

11. The present Issue being a rights issue, as per Regulation 34(c) of the SEBI ICDR Regulations, the
requirement of promoters‘ contribution and lock-in are not applicable.

12. The total number of equity shareholders of our Company as on December 31, 2010 was 16,867. The
total number of preference shareholders of our Company as on December 31, 2010 was 24.

13. Other than ICICI Bank Limited, associate of the Lead Manager, which holds 8,300 Equity Shares as on
January 7, 2011, the Lead Manager and its associates do not hold any Equity Shares on their own
account, as on January 7, 2011.

14. The Equity Shares of our Company are fully paid up and there are no partly paid up Equity Shares as
on the date of this Draft Letter of Offer.

15. All preferential allotments made by our Company after being a listed company have been made in
compliance with the relevant provisions of applicable law.

16. Our Company has not issued any Equity Shares or granted any options under any employee stock
option scheme or employee stock purchase scheme.

17. Our Company has not availed of ―bridge loans‖ to be repaid from the proceeds of the Issue for

32
 incurring expenditure on the projects detailed in the ―Objects of the Issue‖ on page 34.

18. Our Company, Promoter or Promoter Group, our Directors or the Lead Manager have not entered into
any buy-back, standby or similar arrangements for any of the Equity Shares being issued through this
Draft Letter of Offer.

19. Our Company, our Directors, our Promoter, our Promoter Group shall not make incentive, whether
direct or indirect, in any manner, whether in cash or kind or services or otherwise, under this Issue.

20. Other than as disclosed in ―Financial Statements‖ on page 141, none of our sundry debtors are related
to our Directors or Promoter or us.

21. Further, other than as disclosed in this Draft Letter of Offer or by conversion of issued and outstanding
2006 FCCBs, or issuance of 2011 FCCBs and the conversion of such 2011 FCCBs into Equity Shares,
presently our Company does not have any proposal or intention to alter the equity capital structure by
way of split/ consolidation of the denomination of the shares, or the issue of securities on a preferential
basis or issue of bonus or rights or further public issue of securities or qualified institutions placement
within a period of six months from the date of opening of the Issue. However, if business needs of our
Company so require, our Company may alter the capital structure by way of split / consolidation of the
denomination of the Equity Shares / issue of Equity Shares on a preferential basis or issue of bonus or
rights or public or preferential issue of Equity Shares or any other securities during the period of six
months from the date of opening of the Issue 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.

33
 OBJECTS OF THE ISSUE

We intend to use proceeds from the Issue to (1) part finance the expansion and development of the Unit JKPM;
and (2) fund expenditure for general corporate purposes.

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

The details of proceeds of the Issue are summarized in the following table:

(In ` crores)
Description Amount
Gross proceeds of the Issue 250.00
Issue related expenses [●]*
Net proceeds of the Issue [●]*
* To be provided at the time of filing of the Letter of Offer.

Requirement of Funds, Use of Net Proceeds and Means of Finance

We intend to utilise the Net Proceeds of the Issue of ` [●] crores (―Net Proceeds‖) for financing the objects as
set forth below.

(In ` crores)
Expenditure Items Total Estimated Amount Deployed as Amount Proposed to Balance Amount
Cost of December 31, 2010* be Financed from Net Required#
Proceeds

1 2 3 4 = 1- 3
Part finance the 1,653.37 4.37 235.00** 1,418.37
expansion and
development of the
Unit JKPM
Fund expenditure [●]*** - [●]*** -
for general
corporate purposes
Total [●]*** 4.37 [●]*** 1,418.37
* As certified by Lodha & Co., Chartered Accountants, by their certificate dated January 28, 2011.
** Includes the amount of ` 4.37 crores deployed as of December 31, 2010 towards the expansion and development of the
Unit JKPM, to be recouped from the Net Proceeds. As certified by Lodha & Co., Chartered Accountants, by their certificate
dated January 28, 2011, the Company has deployed ` 4.37 crores as of December 31, 2010, from its internal accruals.
*** To be provided at the time of filing of the Letter of Offer.
#
This amount is proposed to be financed through a combination of internal accruals, debt and issue of additional securities,
such as the proposed 2011 FCCBs. In terms of letter dated January 28, 2011, Lodha & Co., Chartered Accountants, have
certified that the amount of existing identifiable internal accruals as on December 31, 2010 is ` 116.08 crores.

Any expenditure incurred towards the aforementioned objects until the raising of funds from this Issue would be
recouped from the Net Proceeds of the Issue.

Other than the feasibility report dated December 19, 2010, provided by Poyry Management Consulting Oy (the
―Appraisal Report‖) in relation to the expansion and development of Unit JKPM, on which we have relied, the
fund requirement and deployment are based on internal management estimates and have not been appraised by
any bank, financial institution or any other external agency. These are based on current circumstances of our
business and are subject to change in light of changes in external circumstances or costs, or in our financial
condition, business or strategy, as discussed further below. Our management, in response to the competitive and
dynamic nature of the industry, will have the discretion to revise its business plan and estimates from time to
time and consequently our funding requirements and deployment of funds may also change. This may also
include rescheduling the proposed utilization of Net Proceeds and increasing or decreasing expenditure for a
particular object vis-à-vis the utilization of Net Proceeds.

In view of the dynamic nature of the paper manufacturing industry and on account of the inherent risks in any
expansion project, we may have to revise the expenditure estimates as a result of variations in the cost structure,

34
changes in estimates, delay in receipt of approvals, exchange rate fluctuations and other external factors, which
may not be within the control of our management. This may entail rescheduling or revising the planned
expenditure and increasing or decreasing the expenditure for a particular purpose from its planned expenditure
at the discretion of our management.

Whilst we intend to utilise the Net Proceeds in the manner provided above, in the event of a surplus, we will use
such surplus towards general corporate purposes including meeting future growth requirements. In case of
variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund
requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other
purposes for which funds are being raised in this Issue. In the event of any shortfall in the Net Proceeds, our
Company will fund requirements from internal accruals or debt.

Details of the Objects

1. Part finance the expansion and development of the Unit JKPM

We propose to expand the manufacturing capacity of our Unit JKPM and carrying out related developments,
which include (a) installation of a new or augmented fibre line with a capacity to produce approximately
2,15,000 tonnes of pulp per annum, and phasing out the existing fibreline with a capacity of 1,10,000 BDMT;
(b) installation of new paper machine with a capacity to produce of 1,65,000 tonnes of woodfree copy paper per
annum for manufacturing copier paper and other multi-functional office paper grades, and phasing out the
existing paper machines with combined capacity of 41,000 TPA; (c) installation of a new chemical recovery
system with a new high pressure recovery boiler with a capacity of 1,400 t ds/d/virgin liquor, and phasing out
the existing recovery boiler with a capacity of 660 t ds/d/virgin liquor; and (d) installation of captive power
generation facility of 55 MW, replacing the existing captive power generation facility with an installed capacity
of 19.9 MW.

We intend to utilise ` 235.00 crores from the Net Proceeds towards part financing the expansion and
development of the Unit JKPM, which includes an amount of ` 4.37 crores deployed from our internal accrual,
as of December 31, 2010 towards the expansion and development of the Unit JKPM, to be recouped from the
Net Proceeds.

Estimated Cost

The breakdown of expansion and development of the Unit JKPM as detailed in the Appraisal Report is provided
below:
(In ` crores)
S. Particulars Amount (Estimated)
No.
1 Installation of new or augmented fibre line* 173.13
2 Installation of new paper machine and A4 cutters** 531.12
3 Installation of new chemical recovery section*** 289.29
4 Installation of captive power generation facility 177.00
5 Others 128.18
6. Total tax and duties 67.19
A. Sub total (Equipment supply and erection) (1 – 6) 1,365.91
7 Indirect costs (Preliminary, pre-operative and other miscellaneous expenses) 28.50
8 Interest during construction 121.36
9 Contingencies 97.61
10 Margin money 40.00
B. Sub total (7-10) 287.47
C. Total (A+B) 1,653.37
As provided in the Appraisal Report, based on an exchange rate of 1 EUR = ` 65.

* The Company has issued a letter of intent for supply of a new fibre line including DD washers, process pumps, heat
exchanges, O2 reactors and design and erection.
** The Company has issued a letter of intent for supply and erection of a paper production line of 165,000 TPA of woodfree
uncoated and pigmented paper.
*** The Company has issued a letter of intent for supply and erection of recovery island comprising evaporators, recovery
boiler, carbon steel, lower furnace, re-caustisiser and lime kiln.

Installation of a new or augmented fibre line with a capacity of 2,15,000 TPA

35
The total cost of installation of a new or augmented fibre line with a capacity to produce approximately 2,15,000
tonnes of pulp per annum is estimated at ` 173.13 crores. This includes cost of installation of a new wood
handling unit, comprising a chipping line and a log washing unit. The total cost primarily includes cost of
machinery estimated at ` 115.89 crores, and the costs of equipment, buildings, erection and commissioning,
civil and electrical costs.

Installation of a new paper machine with a capacity of 1,65,000 TPA and A4 cutters

The total cost of installation of new paper machine with a capacity to produce of 1,65,000 tonnes of woodfree
copy paper per annum is estimated at ` 531.12 crores. This includes cost of installation of an A4 line, primarily
comprising a cutter machine. The total cost primarily includes cost of machinery estimated at ` 429.53 crores,
and the costs of equipment, buildings, erection and commissioning and electrical costs.

Installation of a new chemical recovery system

The total cost of installation of a new chemical recovery system with a new high pressure recovery boiler with a
capacity of 1,400 t ds/d/virgin liquor is estimated at ` 289.29 crores. This primarily includes machinery cost
estimated at ` 213.77 crores and other costs such as cost of buildings, tanks, automation, erection and
commissioning and electrical costs.

Installation of captive power generation facility

The total cost of installation of captive power generation facility of 55 MW is estimated at ` 177.00 crores. This
primarily includes cost of machinery estimated at ` 131.00 crores and other costs such as costs of buildings,
equipments, automation, erection and commissioning and electrical costs.

Others

Other costs include costs of chemical preparation unit, used for bleaching and pulping; common mill systems,
used in water and effluent treatment; roll grinding machine, used in grinding of paper rollers and service
departments and mill site, used for storage purposes. The total cost is estimated at ` 128.18 crores. This
primarily includes machinery and equipment costs, costs of buildings, erection and commissioning, automation
and electrical costs.

Taxes and duties

Total taxes and duties (excluding entries on which MODVAT is applicable), including octroi, basic customs
duty, central sales tax and education cess, applicable to the proposed expansion of Unit JKPM, have been
estimated at ` 67.19 crores.

Indirect costs (Preliminary, pre-operative and other miscellaneous expenses)

Preliminary expenses are estimated at ` 28.50 crores and include expenses incurred for trial run, compensation
to technical personnel, overheads relating to the project, fees to be paid towards technical studies conducted by
engineers and lenders independent engineer, appraisal fees, employees recruitment, training and salaries.

Interest during construction period

The interest during construction period has been estimated at the interest rate of 10.5% p.a. during the expansion
(assuming an implementation period, including trial run, of 26 months for the entire project from the date of
finalization of order for the main plant and machinery) which aggregates to approximately ` 121.36 crores.

Contingencies

We have provided for contingency expenses of ` 97.61 crores towards escalation of input prices, orders yet to
be finalized and currency fluctuations.

Margin money

36
Provision for margin money for working capital requirements, building of inventory has been made at ` 40.00
crores. The margin money has been estimated at 25% of projected net working capital requirement of our
Company. For the purpose of estimates, current assets comprising of receivables for 45 days, raw material
(bamboo and hardwood) stock of 60 days, chemicals and dyes stock of 30 days, stores and spares stock of 120
days, fuel stock of 15 days, finished and semi-finished stock of 20 days and sundry creditors for 30 days, has
been assumed.

Out of the total estimated cost of ` 1,653.37 crores, our Company has already deployed ` 4.37 crores, as of
December 31, 2010, towards pre-operative and other expenditures, from internal accruals of the Company, as
certified by Lodha & Co., Chartered Accountants, by their certificate dated January 28, 2011.

Environment

The major areas of environmental impact due to the proposed expansion plant at our Unit JKPM are as
following:

Effluent treatment

In terms of the Appraisal Report, as a result of the proposed expansion of the Unit JKPM, the level of
dissolved COD in the effluent treatment plant is expected to rise, the specific flow rate per pulp and
paper production is expected to drop and AOX load is expected to drop as a result of change to ECF
bleaching. Our Company intends to upgrade the effluent treatment targets and improve the removal
efficiency of the organic matter.

Solid waste handling

In terms of the Appraisal Report, as a result of the proposed expansion of the Unit JKPM, the total
amount of fibrous waste sludge is expected to decrease, but the amount of waste biological sludge is
expected to increase. Our Company intends to create a new hazardous waste landfill near the
wastewater treatment plant at our Unit JKPM.

An Environmental Impact Assessment and Environment Management Plan (EIA) dated November
2010, has been prepared by MIN MEC Consultancy Private Limited.

For details, see ―Our Business – Proposed Expansion‖ on page 75.

Expansion and development schedule

The expansion and development of the Unit JKPM is expected to be completed, including trial run and
commissioning, by February 2013. The expected schedule of key expansion and development activities for the
Unit JKPM, as per the Appraisal Report, is given below:

Particulars Expected Completion

Basic engineering June 2011
Receipt of vendor data July 2011
Detailed engineering activities December 2011
Equipment delivery August 2012
Civil construction September 2012
Erection of plant and machinery October 2012
Pre-commissioning trials and commissioning November 2012
Commencement of saleable production February 2013

Details of means of finance

The total funds required for the expansion and development of our Unit JKPM are approximately ` 1,653.37
crores. 75% of the stated means of finance, excluding Net Proceeds and existing identifiable internal accruals,
have been arranged as follows:

(In ` crores)
Particulars Amount

37
 Particulars Amount
I. (a) Cost of expansion and development of the Unit JKPM 1,653.37
(b) Expenditure already incurred as on December 31, 2010(1) 4.37
(c) Amount proposed to be financed from the Net Proceeds 235.00
(d) Existing identifiable internal accruals as on December 31, 2010(2) 116.08
(e) Funding required(3) (including towards recoupment of the
expenditure already incurred until December 31, 2010),
excluding Net Proceeds and existing identifiable internal
accruals i.e. I(a) - I(c) - I(d) 1,302.29

II. Arrangements regarding 75% of the funds required (i.e., 75% of I(e)) 976.72
Sanctioned debt proposed to be utilised for the expansion and 1,001.00
development of the Unit JKPM
(1)
As certified by Lodha & Co., Chartered Accountants, by their certificate dated January 28, 2011.
(2)
As certified by Lodha & Co., Chartered Accountants, by their certificate dated January 28, 2011.
(3)
The amount is proposed to be financed through a combination of internal accruals, debt and issue of additional securities,
such as the proposed 2011 FCCBs.

Details of debt financing arrangements

With regards to the amount to be funded through debt in relation to the expansion and development of our Unit
JKPM, we have received the following firm sanction letters:

(In ` crores)
Lender Date of Sanction Amount Sanctioned
Axis Bank September 21, 2010 150.00
Exim Bank January 10, 2011 100.00
Indian Bank October 20, 2010 150.00
State Bank of India September 28, 2010 250.00
DZ Bank December 21, 2010 351.00*
Total 1,001.00
As certified by Lodha & Co., Chartered Accountants, by their certificate dated January 28, 2011, as of December 31, 2010
the Company has not drawn down the aforementioned facilities.
* Calculated on exchange rate of ` 65.00 = 1 EURO, as provided in Appraisal Report.

In accordance with Regulation 4(2)(g) of the SEBI ICDR Regulations and the SEBI Circular
No.SEBI/CFD/MB/IS/3/2008/29/08, we confirm that we have made firm arrangements of finance through
verifiable means towards at least 75% of the stated means of finance, in the form of debt, excluding the amount
to be raised through the Net Proceeds or through existing identifiable internal accruals.

The project team chart in relation to our proposed expansion at Unit JKPM is provided below:

38
 WTD

VP (Purchase) Chief Executive- Advisor (Technical) CFO

New Project

DGM
(Purchase) Sr. GM
(Finance)

Sr. Manager JKPM Site Head Manager (Project

(Purchase) (Project Head) Manager Cost Management)
Project HO

Manager (Project
Cost Management)

Head Process Technology

CGM (Process)
Asst. Manager Asst. Manager
(Project HO) (Project HO)

Head Pulp & Head Paper Machine Head Mechanical Head Automation Head Power Block Head Civil Engg. Head Electrical
Recovery DGM GM GM DGM DGM
GM

Head Head
Stores & Yard Safety
(Vacant)

Schedule of Deployment of funds for the proposed expansion at Unit JKPM

Our Company proposes to deploy the funds for the proposed expansion of Unit JKPM in the manner set out
below:

(In ` crores)
Amount deployed Estimated Estimated Estimated Estimated Total
as on December deployment in deployment in deployment in deployment in
31, 2010(1) remaining Fiscal Fiscal 2012 Fiscal 2013 Fiscal 2014
2011
4.37 99.39 1107.62(2) 372.38 69.61 1653.37
(1)
As certified by Lodha & Co., Chartered Accountants, by their certificate dated January 28, 2011.
(2)
This includes deployment of ` 235.00 crores from the Net Proceeds.

2. Fund expenditure for general corporate purposes

We intend to use a part of the Net Proceeds, approximately ` [●] crores, towards general corporate purposes
including funding cost overruns of our expansion and development plans at our Unit JKPM (if any), strategic
initiatives, acquisitions, joint ventures, meeting exigencies which we may face in the ordinary course and
strengthening of our marketing capabilities. Our management will have the flexibility in utilizing the sum
earmarked for general corporate purposes and any surplus amounts from the Net Proceeds.

Schedule of Deployment of Net Proceeds

Our Company proposes to deploy the entire Net Proceeds in the aforesaid objects in Fiscal 2012. Detailed below
is the estimated schedule of deployment of Net Proceeds for the objects:

(In ` crores)
S. No. Expenditure Items Estimated Net Proceeds Utilization in Fiscal 2012
1. Part finance the expansion and development of the Unit 235.00
JKPM
2. Fund expenditure for general corporate purposes [●]*
Total [●]*
* To be finalised upon determination of Issue Price.

Issue Related Expenses

39
The expenses of this Issue include, among others, management fees, printing and distribution expenses, legal
fees, advertisement expenses and listing fees. The estimated Issue expenses are as follows:

(` in crores, unless stated otherwise)

Activity Estimated expenses* As a % of the As a % of the
total estimated total Issue size*
Issue expenses*
Fees payable to the Lead Manager [●] [●] [●]
Advertising and marketing expenses [●] [●] [●]
Fees payable to the Registrar [●] [●] [●]
Fees payable to the Bankers to the Issue and SCSBs [●] [●] [●]
Others (legal fees, listing fees, etc.) [●] [●] [●]
Total estimated Issue expenses [●] [●] [●]
* Will be incorporated at the time of filing of the Letter of Offer.

Working Capital Requirement

The Net Proceeds will not be used to meet our working capital requirements as we expect to have internal
accruals, avail debt and/or draw down from our existing or new lines of credit to meet our existing working
capital requirements.

Interim use of funds

The management of our Company will have flexibility in deploying the Net Proceeds. Pending utilization for the
purposes described above, we intend to invest the funds in high quality interest/dividend bearing liquid
instruments including investments in mutual funds, deposits with banks and other investment grade interest
bearing securities. We confirm that pending utilization of the Net Proceeds, we shall not use the funds for any
investments in the equity markets.

Appraisal

The expansion and development plan of our Unit JKPM has been appraised by Poyry Management Consulting
Oy, as set out in the Appraisal Report, prepared on the basis of information and documents provided by the
Company.

For details of risks and weaknesses disclosed in the Appraisal Report, see ―Risk Factors‖ on page ix.

The main assumptions on which the Appraisal Report was based were as follows:

Profitability calculations have been done applying general principles which are typical for a feasibility study
and are accepted by major financial institutions.
The focus has been on the cash generating ability of the paper mill and thus the profitability is based on
discounted estimated future unlevered free cash flows.
The following profitability indicators have been applied:
o Internal Rate of return (IRR)
o Net present value (NPV)
o Payback period
The IRR, NPV and the payback period is calculated from marginal free cash flows i.e. on incremental basis.
Marginal cash flow statement = cash flow from the investment alternative minus cash flow from
continuation of the production ―As Is‖.
The project IRR represents the average return on total investment during the project‘s expected lifetime.
In order for the project to be financially feasible, IRR should exceed the risk adjusted cost of capital for the
project (weighted average cost of debt and equity).
The pretax discount rate applied for the NPV calculation and the payback period is 12% and the after tax
discount rate 10%.
The unlevered free cash flows are calculated on year by year basis.
The future annual free cash flow projections refer to annual earnings, as net revenues less all cash expenses
including annual reinvestments, after taxes, but prior to debt service payments.
The annual cash flow is calculated as following:
Net sales income

40
 less Cash operating expenses
less Capex including normal reinvestments to sustain operations
less Taxes
= Cash flow
The projected cash flows are calculated on nominal basis in local currency, INR.
The cost level used as the basis for the projections corresponds to 2009/10 actual figures. The general
exchange rates and inflation assumptions for the following years are in line with the past industry trends.
Long-term trend prices of paper and purchased chemical pulp are used for the whole calculation period. The
transfer price of wood and bamboo delivered to the mill is assumed to include all costs related to forestry
operations.
The calculation period for IRR is 20 years* (including 16 years production of the new paper machine). In the
projected cash flows the start-up date is set for calculation purposes to the beginning of February 2013 (i.e.
the first 2 months‘ saleable production at the end of Fiscal year 4, as defined in the Appraisal Report).
*The IRR calculation method used by Poyry and accepted by major financial institutions takes into consideration the
whole period of the project including construction time. In this method the interest during construction time is not
included in the investment costs. In the financial plans this interest must be observed.

Bridge Financing Facilities

The Company has not raised any bridge loans from any bank or financial institution as on the date of this Draft
Letter of Offer, which are proposed to be repaid from the Issue Proceeds.

Monitoring Utilization of Funds

In accordance with Regulation 16 of the SEBI ICDR Regulations, as the Issue size does not exceed ` 500.00
crores, there is no requirement of appointing a monitoring agency for this Issue to monitor the utilization of the
Net Proceeds.

Our Board will monitor the utilization of the Net Proceeds. The Company will disclose the utilization of the Net
Proceeds, including interim use, under a separate head in its balance sheet until such time the Net Proceeds have
been utilized, clearly specifying the purpose for which such proceeds have been utilized. The Company will
also, in its balance sheet for the applicable Fiscal periods, provide details, if any, in relation to all such Net
Proceeds that have not been utilized, thereby also indicating investments, if any, of such currently unutilized Net
Proceeds.

Pursuant to Clause 49 of the Listing Agreement, the Company shall on a quarterly basis disclose to the Audit
Committee the uses and applications of the Net Proceeds. On an annual basis, the Company shall prepare a
statement of funds utilized for purposes other than those stated in this Draft Letter of Offer and place it before
the Audit Committee. Such disclosure shall be made only until such time that all the Net Proceeds have been
utilized in full. The statement shall be certified by the statutory auditors of the Company. In terms of Clause
43A of the Listing Agreement, the Company will furnish to the Stock Exchanges on a quarterly basis, a
statement indicating material deviations, if any, in the use of proceeds from the objects stated in this Draft Letter
of Offer. Further, this information shall be furnished to the Stock Exchanges along with the interim or annual
financial results submitted under Clause 41 of the Listing Agreement and shall be published in the newspapers
simultaneously with the interim or annual financial results, after placing it before the Audit Committee in terms
of Clause 49 of the Listing Agreement.

Other confirmations

No part of the Net Proceeds will be paid by the Company as consideration to our Promoter, our Directors, Group
Companies, associates or our key managerial personnel, except in normal course of business.

41
 BASIS FOR ISSUE PRICE

The Issue Price would be determined by the Board of Directors in consultation with the Lead Manager.
Investors are advised to read the sections “Risk Factors” and “Financial Statements” on pages ix and 141,
respectively, to have a more informed view before making the investment decision.

The face value of our Equity Shares is ` 10 and the Issue Price of ` [●] is [●] times the face value of our Equity
Shares.

Qualitative Factors

The established ‗JK‘ brand recognition in the paper industry

Our diverse product range and ability to identify customer requirements
The locational advantages of our manufacturing units
Strong relationships with key customers
Our plantation initiatives ensure strong backward linkages for sourcing raw materials
Modern and advanced manufacturing technology and infrastructure

For further details which form the basis for computing the Issue Price, see ―Our Business‖ and ―Risk factors‖
on pages 62 and ix, respectively.

Quantitative factors

The information presented in this section is derived from our restated consolidated financial statements for the
six month period ended September 30, 2010 and Fiscal 2010 as well as our restated standalone financial
statements for the Fiscal 2009 and the nine month period ended March 31, 2008, prepared in accordance with
Indian GAAP. For more information, see ―Financial Statements‖ on page 141.

Basic and Diluted Earning per Share (“EPS”)

As per our restated consolidated financial statements for the six month period ended September 30, 2010 and
Fiscal 2010 as well as our restated standalone financial statements for the Fiscal 2009 and the nine month period
ended March 31, 2008:

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

Nine month period from July 01, 2007 4.07 3.96 1
to March 31, 2008*
Fiscal 2009* 4.79 4.67 2
Fiscal 2010 11.77 11.45 3
Weighted Average 8.16 7.94
* These numbers are standalone as no consolidation was necessary prior to Fiscal 2010.

The basic and diluted EPS for the 6 month period ended September 30, 2010 was ` 7.39 and ` 7.39, respectively
(not annualized).

EPS calculations have been done in accordance with Accounting Standards 20 – ―Earnings per share‖ issued by
the Institute of Chartered Accountants of India.

Average Return on Net Worth (“RoNW”)

RoNW as per our restated consolidated financial statements for the six month period ended September 30, 2010
and Fiscal 2010 as well as our restated standalone financial statements for the Fiscal 2009 and the nine month
period ended March 31, 2008:

Period RoNW Weight

Nine month period from July 01, 2007 8.24% 1
to March 31, 2008*
Fiscal 2009* 9.32% 2
Fiscal 2010 19.56% 3

42
 Period RoNW Weight
Weighted Average 14.26%
* These numbers are standalone as no consolidation was necessary prior to Fiscal 2010.

The RoNW for the six month period ended September 30, 2010 was 10.37% (not annualized).

Minimum Return on Total Net Worth after Issue needed to maintain Pre-Issue EPS for the year
ended March 31, 2010

The minimum return on total net worth after Issue needed to maintain pre-Issue EPS for the year ended March
31, 2010 at the Issue Price is [•]%.

Net Asset Value (“NAV”) per Equity Share

NAV per Equity Share as per our restated consolidated financial statements for the six month period ended
September 30, 2010 and Fiscal 2010 as well as our restated standalone financial statements for the Fiscal 2009
and the nine month period ended March 31, 2008:

Period NAV/ Equity Share (in `)

9 month period from July 01, 2007 to March 31, 2008* 49.32
Fiscal 2009* 51.40
Fiscal 2010 60.16
* These numbers are standalone as no consolidation was necessary prior to Fiscal 2010.

The NAV per Equity Share for the 6 month period ended September 30, 2010 was ` 71.26 (not annualized).

The NAV per Equity Share after the Issue is ` [•] and the Issue Price of ` [•] is at a ` [•] premium to the NAV
per Equity Share.

Formulas used:

1. EPS:

Basic: Earning attributable to Equity Shareholders divide by weighted average number of Equity Shares
outstanding during the year / period before dilution.

Diluted: Earning attributable to Equity Shareholders after dilution divide by weighted average number of
Equity Shares outstanding during the year / period after dilution.

2. RoNW: Net profit after tax, as restated divided by net worth, as restated, at the end of the year / period.

3. NAV/Equity Share: Net worth attributable to Equity Shareholders, as restated, at the end of the year /
period divide by number of Equity Shares outstanding at the end of year / period.

Comparison of Accounting Ratios

Comparison with other Industry Peers

Table A:

Particula Financi Face Book Dilute Net profit Net Share P/E RONW Net
rs al Year Value Value for d EPS After Tax Worth (In Price (%) Sales
Ending (`) Equity (`) (In ` ` crores) (`/Share
Sharehol crores) ) (In `
der per crores)
share (`)
The March 10.00 153.56 21.03 54.19 502.95 142.10 6.76 10.77% 649.08
Andhra 31, 2010
Pradesh
Paper
Mills
Limited

43
 Particula Financi Face Book Dilute Net profit Net Share P/E RONW Net
rs al Year Value Value for d EPS After Tax Worth (In Price (%) Sales
Ending (`) Equity (`) (In ` ` crores) (`/Share
Sharehol crores) ) (In `
der per crores)
share (`)
Ballarpur June 30, 2.00 34.19 3.11 240.42 2,242.39 34.55 11.11 10.72% 3,794.60
Industries 2010
Limited
JK Paper March 10.00 60.16 11.45 91.98 470.33 52.90 4.62 19.56% 1,122.34
Limited 31, 2010
Rainbow March 10.00 127.16 26.00 23.59 221.81 57.35 2.21 10.64% 257.62
Papers 31, 2010
Limited
Seshasaye March 10.00 199.63 35.49 39.93 224.59 234.55 6.61 17.78% 509.26
e Paper 31, 2010
and
Boards
Limited
Tamil March 10.00 116.24 18.21 126.06 804.50 139.90 7.68 15.67% 1,025.68
Nadu 31, 2010
Newsprint
and
Papers
Limited
West March 2.00 85.47 8.80 54.70 536.33 80.35 9.13 10.20% 623.91
Coast 31, 2010
Paper
The March 10.00 122.65 (7.89) (11.85) 184.03 53.30 NA -6.44% 335.49
Sirpur 31, 2010
Paper
Mills
Limited
(1) Revenues refer to the consolidated net sales provided in ` Crores.(10 Million)
(2) P/E ratio calculated as closing market price of equity shares on the BSE as on 25th January, 2011 divided
by the EPS
(3) RoNW is computed as net profit after tax divided by net worth
(4) Book value is computed as net worth reduced by preference share capital divided by number of equity
shares outstanding
(5) Diluted EPS has been taken after considering extraordinary item
(6) Net worth has been calculated after excluding revaluation reserve and miscellaneous expenses to the extent
not written off

Source: Annual Reports of the Company and industry peers for the latest year ending, except for the JK Paper
Limited based upon consolidated restated financial statements for the period ended on March 31, 2010.

Price Earnings (P/E) ratio of the industry peers*:

Table B:

Highest 11.11
Lowest 2.21
Average 7.24
* Industry Peers as provided in Table A

On the basis of the above quantitative and qualitative parameters, the Company and the Lead Manager are of the
opinion that the Issue Price of ` [•] per Equity Share is justified. Investors should also see ―Risk Factors‖ and
―Financial Statements‖, on pages ix and 141, respectively, including important profitability and return ratios, to
have a more informed view. The trading price of the Equity Shares of our Company could decline due to the
factors mentioned in ―Risk Factors‖ on page ix, and you may lose all or part of your investments.

44
 STATEMENT OF GENERAL AND SPECIAL TAX BENEFITS

Statement of Possible Direct Tax Benefits available to JK Paper Limited and its Shareholders

The Board of Directors

JK Paper Limited
Nehru House,
4, Bahadur Shah Zafar Marg,
New Delhi-110 002,
India

Dear Sirs,

We hereby report that the enclosed statement states the possible direct tax benefits available to JK Paper Ltd.
(the “Company”) and its shareholders under the current 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 direct 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 the
future, the Company may or may not choose to fulfill. Investors should also note that the Draft of the Direct
Tax Code has recently been issued for public comments if the same is passed in present form by both houses of
Indian Parliament and approved by the President of India and then notified in the Gazette of India, there could
be an impact on the tax provisions mentioned below.

The benefits discussed in the enclosed statement are not exhaustive. This statement is only intended to provide
general information to the investors and is neither designed nor intended to be a substitute for professional tax
advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is
advised to consult their own tax consultant with respect to the specific tax implications arising out of their
participation in the issue. Neither we are suggesting nor advising the investor to invest money based on this.

We do not express any opinion or provide any assurance as to whether:

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

The contents of the enclosed 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.

For Lodha & Co.

Chartered Accountants

N.K. Lodha
Partner
Firm Registration No. 301051E
Membership No. 85155
Place: New Delhi
Date: January 28, 2011

45
The following key tax benefits are available to the Company and the its shareholder under the current direct tax
laws in India.

A. Special Tax Benefits

No special tax benefits are available to the Company

No special tax benefits are available to the Shareholders of the Company

B. General Tax Benefits

Benefits available under the Income-Tax Act, 1961 (hereinafter referred to as “the Act”) to the Company
and Shareholders of the Company

1. As per Section 10(34) of the Act, income earned by way of dividend from domestic company referred to
in Section 115(O) of the Act is exempt from tax. However as per the section 94(7), the losses arising
from sale/ transfer, where such shares are purchased within three months prior to record date and sold
within three months from record date, will be disallowed to the extent of such loss does not exceed the
amount of dividend claimed exempt.

2. As per Section 10(38) of the Act, long-term capital gain on sale of equity shares or units of an equity
oriented fund will be exempt provided that the transaction of such sale is chargeable to Securities
Transaction Tax.

3. The long-term capital gains accruing otherwise than as mentioned in 2 above shall be chargeable to tax at
the rate of 20 % (plus applicable surcharge and education cess) in accordance with and subject to the
provisions of Section 112 of the Act. However, if the tax on long term capital gain resulting on sale of
listed securities or unit or zero coupon bond, calculated at the rate of 20% with indexation benefit
exceeds the tax calculated at the rate of 10% without indexation benefit, then such gains are chargeable
to tax at a concessional rate of 10% (plus applicable surcharge and education cess)

4. As per Section 111A of the Act, short-term capital gain on sale of equity shares or units of an equity
oriented fund where the transaction of such sale is chargeable to Securities Transaction Tax, shall be
chargeable to tax at the rate of 15% (plus applicable surcharge and education cess).In case of non
chargeability of Securities Transaction Tax, such short term gain will chargeable to tax at the rate of 30%
(plus applicable surcharge and education cess).

5. In accordance with and subject to the condition specified in Section 54EC of the Act, long term capital
gain [other than those exempt U/S 10(38) and 10 (36) ] shall not be chargeable to tax to the extent such
capital gain is invested in certain notified bonds within six months from the date of transfer. If only part
of the capital gain is so reinvested, the exemption shall be allowed proportionately. However, if the said
bonds are transferred or converted into money within a period of three years from the date of their
acquisitions, the amount of capital gain exempted earlier would become chargeable to tax as long term
capital gain in the year in which the bonds are transferred or converted into money. Investment made on
or after April 1, 2007 in the long term specified asset by an assessee during any financial year should not
exceed Rs. 50 Lacs.

In addition to the General Tax Benefit mentioned above, other benefits available to the Company are as
follows:

1. The Company is entitled to claim depreciation at the prescribed rates on specified tangible and intangible
assets under section 32 of the Act.

As per section 32(2) of the Act, Unabsorbed depreciation if any, for an Assessment Year (AY) can be
carried forward & set off against any source of income in subsequent AYs ,subject to the provisions of
sub-section (2) of section 72 and sub-section (3) of section 73.

2. In accordance with and subject to the conditions specified in Section 80-IA of the Act, the Company
would be entitled for a deduction of an amount equal to hundred per cent of profits or gains derived from
industrial undertaking engaged in generation and/or distribution or transmission of power for any ten
consecutive assessment years out of fifteen years beginning from the year in which the undertaking has

46
 started its operation, which should be on or before 31 st day of March, 2011.

3. As per Section 35 of the Act, the Company is eligible for a deduction of the entire amount of the revenue
or capital expenditure incurred (other than expenditure on the acquisition of any land) on scientific
research related to the business of the Company, in the year in which such expenditure is incurred.

Where the assessee does not himself carry on scientific research but makes contributions to other
institutions for this purpose, a weighted deduction is allowed of

- one and one-fourth times of payment if;

the payment is made to an approved company registered in India and having its main object of
scientific research and development, or
the payment is made to an approved university, college or institution for the use of research for
social science or statistical research related or unrelated to the business of the assessee

- one and three-fourth times of payment w.e.f 1.04.2011 if;

the payment is made to an approved research association which has, as its object, undertaking of
scientific research related or unrelated to the business of the assessee; or
the payment is made to an approved university, college or institution for the use of scientific
research related or unrelated to the business of the assessee; or

As per Section 35 (2AB) of the Act, Company is eligible for a weighted deduction of a sum equal to
two times of the expenditure incurred on in-house research and development, if it satisfies the
following conditions:
the tax payer is a Company
it is engaged in the business of manufacture or production of an article or thing except those
specified in the Eleventh Schedule of the Act;
it incurs any expenditure on scientific research and such expenditure is of capital nature (other
than land or building) or revenue nature
the above deduction is allowed up to March 31, 2012 on in-house research and development
facility;
the research and development facility is approved by the prescribed authority (prescribed
authority is Secretary, Department of Scientific and Industrial Research);
the Company has entered into an agreement with the prescribed authority for cooperation in
such research and development facility and for audit of the accounts maintained for that
facility.

4. As per Section 35D, the Company is eligible for deduction in respect of specified preliminary
expenditure incurred by the Company in connection with extension of its industrial undertaking or in
connection with setting up a new industrial unit for an amount equal to one-fifth of such expenditure for
each of the five successive previous years subject to conditions and limits specified in that section.

5. As per Section 35DDA, the Company is eligible for deduction in respect of payments made to its
employees in connection with their voluntary retirement for an amount equal to one-fifth of the amount
so paid for that previous year, and the balance shall be deducted in equal installments for each of the four
immediately succeeding previous years subject to conditions specified in that section.

6. As per Section 115JAA of the Act, credit is allowed in respect of any tax paid (MAT) under Section
115JB of the Act for any assessment year commencing on or after April 1, 2006. Credit eligible for carry
forward is the difference between MAT paid and the tax computed as per the normal provisions of the
Act. Such MAT credit shall be carried forward and set off in the year in which tax computed as per
normal provision of the Act exceeds tax payable under section 115JB to the extent of such excess. Such
carried forward shall be allowed upto ten assessment years immediately succeeding the assessment year
in which tax credit becomes allowable.

7. The domestic company is required to pay Dividend Distribution Tax (―DDT‖) at the rate of 15% (plus
applicable surcharge and education cess).on distributed profits. As per section 115-O (1A) of the Act,
while computing the DDT payable by a domestic company on Dividend , the amount of dividend paid by
47
 it would be reduced by the amount of dividend received by it from its subsidiary company during the
financial year if
 The subsidiary company has paid DDT on such dividend
 The domestic company itself is not a subsidiary of any other company

In addition to the General Tax Benefit mentioned above, other benefits available to the Shareholders of
the Company are as follows:

1. Resident Shareholders
(a) According to the provision of Section 54F of the Act and subject to the conditions specified
therein, in the case of an individual or a Hindu Undivided Family (HUF), capital gain arising on
transfer of long term assets [other than a residential house and those exempt U/S 10(38)] are not
chargeable to tax if the entire net consideration is invested within the prescribed period in a
residential house. If only a part of such net consideration is invested, the exemption shall be
allowed proportionately. For this purpose, net consideration means full value of the consideration
received or accruing as a result of the transfer of capital asset as reduced by any expenditure
incurred, wholly and exclusively in connection with such transfer.
Such benefit will not be available if the individual or Hindu Undivided Family –
owns more than one residential house, other than the new asset on the date of transfer of the
original asset; or
purchase any residential house, other than the new asset, within a period of one year before or
two year after the date of transfer of the original asset; or
constructs any residential house, other than the new asset, with in a period of three years after
the date of transfer of the original asset; and
the income from such residential house, other than the one residential house owned on the date
of transfer of the original asset, is chargeable under the head ―Income from house property‖.

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.

(b) As per the provision of section 71(3), if there is loss under the head ―Capital Gain‖ it cannot be
setoff with the income under any other head. Section 74 provides that the Short term capital loss
can be setoff against both short term capital gain and long term capital gain whereas long term
capital loss can only be set off against long term capital gain. The unabsorbed capital loss can be
carried forward for eight assessment years.

2. Non-Resident Shareholders

i. As per the first proviso to Section 48 of the Act, in case of a non resident, in computing the capital
gains arising from transfer of shares/ Debentures of the Indian company acquired in convertible
foreign exchange (as per exchange control regulations), protection is provided from fluctuations in
the value of rupee in terms of foreign currency in which the original investment was made. Cost
indexation benefits will not be available in such a case.

ii. As per the provision of Section 90(2) if the provision of Double taxation Avoidance Agreement
(DTAA) between India and the country of Residence of Non Resident are more beneficial, then the
provision of DTAA shall be applicable.

iii. As per provisions of Section 115G of the Act, it shall not be necessary for a non-resident Indian to
furnish his return of income if his only source of income is investment income or long term capital
gains or both, arising out of assets acquired, purchased or subscribed in convertible foreign
exchange and tax has been deducted at source from such income

iv. Under Section 115-I of the Act, a non resident Indian may elect not to be governed by the
provisions of Chapter XII-A of the Act for any assessment year by furnishing his return of income
under Section 139 of the Act declaring therein that the provisions of the this Chapter shall not
apply to him for that assessment year and if he does so the provisions of this Chapter shall not
apply to him. In such a case his total income shall be charged as per normal provisions of the Act.

48
 3. Mutual Funds

In terms of Section 10(23D) of the Act, mutual funds registered under the Securities and Exchange
Board of India Act, 1992 and such other mutual funds set up by public sector banks or public financial
institutions authorized by the Reserve Bank of India and subject to the conditions specified therein,
are eligible for exemption from income tax on their entire income, including income from investment
in the shares of the company.

4. Foreign Institutional Investors (FIIs)

i. As per Section 115AD capital gain arising on transfer of short term capital assets, being shares and
debentures in a company, are taxed as follows:
a. Short term capital gain on transfer of equity shares/units of equity oriented fund entered in a
recognized stock exchange which are subject to securities transaction tax shall be taxed @ 15%
(plus applicable surcharge and education cess); and
b. Short term capital gains on transfer of shares/debentures other than those mentioned above would be
taxable @ 30% (plus applicable surcharge and education cess).
ii. As per Section 115AD capital gain arising on transfer of long term capital assets [other than those
exempt U/S 10 (38)], being shares and debentures in a company, are taxed @ 10% (plus applicable
surcharge and education cess).

Such capital gains would be computed without giving effect to the first and second proviso to Section 48.

5. Venture Capital Companies/ Funds

As per the provisions of Section 10(23FB) of the Act, income from investment is exempt from income tax
of:

i. Venture Capital Company which has been granted a certificate of registration under the Securities
and Exchange Board of India Act, 1992 (SEBI) and notified as such in the Official Gazette; and
ii. Venture Capital Fund, operating under a registered trust deed or a venture capital scheme made by
Unit Trust of India, which has been granted a certificate of registration under the Securities and
Exchange Board of India Act, 1992 and notified as such in the Official Gazette from investment in a
Venture Capital Undertaking.

Benefits available under the Wealth Tax Act, 1957

Shares in a company held by a shareholder will not be treated as an asset within the meaning of Section 2(ea) of
Wealth tax Act, 1957, hence wealth tax is not leviable on shares held in the company.

Benefits available under the Gift Tax Act, 1957

Gift of shares of the company made on or after October 1, 1998 are not liable to Gift Tax.

However any transfer of shares made on or after October 1, 2009 without adequate consideration to an
Individual or HUF will be taxable in the hands of receiver under clause (vii) of section 56(2) of the Income Tax
Act 1961 subject to the prescribed condition and valuation rules.

NOTES:

A. All the above benefits are as per the current direct tax law and will be available only to the sole/ first
named holder in case the shares are held by joint holders.
B. In respect of non-residents, taxability of capital gains mentioned above shall be further subject to any
benefits available under the Double Taxation Avoidance Agreement, if any between India and the
country in which the non-resident has fiscal domicile.
C. In view of the individual nature of tax consequence, each investor is advised to consult his/ her own tax
advisor with respect to specific tax consequences of his/ her participation in the scheme.
D. The above statement of possible direct tax benefits sets out the provisions of law in a summary manner
only and is not a complete analysis or listing of all potential tax consequences of the purchase,

49
 ownership and disposal of equity shares.
E. Tax Benefits available to the Company and its shareholders will be varied/change up on applicability of
Direct Taxes Code Bill, 2009 which is proposed to be made applicable w.e.f. 1 st April, 2011.

50
 SECTION IV – ABOUT THE COMPANY
INDUSTRY OVERVIEW

The information in this section has been obtained or derived from publicly available documents prepared by
various sources including the “CRISIL Research paper Annual Review” dated November 2010. This
information has not been prepared or independently verified by us or any of our advisors including the LM, and
should not be relied on as if it had been so prepared or verified. Such data involves risks, uncertainties and
numerous assumptions and is subject to change based on various factors, including those discussed in the
section titled “Risk Factors” in this Draft Letter of Offer.

I) Global Paper Industry Overview

The total consumption of paper globally in 2009 was estimated as 364.0 million tonnes. Asia contributed the
maximum to this consumption pattern with a total consumption of 155.7 mn tonnes, followed by Europe and
North America at 93.5 and 78.1 mn tonnes respectively. Table 1 below describes the patterns for world
consumption of paper since 2004:

Table 1: Paper – World Consumption

Source: CRISIL Research Paper Annual Review November 2010

II) Domestic Paper Industry Overview

India consumed only about 3% of global paper production. As can be seen from Table 2 below, India‘s per
capita consumption of paper averaged around 8.4 kgs in 2009, as compared to a global average of 54.3 kgs
(Source: CRISIL Research Paper Annual Review November 2010). Indian consumption has also lagged the
global averages in past years. However, the per capita consumption in India has shown a persistent rising trend
over the past years as seen in Table 2.

Table 2: Paper- World per Capita consumption

Source: CRISIL Research Paper Annual Review November 2010

Domestic Demand-Supply Situation:

51
The stable economic growth in India has led to a gradual but persistent rise in the consumption of paper and
board. The demand for paper has grown at a CAGR of 6.7% from 2004-05 to 2009-10. The total demand in
2009-10 was approximately 8.14 mn tonnes in 2009-10.

While the demand has grown at a CAGR of 6.7%, over the same period, the domestic capacity increase has seen
a CAGR of just 5.6%. With capacity additions not matching demand increases, imports have seen a rise in the
period mentioned. Table 3 provides a summary of the demand supply situation in India for paper.

Table 3: Paper – Demand -Supply

Source: CRISIL Research Paper Annual Review November 2010

Structure of Indian Paper Industry:

The domestic Indian paper industry can be divided into four broad segments namely Writing and Printing Paper
(WPP), Industrial Paper (IP), Newsprint (NP) and Speciality Paper (SP). Chart 4 shows the structure of the
Indian Paper Industry.

Chart 4: Structure of the Indian Paper Industry

Source: CRISIL Research Paper Annual Review November 2010

Of the total paper demand in 2009-10:

a) IP accounted for about 49%;
b) WPP accounted for 32%;
c) NP accounted for 15% and;
d) SP accounted for 4%.
(Source: CRISIL Research Paper Annual Review November 2010)

The paper industry‘s market size in 2009-10 has been estimated at Rs. 317 bn. Of the various segments:
a) WPP is the highest value segment and accounts for 43.5% of the total market size
b) IP accounts for about 38.9%
c) NP accounts for 11.2% and;

52
 d) SP accounts for 6.5%

Chart 5: Variety wise demand from 2004-05 to 2009-10

Source: CRISIL Research Paper Annual Review November 2010

Segment- Wise Description:

This section describes the specific segments in which our Company operates.

Writing and Printing Paper:

The WPP segment accounts for almost 32% of the total demand of paper in the country. This segment consists
of varieties of paper, normally under 120 GSM used primarily for writing (stationery) and printing (textbooks
and notebooks). The various varieties of WPP starting from the lower end of the value chain are creamwove,
maplitho, copier and coated paper.

Creamwove is a wood free paper manufactured from chemical pulp. It is of medium brightness, mainly used for
computer stationery, textbooks and notebooks. Maplitho is a surface sized WPP, largely used for printing and
manufacturing premium notebooks. Creamwove can replace maplitho in certain applications in order to reduce
costs. Coated paper is a superior quality printing paper that is coated with an adhesive solution and kaolin.

The variety –wise demand situation for the WPP segment is provided in chart 6 below. As can be seen,
creamwove accounts for more than 45% of the WPP demand, maplitho for 24% and the rest for about 29%.
There has been a gradual shift in demand from the traditional creamwove and maplitho to higher end varieties
such as copier and coated paper. Despite a gradual decline in share to 47% in 2009-10 from 52% in 2004-05,
creamwove continues to be the largest contributor to the total WPP demand.

53
Chart 6: WPP: variety Wise Demand (2009-10)

Source: CRISIL Research Paper Annual Review November 2010

In terms of market size for 2009-10, the various varieties accounted for:
a) creamwove: Rs. 56.9 bn
b) maplitho: Rs. 35.4 bn
c) coated paper: Rs. 23.0 bn
d) branded copier: Rs. 22.6 bn
(Source: CRISIL Research Paper Annual Review November 2010)

Demand drivers:

Overall growth for the segment is driven by the increasing emphasis on education in the country, GDP
growth and the increasing presence of modern retail formats and convenience stores.
Increasing use of e-ticketing by airlines, railways, etc.
Increasing use by small-office home office segments.
The implementation of Right to Education is likely to enroll 10 million children additionally each year.
On an average a school-going child consumes 7 kgs per annum.
Growth in post paid mobile connections, electricity bills, bank accounts and credit card population.
Notebooks and textbooks are the main demand drivers for creamwove. Government spending on
printing of these affects demand. With the government providing a greater thrust to education, demand
for creamwove has remained steady. The demand for creamwove is usually seasonal, with higher
demand during February – June, when notebooks are generally manufactured and sold.
Demand drivers for maplitho are printing of annual report, corporate literature, premium books, diaries,
calendars etc. Corporate spending, therefore, affects maplitho demand. Demand for maplitho is
generally not seasonal owing to the requirement throughout the year for various end uses.
Printing of brochures, pamphlets, labels, playing cards, calendars, magazines, greeting cards,
envelopes, officer stationery etc are demand drivers for coated paper.

Copier and Coated segments.

The copier paper segment has grown by a cumulative annual average rate of 17.5 % from Fiscal 2006 to Fiscal
2010. Similarly, over the same period the coated paper segment has grown at a cumulative annual average rate
of 18.1%. Table 7 below provides the year wise production of copier paper by Indian Paper Manufacturers
Association member mills (Source IPMA Report, March 2010). Table 8 below provides year wise production
data of coated paper by IPMA member mills.

Chart 7: Year wise production of copier paper by IPMA member mills.

54
Table 8: Year wise production of Coated paper by IPMA mills.

MILL 2005-06 2006-07 2007-08 2008-09 2009-10

BILT 123,939 133,641 133,782 143,486 229,953
JK 20,145 34,998 40,393 50,580 51,914
WCPM 0 0 0 4,421 0
SPB 1,445 1,846 2,250 2,810 810
Grand Total 145,529 170,485 176,425 201,297 282,677

Source: IPMA Report, March 2010

Industrial Paper

This segment caters to the packaging of manufactured goods. It may be classified into tertiary packaging (which
includes kraft paper) and consumer packaging (which includes greyback paperboard, whiteback paperboard,
folding box board (FBB) and solid bleached board (SBB)).

Tertiary packaging mainly refers to the packaging for the containment and safeguard of goods during storage,
handling and transportation. Such paperboards are made mainly from kraft paper. Kraft paper is usually the
brown paper used for manufacturing brown bags and cartons. Corrugated boxes account for about 90% of the
total demand for kraft paper.
Consumer packaging refer to secondary packaging of goods. It is done not only for protection of goods but also
as a brand building and marketing measure. Of the varieties used for such a purpose, the following form a
majority:
a) Greyback: Made primarily from recycled paper and is a multi layered paperboard with an outer surface
that is unbleached and grey. It has a high degree of stiffness and has a smooth surface that allows for
operations such as stamping and lamination
b) Whiteback: This is of a better quality than greyback and is bleached. Its properties are similar to that of
greyback except for the white surface that is better suited to printing
c) Folding box board: This is made entirely of virgin pulp and has some layers which are unbleached. It is
a superior variety of paperboard as compared to greyback and whiteback. FBB is a clean strong board
with even brightness and good printing properties
d) Solid bleached board: it is also made of virgin pulp with all layers made of bleached pulp. Its printing
and embossing characteristics are superior to all other varieties of paperboard and is therefore ideal for
packaging of production where preservation of aroma and flavor are essential

Chart 9 provides the variety wise demand for paper board in 2009-10. As can be seen, kraft paper accounts for
nearly 55% of demand. Demand for paperboard has increased at a CAGR of 6.7% to an estimated 4.7 mn tonnes
in 2009-10 from 3.4 mn tonnes in 2004-05.

55
Chart 9: Paper Board: Variety Wise Demand (2009-10)

Source: CRISIL Research Paper Annual Review November 2010

The total market size of paperboard was about Rs. 123 bn in 2009-10 of which:
a) Kraft accounted for Rs 54.5 bn
b) Others for Rs 68.5 bn

Demand drivers:
Overall demand is closely linked to the level of industrial activity in the country and the manufacture of
consumer and white goods
Demand for kraft paper depends on the growth on the FMCG, textile, consumer durables and
horticulture industries
Growth in the consumer packaging is dependant upon industries such as pharmaceuticals, cigarettes,
matchboxes and hosiery
Growth in organized retail which uses more of virgin grade packaging board.

III) Costs and Prices

Costs:
The primary inputs for the manufacture of paper are the fiber (derived from wood, waste paper, agri residues
etc) and the power and fuel expenses. While actual costs may vary based upon individual company product
profiles and locations, these two together typically account for almost 70% of the total costs.

Fiber Costs
The three main sources of fiber are:
a) Wood or bamboo
b) Waste paper
c) Agri- residue such as Bagasse
Wood accounts for 37% of production, while wastepaper and agri residue account for 32% and 31%
respectively

Described below are the key raw materials in use by Our Company:

Wood / Bamboo:

Softwood is not used in India given its unavailability. High end products require the use of imported pulp.
Hardwood prices depend upon the location from where a company sources its requirements. Prices of hardwood
have been increasing in recent years as shown in Chart 10. Despite availability of bamboo, its supply is
restricted owing to government regulations, and the lack of bamboo farming. Bamboo prices have also shown
steep increases as shown in Chart 11. Imported wood pulp is also used by manufacturers for purposes of high
end products. Chart 12 shows the movement of imported softwood pulp.

Chart 10: Hardwood Prices

56
Source: CRISIL Research Paper Annual Review November 2010

Chart 11: Bamboo Prices

Source: CRISIL Research Paper Annual Review November 2010

Chart 12: Pulp Prices

Source: CRISIL Research Paper Annual Review November 2010

57
Paper Prices:

The prices of most varieties in the WPP and IP segments have been growing in the recent years. Table 13 shows
the domestic paper price movements since 2004-05. Prices reduced on a y-o-y basis in 2009-10 owing to the
general economic conditions that prevailed in 2009-10

Table 13: Domestic Paper Prices

Source: CRISIL Research Paper Annual Review November 2010

IV) Characteristics and concerns for the industry

Characteristics of the industry:

a) Fragmented nature of the Industry and the small size of paper mills

The domestic paper industry is highly fragmented. The estimated number of mills in India varies between
500 to over 1,000. The top 5 paper producers account for approximately 20-23% of the total paper capacity
(Source: CRISIL Research Paper Annual Review November 2010). Adding to the fragmentation is the
small size of paper mills. In an Indian context, mills with an annual capacity of over 33,000 tpa may be
categorized as large while those with capacity up to 7,500 tpa may be termed small. Nearly 45% of paper
mills in India are small units with only about 15% have capacities in excess of 33,000 tpa (Source: CRISIL
Research Paper Annual Review November 2010). A result of this fragmentation has increased competition
among varieties of products. most of the smaller players in the industry are largely present in lower end of
the paper product segments especially unbleached kraft paper, duplex board, creamwove paper and
newsprint which largely use waste paper and agri-residues as their raw materials which require lower
upfront capital investments. As a result, the competition within these product segments is relatively higher
than other paper segments, which are largely dominated by bigger mills and hence acts as a protective
factor for the players present in value added paper segments such as copier paper, maplitho paper, coated
paper and other specialised paper categories

b) Raw material availability decides location of plants

Location of plants has an important role to play in ensuring cost competitiveness. Most paper mills in India
are located close to the source of the raw materials (forests and coal pit heads) and skilled labour.
Companies that rely on imports are located close to the ports. In general, along with the availability of raw
materials, proximity to a water source also influences a plant‘s location. Agri-based mills are largely
located in the northern and western states where the presence of several sugar mills guarantees easy
availability of bagasse. Wood based units tend to be located in eastern and southern states.

c) High entry barriers preventing entry of new players

Setting up a paper mill calls for a substantial capital outlay. A new integrated plant with captive power, with
in-house pulping facility and a co-generation plant will require an investment of Rs 80,000 -100,000 per
tonne of paper output. Cost economics therefore do not favour the setting up of a Greenfield plant. This
adds a significant entry barrier to new players who wish to enter the industry. Added to the high initial cost
of investment is the 2-3 year gestation period for the setting up of a paper mill. (Source: CRISIL Research
Paper Annual Review November 2010)

58
Concerns:
d) Raw material availability

Availability of raw material remains a key concern in the domestic market. Wood and wood based pulp are
limited by the limited forest resources and limitations on enlarging man made forests. Additionally, wood is
used for many alternate purposes which lead to competition for available wood. The domestic paper
industry used around 5 to 5.6 mn tonnes of wood pulp in 2009-10. Of this, close to 0.5 mn tonnes was
imported owing to a lack of domestic supply (Source: CRISIL Research Paper Annual Review November
2010). Waste paper collection mechanisms in India are not very well developed, thus requiring an import of
waste paper to the tune of almost 15% of domestic production. Agri products such as bagasse are seasonal
in nature and also have alternate uses such as for power generation.

e) Substitution by other products

While the level of substitution in the industry has not reached threatening levels, in the IP segment paper
competes with products such as polymers, wood and steel for packaging. Polymers pose a threat owing to
their lower prices, durability and appearance. The WPP segment faces limited substitution threat. Their
main threat is from online storage of data etc, which can only marginally affect demand (Source: CRISIL
Research Paper Annual Review November 2010).

f) Reducing import duty levels

There has been a secular reduction in import duties on paper and packaging products over the years. Table
14 shows the import duties of such products in recent years. Since the level of distribution efforts required
in channelizing imports of WPP in domestic market is much higher than IP and newsprint segments due to
diversity in customer profile of PWP; the import threats are relatively lower in PWP segment.

Table 14: paper – Import Duties

Source: CRISIL Research Paper Annual Review November 2010

g) Capacity Additions

With the steady growth in domestic consumption, almost all the leading players in the industry have
expanded their capacities during past few years. Chart 15 provides an estimate of the amount of capacity
additions that have happened and are expected to occur. Given the demand growth the incremental
capacities could be absorbed, however bunching of these capacities may result in temporary supply side and
pricing pressures in near term

59
 Chart 15: Trends in Capacity Additions

Source: CRISIL Research Paper Annual Review November 2010

V) Growth Expectations:

The information provided below should be read in conjunction with ―Risk Factors‖, beginning on page ix.

Estimates indicate that the Indian paper industry will grow at a CAGR of 10.7% from its current levels of Rs.
317 bn in 2009-10 to Rs. 526 bn in 2014-15, the demand being driven by strong industrial and economic
growth. WPP is likely to be the largest segment with a market share of around 42% followed by paperboard at
39%. The shares of speciality paper and newsprint are expected to be around 7% and 13% respectively.

Chart 16: Paper Industry: Market Size

Source: CRISIL Research Paper Annual Review November 2010

Among the segments, demand for paperboard is expected to increase as 7.8% CAGR to reach 6.7 mn tonnes in
2014-15 driven by a healthy growth in industrial production and a sustained demand for consumer goods. Table
17 provides a breakup of the expected demand in this segment. (Source: CRISIL Research Paper Annual
Review November 2010)

60
Table 17: Variety-wise Demand for Paperboard

Source: CRISIL Research Paper Annual Review November 2010

The WPP segment is expected to increase in demand at a 7.6% CAGR till 2014-15 as compared to a 6.5%
CAGR in the preceding 5 years. Demand is expected to reach 4.5 mn tonnes in 2014-15. Within this segment,
the demand for copier paper is likely to record the strongest growth at around 16% which will be driven by the
revival in economic conditions leading to a greater demand for good quality paper from the office printing
segment. The expected CAGR for various varieties of WPP is shown in Chart 18.

Chart 18: WPP demand – Variety Wise Projected Growth Rates

Source: CRISIL Research Paper Annual Review November 2010

61
 OUR BUSINESS

The following information is qualified in its entirety by, and should be read together with, the more detailed
financial and other information included in this Draft Letter of Offer, including the information contained in
“Risk Factors” on page ix.

Overview

We are the largest producer of branded papers in terms of production and a leading player in the ‗fine papers‘
and ‗virgin packaging board‘ segments, in terms of market share, in India. We are a market leader in the
branded copier paper segment in India where we had a market share of approximately 28.8% (Source: CRISIL
Research Paper Annual Review, November 2010). We manufacture and sell a diverse and multi-application
range of papers, specialty papers, allied stationery and virgin packaging board products and are focused in the
production and marketing of high-end paper and virgin packaging board products. As on September 30, 2010,
our distribution network of paper and virgin packaging board products comprises of four regional offices, six
warehouses, 134 wholesalers and various dealers, enabling us to have a pan-India presence. Additionally, we
export our paper and virgin packaging board to over 40 countries including in Brazil, UK, Turkey, Middle East,
Sri Lanka, Bangladesh, Singapore, Malaysia and several African nations. We are a part of the JK Group, one of
the leading business brands in India, with a significant presence in automotive tyres and tubes, cement, power
transmission including V-belts, oil seals, hybrid agricultural seeds, system engineering, sugar, dairy products,
textiles, health care, clinical research and the paper and pulp brand segments, among others, with presence in
India as well as several other countries.

We operate two integrated manufacturing facilities, the JK Paper Mills Unit at Rayagada, Odisha (―Unit
JKPM‖) and the Central Pulp Mills Unit at Songadh, Gujarat (―Unit CPM‖), for the production of paper and
virgin packaging boards, with a combined manufacturing capacity of 240,000 TPA. Our Unit JKPM presently
has an installed capacity of 125,000 TPA for manufacturing paper and saleable pulp. In addition, our blade
coating facility was commissioned at the Unit JKPM in July 2005 to produce quality coated paper, enabling us
to move up the value chain and capitalize on the growing market of coating paper. The capacity of the coating
plant at the Unit JKPM is 46,000 TPA. We are the second largest producer of coated paper in India. (Source:
IPMA Report, March 2010) Further, we commissioned a pulp drying plant at our Unit JKPM, in 2001 to
increase the output and realization of market pulp. Our Unit CPM presently has an installed capacity of 55,000
TPA for manufacturing paper and saleable pulp. Additionally, we have set up a packaging board plant at our
Unit CPM, which was commissioned in October 2007, with an installed capacity of 60,000 TPA, which is
equipped with contemporary technology sourced from global leaders in the paper board machinery sector.

We were incorporated as ‗The Central Pulp Mills Limited‘ in 1960, as a pulp manufacturing facility, at
Songadh, in Gujarat, and started paper production in 1975. We were subsequently referred to the BIFR in 1988
due to accumulated losses. We were declared a sick industrial company in terms of the Sick Industrial
Companies (Special Provisions) Act, 1985 in 1989. The JK Group, as part of its strategy to strengthen its
position in the paper manufacturing market, acquired our Company in 1992, pursuant to a rehabilitation scheme
sanctioned by the BIFR. In 2000, as part of a restructuring exercise undertaken by JK Lakshmi Cement Limited,
the Unit JKPM, which was operating as a division of JK Lakshmi Cement Limited for its paper manufacturing
business, was consolidated with our Company, which was subsequently renamed as ‗JK Paper Limited‘.

Our Company and our manufacturing units have received numerous awards and recognitions, such as, the ‗Good
Corporate Citizen Award-2006‘ by PHD Chambers of Commerce & Industry, ‗Certificate of Appreciation for
Excellence in Energy Management – 2008‘ by Bureau of Energy, GoI, for our Unit JKPM, the ‗Paper Mill of
the Year‘ award from Indian Paper Manufacturers Association, for our Unit CPM in 2004 and the ‗Greentech
Environment Excellence Award 2010 - Winner of Gold Award in Paper Sector‘ to our Unit CPM, among others.
Further, we were awarded the ‗TPM Excellence First Category Award‘ for the year 2006 by the Japan Institute
of Plant Maintenance for both our manufacturing units.

We have been conscious in addressing environmental and safety concerns and have regularly introduced cleaner
and environment-friendly technologies in our manufacturing units. Both our manufacturing units are ISO 9001 –
2008 compliant, operating at over 100% capacity utilization and are equipped with all of the requisite facilities
for end-to-end environmentally compliant operations ranging from production of pulp to finishing and
packaging of our paper, virgin packaging board and stationery products. Our Unit JKPM has been adjudged as
the ‗First Greenest Paper Mill‘ in 1999 and ‗Second Greenest Paper Mill‘ in 2004 by Centre for Science &

62
Environment (CSE) Additionally, both our manufacturing units are ISO 14001 certified for their eco-friendly
operations and OHSAS 18001:2007 certified for occupational health and safety management system standards.

Our Equity Shares re-admitted for trading on the BSE in 1992. Our Equity Shares were listed on the VSE and
the NSE in 1995 and 2005 respectively. However, our Equity Shares were delisted from the VSE in 2007.

For the six month period ending September 30, 2010 and Fiscal 2010, based on our restated consolidated
financial statements, our net sales were ` 613.16 crores and ` 1,122.34 crores, respectively, and our adjusted
profit after tax was ` 57.75 crores and ` 91.98 crores, respectively, and for the Fiscal 2009, based on our
restated standalone financial statements, our net sales were ` 1,092.85 crores and our adjusted profit after tax
was ` 37.46 crores.

Our Strengths

Our business is characterized by the following key strengths:

Established „JK‟ brand recognition in the paper industry

We believe the ―JK Paper‘ brand has an established reputation in the Indian market. This is reflected in our
market share of approximately 28.8%, in the branded copier paper segment in India. In virgin packaging board
segment, out of the total production of 3,87,000 tonnes during Fiscal 2010 in India, our Company produced
66,135 tonnes. We are the largest producer of branded papers in India in terms of production, second largest
producer of virgin board, and a leading player in the ‗fine papers‘ segment, in terms of market share. (Source:
CRISIL Research Paper Annual Review, November 2010) We believe that our brand commands respect and
credibility and offers us competitive advantages, enabling us to maintain our leadership position in the branded
market along with strengthening the brand equity of our leading products such as ‗JK Copier‘, ‗JK Excel Bond‘
and ‗JK Easy Copier‘.

Both our manufacturing units are ISO 9001 – 2008 compliant. In Fiscal 2010, our Unit JKPM operated at
110.14% capacity utilization and Unit CPM operated at 118.33% capacity utilization. The paper manufacturing
unit at Unit CPM operated at 118.60% capacity utilization and the virgin packaging board manufacturing unit at
Unit CPM operated at 118.09% capacity utilization. Both our manufacturing units are equipped with the
requisite facilities for end-to-end environmentally compliant operations ranging from production of pulp to
finishing and packaging of our paper, stationery and virgin packaging board products. Additionally, both our
manufacturing units are ISO 14001 certified for their eco-friendly operations and OHSAS 18001:2007 certified
for occupational health and safety management system standard.

Diverse product range and ability to identify customer requirements

We manufacture and sell a diverse and multi-application range of papers, specialty papers, allied stationery and
virgin packaging board products to serve and satisfy the growing requirements of customers. We produce paper
under several brands which are used for varied purposes, including in diaries, notepads, letterheads, calendars,
balance sheets, book printing, labels, photocopying, project reports, resumes, inkjet, laserjet and colour printers,
office stationary, envelopes, mark sheets, share certificates and financial instruments, among others. Our
speciality papers are used for MICR cheques and other premium printing applications such as P.O.P materials,
catalogues, brochures, books and calendars. Additionally, our virgin packaging board products serve a diverse
range of customer requirements, including in packaging of FMCG products such as cosmetics, food,
pharmaceuticals and garments, personal care products, greeting cards, life style products, book covers, beverage
cups and playing cards, among others. We strive to identify specific customer needs and to increase our products
range, from economy to premium segment, varying in terms of brightness, smoothness, opacity, stiffness while
at the same time ensuring quality of printability and runnability in printing machines.

Our Company introduced high quality bond paper ‗Finesse‘ in A4 size consumer friendly retails packs of 100
sheets in 1998 and also laser paper in 1999. In recent times, our Company has introduced ‗Cedar‘ in 2009, a
high quality paper for use in colour printers and for making corporate presentations, developed the high value
MICR cheque paper and branded ‗JK Savannah‘ in A4 packs, which have been well received in the market. We
believe our dedicated effort towards increasing our products range and the ability to identify varying customer
requirements contribute significantly to our position as one of the leading players of the pulp and paper industry
in India.

63
Locational advantages of our manufacturing units

Our manufacturing units are strategically located to meet our requirements with respect to raw materials as well
as to ensure timely delivery of our products to our customers. Both our units are connected to rail and road
networks. Our Company has a competitive advantage of location with respect to sourcing of raw materials as we
source bamboo and hardwood within an average distance of 325 kms from Unit JKPM and 500 kms from Unit
CPM.

Our Unit JKPM at Rayagada, Odisha procures privately grown bamboo from North Odisha as and when
required in addition to sourcing bamboo from the forests under the control of the state government of Odisha,
where the Company has long term extraction concessions. Our Unit JKPM meets its water requirement from the
Nagavali river, a perennial river flowing within one km distance from the unit. Hardwood is procured mainly
from Odisha and the neighbouring states of Andhra Pradesh and West Bengal.

Our Unit CPM at Songadh, Gujarat procures bamboo for its paper production primarily from the forests leased
from the Government of Gujarat. Further, our Unit CPM, equipped with manufacturing facilities for our virgin
packaging board products, is located on the western coast of India near the main consumption markets in the
states of Maharashtra and Gujarat. This gives us significant cost as well as time advantage in reaching supplies
to the customers. The location also facilitates faster imports logistics since the ports are nearer to our Unit CPM
compared to the facilities of our competitors.

Additionally, our manufacturing units are favorably located to effectively cover geographically dispersed
demand centers like Mumbai, Ahmedabad, Chennai, Bangalore, Hyderabad, Cochin, Kolkata, New Delhi,
Varanasi, Patna, Guwahati, Bhubaneshwar, Nagpur, Madurai, Sivakasi, Vijaywada, Raipur and Cuttack through
our distribution network.

Strong relationships with key customers

We have long-standing relationships with leading publishers, wholesalers, commercial printers and retailers. We
believe our sales strategy, which includes both direct sales to our larger customers and sales to wholesalers and
retailers, who then resell our products, has enabled us to reduce our sales costs and enhance customer service. In
relation to our paper products, our relationships with our five largest customers, which contributed
approximately 20.30% and 21.20% of our net sales for the six month period ended September 30, 2010 and
Fiscal 2010, respectively, is more than 10 years old. In relation to our virgin packaging board products, our
relationships with our five largest customers, which contributed approximately 9.62% and 9.31% of our net
sales for the six month period ended September 30, 2010 and Fiscal 2010, respectively, is since the beginning of
commercial production of our virgin packaging board products, i.e.; October 2007. We seek to continue to
enhance our relationships with our key customers by providing them with a high level of value-added customer
service.

Our plantation initiatives ensure strong backward linkages for sourcing raw materials

Our plantation initiative was started in 1990 at our Unit JKPM and later extended to our Unit CPM. Our
Company has been aggressively promoting social and farm forestry and high yielding clones developed by our
in-house research and development institutions in the areas close to our manufacturing units, i.e., in Odisha and
Andhra Pradesh for our Unit JKPM and in Gujarat and Maharashtra for our CPM Plant, to provide for
sustainable supply of raw materials and increasing benefit to the villagers. Under this programme, carried out on
the land owned by people residing in villages near to our manufacturing units, villagers are educated to adopt
scientific methods of growing trees besides being supplied with high quality seeds, seedlings and high yielding
clones. During Fiscal 2010, an additional area of 4,200 hectares of land was covered under this programme by
utilising over 2 crore seedlings/plants. Procurement of wood from farm forestry sources now accounts for over
70-75% of our Company‘s raw materials consumption. Our Company has developed seed orchards of high
yielding strains of various species including Eucalyptus and Casuarina. We are presently operating such social
and farm forestry programs in Koraput, Rayagada, Ganjam, Gajpati and Kalahandi districts of Odisha, Dhule,
Nandurbar, Jalgaon and Nashik districts of Maharashtra, Tapi, Surat, Bharuch, Baroda, Kheda and Valsad
districts of Gujarat and Vizianagram, Srikakulam and Vishakhapatnam districts of Andhra Pradesh.
Additionally, the location and proximity of our manufacturing units to the areas in which are plantation
initiatives are carried out, in comparison to our competitors, benefits our Company by assisting in the
continuous procurement of raw materials in the long term.

64
Modern and advanced manufacturing technology and infrastructure

Our manufacturing units are equipped with modern and advanced manufacturing technology and infrastructure,
enabling us to maintain our position amongst leaders in quality paper segment in India. Our modern and
advanced manufacturing technology includes, amongst others, efficient chip washing system, implementation of
DCS control and oxygen delignification plant that helps in reduction of chlorine consumption. Further, we are
the exclusive licensee of ‗colorlok technology‘ and ‗colorlok trademark‘ in India, for manufacture of high
quality copier paper. We believe that our dedicated effort towards use and continuous upgradation of
manufacturing technology and infrastructure contributes significantly to our position as one of the leading
players of the pulp and paper industry in India.

Our Business Strategies

Our aim is to further strengthen our position as one of India‘s leading paper manufacturing and selling
companies, to enhance our manufacturing capacity and increase our products range and to increase our
geographical reach in India and abroad to complement our brand. In order to achieve our aim, we intend to
follow the key business strategies described below:

Increase our market share in the paper and virgin packaging board segments

We seek to take advantage of our competitive strengths to further increase our market share in the paper and
virgin packaging board business segments. The branded copier paper and coated paper segments are market
segments that, in addition to being more stable than other market segments, have grown at a cumulative annual
average rate of 17.5% and 18.1%, respectively, from Fiscal 2006 to Fiscal 2010 (Source: IPMA Report, March
2010). We intend to continue our focus and our marketing efforts on the sale of our copier paper products,
coated paper products (especially in higher gsm range) and virgin packaging board products. We seek to further
increase our market share by enhancing our manufacturing capacity at our Unit JKPM. For details, see ―Objects
of the Issue‖ on page 34.

Maintain our focus on increasing our products range and moving up the value chain

Our Company has consistently focused on increasing its product range, particularly in the high value added
segment like branded copier paper, for instance, ‗JK Copier Plus‘, premium watermark bond, for instance, ‗JK
Excel Bond‘, premium digital coated paper, ‗Cedar‘, and virgin packaging board, for instance, ‗JK TuffCote‘
and ‗JK Ultima‘. We seek to identify specific customer needs and to increase our products range, from economy
to premium segment, by employing a combination of innovative and creative marketing initiatives such as
advertising in the print media, trade and consumer campaigns at the national level, road shows and select
customer meets. We believe that this will contribute towards enhancing our reputation as one the leading players
in the Indian pulp and paper manufacturing industry.

Expanding operations and our distribution network in new markets

We are actively involved in market expansion beyond the Indian market to ultimately have a global footprint for
our paper and virgin packaging board products. Our Company is presently exporting paper and virgin packaging
board to over 40 countries including in Brazil, UK, Turkey, Middle East, Sri Lanka, Bangladesh, Singapore,
Malaysia and several African nations. We intend to capitalize on our established global network and further
expand the reach of our paper and virgin packaging board products in international markets.

Further, our wholesalers and retailers form an important part of our distribution network and help us reach the
end-use customers of our paper, allied stationery and virgin packaging board products. We believe that our wide
distribution network, consisting of four regional offices, six warehouses, 134 wholesalers and various dealers, as
of September 30, 2010, enables us to have a pan-India presence. We intend to further expand our distribution
network across our geographies, by identifying pockets of opportunities and ensure a direct or indirect presence
in these areas.

Ensuring continuous raw material supply

Our Company is focused on ensuring long-term continuous supply of pulp wood, primary raw material used in
manufacturing of our products, by promoting farm forestry activities. We provide high quality seedlings/clones
to private farmers located within the vicinity of our manufacturing units, and source wood back from such

65
farmers. During Fiscal 2010, an additional area of 4,200 hectares of land was covered under this programme by
utilising over 2 crore seedlings/plants. At present, procurement of wood from farm forestry sources accounts for
over 70-75% of our raw material consumption. We seek to further increase our dependency on farm forestry
sources and consequently decrease our dependency on government and other sources. We believe that this
would reduce uncertainty in availability of raw materials and also assist us in arresting significant increase in
costs of raw materials.

Our Business Activities

Our Company manufactures and sells a diverse and multi-application range of papers, and allied stationery
products as well as virgin packaging board products. Detailed below is the description of our business segments:

JK Paper Limited

Writing and Printing Industrial paper Specialty paper

Paper

Branded Coated Paper Consumer

Copier Paper Packaging

Folding Box Board/ Solid Bleached Sulphate Board

(Virgin grade Packaging Board)

Writing and printing paper

Our paper products portfolio include several brands which are used for varied purposes, including in
photocopying, project reports, resumes, inkjet, laserjet and colour printers, office stationary, diaries, notepads,
letterheads, calendars, annual reports, book printing and financial instruments, among others. Our speciality
papers are used for MICR cheques and other premium printing applications such as P.O.P materials, catalogues,
brochures, books and calendars. The different categories of paper used in our paper brands include creamwove,
watermarked bond, photocopier, art paper, poster paper and coated paper.

We operate two integrated manufacturing facilities, the Unit JKPM at Rayagada, Odisha and the Unit CPM at
Songadh, Gujarat, for the production of our pulp, paper and virgin packaging boards, with a combined
manufacturing capacity of 240,000 TPA, and have a pan-India presence through our four regional offices, six
warehouses, 134 wholesalers and various dealers, as on September 30, 2010.

Our Company‘s leading brands in the paper segment include ‗JK Copier‘, ‗JK Easy Copier‘, ‗JK Excel Bond‘,
‗JK Bond‘ and ‗JK Cote‘. Additionally, in order to further strengthen our position in the market, our Company
has launched higher price product variants, such as, ‗JK Copier Plus‘, ‗Cedar‘, across India.

Product range

A detailed description of the product range of our paper segment and their use is given below:

S. No. Product Uses

Writing and Printing Paper
1. JK Copier Plus Ideal for quality photocopying, project reports,
resumes, inkjet and laserjet printers, presentation
Substance range: 80 gsm copies or any aesthetic job
2. JK Copier Consumer packed paper for high speed photocopying,
desk top printing and general stationery paper

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 S. No. Product Uses
Substance range: 75 gsm
3. JK Easy Copier Value for money consumer packed paper for
photocopying/general office stationery
Substance range: 56-150 gsm
4. Sparkle Mid price range multipurpose copy paper

Substance range: 75 gsm

5. Cedar Ideal for color printing, digital photocopying and
desktop printing
Substance range: 100 gsm
6. JK Cote (Coated wood free) Premium international quality coated papers for
premium printing applications such as P.O.P
Substance range: 130 – 220 gsm materials, catalogues, brochures, books, calendars,
among others
Speciality Paper
7. MICR Cheque Paper MICR cheques

Substance range: 95 gsm

8. JK Excel Bond A premium watermarked paper for letterheads,
project reports, resumes, presentations and premium
Substance range: 70-90 gsm stationery paper
9. JK Bond An economy brand watermarked paper for
letterheads, computer stationery, envelopes, among
Substance range: 58-70 gsm others
10. JK Ledger Account books, ledgers and legal documentation

Substance range: 70-90 gsm

11. Parchment Paper Lifelong documents – mark sheets, share certificates,
financial instruments and high value stationery
Substance range: 70-110 gsm

The Company also has a limited presence in the stationery segment through its brands JK PhotoVista (used for
high quality digital printing), JK Excel (premium notebooks and pads), NotePal (Student notebooks) and
PrintBlanc (Plotter rolls for use by printers).

Raw materials and other purchases

The primary raw materials for our paper manufacturing are hardwood, bamboo and imported pulp.

Privately grown bamboo from North Odisha is procured as and when required in addition to bamboo sourced
from forests managed by the state governments of Odisha and West Bengal. Hardwood required for our Unit
JKPM is procured primarily from the states of Andhra Pradesh, West Bengal and Odisha, wherein the Unit
JKPM uses the services of various local suppliers to procure bulk of the requisite quantities and a small portion
is procured by us directly through its depots to develop a better understanding of the hardwood market. We also
participate in auctions conducted by various State Forest Corporations to source our raw material requirements.
Over the years, due to reduced availability of bamboo and its higher costs, the Unit JKPM has limited its
bamboo usage to approximately 10%-15% of its raw material requirement. The Unit JKPM now uses hardwood
for the balance requirement, being approximately 85%-90%, of its raw material requirement.

The Unit CPM‘s annual requirement of bamboo and hardwood is approximately 130,000 BDMT. The Unit
CPM in Gujarat primarily uses hardwood as the main cellulosic raw material and it accounts for nearly 65% of
its requirements. Hardwood required for our Unit CPM is being procured from farmers / suppliers primarily
from the state of Andhra Pradesh in addition to some quantity which is procured from the states of Gujarat and
Maharashtra in the surrounding areas of our manufacturing unit in order to minimize the transportation cost. The
wood plantations in Gujarat are primarily owned by the state government and government institutions and these
are periodically cut and sold in the local markets. Our Unit CPM procures wood from the states of Gujarat and
Maharashtra.

Bamboo is procured from the forests leased from the government of Gujarat. Our Unit CPM works on the
forests and is required to arrange for cutting, stacking, bundling and transporting the bamboo to meet its raw
material requirements. Our Company pays the state government of Gujarat a royalty based on the weight of
bamboo extracted. In addition, bamboo is procured from the state of Madhya Pradesh through a tender process

67
and a small quantity is procured from private growers in the states of Gujarat and Maharashtra. Further, need
based quantities of bamboo are also procured from the states of Assam and Uttar Pradesh on a spot delivery–
basis, depending upon price and availability. The state government of Gujarat owned forests had been a major
source of pulpwood for the Unit CPM since its inception. However, due to flowering and illegal felling the
present availability of bamboo from some of the designated forest divisions has reduced drastically. Separately,
our Company has been planting bamboo shoots in barren areas of the forests under the control of the state
government of Gujarat to increase future availability of bamboo.

Additionally, over the years, we have undertaken plantation initiatives and promoted social and farm forestry
along with high yielding clones developed by our research and development team to provide for sustainable
supply of raw materials. We have provided ‗Eucalyptus‘ seedlings to villagers at subsidized rates and have
started the promotion of ‗Subabul‘ plantations by distributing quality seedlings and technical guidance to
interested villagers with whom we enter into buy-back agreements.

Both our manufacturing units are strategically located to ensure ready availability of industrial chemicals and
sufficient supply of water required for our paper manufacturing process. At our Unit JKPM, the total power
requirement is 22.5 MW with the peak load requirement at 23.5 MW, of which, approximately 82% of the
power requirement is met through our own captive power plant and the balance through purchase of power from
GRIDCO (the state power distribution company in Odisha) under contract demand of 10 MVA at 132 KV. At
our Unit CPM, the total power requirement is 16 MW and the peak load requirement is 17 MW. Our captive
power unit meets the entire power requirement. Grid power is used only when captive power generation
equipment is under maintenance. For details, see ―History and Certain Corporate Matters‖ on page 87.

Additionally, the industrial chemicals required as raw materials for our manufacturing process, such as alum
(ferric and non ferric) and wet ground calcium carbonate (95 and 45), are also procured from the local markets
near our manufacturing units on a spot delivery–basis, depending upon price and availability.

For the six months period ended September 30, 2010 and for the Fiscal 2010, respectively, 42.06% and 39.59%,
of raw materials consumed by us were imported. Further, for the six months period ended September 30, 2010
and the Fiscal 2010, respectively, 5.63% and 7.03%, of total stores, spares and chemicals consumed by us were
imported. Pulp of different varieties is imported from countries such as Indonesia, Sweden, Finland and USA,
for manufacturing high strength virgin packaging board. Hydrogen peroxide is imported from Thailand, Turkey
and China, for bleaching pulp to manufacture bright paper. We also import Hydragloss-90 Kaolin clay from
USA and Brazil for providing high gloss in coated paper. Industrial chemicals such as LB-50, PA-40, Carboxy
Methyl Cellulose and Sodium Chlorate are also imported from countries such as Taiwan and Italy.

Manufacturing process

The basic operations in paper manufacturing consist of manufacture of pulp from bamboo/hardwood,
conversion of pulp into paper on a paper machine and cutting, finishing and packing. Recovery of chemicals is
an integral part of the pulp and paper manufacturing process. Both our Units follow substantially similar
process. The process at Unit JKPM is based on a new fibreline consisting of Rapid Displacement Heating
(RDH) Alkaline Kraft Pulping process with extended oxygen delignification system. The process at our Unit
CPM is based on Alkaline Kraft Pulping technology. The manufacturing process of paper is detailed below.

Chip preparation: The raw materials, bamboo and hardwood, are washed with water to remove the adhering
impurities on the log. The raw materials are then chipped with the help of chippers to an optimum dimensional
size (20 – 25 mm) and sent to the digesters after screening oversized chips, dusts and fines.

Pulp preparation: The cellulosic raw materials are chemically digested to free the cellulose from lignin, which
binds the fibers, by RDH cooking in our Unit JKPM. In Unit CPM, the chemical digestion is done through
sulphate cooking. The resulting pulp is sent to the screening and cleaning plant to remove the wood knots. The
screened pulp is washed and thickened to a high pulp consistency in a press.

Thereafter, the process of oxygen delignification and bleaching is carried out pursuant to which pulp is washed
with clean warm water or steam condensate and diluted. Thereafter, coloured residues of lignin are removed by
usage of chlorine dioxide and chlorine, and oxygen-reinforced extraction is carried out with hydrogen peroxide
dosing at our Unit JKPM. Calcium hypochlorite is used for extra stage bleaching at Unit CPM. Thereafter, pulp
is bleached using chlorine dioxide. Black liquor recovered in the process goes to chemical recovery to
regenerate the chemicals which are re-cycled in RDH /sulphate cooking.

68
The surplus pulp produced at our Unit JKPM is passed through a pulp drying machine to make pulp dried
sheets. Surplus bleached pulp in the form of slurry is fed to endless wire in a pulp drying machine. The water is
drained out gradually and a wet mat of pulp is formed. The pulp mat is then dewatered by pressing action in
press section and dried further with airborne dryers. The dried pulp web is then converted into proper size
(75X100cm) pulp sheets. The pulp sheets are then tied with a string to form bundles of around 50 kgs, which are
sold for commercial purpose. The surplus pulp produced at Unit CPM is directly pumped to our packaging
board plant at cost basis.

Stock preparation and paper machines: The bleached pulp obtained from the bleaching process needs
mechanical and chemical treatment for papermaking. Refining and systematic addition of fillers, sizing
chemicals, whitening agents and dyes are used to provide the required characteristics to the paper. Stock in the
slurry form is fed to endless wire in a paper machine. The water is drained out gradually with the help of dandy
roll and a wet mat of paper is formed. The water mark is imparted on the paper mat with the dandy roll if so
desired by the customer. The paper web is then dewatered by pressing action and dried further with a series of
dryers. The paper web is then passed through calendars with or without starch at the sizing press to reduce the
surface roughness and to impart a smooth texture. The paper web is then wound at the pope reel to form big size
paper rolls.

Conversion and finishing: After paper making, the big size paper rolls are passed through rewinders and
cutters for conversion to reels or sheets as per market requirement. After sorting out the defective sheets, the cut
sheets are finished into paper reams and packed as per the requirement of the customers.

Coating: The base paper produced at Unit JKPM is passed through an off-line blade coater to coat it with
different finishes. The coated paper is dried and passed through super calendar to improve the gloss and through
rewinder and cutter before finishing.

Chemical recovery: The spent cooking liquor (called black liquor) obtained from the pulping operation is sent
to the recovery process. It is concentrated in evaporators and burnt in recovery boilers to obtain smelt (which is
mostly sodium carbonate). The smelt is dissolved to make a solution and is reacted with slaked lime (calcium
hydroxide) in the causticizing section. Calcium carbonate precipitates out of the solution and the sodium
hydroxide is reused for cooking bamboo / wood chips in the pulp mill. The Calcium carbonate thus generated is
burnt in a lime kiln to regenerate the lime (calcium oxide).

An energy efficient falling film type evaporation plant has been installed for black liquor solids processing. This
incorporates a large economizer for recovery of heat and a high efficiency electrostatic precipitator for
increasing the chemical recovery efficiency.

The process chart for our paper manufacturing process is presented below:

69
 Wood/Bamboo Dust
Chip Preparation
Black Liquor
Chips

Digester Evaporators
Strong Steam
Pulp
Black Liquor

Washing Recovery Boiler Coal Fired Boiler TG Set

Unbleached Furnace Oil*
Pulp
Screening & Captive Power Steam to
Causticising Lime
Cleaning Generated Process
Unbleached Screened Lime Sludge
Pulp Disposal
Oxygen
Delignification
Oxygen Bld . Pulp

Bleaching
Bleached Pulp Drying
Pulp
Stock Preparation

Pulp Stock
Pulp Sheets to Market
Paper Machine

Paper
Finishing
* Furnace oil used during
startup only
Paper

Godown

Paper

Despatch

Paper to
Market

Virgin Packaging board

We entered the virgin packaging board business in Fiscal 2008 and have steadily increased our market share to
become one of the leading players in this segment. Our virgin packaging board products portfolio serve a
diverse range of customer requirements, including in packaging of high-end FMCG products such as cosmetics,
food, pharmaceuticals and garments, personal care products, greeting cards, life style products, book covers,
beverage cups and playing cards, among others. Our Company has set up a virgin packaging board plant at our
Unit CPM, which was commissioned in October 2007, having an installed capacity of 60,000 TPA, and is
equipped with contemporary technology sourced from global leaders in the packaging board machinery sector.
Further, our Unit CPM, equipped with manufacturing facilities for our virgin packaging board products, is
located on the western coast of India near the main consumption markets in the states of Maharashtra and
Gujarat.

Our Company‘s primary and high-end brands in the virgin packaging board segment include ‗JK Ultima‘, ‗JK

70
TuffCote‘, ‗JK TuffPac‘, ‗JK PristineCote‘, ‗JK PureFil Base‘ and ‗JK Club Card‘.

Products range

A detailed description of the product range of our virgin packaging board segment and their use is given below:

S. No. Product Uses

1. JK Ultima Packaging of personal care products/ pharma/ book covers/
greeting cards
Substance range: 200 – 450 gsm
2. JK TuffCote Packaging of high-end FMCG products such as cosmetics/
food/ pharma/ lifestyle products, among others.
Substance range: 190 - 450 gsm
3. JK TuffPac Cigarette packaging

Substance range: 190 – 230 gsm

4. JK PristineCote Book covers/ danglers/ brochures

Substance range: 200 – 400 gsm

5. JK PureFil Base Disposable beverage cups and tubs

Substance range: 170 – 330 gsm

6. JK Club Card Playing cards/ book covers/ danglers/ brochures/ annual
report covers
Substance range: 250 – 270 gsm

Raw materials and other purchases

The fibrous raw materials required for manufacturing of virgin grade packaging board consist of hard wood
chemical pulp, soft wood chemical pulp and bleached chemi thermo mechanical pulp. We internally produce
hard wood chemical pulp, which meets approximately one-third of our total pulp requirements. The balance
requirement, consisting of bleached chemi thermo mechanical pulp, soft wood chemical pulp and a part of hard
wood chemical pulp is imported from Indonesia, Brazil, Chile, Estonia, Canada, Sweden, Finland and USA.

Coal required in the manufacturing process of virgin packaging board is sourced from WCL and from open
market, depending on our requirement and availability.

In addition, chemicals such as resin, PAC, talcum and packing materials such as core pipe, LDPE shrink film
are also used for manufacture of virgin packaging board. These chemicals are sourced from local markets near
our manufacturing units on a spot delivery–basis, depending upon price and availability.

Manufacturing process

The manufacturing process of virgin packaging board is detailed below.

Treatment of raw materials: Raw materials for the virgin packaging board currently manufactured by our
Company are different types of virgin pulp.

Pulp manufacturing: Market pulp is re-pulped in hydro pulpers. Sand and grits are removed in high density
cleaner and the pulp is screened by fine screening system and through centricleaning system to remove the
unwanted non fibrous materials.

Stock preparation: In the secondary fibre treatment plant for stock preparation, mechanical and chemical
treatment is done to the pulp, and chemicals like PAC, rosin, soap stone powder, ORA, and dyes are added to
pulp slurry.
Paperboard manufacturing: Pulp slurry is sent through ‗forming fabrics‘ to form layers and subsequently all
layers of pulp are attached in the wire section. Thereafter, the pulp is sent to the press section and drier section
wherein the wet web is passed through rotary steam heated dryers to remove water from sheet. The board sheet
then passes through size press followed by dryers and coating section where coating solution is applied on the
surface of board sheet for achieving smooth printable surface. Thereafter, the board sheet is calendared in soft
nip calendar and reeled on pope reel.

71
Finishing and Converting: Lastly, the board is sent to finishing and converting section where virgin packaging
board is made in the form of reels or sheets in accordance with the requirements.

72
Process chart of manufacturing process of virgin packaging board

Top Layer and back layer for Market Pulp/Mill pulp

Conveyor Pulper H.D. Coarse Storage Stock Approach

Cleaner Screening Chest Prepration Flow

Filler – Middle Layer (BCTMP) Storage Stock Approach

Conveyor Pulper H.D.

Chest Prepration Flow Board Board machine

Cleaner Board machine Board machine Board machine
machine wet wet end dry end section dry end section dry end section
end section section (DRYER PART) (COATING PART) (SOFT NIP &
(PRESS PART) POPE REEL)
(WIRE PART)

Board Machine Rewinding

section

Board Machine Finishing

House Sheeting Section

Board Machine Godown

Section

Dispatch to Coustomer

73
Manufacturing Facilities

Unit JKPM

Our Unit JKPM was established in 1962 at Rayagada, Odisha, and is located on a total land measuring 686 acres
(636.97 acres leasehold and 49.03 acres freehold).

Our Unit JKPM presently has an installed capacity of 1,25,000 TPA for manufacturing paper and saleable pulp.
In addition, our blade coating facility was commissioned at the Unit JKPM in July 2005 to produce quality
coated paper, enabling us to move up the value chain and capitalize on the growing market of coating paper. The
capacity of the coating plant at the Unit JKPM is 46,000 TPA.

The total power requirement at our Unit JKPM is 22.5 MW with the peak load requirement at 23.5 MW, of
which, approximately 82% of the power requirement is met through own captive power plant and the balance
through purchase of power from GRIDCO (the power distribution company in Odisha) under contract demand
of 10 MVA at 132 KV. For details, see ―History and Certain Corporate Matters‖ and ―Government and Other
Approvals‖ on pages 87 and 257, respectively.

The Unit JKPM meets water requirement of approximately 33,000 m3/d from river Nagavali, a perennial river
flowing within one km distance from the unit. For details, see ―History and Certain Corporate Matters‖ and
―Government and Other Approvals‖ on pages 87 and 257, respectively.

We have well-developed township, Jaykaypur, which is self-sufficient in various facilities including school,
college, medical centre, bank, post office, shopping centre, guest house, employees‘ club, officers‘ mess and
religious places of worship. Pursuant to the Scheme of Arrangment, our Company has transferred 1,806
residential units for its officers, workers and contractors to JIHL, with effect from April 1, 2009.

Our Unit JKPM has an effluent treatment plant that releases about 24,500 m3/d of treated effluent to the
Nagavali river. The plant treats the effluent by way of an activated sludge process. The clear effluent discharged
from the Unit JKPM conforms to the standards set by the Orrisa State Pollution Control Board.

Unit CPM

Our Unit CPM was established in 1960 at Songadh, Gujarat, and is located on a total land measuring 396.22
acres of freehold land.

Our Unit CPM presently has an installed capacity of 55,000 TPA for manufacturing paper and saleable pulp.
Additionally, we have set up a virgin packaging board plant at our Unit CPM, which was commissioned in
October 2007, having an installed capacity of 60,000 TPA, and is equipped with contemporary technology
sourced from global leaders in the paper board machinery sector.

At our Unit CPM, the total power requirement is 16 MW and the peak load requirement is 17 MW. The captive
power unit meets the entire power requirement. Grid power is used only when captive power generation
equipment is under maintenance. For details, see ―History and Certain Corporate Matters‖ and ―Government
and Other Approvals‖ on pages 87 and 257, respectively.

The Unit CPM meets water requirement of approximately 22,000 m3/d from river Ukai left bank canal sourced
from river Tapi reservoir flowing within a distance of 5 kms from the Unit CPM. For details, see ―History and
Certain Corporate Matters‖ and ―Government and Other Approvals‖ on pages 87 and 257, respectively.

We have residential colony having various facilities including school, bank, post office, guest house,
employees‘ club, officers‘ mess, places of religious worship and centre for medical facilities. Pursuant to the
Scheme of Arrangment, our Company has transferred 575 residential units for its officers and workers to SIHL,
with effect from April 1, 2009.

Our Unit CPM has an effluent treatment plant having capacity of 30,000 m3/d. This plant treats effluents from
different units like pulp mill, chemical recovery, cooling tower blow down and sewage from colony by way of
activated sludge process. The clear effluent discharged from the Unit CPM confirms to the standards set by the
Gujarat State Pollution Control Board.

74
Capacity utilization of our manufacturing units

Capacity utilization of each of our manufacturing unit for Fisca1 2010, Fiscal 2009 and for nine month period
ended March 31, 2008, is set forth below

Particulars Fiscal 2010 (%) Fiscal 2009 (%) Nine month period ended
March 31, 2008 (%)
Unit JKPM – Paper and 110.14 107.57 103.92
saleable pulp
Unit CPM – Paper and 118.60 114.35 106.19
saleable pulp
Unit CPM – Packaging 118.09 95.78 45.08
board
Total 114.06 106.17 94.79

Proposed expansion

Manufacturing units

We seek to expand and develop our Unit JKPM, in order to maintain our leadership position in the Indian paper
market. We initiated the expansion and development plan of Unit JKPM in December 2010 and expect to
complete the proposed expansion by February 2013. Under the proposed expansion and development
programme, we seek to expand the manufacturing capacity of our Unit JKPM and carrying out related
developments, which include (a) installation of a new or augmented fibre line with a capacity to produce
approximately 2,15,000 tonnes of pulp per annum, and phasing out the existing fibreline with a capacity of
110,000 BDMT; (b) installation of new paper machine with a capacity to produce of 1,65,000 tonnes of
woodfree copy paper per annum for manufacturing copier paper and other multi-functional office paper grades,
and phasing out the existing paper machines with combined capacity of 41,000 TPA; (c) installation of a new
chemical recovery system with a new high pressure recovery boiler with a capacity of 1400 t ds/d/virgin liquor,
and phasing out the existing recovery boiler with a capacity of 660 t ds/d/virgin liquor ; and (d) installation of
captive power generation facility of 55 MW, replacing the existing captive power generation facility having
installed capacity of 19.9 MW.

As a result of the expansion and development programme, our installed capacity of paper at Unit JKPM is
expected to be 2,43,000 TPA. In addition, the unit is expected to produce 32,000 BDMT of saleable pulp which
would be available for external sales or transfer to virgin packaging board operations at Unit CPM. Post
expansion, the combined installed capacity of our Company for paper and saleable pulp manufacturing is
expected to be 3,30,000 TPA.

The table below sets forth our present and planned total installed capacity after implementation of our expansion
and development plan:
Unit Present installed capacity (TPA) Proposed installed capacity (post
expansion) (TPA)
CPM
Paper and saleable pulp 55,000 55,000
Virgin Packaging board 60,000 60,000
JKPM
Paper and saleable pulp 1,25,000 2,75,000
Total
Paper, saleable pulp and virgin 2,40,000 3,90,000
packaging board

Technology upgradation

Pursuant to the proposed expansion, we intend to install a new paper machine, equipped with new generation
technology named ‗Process Line Package‘ based on ‗Voith‘s OnePlatform Concept‘, supplied by Voith Paper,
Germany, for manufacturing cut-size multi-purpose office paper.

In addition, the proposed expansion includes installation of a wood handling unit which includes a new chipping
line with log washing. The new chipping line would consist of one new chipper, chip storage and two new chip
75
screens. Further, the Company intends to install of a new chemical recovery system with a new high pressure
recovery boiler with a capacity of 1400 t ds/d/virgin liquor, and phasing out the existing recovery boiler with a
capacity of 660 t/ds/d/virgin liquor, and installation of captive power generation facility of 55 MW, replacing
the existing captive power generation facility having an installed capacity of 19.9 MW.

Approvals

In order to undertake the proposed expansion at Unit JKPM, we have applied to obtain approval of the state
government of Odisha on May 21, 2010, under Orissa Industries (Facilitation) Act, 2004. The terms of reference
of the proposed expansion at Unit JKPM was issued by MoEF on August 16, 2010, pursuant to which an
environmental impact assessment and environment management plan dated November 2010 (EIA), has been
prepared by MIN MEC Consultancy Private Limited. The EIA was prepared in order to, amongst other things,
establish the present environment scenario of the area, anticipate the impacts of the proposed project on the
environment during its construction and operation phase and suggest preventive and mitigative measures to
minimize adverse impacts and to maximize beneficial impacts. A public hearing in accordance with the rules
prescribed in the EIA Notification was held on December 22, 2010. For further details, see ―Government and
Other Approvals‖ on page 257.

Implementation schedule

On the basis of quotations received from various suppliers of fibre line, pulp machine and recovery boiler, the
Company has issued letter of intents in the month of December 2010 and January 2011.

The expected schedule of key expansion and development activities for the Unit JKPM is given below:

Particulars Expected Completion

Basic engineering June 2011
Receipt of vendor data July 2011
Detailed engineering activities December 2011
Equipment delivery August 2012
Civil construction September 2012
Erection of plant and machinery October 2012
Pre-commissioning trials and commissioning November 2012
Commencement of saleable production February 2013

Raw materials and other purchases

We will continue to procure privately grown bamboo from North Odisha and from the forests managed by the
state governments of Odisha and West Bengal. Hardwood is expected to be procured from various local
suppliers and depots in the states of Andhra Pradesh, West Bengal and Odisha.

The raw water intake after implementation of our expansion and development plan, is expected to continue to be
met from Nagavali River. The total water requirement after the completion of expansion and development plan
is expected to increase from 33,000 m3/d to 35,000 m3/d.

The total power requirement at our Unit JKPM is expected to increase from 22.5 MW to 46.7 MW. With the
installation of new of captive power generation facility of 55 MW, our complete power requirement for the Unit
JKPM shall be met. However, our Company intends to continue the arrangement with GRIDCO, with respect to
the purchase of power, as a back-up.

Additionally, the industrial chemicals required will be procured from the local markets on a spot delivery–basis,
depending upon price and availability.

Environmental impact

As a result of the proposed expansion of the Unit JKPM, the level of dissolved COD in the effluent treatment
plant is expected to rise, the specific flow rate per pulp and paper production is expected to drop and AOX load
is expected to drop as a result of change to ECF bleaching. Our Company intends to upgrade the effluent
treatment targets and improve the removal efficiency of the organic matter. Further, the total amount of fibrous
waste sludge is expected to decrease, but the amount of waste biological sludge is expected to increase. Our
Company intends to create a new hazardous waste landfill near the wastewater treatment plant at our Unit
76
JKPM.

Financing Plan

The total costs estimated to part finance the expansion and development of the Unit JKPM is ` 1,653.37 crores.
The table below sets out the means for financing the proposed expansion and development:

(In ` crores)
Expenditure Items Total Estimated Amount Deployed as Amount Proposed to Balance Amount
Cost of December 31, 2010* be Financed from Net Required#
Proceeds

1 2 3 4 = 1- 3
Part finance the 1,653.37 4.37 235.00** 1,418.37
expansion and
development of the
Unit JKPM
* As certified by Lodha & Co., Chartered Accountants, by their certificate dated January 28, 2011.
** Includes the amount of ` 4.37 crores deployed as of December 31, 2010 towards the expansion and development of the
Unit JKPM, to be recouped from the Net Proceeds.
#
This amount is proposed to be financed through a combination of internal accruals, debt and issue of additional securities,
such as the proposed 2011 FCCBs. In terms of letter dated January 28, 2011, Lodha & Co., Chartered Accountants, have
certified that the amount of existing identifiable internal accruals as on December 31, 2010 is ` 116.08 crores.

To meet a portion of balance amount required for expansion of Unit JKPM, we have entered into firm-tie up
arrangements with various lenders such as DZ Bank, State Bank of India, Axis Bank, Indian Bank and Exim
Bank.

For details, see ―Objects of the Issue‖ on page 34.

Plantation initiatives

Our plantation initiative was started in 1990 at our Unit JKPM and later extended to our Unit CPM. Our
Company has been aggressively promoting social and farm forestry and high yielding clones developed by our
in-house research and development institutions, carried out on the lands owned by people residing at villages
near our manufacturing units, (i.e., in Odisha and Andhra Pradesh for our Unit JKPM and in Gujarat and
Maharashtra for our CPM Plant), to provide for sustainable supply of raw materials and increasing benefit to the
villagers. Our Company has been promoting plantation of high yielding, short duration pulpwood species with
the help of villagers in areas in a radius of about 250-300 kms from our manufacturing units. Currently, a well-
equipped network comprising around 60 de-centralized nurseries and two centralized nurseries contain 18 mist
chambers and several clone testing and demonstration fields that are used for development and production of
clonal plants. Fast growing clones have been identified that are able to produce 100-120 MT/ha of hardwood in
a period of five to six years as compared to 50-60 MT/ha from seed route seedlings in six to seven years. Clonal
seedlings and seed route seedlings are distributed among villagers with a buyback understanding. Regular
technical assistance is made available to the villager for the proper upkeep and growth of plants.

Procurement of wood from farm forestry sources now accounts for over 70-75% of our Company‘s raw
materials consumption. Our Company has developed seeds orchards of high yielding strains of various species
including Eucalyptus and Casuarina. We are presently operating such social and farm forestry programs in
Koraput, Rayagada, Ganjam, Gajpati and Kalahandi districts of Odisha, Dhule, Nandurbar, Jalgaon and Nashik
districts of Maharashtra, Tapi, Surat, Bharuch, Baroda, Kheda and Valsad districts of Gujarat and Vizianagram,
Srikakulam and Vishakhapatnam districts of Andhra Pradesh. This benefits our Company in the long term
ensuring continuous procurement of hardwood and bamboo.

We have been able to generate over 75,000 hectares of plantations through our social forestry and farm forestry
programs. The ecological benefits from plantations include:

control of surface run-off, nutrient and soil erosion;

improvement of microclimates, such as lowering of soil temperature and reduction in evaporation of
moisture through mulching and shading;
improvement in soil structure through constant addition of organic matter from decomposed litter;

77
 use and restoration of degraded marginal lands;
greening of wastelands and increase in the area under tree cover; and
reduction of pressure on natural forests.

The plantation program undertaken by the Company has the following key objectives:

maximization of farm forestry within 200 kms radius of the manufacturing units;
research and development for disease resistant varieties and improvement of farm productivity;
diversity of species to be maintained to avoid monoculture;
focus on less productive lands and providing assistance to farmers for sustainable management of land;
development of agro-forestry; and
implementation of gate-purchase scheme for direct purchase of raw materials from farmers.

Distribution, Sales and Marketing

Our sales and marketing office is headquartered in New Delhi. It is responsible for the entire sales and
marketing activities including planning, strategy, product development, product promotion, brand management
and advertising. Our Company has four Regional Marketing Offices located at New Delhi, Mumbai, Kolkata
and Chennai. These offices comprise sales and product managers who operate as brand managers to meet the
local market and customer requirements. The overall sales and marketing team comprises of 63 people.

The marketing of our brands is undertaken domestically by a dedicated and experienced team and an extensive
distribution network. Additionally, we export our paper and virgin packaging board to over 40 countries
including in Brazil, UK, Turkey, Middle East, Sri Lanka, Bangladesh, Singapore, Malaysia and several African
nations. Sales in countries outside India are undertaken directly.

Presently, our distribution network comprises numerous distributors across India, four carrying and forwarding
agents and 134 wholesellers. Based on their long term experience in the paper and stationery, they facilitate in
creating awareness about our products and their features amongst the customers and thereby also help in product
marketing.

Traditionally, our distribution has been driven through a chain of wholesalers who supply directly to large
customers and are also responsible for distributing the products in their respective areas through a network of
dealers and sub-dealers. This channel is utilised to deal with all bulk consumers needing direct servicing
including customers in the printing and publishing industry.

Our Company distributes its products through the following modes:

(i) direct sales to wholesalers from the manufacturing units;

(ii) exports to international markets directly from the manufacturing units; and

(iii) through our depots managed by clearing and forwarding (C&F) agents and through consignment
agents.

Research and Development

In addition to a well equipped laboratory, responsible for various development works in order to promote basic
and applied research in the paper industry for product development, process studies and technology
development, our Company has promoted an autonomous research institution, Pulp and Paper Research Institute
(―PAPRI‖), at our Unit JKPM in Jaykaypur, in 1971. Since its inception, PAPRI has carried out studies in the
field of pulp and paper making and raw material development (including clonal propagation and tissue culture).
The institute has a fully equipped laboratory that carries out diversified tests and trials. PAPRI has run various
trials from time to time to infuse latest environment friendly technologies in areas like pulping of raw materials,
paper manufacturing processes and formulations.

Human Resource
78
We believe that our ability to maintain our growth depends to a large extent on our strength to attract, train,
motivate and retain employees. As of December 31, 2010 we had approximately 2,823 full-time employees on
the rolls of our Company.

Category No. of Employees

Workmen 1,597
Officers 657
Supervisors 214
Staff 132
Sub staff 50
Casual employees 173
Total 2,823

Our Company has several human resource initiatives in place, conforming to contemporary standards, to nurture
and develop its human resources. Efforts are made to enhance the individual skills and abilities of our
employees through various training programmes and to make the overall work experience meaningful. The
developmental needs for each employee is identified at the time of annual appraisal and employees are put
through an appropriate mix of internal and external training programmes and other facilitating mechanisms. Our
Company emphasizes on improved business performance year after year, and, accordingly, the individual goals
and targets of the management team are finalized in a workshop prior to the beginning of the relevant financial
year. As a part of the customer-in culture, a few distinguished dealers/ wholesalers are invited to share their
experiences and expectations from our Company during the ‗Goal Setting Workshop‘, thereby helping our
senior management to orient their goals for the coming Fiscal Year. Besides, several visits to customer locations
by the executives not working in our sales and marketing department are also arranged from our manufacturing
units as well as our head office in New Delhi. Further, our Company has instituted ‗The Executive Coaching‘
along with M/s Hewitt Associates, a renowned HR Consultancy firm, a program for our senior executives to
train them in delivering quality performance

At the top management level strategic skills and organization building skills are emphasized, at the middle
management level it is largely focused on preparing future leadership, whereas at junior management levels
appropriate functional skills training is imparted. Our Company has organized summits for our senior
management, such as, a 3-day summit on ‗Strategies for Quantum Growth‘, conducted at the ISB, Hyderabad in
November 2008. Additionally, some of our promising employees have also undergone one to two weeks'
‗Leadership Programmes‘ at IIM, Bangalore and IIM, Lucknow.

Awards and Recognitions

Our Company and our manufacturing units have received numerous awards and recognitions, some of which are
listed below:

• Sword of Honour from British Safety Council, United Kingdom, for our Unit JKPM.

• ‗Paper Mill of the Year‘ award from Indian Paper Makers Association, for our Unit JKPM in 1995.

• Our Unit JKPM has been adjudged as the ‗First Greenest Paper Mill‘ in 1999 and ‗Second Greenest Paper
Mill‘ in 2004 by Centre for Science & Environment (CSE).

• ‗Paper Mill of the Year‘ award from Indian Paper Manufacturers Association, for our Unit CPM in 2004.

• ‗National Safety Award-2004‘ by Ministry of Labour & Employment, GoI, to our Unit CPM.

• ‗CII Sohrabji Godrej‘s National Award for Excellence in Energy Management 2005‘ to our Unit CPM.

• ‗CII National Award‘ to our Unit CPM for excellence in energy management in 2005.

• ‗The IPMA Energy Conservation Award‘ to our Unit CPM in 2007.

• ‗Greentech Environment Excellence Award 2010 - Winner of Gold Award in Paper Sector‘ to our Unit
CPM.

79
• ‗Greentech Environment Excellence Award 2010 - Winner of Silver Award in Paper Sector‘ to our Unit
JKPM.

• ‗National Energy Conservation Award 2009 - Merit Certificate in the Pulp & Paper Sector‘ to our Unit
CPM.

• ‗Good Corporate Citizen Award-2006‘ by PHD Chambers of Commerce & Industry.

• ‗TPM Excellence First Category Award‘ in 2006 by Japan Institute of Plant Maintenance for both our
manufacturing units.

• ‗Award for Excellence in Consistent TPM Commitment – 2009‘ by Japan Institute of Plant Maintenance for
our Unit JKPM.

Intellectual Properties

We have six trademarks registered in our name, including ‗JK Copier Plus‘ and ‗JK Bond‘. Further, we have
filed 11 applications in relation to change in name from ‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills
Limited‘ and from ‗The Central Pulp Mills Limited‘ to ‗JK Paper Limited‘, for trademarks such as ‗JK Paper
Limited‘ (logo) and ‗JK Copier‘. In addition, eight applications are pending for registration of our trademarks
such as ‗JK TuffPac‘ before Registrar of Trade Marks. For further details, see “Government and other
Approvals” on page 257.

Properties

In terms of the lease agreement dated May 7, 2008, our Corporate Office has been leased to us by Children‘s
Book Trust, until November 15, 2016. Our Unit CPM is located at 396.22 acres of freehold land. Further, our
Unit JKPM located on a total land measuring 686 acres, of which 49.03 acres is freehold and 636.97 acres has
been leased to us on 99 years‘ lease from State of Odisha. Pursuant to the Scheme of Arrangement between our
Company, Songadh Infrastructure & Housing Limited and Jaykaypur Infrastructure & Housing Limited, with
effect from April 1, 2009, 48.51 acres of land of our Unit CPM stands transferred to Songadh Infrastructre &
Housing Limited and 122.78 acres of land of our Unit JKPM, which includes 2.64 acres of freehold land and
120.14 acres of leasehold land, stands transferred to Jaykaypur Infrastructure & Housing Limited. See, ―Our
Promoter and Group Companies‖, on page 117.

Insurance

We maintain insurance against property damage caused by fire, burglary, terrorism, earthquake and other perils
that may result in physical damage to or destruction of our offices, manufacturing units, equipment, raw
materials, inventory and business interruption. We also have a marine cargo open policy for transport of
machines. All policies are subject to standard deductibles and coverage limitations. In addition, we maintain
group personnel accident policy and group mediclaim policy with respect to certain of our employees. We also
maintain a range of general commercial liability insurance, including directors and officers' and company
reimbursement policy. Our insurance policies are provided by domestic insurance companies.

Environment

Our Company has been focused in terms of adopting and improving the practices contributing to continual
environment improvement and sustainable development. Both our manufacturing units are ‗ISO 14001‘ certified
for their eco-friendly operations and ‗OHSAS 18001: 2007‘ certified for occupational health and safety
management system standard. Our Unit CPM has won the National Safety Award from Ministry of Labour, GoI
for the year 2004 and the National Award for Excellence in Energy Management in 2005 by CII-Sohrabji
Godrej Green Business Centre, Hyderabad, which declared our Unit CPM as an ―Energy Efficient Unit‖. We
deploy eco-friendly technology to provide a safe and clean environment in its neighbourhood. In recognition of
our efforts in these areas, the Unit CPM was conferred the ‗Greentech Environment Excellence Gold Award
2010‘ and the Unit JKPM was conferred the prestigious ‗National Ground Water Augmentation Award – 2008‘
by Ministry of Water Resources, GoI and the ‗Certificate of Appreciation for Excellence in Energy Management
– 2008‘ by Bureau of Energy, GoI.

Some of the recent initiatives taken by our Company to further improve the environment include the following:

80
 We have implemented an oxygen delignification system and chlorine dioxide system at the Unit CPM
to reduce elemental chlorine consumption in the process;

We have installed high efficiency, DCS controlled modern recovery boiler at the Unit CPM to improve
upon the chemical recovery efficiency and also help in conserving coal for steam generation;

We are using treated effluent for internal use of effluent treatment plant and chips washing, to save
water;

We are increasing fly ash utilization by 25%; and

We have installed lime kilns at both our manufacturing units to recover lime from the lime sludge. This
has brought down the quantity of lime sludge disposed by about 85% besides reducing the requirement
of lime.

In Fiscal 2008, we signed an Emission Reduction Purchase Agreement (ERPA) with the Bio Carbon Fund of
World Bank for sale of carbon emission reductions under the Clean Development Mechanism (CDM).

Health, safety and risk management

We have implemented work safety measures and standards to ensure healthy and safe working conditions,
equipment and systems of work for all the employees, contractors, workers, visitors and customers at our
manufacturing units. We intend to reduce waste and other harmful pollutants by careful use of materials, energy
and other resources while maximizing recycling opportunities. Each of our manufacturing unit has its own work
safety management department which ensures compliance with safety measures and standards. In addition, we
have established a separate in-house safety department to address all safety related issues with respect to our
manufacturing units. We have established a committee for work safety which sets safety measures and standards
in accordance with the relevant safety laws and regulations in India. We oversee the implementation and
compliance of these safety measures and standards.

Starting at the design and engineering of our manufacturing units, we adopt safety technology for all our
equipment, electrical machines and electronic control systems as per international standards of industrial safety.
Both our manufacturing units have integral safety systems and emergency shutdown systems for stoppage of the
manufacturing units in abnormal conditions.

Corporate and social responsibility

As a part of our corporate and social responsibility initiatives, our Unit JKPM established the Lakshmipat
Singhania School at Jaykaypur, in 1964. Our Unit JKPM also commenced an adult literacy program in 2005 and
is currently operating 18 adult literacy centres. Our Unit JKPM also organizes approximately 20 healthcare
camps every year for the benefit of people residing near the unit. As a community development initiative, our
Unit JKPM has formed ‗women self-help groups‘ which take up income generation projects such as production
and marketing of hill brooms, powders and cultivation of mushroom and hybrid maize. Our Unit JKPM has also
started tailoring and embroidery training centre in the year 2009, as a part of its skill development programme
for tribal girls.

Additionally, our Unit CPM established the Singhania Public School at Songadh in the year 2007. Our Unit
CPM has also commenced an adult literacy program in 2004 and is currently operating 13 adult literacy centres.
Our Unit CPM also runs a mobile medical unit for weekly visits in villages and organized 14 medical camps in
Fiscal 2010 for the benefit of villagers. Our Unit CPM has also started skill development program for women
wherein it provides training for skills such as cutting, sewing and painting. It also conducts program to provide
technical training to students of various industrial training institutes. Further, our Unit CPM has also provided
infrastructural support for construction and repair of roads and supply for piped water in Songadh.

Competition

We compete with companies operating in the paper and virgin packaging board business in India and other
countries we operate in. Some of our competitors may have more experience than us in the manufacturing and
sale of paper and virgin packaging board products. In addition, a number of our competitors may have more

81
resources than us. In coated paper segment, our primary competitor is Ballarpur Industries Limited. In writing
and printing paper segment, our primary competitors are Ballarpur Industries Limited, TNPL, AP Paper Mills,
and West Coast Paper Mills, among others. In virgin packaging board segment, ITC Limited is our major
competitor. Further, we face competition from countries such as China, Korea, Indonesia from where lower
price coated paper is imported into India. Additionally, the competition in paper industry ranges from large,
well-established players to small units in the unorganized segment. Small, unorganized players mainly compete
in the low value added segments like creamwove and kraft paper whereas the high value added segments like
copier paper, coated paper and virgin packaging board are mainly controlled by the larger players. See
―Industry Overview‖ on page 51.

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 REGULATIONS AND POLICIES

The following description is a summary of various sector-specific laws and regulations in India prescribed by
the GoI and various state Governments, which are applicable to our Company. The information contained in
this chapter has been obtained from publications in the public domain. The regulations set out below may not be
exhaustive, and are only intended to provide general information to the investors and are neither designed nor
intended to substitute for professional legal advice.

Set forth below are certain significant legislations and regulations that generally govern our business operations.

The Factories Act, 1948 (the “Factories Act”)

State governments prescribe rules with respect to the prior submission of plans, their approval for the
establishment of factories and the registration and licensing of factories.

The Factories Act provides that the ‗occupier‘ of a factory (defined as the person who has ultimate control over
the affairs of the factory and in the case of a company, any one of the directors) shall ensure the health, safety
and welfare of all workers while they are at work in the factory, especially in respect of safety and proper
maintenance of the factory such that it does not pose health risks, the safe use, handling, storage and transport of
factory articles and substances, provision of adequate instruction, training and supervision to ensure workers‘
health and safety, cleanliness and safe working conditions.

If there is a contravention of any of the provisions of the Factories Act or the rules framed thereunder, the
occupier and manager of the factory may be punished with imprisonment for a term up to two years or with a
fine up to ` 1,00,000 or with both, and in case of contravention continuing after conviction, with a fine of up to
` 1,000 per day of contravention. In case of a contravention which results in an accident causing death or
serious bodily injury, the fine shall not be less than ` 25,000, and ` 5,000, respectively.

Environmental Laws

Our operations require various environmental and other permits covering, among other things, water use and
discharges, stream diversions, solid waste disposal and air and other emissions. The applicability of these laws
and regulations varies from operation to operation and is also dependent on the jurisdiction in which we operate.
Compliance with relevant environmental laws is the responsibility of the occupier or operator of the facilities.

Major environmental laws applicable to our operations include:

Indian Forest Act, 1927 (the “Forests Act”)

The Forests Act consolidates the law relating to forests, the transit of forest produce and the duty leviable on
timber and other forest produce. Under Section 4 of the Forests Act, the state government is empowered to
declare proprietary rights over forests or forest produce by issuing a notification in the Official Gazette. Further,
as per Section 84 of the Forests Act, land so acquired by issuing such a notification in the Official Gazette, is
deemed to be acquired for a public purpose under the Land Acquisition Act, 1894, as amended.

As per Section 39, of the Forests Act, the GoI is also authorised to declare by notification the duty leviable on
timber or other forest produce which is (1) produced in territories over which the GoI has any right, and (2)
which is brought into territories to which the Forests Act applies. There is no monetary limit under the Forests
Act on the amount chargeable as purchase money or royalty on any timber/forest produce. Additionally,
Chapter IX of the Forests Act prescribes penalties for offences in relation to forest produce.

The Environment (Protection) Act, 1986 (the “EPA”)

The EPA is an umbrella legislation in respect of the various environmental protection laws in India. The EPA
vests the GoI with the power to take any measure it deems necessary or expedient for protecting and improving
the quality of the environment and preventing and controlling environmental pollution. This includes rules for
inter alia, laying down the quality of environment, standards for emission of discharge of environment
pollutants from various sources, inspection of any premises, plant, equipment, machinery, examination of
manufacturing processes and materials likely to cause pollution. Penalties for violation of the EPA include fines

83
up to ` 1,00,000 or imprisonment of up to five years, or both.

There are provisions with respect to certain compliances by persons handling hazardous substances, furnishing
of information to the authorities in certain cases, establishment of environment laboratories and appointment of
government analysts.

The Environment Impact Assessment Notification S.O. 1533(E), 2006 (the “EIA Notification”)

The EIA Notification issued under the EPA and the Environment (Protection) Rules, 1986, as amended,
provides that the prior approval of the MoEF, GoI, or State Environment Impact Assessment Authority, as the
case may be, is required for the establishment of any new project and for the expansion or modernisation of
existing projects specified in the EIA Notification. The EIA Notification states that obtaining of prior
environmental clearance includes a maximum of four stages, i.e., screening, scoping, public consultation and
appraisal.

An application for environmental clearance is made after the identification of prospective site(s) for the project
and/or activities to which the application relates but before commencing any construction activity, or
preparation of land, at the site by the applicant. Certain projects which require approval from the State
Environment Impact Assessment Authority may not require an Environment Impact Assessment Report. For
projects that require preparation of an Environment Impact Assessment Report public consultation involving
both public hearing and written response is conducted by the State Pollution Control Board. The appropriate
authority makes an appraisal of the project only after a Final EIA Report is submitted addressing the questions
raised in the public consultation process.

The prior environmental clearance granted for a project or activity is valid for a period of five years in the case
of all projects and activities in the paper manufacturing sector. This period of validity may be extended by the
regulatory authority concerned by a maximum period of five years.

Coal or lignite based thermal power plants with a capacity of 500 MW or more requires clearance from the
MoEF, GoI. Coal or lignite based thermal power plants with a capacity of more than 50 MW, but less than 500
MW requires clearance from State Environment Impact Assessment Authority.

The Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 (the
“Hazardous Wastes Rules”)

The Hazardous Wastes Rules aim to regulate the proper collection, reception, treatment, storage and disposal of
hazardous waste by imposing an obligation on every occupier and operator of a facility generating hazardous
waste to dispose such waste without adverse effect on the environment, including through the proper collection,
treatment, storage and disposal of such waste. Every occupier and operator of a facility generating hazardous
waste must obtain an approval from the relevant state Pollution Control Board. The occupier, the transporter
and the operator are liable for damages caused to the environment resulting from the improper handling and
disposal of hazardous waste. The operator and the occupier of a facility are liable for any fine that may be levied
by the relevant State Pollution Control Boards. Penalty for the contravention of the provisions of the Hazardous
Waste Rules includes imprisonment up to five years and imposition of fines as may be specified in the EPA or
both.

The Water (Prevention and Control of Pollution) Act, 1974 (the “Water Act”)

The Water Act aims to prevent and control water pollution as well as restore water quality by establishing and
empowering the Central Pollution Control Board and the State Pollution Control Boards. Under the Water Act,
any person establishing any industry, operation or process, any treatment or disposal system, use of any new or
altered outlet for the discharge of sewage or new discharge of sewage, must obtain the consent of the relevant
State Pollution Control Board, which is empowered to establish standards and conditions that are required to be
complied with. In certain cases the State Pollution Control Board may cause the local Magistrates to restrain the
activities of such person who is likely to cause pollution. Penalty for the contravention of the provisions of the
Water Act include imposition of fines or imprisonment or both.

The Central Pollution Control Board has powers, inter alia, to specify and modify standards for streams and
wells, while the State Pollution Control Boards have powers, inter alia, to inspect any sewage or trade effluents,
and to review plans, specifications or other data relating to plants set up for treatment of water, to evolve

84
efficient methods of disposal of sewage and trade effluents on land, to advise the state government with respect
to the suitability of any premises or location for carrying on any industry likely to pollute a stream or a well, to
specify standards for treatment of sewage and trade effluents, to specify effluent standards to be complied with
by persons while causing discharge of sewage, to obtain information from any industry and to take emergency
measures in case of pollution of any stream or well.

A central water laboratory and a state water laboratory has been established under the Water Act.

The Water (Prevention and Control of Pollution) Cess Act, 1977 (the “Water Cess Act”)

The Water Cess Act provides for levy and collection of a cess on water consumed by industries with a view to
augment the resources of the Central and State Pollution Control Boards constituted under the Water Act. Under
this statute, every person carrying on any industry is required to pay a cess calculated on the basis of the amount
of water consumed for any of the purposes specified under the Water Cess Act at such rate not exceeding the
rate specified under the Water Cess Act. A rebate of up to 25% on the cess payable is available to those persons
who install any plant for the treatment of sewage or trade effluent, provided that they consume water within the
quantity prescribed for that category of industries and also comply with the provision relating to restrictions on
new outlets and discharges under the Water Act or any standards laid down under the EPA. For the purpose of
recording the water consumption, every industry is required to affix meters as prescribed. Penalties for non-
compliance with the obligation to furnish a return and evasion of cess include imprisonment of any person for a
period up to six months or a fine of `1,000 or both and penalty for non payment of cess within a specified time
includes an amount not exceeding the amount of cess which is in arrears.

The Air (Prevention and Control of Pollution) Act, 1981 (the “Air Act”)

Pursuant to the provisions of the Air Act, any person, establishing or operating any industrial plant within an air
pollution control area, must obtain the consent of the relevant State Pollution Control Board prior to establishing
or operating such industrial plant. The State Pollution Control Board is required to grant consent within a period
of four months of receipt of an application, but may impose conditions relating to pollution control equipment to
be installed at the facilities. No person operating any industrial plant in any air pollution control area is
permitted to discharge the emission of any air pollutant in excess of the standards laid down by the State
Pollution Control Board. The penalties for the failure to comply with the provisions of the Air Act include
imprisonment of up to six years and the payment of a fine as may be deemed appropriate.

Under the Air Act, the Central Pollution Control Board has powers, inter alia, to specify standards for quality of
air, while the State Pollution Control Boards have powers, inter alia, to inspect any control equipment,
industrial plant or manufacturing process, to advise the state government with respect to the suitability of any
premises or location for carrying on any industry and to obtain information from any industry.

Kyoto Protocol and Carbon Credits

The Kyoto Protocol is a protocol to the International Framework Convention on Climate Change with the
objective of reducing greenhouse gases (GHG) that cause climate change. The Kyoto Protocol was agreed on
December 11, 1997 at the third conference of the parties to the treaty when they met in Kyoto, and entered into
force on February 16, 2005. India ratified the Kyoto Protocol on August 22, 2006.

The Kyoto Protocol defines legally binding targets and timetables for reducing the GHG emissions of
industrialized countries that ratified the Kyoto Protocol.

Governments have been separated into developed nations (who have accepted GHG emission reduction
obligations) and developing nations (who have no GHG emission reduction obligations). The protocol includes
‗flexible mechanisms‘ which allow developed nations to meet their GHG emission limitation by purchasing
GHG emission reductions from elsewhere. These can be bought either from financial exchanges, from projects
which reduce emissions in developing nations under the Clean Development Mechanism (―CDM‖), the Joint
Implementation scheme or from developed nations with excess allowances.

Typical emission certificates are:

Certified Emission Reduction (CER);

Emission Reduction Unit (ERU); and

85
 Voluntary or Verified Emission Reductions (VER).

CERs and ERUs are certificates generated from emission reduction projects, under the CDM for projects
implemented in developing countries, and under Joint Implementation (―JI‖) for projects implemented in
developed countries, respectively. These mechanisms are introduced within the Kyoto Protocol. For projects
which cannot be implemented as CDM or JI, but still fulfill the required standards, VERs can be generated.
VERs, however, cannot be used for compliance under the Kyoto Protocol.

Other Applicable Regulations

In addition to the aforementioned material legislations applicable to our Company, following are laws that apply
to our operations:

The Contract Labour (Regulation and Abolition) Act, 1970;

The Employees‘ Provident Funds and Miscellaneous Provisions Act, 1952;
The Employees‘ State Insurance Act, 1948;
The Industrial Disputes Act, 1947;
The Payment of Wages Act, 1936;
The Workmen‘s Compensation Act, 1923;
The Minimum Wages Act, 1948;
The Payment of Bonus Act, 1965; and
The Payment of Gratuity Act, 1972

In relation to sale of power, we are required to comply with rules, bye laws and circulars issued by the Power
Exchange India Limited.

86
 HISTORY AND CERTAIN CORPORATE MATTERS

Incorporation

We were incorporated as ‗The Central Pulp Mills Limited‘ on July 4, 1960 under the Companies Act in the State
of Maharashtra. We received our certificate of commencement of business on August 27, 1960. Subsequently,
the name of our Company was changed from ‗The Central Pulp Mills Limited‘ to ‗JK Paper Limited‘, and a
fresh certificate of incorporation to this effect was issued by the Registrar of Companies, Gujarat, Dadra and
Nagar Haveli on November 5, 2001, after consolidation of the Unit JKPM, which was operating as a division of
JK Lakshmi Cement Limited for its paper manufacturing business, with our Company as part of a restructuring
exercise undertaken by JK Lakshmi Cement Limited.

Changes in our registered office

Pursuant to the order of the Board of Industrial and Financial Reconstruction (the ―BIFR‖) dated May 13, 1992,
the registered office of the Company was transferred from the State of Maharashtra to the State of Gujarat on
August 4, 1992.

Scheme of Rehabilitation

The BIFR by its orders dated May 13, 1992 and May 7, 1994 (Case No. 167/88 In re Central Pulp Mills
Limited) sanctioned a scheme for the rehabilitation of our Company as it was declared a sick industrial company
in terms of the Sick Industrial Companies (Special Provisions) Act, 1985 (―Scheme of Rehabilitation‖) in
1989. Pursuant to the Scheme of Rehabilitation, the management of the Company was transferred from the
erstwhile promoters of our Company, namely Paper & Pulp Conversions Limited, Mr. M.S. Parkhe and their
associates, to J.K. Industries Limited (subsequently renamed as JK Tyre & Industries Limited) and its associates
by transfer of entire shareholding of the erstwhile promoters amounting to 40.89% of the issued, subscribed paid
up capital of the Company to J.K. Industries Limited and its associates at a discount (at the rate of ` 52 per
equity share of face value ` 100 each) and a one time settlement was arrived for settlement of certain dues of
financial institutions and banks.

The cost of rehabilitation as per the Scheme of Rehabilitation was ` 133.50 crores. This amount was financed by
issue of fresh capital for an amount of ` 70.00 crores, including issue of warrants to JK Tyre & Industries
Limited and Straw Products Limited (subsequently renamed as JK Lakshmi Cement Limited), aggregating to `
50 crores, an unsecured loan of ` 19.00 crores, suppliers‘ deferred credit of ` 21.00 crores, and internal accruals
of ` 15.30 crores along with certain reliefs and concessions granted in accordance with the Scheme of
Rehabilitation. Subsequently, pursuant to BIFR order dated June 24, 1996, the issued, subscribed and paid up
share capital of our Company was reduced by 70%, i.e. from ` 75.23 crores to ` 22.57 crores along with a sub-
division of the face value of the equity shares of the Company from ` 100 to ` 10. The BIFR by its order dated
February 17, 1997, upon consideration of the annual report of our Company for the financial year ended June
30, 1996, held that our Company had ceased to be a sick industrial company within the meaning of Section
3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985.

Scheme of Compromise

The High Court of Gujarat by its order dated August 30, 2001, in Company Petition No. 313 of 2000, under
Section 391(2) of the Companies Act, approved the scheme of compromise/arrangement between JK Lakshmi
Cement Limited (―JKLC‖), the lenders, bankers and shareholders of JKLC, our Company and the shareholders
of our Company, for restructuring of debts of JKLC due to its lenders and bankers and for reconstruction of
JKLC and our Company (―Scheme of Compromise‖). This was achieved by the transfer of the assets and
liabilities of the Unit JKPM (which was part of JKLC), by way of slump sale, for a lumpsum consideration of `
5.00 crore, to our Company with effect from April 1, 2000. In addition, our Company allotted, 1,62,00,000 8%
OCCRPS and 1,00,00,000 10% CRPS to lenders of JKLC on November 29, 2001. For details, see ―Capital
Structure‖ on page 23.

Scheme of Arrangement

The High Court of Orissa and the High Court of Gujarat, in terms of their orders dated October 1, 2010 and
December 24, 2010, respectively, sanctioned a scheme of arrangement between the Company, SIHL, JIHL and

87
their shareholders, pursuant to which (i) housing business which is carried on by the Company and including all
assets, rights, liabilities and obligations (whether movable or immovable, tangible or intangible) located in the
state of Gujarat of whatsoever nature of the staff housing undertaking as on April 1, 2009, (―CPM Staff
Housing Undertaking‖) were to be transferred to Songadh Infrastructure & Housing Limited; and (ii) housing
business which is carried on by the Company and including all assets, rights, liabilities and obligations (whether
movable or immovable, tangible or intangible) located in the state of Odisha of whatsoever nature of the staff
housing undertaking as on April 1, 2009, (―JKPM Staff Housing Undertaking‖) were to be transferred to
Jaykaypur Infrastructure & Housing Limited (―Scheme of Arrangement‖). Songadh Infrastructure & Housing
Limited and Jaykaypur Infrastructure & Housing Limited are wholly owned subsidiaries of our Company

The Scheme of Arrangement became effective on January 20, 2011, and is operative from April 1, 2009.
Accordingly, upon the Scheme of Arrangement becoming effective, the CPM Staff Housing Undertaking stood
transferred to Songadh Infrastructure & Housing Limited, and the JKPM Staff Housing Undertaking stood
transferred to Jaykaypur Infrastructure & Housing Limited, both with effect from April 1, 2009.

As a consideration, Songadh Infrastructure & Housing Limited shall issue 49,00,000 equity shares and
86,73,142, 0% redeemable debentures of ` 10 each, aggregating to ` 13.57 crore, to our Company and
Jaykaypur Infrastructure & Housing Limited shall issue 49,00,000 equity shares and 3,34,97,896, 0%
redeemable debentures of ` 10 each, aggregating to ` 38.40 crores, to our Company. For further details on the
impact of this scheme on our results, operation and financial condition, see ―Management„s Discussion and
Analysis of Financial Condition and Results of Operations” on page 189.

Major Events

Year Event
1992 Scheme of rehabilitation sanctioned by the BIFR, pursuant to which the JK Group acquired control
over our Company.
1992 Re-admission of dealing of our Equity Shares on the Bombay Stock Exchange Limited with effect
from November 5, 1992.
1997 Pursuant to the order of the BIFR dated February 17, 1997, our Company was no longer a ‗sick
industrial company‘ in terms of the Sick Industrial Companies (Special Provisions) Act, 1985.
2001 The Scheme of Compromise was approved by the order of the High Court of Gujarat dated August 30,
2001, pursuant to which Unit JKPM was transferred to our Company.
2004 The Unit CPM of the Company received the ―Paper Mill of the Year Award‖ from the Indian Paper
Manufacturers‘ Association.
2004 ‗3 Leaves Award‘ by the Centre for Science and Environment for leadership in efficient process
management, reduction in water use and promotion of farm forestry.
2005 Listing of Equity Shares on National Stock Exchange of India Limited.
2006 Issue of 1.25% unsecured foreign currency convertible bonds for an aggregate value of USD 50,00,000
due for redemption on March 30, 2011 at 130.441% of their principal amount and 77,00,000 global
depositary receipts (the ―GDRs‖) by way of an Offering Circular dated March 30, 2006.
2007 Forayed into the packaging board business with the installation of a packaging board plant with an
installed capacity of 60,000 TPA in our Unit CPM.
2009 Jaykaypur Infrastructure & Housing Limited and Songadh Infrastructure & Housing Limited became
our wholly owned Subsidiaries with effect from April 30, 2009.
2010 The Scheme of Arrangement between the Company and its Subsidiaries was approved by the High
Court of Orissa and the High Court of Gujarat, in terms of their orders dated October 1, 2010 and
December 24, 2010.

Our Company has not changed its activities or discontinued any lines of business during the last five years
which may have a material effect on our financial condition and results of operation. Further, our Company is
not operating under any injunction or restraining order.

For details of our business, our operations, activities, markets, technology, capacity build-up and competition
see ―Our Business‖ on page 62. For details relating to the management of our Company, see ―Our
Management‖ on page 100.

The total number of equity shareholders of our Company as on December 31, 2010 was 16,867. The total
number of preference shareholders of our Company as on December 31, 2010 was 24.

Our Main Objects

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Our main objects as contained in our Memorandum of Association are:

Clause Particulars
I To carry on the business of manufacturers of and dealers in all kinds and classes of Pulp and Pulp products
and conversions including Sulphate and Sulphite Pulp, Soda Pulp, Mechanical Pulp, Chemical Pulp, Paper
Pulp, Rayon Pulp and all other varieties, types and qualities of Pulp in all its forms by converting, treating
or turning to account by any process or method of manufacture, spin, dye, manner and mode bamboo,
timber and wood, dropping, fly, cotton or cotton waste, cotton seeds, grasses, straw, rice straw, wheat straw,
jute, jute sticks, seisal fibre flax, hemp, remie, hessian, gunny, sugarcane, bagasse, leather, asbestos, rags,
waste paper, water hyacinth, all types and forms of seed hairs, bast fibres, grass fibre, leaf fibre, wood fibre
or any other vegetable or other material, synthetic or otherwise, suitable for any of the above treatment and
to manufacture and deal in all kinds of articles in which any form of pulp is used and also to manufacture
and/or deal in any other articles or things of a character similar or analogous to the foregoing or any of them
or connected therewith.
II To carry on the business of manufacturers of and dealers in all kinds and classes of Paper, Board, and Paper
and Board products and conversions including writing paper, printing paper, absorbent paper, blotting
paper, filter paper, antique paper, ivory-finish paper, coated paper, art paper, bank or bond paper, badami,
brown or buff paper, bible paper, cartridge paper, clothlined paper, azure-laid and move paper, cream-laid
and wove paper, greaseproof paper, glassine paper, gummed paper, hand-made paper, parchment paper,
drawing paper, wrapping paper, kraft paper, manilla paper, envelope paper, tracing paper, vellum paper,
corrugated paper, water-proof paper, carbon paper, sensitised paper, chemically treated paper, litmus paper,
photographic paper, glass paper, emery paper, paper board, paste board, card cardboard, strawboard, grey
board, pulpboard, leather board, mill board, corrugated board, duplex and triplex boards, laminated board,
hard-board, plywood board, post cards, visiting cards, chromo and coated paper and boards, machine coated
boards etc., and all kinds or articles in the manufacture of which in any form paper or board is used and also
to manufacture or deal in any other articles or things of a character similar or analogous to the foregoing or
any of them or connected therewith.
III To manufacture and deal in all materials and substances used in the manufacture, production or treatment of
Pulp, Paper and Board and other substances, articles and things the manufacture of which the Company is
authorised to undertake and to turn to account, render marketable and deal in any of the by-products or the
manufacturing process which the Company may undertake.
IV To buy, sell, import, export, process, cut, cost, chemically or otherwise treat and to work out for special
purposes all kinds of pulps, paper and boards and also deal in the manufacture of any other articles
connected with the foregoing.
V To plant, cultivate, produce, raise, manufacture, purchase, sell, import, export or otherwise handle or deal in
grass, timber, wood, bamboo, straw and other forest products, cotton, jute, flax, hemp, sugarcane, leather,
asbestos, rags, waste paper, gunnies, water hyacinth, jute sticks or other fibres, fibrous substances or other
things as many furnish materials for pulp and for paper or board manufacture in any of its branches or as
may be proper or necessary in connection with the above objects or any of the them and to carry on
business as owners, lessees, managers or planters of forest, plantations and farms and hewers and cutters of
bamboo, wood, timber, grasses and all other forest products.
VI To own, work, erect, install, maintain, equip, repair, alter, add to or otherwise handle or deal in pulp and
paper plants, filatures or any other factories for pressing, ginning, carding, combing scouring, mixing,
processing, bleaching, printing, dyeing, or finishing pulp or paper or board for conversion of pulp, paper or
board or any allied products of any description and kind.

Changes in Memorandum of Association

Since our incorporation, the following changes have been made to our Memorandum of Association.

Date of shareholders‟ Amendment

resolution
February 1, 1964* Amendment to Clause V of the MoA of the Company by substitution of ―9.30%‖ instead of
―9.00%‖, with respect to the applicable fixed cumulative preferential dividend on the
Redeemable Cumulative Preference Shares
September 26, 1972* Substitution of Clause V of the MoA with the following:
“The capital of the Company is ` 5 crores divided into 350,000 equity shares of ` 100 each
and 150,000 preference shares of ` 100 each, with power to increase or reduce the capital
or convert shares into different classes as may be determined from time to time in
accordance with the provisions of the Act and any modifications thereof‖
July 9, 1992** Amendment to Clause V of the MoA to reflect increase in authorized capital of the Company
from ` 5 crores divided into 5 lakhs equity shares of ` 100 each to ` 25 crores divided into
25 lakhs equity shares of ` 100 each
July 9, 1992** The situation of the registered office of the Company was changed from 1183 Shivaji Nagar,
Fergusson College Road, Pune 411 005 to its present Registered Office

89
 Date of shareholders‟ Amendment
resolution
September 25, 1993 Amendment to Clause V of the MoA to reflect increase in authorized capital of the Company
from ` 25 crores divided into 25 lakhs equity shares of ` 100 each to ` 35 crores divided into
35 lakhs equity shares of ` 100 each
March 30, 1994** Amendment to Clause V of the MoA to reflect increase in authorized capital of the Company
from ` 35 crores divided into 35 lakhs equity shares of ` 100 each to ` 135 crores divided
into 135 lakhs equity shares of ` 100 each
June 10, 1996 Amendment to Clause V of the MoA to reflect sub—division of our equity shares by
substituting 1,35,00,000 equity shares of ` 100 each to 13,50,00,000 equity shares of ` 10
each
December 29, 1997 Amendment to Clause V of the MoA to reflect reclassification of our authorized capital by
substituting the existing Clause V with the following
“The authorized share capital of the Company is ` 135 crore divided into 7,50,00,000 equity
shares of ` 10 each, 30,00,000 redeemable preference shares of ` 100 each and unclassified
share capital of ` 30,00,00,000.”
November 2, 2001 The name of the Company was changed from ―The Central Pulp Mills Limited‖ to ―JK
Paper Limited‖.
November 2, 2001 Amendment to Clause V of the MoA by substituting the existing authorized capital of the
Company from ` 400 crores divided into 12,50,00,000 equity shares of ` 10 each and
2,75,00,000 preference shares of ` 100 each to ` 500 crores divided into 20,00,00,000 equity
shares of ` 10 each and 3,00,00,000 preference shares of ` 100 each
*
For details, see “Risk Factors- Internal Risk Factor no. 30 - We do not have access to records and data pertaining to certain historical
legal and secretarial information, including with respect to issuance of shares and amendments in our MoA” on page xxii.
** Dates of meetings of the Board at which orders of the BIFR were given effect to.

Our Subsidiaries

1. Jaykaypur Infrastructure & Housing Limited (“JIHL”)

JIHL was incorporated on December 30, 2008 and received its certificate of commencement of business on
August 25, 2009. JIHL is engaged in the business of construction of residential houses, staff colonies and
commercial buildings. The authorised share capital of JIHL is ` 5.00 crore divided into 0.5 crore equity shares
of ` 10 each and the issued, subscribed and paid up capital of JIHL is approximately ` 0.05 crore divided into
50,600 equity shares of ` 10 each.

The shareholding pattern of JIHL as on December 31, 2010, is as follows:

S.No. Name of shareholder Number of equity shares of ` Percentage of

10 each shareholding
1. Company 50,000 98.81
2. Nominees of the Company and the Company 600 1.19
Total 50,600 100.00

2. Songadh Infrastructure & Housing Limited (“SIHL”)

SIHL was incorporated on January 2, 2009, and received its certificate of commencement of business on July
30, 2009. SIHL is engaged in the business of construction of residential houses, staff colonies and commercial
buildings. The authorised share capital of SIHL is ` 5.00 crore divided into 0.5 crore equity shares of ` 10 each
and the issued, subscribed and paid up capital of SIHL is approximately ` 0.05 crore divided into 50,600 equity
shares of ` 10 each.

The shareholding pattern of SIHL as on December 31, 2010, is as follows:

S.No. Name of shareholder Number of equity shares of ` Percentage of

10 each shareholding
1. Company 50,000 98.81
2. Nominees of the Company and the Company 600 1.19
Total 50,600 100.00

There are no accumulated profits or losses of the Subsidiaries which have not been accounted for by our
Company.

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Our Joint Ventures

We currently do not have any joint ventures.

Strategic and Financial Partners

We currently do not have any strategic or financial partners.

Shareholders Agreements

Shareholders‟ agreement dated March 8, 2006, among our Company, JK Agri Genetics Limited, JK Lakshmi
Cement Limited, JK Industries Limited, BMF Beltings Limited, Fenner (India) Limited, and International
Finance Corporation and share-subscription agreement dated March 8, 2006, among our Company and
International Finance Corporation

JK Agri Genetics Limited, JK Lakshmi Cement Limited, JK Tyre and Industries Limited (formerly, JK
Industries Limited), BMF Beltings Limited, Fenner (India) Limited, (collectively known as the ―Sponsors‖),
International Finance Corporation (―IFC‖) and our Company entered into a shareholders agreement whereby
each of the IFC and Fenner (India) Limited subscribed to 76,90,000 Equity Shares.

Board rights: So long as IFC remains a shareholder of the Company holding more than 6% of the issued,
subscribed and paid up share capital of the Company, it shall have the right but not the obligation to nominate a
director on the Board. At present, IFC holds 9.84% of the issued, subscribed and paid up share capital of the
Company but it has not exercised its right to nominate a director on the Board.

Transfer rights: In the event IFC proposes to sell 50% or more of its shareholding in the Company in a single
transaction it shall provide prior written notice to the Sponsors stating the number of Equity Shares it proposes
to sell and the price at which it proposes to sell such Equity Shares. The Sponsors shall have the right to buy all
but not less than all of the Equity Shares stated in the notice. If the Sponsors communicate their non-acceptance,
or if they do not respond to the notice within a stipulated time, IFC shall have the right to sell such Equity
Shares to any person.

Pre-emptive and tag along rights: So long as IFC holds 1% of the issued, subscribed paid up capital of the
Company it shall have the right, (a) to be entitled to subscribe on a pro-rata basis to any increase of the
subscribed share capital of the Company including by way of a public issue, rights issue or a preferential
allotment and (b) to participate on a pro-rata basis under the same terms and conditions in any transfer being
effected by any of the Sponsors of the Equity Shares of the Company by way of sale of any Equity Shares in any
transaction off market or a ‗block deal‘ outside the Stock Exchanges, provided that the Sponsors shall not
complete the sale to any third party acquirer unless and until such third party acquirer has acquired such number
of Equity Shares as determined from IFC; and (c) to participate on a pro-rata basis under the same terms and
conditions in any sale by the Sponsors, jointly and severally, of more than 4% of the issued, subscribed and paid
up equity share capital of the Company in one or a series of transactions on the floor of a recognized stock
exchange in one calendar year. IFC does not have any tag along rights in any inter-se transfer of shares between
the constituent members of the JK group (as defined under Section 2(ef) of the Monopolies and Restrictive
Trade Practices Act, 1969) that does not result in the collective direct shareholding of the Sponsors becoming
less than 26% of the issued, subscribed and paid up capital of the Company. In the event that the collective
shareholding of the Sponsors falls below 26% of the issued, subscribed and paid-up capital of the Company, IFC
shall have the right to tag along its entire shareholding in the Company. As per the terms of the shareholders‘
agreement, the Company cannot form any subsidiary other than having the main objective of carrying out
plantation operations, make any amendment to the MoA and the AoA which is prejudicial to the interests of
IFC, enter into any related party transactions that is not on an arms length basis and enter into any transaction
other than on the basis of arms length arrangement. IFC has granted waiver to the Company for incorporating
SIHL and JIHL as its subsidiaries.

Term: The shareholders agreement is effective so long as IFC remains a shareholder of the Company. However,
if the shareholding of IFC falls below 1% of the issued, subscribed and paid up capital of the Company certain
clauses of the shareholders agreement, including clauses pertaining to certain tag along rights and affirmative
covenants would cease to have any effect.

Other Material Agreements

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Set forth below is a brief summary of our other material agreements with a brief description of significant terms
of such agreements.

Agreement for extraction of bamboo from forest areas between Orissa Forest Development Corporation
Limited, and the Company dated January 5, 2011.

Pursuant to this agreement, our Company has been granted the rights to extract and lift harvested and left over
bamboo stocks from certain allotted forest divisions in Odisha subject to the approval of the competent
authority. The forest divisions allotted to our Company are Baliguda, Behrampur, Ghumsur (North), Ghumsur
(South), Kalahandi (North), Kalahandi (South), Koraput, Parakhemundi, Phulbani and Rayagada.

Production targets: We are required to achieve specified targets of production as per the terms of the agreement.
The agreement also fixes a minimum target for the production of industrial bamboo along with a minimum
royalty payable to the state government. The state government may provide certain incentives if the production
of bamboo is above a certain qualifying quantity of the production slab.

Selling Price: The selling price of bamboo and the royalty payable to the state government for the year 2010-
2011, is fixed as per the terms of the agreement.

Lifting: We are required to take delivery of the bamboo stock within seven days of issue of allotment order by
the relevant authority. We are bound to lift and remove the delivered stock within 90 days from the date of such
delivery. Further, if the bamboo delivered to us are not removed by us within the prescribed time limit, we will
be liable to pay land rent from the date of expiry of 90 days up to a maximum of 180 days or December 31,
2010, whichever is earlier, after which the average weight of bamboo obtained shall be accounted for the
remaining delivered but unlifted bamboo bundles. In the event of any additional delay, we will be liable to pay
penal rates, and thereafter such bamboo shall become the property of the government.

Term and termination: The agreement is in force from date of execution and is in force for the year 2009-2010
bamboo crop year i.e.; until June 30, 2011. The terms and conditions of the contract are subject to review and
modification as may be mutually agreed between the parties at the end of every year during the period of
contract, provided that in case of any urgency, suitable modifications as deemed necessary may be effected by
mutual agreement. The Orissa Forest Development Corporation Limited is at a liberty to terminate this
agreement if after affording reasonable opportunity of being heard if it is of the opinion that our performance
was unsatisfactory as per the terms of the agreement.

Forest working contract dated November 25, 1960 among the Company, the Governor of Gujarat and the
Paper and Pulp Conversions Limited (as the confirming party and hereinafter referred to as “Papco”).

Our Company entered into the forest working contract on November 25, 1960 with the Governor of Gujarat and
Papco (as a confirming party by virtue of the State of Bombay having granted concession to Papco to extract
bamboos by an agreement dated April 10, 1960, in the areas forming part of this contract), which provides our
Company a concession for a period of 40 years from the date of this contract for the extraction of bamboos in
the forest areas of the districts of Dang and Surat as well as the Rajpipla forest division in the District of Broach,
Gujarat, for manufacturing pulp, paper and allied products. Some of the salient features of the forest working
contract are as follows:

we are required to set up a bamboo pulp plant at Fort Songadh, Gujarat, and the government has agreed
to provide assistance for acquiring a site for the plant and connected installations. Further, the
government has agreed to lease 300 acres of waste or forest land to us for the purposes of the factory
and the housing colonies of the employees.

we are required to work in the designated territory strictly in accordance with the prescriptions of the
working plans and/or special schemes approved by the government and cannot extract more bamboos
than the quantity laid down by the Chief Conservator of Forests as the sustained annual yield of the
territory. We have undertaken to extract a minimum of 35,000 tonnes of bamboos per year which
quantity may be raised to 0.01 crore tonnes subject to availability of material whenever and wherever
possible.

we are required to pay to the government a royalty at the rate of ` 5 per ton by weight of air-dry

92
 bamboos during the first three years, at the rate of ` 7 per ton during the next five years, and at such
revised rates as may be prescribed by the government during the remaining period of the concession
provided the revision shall not exceed 20% of the rate in force at or immediately before such revision.
The amount of royalty shall be payable quarterly in advance.

the state government shall supply raw material for infrastructural facilities to be established by our
Company, such as, timber, quarry stones and electricity. The state government has also agreed to grant
license to our Company to draw water from the river Tapi for the purposes of its factory and housing
colonies for our employees.

we have undertaken to allot a maximum of 10% of our total production to supply the needs of cottage
industries in the state of Gujarat. Such allocation shall be at concessional rates to be fixed by the state
government, which shall in no case be less than our cost of production.

we have agreed that in respect of the pulp that we will manufacture, after supplying our own needs for
manufacture of paper and allied products and the like requirements of Promoter, we shall give
preference to the requirements of the paper mills situated in the state of Gujarat.

We are required to insure the bamboo stacks, the dumping depots and the factory premises against loss
by fire along with the factory buildings for a value to be assessed at the market rates.

The state government has the right to terminate the agreement for any breach or non-observance of the
terms of this agreement or the applicable law.

On November 19, 2001, pursuant to a notification of the state government of Gujarat, the forest working
contract was extended for a further period up to November 18, 2010. Further, pursuant to a letter dated
November 19, 2010, issued by the Forest and Enviornment Department, state government of Gujarat, the
Company would continue to extract bamboos on the terms and conditions mentioned in the forest working
contract, till the time an agreement extending the term of the forest working contract for a period up to October
31, 2020, is executed between the parties.

Material Agreements in relation to the Unit CPM

Coal supply agreements (“Coal Supply Agreements”) entered between the Company and Western Coalfields
Limited (“WCL”)

Our Company entered into three separate coal supply agreements with WCL, two of them dated June 28, 2008,
and as amended on February 1, 2010, and a third agreement dated July 21, 2009, read with a memorandum of
understanding entered between the parties dated July 21, 2009, for satisfying the coal requirements of the
process plant and the captive power generation plant of 12 MW at the Unit CPM. Details of the Coal Supply
Agreements are provided below:

(a) Coal supply agreement between WCL and the Company dated June 28, 2008, for 12,321 TPA of coal
for the process plant at the Unit CPM, as amended on February 1, 2010 (“Process Plant CSA”)

Our Company entered into the Process Plant CSA with WCL, dated June 28, 2008, for satisfying the
coal requirements of the process plant at the Unit CPM. The agreement is effective from July 1, 2008
and provides for 12,321 TPA of coal of grade ‗D‘ to be supplied by WCL from its mines at Wareham /
Umber / Kamp tee / Pinch / Kansan / Pathakhera coalfields or international coalfields in case coal
cannot be sourced from such domestic coalfields, to our Company through rail or road network, in
equal monthly installments.

If for any year the level of delivery by WCL or the level of lifting by our Company is less than 60% of
12,321 TPA, the defaulting party is required to pay compensation at the rate of 10% of the value of the
failed quantity of coal below 60% of 12,321 TPA, calculated in terms of the base price of the highest
grade of the coal to be supplied as per the terms of the agreement. The agreement provides that if WCL
delivers more than 90% of 12,321 TPA of coal to our Company in a particular year, our Company is
required to pay a performance incentive to WCL, calculated in terms of the agreement. The method of
calculation of level of delivery and level of lifting of coal under the agreement has been amended by
way of an agreement between the parties dated February 1, 2010.

93
(b) Coal supply agreement between WCL and the Company dated June 28, 2008, for 53,556 TPA of coal
for the 12 MW captive power plant at the Unit CPM, as amended on February 1, 2010 (“CPP CSA”)

Our Company entered into the CPP CSA with WCL, dated June 28, 2008, for satisfying the coal
requirements of the 12 MW captive power plant at the Unit CPM. The agreement is effective from July
1, 2008 and provides for 53,556 TPA of coal of grade ‗D‘ to be supplied by WCL from its mines at
Wardha / Umrer / Kamptee / Pench / Kanhan / Pathakhera coalfields or international coalfields in case
coal cannot be sourced from such domestic coalfields, to our Company through rail or road network, in
equal monthly installments.

If for any year, the level of delivery by WCL or the level of lifting by our Company is less than 60% of
53,556 TPA, the defaulting party is required to pay compensation at the rate of 10% of the value of the
failed quantity of coal below 60% of 53,556 TPA, calculated in terms of the base price of the highest
grade of the coal to be supplied as per the terms of the agreement. The agreement provides that if WCL
delivers more than 90% of 53,556 TPA of coal to our Company in a particular year, our Company is
required to pay a performance incentive to WCL, calculated in terms of the agreement. The method of
calculation of level of delivery and level of lifting of coal under the agreement has been amended by
way of an agreement between the parties dated February 1, 2010.

(c) Coal supply agreement entered between the Company and WCL, dated July 21, 2009 (“CPP CSA II”),
and the memorandum of understanding entered between the Company and WCL dated July 21, 2009
(“MoU”)

Our Company entered into CPP CSA II with WCL, dated July 21, 2009, for satisfying the coal
requirements of the 12 MW captive power plant at the Unit CPM. The agreement provides for certain
conditions by both parties to be satisfied for the agreement to be effective. As on the date of the
agreement, our Company has satisfied the requisite conditions and the conditions required to be
satisfied by WCL are deemed to be satisfied pursuant to a waiver given by our Company. Accordingly,
the agreement is effective from July 29, 2009 and provides for 60,000 TPA of coal of grade ‗E‘ to be
supplied by WCL from its mines at Wardha / Umrer / Kamptee / Pench / Nagpur / Kanhan / Pathakhera
coalfields or international coalfields in case coal cannot be sourced from such domestic coalfields, to
our Company through rail or road network, in equal monthly installments.

If for any year, the level of delivery by WCL or the level of lifting by our Company is less than 25% of
60,000 TPA, the defaulting party is required to pay compensation at the rate of 10% of the value of the
failed quantity of coal below 25% of 60,000 TPA, calculated in terms of the base price of the highest
grade of the coal to be supplied as per the terms of the agreement. The agreement provides that if WCL
delivers more than 90% of 60,000 TPA of coal to our Company in a particular year, our Company is
required to pay a performance incentive to WCL, calculated in terms of the agreement.

The Coal Supply Agreements are each valid for a period of five years unless terminated earlier in accordance
with the terms specified in the agreements. After completion of three years from the effective date of the
agreements, either party is entitled, by prior written notice to the other party of not less than 30 days, to seek a
review of the agreements. If the review requested by a party does not result in a mutually agreed position within
nine months from the date of notice for review, such party shall have the right to terminate the agreements
subject to a further notice of three months given in writing to the other party. On completion of five years from
the effective date of the agreements, the agreements shall expire unless both parties mutually agree in writing to
extend the agreements on the same or such terms as may be agreed upon by the parties.

As per the terms of the Coal Supply Agreements, the title and risk of coal shall pass from WCL to our Company
at the colliery sidings or colliery loading points, as the case may be, as coal is loaded in to wagons / containers
of our Company, and WCL shall have no liability with regard to any loss thereafter.

The price of coal delivered under the Coal Supply Agreements shall be the sum of the base price (meaning, in
case of supply from domestic mines, the pithead price notified from time to time by Coal India Limited or WCL,
as the case may be, and; in relation to imported coal, wherever applicable, the landed price intimated by Coal
India Limited or WCL, as the case may be), sizing charges, transportation charges up to the delivery points,
rapid loading charges, statutory charges, levies and other charges, as applicable. The components of the price
shall be determined on the basis of the rates/criteria duly notified by Coal India Limited / WCL / relevant

94
statutory authority from time to time. The price of imported coal shall be as decided and declared by Coal India
Limited from time to time. Any statutory levy or tax including royalty payable to the state government / central
government for supply of coal under the agreements shall be borne by our Company with effect from the date
such charges are made applicable. Further, freight charges, irrespective of the mode of transportation of the coal
supplied, shall be borne by our Company.

Either of the parties is entitled to terminate the Coal Supply Agreements due to any force majeure event, as
specified under the agreements. Additionally, in the event that the level of delivery falls below 30% or the level
of lifting falls below 30%, our Company or WCL, as the case may be, shall have the right to terminate the
agreements within 60 days of the end of the relevant year after providing the other party with prior written
notice of not less than 30 days. In the event that either party suffers insolvency, appointment of liquidator,
appointment of receiver of any of the material assets, levy of any order of attachment of material assets, or any
order or injunction restraining the party from dealing with or disposing of its assets and such order having been
passed is not vacated within 60 days, the other party shall be entitled to terminate the agreements. Further, in the
event that any party commits a breach of terms or conditions of the Coal Supply Agreements, the other party
shall have the right to terminate the agreements after providing the defaulting party with 30 days prior notice
and breach has not been cured or rectified to the satisfaction of the non-defaulting party within the said period of
30 days.

Further, WCL is entitled to terminate the Coal Supply Agreements in the event of:

(i) any material change in the coal distribution system of WCL due to any government
directive/notification, at any time after the execution of the agreements, without any obligation /
liability after providing WCL with prior written notice to WCL of not less than 30 days; and/or

(ii) our Company reselling or diverting the coal purchased pursuant the agreements; and/or

(iii) encashment of security deposit or financial coverage or suspension of coal supplies as per the
agreements, subject to providing a prior written notice of 30 days, provided WCL has not replenished
the security deposit / financial coverage within the aforesaid notice period of 30 days.

Further, our Company is entitled to terminate the Coal Supply Agreements in the event that our Company is
prevented / disabled under law from using coal, for reasons beyond our control, owing to changes in applicable
environmental and/or statutory norms, subject to a prior written notice to WCL of not less than 30 days.

Material Agreements in relation to the Unit JKPM

Fuel supply agreement entered between the Company and Mahanadi Coalfields Limited (“MCL”) dated
November 7, 2008 (“Fuel Supply Agreement”)

Our Company entered into the Fuel Supply Agreement with MCL, dated November 7, 2008, for satisfying the
coal requirements of the captive power plant and the paper manufacturing plant at the Unit JKPM. The
agreement is effective from November 7, 2008 and provides for 1,16,932 tonnes per year of coal and 61,026
tonnes per year of coal, of grade ‗E/F‘, to be supplied by MCL from its mines or international sources, to our
Company through rail, in equal monthly installments.

If for any year, the level of delivery by MCL or the level of lifting by our Company is less than 60% of 1,77,958
tonnes per year, the defaulting party is required to pay compensation at the rate of 10% of the value of the failed
quantity of coal below 60% of 1,77,958 tonnes per year, calculated in terms of the base price of the highest
grade of the coal to be supplied as per the terms of the agreement. The agreement provides that if MCL delivers
more than 90% of 1,77,958 tonnes per year of coal to our Company in a particular year, our Company is
required to pay a performance incentive to MCL, calculated in terms of the agreement.

The Fuel Supply Agreement is valid until April 30, 2013 unless terminated earlier in accordance with the terms
specified in the agreements. After completion of three years from the effective date of the agreement, either
party is entitled, by prior written notice to the other party of not less than 30 days, to seek a review of the
agreement. If the review requested by a party does not result in a mutually agreed position within nine months
from the date of notice for review, such party shall have the right to terminate the agreement subject to a further
notice of three months given in writing to the other party. On completion of five years from the effective date of
the agreement, the agreement shall expire unless both parties mutually agree in writing to extend the agreement

95
on the same or such terms as may be agreed upon by the parties.

As per the terms of the Fuel Supply Agreement, the title and risk of coal shall pass from MCL to our Company
at the colliery sidings or colliery loading points, as the case may be, in the designated coal mine of MCL or the
locations / ports identified by MCL at which MCL delivers imported coal, and MCL shall have no liability with
regard to any loss thereafter.

The price of coal delivered under the Fuel Supply Agreement shall be the sum of the base price (meaning, in
case of supply from domestic mines, the pithead price notified from time to time by Coal India Limited or MCL,
as the case may be, and, in relation to imported coal, wherever applicable, the landed price intimated by Coal
India Limited or MCL, as the case may be), sizing charges, transportation charges up to the delivery points,
rapid loading charges, statutory charges, levies and other charges, as applicable. The components of the price
shall be determined on the basis of the rates/criteria duly notified by Coal India Limited / MCL / relevant
statutory authority from time to time. The price of imported coal shall be as decided and declared by Coal India
Limited from time to time. Any statutory levy or tax including royalty payable to the state government / GoI for
supply of coal under the agreements shall be borne by our Company with effect from the date such charges are
made applicable. Further, freight charges, irrespective of the mode of transportation of the coal supplied, shall
be borne by our Company.

Either of the parties is entitled to terminate the Fuel Supply Agreement due to any force majeure event, as
specified under the agreement. Additionally, in the event that the level of delivery falls below 30% or the level
of lifting falls below 30%, our Company or MCL, as the case may be, shall have the right to terminate the
agreement within 60 days of the end of the relevant year after providing the other party with prior written notice
of not less than 30 days. In the event that either party suffers insolvency, appointment of liquidator, appointment
of receiver of any of the material assets, levy of any order of attachment of material assets, or any order or
injunction restraining the party from dealing with or disposing of its assets and such order having been passed is
not vacated within 60 days, the other party shall be entitled to terminate the agreement. Further, in the event that
any party commits a breach of terms or conditions of the Fuel Supply Agreement, the other party shall have the
right to terminate the agreement after providing the defaulting party with 30 days prior notice and breach has not
been cured or rectified to the satisfaction of the non-defaulting party within the said period of 30 days.

Further, MCL is entitled to terminate the Fuel Supply Agreement in the event of:

(i) any material change in the coal distribution system of MCL due to any government
directive/notification, at any time after the execution of the agreement, without any obligation / liability
after providing MCL with prior written notice to MCL of not less than 30 days; and/or

(ii) our Company reselling or diverting the coal purchased pursuant the agreement; and/or

(iii) encashment of security deposit or financial coverage or suspension of coal supplies as per the
agreement, subject to providing a prior written notice of 30 days, provided MCL has not replenished
the security deposit / financial coverage within the aforesaid notice period of 30 days.

Further, our Company is entitled to terminate the Fuel Supply Agreement in the event that our Company is
prevented / disabled under law from using coal, for reasons beyond our control, owing to changes in applicable
environmental and/or statutory norms, subject to a prior written notice to MCL of not less than 30 days.

Agreement for supply of power between JKLC (then „J.K. Corp Limited‟) and GRID Corporation of Orissa
Limited (“Gridco”) dated March 23, 1998 (“JKPM Power Supply Agreement”)

JKLC has entered into the JKPM Power Supply Agreement with Gridco, dated March 23, 1998, for the supply
up to but not exceeding 10,000 KVA of power per month for the Unit JKPM, including 1,000 KVA of power
per month for the residential colony at the Unit JKPM, the supply of which started from September 1, 1997. The
agreement is valid for a period of five years from September 1, 1997 and thereafter continue until the agreement
is determined by either party giving to the other three calendar months notice in writing of its intention to
terminate the agreement. However, if the power supply remains disconnected for a period of three years for non-
payment of tariff or non-compliance of directions issued under the Orissa State Electricity Board (General
Condition of Supply) Regulations, 1995 and no effective steps are taken by JKLC for removing the cause of
disconnection and restoration of power supply, the agreement shall be deemed to have been terminated on the
expiry of three months from the date of disconnection without any further notice. The agreement provides that

96
JKLC shall comply with the applicable provisions of the Orissa State Electricity Board (General Condition of
Supply) Regulations, 1995, as amended from time to time, including the provisions relating to the payment of
demand charges or energy charges or electricity duty or any other applicable charges or levies, as may be
notified thereunder.

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 DIVIDEND POLICY

Under the Companies Act, an Indian company pays dividends upon recommendation by its board of directors
and approval by a majority of the shareholders, who have the right to decrease but not to increase the amount of
dividend recommended by the board of directors. Under the Companies Act, dividends may be paid out of
profits of a company in the year in which the dividend is declared or out of the undistributed profits or reserves
of the previous Fiscal Years or out of both.

We do not have a formal dividend policy. Any future dividends declared would be at the discretion of the Board
of Directors and would depend on the financial condition, results of operations, capital requirements, contractual
obligations, the terms of our credit facilities and other financing arrangements at the time a dividend is
considered, and other relevant factors.

Pursuant to the terms of some of our loan agreements with certain banks and financial institutions, we cannot
declare or pay any dividend to our shareholders during any Fiscal if any amount remaining outstanding under
such loan agreements to the relevant lenders or if we are in default of the terms and conditions of such loan
agreement. For details, see ―Financial Indebtedness‖ on page 213.

Set forth below is the dividend paid by our Company for the last five Fiscals

(a) Equity Shares:

Particulars Fiscal Fiscal 2009 Fiscal 2008 (nine Year ended Year ended Year ended
2010 month period) June 30, 2007 June 30, June 30,
2006 2005
Number of 78,149,939 78,149,939 78,149,939 78,149,939 78,149,939 55,069,939
Equity
Shares
Dividend 15.63 13.68 11.72 17.58 12.40 11.01
paid (` in
crores)
Rate of
dividend
(%)
(a) Interim 0.00 0.00 0.00 0.00 14 (1) 0.00
(b) Final 20.00 17.50 15.00 22.50 6.00 20.00
Dividend tax 2.60 2.32 1.99 2.99 1.74 1.55
(in ` crores)
(1)
Interim dividend at 14% on 5,50,69,939 Equity Shares

In terms of resolution passed by our Board on January 28, 2011, our Company approved payment of interim
dividend for the Fiscal 2011 at the rate of ` 2.25 per Equity Share on equity share capital of our Company.

(b) Preference Shares

(i) 10% cumulative redeemable

Particulars Fiscal 2010 Fiscal 2009 Fiscal 2008 (nine Year ended Year ended Year ended
month period) June 30, 2007 June 30, 2006 June 30, 2005
Number of 20,000 41,000 81,000 81,000 157,000 300,000
preference
shares of
face value `
100 each
Dividend 0.03 0.05 0.06 0.16 0.30 0.30
paid (` in
crore)
Rate of 10.00 10.00 10.00 10.00 10.00 10.00
dividend (%)
Dividend tax 0.004 0.01 0.01 0.03 0.04 0.04
(in ` crore)

98
In terms of resolution passed by our Board on January 28, 2011, our Company has declared interim dividend at
the rate of 10% on preference share capital of our Company.

(ii) 3.75% cumulative redeemable

Particulars Fiscal 2010 Fiscal 2009 Fiscal 2008 (nine Year ended Year ended Year
month period) June 30, 2007 June 30, ended
2006 June 30,
2005
Number of - - - - 5,200,000 5,200,000
preference
shares of
face value `
100 each
Dividend - - - - 1.95 1.95
paid (` in
crores)
Rate of - - - - 3.75 3.75
dividend (%)
Dividend tax - - - - 0.27 0.28
(in ` crore)

The amounts paid as dividends in the past are not necessarily indicative of the dividend policy of the Company
or dividend amounts, if any, in the future.

99
 OUR MANAGEMENT

Our Articles of Association provide that the minimum number of Directors shall be three and the maximum
number of Directors shall be not more than 18 (excluding nominee Directors). As on the date of this Draft Letter
of Offer, we have 11 Directors.

The following table sets forth details regarding our Board as on date of filing of this Draft Letter of Offer:

Name, Fathers Name, Address Other directorships

Designation, Occupation, Age,
DIN and Term
Mr. Hari Shankar Singhania
S/o Late Mr. Lakshmipat
Singhania
Designation: Chairman
Occupation: Industrialist
19, Prithviraj Road, New
Delhi 110 011, India
JK Lakshmi Cement Limited;
JK Tyre & Industries Limited;
Bengal & Assam Company Limited;
Tanvi Commercial Private Limited;
Niyojit Properties Private Limited;
HSS Stock Holding Private Limited; and
Henry F. Cockill & Sons Limited.

Age: 78 years

DIN: 00051324

Term: Five years with effect from

January 1, 2007

Mr. Harsh Pati Singhania
S/o Mr. Bharat Hari Singhania
Designation: Managing Director
(Executive
Non-Independent)
19, Prithviraj Road, New
Delhi 110 011, India
Fenner (India) Limited;
Bhopal Udyog Limited;
Anant Design Private Limited;
Rockwood Properties Private Limited; and
Oakwood Properties & Farms Private
Limited.

Occupation: Industrialist

Age: 50 years

DIN: 00086742

Term: Five years with effect from

January 1, 2007

Mr. Om Prakash Goyal B-50, Sector-XIV, Noida, Shiva Cement Limited;

Uttar Pradesh 201 301, India JK Enviro-Tech Limited; and
S/o Late Mr. B.D.Goyal LVP Foods Private Limited.

Designation: Whole-time
Director (Executive Non-
Independent)

Occupation: Company Executive

Age: 68 years

DIN: 00030115

Term: Three years with effect

from September 7, 2009

Mr. Dhirendra Kumar 11, Mandevilla Gardens, SIVPL Products Private Limited;
Kolkata 700 019, West Contemporary Polysacks Limited;
S/o Late Mr. Bhagwat Prasad Bengal, India R.D. Tea Limited;
Rukong Tea Estate Private Limited;
Designation: Non-Executive

100
 Name, Fathers Name,
Designation, Occupation, Age,
DIN and Term
Non- Independent Director
Occupation: Business
Age: 67 years
DIN: 00153773
Term: Liable to retire by rotation
Mrs. Vinita Singhania
W/o Late Mr. Shripati Singhania
Designation: Non Executive Non-
Independent Director
Occupation: Industrialist
Age: 58 years
DIN: 00042983
Term: Liable to retire by rotation
Mr. Arun Bharat Ram
S/o Late Dr. Bharat Ram
Designation: Non-Executive
Independent Director
Occupation: Industrialist
Age: 70 years
DIN: 00694766
Term: Liable to retire by rotation
Mr. M.H. Dalmia
S/o Late Mr. Jaidayal Dalmia
Designation: Non-
Executive Independent Director
Occupation: Industrialist
Age: 69 years
DIN: 00009529
Term: Liable to retire by rotation
Mr. R.V. Kanoria
S/o Mr. Shyam Sundar Kanoria
Designation: Non-
Executive Independent Director
Occupation: Industrialist
Address Other directorships
Rosebud Commercial Company Private
Limited;
The Scottish Assam (India) Limited;
SPBP Tea Plantation Limited;
Shwetambra Investment & Trading Private
Limited;
Bengal Tea & Fabrics Limited; and
Park Tower Services Private Limited.
101, Friends Colony (East), JK Lakshmi Cement Limited;
New Delhi 110 065, India Bengal & Assam Company Limited;
JKLC Employees Welfare Association
Limited;
Niyojit Properties Private Limited; and
Vinita Stockholdings Private Limited.
1, Silver Oak Avenue, SRF Limited;
Westend Green Farms, DCM Shriram Consolidated Limited;
Rajokari, New Delhi 110 038, Essilor India Private Limited;
India Moser Baer India Limited;
Samtel Color Limited;
Samtel Glass Limited;
SRF Holiday Home Limited;
SRF Fluoro Chemicals Limited;
SRF Energy Limited;
Shri Educare Limited;
SRF Overseas Limited;
SRF Industex Belting (Proprietary) Limited;
SRF Tech Textile (Thailand) Limited; and
Bharat Ram Associates Private Limited
Dalmia House, 20 F, Dalmia Bharat Sugar and Industries Limited
Prithviraj Road, New Delhi (formerly Dalmia Cement (Bharat) Limited;
110 011, India First Capital India Limited;
Dalton International, UK;
Marathon Trading International FZE, UAE;
and
Dalmia International FZE, UAE.
A-45, Vasant Marg, Vasant Kanoria Chemicals & Industries Limited;
Vihar, New Delhi 110 057, Ludlow Jute & Specialities Limited;
India Kirtivardhan Finvest Services Limited;
KPL International Limited;
Cholamandlam Investment and Finance
Company Limited;
R.V.Investment & Dealers Limited; and
101
 Name, Fathers Name, Address Other directorships
Designation, Occupation, Age,
DIN and Term
KCI Alco Chem Limited.
Age: 56 years

DIN: 00003792

Term: Liable to retire by rotation

Mr. Shailesh Vishnu Haribhakti 228, Kalpataru Habitat, B BDO Consulting Private Limited;
Wing, 22nd & 23rd Floor, Dr. Advantage Moti India Private Limited;
S/o Mr. Vishnu Bhagwandas S.S. Road, Parel, Mumbai 400 Quadrum Solutions Private Limited;
Haribhakti 012, Maharashtra, India J M Financial Asset Reconstruction
Company Private Limited;
Designation: Non- Milestone Ecofirst Advisory Services
Executive Independent Director (India) Private Limited;
Planet People and Profit Consulting Private
Occupation: Chartered Limited;
Accountant
Pantaloon Retail (India) Limited;
Future Capital Holdings Limited;
Age: 54 years
Hexaware Technologies Limited;
DIN: 00007347 Ackruti City Limited;
ACC Limited;
Term: Liable to retire by rotation Ambuja Cements Limited;
Mahindra Lifespace Developers Limited;
Blue Star Limited;
The Dhanlaxmi Bank Limited;
Everest Kanto Cylinder Limited;
L&T Finance Holdings Limited;
Future Value Retail Limited;
Haribhakti SME Transformation and
Support Solutions Private Limited;
Torrent Pharmaceuticals Limited;
Raymond Limited; and
Fortune Financial Services (India) Limited
(Alternate director)
Hercules Hoists Limited (Alternate
Director)

Mr. S.K. Pathak
S/o Late Mr. J.P. Pathak
Designation: Non-
Executive Independent Director
Occupation: Industrialist
Villa no. 19, Umm Al Sheif
Street, Jumeirah-3, Dubai,
United Arab Emirates
Al Basti & Mukhta LLC
Bilt Middle East LLC
ABM Inks Industries LLC
Ductfab LLC
Tushar Investments LLC
Tushar International Limited
Romeco Trading Company Limited

Age: 76 years

DIN: 00928630

Term: Liable to retire by rotation

Mr. Udayan Bose 34 A Sterling Apartments, Pritish Nandy Communication Limited;

Pedder Road, Mumbai 400 Creditcapital Finance Limited;
S/o Late Mr. Prabhas Chandra 026, Maharashtra, India Tamara Capital Advisors Private Limited;
Bose Bikrampur Investment & Trading Private
Limited;
Designation: Non- Executive Invest India Private Limited;
Independent Director Earl Investments Private Limited;
KC Corporate Finance Advisors Private
Occupation: Banker
Limited; and
Zodiac Clothing Company (UAE) LLC,

102
 Name, Fathers Name, Address Other directorships
Designation, Occupation, Age,
DIN and Term
Age: 61 years Dubai

DIN: 00004533

Term: Liable to retire by rotation

All our Directors except Mr. S.K. Pathak and Mr. M.H. Dalmia, are Indian residents. Further, Mr. Harsh Pati
Singhania is the nephew of Mr. Hari Shankar Singhania as well as Mrs. Vinita Singhania and Mrs. Vinita
Singhania is the wife of late Mr. Shripati Singhania, one of the brothers of Mr. Hari Shankar Singhania. Further,
Mr. Dhirendra Kumar is the brother-in-law of Mr. Hari Shankar Singhania.

Mr. Hari Shankar Singhania, and Mr. Harsh Pati Singhania, have been nominated pursuant to Article 101 of our
AoA, by Fenner (India) Limited and BACL, respectively, as Directors on the Board of our Company. For details
see ―Main Provisions of our Articles of Association‖ on page 301. Except as disclosed above, there are no
arrangements or understanding with major shareholders, customers, suppliers or others, pursuant to which any
of the Directors were selected as a Director except as per the Articles of Association of our Company.

Details of our Directors

Mr. Hari Shankar Singhania, is the Chairman of our Company. He has obtained a bachelor‘s degree in
science from Calcutta University. Mr. Hari Shankar Singhania has nearly 58 years of experience in managing
various industries including paper, cement, automotive tyres, synthetics, jute and hybrid seed industries. Besides
our Company, he is currently the chairman of JK Tyre and Industries Limited, BACL and JK Lakshmi Cement
Limited. He is also president, Managing Committee of Pushpawati Singhania Research Institute for Liver, Renal
and Digestive Diseases, New Delhi and member, Managing Committee, ASSOCHAM. He has also served as
president of the International Chamber of Commerce (1993 and 1994), and president of the Federation of Indian
Chambers of Commerce and Industry. He was vice president of the Confederation of Asia-Pacific Chambers of
Commerce and Industry and member of the Board of Commonwealth Development Corporation, United
Kingdom. He has held positions as director on various board appointed by GoI. Mr. Hari Shankar Singhania is a
recipient of the ‗Padma Bhushan‘ from the GoI, for his contribution in the field of trade and economic activities.
He has also been conferred several other awards and decorations, including ‗The Royal Order of Polar Star‘ by
His Majesty the King of Sweden and has been named as the ‗Commander First Class‘ in recognition of his
distinguished services to Sweden. He has been a member of our Board since July 9, 1992.

Mr. Harsh Pati Singhania, is the Managing Director of our Company. He is responsible for overseeing our
paper business and directly controls the strategy and finance functions of our Company. He has obtained a
degree in Bachelors in Commerce from Calcutta University and holds a degree in Masters in Business
Administration from the University of Massachusetts, USA. He has also completed the Owner/ President
Management program from Harvard Business School, USA. Mr. Harsh Pati Singhania has more than 21 years of
experience in the paper industry. He currently holds several key positions, such as, member of the Executive
Committee and Steering Committee of FICCI, Managing Committee of PHD Chamber of Commerce and
Industry, Executive Committee of International Chamber of Commerce (India), committee of the Indian Paper
Manufacturers Association, and Board of Governors, International Management Institute, India. He is also
member of the Council of Association, Central Pulp and Paper Research Institute and Managing Committee of
Pushpawati Singhania Research Institute for Liver, Renal and Digestive Diseases, New Delhi. He has been a
member of our Board since July 9, 1992.

Mr. Om Prakash Goyal, is a whole-time Director of our Company. He is responsible for the day to day
operations of our Company. Mr. Goyal is a qualified chartered accountant from ICAI and has obtained a
bachelor‘s degree in commerce from Rajasthan University, Jaipur. Mr. Goyal has over 45 years of experience in
paper and cement industry, having served in various capacities in numerous companies such as JK Lakshmi
Cement Limited, Kesoram Textiles and Industries Limied and Century Textiles and Industries Limited. He has
been a member of our Board since December 24, 1996.

Mr. Dhirendra Kumar, is a non-executive Director of our Company. Mr. Kumar obtained his bachelor‘s
degree in Engineering from New York University. Mr. Kumar has over 45 years of experience primarily in the
tea industry. He has been the President of Tea Association of India, Bharat Chamber of Commerce and Calcutta

103
Tea Traders Association. He has been a member of our Board since October 30, 2001.

Mrs. Vinita Singhania, is a non-executive Director of our Company. Mrs. Singhania has a degree in bachelors‘
of arts from Chowdhary Charan Singh University, Meerut. She is presently the managing director of JK
Lakshmi Cement Limited. She is president of Cement Manufacturers' Association and Chairperson of National
Council for Cement and Building Materials. She is also actively involved in organizing religious discourses,
providing health-care to people below the poverty line and helping destitute girl children for higher education
and various other philanthropic activities. She has been awarded ‗Best Woman Entrepreneur of the Year 2009‘
by PHD Chamber of Commerce and the ‗Golden Peacock Women Business Leadership Award‘ from the
Institute of Directors. She has been a member of our Board since May 14, 2009.

Mr. Arun Bharat Ram, is a non-executive independent Director of our Company. Mr. Arun Bharat Ram has a
bachelors‘ degree in industrial engineering from University of Michigan, USA. Mr. Arun Bharat Ram has over
43 years of experience. He has been instrumental in building SRF Limited. Mr. Arun Bharat Ram was President
of CII (2000-01) and is currently chairman, CII Educational Council. He was also appointed by the GoI to be
co-chairman of Indo-German Consultative Group. Mr. Arun Bharat Ram has been awarded Jamshedji Tata
Award, by the Indian Society for Quality for the year 2006 and the Officer‘s Cross of the Order of Merit, by the
Federal Government of Germany in 2008. He has been a member of our Board since April 25, 2006.

Mr. M.H. Dalmia, is a non-executive independent Director of our Company. Mr. Dalmia obtained a bachelors‘
degree in chemical engineering from Jadavpur University, Kolkata. Mr. Dalmia has over 30 years of experience
in the fields of cement, industrial ceramics, real estate, information technology, investments, engineering and
trading, in India United Kingdom and USA. He is a member of the managing committee of the Associated
Chambers of Commerce and Industry and has been the President of Indian Refractories Manufacturers
Association and of Cement Manufacturers Association. He was also the President of National Council for
Cement and Building Materials during 1986-89 and a member of the Managing Committee of the FICCI during
1987-89. He has been a member of our Board since May 14, 2009.

Mr. R.V. Kanoria, is a non-executive independent Director of our Company. Mr. Kanoria completed his degree
in Masters of Business Administration (Honours) from International Institute for Management Development,
Switzerland, and completed an Advanced Management Programme of the Wharton School of Business, USA.
Mr. Kanoria has substantial experience in the chemicals, petrochemicals, textiles and jute industries. He has
been Vice President of FICCI and served in its executive committee for 17 years, during which period he has
headed several joint business councils for India. He was a part of the official GoI delegation for the WTO Inter
Ministerial Meetings in Seattle and Hong Kong. He has also served as chairman of the Indian Jute Mills
Federation and the Confederation of Indian Textile Industries. He is a chairman of the Commission on Trade
and Investment Policy of the International Chamber of Commerce, Paris. He is also a Member of the managing
committee of PHD Chamber of Commerce and Industry. He has been a member of our Board since July 24,
2007.

Mr. Shailesh Vishnu Haribhakti, is a non-executive independent Director of our Company. Mr. Haribhakti is
a chartered accountant. Mr. Haribhakti has over 30 years of experience in the fields of governance issues and
risk management. Mr. Haribhakti is a director on the board of various companies. In addition, he is a committee
member of Futures & Options segment of the NSE and a member of SEBI committee on Disclosures and
Accounting Standards. He serves as a member of managing committees of ASSOCHAM and IMC, Corporate
Governance Committee of ASSOCHAM and CII and is the Chairman of the Global Warming Committee. He
was a member of the ICAI's Group on Implementation of Convergence with IFRS and a Member on the
Standards Advisory Council of the International Accounting Standards Board. He has been awarded ‗The Best
Non Executive Independent Director Award – 2007‘ by the Asian Centre for Corporate Governance. He has
been a member of our Board since July 21, 2008.

Mr. S.K. Pathak, is a non-executive independent Director of our Company. Mr. Pathak obtained his degree in
master of arts in economics from University of Allahabad. Mr. Pathak has over 51 years of experience in
engineering (civil, mechanical and electrical), contracting and manufacturing business. He is also the founder
and chairman of the Al Basti & Mukhta group, based in UAE, engaged in the business of, amongst others, civil
construction and manufacture of printing inks, coating and varnishes. He has been a member of our Board since
April 24, 2004.

Mr. Udayan Bose, is a non-executive independent Director of our Company. Mr. Bose obtained his degree in
chemistry with honours and majored in mathematics from the Presidency College, Kolkata. Mr. Bose has over

104
40 years of experience in banking business. Mr. Bose is a Fellow of the Chartered Institute of Bankers, United
Kingdom and has completed his course in Advanced Management at Harvard Business School, USA. Mr. Bose
has previously worked with Grindlays Bank in India and the United Kingdom and Deutsche Bank Asia, where
he became Regional Director of South Asia. In 1985, he set up Creditcapital, which eventually was bought out
by Lazard LLC. Mr. Bose has served as Chairman of Creditcapital/ Lazard India from 1985 to 2005 and became
a managing director and General Partner of Lazard LLC in the period from 2001 to 2005. He was Advisor to the
Union Bank of Switzerland and has also served on the Advisory Board of The Economic Intelligence Unit of the
Economist. Recently, Mr. Bose joined Dubai Holding LLC as a member of its board of directors. He has been a
member of our Board since April 25, 2006.

None of our Directors is or was a director on any listed companies during the last five years preceding the date
of filing of the Draft Letter of Offer and until date, whose shares have been or were suspended from being
traded on BSE or NSE, during the term of their directorship in such companies.

Except as listed below, none of our Directors is or was a director on any listed companies which have been or
were delisted from the any stock exchange, during the term of their directorship in such companies:

Name of the Name of the Date of Whether Reasons for Whether Date of
Director(s) and stock exchange(s) delisting on compulsory delisting relisted relisting and
term of on which the stock or voluntary stock
directorship company was exchanges delisting exchange on
listed which
relisted
Bengal & Assam Company Limited
Hari Shankar Calcutta Stock November Voluntary Insignificant No N.A.
Singhania Exchange Limited 3, 2010 Delisting trading volume of
equity shares
Term: Non-
executive
chairman w.e.f.
February 2, 2009
– present
Vinita Singhania

Term: Director
liable to retire by
rotation w.e.f.
February 2, 2009
– present
JK Lakshmi Cement Limited
Hari Shankar Jaipur Stock June 7, 2003 Voluntary Insignificant No N.A.
Singhania Exchange Delisting trading volume of
equity shares
Term: Non-
executive
chairman w.e.f.
January 1, 2002 -
present

Vinita Singhania Ahmedabad Stock September Voluntary Insignificant No N.A.

Exchange 26, 2003 Delisting trading volume of
Term: Managing equity shares
Director for a Delhi Stock December Voluntary Insignificant No N.A.
period of five Exchange 29, 2003 Delisting trading volume of
years w.e.f. Association equity shares
January 1, 2006 - Limited
present Calcutta Stock March 3, Voluntary Insignificant No N.A.
Exchange Limited 2004 Delisting trading volume of
equity shares
Madhya Pradesh March 21, Voluntary Insignificant No N.A.
Stock Exchange 2005 Delisting trading volume of
equity shares
Bhubaneshwar September Voluntary Insignificant No N.A.
Stock Exchange 28, 2006 Delisting trading volume of

105
 Name of the Name of the Date of Whether Reasons for Whether Date of
Director(s) and stock exchange(s) delisting on compulsory delisting relisted relisting and
term of on which the stock or voluntary stock
directorship company was exchanges delisting exchange on
listed which
relisted
equity shares
JK Tyre and Industries Limited
Hari Shankar Calcutta Stock August 18, Voluntary Infrequent and No N.A.
Singhania Exchange Limited 2010 delisting insignificant
trading of equity
Term: chairman shares
w.e.f March 25, Delhi Stock January 29, Voluntary Infrequent and No N.A.
1974 - present Exchange 2004 delisting insignificant
Association trading of equity
Limited shares
Jaipur Stock June 7, 2003 Voluntary Infrequent and No N.A.
Exchange Limited delisting insignificant
trading of equity
shares
Kanoria Chemicals and Industries Limited
R.V. Kanoria The Uttar Pradesh October 28, Voluntary Insignificant No N.A.
Stock Exchange 2004 delisting trading volume of
Term: director Association equity shares
w.e.f November Limited
9, 1982 – present The Calcutta March 30, Voluntary Insignificant No N.A.
Stock Exchange 2005 delisting trading volume of
Association equity shares
Limited
Ludlow Jute & Specialities Limited (previously Aekta Limited)
R.V. Kanoria The Calcutta June 28, Voluntary Insignificant No N.A.
Stock Exchange 2008 delisting trading volume of
Term: director Association equity shares
w.e.f November Limited
8, 2006 – present
KPL International Limited
R.V. Kanoria The Bombay January 31, Voluntary Public No N.A.
Stock Exchange 2005 delisting shareholding
Term: director Limited falling below
w.e.f June 4, 2001 minimum public
– present shareholding
requirements
The Delhi Stock March 31, Voluntary Public No N.A.
Exchange 2005 delisting shareholding
Association falling below
Limited minimum public
shareholding
requirements
The Calcutta June 21, Voluntary Public No N.A.
Stock Exchange 2005 delisting shareholding
Association falling below
Limited minimum public
shareholding
requirements
R V Investment & Dealers Limited
R.V. Kanoria The Calcutta March 19, Voluntary Insignificant No N.A.
Stock Exchange 2010 delisting trading volume of
Term: director Association equity shares
w.e.f April 19, Limited
2007 – present
SRF Limited
Arun Bharat Ram The Ahmedabad December 8, Voluntary Insignificant No N.A.
Stock Exchange 2003 delisting trading volume of
Term: director equity shares
w.e.f August 1, Delhi Stock December Voluntary Insignificant No N.A.
1975 – present Exchange 10, 2003 delisting trading volume of

106
 Name of the Name of the Date of Whether Reasons for Whether Date of
Director(s) and stock exchange(s) delisting on compulsory delisting relisted relisting and
term of on which the stock or voluntary stock
directorship company was exchanges delisting exchange on
listed which
relisted
equity shares
Madras Stock January 7, Voluntary Insignificant No N.A.
Exchange 2004 delisting trading volume of
equity shares
DCM Shriram Consolidated Limited
Arun Bharat Ram Delhi Stock February 11, Voluntary Insignificant No N.A.
Exchange 2004 delisting trading volume of
Term: director equity shares
w.e.f May 25, Calcutta Stock June 27, Voluntary Insignificant No N.A.
1990 – present Exchange 2005 delisting trading volume of
equity shares
Samtel Color Limited
Arun Bharat Ram Calcutta Stock Year 2006 Voluntary Infrequent and No N.A.
Exchange delisting insignificant
Term: director trading of equity
w.e.f February 15, shares
1998 – present
Moser Baer India Limited
Arun Bharat Ram Ahmedabad Stock January 22, Voluntary Insignificant No N.A.
Exchange 2004 delisting trading volume of
Term: director equity shares
w.e.f April 30, Delhi Stock January 23, Voluntary Insignificant No N.A.
2002 – present Exchange 2004 delisting trading volume of
equity shares
Kanpur Stock November Voluntary Insignificant No N.A.
Exchange Limited 28, 2003 delisting trading volume of
equity shares
Calcutta Stock August 10, Voluntary Insignificant No N.A.
Exchange 2007 delisting trading volume of
equity shares
KAMA Holdings Limited (formerly SRF Polymers Limited)
Arun Bharat Ram Ahmedabad Stock December 8, Voluntary Insignificant No N.A.
Exchange 2003 delisting trading volume of
Term: director equity shares
from January 11, Delhi Stock December Voluntary Insignificant No N.A.
2002 – July 10, Exchange 10, 2003 delisting trading volume of
2008 equity shares
Madras Stock January 7, Voluntary Insignificant No N.A.
Exchange 2004 delisting trading volume of
equity shares

Compensation of our Directors

Executive Directors

Except as per employment agreements pursuant to which we pay remuneration (including commissions) to Mr.
Hari Shankar Singhania, Mr. Harsh Pati Singhania and Mr. O.P. Goyal, and the sitting fees paid to our
Directors, our Company does not pay any remuneration to our Directors.

Our Company has entered into an employment agreement with Mr. Hari Shankar Singhania, dated March 26,
2007, and supplemental agreement dated October 30, 2008 appointing him as the Chairman of our Company for
a term of five years with effect from January 1, 2007. As per the terms of the agreement, Mr. Hari Shankar
Singhania is currently being paid a basic salary of ` 15,00,000 per month with effect from January 1, 2011, in
the salary range of ` 0.07 crore to ` 0.15 crore per month, with such increments as may be decided by the Board
from time to time. Mr. Hari Shankar Singhania is also entitled to a commission of two per cent of the net profits
of our Company, computed under Section 349 to 350 of the Companies Act, and a performance linked incentive
as may be decided by the Board from time to time.

107
Our Company has entered into an employment agreement with Mr. Harsh Pati Singhania, dated March 26, 2007,
and supplemental agreement dated October 30, 2008, appointing him as the Managing Director of our Company
for a term of five years with effect from January 1, 2007. As per the terms of the agreement, Mr. Harsh Pati
Singhania is being currently paid a basic salary of ` 14,00,000 per month with effect January 1, 2011, in the
salary range of ` 0.07 crore to ` 0.15 crore per month, with such increments as may be decided by the Board
from time to time. Mr. Harsh Pati Singhania is also entitled to a commission of two per cent of the net profits of
our Company, computed under Section 349 to 350 of the Companies Act, and a performance linked incentive as
may be decided by the Board from time to time.

Our Company has entered into an employment agreement with Mr. Om Prakash Goyal, dated September 3,
2009, appointing him as a Whole-time Director of our Company for a term of three years with effect from
September 7, 2009. As per the terms of the agreement, Mr. Goyal is being currently paid a basic salary of `
3,50,000 per month, in the salary range of approximately ` 0.02 crore to ` 0.06 crore per month, with such
increments as may be decided by the Chairman or Managing Director from time to time. Mr. Goyal is also
entitled to a commission of one per cent of the net profits of our Company subject to a ceiling of 100% of his
annual salary, computed under Section 349 to 350 of the Companies Act, and a performance linked incentive as
may be decided by the Board from time to time.

Mr. Hari Shankar Singhania, Mr. Harsh Pati Singhania and Mr. Goyal, as per the terms of their respective
employment agreements, are also entitled to allowances and perquisites, including (i) free furnished residential
accommodation with gas, electricity, water and other amenities, (ii) car(s) with drivers, (iii) reimbursement of
medical expenses incurred in India and abroad, (iv) reimbursement of expenses on domestic help, (v) telephone
at residence, (vi) leave travel including foreign travel, (vii) personal accident insurance, and (viii) fees of clubs.
Additionally, Mr. Hari Shankar Singhania, Mr. Harsh Pati Singhania and Mr. Goyal are also entitled to
contribution to provident and superannuation fund or annuity fund, to the extent these are not taxable under the
Income Tax Act, 1961, payment of gratuity and encashment of unavailed leave.

Non-Executive Directors

Each of the non-executive Directors are entitled to sitting fees of ` 15,000 for each Board meeting, ` 10,000 for
each meeting of the Audit Committee, and ` 5,000 for each meeting of all other committees of the Board such
as the Investor Grievance Committee, Remuneration Committee and Committee of Directors.

In the case of Executive Directors, notice period is six months. Severance fee for the Chairman and the
Managing Director is remuneration for the unexpired residue of term or for three years, whichever is shorter,
and for the Whole-time Director, six months salary in lieu of notice period.

In Fiscal 2010, our Company paid compensation to our Directors as follows:

Name of Director Term Compensation Remuneration in Fiscal

Mr. Hari Shankar Singhania
Mr. Harsh Pati Singhania
Mr. Om Prakash Goyal
Mr. Arun Bharat Ram
Mr. Dhirendra Kumar
Mr. M.H. Dalmia
Mr. R.V. Kanoria
Mr. Shailendra Swarup
Mr. Shailesh Vishnu
Haribhakti
Mr. S.K. Pathak
Mr. Udayan Bose
Mrs. Vinita Singhania
Five years w.e.f. January 1,
2007
Five years w.e.f. January 1,
2007
Three years w.e.f. September
7, 2009
Liable to retire by rotation
Liable to retire by rotation
Liable to retire by rotation
Liable to retire by rotation
Up to January 28, 2011
Liable to retire by rotation
Liable to retire by rotation
Liable to retire by rotation
Liable to retire by rotation
2010 (` in crore)
See ―- Terms and conditions 4.95
of employment of our
executive Directors‖
See ―- Terms and conditions 5.21
of employment of our
executive Directors‖
See ―- Terms and conditions 1.67
of employment of our
executive Directors‖
Sitting fees and commission 0.07
Sitting fees and commission 0.07
Sitting fees and commission 0.06
Sitting fees and commission 0.07
Sitting fees and commission 0.07
Sitting fees and commission 0.06
Sitting fees and commission 0.06
Sitting fees and commission 0.07
Sitting fees and commission 0.06

Borrowing Powers of the Board in our Company

108
Pursuant to a resolution passed by our shareholders on December 1, 2010, in accordance with provisions of the
Companies Act and our Articles of Association, our Board has been authorised to borrow sums of money for the
purpose of the Company upon such terms and conditions as the Board may think fit, provided that the money or
monies to be borrowed together with the monies already borrowed by the Company shall not exceed, at any
time, a sum of ` 2,500 crores.

Corporate Governance

As a listed company we are in compliance with the applicable provisions of the Listing Agreements pertaining
to corporate governance, including appointment of independent Directors and constitution of committees.
Corporate governance is administered through our Board and the committees of the Board. In compliance with
Clause 49 of the Listing Agreement with the Stock Exchanges, our Board has constituted Audit Committee and
Shareholders/Investor‘s Grievance Committee. Further, our Board has also constituted Remuneration
Committee and Committee of Directors.

A brief description of the key committees, their scope, composition and meetings for the current year is as
follows:

(i) Audit Committee

We had through a resolution of Board dated July 24, 2007, re-constituted an Audit Committee as required under
Section 292A of the Companies Act and Clause 49 of the Equity Listing Agreement with the Stock Exchanges.
The Audit Committee currently comprises:

(a) Mr. Udayan Bose, Chairman;

(b) Mr. Dhirendra Kumar; and
(c) Mr. R.V. Kanoria.

Terms of Reference

The terms of reference of the Audit Committee includes the following:

Overseeing the financial reporting process and disclosure of its financial information.
Recommending to the Board the appointment, re-appointment or replacement of statutory auditors, and
the setting of audit fees.
The management shall disclose to the Audit Committee the uses/applications of funds by major
category (capital expenditure, sales and marketing, working capital, etc.,) raised through an issue
(public issues, rights issues, preferential issues, etc.,) on a quarterly basis, as part of the Company‘s
quarterly declaration of financial results.
Approving the statement of funds utilized for purposes other than those stated in any offer
document/prospectus/notice issued by our Company.

Two-thirds of the members of the Audit Committee are independent. The Audit Committee met four times
during Fiscal 2010.

(ii) Shareholders‟/Investors‟ Grievance Committee

We have through a resolution of Board dated January 28, 2011, re-constituted our Shareholders‘/Investors‘
Grievance Committee which currently comprises:

(a) Mr. R.V. Kanoria, Chairman;

(b) Mr. Arun Bharat Ram;
(c) Mr. Harsh Pati Singhania; and
(c) Mr. O.P. Goyal.

Terms of Reference

The terms of reference of the Shareholders‘/Investors Grievance Committee‘ includes the following:

109
 To redress all investor complaints like non-receipt of balance sheet, dividends, transfer/transmission of
shares etc.
To oversee the performance of the registrar and the share transfer agent.

The Shareholders‘/Investors‘ Grievance Committee met four times during Fiscal 2010.

(iii) Remuneration Committee

We had through a resolution of Board dated January 28, 2011, re-constituted our Remuneration Committee. The
Remuneration Committee currently comprises:

(a) Mr. Arun Bharat Ram, Chairman;

(b) Mr. Udayan Bose; and
(c) Mr. R.V. Kanoria

Terms of Reference

The terms of reference of the Remuneration Committee inter alia includes the following:

To determine, consider and recommend remuneration (including minimum remuneration) to the

executive Directors of our Company.

The quorum of this committee is three independent Directors. The Remuneration Committee met two times
during Fiscal 2010.

(iv) Committee of Directors

We had through a resolution of Board dated January 28, 2011, re-constituted our Committee of Directors. The
Committee of Directors currently comprises:

(a) Mr. Hari Shankar Singhania, Chairman;

(b) Mr. Harsh Pati Singhania; and
(c) Mr. O.P. Goyal;
(d) Mr. R.V. Kanoria

Terms of Reference

The terms of reference of the Committee of Directors inter alia include the following:

To approve from time to time transfer, transmission and transposition of shares/ debentures or other
securities of the Company, issue of certificates on consolidation, subdivision, or renewal of certificates
of shares, debentures and other securities of the Company and issue of duplicate certificates or fresh
certificates on rematerialization of respective securities.
To close registers of shares, debentures or other securities of the Company or fix record date for
determining entitlement to payment of dividend, interest or redemption amount and/or for purposes of
annual closing in terms of the listing agreement.
To borrow sums, make loans and additional investments and approve purchase, lease or acquisition of
lands, buildings or other immovable properties and to sell, lease or otherwise dispose of the properties
or other assets of the Company.
To do all such acts, deeds and things as may be required in connection with the Issue, including but not
limited to (i) finalisation of and approval of Letter of Offer, Composite Application Form, abridged
Letter of Offer; (ii) approval of notices, advertisement(s); (iii) decide the Record Date, date of opening
and closing of the Issue, ratio, price and premium of the Equity Shares to be offered; (iv) reserve
Equity Shares in favour of holders of outstanding convertible debt instruments and issue and Allot
Equity Shares.

The Committee of Directors met 12 times during Fiscal 2010.

Our Articles do not require our Directors to hold any qualification shares.

110
Shareholding of our Director(s) in our Company

The following table details the shareholding of our Director(s) in their personal capacity and either as sole or
first holder, as on the date of filing of this Draft Letter of Offer.

Name of Director Number of Equity Shares (Pre-Issue)

Mr. Hari Shankar Singhania 1,00,000
Mr. Harsh Pati Singhania 75,000
Mr. Om Prakash Goyal 15
Mrs. Vinita Singhania 50,000

Interest of our Directors

Our Directors may be deemed to be interested to the extent benefits they are entitled to in terms of their
appointment, including any compensation and fees, payable to them for attending meetings of the Board or a
committee thereof, to the extent of reimbursement of expenses payable to them as detailed in “- Compensation
of our Directors‖ on page 107.

One of our Directors, Mr. Hari Shankar Singhania, is also the natural person in control of our Promoter. For
details see ―Our Promoter and our Group Companies‖ on page 117.

All our Directors may be interested in the Equity Shares already held by them or that may be Allotted to them
pursuant to the Issue and / or that may be Allotted to their relatives or companies, firms and trusts in which they
are directors, members, partners or trustees, as the case may be, pursuant to this Issue. The Director(s) may have
further interest to the extent of any dividend payable to them and other distributions in respect of the Equity
Shares. For details, see ―Related Party Transactions‖ on page 140.

Additionally, Mr. Harsh Pati Singhania is the nephew of Mr. Hari Shankar Singhania and Mrs. Vinita Singhania
is the wife of late Mr. Shripati Singhania, one of the brothers of Mr. Hari Shankar Singhania.

Except as stated below and in the ―Related Party Transactions‖ on page 140, the Company has not entered into
any contracts or agreements during the two years prior to this Draft Letter of Offer in which Directors are
directly or indirectly interested, and no payments have been made to them in this respect of any such contracts,
agreements or arrangements or as are proposed to be made to them.

Name of Director Name of the Company Nature of transaction

Hari Shankar Singhania JK Lakshmi Cement Limited
Habras International Limited
JK Tyre and Industries Limited
Lakshmipat Singhania Education Foundation
Harsh Pati Singhania Fenner (India) Limited
Pulp and Paper Research Institute
Bhopal Udyog Limited
Lakshmipat Singhania Education Foundation
Habras International Limited
Vinita Singhania JK Lakshmi Cement Limited
Lakshmipat Singhania Education Foundation
Habras International Limited
O.P. Goyal JK Enviro-tech Limited
Purchase of Cement bags by our
Company
Commission on purchase order paid
by our Company
Sale of paper, note pad by our
Company
Payment of donation by our
Company
Purchase of V-belts and other
materials by our Company
Payment of charges by our Company
Arrangement of residential
accommodation by Bhopal Udyog
Limited
Payment of donation by our
Company
Commission on purchase order
Purchase of cement bags by our
Company
Sale of paper by our Company
Payment of donation by our
Company
Commission on purchase order paid
by our Company
Purchase of lime and other re-
imbursements by our Company

111
 Name of Director Name of the Company Nature of transaction
R.V. Kanoria Kanoria Chemicals & Industries Limited Purchase of polyalumium chloride by
our Company

All the transactions mentioned above are entered in ordinary course of business and on an arm-length basis.

None of our Directors have any interest in any property acquired or proposed to be acquired by our Company in
the last two years. Our Directors do not have any interest in any Objects of the Issue for which the Issue
proceeds are proposed to be utilised.

Changes in our Board of Directors during the last three years

Name Date of Appointment Date of Cessation Reason

Mr. Gajanan Khaitan October 30, 2001 January 23, 2009 Death
Mr. Shailesh Vishnu Haribhakti July 21, 2008 - Appointment
Mr. M.H. Dalmia May 14, 2009 - Appointment
Mrs. Vinita Singhania May 14, 2009 - Appointment
Mr. Shailendra Swarup July 9, 1992 January 28, 2011 Resignation

112
 Organisational Structure

Chairman
Hari Shankar
Singhania

MD
Harsh Pati Singhania

WTD
OP Goyal

COO
P Ramnath

GM (RM Procurement)
DK Daukia

CE (New CFO VP Chief of

Project) V Kumaraswamy (Tech & Dev) Taxation Company
Ashish De Vinit Secretary
Marwaha SC Gupta
EVP EVP VP VP (HRD) VP
CGM (Works) – CPM (Works) – JKPM (Sales - Paper) (Materials)
(Internal NK Agarwal MC Goel AK Ghosh Amit Datta
CGM
Audit) (Sale – PB)
Pramod Santosh
Kapoor Wakhloo Sr. GM (A/Cs)
Advisor B Dhimaan
SC Majumdar

Senior GM
GM (Sales)
(Finance)
GM (TS) Saikat Basu Ashok Gupta
S C Rath

DGM (security)
Virender Singh

113
Key Managerial Personnel

Mr. P. Ramnath, aged 51 years, is the Chief Operating Officer of our Company. Mr. Ramnath holds a B.Tech.
degree in Chemical Engineering from Osmania University College of Technology and is a Post Graduate in
Management from Indian Institute of Management, Bangalore. He has over 28 years of experience in the fields
of management consulting, sales and marketing, business development and business unit management across
diverse industries such as petrochemicals, building products, speciality polymers, industrial and speciality gases
and pharma/agro intermediates. Mr. Ramnath has previously worked with Business Consulting Group (BCG),
Reliance Industries Limited, Bakelite Hylam Limited, SNG Ion Exchange and Praxair India Limited. Prior to
joining our Company in March 2010, he was Senior Vice President & Head (Advanced Intermediates Business),
Jubilant Organosys Limited. The remuneration paid to Mr. Ramnath for period ended March 31, 2010 was `
3.86 lakhs.

Mr. Ashish De, aged 60 years, is the Chief Executive (New Projects) of our Company. Mr. De obtained his
Bachelors of Science from Calcutta University and is a post graduate diploma in pulp and paper technology
from Institute of Paper Technology (presently, Indian Institute of Technology, Roorkie, Chapter Saharanpur) as
well as trained in recycled paper board treatment and coating technology at North Carolina State University,
North Carolina, U.S.A. He has over 39 years of experience in the pulp and paper industry. Mr. De previously
worked with Orient Paper Mills, Rohit Pulp & Paper Mills, Balkrishna Industries (a subsidiary of Siyaram Silk
Mills) and BILT Industries in various capacities. Prior to joining our Company in February 2005, he was with
ITC‘s paper board and specialty paper division in various capacities, such as, Vice President (Business
Development), Vice President (Technical) and Vice President – Bhadrachalam Operations. Mr. De has been in-
charge of the packaging paperboard business of the Indian joint venture unit of MM Carton, Austria. The
remuneration paid to Mr. De for Fiscal 2010 was ` 52.29 lakhs.

Mr. V. Kumaraswamy, aged 49 years, is the Chief Financial Officer of our Company. Mr. Kumaraswamy
obtained his Bachelors of Commerce from Madras University and completed his Masters in Business
Administration from Indian Institute of Management, Ahmedabad as well as his CWA from ICWAI. He has
over 27 years of experience in the field of finance. Mr. Kumaraswamy has previously worked with Voltas, ITC
Group and Ciba-Geigy. Prior to joining our Company in September 2005 as Vice President (Finance), he was
with Atul Limited as General Manager (Finance). The remuneration paid to Mr. Kumaraswamy for Fiscal 2010
was ` 53.09 lakhs.

Mr. M.C. Goel, aged 59 years, is the Executive Vice President (Works) of the Unit JKPM of our Company and
is responsible for overall, efficient, cost effective & smooth mill management including raw material
procurement and plantation (including bamboo forest working), personnel and administration, manufacturing,
maintenance, power plant operation, material management, accounts and costing, sales and dispatch and project
and development, including strategic business planning, liaisoning, public relation, corporate social
responsibility activities, and implementation of management system at our Unit JKPM. Mr. Goel is an
engineering graduate from IIT, Roorkee (formerly University of Roorkee, Roorkee) and Post Graduate from IIT,
New Delhi and holds Post Graduate Diploma in Project Management from Punjabi University, Patiala. He has
over 36 years of experience in general management, operations and maintenance, project planning and
execution of various projects in integrated pulp and paper mills and synthetic fiber industries. Mr. Goel has
previously worked with Phoenix Pulp & Paper, Thailand, Century Polyester Limited, Nigeria, JCT Limited, Star
Paper Mills Limited and the Ministry of Energy, GoI. The remuneration paid to Mr. Goel for Fiscal 2010 was `
29.87 lakhs.

Mr. N.K. Agarwal, aged 54 years, is the Executive Vice President (Works) of the Unit CPM of our Company
and is responsible for overall functioning, modernization and expansion plans of the Unit CPM in the areas of
pulp and paper manufacturing, packaging board operations, quality control, project management, cost
compression, operational excellence, human resource management, commercial and administration functions,
TPM and business process re-engineering at our Unit CPM. Mr. Agarwal has obtained his B.Tech. in Chemical
Engineering from Harcourt Butler Technological Institute, Kanpur. He has over 31 years of experience in the
paper industry. Mr. Agarwal has previously worked with West Coast Paper Mills and Century Pulp and Paper.
Prior to joining our Company in July 1992, Mr. Agarwal has worked with Star Paper Mills Limited as Manager
(Project and Development). The remuneration paid to Mr. Agarwal for Fiscal 2010 was ` 31.59 lakhs.

Mr. A.K. Ghosh, aged 46 years, is the Vice President (Sales - Paper) of our Company and is responsible for
sales and marketing. Mr. Ghosh has obtained his Bachelors in Arts form University of Calcutta, Diploma in
export and import from Bombay University and Post Graduate Diploma in Sales and marketing from Xavier

114
Institute of Management affiliated to Bharat Chamber of Commerce. He has over 14 years of experience in the
paper industry. Mr. Ghosh has previously worked with TLT Worldwide and Cannon India. Prior to joining our
Company in March 1997, Mr. Ghosh has worked with Vijay Fine Protection Systems Limited as Regional Sales
Manager. The remuneration paid to Mr. Ghosh for Fiscal 2010 was ` 31.56 lakhs.

Mr. Suresh Chander Gupta, aged 53 years, is the Company Secretary of our Company. Mr. Gupta became a
qualified company secretary from ICSI in 1982. Mr. Gupta obtained his degree in commerce from Sri Ram
College of Commerce, University of Delhi, and completed his Masters in Business Administration from
Management Development Institute, Gurgaon. He has over 27 years of experience in various aspects related to
corporate laws. Mr. Gupta has previously worked with Khosla Foundry Limited and Jindal Drilling and
Industries Limited. Prior to joining our Company in January 2001, Mr. Gupta has worked with Jindal Pipes
Limited as Deputy General Manager (Finance and Company Secretary). The remuneration paid to Mr. Gupta for
Fiscal 2010 was ` 19.57 lakhs.

All of the above key managerial personnel are permanent employees of the Company.

None of the key managerial personnel are related to each other or to any Director of our Company. Further,
there are no arrangements or understanding with major shareholders, customers, suppliers or others, pursuant to
which any of the key managerial persons were appointed.

Shareholding of Key Managerial Personnel

The following key managerial personnel hold Equity Shares as on the date of filing of the Draft Letter of Offer.

Name Number of Equity Shares (Pre-Issue)

Mr. Ashish De 500

Except the above, none of our key managerial personnel hold any Equity Shares or options to acquire Equity
Shares.

Bonus or Profit Sharing Plan for our Key Managerial Personnel

The Company has an annual Business Performance Link Incentive Pay Plan (―BPLIP‖), for the employees
having designation General Manager and above. The incentives under the BPLIP are determined on the basis of
achievement of certain financial and non-financial parameters, as detailed in the BPLIP. The financial
parameters include amongst others, achieving target earning levels, return on capital employed (ROCE) and
non-financial parameters include, among others, risk mitigation and other operating parameters on which the
long term health of our Company depends.

Except as mentioned above, our Company does not have any bonus or profit sharing plans for our key
managerial personnel and the employees of our Company.

Interest of Key Managerial Personnel

The key managerial personnel have an interest in our Company to the extent of the remuneration or benefits to
which they are entitled to as per the terms of appointment, incentive payable under the BPLIP and
reimbursement of expenses incurred by them in the ordinary course of business. Additionally, the key
managerial persons have interest in our Company to the extent of their shareholding in our Company and to the
extent of Equity Shares that may be Allotted to them and / or that may be Allotted to their relatives or
companies, firms and trusts in which they are directors, members, partners or trustees, as the case may be,
pursuant to this Issue. The key managerial persons may have further interest to the extent of any dividend
payable to them and other distributions in respect of the Equity Shares.

We have not entered into any contract, agreement or arrangement during the preceding two years from the date
of this Draft Letter of Offer in which our key managerial personnel are interested directly or indirectly and no
payments have been made to them in respect of these contracts, agreements or arrangements or are proposed to
be made to them.

115
Changes in our Key Managerial Personnel of the Company during the last three years

Name Designation Date of appointment as Date of Reason

key managerial Cessation
personnel
Mr. Chief Executive (Works) January 31, 1990 December 13, Resignation
S.K.Mishra 2008
Mr. Rajiv Chief Executive (Marketing and September 13, 2000 December 31, Resignation
Sheopuri Business Development) 2008

Mr. Surajit Vice President (Technology and June 1, 2005 November 8, Resignation
Ray Development) 2010

Dr. T.K. Vice President (Human Resource December 1, 2006 November 18, Resignation
Mandal Development) 2010

Mr. M.C. Goel Executive Vice President (Works) November 3, 2008 - Promotion
(Unit JKPM)

Mr. N.K. Executive Vice President (Works) May 26, 2008 - Promotion
Agarwal (Unit CPM)

Mr. A.K. Vice President (Sales - Paper) January 19, 2009 - Promotion
Ghosh
Mr. P. Chief Operating Officer March 11, 2010 - Appointment
Ramnath

Employees Share Purchase Scheme/Employee Stock Option Scheme

Our Company does not have any employee share purchase scheme or an employee stock option scheme.

Payment of benefit to officers of our Company

Except as disclosed in this Draft Letter of Offer and except the statutory benefits provided upon termination of
their employment in our Company or superannuation, no officer of our Company is entitled to any benefits.

116
 OUR PROMOTER AND GROUP COMPANIES

Our Promoter

The Promoter of our Company is Bengal & Assam Company Limited.

Our Promoter currently holds 14,344,407 Equity Shares of our Company, which constitutes 18.35% of our pre-
Issue paid-up share capital, and will continue to hold the majority of our post-Issue paid-up share capital.

Promoter

Bengal & Assam Company Limited (―BACL‖)

BACL was incorporated as ‗Bengal & Assam Investors Limited‘ under the erstwhile Companies Act, 1913 on
January 30, 1947 as a public limited company. The name of the company was subsequently changed to ‗Bengal
& Assam Company Limited‘ on June 2, 1982. The registered office of BACL is situated at Link House, 3,
Bahadur Shah Zafar Marg, New Delhi 110 002, India. Its corporate identification number is
L67120DL1947PLC116830.

BACL is engaged in the business of holding investments and other financial assets of certain companies under
the JK group. BACL is duly registered as a non-banking financial company (NBFC) with the RBI.

Pursuant to a scheme of scheme of arrangement between BACL and Sthenic Investment Limited, as approved
by the High Court of Delhi, BACL acquired 35,000 Equity Shares of our Company on January 16, 2006. In
terms of the scheme of arrangement and demerger between Juggilal Kamlapat Udyog Limited, Nav Bharat
Vanijya Limited, J. K. Credit & Finance Limited, Param Shubham Vanijya Limited, Pranav Investment (M.P.)
Company Limited (―Transferor Companies‖) and BACL and their respective shareholders and creditors,
certain specified investments were demerged from the Transferor Companies and merged with BACL. The said
scheme was sanctioned by the High Court of Delhi in terms of its order dated July 19, 2007. Pursuant to the said
scheme, BACL acquired 67,000 Equity Shares of our Company on January 24, 2008.

Further, pursuant to a scheme of amalgamation as approved by the order of the Delhi High Court dated August
22, 2008 and made effective on November 11, 2008, Ashim Investment Company Limited (―AICL‖) and its
four wholly owned subsidiaries, namely, Mayfair Finance Limited, Sidhi Vinayak Investment Limited,
Terrestrial Finance Limited and Yashodhan Investment Limited, along with Netflier Finco limited (―NFL‖) and
its four wholly owned subsidiaries, namely, Hansdeep Investment Limited, Panchanan Investment Limited,
Hidrive Finance Limited and Radial Finance Limited, have amalgamated into and with BACL (the ―Bengal and
Assam Scheme of Amalgamation‖). As per the scheme, BACL has issued and allotted 23 equity shares of ` 10
each for every 59 equity shares of ` 10 each held by the shareholders in AICL and 17 equity shares of ` 10 each
fully paid up for every 73 equity shares of ` 10 each held in NFL as on the relevant record date, i.e. November
28, 2008 and the equity share capital of BACL was increased to approximately ` 8.68 crore.

Pursuant to the Bengal and Assam Scheme of Amalgamation, the equity shares of BACL were listed on BSE
and CSE on August 17, 2009, and December 8, 2009, respectively. The equity shares of BACL have been
delisted from the CSE with effect from November 3, 2010. The equity shares of BACL are presently listed on
BSE.

Shareholding Pattern

The shareholding pattern of BACL as on December 31, 2010, is as follows:

Category Category of shareholder Pre- Issue

code Number of Equity Percentage
Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) Individuals/Hindu Undivided Family 51,76,993 59.62
(b) Central Government/State Government(s) - -
(c) Bodies Corporate 8,80,047 10.13
(d) Financial Institutions/Banks - -
(e) Any Other (Specify) - -

117
 Category Category of shareholder Pre- Issue
code Number of Equity Percentage
Shares
Sub-Total (A)(1) 60,57,040 69.75
(2) Foreign
(a) Individuals (Non-Resident Individuals/Foreign - -
Individuals)
(b) Bodies Corporate - -
(c) Institutions - -
(d) Any Other (specify) - -
Sub-Total (A)(2) - -
Total Shareholding of Promoter and Promoter Group 60,57,040 69.75
(A) = (A)(1)+(A)(2)
(B) Public shareholding
(1) Institutions
(a) Mutual Funds/UTI 1,129 0.01
(b) Financial Institutions/Banks 1,150 0.01
(c) Central Government/State Government(s) 37,285 0.43
(d) Venture Capital Funds - -
(e) Insurance Companies 3,75,805 4.33
(f) Foreign Institutional Investors 14,985 0.17
(g) Foreign Venture Capital Investors - -
(h) Any Other (specify) - -
Sub-total (B)(1) 4,30,354 4.96
(2) Non-Institutions
(a) Bodies Corporate 5,13,177 5.91
(b) Individuals-
(i) Individual shareholders holding nominal share capital 6,02,571 6.94
up to Rs. 1 lakh.
(ii) Individual shareholders holding nominal share capital 6,41,497 7.39
in excess of Rs. 1 lakh
(c) Others
Trusts 2,09,797 2.42
NRI‘s/OCBs 2,27,854 2.62
Custodian of Enemy Property 1,263 0.01
Sub-Total (B)(2) 21,96,159 25.29
Total Public Shareholding (B) = (B)(1)+(B)(2) 26,26,513 30.25
Total (A)+(B) 86,83,553 100.00
(C) Shares held by custodians against which depository
receipts have been issued
(a) Promoter and Promoter Group - -
(b) Public - -
Sub-Total(C) - -
Grand total (A)+(B)+(C) 86,83,553 100.00

Board of Directors

The Board of Directors of BACL as on December 31, 2010, comprises Mr. Hari Shankar Singhania, Chairman,
Mr. Bharat Hari Singhania, Dr. Raghupati Singhania, Mrs. Vinita Singhania, Mr. O.P. Khaitan, Mr. Shailendra
Swarup, Mr. L.R. Puri, and Mr. J.R.C. Bhandari.

Financial Performance

The audited standalone financials of BACL for Fiscal 2010, Fiscal 2009 and Fiscal 2008 are set forth below:

(Amount in ` crores, except per share data)

Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 8.68 8.68 8.68(**)
Reserves and surplus(*) 224.92 203.06 191.48
Sales/Turnover 26.51 16.15 16.13
Profit/(Loss) after tax 24.04 12.88 13.59

Earnings per share (in `) (Basic) 27.68 14.83 15.64

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 Fiscal 2010 Fiscal 2009 Fiscal 2008
Diluted earnings per share (in `) 27.68 14.83 15.64
Net asset value per share (in `) 269.02 243.84 230.51
(*)
Reserves and surplus are excluding revaluation reserve, if any, and reduced by miscellaneous expenditure, if any.
(**)
Including share capital suspense account of ` 3.53 crores

Details of listing and highest and lowest market price during the preceding six months

Monthly high and low price of the equity shares of BACL during the preceding six months at the BSE are as
follows:

Month BSE
High Low
July 2010 214.70 189.05
August 2010 320.00 199.10
September 2010 454.00 286.45
October 2010 429.00 363.00
November 2010 391.00 296.00
December 2010 384.80 268.70
(Source: www.bseindia.com)

There has been no trading of equity shares of BACL on the CSE since listing of equity shares of BACL on the
CSE.

The closing share price of BACL as of December 31, 2010 on the BSE was ` 349.25.

The market capitalization of BACL as of December 31, 2010 as per the closing price on the BSE was ` 303.27
crores.

Capital issues in the last three years

There have been no public or rights issues by BACL in the last three years.

Rate of dividend

Rates of dividend for Fiscal 2010, Fiscal 2009 and Fiscal 2008 are 25%, 15% and 50%, respectively.

Change in capital structure since the date of last issue

Except in accordance with the BACL Scheme of Amalgamation, there has been no change in capital structure of
Bengal & Assam since the date of its last issue.

Promise vs. performance

Not applicable.

Mechanism for redressal of investor grievance

The board of directors of BACL have constituted an investor grievance committee comprising Mr. Om Prakash
Khaitan (Chairman), Mr. Jatan Roop Chand Bhandari and Mr. Lajpat Rai Puri, in accordance with Clause 49 of
the Listing Agreement to look into the redressal of complaints of investors such as transfers or credit of shares to
demat accounts and non-receipt of dividend/interest/annual reports. Mr. Dillip Swain, the company secretary of
BACL, is the compliance officer.

BACL normally takes three-four days to dispose of various types of investor complaints. BACL received eight
investor complaints in Fiscal 2010 and all were disposed of in that period. As of December 31, 2010, there were
no investor complaints pending against BACL.

Promoter of BACL

The promoter of BACL is Mr. Hari Shankar Singhania.

119
Our Company confirms that the PAN, bank account numbers, company registration numbers and the addresses
of the registrar of the companies where our Promoter is registered will be submitted to the Stock Exchanges at
the time of filing the Draft Letter of Offer with them.

Natural person in control of our Promoter

Mr. Hari Shankar Singhania, 78 years, has been instrumental in the foundation of the
JK group of companies and the expansion of their business. He is on the board of
directors of our Promoter, Bengal & Assam Company Limited.

Mr. Hari Shankar Singhania is a resident Indian national, currently residing at 19,
Prithviraj Road, New Delhi 110 011, India. His driving license number is
P02042000112985. His voter identification number is DL/01/002/2222/79. For further
details see, ―Our Management‖ on page 100.

Interests of our Promoter

Our Promoter is interested in our Company to the extent of its shareholding and the premium and dividends
received on such shareholding of Equity and preference shares, as may be applicable, in our Company.
Additionally, our Promoter is entitled to appoint Director(s) on the Board of our Company, until such time it
holds the requisite percentage of shareholding in the Company, as provided under Article 101 of the Articles of
the Company. The Promoter will also have interest to the extent of subscription pursuant to renouncements in its
favour and towards subscription of additional Equity Shares applied for towards the unsubscribed portion.

The Promoter confirms that it has no interest in any property acquired by our Company during the last two years
from the date of filing of this Draft Letter of Offer.

Disassociation by the Promoter in the last three years

Our Promoter has not disassociated itself from any company or firm during the three years immediately
preceding the date of filing of this Draft Letter of Offer with SEBI.

Group Companies

The following companies/firms/ventures are promoted by our Promoter (including companies under the same
management pursuant to Section 370 (1B) of the Companies Act) and thus, are our Group Companies:

S. Name of Company Brief Description of business Promoters‟ shareholding

No. in % (direct)*
1. J.K. Lakshmi Cement Limited Manufacturing and sale of cement. 22.25
2. JK Tyre & Industries Limited Manufacturing and sale of 20.54
automotive tyres, tubes and flaps.
3. Fenner (India) Limited Manufacture and sale of fan belts 87.90
including raw edge cogged power
transmission belts, oil seals, moulded
rubber products, and, in designing,
supplying and installing of
mechanical power transmission
drives
4. J.K. Agri Genetics Limited** Reasearch and development, 38.55
production and marketing of hybrid
seeds and holding and dealing in
investments
5. BMF Investments Limited Investment into shares and other -
securities
6. Florence Alumina Limited** Manufacturing of alumina and -
conversion of alumina to aluminum.
7. J.K. Sugar Limited Manufacturing, trading, exporting 44.86
and importing of sugar and sugar

120
 S. Name of Company Brief Description of business Promoters‟ shareholding
No. in % (direct)*
products and generation and
distribution of electricity.
8. Pranav Investment (M.P.) Company Investment in securities and 30.00
Limited registered with the RBI as a non-
banking financial company.
9. Southern Spinners and Processors Limited Manufacture, sale and distribution of -
cotton yarn and fabric.
10. Udaipur Cement Works Limited Manufacture and sale of cement 49.37
11. Modern Cotton Yarn Spinners Limited Manufacture, sale and distribution of -
cotton yarn and fabric.
12. Hansdeep Industries and Trading Manufacture, purchase, sale and -
Company Limited dealing in cement and cement
products
13. Dwarkesh Energy Limited Production and distribution of 49.94
power.
14. JK Enviro-tech Limited Manufacturing of lime. 45.45
15. J.K. Risk Managers and Insurance Brokers Insurance broking 49.50
Limited
16. Panchmahal Properties Limited Purchase and sale of land and 99.98
buildings, any real estate and
investments
17. Acorn Engineering Limited Manufacturing of engineering -
materials.
18. Umang Dairies Limited Manufacture of diary products such 45.31
as instant diary powder, ghee and
skimmed milk powder
19. LVP Foods Private Limited Processing and packing of liquid 99.99
milk in poly pouches.
*Promoters‟ shareholdings shown as „-‟ in the table above are held indirectly.
** Pursuant to a scheme of arrangement and demerger between JK Agri Genetics Limited and Florence Alumina Limited and their
respective shareholders and creditors, filed before the High Court of Calcutta, the Seed Undertaking of JK Agri Genetics Limited, as
defined in the scheme of arrangement, is proposed to be transferred to Florence Alumina Limited. Upon approval of the proposed scheme,
Florence Alumina Limited will engage in the business of research and development, production and marketing of hybrid seed, and JK Agri
Genetics Limited will engage in the business of holding and dealing in investments.

Unless otherwise specifically stated, no equity shares of any of our Group Companies are listed on any Indian
stock exchange and they have not made any public or rights issue of securities in India in the preceding three
years.

The following information with respect to our Group Companies is being provided pursuant to sub-clause (2)
of clause (C) of (IX) of Part A of Schedule VIII of the SEBI ICDR Regulations.

A. Listed Group Companies

1. JK Tyre & Industries Limited (“JK Tyre”)

JK Tyre was incorporated as ‗J.K. Industries Private Limited‘, as a private company, under the erstwhile Indian
Companies Act, 1913 on February 14, 1951. Upon conversion to a public company, the name of JK Tyre was
changed to ‗J.K. Industries Limited‘ with effect from May 24, 1974 and subsequently to its present name with
effect from April 2, 2007. Its corporate identification number is L67120WB1951PLC019430. Its registered
office is situated at 7, Council House Street, Kolkata – 700 001.

JK Tyre is engaged in the business of manufacture and sale of automotive tyres, tubes and flaps.

The equity shares of JK Tyre were listed on the BSE, Calcutta Stock Exchange Limited and Delhi Stock
Exchange Association Limited in 1975. The equity shares were subsequently listed on Jaipur Stock Exchange
Limited in 1990 and on the NSE in 2004. Subsequently, the equity shares of JK Tyre were voluntary delisted
from the Calcutta Stock Exchange Limited, the Delhi Stock Exchange Association Limited and from Jaipur
Stock Exchange Limited. The equity shares of JK Tyre are presently listed on the Stock Exchanges.

Shareholding Pattern

121
The shareholding pattern of JK Tyre as of December 31, 2010 is as follows:

Category Category of shareholder Pre- Issue

code Number of Equity Percentage
Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) Individuals/Hindu Undivided Family 7,15,161 1.74
(b) Central Government/State Government(s) - -
(c) Bodies Corporate 1,85,69,320 45.23
(d) Financial Institutions/Banks - -
(e) Any Other (Trust) - -
Sub-Total (A)(1) 1,92,84,481 46.97
(2) Foreign
(a) Individuals (Non-Resident Individuals/Foreign - -
Individuals)
(b) Bodies Corporate - -
(c) Institutions - -
(d) Any Other (specify) - -
Sub-Total (A)(2) - -
Total Shareholding of Promoter and Promoter Group 1,92,84,481 46.97
(A) = (A)(1)+(A)(2)
(B) Public shareholding
(1) Institutions
(a) Mutual Funds/UTI 8,02,747 1.96
(b) Financial Institutions/Banks 8,613 0.02
(c) Central Government/State Government(s) 2,85,520 0.70
(d) Venture Capital Funds - -
(e) Insurance Companies 19,03,294 4.64
(f) Foreign Institutional Investors 50,94,003 12.41
(g) Foreign Venture Capital Investors - -
(h) Any Other (specify) - -
Sub-total (B)(1) 80,94,177 19.71
(2) Non-Institutions
(a) Bodies Corporate 72,05,518 17.55
(b) Individuals-
(i) Individual shareholders holding nominal share
capital up to Rs. 1 lakh. 41,81,442 10.18
(ii) Individual shareholders holding nominal share
capital in excess of Rs. 1 lakh 22,17,346 5.40
(c) Others (Trust) 200 0.00
(d) Clearing Members 76,182 0.19
Sub-Total (B)(2) 1,36,80,688 33.32
Total Public Shareholding (B) = (B)(1)+(B)(2) 2,17,74,865 53.03
Total (A)+(B) 4,10,59,346 100.00
(C) Shares held by custodians against which depository
receipts have been issued
(a) Promoter and Promoter Group - -
(b) Public - -
Sub-Total(„c) - -
Grand total (A)+(B)+(C) 4,10,59,346 100.00

Board of Directors

The Board of Directors of JK Tyre as on December 31, 2010 comprises Mr. Hari Shankar Singhania, Chairman,
Dr. Raghupati Singhania, Vice Chairman & Managing Director, Mr. Arvind Singh Mewar, Mr. Bakul Jain, Mr.
G.B. Pande (Representative of LIC of India), Mr. O.P. Khaitan, Mr. Kalpataru Tripathy, Mr. Ashok U. Katra
(IDBI Nominee), Mr. Bharat Hari Singhania, Managing Director, Mr. Vikrampati Singhania, Deputy Managing
Director, Mr. S.C. Sethi, Whole-time Director and Mr. Arun K. Bajoria, President & Director. Mr. G.B. Pande
ceased to be director with effect from January 6, 2011.

122
Financial Performance

The audited financials of JK Tyre for the Fiscal 2010, Fiscal 2009 and Fiscal 2008 are set forth below.

(In ` crores, except per share data)

Fiscal 2010 Fiscal 2009 (October
2007 – March Fiscal 2008 (
Equity capital 41.06 41.06 30.79
Reserves and surplus* 545.02 398.75 328.96
Gross Sales/ Turnover 3,956.29 5,490.32 3,195.71
Profit/(Loss) after tax 163.47 19.05 66.73

Earnings per share (`) (Basic) 39.74 5.52 21.53

Earnings per share (`) (Diluted) 39.74 5.52 21.53
Net asset value per share (`) 142.74 107.12 116.82
* Reserves and surplus are excluding revaluation reserve, if any, and reduced by miscellaneous expenditure, if any.

Details of listing and highest and lowest market price during the preceding six months

Monthly high and low price of the equity shares of JK Tyre at the BSE and the NSE are as follows:

BSE NSE
Month High (Rs) Low (Rs) High (Rs) Low (Rs)
July 2010 173.35 157.50 173.50 157.10
August 2010 188.40 157.75 189.00 155.15
September2010 202.60 169.05 204.00 169.00
October 2010 196.30 162.15 196.40 162.40
November 2010 170.50 130.00 170.65 134.90
December 2010 153.90 132.15 153.00 132.30
(Source: BSE and NSE websites)

The closing equity share price of JK Tyre as of December 31, 2010 on NSE and BSE were ` 134.45 and `
134.85, respectively and the market capitalization of JK Tyre as of December 31, 2010 on NSE and BSE was `
552.04 crore and ` 553.69 crores, respectively.

Public or Rights Issue in the last three years

JK Tyre made a rights issue of 1,02,64,836 equity shares of ` 10 each for a price of ` 85 per equity share
aggregating to ` 8,725.11 lakhs in September 2008. There has been no change in capital structure of JK Tyre
subsequent to the date of allotment of equity shares pursuant to the rights issue.

Promise v/s Performance

The objects of the rights issue in the year 2008 were to part finance expansion projects which were (i) expansion
program for enhancing the capacity of truck/bus radial plant, (ii) implementation of the project for
manufacturing speciality tyres/ special application tyres, and (iii) implementation of certain energy saving
projects. The proceeds of rights issue have been fully utilized for the aforesaid purposes.

Mechanism for redressal of investor grievance

The board of directors of JK Tyre have constituted a shareholders/investors grievance committee comprising
four directors, namely, Mr. G.B. Pande (Chairman), Mr. O.P. Khaitan, Mr. Vikrampati Singhania and Mr. S.C.
Sethi, in accordance with clause 49 of the Equity Listing Agreement with the Stock Exchanges to specifically
look into the redressal of complaints of investors such as the transfers or credit of shares to demat accounts and
non receipt of dividend/ annual reports. Mr. P.K. Rustagi, Vice President (Legal) and Company Secretary, is the
compliance officer. JK Tyre normally takes up to 15 days for disposal of various types of investor grievances.

Total number of investor complaints received during the last three Fiscal years is 19, out of which three investor
complaints were received during Fiscal 2010. As of December 31, 2010, there were no pending investor
complaints pending against JK Tyre.

123
Business interest in the Company

JK Tyre has had following business interest in the Company, in the last three Fiscal years:
(` in crore)
S. No. Particulars Fiscal 2010 Fiscal 2009 Nine month
period ended
March 31, 2008
1. Reimbursement of expenses received from the 0.31 0.39 0.64
Company
2. Reimbursement of expenses provided to the 0.18 0.31 0.42
Company
3. Purchase of paper from our Company Negligible Negligible Negligible
4. Sale of car to the Company - - 0.08

2. JK Lakshmi Cement Limited (“JKLC”)

JKLC was incorporated as ‗Straw Products Limited‘, a public limited company, under the erstwhile Indian
Companies Act, 1913 on August 6, 1938 and received its certificate for commencement of business on May 30,
1939. Its corporate identification number is L74999RJ1938PLC019511. Its registered office is situated at
Jaykaypuram-307019, Basantgarh, Dist. Sirohi, Rajasthan.

JKLC is engaged in the business of manufacture and sale of cement.

JKLC was listed on the BSE and the NSE in the year 1959 and 2006, respectively. The equity shares of JKLC
are presently listed on the Stock Exchanges.

Shareholding Pattern

The shareholding pattern of JKLC as of December 31, 2010 is as follows:

Category Category of shareholder Pre- Issue

code Number of Equity Percentage (%)
Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) Individuals/Hindu Undivided Family 10,03,260 0.82
(b) Central Government/State Government(s) Nil Nil
(c) Bodies Corporate 5,30,69,093 43.37
(d) Financial Institutions/Banks Nil Nil
(e) Any Other (Trust) Nil Nil
Sub-Total (A)(1) 5,40,72,353 44.19
(2) Foreign
(a) Individuals (Non-Resident Individuals/Foreign Nil Nil
Individuals)
(b) Bodies Corporate Nil Nil
(c) Institutions Nil Nil
(d) Any Other (specify) Nil Nil
Sub-Total (A)(2) Nil Nil
Total Shareholding of Promoter and Promoter Group 5,40,72,353 44.19
(A) = (A)(1)+(A)(2)
(B) Public shareholding
(1) Institutions
(a) Mutual Funds/UTI 48,00,641 3.92
(b) Financial Institutions/Banks 95,60,324 7.81
(c) Central Government/State Government(s) (IPICOL) 3,06,230 0.25
(d) Venture Capital Funds Nil Nil
(e) Insurance Companies 37,63,420 3.08
(f) Foreign Institutional Investors 53,18,684 4.35
(g) Foreign Venture Capital Investors Nil Nil
(h) Any Other (specify) – Foreign Banks 8,524 0.01
Sub-total (B)(1) 2,37,57,823 19.42
(2) Non-Institutions
(a) Bodies Corporate 1,03,07,460 8.42

124
 Category Category of shareholder Pre- Issue
code Number of Equity Percentage (%)
Shares
(b) Individuals-
(i) Individual shareholders holding nominal share capital 2,38,51,099 19.49
up to Rs. 1 lakh.
(ii) Individual shareholders holding nominal share capital 60,78,764 4.97
in excess of Rs. 1 lakh
(c) Others
Trusts & Foundations 8,300 0.01
Cooperative Societies Nil Nil
Educational Institutions Nil Nil
Foreign Companies Nil Nil
Overseas Corporate Bodies Nil Nil
Non-resident Indians 35,43,371 2.90
Sub-Total (B)(2) 4,37,88,994 35.79
Total Public Shareholding (B) = (B)(1)+(B)(2) 6,75,46,817 55.21
Total (A)+(B) 12,16,19,170 99.40
(C) Shares held by custodians against which depository
receipts have been issued
(a) Promoter and Promoter Group Nil Nil
(b) Public 7,39,754 0.60
Sub-Total (C) 7,39,754 0.60
Grand total (A)+(B)+(C) 12,23,58,924 100.00

Board of Directors

The board of directors of JKLC as on December 31, 2010, comprises of Mr. Hari Shankar Singhania, Mr. Bharat
Hari Singhania, Mrs. Vinita Singhania, Dr. Ajay Dua, Mr. B.V. Bhargava, Mr. Kashi Nath Memani, Mr. N.G.
Khaitan, Mr. Pradeep Dinodia, Dr. R.P. Singhania, Mr. S. Chouksey, Mr. Raj Kumar Bansal and Mr. S.K. Wali.

Financial Performance

The audited financials of JKLC for the Fiscal 2010, Fiscal 2009 and Fiscal 2008 are set forth below.

(In ` crores, except per share data)

Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital ( face value ` 5 per 61.19 61.19 61.19
share)
Reserves and surplus* 928.79 723.44 573.48
Gross Sales/Turnover 1,644.05 1,404.05 1,286.36
Profit/(Loss) after tax 241.13 178.59 223.67

Earnings per share (`) (Basic) 19.71 14.60 19.36

Earnings per share (`) (Diluted) 19.71 14.60 18.86
Net asset value per share (`)** 80.91 64.12 51.87
* Reserves and surplus are excluding Revaluation reserve, if any and reduced by miscellaneous expenditure if any.
** Net asset value per share is on the basis of face value of ` 5 per share

Details of listing and highest and lowest market price during the preceding six months

Monthly high and low price of the equity shares of JKLC at the BSE and the NSE are as follows:

BSE NSE
Month High (`) Low (`) High (`) Low (`)
July 2010 71.95 61.10 73.20 61.30
August 2010 64.30 51.15 64.15 58.25
September 2010 67.75 58.05 67.90 58.00
October 2010 67.00 61.10 67.00 61.20
November 2010 68.30 48.50 68.00 48.00
December 2010 59.50 50.20 59.40 50.55
(Source: BSE and NSE websites)

125
The share price of JKLC as of December 31, 2010 on the NSE and the BSE were ` 55.35 and ` 55.20,
respectively.

The market capitalization of JKLC as of December 31, 2010 on the NSE and the BSE was ` 677.26 crores and `
675.42 crores, respectively.

Public or Rights Issue in the last three years

JKLC has not undertaken any public or rights issue in the last three years.

Changes in the capital structure of JKLC during last three years

Date of Allotment Number of equity Face Issue Price Consideration Reasons of allotment
shares allotted Value (`)
(`)
January 30, 2008 41,02,500 10 97.50 Cash Allotment pursuant to
conversion of warrants
December 21, 2009 12,23,58,924 5 NA - Allotment pursuant to sub-
division of each equity share
with face value of ` 10 each
into two equity shares with
face value of ` 5 each.

Promise v/s Performance

Not applicable.

Mechanism for redressal of investor grievance

The board of directors of JKLC have constituted a shareholders/investors grievance committee comprising four
directors, namely, Dr. R.P. Singhania, chairman, Mr. N.G. Khaitan, Mr. Bharat Hari Singhania and Dr. Ajay
Dua, in accordance with clause 49 of the Equity Listing Agreement with the Stock Exchanges to look into the
redressal of complaints of investors such as transfers or credit of shares to demat accounts and non receipt of
dividend/interest/annual reports. Mr. Brijesh Kumar Daga, Vice President and Company Secretary, is the
compliance officer. JKLC normally takes up to two days for disposal of various types of investor grievances.

Total number of investor complaints received during the last three Fiscal years is 21, out of which five investor
complaints were received during Fiscal 2010. As of December 31, 2010, there were no pending investor
complaints pending against JKLC.

Business Interest in our Company

JKLC has had following business interest in the Company, in the last three Fiscal years:

(` in crore)
S. No. Particulars Fiscal 2010 Fiscal 2009 Nine month
period ended
March 31, 2008
1. Sale of cement to Company 0.66 0.98 1.81
2. Purchase of paper from Company 0.07 0.07 0.06
3. Reimbursement of expenses received from 2.06 1.56 1.51
Company
4. Reimbursement of expenses paid to Company 0.87 0.92 0.91

3. JK Agri Genetics Limited

JK Agri Genetics Limited (―JK Agri‖) was incorporated as a public limited company under the Companies Act
on May 25, 1993, as JK Agro Products Limited. JK Agri received its certificate for commencement of business
on September 1, 1993. Its corporate identity number is L24211WB1993PLC092885. The registered office of JK
Agri is situated at 7, Council House Street, Kolkata 700 001.

JK Agri is engaged in the business of research and development, production and marketing of hybrid seeds and
126
holding and dealing in investments. Pursuant to a scheme of arrangement and demerger between JK Agri and
Florence Alumina Limited and their respective shareholders and creditors, filed before the High Court of
Calcutta, the Seed Undertaking of JK Agri Genetics Limited, as defined in the scheme of arrangement, is
proposed to be transferred to Florence Alumina Limited. Upon approval of the proposed scheme, JK Agri will
primarily engage in the business of holding and dealing in investments.

The equity shares of JK Agri were listed on the BSE with effect from March 8, 2004 and on CSE with effect
from March 29, 2004.

Shareholding pattern

The shareholding pattern of JK Agri as of December 31, 2010 is as follows:

Category Category of Shareholder Number % holding

Code of Equity
Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) Individuals/Hindu Undivided Family 95,251 2.72
(b) Central Government/State Governments(s) -- --
(c) Bodies Corporate 13,51,820 38.55
(d) Financial Institutions/Banks -- --
(e) Any Other (specify) -- --
Sub-Total (A)(1) 14,47,071 41.27
(2) Foreign
(a) Individuals (Non-Resident Individuals)/Foreign Individuals -- --
(b) Bodies Corporate -- --
(c) Institutions -- --
(d) Any Other (specify) -- --
Sub-Total (A)(2) -- --
Total Shareholding of Promoter and Promoter Group 14,47,071 41.27
(A)=(A)(1)+(A)(2)
(B) Public Shareholding
(1) Institutions
(a) Mutual Funds/UTI 1,296 0.04
(b) Financial Institutions/Banks 451 0.01
(c) Central Government/State Government(s) -- --
(d) Venture Capital Funds -- --
(e) Insurance Companies 50 0.00
(f) Foreign Institutional Investors -- --
(g) Foreign Venture Capital Investors -- --
(h) Any Other (specify) -- --
Sub-Total (B)(1) 1797 0.05
(2) Non-Institutions
(a) Bodies Corporate 12,74,424 36.34
Individuals –
(b)
(i) Individual Shareholders holding nominal share capital upto Rs. 1
lakh 5,13,223 14.64
(ii) Individual Shareholders holding nominal share capital in excess
of Rs. 1 lakh 2,67,933 7.64
(c) Others -- --
(d) Clearing Members 2,062 0.06
Sub-Total (B)(2) 20,57,642 58.68
Total Public Shareholding (B)=(B)(1)+(B)(2) 20,59,439 58.73
Total (A)+(B) 35,06,510 100.00
Shares held by custodians against which depository receipts have
(C) been issued
(a) Promoter and Promoter Group -- --
(b) Public -- --
Sub-Total(C) -- --
Grand Total (A)+(B)+(C) 35,06,510 100.00

127
Board of Directors

The board of directors of JK Agri as on December 31, 2010 comprise of Mr. Bharat Hari Singhania, Chairman,
Dr. Raghupati Singhania, Mr. Vikrampati Singhania, Mr. Swaroop Chand Sethi, Mr. J.R.C. Bhandari, Mr.
Sanjay Kumar Khaitan and Mr. Sanjeev Kumar Jhunjhunwala

Financial Performance

The audited financial statements of JK Agri for the last three years ended on September 30 2010, September 30,
2009 (18 months) and March 31, 2008 are as follows:

(` in crores except per share data)

Particulars September 30,2010 September 30, 2009 (18 March 31, 2008
months)
Equity Capital 3.51 3.51 3.51
Reserves and Surplus* 52.60 41.96 43.19
Sales/Turnover 113.83 140.08 89.74
Profit/(Loss) after tax 10.64 (1.23) 6.45
Earnings per share (`) (Basic) 30.34 (3.51) 18.39
Earnings per share (`) (Diluted) 30.34 (3.51) 18.39
Net Asset value per share (`) 160.01 129.65 133.17
* Reserves and surplus are excluding revaluation reserve, if any, and reduced by miscellaneous expenditure, if any.

Details of listing and highest and lowest market price during the preceding six months

The equity shares of JK Agri are listed on the BSE and the CSE. The details of the highest and lowest price on
the BSE during the preceding six months are as follows:

Month Monthly High (`) Monthly Low (`)

July 2010 199.00 170.00
August 2010 343.90 181.50
September 2010 444.00 290.35
October 2010 634.00 390.00
November 2010 726.00 500.00
December 2010 744.00 510.00
Source: www.bseindia.com

The equity shares of JK Agri are not being traded actively on CSE.

The closing equity share price of JK Agri as of December 31, 2010 on BSE was ` 615.15 and market
capitalization of the Company on the said date on BSE was ` 215.70 crores.

Public or Rights Issue in the last three years

JK Agri has not made any public or rights issue in the last three years.

Changes in the capital structure of JKLC during last three years

Not Applicable

Promise v/s. Performance

Not Applicable

Mechanism for redressal of investor grievance

The Board of Directors of JK Agri has constituted a shareholders/investors grievance committee comprising of
Mr. Swaroop Chand Sethi, Chairman, Mr. Sanjay Kumar Khaitan and Mr. Vikrampati Singhania, in accordance
with clause 49 of the equity listing agreement with the stock exchanges to specifically look into the redressal of
complaints of investors such as transfers or credit of shares to demat accounts and non receipt of dividend/
interest/ annual reports. JK Agri normally takes up to 15 days for disposal of various types of investor

128
grievances.

Total number of investor complaints received during the last three Fiscal years is one, which was received
during Fiscal 2008. As at December 31, 2010 there are no investor grievances pending against the company.

4. JK Sugar Limited

JK Sugar Limited was incorporated as ‗Sahai Woodplast Limited‘, a public limited company, under the
Companies Act on April 19, 1996 and received its certificate for commencement of business on July 4, 1996. Its
corporate identification number is L25206WB1996PLC079417. Its registered office is situated at 7, Council
House Street, Kolkata 700 001.

JK Sugar Limited is engaged in the business of manufacturing, trading, exporting and importing of sugar and
sugar products and generation and distribution of electricity.

The equity shares of JK Sugar Limited were listed on the BSE and the CSE in March 2004.

Shareholding Pattern

The shareholding pattern of JK Sugar Limited as of December 31, 2010 is as follows:

Category Number of Equity

Category of shareholder Percentage
code Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) Individuals/Hindu Undivided Family 11,76,877 11.36
(b) Central Government/State Government(s) - -
(c) Bodies Corporate 54,62,534 52.73
(d) Financial Institutions/Banks - -
(e) Any Other (Trust) - -
Sub-Total (A)(1) 66,39,411 64.09
(2) Foreign
(a) Individuals (Non-Resident Individuals/Foreign - -
Individuals)
(b) Bodies Corporate - -
(c) Institutions - -
(d) Any Other (specify) - -
Sub-Total (A)(2) - -
Total Shareholding of Promoter and Promoter Group 66,39,411 64.09
(A) = (A)(1)+(A)(2)
(B) Public shareholding
(1) Institutions
(a) Mutual Funds/UTI 1,941 0.02
(b) Financial Institutions/Banks 1,21,155 1.17
(c) Central Government/State Government(s) - -
(d) Venture Capital Funds - -
(e) Insurance Companies 2,86,795 2.77
(f) Foreign Institutional Investors - -
(g) Foreign Venture Capital Investors - -
(h) Any Other (specify) - -
Sub-total (B)(1) 4,09,891 3.96
(2) Non-Institutions
(a) Bodies Corporate 18,16,299 17.53
(b) Individuals- 11,11,314 10.73
(i) Individual shareholders holding nominal share capital
up to Rs. 1 lakh.
(ii) Individual shareholders holding nominal share capital 3,81,413 3.68
in excess of Rs. 1 lakh
(c) Others - -
(d) Clearing Members 1,257 0.01
Sub-Total (B)(2) 33,10,283 31.95
Total Public Shareholding (B) = (B)(1)+(B)(2) 37,20,174 35.91

129
 Category Number of Equity
Category of shareholder Percentage
code Shares
Total (A)+(B) 1,03,59,585 100.00
(C) Shares held by custodians against which depository - -
receipts have been issued
(a) Promoter and Promoter Group - -
(b) Public - -
Sub-Total(C) - -
Grand total (A)+(B)+(C) 1,03,59,585 100.00

Board of directors

The board of directors of JK Sugar Limited as on December 31, 2010, comprises of Mr. Bharat Hari Singhania,
chairman, Mr. Vikrampati Singhania, Mr. Jatan Roop Chand Bhandari, Mr. Gautam Khaitan, Mr. Pramod
Kumar Jain, Mr. Ashok Kumar Kinra and Mr. Arun Kumar Jain.

Financial Performance

The audited financials of JK Sugar Limited for the Fiscal 2010, Fiscal 2009 and Fiscal 2008 are set forth below.

(In ` crores, except per share data)

Particulars Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 10.36 10.36 10.36
Reserves and surplus* 6.22 9.96 12.44
Gross Sales/Turnover 102.33 128.23 113.19
Profit/(Loss) after tax (2.70) (1.37) (1.98)
Earnings per share (`) (Basic) (2.61) (1.32) (1.91)
Earnings per share (`) (Diluted) (2.61) (1.32) (1.91)
Net asset value per share (`) 16.00 19.65 22.00
* Reserves and surplus are excluding revaluation reserves, if any, and reduced by miscellaneous expenditure, if any.

Details of listing and highest and lowest market price during the preceding six months

The equity shares of JK Sugar Limited are listed on BSE and CSE. The details of monthly high and low price of
the equity shares of JK Sugar Limited at the BSE are as follows:

BSE
Month High (`) Low (`)
July 2010 29.20 22.60
August 2010 26.85 22.05
September 2010 27.95 23.15
October 2010 28.50 24.10
November 2010 33.80 21.80
December 2010 26.75 22.00
(Source: www.bseindia.com)

The equity shares of the JK Sugar are not being traded actively on CSE.

The closing equity share price of JK Sugar Limited as of December 31, 2010 on the BSE was ` 25.55.

The market capitalization of JK Sugar Limited as of December 31, 2010 on the BSE was ` 26.47 crores.

Public or Rights Issue in the last three years

JK Sugar Limited has not undertaken any public or rights issue in the last three years.

Changes in the capital structure of JK Sugar Limited during last three years

Not Applicable

Promise v/s Performance

130
Not Applicable

Mechanism for redressal of investor grievance

The board of directors of JK Sugar Limited have constituted a shareholders/investors grievance committee
comprising three directors, namely, Mr. Vikrampati Singhania (chairman), Mr. Gautam Khaitan and Mr. A.K.
Kinra, in accordance with clause 49 of the Equity Listing Agreement with the stock exchanges to look into the
redressal of complaints of investors such as transfers or credit of shares to demat accounts and non receipt of
dividend/interest/annual reports. JK Sugar normally takes up to 15 days for disposal of various types of investor
grievances.

No investor complaints were received during the last three Fiscal years. As of December 31, 2010, there were no
investor complaints pending against JK Sugar Limited.

B. Unlisted Group Companies

1. Fenner (India) Limited

Fenner (India) Limited was incorporated as a private limited company April 9, 1992 under the name Sonex
Pharma Private Limited. The company became public company on April 22, 1997. The name of the company
was changed to its present name with effect from October 18, 2007.

The corporate identification number of Fenner (India) Limited is U24231TN1992PLC062306 and its registered
office is situated at 3, Madurai-Melakkal Road, Madurai 625 016, Tamil Nadu.

Fenner (India) Limited is engaged in the manufacture and sale of V & fan belts including raw edge cogged
power transmission belts, oil seals, moulded rubber products, and, in designing, supplying and installing of
mechanical power transmission drives.

Board of directors

The board of directors of Fenner (India) Limited as on December 31, 2010, comprise Dr. Raghupati Singhania,
chairman, Mr. H.V. Lodha, Mr. Harsh Pati Singhania, Mr. L.R. Puri, Mr. Surendra Malhotra, Mr. Vikrampati
Singhania and Mr. A.N.Ravichandran

Financial Performance

The audited financials of Fenner (India) Limited for the Fiscals 2010, 2009 and 2008 are set forth below.

(Rs. in crores, except per share data)

Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 2.48 2.48 2.48
Reserves and surplus* 237.98 207.73 195.76
Sales/Turnover 347.98 305.23 286.45
Profit/(Loss) after tax 39.11 16.50 20.15
Earnings per share (Rs.) (Basic) 157.49 66.44 81.14
Earnings per share (Rs.) (Diluted) 157.49 66.44 81.14
Net asset value per share (Rs.) 968.44 846.59 798.37
* Reserves and surplus are excluding revaluation reserve, if any, and reduced by miscellaneous expenditure, if any.

Business Interest in our Company

Fenner (India) Limited has had following business interest in the Company, in the last three Fiscal years:

(` in crore)
S. No. Particulars Fiscal 2010 Fiscal 2009 Nine month
period ended
March 31, 2008
1. Sale of V-belts and other items to our 0.02 0.03 0.03
Company

131
C. Group Companies having negative net worth and/or sick Group Companies

1. J. K. Risk Managers & Insurance Brokers Limited

J. K. Risk Managers & Insurance Brokers Limited (“J.K. Risk Managers”) was incorporated as ‗J.K. Insurance
& Risk Managers Limited‘ as a public limited company under the Companies Act on April 3, 2002. It received a
certificate of commencement of business on June 12, 2002. Subsequently, its name was changed to ‗J.K. Risk
Managers & Insurance Brokers Limited‘ on September 11, 2007. Its corporate identification number (CIN) is
U74999DL2002PLC114816. Its registered office is situated at Link House, 3 Bahadur Shah Zafar Marg, New
Delhi.

It is authorised to carry on the business of insurance broking.

Financial Performance

The audited financials of J.K. Risk Managers for Fiscal 2010, 2009 and 2008 are set forth below:
(In ` crores, except per share data)
Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 2.50 2.50 2.50
Reserves and surplus* (4.86) (3.52) (1.58)
Gross Sales/Turnover 2.25 2.31 1.71
Profit/(Loss) after tax (1.34) (1.94) (2.20)
Earnings per share (Rs.) (Basic) (5.36) (7.75) (42.65)
Earnings per share (Rs.) (5.36) (7.75) (42.65)
(Diluted)
Net asset value per share (Rs.) (9.43) (4.07) 3.68
* Reserves and surplus are excluding revaluation reserve, if any, and reduced by miscellaneous expenditure, if any.

2. Umang Dairies Limited (“Umang Dairies”)

Umang Dairies was incorporated as a public limited company under the Companies Act on December 2, 1992,
as JK Dairy and Foods Limited, and received its certificate of commencement of business on December 24,
1992. Its registered office is located at Gajraula, Hasanpur Road, Gajraula, District Jyotiba Phule Nagar, Uttar
Pradesh – 244 235. Its corporate identification number is L15111UP1992PLC014942.

Umang Dairies Limited is engaged in manufacturing of dairy products such as instant dairy powder, ghee and
skimmed milk powder.

The net worth of Umang Dairies was fully eroded as on March 31, 2002 and a reference was made to BIFR
under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended. Pursuant to an
order dated July 14, 2005, the BIFR declared Umang Dairies as a sick industrial undertaking and appointed
Canara Bank as operating agency. The rehabilitation scheme for Umang Dairies was sanctioned by the BIFR on
August 3, 2009.

The equity shares of Umang Dairies Limited were listed on the BSE in October 1994. The equity shares of
Umang Dairies Limited are presently listed on the BSE.

Shareholding Pattern

The shareholding pattern of Umang Dairies Limited as on December 31, 2010 is as follows:

Category Category of shareholder Pre- Issue

code Number of Equity Percentage
Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) Individuals/Hindu Undivided Family 1,500 0.01
(b) Central Government/State Government(s) Nil Nil
(c) Bodies Corporate 16,489,930 74.94
(d) Financial Institutions/Banks Nil Nil

132
 Category Category of shareholder Pre- Issue
code Number of Equity Percentage
Shares
(e) Any Other (Trust) Nil Nil
Sub-Total (A)(1) 16,491,430 74.95
(2) Foreign
(a) Individuals (Non-Resident Individuals/Foreign Nil Nil
Individuals)
(b) Bodies Corporate Nil Nil
(c) Institutions Nil Nil
(d) Any Other (specify) Nil Nil
Sub-Total (A)(2) Nil Nil
Total Shareholding of Promoter and Promoter Group 16,491,430 74.95
(A) = (A)(1)+(A)(2)
(B) Public shareholding
(1) Institutions
(a) Mutual Funds/UTI 14,200 0.06
(b) Financial Institutions/Banks 4,100 0.02
(c) Central Government/State Government(s) Nil Nil
(d) Venture Capital Funds Nil Nil
(e) Insurance Companies Nil Nil
(f) Foreign Institutional Investors Nil Nil
(g) Foreign Venture Capital Investors Nil Nil
(h) Any Other (specify) Nil Nil
Sub-total (B)(1) 18,300 0.08
(2) Non-Institutions
(a) Bodies Corporate 717,542 3.26
(b) Individuals- 4,385,285 19.93
(i) Individual shareholders holding nominal share capital
up to Rs. 1 lakh.
(ii) Individual shareholders holding nominal share capital 348,222 1.58
in excess of Rs. 1 lakh
(c) Others Nil Nil
Non-resident Indians 42,421 0.19
(d) Clearing Members Nil Nil
Sub-Total (B)(2) 5,493,470 24.97
Total Public Shareholding (B) = (B)(1)+(B)(2) 5,511,770 25.05
Total (A)+(B) 22,003,200 100
(C) Shares held by custodians against which depository Nil Nil
receipts have been issued
(a) Promoter and Promoter Group Nil Nil
(b) Public Nil Nil
Sub-Total(„C) Nil Nil
Grand total (A)+(B)+(C) 22,003,200 100

Board of directors

The board of directors of Umang Dairies Limited as on December 31, 2010, comprise Mr. D. B. Doda, Mr. R.C.
Jain, Mr. R.C. Periwal and Mr. R.L. Saha.

Financial Performance

The audited financials of Umang Dairies Limited for the Fiscals March 2010, March 2009 and March 2008 are
set forth below.

(` in crore, except per share data)

Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 11.00 12.00 12.00
Reserves and surplus* (20.57) (31.99) (29.42)
Sales/Turnover 46.25 32.13 34.62
Profit/(Loss) after Tax and extra 5.42 (2.57) (1.19)
ordinary items**
Earnings per share (Rs.) (Basic) 2.46 (1.51) (0.99)

133
 Fiscal 2010 Fiscal 2009 Fiscal 2008
after extra ordinary items***
Earnings per share (Rs.) 2.46 (1.51) (0.99)
(Diluted) after extra ordinary
items@***
Net asset value per share (4.35) (9.08) (14.52)
(Rs.)after extra ordinary
items***
* Reserves and surplus are excluding revaluation reserve, if any, and reduced by miscellaneous expenditure, if any.
** Pursuant to the scheme of rehabilitation sanctioned by the BIFR on August 3, 2009, one time settlement was done between Umang
Dairies and its lenders. Due to remission back of liabilities and written off the premium on redemption of preference shares, a sum of ` 7.44
crores have been shown as extra-ordinary items. For Fiscal 2010, profit after tax before extra-ordinary items was ` (2.02) crores and basic
and diluted earnings per share was ` (0.91) each.
***Calculation based on face value of ` 5 per equity share except for Fiscal year 2008 in which face value was Rs 10 per equity share.

Details of listing and highest and lowest market price during the preceding six months

Monthly high and low price of the equity shares of Umang Dairies Limited at the BSE are as follows:

BSE
Month High (`) Low (`)
July 2010 24.90 16.30
August 2010 24.85 19.00
September 2010 23.85 18.70
October 2010 22.35 17.95
November 2010 20.20 14.00
December 2010 18.00 13.70
(Source: www.bseindia.com)

The equity share price of Umang Dairies Limited as of December 31, 2010 on the BSE was ` 17.25.

The market capitalization of Umang Dairies Limited as of December 31, 2010 on the BSE was ` 37.96 crores.

Public or Rights Issue in the last three years

Umang Dairies Limited has not undertaken any public or rights issue in the last three years.

Changes in the capital structure of Umang Dairies Limited

Date of Number of equity Face Issue price Consideration Reasons of allotment

Allotment/ shares allotted Value (Rs.)
change (Rs.)
October 20, - - - - Pursuant to order of BIFR
2009 dated August 3, 2009, the
face value of equity shares
of Umang Dairies was
reduced from ` 10 per
equity share to ` 5 per
equity share. Consequently,
the paid-up equity share
capital was reduced from
approximately ` 12 crores to
approximately ` 6 crores.
January 28, 1,00,00,000 5 - Other than cash Fresh issue of equity shares
2010 to promoter group entities of
Umang Dairies Limited, i.e.
BACL, Juggilal Kamlapat
Udyog Limited, Accurate
Finman Services Limited,
pursuant to the order of
BIFR dated August 3, 2009
with effect from October 1,
2008

Promise v/s Performance

134
Not applicable.

Mechanism for redressal of investor grievance

The board of directors of Umang Dairies Limited have constituted a shareholders/investors grievance committee
comprising of three directors, Mr. R. C. Periwal, Chairman, Mr. R.C. Jain and Mr. R.L. Saha in accordance with
clause 49 of the Equity Listing Agreement with the stock exchanges to look into the redressal of complaints of
investors such as transfers or credit of shares to demat accounts and non receipt of dividend/interest/annual
reports. Mrs. Shuchi Sharma, the company secretary, is the compliance officer. Umang Dairies normally takes 7-
15 days for disposal of various types of investor grievances.

Total number of investor complaints received during the last three Fiscal years is 23, out of which four investor
complaints were received during Fiscal 2010. As of December 31, 2010, no investor complaints were pending
against Umang Daries Limited.

Business interest in the Company

Umang Dairies Limited has taken an inter-corporate deposit from the Company amounting to ` 0.50 crore, and
has paid aggregate interest of ` 0.16 crore to the Company during the last three Fiscal years.

3. Udaipur Cement Works Limited (“UCWL”)

UCWL was incorporated as a public limited company under the Companies Act on March 15, 1993, as ‗J.K.
Udaipur Udyog Limited‘ and received its certificate for commencement of business on March 24, 1993. Its
corporate identification number is L26943RJPLC007267. Its registered office is located at E-2, Transport
Nagar, Jaipur, Rajasthan.

The BIFR by its order dated November 13, 2003, declared it to be a sick industrial company within the meaning
of the Sick Industries (Special Provisions) Act, 1985, as amended. The BIFR has appointed ICICI Bank as the
operating agency to formulate a rehabilitation scheme based on the proposal of UCWL for revival. UCWL has
also filed a scheme of rehabilitation with the BIFR which was approved by the BIFR by its order dated
November 24, 2010. Steps are being initiated for implementation of the said scheme.

Trading in equity shares of UCWL was suspended at the BSE with effect from February 3, 2003 due to non
payment of listing fees by UCWL.

UCWL is engaged in the business of manufacture and sale of cement.

Shareholding pattern

The shareholding pattern of UCWL, as of December 31, 2010, is as follows:

Category Category of shareholder Pre- Issue

code Number of Equity Percentage
Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) Individuals/Hindu Undivided Family Nil Nil
(b) Central Government/State Government(s) Nil Nil
(c) Bodies Corporate 4,04,86,242 64.16
(d) Financial Institutions/Banks Nil Nil
(e) Any Other (Trust) - -
Sub-Total (A)(1) 4,04,86,242 64.16
(2) Foreign
(a) Individuals (Non-Resident Individuals/Foreign Nil Nil
Individuals)
(b) Bodies Corporate Nil Nil
(c) Institutions Nil Nil
(d) Any Other (specify) - -
Sub-Total (A)(2) - -

135
 Category Category of shareholder Pre- Issue
code Number of Equity Percentage
Shares
Total Shareholding of Promoter and Promoter Group 4,04,86,242 64.16
(A) = (A)(1)+(A)(2)
(B) Public shareholding
(1) Institutions
(a) Mutual Funds/UTI 31,500 0.05
(b) Financial Institutions/Banks 37,90,900 6.00
(c) Central Government/State Government(s) - -
(d) Venture Capital Funds - -
(e) Insurance Companies 10,800 0.02
(f) Foreign Institutional Investors - -
(g) Foreign Venture Capital Investors - -
(h) Any Other (specify) - -
Sub-total (B)(1) 38,33,200 6.07
(2) Non-Institutions
(a) Bodies Corporate 1,10,06,251 17.44
(b) Individuals- 77,77,550 12.33
(i) Individual shareholders holding nominal share capital
up to Rs. 1 lakh.
(ii) Individual shareholders holding nominal share capital - -
in excess of Rs. 1 lakh
(c) Others - -
Sub-Total (B)(2) 1,87,83,801 29.77
Total Public Shareholding (B) = (B)(1)+(B)(2) 2,26,17,001 35.84
Total (A)+(B) 6,31,03,243 100.00
(C) Shares held by custodians against which depository
receipts have been issued
(a) Promoter and Promoter Group - -
(b) Public - -
Sub-Total(„C) - -
Grand total (A)+(B)+(C) 6,31,03,243 100.00

Board of directors

The board of directors of UCWL as on December 31, 2010 comprises Mr. O.N. Rai, Mr. Vinit Marwaha and
Mr. R.K. Gupta.

Financial performance

The audited financials of UCWL for the Fiscal year ended March 31, 2010 (15 months period), Fiscal year
ended December 31, 2008 (12 month period) and Fiscal year ended December 31, 2007 (12 months period) are
set forth below.

(In ` crores, except per share data)

15 month period 12 month period 12 month period
beginning January 1, beginning January 1, beginning January 1,
2008 ending March 31, 2007 ending December 2006 ending December
2009 31, 2007 31, 2006
Equity capital 63.37 63.37 63.37
Reserves and surplus (*) 229.57 227.70 220.23
Sales/turnover and other income - 0.02 0.05
Profit/(Loss) after tax (1.87) (7.47) (7.47)

Earnings per share (`) (Basic) (0.30) (1.18) (1.18)

Earnings per share (`) (Diluted) (0.30) (1.18) (1.18)
Net asset value per share (`) (26.34) (26.04) (24.85)
* Reserves and surplus are excluding revaluation reserve, if any, and reduced by miscellaneous expenditure, if any.

The qualifications of the auditors, as provided in the audit report dated July 5, 2010, in relation to audited
accounts of UCWL, with respect for the 15 months period ended March 31, 2010 are reproduced below:

136
―In our opinion and to the best of our information, the Profit & Loss Account, Balance Sheet and the Cash Flow
Statement dealt with by this report comply with the accounting standards referred to section 211(3C) of the
Companies Act, 1956, to the extent applicable except to the extent of non-provision of interest liability etc and
preparation of accounts on going concern basis (AS-1), non provision of leave encashment (AS-15), Non-
determination of current net Realizable value of Inventory and Non-determination/ non-provision of obsolete
and unusable assets and inventory, non provision of depreciation and for impairment of assets (AS-2,AS-6,AS-
10 and AS-28).

On the basis of written representations received from the directors, as on 31 st March 2010 and taken on record
by the Board of Directors, we report that non of the directors is disqualified as on 31 st March 2010 from being
reappointed as a director of the company in terms of the clause (g) of sub-(1) of section 274 of the Companies
Act, 1956. However all the directors of the company are disqualified to be appointed/reappointed as directors in
any other public company.

Attention is invited to:

i. Note no 1&11 of Schedule 13 regarding preparation of accounts on ―going concern basis‖ for the
reasons stated in the said notes and our inability to comment thereon.
ii. Note no 2 of Schedule 13 regarding non provision of salary, wages, allowances and other benefit etc. as
stated in the said note(amount uncertained).
iii. Note no 3 of Schedule 13 regarding valuation of respective inventories as valued, considered same as
in the previous year and have been taken on the same value as in the previous year and non provision of
adjustment of lower of net realizable value over cost of inventories and non provision for obsolete,
shortages, damaged and non moving, inventories and fixed assets and for impairment of assets (amount
unascertained) and non provision of depreciation as stated in the said note.
iv. Note no. 4(a) of Schedule 13 regarding non provision of interest on secured loans, bank borrowings,
trade deposits, royalty, dues payable to Ajmer Vidyut Vitaran Nigam Ltd. (AVVNL), excise duty
demand and penal interest, liquidated damages, etc. thereon as stated in the said note (amount
unascertained) and regarding non-accounting of interest earned on certain deposits.
v. Note No. 4 (c) of Schedule 13 regarding non-accounting of interest earned on certain deposits as stated
in the said note (amount unascertained).
vi. Note No. 14 Schedule 13 regarding non-provision against overdue debtors amounting to Rs. 3,67,
79,578 and loans and advances amounting to Rs. 4,70,28,145.
vii. Note No. 21, 14, 6 & 11 of Schedule 13 regarding pending reconciliation /confirmation of balances of
secured loans, unsecured loans, deferred interest, creditors, other current liabilities, banks, deposits,
debtors, loans and advances and contingent liabilities considered to the extent identified by the
management and our inability to comment thereon.
viii. Note No. 13 Schedule 13 regarding non-provision of interest on overdue liability of Sundry Creditors
under Current Liabilities & Provision as defined under the ―Micro, Small and Medium Enterprises
Development Act,2006‖ (amount unascertained) and identification of such parties and their dues by the
management and our inability to comment on the same.

We further report that the loss for the year, balance in profit & loss account, assets and liabilities as stated are
without considering the impact of items. Loss for the year would have been Rs 1924.00 Lac(as against reported
figure of Rs 186.83 Lac), debit balance in profit and loss account would have been Rs 30783.72 Lac(as against
reported figure of Rs 29046.56 Lac), debtors would have been Rs Nil(as against reported figure of Rs 367.80
Lac) and loans & advances would have been Rs 1000 Lac(as against reported figure of Rs 1470.28 Lac).‖

Public or Rights Issue in the last three years

UCWL has not undertaken any public or rights issue in the last three years.

Changes in the capital structure of UCWL during last three years

Not Applicable

Promise v/s Performance

Not Applicable

137
Mechanism for redressal of investor grievance

The board of directors of UCWL have constituted a shareholders/investors grievance committee comprising Mr.
O.N. Rai, Mr. Vinit Marwaha and Mr. R.K. Gupta, in accordance with clause 49 of the Equity Listing
Agreement with the stock exchange to look into the redressal of complaints of investors such as transfers or
credit of shares to demat accounts and non receipt of dividend/interest/annual reports. Mr. R.K. Gupta, the
company secretary, is the compliance officer. UCWL normally takes up to two days for disposal of various
types of investor grievances.

Total number of investor complaints received during the last three Fiscal years is 112, out of which 13 investor
complaints were received during 15 month period ended March 31, 2010. As of December 31, 2010, there were
no pending investor complaints pending against UCWL.

Interests of our Group Companies

We have an existing lease agreement dated August 31, 2005, as extended by a letter dated March 11, 2010 for a
period up to March 31, 2014, with JK Lakshmi Cement Limited, one of our Group Companies in respect of a
space admeasuring 8,060 square feet at Gulab Bhawan, New Delhi. See, ―Risk Factors‖ and ―Related Party
Transactions‖ on pages ix and 140, respectively.

Our Group Companies is interested in our Company to the extent of their shareholding in our Company and the
dividends received on such shareholding. Except for Fenner (India) Limited, JK Agri Genetics Limited, BMF
Investments Limited, none of our Group Companies have any shareholding in our Company.

Except as disclosed above or in ―Related Party Transactions” on page 140, our Group Companies have no
interest in any property acquired by our Company during the last two years from the date of filing of the Draft
Letter of Offer, or proposed to be acquired by our Company.

Except as mentioned otherwise in this Draft Letter of Offer, none of our Group Companies have any business or
other interest in the Company. Further, transactions conducted between our Company and the Group Companies
are in ordinary course of business and on an arms length basis. Further, except as stated in ―Related Party
Transactions‖ on page 140, our Company does not have any sales/purchase arising out of any transaction with
any Group Company or Subsidiary exceeding aggregate 10% of total sales or purchase of our Company.

Other Confirmations

Our Promoter, directors of our Promoter, directors of our Group Companies and Group Companies have
confirmed that they have not been declared as willful defaulters by the RBI or any other governmental authority
and except as disclosed in ―Outstanding Litigation and Material Developments‖ on page 224, there are no
violations of securities laws committed by them in the past and no proceedings pertaining to such penalties are
pending against them.

Except as disclosed in this Draft Letter of Offer, neither our Promoter nor any of our Group Companies have
become sick companies under the Sick Industrial Companies (Special Provisions) Act, 1985 and no winding up
proceedings are pending against them. Further no application has been made, in respect of any of them, to the
Registrar of Companies for striking off their names. Additionally, neither our Promoter nor any of the Group
Companies have become defunct in the five years preceding the filing of the Draft Letter of Offer with SEBI.

Payment or Benefit to Promoter and Group Companies

Except as stated above in ―-Interests of our Promoter‖, ―-Interests of our Group Companies” and ―Related
Party Transactions‖ on pages 120, 138 and 140, respectively, there has been no payment of benefits to the
Promoter and Group Companies during Fiscal 2010, Fiscal 2009 and Fiscal 2008.

Litigation

For details relating to the legal proceeding involving the Promoter and Group Companies, see ―Outstanding
Litigation and Material Developments‖ on page 224.

Common Pursuits

138
Our Promoter and Group Companies do not have any interest in any venture that is involved in any activities
similar to those conducted by us. We shall adopt the necessary procedures and practices as permitted by law to
address any conflict situations, as and when they may arise. For, further details on the related party transactions,
to the extent of which our Company is involved, see ―Related Party Transactions‖ on page 140.

139
 RELATED PARTY TRANSACTIONS

We have related party transactions with our Subsidiaries, associates, Group Companies, Promoter, key
management personnel and entities under significant influence. For details, see ―Financial
Statements―Restated Consolidated Financial Statements ―Annexure E‖ on page 179.

140
 SECTION V – FINANCIAL INFORMATION
FINANCIAL STATEMENTS

Auditor‟s Repo rt o n Fina ncia l Info rma tion in rela tio n to Dra ft Letter of Offer
(Financial information of JK Paper Ltd.)

To
The Board of Directors,
JK Paper Limited,
Nehru House,
4, Bahadur Shah Zafar Marg,
New Delhi-110 002
India

Dear Sirs,

We have examined (a) the restated standalone financial information of JK Paper Limited (―the Company‖) (b)
the restated consolidated financial information of the Company, its subsidiaries and its interest in associate
(collectively described as ―the Group‖) annexed to this report. The said restated financial information have been
prepared by the management and approved by the Board of Directors, in accordance with the requirements of:

a. paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 (―the Act‖) ;

b. the Securities and Exchange Board of India (Issue of Capital and Disclosures requirements)
Regulations, 2009 (the ―SEBI Regulations‖), to the extent applicable and the related clarifications
thereto issued by the Securities and Exchange Board of India (―SEBI‖) pursuant to section 11 of
the Securities and Exchange Board of India Act, 1992, as amended to date; and

c. the terms of our engagement agreed upon with you in accordance with our appointment letter dated
August 25, 2010 in connection with the Draft Letter of Offer and Letter of Offer (‗collectively
hereinafter refer as ‗Offer Documents‘) being issued by the Company for its proposed right issue
of Equity shares.

1. Restated financial information:

a. The restated standalone financial information of the Company has been extracted from the audited
standalone financial statements as at and for the years/periods ended March 31 2010, 2009, 2008,
June 30, 2007, 2006 and 2005 which have been approved by the board of directors and also
adopted by the Members of the Company and from the audited standalone financial statements as
at and for the periods ended September 30, 2010, which has been approved by the board of
directors and thereafter. restated

b. The restated consolidated financial information of the Group has been extracted from the audited
consolidated financial statements as at and for the periods/ year ended September 30, 2010, March
31, 2010 which have been approved by the board of directors of the Company and restated
thereafter.

2. Financial Information

We have examined the attached:

a. Restated standalone Summary Statement of Assets and Liabilities of the Company as on

September 30, 2010, March 31, 2010, 2009, 2008, June 30, 2007, 2006 and 2005 (Annexure 1);
Restated Summary Statement of Profit or Loss of the Company for the years/periods ended
September 30, 2010, March 31, 2010, 2009, 2008, June 30, 2007, 2006 and 2005 (Annexure 2);
and Restated Summary Statement of Cash Flows of the Company for the years/periods ended
September 30, 2010, March 31, 2010, 2009, 2008, June 30, 2007, 2006 and 2005 (Annexure 3)
together with Significant Accounting Policies as at September 30, 2010 and selected Notes thereto
set out in Annexure 5 & 6;

141
 b. Restated Consolidated Summary Statement of Assets and Liabilities as at September 30, 2010,
March 31, 2010 (Annexure A); Restated Consolidated Summary Statement of Profit or Loss for
the year/ periods ended September 30, 2010, March 31, 2010 (Annexure B); and Restated
Consolidated Summary Statement of Cash Flows the year/ periods ended September 30, 2010,
March 31, 2010 (Annexure C) together with Principles of Consolidation and the selected Notes
thereto set out in Annexure E;

3. We did not audit the financial statements of the subsidiaries. The financial statements of the
subsidiary, namely, Songadh Infrastructure & Housing Limited reflects total assets of Rs. 13.76 crores
as at September 30, 2010 and of Jaykaypur Infrastructure & Housing Limited reflects total assets of
Rs. 38.47 crores as at September 30, 2010 total revenues of Rs. Nil for the six months period ended
on September 30, 2010. Further we did not audit the financial statements of an associate, namely, JK
Enviro-tech Limited, whose financial statements reflects total assets of Rs. 75.17 crores as at
September 30, 2010 and total revenues of Rs. 16.65 crores for the period then ended. The financial
statements of subsidiaries and associate have been audited by other auditors, whose reports have been
furnished to us and our opinion in so far as it relates to the amounts included in respect of the said
companies, is based solely on the reports of other auditors.

4. Without qualifying our opinion, we draw your attention to

i) note no. 2 Annexure-6 and note no. 2 of Annexure-E regarding certain adjustments made for the
limited purpose for inclusion in restated financial information in the Offer Documents;
ii) Note no.12 (a) (iii) and (iv) of Annexure 6 regarding the year wise measurement and disclosure in
respect of certain employee benefits for the limited purpose for inclusion in restated financial
information in the Offer Documents.
iii) note no. 16 of Annexure-6 and note no. 10 of Annexure E regarding pursuant to the Scheme of
Arrangement sanctioned by , CPM Staff Housing Undertaking and JKPM Staff Housing
Undertaking of the company have been transferred and vested to Songadh Infrastructure &
Housing limited and Jaykapur Infrastructure & Housing Limited respectively on going concern
basis w.e.f. 1st April 2009. The impact of the scheme has been considered in six months restated
standalone and consolidated financial information for the period ended 30 th September 2010.

5. Based on our examination of the standalone and consolidated financial information and the related
Audit reports and on the basis of the information and explanations given to us, we report that:

a. Having regards to para 4 above, the accounting policies applied for preparation of standalone
financial information as on for the years/periods ended September 30, 2010, March 31, 2010,
2009, 2008, June 30 2007, 2006 and 2005 are in accordance with the applicable Accounting
Standards and consistent accounting practices followed by the Company. Accordingly, no
adjustments on account of changes in accounting policies and accounting practices that have been
made to the Company‘s standalone audited financial statements for years presented except
adjustments stated vide note No 4a of Annexure 6;

b. Having regards to para 4 above, the accounting policies applied for preparation of consolidated
financial information as at and for the period ended September 30, 2010, March 31, 2010 are in
accordance with the applicable Accounting Standards and consistent accounting practices followed
by the Company. Accordingly, no adjustments on account of changes in accounting policies and
accounting practices have been made to the Group‘s consolidated audited financial statements for
years presented except adjustments duly made vide note no 2 of Annexure E;

c. There are no material adjustments relating to previous years, which need to be adjusted in the
financial information in the period to which they relate except adjustments stated vide note no 4a
of Annexure 6;

d. There are no exceptional items which need to be disclosed separately in the financial information;
except note no. 4a of Annexure 6

e. There are no qualifications in the auditor‘s report which require any adjustment in the financial
information annexed.

142
6. Other Financial Information

(a) We have also examined the other standalone financial information relating to the Company for the
years/periods ended September 30, 2010, March 31, 2010, 2009, 2008, June 30, 2007, 2006 and
2005, listed below which is proposed to be included in the Offer Documents, as approved by the
Board of Directors:

i. Statement of Other Income included in Annexure 7;

ii. Statement of Accounting Ratios included in Annexure 8;
iii. Statement of Dividend paid/proposed included in Annexure 9;
iv. Statement of Capitalisation as at September 30, 2010 included in Annexure10;
v. Statement of Outstanding Secured and Unsecured Loans as at September30, 2010 included in
Annexure 11; and
vi. Statement of Tax Shelter included in Annexure 12.

(b) We have also examined the other standalone financial information as set out in Annexure 4(1) to
Annexure 4 (10) relating to the Company

(c) We have also examined the other consolidated financial information relating to the Group as at
and for the years/periods ended September 30, 2010, March 31, 2010 listed below, which is
proposed to be included in the Offer Documents, as approved by the Board of directors:

i. Statement of Other Income included in Annexure-F;

ii. Statements of Accounting ratios included in Annexure-G;
iii. Statement of Dividend paid/proposed included in Annexure H;
iv. Statement of Capitalisation as at September 30, 2010 included in Annexure-I;
v. Statement of Outstanding Secured and Unsecured Loans as at September30, 2010 included in
Annexure J; and
vi. Statement of Tax Shelter included in Annexure K;

(d) We have also examined the other consolidated financial information as set out in Annexure D(1) to
Annexure D-(9)relating to the Group.

7. In our opinion the financial information and other financial information read with the notes of the
Company, as attached to this report, as mentioned in paragraphs 2 and 6 above, prepared by the
Company after making adjustments and regrouping as considered appropriate, have been prepared in
accordance with paragraph B (1) of Part II of Schedule II of the Act and the SEBI Regulations, as
amended from time to time. Our work has been carried out in accordance with auditing standards
generally accepted in India and as per the Guidance Note on Reports in Company Prospectuses issued
by the Institute of Chartered Accountants of India.

8. This report should not, in any way be construed as a re-issuance or re-dating of any of the previous
audit reports issued by us for the respective years nor should this report be construed as a new opinion
on any of the audited financial statements referred to herein. We have no responsibility to update our
reports for events and circumstances occurring after the date of the report.

9. Our report is intended solely for the use of the management and for inclusion in the Offer Documents
in connection with the proposed right issue of equity shares of the Company and should not be used
for any other purposes except with our prior consent in writing.

For Lodha & Co.,

Chartered Accountants
Firm Registration Number: 301051E

N.K. Lodha
Partner

143
Membership Number:301051E
Place: New Delhi
Date: January 28, 2011

144
FINANCIAL INFORMATION FROM RESTATED STANDALONE FINANCIAL STATEMENTS

145
146
147
148
149
150
151
152
 Annexure - 5

Significant Accounting Policies

1. Accounts are maintained on accrual basis. Claims/Refunds not ascertainable with reasonable certainty
are accounted for on settlement basis.

2. Fixed Assets are stated at cost adjusted by revaluation of certain assets.

3. Expenditure during construction/erection period is included under Capital Work-in-Progress and

allocated to the respective fixed assets on completion of construction/ erection.

4. a) Foreign currency transactions are recorded at exchange rates prevailing on the date of transaction.
Monetary assets and liabilities in foreign currencies as at the Balance Sheet date are translated at
exchange rate prevailing at the year end. Premium or discount in respect of forward contracts covered
under AS 11 (revised 2003) is recognized over the life of contract. Exchange differences arising on
actual payments / realizations and year end translations including on forward contracts are dealt with in
Profit and Loss Account except foreign exchange loss/gain on reporting of long-term foreign currency
monetary items used for depreciable assets, which are capitalized. Non Monetary Foreign Currency
items are stated at cost.

b) In accordance with Announcement issued by the Institute of Chartered Accountants of India all
outstanding derivatives except covered under AS 11 (revised 2003) are mark to market on Balance
Sheet date and loss, if any, is recognized in Profit & Loss Account and gain being ignored.

5. Long term investments are stated at cost. Provision for diminution in the value of long term
investments is made only if such a decline is other than temporary in the opinion of the management.
The current investments are stated at lower of cost and quoted / fair value computed category-wise.
When investment is made in partly convertible debentures with a view to retain only the convertible
portion of the debentures, the excess of the face value of the non-convertible portion over the
realisation on sale of such portion is treated as a part of the cost of acquisition of the convertible
portion of the debenture. Income in respect of securities with long-term maturities is accounted for as
per contractual obligation.

6. Inventories are valued at the lower of cost and net realisable value (except scrap/ waste which are
valued at net realisable value). The cost is computed on weighted average basis. Finished Goods and
Process Stock include cost of conversion and other costs incurred in bringing the inventories to their
present location and condition.
7. Export incentives, Duty drawbacks and other benefits are recognized in the Profit and Loss Account.
Project subsidy is credited to Capital Reserve.

8. Revenue expenditure on Research and Development is charged to Profit and Loss Account in the year
in which it is incurred and capital expenditure is added to Fixed Assets.

9. Borrowing cost is charged to Profit and Loss Account except cost of borrowing for acquisition of
qualifying assets which is capitalised till the date of commercial use of the asset.

10.(a) Depreciation on Buildings, Plant & Machinery, Railway Siding and Other Assets of all Units is
provided as per straight line method considering the rates in force at the time of respective additions of
the assets made before 02.04.1987 and on additions thereafter at the rates and in the manner specified
in Schedule XIV of the Companies Act 1956. Continuous Process Plants as defined in Schedule XIV
have been considered on technical evaluation. Depreciation on additions due to exchange rate
fluctuation is provided on the basis of residual life of the assets. Depreciation on assets costing up to
Rs.5000/- and on Temporary Sheds is provided in full during the year of additions.

(b) Depreciation on the increased amount of assets due to revaluation is computed on the basis of the
residual life of the assets as estimated by the valuers on straight-line method.

(c) Leasehold Land is being amortised over the lease period.

153
11. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable amount. An
impairment loss is charged to the profit and loss account when an asset is identified as impaired.
Reversal of impairment loss recognised in prior periods is recorded when there is an indication that the
impairment losses recognised for the assets no longer exist or have decreased. Post impairment,
depreciation is provided on the revised carrying value of the asset over its remaining useful life.

12. Employee Benefits:

(a) Defined Contribution Plan
Employee benefit in the form of Superannuation Fund is considered as defined contribution plan
and charged to the Profit and Loss Account in the year when the contribution to the respective
fund is due.

(b) Defined Benefit Plan

Retirement benefits in the form of Gratuity is considered as defined benefit obligation and
provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the
date of Balance Sheet.

The Provident Fund Contribution is made to trust administered by the trustees. The interest rate to
the members of the trust shall not be lower than the statutory rate declared by the Central
Government under Employees‘ Provident Fund and Miscellaneous Provision Act, 1952. Any
shortfall, if any, shall be made good by the Company.

(c) Other long-term benefits

Long term compensated absences are provided for on the basis of an actuarial valuation, using the
projected unit credit method, as at the date of Balance Sheet.

Actuarial gain/losses, if any, are immediately recognized in the Profit and Loss Account.

13. Lease rentals in respect of assets taken on finance lease are accounted for in reference to lease terms.

14. Miscellaneous expenditure are amortised as under:

Expenditure incurred against which benefit is expected to flow into future periods, are treated as
Deferred Revenue Expenditure and charged to Revenue Account over the expected duration of benefit.

15. Intangible Assets are being recognised if the future economic benefits attributable to the asset are
expected to flow to the company and the cost of the asset can be measured reliably. The same are being
amortised over the expected duration of benefits.

16. Current tax is the amount of tax payable on the estimated taxable income for the current year as per the
provisions of Income Tax Act, 1961. Deferred tax assets and liabilities are recognised in respect of
current year and prospective years. Deferred Tax Assets are recognised on the basis of reasonable
certainty / virtual certainty as the case may be, that sufficient future taxable income will be available
against which the same can be realised.

17. Provisions involving substantial degree of estimation in measurement are recognised when there is a
present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the notes.

18. Premium on redemption of preference shares is accounted for in the year of redemption.

154
 Annexure – 6

Notes to the Summary Statement of Assets and Liabilities - Restated and Summary Statement of Profit &
Loss - Restated for the six month ended September 30, 2010, for each of the year ended March 31, 2010,
2009, for the nine months ended March 31, 2008 and for each of the year ended 30th June 2007, 2006 &
2005.

1 Company, with a view to have a uniform financial year under the Companies Act, 1956 & the Income
Tax Act, 1961 had changed its accounting year from July-June to April-March in the period ended 31st
March 2008. Accordingly, the Accounts for 2007-08 are for a period of 9 months from July 01, 2007 to
March 31, 2008.

2 Following Adjustments, referred in note no. 2 (i) to (iv), have been made in the financial information
for the Years/periods ended September 30, 2010, March 31, 2010, 2009, 2008, June 30 2007, 2006 and
2005 for the limited purpose of inclusion of financial information in the Offer Document:

i. Changes in Accounting Policies:

(a) Foreign Currency Exchange Fluctuation (Accounting Standard-11):
1) During the year ended March 31, 2008; exchange difference in respects of loans other than
regarded as borrowing cost which were hitherto adjusted in carrying cost of related assets have
been reorganized as income/expense in the profit & loss account.
2) During the year ended March 31, 2009; Company has opted to capitalize the exchange
difference on reporting of foreign currency monetary items used for depreciable assets
retrospectively w.e.f. July 1, 2007;
3) Financial information for the period ended March 31, 2008 has been restated accordingly for
the reasons stated in para (1) & (2) above.

(b) The Company has adopted Accounting Standard-15 (Revised) ‗Employees Benefits‘ w.e.f. July 1,
2007. For the purpose of restatement, Financial information for the years ended on June 30, 2007,
2006 and 2005 has not been restated, since in the opinion of management it does not have material
impact.

ii. Material amounts relating to adjustments for previous years have been identified and adjusted in
arriving at the profits of the years to which they relate irrespective of the year in which the event
triggering the profit or loss occurred.

iii. Adjustment of Auditor‟s Qualifications:

Auditor had qualified their report for the financial year/period ended on March 31, 2008, June 30,
2007, 2006 and 2005 on the matter of (a) non-provision of deferred tax liability for the transitional
period up to June 30, 2001; (b) non-provision for diminution in the value of long term investment;
and (c) charging off one time additional interest (exceptional) to the Profit & Loss account and
transferring an equivalent amount from the General Reserve to the Profit & Loss Account.
Aforesaid Auditor‘s qualifications have been appropriately adjusted in the restated financial
information.

iv. Appropriate adjustments have been made in the Restated financial information, wherever required,
by a reclassification of the corresponding items of assets, liabilities, income, expenses and cash
flows, in order to bring them in line with the groupings as per the financials of the Company for
the 6 months period ended September 30, 2010.

3 In the opinion of management, there is no extraordinary item as defined in ―Accounting Standard-5‖

Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies', included in
Summary Statement of Profit & Losses for the Year/period ended September 30, 2010, March 31,
2010, 2009, 2008, June 30 2007, 2006 and 2005.
4 a) Restatements in Summary Statement of Profit & Loss arising out of change in accounting
policies and adjustments relating to previous years (also refer Note 2 above):

155
 Rs. in Crores (10 Million)
6 Months Year Year 9 Months Year Year Year
ended ended ended ended ended ended ended
September March 31, March 31, March 31, June 30, June 30, June 30,
Particulars 30, 2010 2010 2009 2008 2007 2006 2005
A Profit after tax as per Audited Financial
Statements (A) 58.19 91.03 38.01 34.71 45.91 35.52 38.53
B Adjustment on account of :
i) Change in accounting policies
- Capitalisation of Foreign Exchange Fluctuation - - - 1.05 - - -
ii) Previous-period items
Previous period adjustments (net) - 1.04 (1.48) (1.65) 0.94 2.21 1.00
Total Adjustments before tax (i + ii) - 1.04 (1.48) (0.60) 0.94 2.21 1.00
Tax Impact on Adjustments - (0.35) 0.93 0.13 (0.32) (0.74) (0.16)

Total Adjustments net of tax impact (B) - 0.69 (0.55) (0.47) 0.62 1.47 0.84
C Adjusted Profit after tax before exceptional
items (A + B) 58.19 91.72 37.46 34.24 46.53 36.99 39.37

D Exceptional Items *
One time additional interest charges on
prepayment of high cost loans - - - (2.40) - (1.59) (20.66)

E Adjusted Profit after tax After exceptional

items (C + D) 58.19 91.72 37.46 31.84 46.53 35.40 18.71
* Adjusted against general reserve in audited accounts

b) Restatements in Reserves & Surplus arising out of change in accounting policies and adjustments relating to
previous years:
Rs. in Crores (10 Million)
As at As at As at As at As at As at As at
September March 31, March 31, March 31, June 30, June 30, June 30,
Particulars 30, 2010 2010 2009 2008 2007 2006 2005
A Reserves & Surplus as per Audited Financial
Statements (A) 483.05 397.39 330.30 313.62 300.25 283.65 144.31
B Adjustment on account of :
i) Change in accounting policies
- Capitalisation of Foreign Exchange Loss - - - 1.05 - - -
ii) Previous-period items
Previous period adjustment (net) - 0.01 (1.03) 0.45 2.10 1.16 (1.05)

iii) Provision for diminution in value of Investments

(being provided in the period ended 31.03.08) - - - - (4.53) (4.53) (4.53)
Total Adjustments before tax (i + ii + iii) - 0.01 (1.03) 1.50 (2.43) (3.37) (5.58)
Tax Impact on Adjustments - - 0.35 (0.58) (0.71) (0.22) 0.52
Deferred Tax on Transional Period upto 30.06.2001
(being provided in the year ended 30.06.07) - (2.75) (2.75)
Total Tax Impact - - 0.35 (0.58) (0.71) (2.97) (2.23)

Total Adjustments net of tax impact (B) - 0.01 (0.68) 0.92 (3.14) (6.34) (7.81)
C Adjusted Reserves & Surplus as per Summary
Statement of Assets & Liabilities - Restated (A + B) 483.05 397.40 329.62 314.54 297.11 277.31 136.50

5 Estimated amount of contracts remaining to be executed on capital account (Net of Advances) are as
under:

Rs. in Crore (10 Million)

As at As at March 31, As at June 30,
September

156
 30,
2010 2010 2009 2008 2007 2006 2005
Outstanding
contracts/Capital 23.66 11.40 2.14 19.75 43.72 159.03 101.86
commitments

6 a) Contingent Liabilities in respect of claims not acknowledged as debts are as follows

Rs. in Crore (10 Million)
As at As at March 31, As at June 30,
September
30,
2010 2010 2009 2008 2007 2006 2005
Excise duty liability in 8.12 2.72 3.01 3.00 3.00 5.76 5.78
respect of matters in appeal
Sales tax liability in respect 2.44 1.82 2.50 3.23 4.32 4.53 6.74
of matters in appeals
Foreign Exchange
Fluctuation Liability
(Pertaining to Pre-take - - - - 3.80 4.55 4.23
over period)
Forest Matters 5.73 5.88 5.88 5.88 5.77 3.92 3.07
Income Tax Matters 1.79 1.79 6.49 5.25 5.03 - -
Other Matters 3.34 4.32 3.17 6.71 6.62 5.88 5.74
TOTAL 21.42 16.53 21.05 24.07 28.54 24.64 25.56

b) In respect of certain disallowances and additions made by the Income Tax Authorities, appeals are
pending before the Appellate Authorities and adjustment, if any, will be made after the same are finally
determined.

c) In respect of levy of Octroi pertaining to Central Pulp Mills Unit by Songadh Group Gram Panchayat,
the Company has paid Rs.1.25 Crore till 31 st March 1997 under protest and also created a liability for
the similar amount. As the matter is still pending in the court of law, the necessary adjustment, if any,
would be made after its disposal.

7 The Company has only one business segment i.e. Paper and Boards and geographical reportable
segment i.e. Operations within India, hence Segment Reporting as defined in Accounting Standard (AS
– 17) is not required.

8 Land, Roads, Buildings and Pulp Mill Plant & Machinery of Unit - Central Pulp Mills were revalued as
on 30.09.1976. The revaluation in respect of these assets (other than Land and Roads) were updated
and Plant & Machinery of Paper Machine I & II and Railway Sidings were revalued as on 31.3.1994
based on current replacement cost by the approved valuers appointed for the purpose. As a result, the
book value of such assets has been increased by Rs. 42.27 Crore, which has been transferred to
Revaluation Reserve during the year ended 31.3.1994.

9 In accordance with AS 28 ―Impairment of Assets‖ which became mandatory for the company w.e.f.
01.07.2004, the company had carried the impairment test on that date. Considering the market
conditions & future plans of the company, certain plant & machinery and building on the basis of cash
generating units had been identified for impairment, as value in use (discount rate 7%)/net selling price
was lower than its carrying value. The impairment loss aggregating to the Rs. 6.49 Crore (net of
deferred taxes of Rs. 3.63 Crore) had been provided & adjusted against the opening balance in the
General Reserve account as per the transitional provision.

10 The Balances of certain Advances, Security Deposits, Creditors and Other liabilities are in the process
of confirmation/reconciliation

11 a) Details of Deferred Tax Liability/(Asset) pursuant to the Accounting Standard for ‗Taxes on
Income‘ (AS 22):

Rs. in Crore (10 Million)

As at As at March 31, As at June 30,
September

157
 30,
2010 2010 2009 2008 2007 2006 2005
(i) Tax on difference
between book value of
depreciable assets as per
books of account and
written down value as per
Income Tax. 136.60 * 143.79 147.89 129.35 118.43 105.57 101.26
(ii) Tax on Carried
forward unabsorbed -- -- (30.29) (27.78) (15.80) (28.12) (41.56)
depreciation
(iii) Tax on Others (10.63) (9.23) (8.01) (6.71) (6.72) (6.13) (7.06)
TOTAL 125.97 134.56 109.59 94.86 95.91 71.32 52.64
* after the effect of deferred tax liability of Rs. 4.53 Crore pursuant to the Scheme (refer note 16)

b) Based on the past performance and current plans, the Company expects to continue to generate
taxable income which will enable it to utilise MAT credit entitlement.

12. a) Defined Benefit Plans – As per Actuarial Valuation on Balance Sheet date:

158
 Rs. in Crore (10 Million)
Nature of Transactions April 2010 to September
2010 (6 Months) 2009-10 (12 Months) 2008-09 (12 Months) 2007-08 (9 Months)
Sr. No. Gratuity Long Term Gratuity Long Term Gratuity Long Term Gratuity Long Term
(Funded) Compensated (Funded) Compensated (Funded) Compensated (Funded) Compensated
Absences Absences Absences Absences
(Non Funded) (Non Funded) (Non Funded) (Non Funded)

I Expenses recognized in the Statement of Profit & Loss Account

1 Current Service Cost 0.78 0.49 1.42 0.86 1.33 0.79 0.81 0.37
2 Interest Cost 1.17 0.20 1.88 0.37 1.84 0.43 1.35 0.24
3 Expected return on plan assets (1.17) - (2.01) - (1.56) - (0.78) -
4 Actuarial (gains)/losses 0.84 (0.34) 3.52 0.09 1.50 (1.19) 0.55 0.47
5 Past Service Cost 0.14 - 0.17 - - - - -
6 Total expense 1.76 0.35 4.98 1.32 3.11 0.03 1.93 1.08
II Net Assets/(Liability) recognized in the Balance Sheet
1 Present Value of Defined Benefit
Obligation 31.17 4.84 29.81 4.81 24.09 4.22 23.06 5.08
2 Fair Value of plan assets 29.55 - 27.10 - 17.71 - 14.88 -
3 Funded status [Surplus/(Deficit)] (1.62) (4.84) (2.71) (4.81) (6.38) (4.22) (8.18) (5.08)
4 Net Assets/(Liability) recognized (1.62) (4.84) (2.71) (4.81) (6.38) (4.22) (8.18) (5.08)
III Change in obligation during the period
1 Present Value of Defined Benefit
Obligation at the beginning of the
period 29.81 4.81 24.09 4.22 23.06 5.08 22.43 4.00
2 Current Service Cost 0.78 0.49 1.42 0.86 1.33 0.79 0.81 0.37
3 Interest Cost 1.17 0.20 1.88 0.37 1.84 0.43 1.35 0.24
4 Actuarial (gains)/losses 0.81 (0.34) 4.79 0.09 0.81 (1.19) 0.61 0.47
5 Past Service Cost 0.14 -- 0.17 -- -- -- -- --
6 Benefits Paid (1.54) (0.32) (2.54) (0.73) (2.95) (0.89) (2.14) --
7 Present Value of Defined Benefit
Obligation at the end of the
period 31.17 4.84 29.81 4.81 24.09 4.22 23.06 5.08
IV Change in Assets during the period
1 Fair Value of plan assets at the
beginning of the period 27.11 - 17.71 - 14.88 - 12.17 -
2 Expected return on plan assets 1.17 - 2.01 - 1.56 - 0.78 -
3 Contribution by employer 2.85 - 8.65 - 4.91 - 4.01 -
4 Actual benefits paid (1.54) - (2.54) - (2.95) - (2.14) -
5 Actuarial gains/(losses) (0.03) - 1.27 - (0.69) - 0.06 -
6 Fair value of plan assets at the
end of the period 29.56 - 27.10 - 17.71 - 14.88 -
7 Actual return on plan assets 1.14 - 3.28 - 0.86 - 0.83 -
V The major categories of plan assets as % of total plan
Mutual Funds 79% - 94% - 100% - 100% -
VI Actuarial Assumptions:
1 Discount Rate 7.91% 7.91% 7.85% 7.85% 7.75% 7.75% 8.00% 8.00%
2 Expected rate of return on plan
assets 8.00% - 8.00% - 8.00% - 8.50% -
3 Mortality LIC (1994-96) duly LIC (1994-96) duly LIC (1994-96) duly modified LIC (1994-96) duly modified
4 Turnover rate Age upto 30-3%, upto 44-2%, Age upto 30-3%, upto 44-2%, Age upto 30-3%, upto 44-2%, Age upto 30-3%, upto 44-2%,
above 44-1% above 44-1% above 44-1% above 44-1%
5 Salary Escalation 6.25% 5.50% 5.50% 5.50%

Amount recognized as an expense and included in Staff Cost :

6 Months Year ended March 31, 9 Months

ended ended Year ended June 30,
September 30, March 31,
2010 2010 2009 2008 2007 2006 2005
Gratuity 1.76 4.98 3.11 1.93 2.19 4.18 4.17
Long Term 0.35 1.32 0.03 1.08 1.72 0.31 0.80
Compensated
Absences

Notes:
i. The expected return on plan assets is determined considering several applicable factors mainly
the composition of the plan assets held, assessed risk of assets management, historical results on
plan assets and the policy for plan assets management.

ii. The estimates of future salary increase, considered in actuarial valuation, take account of
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 inflation, seniority, promotion and other relevant factors, such as supply and demand in the
employment market.

iii. The disclosure in respect of status of defined benefits obligation have been given for the 6
months ended September 30, 2010 and the previous 3 years/periods since the Company has
adopted Accounting Standard – 15 ―Employee Benefits‖ (Revised 2005) with effect from July
1, 2007.

iv. In the Financial Year 2008 Company had made provision for the employee benefits in
accordance with the Accounting Standard-15 (revised 2005) ―Employee Benefits‖ which
became applicable to the Company w.e.f. 1st July 2007 and accordingly Rs. 0.28 Crore (net of
tax expense of Rs. 0.14 Crore) had been adjusted against opening balance of General Reserve

b) Defined Contribution Plans

Amount recognized as an expense in Profit & Loss Account:

6 Months Year ended March 31, 9 Months

ended ended Year ended June 30,
September March 31,
30,
2010 2010 2009 2008 2007 2006 2005
Contribution to 3.31 6.51 5.84 4.17 5.18 4.75 4.53
Provident & Other
Funds

Pending the issuance of Guidance Note from the Institute of Actuaries of India, the Company‘s
actuary has expressed his inability to reliably measure the provident fund liability.

13. Disclosure as required under ‗Related Party Disclosures‘ (AS 18) issued by The Institute of Chartered
Accountants of India are as below:
a) List of Related Parties
i. Subsidiaries
- Songadh Infrastructure & Housing Ltd (Wholly Owned Subsidiaries w.e.f 30 th April 2009)
- Jaykaypur Infrastructure & Housing Ltd (Wholly Owned Subsidiaries w.e.f 30 th April 2009)
ii. Associate
- JK Enviro-tech Limited (w.e.f. 19th December 2007)
- JK Tyre & Industries Limited (ceased to be Associate w.e.f. 18 th April 2007)
- JK Lakshmi Cement Limited (ceased to be Associate w.e.f. 18 th April 2007)
iii. Key Management Personnel (KMP)
- Shri Hari Shankar Singhania - Chairman
- Shri Harsh Pati Singhania - Managing Director
- Shri Om Prakash Goyal - Whole-time Director
iv Enterprise over which KMP‘s have significant influence
- Habras International Limited

b) The following transactions were carried out with related parties in the ordinary course of business:

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 Rs. in Crores (10 Million)
6 Months
ended Year ended Year ended 9 Months Year ended Year ended Year ended
September March 31, March 31, ended March June 30, June 30, June 30,
Particulars 30, 2010 2010 2009 31, 2008 2007 2006 2005
(i) Purchase of Goods
JK Enviro-tech Ltd. 14.59 20.26 0.40 - - - -
JK Lakshmi Cement Limited - - - - 2.43 0.96 0.22

(ii) Sale of Goods

JK Enviro-tech Ltd. 0.70 0.42 - - - - -
JK Lakshmi Cement Limited - - - - 0.09 0.17 0.02
Habras International Limited 0.75 - - - - - -

(iii) Reimbursement of Expenses – Received

JK Enviro-tech Ltd. 1.41 0.42 1.97 - - - -
JK Tyre & Industries Limited - - - - 0.35 0.51 0.31
JK Lakshmi Cement Limited - - - - 1.15 1.22 1.24

(iv) Reimbursement of Expenses – Paid

JK Enviro-tech Ltd. 2.82 4.04 - - - - -
JK Tyre & Industries Limited - - - - 1.00 0.45 0.35
JK Lakshmi Cement Limited - - - - 0.96 0.65 0.67
Songadh Infrastructure & Housing Ltd 1.47
Jaykaypur Infrastructure & Housing Ltd 2.62

(v) Interest received

JK Enviro-tech Ltd. 1.30 2.18 2.49 - - - -
Key Management Personnel - - - - - # $
(# Rs. 2000/-, $ Rs. 6000/-)
(vi) Commission Paid
Habras International Limited 0.02 0.16 - - - - -

(vii) Sale of Fixed Assets

JK Enviro-tech Ltd. - 1.98 52.61 - - - -
JK Lakshmi Cement Limited - - - - 0.08 - @
(@ Rs. 26000/-)
(viii) Equity Contribution
Songadh Infrastructure & Housing Ltd - 0.05 - - - - -
Jaykaypur Infrastructure & Housing Ltd - 0.05 - - - - -
JK Enviro-tech Ltd. - - - 1.70 - - -

(ix) Loans given

JK Enviro-tech Ltd. 1.29 7.43 21.04 - - - -

(x) Loans installment received

JK Enviro-tech Ltd. 0.92 - - - - - -

(xi) Advance received for Capital Equipments

JK Enviro-tech Ltd. - - - 3.00 - - -

(xii) Managerial Remuneration

Key Management Personnel (KMP) 7.09 11.92 5.83 3.34 6.56 4.96 4.06

(xiii) Outstanding at end of the year/period

Receivable / (Payable)
JK Enviro-tech Ltd. 31.50 30.51 21.46 (3.00) - - -
JK Tyre & Industries Limited - - - - - 0.09 0.05
JK Lakshmi Cement Limited - - - - 0.23 0.10 -
Habras International Limited 0.14 (0.16) - - - - -
Songadh Infrastructure & Housing Ltd 0.18
Jaykaypur Infrastructure & Housing Ltd 0.52
Key Management Personnel (KMP) - - - - - - 0.01

Pursuant to the Scheme of Arrangement sanctioned by the Hon‘ble High Courts of Gujarat &
Orissa under section 391 to 394 of the Companies Act 1956 which has become effective on 20 th
January 2011, CPM Staff Housing Undertaking and JKPM Staff Housing Undertaking of the
Company have been transferred and vested to Songadh Infrastructure & Housing Limited (SIHL)
and Jaykaypur Infrastructure & Housing Limited (JIHL) respectively on a going concern basis
w.e.f. 1st April 2009.

14. Based on information so far available with the company in respect of MSME (as defined in ‗The Micro
Small & Medium Enterprises Developments Act 2006‘) there is no delay in payment of dues to such
enterprises and there is no such dues payable at the end of the year/period.

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15. The Company has entered into a Take or Pay agreement for the purpose of sourcing lime from JK
Enviro-tech Ltd. The Company has given an undertaking that on the happening of certain events, it will
takeover Loan taken by JK Enviro-tech Ltd. from IDFC Ltd. of the value of Rs. 40 Crore
16. Pursuant to the Scheme of Arrangement sanctioned by the Hon‘ble High Courts of Gujarat & Orissa
under section 391 to 394 of the Companies Act 1956 which has become effective on 20th Jan 2011,
CPM Staff Housing Undertaking and JKPM Staff Housing Undertaking of the Company have been
transferred and vested to Songadh Infrastructure & Housing Limited (SIHL) and Jaykaypur
Infrastructure & Housing Limited (JIHL) respectively on a going concern basis w.e.f. 1st April 2009,
as a result:
(i) The effect of the above has been considered in 6 months restated financial information as shown
below:
Rs in Cr. (10 million)
Sr. No. Particulars
A Assets as reduced by transfer and vesting of above two undertaking 22.05
B Settled as follows:
SIHL
- 49,00,000 Fully paid up Equity Share of Rs. 10/- each 4.90
- 86,73,142 Nos. Fully paid up 0% Redeemable Debenture of Rs.10/- each 8.67
JIHL
- 49,00,000 Fully paid up Equity Share of Rs. 10/- each 4.90
- 3,34,97,896 Nos. Fully paid up 0% Redeemable Debenture of Rs.10/- each 33.50
C Capital Reserve 29.92

(ii) The Deferred Tax Liability of Rs. 4.53 Crore has been adjusted against the general reserve.

(iii) The Company carried on the business of above two Housing Undertaking w.e.f. 1st April 2009 for
and on behalf of SIHL and JIHL.

(iv) The necessary steps and formalities in respect of issue of redeemable debentures, issue and
allotment of shares as stated above and transfer of assets are under implementation.

(v) Based upon the agreement, the Company has reimbursed all the expenses incurred, during 1st
April, 2009 to 30th Sep, 2010 by the SIHL and JIHL and the same has been included in
respective heads of accounts.

17. During the year ended 30th June 2006, Company raised Rs 99.97 Crore by issue of Equity Shares on
preferential basis, Rs. 53.13 Crore by issue of Equity Shares in the form of GDRs and Rs. 22.35 Crore
by issue of FCCBs aggregating to Rs. 175.45 Crore.

18. The company had issued FCCB's in the financial year 2005-06 with an option to convert into equity
shares at an initial conversion price of Rs. 95 per equity share between April 4, 2006 to March 17, 2011
or redemption at 130.441 percent of the principal amount on March 30, 2011. The company has a
policy to account for the premium on redemption, if any, in the year of redemption. Since as on 30 th
September 2010, it is likely that the FCCB's will be fully redeemed, the proportionate 50 percent of
premium payable on redemption amounting to Rs 3.82 crore has been provided in Interest and finance
charges in the 6 months ended September 30, 2010.
19. In the Year ended 31st March 2008 Other Current Assets includes Lime Kiln assets of Rs. 41.70 Crore
held for sale to JK Enviro-tech Ltd.

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FINANCIAL INFORMATION FROM RESTATED CONSOLIDATED FINANCIAL STATEMENTS

170
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 Annexure - E

Notes to the Summary Statement of Assets and Liabilities - Restated and Summary Statement of Profit &
Loss -Restated for the six month ended September 30, 2010 and the year ended March 31, 2010.

1 Principles of Consolidation:
a) The Consolidated Financial Statements comprise of the financial statements of JK Paper Limited
(Parent Company) and the followings as on 30 th September, 2010 and 31st March, 2010;

Proportion of Ownership Financial Statements as on Status

interest held as at
Name Country of 30th September, 31st March, For the 6 For the Year
Incorporat 2010 2010 months ended
ion ended March 31,
September 2010
30, 2010
a)
Subsidiaries
Jaykaypur India 100% 100% 30th Sep., 29th March, Audited
Infrastructure 2010 2010
& Housing
Limited
Songadh India 100% 100% 30th Sep., 31st March, Audited
Infrastructure 2010 2010
& Housing
Limited

b) Associates
JK Enviro- India 34.34% 34.34% 30th Sep., 31st March, Audited
tech Limited 2010 2010

b) The Financial Statements of the Parent Company and its Subsidiaries have been consolidated on a
line by line basis by adding together the book value of like items of assets, liabilities, income and
expenses, after eliminating intra-group balances and intra-group transactions.

c) In case of Associate, where Company holds directly or indirectly 20% or more equity or/ and
exercises significant influence, Investments are accounted for by using Equity Method in
accordance with Accounting Standard (AS-23) – ―Accounting for Investments in Associate in
Consolidated Financial Statements‖.

d) The Accounting Policies of the Parent Company, its Subsidiaries and Associate are largely similar,
hence not be re-produced.

2 Material amounts relating to adjustments for previous years have been identified and adjusted in
arriving at the profits of the years to which they relate irrespective of the year in which the event
triggering the profit or loss occurred.
3 Estimated amount of contracts remaining to be executed on capital account (Net of Advances) - Rs.
23.66 Crore as on 30th September 2010 and Rs. 11.40 Crore as on 31 st March 2010.

4 a) Contingent liabilities in respect of claims not acknowledged as debts are as follows:

Rs. in Crores (10 Million)

30th Sep.,2010 31stMarch,2010
a) Excise duty liability in respect of matters in appeal 8.12 2.72
b) Sales tax liability in respect of matters in appeals 2.44 1.82
c) Forest Matters 5.73 5.88
d) Income Tax Matters 1.79 1.79
e) Other Matters 3.34 4.32
Total 21.42 16.53

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 b) In respect of certain disallowances and additions made by the Income Tax Authorities, appeals are
pending before the Appellate Authorities and adjustment, if any, will be made after the same are
finally determined.
c) The Company has entered into a Take or Pay agreement for the purpose of sourcing lime from JK
Enviro-tech Ltd. The Company has given an undertaking that on the happening of certain events, it
will takeover Loan taken by JK Enviro-tech Ltd. from IDFC Ltd. of the value of Rs. 40 Crore

5 The Company has identified business segment as the primary segment after considering all the relevant
factors. The Company's manufactured products are sold primarily within India and as such there is no
reportable geographical segment. During the last year ended 31st March, 2010 the Company has one
Business segment, namely Paper & boards.

The Company's operation predominantly relates to manufacture of Paper & Boards. Other Business
Segment comprise activities providing housing facilities to the employees engaged in Paper & Boards
Manufacturing Business of JK Paper Ltd., whose operations are insignificant in the context of total
turnover, hence same has been shown as "others" which comprise the information from 1st April 2009
to 30th Sep 2010 . (Also refer note 10 of Annexure E)

Rs. in Crores (10 Million)

Primary Segments - Business 6 Months ended September 30, 2010
Paper & Boards Others Total
A REVENUE
Net Sales 613.16 - 613.16
Other Income 2.31 - 2.31
Total Revenue 615.47 - 615.47

B RESULTS
Segment Results (PBIT) 103.02 (0.54) 102.48
Interest & Financial Charges 22.67 - 22.67
Income Tax 22.16 - 22.16
Net Profit 58.19 (0.54) 57.65

C OTHER INFORMATION
Segment Assets 1,295.44 52.23 1,347.67
Segment Liabilities 683.77 0.73 684.50
Capital Expenditure 21.99 - 21.99
Depreciation 35.63 0.45 36.08
Non-cash expense other than depreciation 2.58 - 2.58

6 Land, Roads, Buildings and Pulp Mill Plant & Machinery of Unit - Central Pulp Mills were revalued as
on 30.09.1976. The revaluation in respect of these assets (other than Land and Roads) were updated
and Plant & Machinery of Paper Machine I & II and Railway Sidings were revalued as on 31.3.1994
based on current replacement cost by the approved valuers appointed for the purpose. As a result, the
book value of such assets has been increased by Rs. 42.27 Crore, which has been transferred to
Revaluation Reserve during the year ended 31.3.1994.

7 In accordance with AS 28 ―Impairment of Assets‖ which became mandatory for the company w.e.f.
01.07.2004, the company had carried the impairment test on that date. Considering the market
conditions & future plans of the company, certain plant & machinery and building on the basis of cash
generating units had been identified for impairment, as value in use (discount rate 7%)/net selling price
was lower than its carrying value. The impairment loss aggregating to the Rs. 6.49 Crore (net of
deferred taxes of Rs. 3.63 Crore) had been provided & adjusted against the opening balance in the
General Reserve account as per the transitional provision.

8 a) Details of Deferred Tax Liability/(Asset) pursuant to the Accounting Standard for ‗Taxes on Income‘
(AS 22):
Rs. in Crore (10 million)
30th Sep. 2010 31stMarch 2010

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 30th Sep. 2010 31stMarch 2010
i). Tax on difference between book value of depreciable assets as per books 136.60* 143.79
of account and written down value as per Income Tax.

ii). Tax on Others (10.63) (9.23)

Total 125.97 134.56

* after the effect of deferred tax liability of Rs. 4.53 Crore pursuant to the Scheme (refer note 10)
b) Based on the past performance and current plans, the Parent Company expects to continue to generate
taxable income which will enable it to utilise MAT credit entitlement.

9 Disclosure as required under ‗Related Party Disclosures‘ (AS 18) issued by The Institute of Chartered
Accountants of India are as below:

c) List of Related Parties

iii. Associate
- JK Enviro-tech Limited
ii. Key Management Personnel (KMP)
- Shri Hari Shankar Singhania - Chairman
- Shri Harsh Pati Singhania - Managing Director
- Shri Om Prakash Goyal - Whole-time Director

iii. Enterprise over which KMP‘s have significant influence

Habras International Limited

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 Annexure – E Cont.
d) The following transactions were carried out with related parties in the ordinary course of business:
Rs. in Crores (10 Million)
6 Months
ended Year ended
Sptember 30, March 31,
Particulars 2010 2010
(i) Purchase of Goods
JK Enviro-tech Ltd. 14.59 20.26

(ii) Sale of Goods

JK Enviro-tech Ltd. 0.70 0.42
Habras International Limited 0.75 -

(iii) Sharing of Expenses – Received

JK Enviro-tech Ltd. 1.41 0.42

(iv) Reimbursement of Expenses – Paid

JK Enviro-tech Ltd. 2.82 4.04

(v) Interest received

JK Enviro-tech Ltd. 1.30 2.18

(vi) Commission Paid

Habras International Limited 0.02 0.16

(vii) Sale of Fixed Assets

JK Enviro-tech Ltd. - 1.98

(viii) Loans given

JK Enviro-tech Ltd. 1.29 7.43

(ix) Loans installment received

JK Enviro-tech Ltd. 0.92 -

(x) Managerial Remuneration

Key Management Personnel (KMP) 7.09 11.92

(xi) Outstanding at end of the year/period

Receivable / (Payable)
JK Enviro-tech Ltd. 31.50 30.51
Habras International Limited 0.14 (0.16)

10 Pursuant to the Scheme of Arrangement sanctioned by the Hon‘ble High Courts of Gujarat & Orissa
under section 391 to 394 of the Companies Act 1956 which has become effective on 20th Jan 2011,
CPM Staff Housing Undertaking and JKPM Staff Housing Undertaking of the Company have been
transferred and vested to Songadh Infrastructure & Housing Limited (SIHL) and Jaykaypur
Infrastructure & Housing Limited (JIHL) respectively on a going concern basis w.e.f. 1st April 2009,
as a result:

(i) The effect of the above has been considered in 6 months restated consolidated financial
information as shown below:
Rs in Cr. (10 million)
Sr. No. Particulars
A Assets as increased by transfer and vesting of above two undertakings from JK 29.92

180
 Paper Ltd. to SIHL and JIHL
B Capital Reserve 29.92

(ii) The Deferred Tax Liability of Rs. 4.53 Crore has been adjusted against the general reserve.

(iii) The Company carried on the business of above two Housing Undertakings w.e.f. 1st April 2009
for and on behalf of SIHL and JIHL.

(iv) The necessary steps and formalities in respect of issue of redeemable debentures, issue and
allotment of shares as stated above and transfer of assets are under implementation.

11 The company had issued FCCB's in the financial year 2005-06 with an option to convert into equity
shares at an initial conversion price of Rs. 95 per equity share between April 4, 2006 to March 17, 2011
or redemption at 130.441 percent of the principal amount on March 30, 2011. The company has a
policy to account for the premium on redemption, if any, in the year of redemption. Since as on 30 th
September 2010, it is likely that the FCCB's will be fully redeemed, the proportionate 50 percent of
premium payable on redemption amounting to Rs 3.82 crore has been provided in Interest and finance
charges in the 6 months ended September 30, 2010.

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MANAGEMENT‟S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

You should read the following discussion of our Company‟s financial condition and results of operations
together with the restated consolidated and standalone financial statements which appear in this Draft Letter of
Offer. Unless otherwise stated, the financial information used in this section is derived from our audited
restated consolidated financial statements for Fiscal 2010, Fiscal 2009, Fiscal 2008, Fiscal 2007, Fiscal 2006
and the six month period ended September 30, 2010. Our audited restated standalone and consolidated
financial statements have been derived from our audited standalone and consolidated financial statements,
respectively. Our fiscal year ends on March 31 of each year. Accordingly, unless otherwise stated, all
references to a particular fiscal year are to the twelve-month period ended March 31 of that year. However,
until June 30, 2007, our Company had a fiscal year ending June 30. Effective July 1, 2007, our Company‟s
fiscal year ends on March 31 of that year. Therefore, the Company‟s standalone financial statements for Fiscal
2008 and the discussion of this period in this section refers to the nine month period ended March 31, 2008 and
is not directly comparable to our results of operations for Fiscal 2009, Fiscal 2010 or prior fiscal years.

Prior to April 30, 2009, our Company did not have any Subsidiaries. Therefore, the Company has only
standalone financial statements as of and for the fiscal year ended March 31, 2009 and as of and for the nine
month period ended March 31, 2008.

Our financial statements have been prepared in accordance with Indian GAAP and standards issued by the
Institute of Chartered Accountants of India and restated in accordance with the SEBI ICDR Regulations.

Some of the statements in the following discussion are forward-looking statements. See “Forward-Looking
Statements” on page viii. Our actual results could differ materially from those anticipated in these forward-
looking statements as a result of certain factors and contingencies that could impact our financial condition,
results of operations and cash flows, including those set forth under “Risk Factors” on page ix and elsewhere
in this Draft Letter of Offer and those set forth below.

Overview

We are the largest producer of branded paper in terms of production and a leading player in the ‗fine papers‘ and
‗virgin packaging board‘ segments, in terms of market share, in India. We are a market leader in the branded
copier paper segment in India where we had a market share of approximately 28.8% (Source: CRISIL Research
Paper Annual Review, November 2010). We manufacture and sell a diverse and multi-application range of
papers, specialty papers, allied stationery and virgin packaging board products and are focused in the production
and marketing of high-end paper and virgin packaging board products. As on September 30, 2010, our
distribution network of paper and virgin packaging board products comprises of four regional offices, six
warehouses, 134 wholesalers and various dealers, enabling us to have a pan-India presence. Additionally, we
export our paper and virgin packaging board to over 40 countries including in Brazil, UK, Turkey, Middle East,
Sri Lanka, Bangladesh, Singapore, Malaysia and several African nations. We are a part of the JK Group, one of
the leading business brands in India, with a significant presence in automotive tyres and tubes, cement, power
transmission including V-belts, oil seals, hybrid agricultural seeds, system engineering, sugar, dairy products,
textiles, health care, clinical research and the paper and pulp brand segments, among others, with presence in
India as well as several other countries.

We operate two integrated manufacturing facilities, the JK Paper Mills Unit at Rayagada, Odisha (―Unit
JKPM‖) and the Central Pulp Mills Unit at Songadh, Gujarat (―Unit CPM‖), for the production of paper and
virgin packaging boards, with a combined manufacturing capacity of 240,000 TPA. Our Unit JKPM presently
has an installed capacity of 125,000 TPA for manufacturing paper and saleable pulp. In addition, our blade
coating facility was commissioned at the Unit JKPM in July 2005 to produce quality coated paper, enabling us
to move up the value chain and capitalize on the growing market of coating paper. The capacity of the coating
plant at the Unit JKPM is 46,000 TPA. We are the second largest producer of coated paper in India. (Source:
IPMA Report, March 2010) Further, we commissioned a pulp drying plant at our Unit JKPM, in 2001 to
increase the output and realization of market pulp. Our Unit CPM presently has an installed capacity of 55,000
TPA for manufacturing paper and saleable pulp. Additionally, we have set up a packaging board plant at our
Unit CPM, which was commissioned in October 2007, with an installed capacity of 60,000 TPA, which is
equipped with contemporary technology sourced from global leaders in the paper board machinery sector.

We were incorporated as ‗The Central Pulp Mills Limited‘ in 1960, as a pulp manufacturing facility, at

189
Songadh, in Gujarat, and started paper production in 1975. We were subsequently referred to the BIFR in 1988
due to accumulated losses. We were declared a sick industrial company in terms of the Sick Industrial
Companies (Special Provisions) Act, 1985 in 1989. The JK Group, as part of its strategy to strengthen its
position in the paper manufacturing market, acquired our Company in 1992, pursuant to a rehabilitation scheme
sanctioned by the BIFR. In 2000, as part of a restructuring exercise undertaken by JK Lakshmi Cement Limited,
the Unit JKPM, which was operating as a division of JK Lakshmi Cement Limited for its paper manufacturing
business, was consolidated with our Company, which was subsequently renamed as ‗JK Paper Limited‘.

Our Company and our manufacturing units have received numerous awards and recognitions, such as, the ‗Good
Corporate Citizen Award-2006‘ by PHD Chambers of Commerce & Industry, ‗Certificate of Appreciation for
Excellence in Energy Management – 2008‘ by Bureau of Energy, GoI, for our Unit JKPM, the ‗Paper Mill of
the Year‘ award from Indian Paper Manufacturers Association, for our Unit CPM in 2004 and the ‗Greentech
Environment Excellence Award 2010 - Winner of Gold Award in Paper Sector‘ to our Unit CPM, among others.
Further, we were awarded the ‗TPM Excellence First Category Award‘ for the year 2006 by the Japan Institute
of Plant Maintenance for both our manufacturing units.

We have been conscious in addressing environmental and safety concerns and have regularly introduced cleaner
and environment-friendly technologies in our manufacturing units. Both our manufacturing units are ISO 9001 –
2008 compliant, operating at over 100% capacity utilization and are equipped with all of the requisite facilities
for end-to-end environmentally compliant operations ranging from production of pulp to finishing and
packaging of our paper, virgin packaging board and stationery products. Our Unit JKPM has been adjudged as
the ‗First Greenest Paper Mill‘ in 1999 and ‗Second Greenest Paper Mill‘ in 2004 by Centre for Science &
Environment (CSE) Additionally, both our manufacturing units are ISO 14001 certified for their eco-friendly
operations and OHSAS 18001:2007 certified for occupational health and safety management system standards.

Our Equity Shares re-admitted for trading on the BSE in 1992. Our Equity Shares were listed on the VSE and
the NSE in 1995 and 2005 respectively. However, our Equity Shares were delisted from the VSE in 2007.

For the six month period ending September 30, 2010 and Fiscal 2010, based on our restated consolidated
financial statements, our net sales were ` 613.16 crores and ` 1,122.34 crores, respectively, and our adjusted
profit after tax was ` 57.75 crores and ` 91.98 crores, respectively, and for the Fiscal 2009, based on our
restated standalone financial statements, our net sales were ` 1,092.85 crores and our adjusted profit after tax
was ` 37.46 crores.

Note regarding presentation

Our consolidated financial statements comprise the financial statements of our Subsidiaries and our associate,
JK Enviro-tech Limited, in which we hold 34.34% equity interest. The financial statements for both our
Subsidiaries were made for 15 months ending March 31, 2010. Prior to April 30, 2009, our Company did not
have any Subsidiaries. Therefore the Company only has standalone financial statements for the nine month
period ended March 31, 2008 and Fiscal 2009. The financial statements of our Company and our Subsidiaries
have been consolidated on a line by line basis for Fiscal 2010 and the six month period ended September 30,
2010. However, in case of our associate, as we hold more than 20% of the equity capital of JK Enviro-tech
Limited, investments are accounted for by using the equity method in accordance with Accounting Standard 23
– ―Accounting for Investments in Associate in Consolidated Financial Statements‖.

The High Court of Orissa and the High Court of Gujarat, in terms of their orders dated October 1, 2010 and
December 24, 2010, respectively, sanctioned a scheme of arrangement between the Company, SIHL, JIHL and
their shareholders, pursuant to which (i) housing business which is carried on by the Company and including all
assets, rights, liabilities and obligations (whether movable or immovable, tangible or intangible) located in the
state of Gujarat of whatsoever nature of the staff housing undertaking as on April 1, 2009, (―CPM Staff
Housing Undertaking‖) were to be transferred to Songadh Infrastructure & Housing Limited; and (ii) housing
business which is carried on by the Company and including all assets, rights, liabilities and obligations (whether
movable or immovable, tangible or intangible) located in the state of Odisha of whatsoever nature of the staff
housing undertaking as on April 1, 2009, (―JKPM Staff Housing Undertaking‖) were to be transferred to
Jaykaypur Infrastructure & Housing Limited (―Scheme of Arrangement‖). Songadh Infrastructure & Housing
Limited and Jaykaypur Infrastructure & Housing Limited are wholly owned subsidiaries of our Company

The Scheme of Arrangement became effective on January 20, 2011, and is operative from April 1, 2009.
Accordingly, upon the Scheme of Arrangement becoming effective, the CPM Staff Housing Undertaking stood

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transferred to Songadh Infrastructure & Housing Limited, and the JKPM Staff Housing Undertaking stood
transferred to Jaykaypur Infrastructure & Housing Limited, both with effect from April 1, 2009.

As a consideration, Songadh Infrastructure & Housing Limited shall issue 49,00,000 equity shares and
86,73,142, 0% redeemable debentures of ` 10 each, aggregating to ` 13.57 crore, to our Company and
Jaykaypur Infrastructure & Housing Limited shall issue 49,00,000 equity shares and 3,34,97,896, 0%
redeemable debentures of ` 10 each, aggregating to ` 38.40 crores, to our Company.

The financial statements included in this Draft Letter of Offer give effect to the Scheme of Arrangement. The
effect of the Scheme of Arrangement has been considered in the restated consolidated financial information for
the six month period ended September 30, 2010, as shown below:

(In ` crores)
S. No. Particulars
1. Assets as increased by transfer and vesting of the two undertakings from the Company to its 29.92
respective Subsidiaries
2. Capital Reserve 29.92

(i) The deferred tax liability of ` 4.53 crores has been adjusted against the general reserve.

(ii) The Company carried on the business of the two housing undertakings with effect from April 1, 2009
for and on behalf of its respective Subsidiaries.

(iii) The necessary steps and formalities in respect of issue of redeemable debentures, issue and allotment of
shares as stated above and transfer of assets are under implementation.

For details of the Scheme of Arrangement, see ―History and Certain Corporate Matters‖ on page 87.

Factors Affecting our Results of Operations

We are a company engaged in the paper and packaging board manufacturing business produced at our two
manufacturing units, i.e., the Unit CPM and the Unit JKPM. Our results of operations have been, and will
continue to be, affected by a number of events and actions, some of which are beyond our control including the
performance of the Indian economy and the paper and packaging board industries and the price of raw materials.
However, there are some specific items that we believe have impacted our results of operations, and in some
cases, may continue to impact our results of operations on a consolidated level and at our individual projects in
future. In this section, we discus some of the significant factors that we believe have or could have an impact on
our revenue and expenditure. Please also see the section titled ―Risk Factors‖ on page ix.

Cost and availability of raw materials

The availability, cost and quality of certain raw materials such as hardwood, bamboo and imported pulp are key
to our results of operations. Our cost of raw material consumed comprised 26.33% of our total income in the six
month period ended September 30, 2010, 25.73% of our total income in Fiscal 2010, 25.47% of our total income
in Fiscal 2009 and 23.93% in the nine month period ended March 31, 2008. We procure approximately 20-25%
of our bamboo / pulp wood from forest land allotted to us by the relevant state government through long term
agreements spanning a year on a fixed price basis. However, such supply by the relevant state government is
subject to numerous conditions including achieving certain production targets and lifting the bamboo/wood
within the periods specified. We have no formal commitments for the supply of our remaining bamboo/pulp
requirements and procure such requirement from local farmers and the open market. Hardwood required for our
Unit JKPM is procured primarily from the states of Andhra Pradesh, West Bengal and Odisha, wherein the Unit
JKPM uses the services of various local suppliers to procure bulk of the requisite quantities and a small portion
is procured by us directly through its depots to develop a better understanding of the hardwood market.
Hardwood required for our Unit CPM is being procured from farmers / suppliers primarily from the state of
Andhra Pradesh in addition to some quantity which is procured from the states of Gujarat and Maharashtra in
the surrounding areas of our manufacturing unit in order to minimize the transportation cost. Pulps of different
varieties are imported from countries such as Indonesia, Sweden, Finland and USA, for manufacturing high
strength packaging board. The cost and supply of these raw materials depend on factors which are not under our
control including, availability of such raw materials, competition, productivity, transportation costs, foreign
exchange fluctuations, and import duties.

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Competition

We compete in different markets and competitors within the paper and packaging board industry on the basis of
the quality of our products, customer service, product development activities, price, and distribution. In
particular, in the coated paper segment, our primary competitor is Ballarpur Industries Limited. In writing and
printing paper segment, our primary competitors are Ballarpur Industries Limited, TNPL, AP Paper Mills, and
West Coast Paper Mills, among others. In packaging board segment, ITC Limited is our major competitor.
Further, we face competition from countries such as China, Korea, Indonesia from where lower price coated
paper is imported into India. Additionally, the competition in paper industry ranges from large, well-established
players to small units in the unorganized segment. Small, unorganized players mainly compete in the low value
added segments like creamwove and kraft paper whereas the high value added segments like copier paper,
coated paper and high bright maplitho and packaging board are mainly controlled by the larger players.

The sustained demand for our products, our ability to remain competitive in the markets we operate in, and our
ability to expand and meet the market demand may have a material impact on our business, operations and
financial condition.

Other manufacturing expenses

Other manufacturing expenses comprise consumption of industrial chemicals, packing material, machine
clothing, stores and spares (net of scrap sales). Industrial chemicals comprise lime, caustic soda, chlorine
dioxide, hydrogen peroxide, sodium sulphite powder, starch and other chemicals used in the manufacture of
coated paper and packaging board, required as raw materials for our manufacturing process. Stores and spares
comprise spare parts, replacements which are required for the continued operation and maintenance of the
machinery at our manufacturing units. In Fiscal 2010 and the six months ended September 30, 2010, as a
percentage of our total income our consumption of stores, spares and chemicals constituted 20.77% and 21.45%,
respectively. The availability, quality and price of these constituents are key to our results of operations.

Availability, quality and price of fuel supply

We own and operate thermal captive power plants at each of our Unit JKPM and the Unit CPM for the
generation of power to meet the demands of each of our manufacturing units. In view of the electricity tariffs,
our ability to source quality coal at reasonable prices is critical to our business operations. We source our coal
primarily through our long term coal supply agreements with Mahanadi Coalfields Limited and Western
Coalfields Limited for our Unit JKPM and Unit CPM, respectively. For a summary of the key terms of these
agreements, see ―History and Certain Corporate Matters‖ on page 87. Further, in Fiscal 2010, we purchased
approximately 28.43% and 60.10% of our coal requirements for our Unit JKPM and Unit CPM, respectively,
from the open market.

Coal prices have fluctuated dramatically in the past and may continue to fluctuate in the future. Any inability to
source our coal requirements at a competitive cost and timely manner would have a significant impact on our
business, operations and financial condition. There can be no assurance that we will be able to obtain coal
supplies both in sufficient quantities, acceptable quality and on commercially acceptable terms for our power
plants.

Compliance with environmental laws and regulations

We are subject to central and state environmental laws and regulations, which govern the discharge, emission,
storage, handling and disposal of a variety of substances that may be used in or result from its operations. In
case of any change in environmental or pollution laws and regulations, we may be required to incur significant
amounts on, among other things, environmental monitoring, pollution control equipments and emissions
management. In addition, failure to comply with environmental laws may result in the assessment of penalties
and fines against us by regulatory authorities.

Macroeconomic conditions

Our results of operations may be materially affected by conditions in the global capital markets and the
economy generally in India and elsewhere around the world. As widely reported, financial markets in the United
States, Europe and Asia, including India, experienced extreme disruption recently, including, among other

192
things, extreme volatility in security prices, severely diminished liquidity and credit availability, rating
downgrades of certain investments and declining valuation of others. Performance of global paper and
packaging board industry is dependent, among other things, on economic growth and in particular on industrial
growth.

Critical Accounting Policies

Our financial statements have been prepared on accrual basis in compliance with the accounting standards
issued by the ICAI, in accordance with the Indian GAAP and the provisions of the Companies Act. The
preparation of financial statements in conformity with the Indian GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities
on the date of financial statements and reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.

The critical accounting policies that are relevant and specific to our business and operations are described
below:

1. Accounts are maintained on accrual basis. Claims/refunds not ascertainable with reasonable certainty
are accounted for on settlement basis.

2. Fixed Assets are stated at cost adjusted by revaluation of certain assets.

3. Expenditure during construction/erection period is included under capital work-in-progress and

allocated to the respective fixed assets on completion of construction/ erection.

4. (a) Foreign currency transactions are recorded at exchange rates prevailing on the date of
transaction. Monetary assets and liabilities in foreign currencies as at the balance sheet date
are translated at exchange rate prevailing at the year end. Premium or discount in respect of
forward contracts covered under AS 11 (revised 2003) is recognized over the life of contract.
Exchange differences arising on actual payments / realizations and year end translations
including on forward contracts are dealt with in profit and loss account except foreign
exchange loss/gain on reporting of long-term foreign currency monetary items used for
depreciable assets, which are capitalized. Non monetary foreign currency items are stated at
cost.

(b) In accordance with Announcement issued by the Institute of Chartered Accountants of India
all outstanding derivatives except covered under AS 11 (revised 2003) are mark to market on
balance sheet date and loss, if any, is recognized in profit & loss account and gain being
ignored.

5. Long term investments are stated at cost. Provision for diminution in the value of long term
investments is made only if such a decline is other than temporary in the opinion of the management.
The current investments are stated at lower of cost and quoted / fair value computed category-wise.
When investment is made in partly convertible debentures with a view to retain only the convertible
portion of the debentures, the excess of the face value of the non-convertible portion over the
realisation on sale of such portion is treated as a part of the cost of acquisition of the convertible
portion of the debenture. Income in respect of securities with long-term maturities is accounted for as
per contractual obligation.

6. Inventories are valued at the lower of cost and net realisable value (except scrap/ waste which are
valued at net realisable value). The cost is computed on weighted average basis. Finished goods and
process stock include cost of conversion and other costs incurred in bringing the inventories to their
present location and condition.

7. Export incentives, duty drawbacks and other benefits are recognized in the profit and loss account.
Project subsidy is credited to capital reserve.

8. Revenue expenditure on research and development is charged to profit and loss account in the year in
which it is incurred and capital expenditure is added to fixed assets.

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9. Borrowing cost is charged to profit and loss account except cost of borrowing for acquisition of
qualifying assets which is capitalised till the date of commercial use of the asset.

10. (a) Depreciation on buildings, plant & machinery, railway siding and other assets of all Units is
provided as per straight line method considering the rates in force at the time of respective
additions of the assets made before April 2, 1987, and on additions thereafter at the rates and
in the manner specified in Schedule XIV of the Companies Act. Continuous Process Plants as
defined in Schedule XIV have been considered on technical evaluation. Depreciation on
additions due to exchange rate fluctuation is provided on the basis of residual life of the assets.
Depreciation on assets costing up to ` 5,000 and on temporary sheds is provided in full during
the year of additions.

(b) Depreciation on the increased amount of assets due to revaluation is computed on the basis of
the residual life of the assets as estimated by the valuers on straight-line method.

(c) Leasehold land is being amortised over the lease period.

11. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable amount. An
impairment loss is charged to the profit and loss account when an asset is identified as impaired.
Reversal of impairment loss recognised in prior periods is recorded when there is an indication that the
impairment losses recognised for the assets no longer exist or have decreased. Post impairment,
depreciation is provided on the revised carrying value of the asset over its remaining useful life.

12. Employee benefits:

(a) Defined Contribution Plan

Employee benefit in the form of Superannuation Fund is considered as defined contribution

plan and charged to the profit and loss account in the year when the contribution to the
respective fund is due.

(b) Defined Benefit Plan

Retirement benefits in the form of gratuity is considered as defined benefit obligation and
provided for on the basis of an actuarial valuation, using the projected unit credit method, as at
the date of balance sheet.

The provident fund contribution is made to trust administered by the trustees. The interest rate
to the members of the trust shall not be lower than the statutory rate declared by the Central
Government under Employees‘ Provident Fund and Miscellaneous Provision Act, 1952. Any
shortfall, if any, shall be made good by the Company.

(c) Other long-term benefits

Long term compensated absences are provided for on the basis of an actuarial valuation, using
the projected unit credit method, as at the date of balance sheet.

Actuarial gain/losses, if any, are immediately recognized in the profit and loss account.

13. Lease rentals in respect of assets taken on finance lease are accounted for in reference to lease terms.

14. Miscellaneous expenditure are amortised as under:

Expenditure incurred against which benefit is expected to flow into future periods, are treated as
deferred revenue expenditure and charged to revenue account over the expected duration of benefit.

15. Intangible assets are being recognised if the future economic benefits attributable to the asset are
expected to flow to the company and the cost of the asset can be measured reliably. The same are being
amortised over the expected duration of benefits.

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16. Current tax is the amount of tax payable on the estimated taxable income for the current year as per the
provisions of Income Tax Act, 1961. Deferred tax assets and liabilities are recognised in respect of
current year and prospective years. Deferred tax assets are recognised on the basis of reasonable
certainty / virtual certainty as the case may be, that sufficient future taxable income will be available
against which the same can be realised.

17. Provisions involving substantial degree of estimation in measurement are recognised when there is a
present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the notes.

18. Premium on redemption of preference shares is accounted for in the year of redemption.

Principles of consolidation

The financial statements of the Company and its Subsidiaries have been consolidated on a line by line basis by
adding together the book value of like items of assets, liabilities, income and expenses, after eliminating intra-
group balances and intra-group transactions.

In case of associate company, JK Enviro-tech Limited,, where Company holds directly or indirectly 20% or
more equity or/ and exercises significant influence, investments are accounted for by using equity method in
accordance with Accounting Standard (AS-23) – ―Accounting for Investments in Associate in Consolidated
Financial Statements‖.

For details of our critical accounting policies adopted in the preparation of the restated consolidated financial
information, see ―Financial Statements‖ on page 141.

Results of Operations

Income

Our total income comprises our net sales and other income. The following table shows our income from net
sales and other income for the periods indicated in Rupees in crores and as a percentage of our total income.
Amounts have been rounded to ensure percentages total to 100% as appropriate.

(In ` crores)
S. Particulars Six Month Fiscal 2010 Fiscal 2009 Nine Month
No. Period Ended Period Ended
September 30, March 31, 2008
2010
1. Net sales 613.16 1,122.34 1,092.85 617.21
% of total income 101.05 100.68 98.04 98.10
2. Other income 2.31 1.35 4.92 7.87
% of total income 0.38 0.12 0.44 1.25
3. Increase/(Decrease) in stocks (8.69) (8.95) 6.97 4.09
% of total income (1.43) (0.80) 0.63 0.65
Total Income 606.78 1,114.74 1,104.74 629.17

Net Sales

Our net sales comprise our gross sales of products manufactured by our Company and products traded by our
Company less discounts and excise duties paid. The products manufactured by our Company comprises
products in the (i) paper (both coated and uncoated) segment, and (ii) the packaging board segment. We
currently have two manufacturing units, i.e., the Unit CPM and the Unit JKPM. We derive our income primarily
from the sale of paper and allied products and packaging board manufactured in these two units.

The products traded by our Company comprise paper and allied stationery products. Due to capacity constraints
our Company purchases such products from third parties in order to offer a wider range of products to customers
and distributors. Sale of such products are classified under this category.

Our income from net sales accounted for 101.05%, 100.68%, 98.04% and 98.10% of our total income for the six

195
month period ended September 30, 2010, Fiscal 2010, Fiscal 2009 and the nine month period ended March 31,
2008, respectively.

Other Income

Our other income primarily comprises income from current investments, dividend income, profit on sale of
fixed assets, excess provisions of earlier years no longer required and miscellaneous income. Additionally, we
also derive income from selling the surplus power generated from our Unit CPM, pursuant to commencement of
power trading from our Unit CPM in May 2010. Our other income accounted for 0.38%, 0.12%, 0.44% and
1.25% of our total income for the six month period ended September 30, 2010, Fiscal 2010, Fiscal 2009 and the
nine month period ended March 31, 2008, respectively.

Expenditure

Our expenditure comprises cost of raw materials consumed, staff cost, other manufacturing expenses, cost
towards purchase of finished goods, selling and distribution expenses, administration and other expenses,
interest and financial charges and depreciation expenses. The following table shows our expenditure for the
periods indicated in Rupees in crores and as a percentage of our total income. Amounts have been rounded to
ensure percentages total to 100% as appropriate.

(In ` crores)
S. Particulars Six Month Period Fiscal 2010 Fiscal 2009 Nine Month
No. Ended September Period Ended
30, 2010 March 31,
2008
1. Raw materials consumed 159.79 286.79 281.43 150.54
% of total income 26.33 25.73 25.47 23.93
2. Staff cost 65.93 119.70 99.79 71.00
% of total income 10.87 10.74 9.03 11.28
3. Other manufacturing expenses 202.59 359.15 367.88 203.37
% of total income 33.39 32.22 33.00 32.32
4. Purchase of finished goods 8.31 43.98 114.87 56.68
% of total income 1.37 3.95 10.30 9.01
5. Selling & distribution expenses 16.90 24.25 26.22 14.63
% of total income 2.79 2.18 2.35 2.33
6. Administration & other expenses 14.70 35.44 32.31 16.71
% of total income 2.42 3.18 2.90 2.66
7. Interest & financial charges 22.67 48.49 58.47 35.46
% of total income 3.74 4.35 5.25 5.64
8. Depreciation 36.08 70.04 69.69 45.86
% of total income 5.95 6.28 6.25 7.29
Total expenditure 526.97 987.84 1,050.66 594.25

Raw materials consumed

Our expenses towards raw materials consumed primarily comprised cost of procurement of raw materials for
our paper and packaging board products, such as hardwood, bamboo and imported pulp, for both our
manufacturing facilities, i.e., the Unit CPM and the Unit JKPM. Cost of raw materials accounted for 26.33%,
25.73%, 25.47% and 23.93% of our total income for the six month period ended September 30, 2010, Fiscal
2010, Fiscal 2009 and the nine month period ended March 31, 2008, respectively.

Staff cost

Our staff cost primarily comprises employee salaries and wages and bonuses, contribution towards employees‘
provident fund and other funds, staff welfare expenses and employee benefits. Staff costs accounted for 10.87%,
10.74%, 9.03% and 11.28% of our total income for the six month period ended September 30, 2010, Fiscal
2010, Fiscal 2009 and the nine month period ended March 31, 2008, respectively.

Other manufacturing expenses

Our other manufacturing expenses primarily include costs incurred towards consumption of stores, spares and

196
chemicals, power, fuel and water, repairs to buildings and machinery, for both our manufacturing facilities, i.e.,
the Unit CPM and the Unit JKPM. Our other manufacturing expenses accounted for 33.39%, 32.22%, 33.00%
and 32.32% of our total income for the six month period ended September 30, 2010, Fiscal 2010, Fiscal 2009
and the nine month period ended March 31, 2008, respectively.

Purchase of finished goods

Our expenses towards purchase of finished goods primarily comprises costs incurred towards purchase of paper
products from third parties in our traded products segment. Our expenses towards purchase of finished goods
accounted for 1.37%, 3.95%, 10.30% and 9.01% of our total income for the six month period ended September
30, 2010, Fiscal 2010, Fiscal 2009 and the nine month period ended March 31, 2008, respectively.

Selling & distribution expenses

Our selling and distribution expenses primarily comprise expenses incurred towards sales promotion, transport,
clearing and forwarding charges, rent, commission on sales, advertisement expenses and cash discounts offered
on our products. Our selling and distribution expenses accounted for 2.79%, 2.18%, 2.35% and 2.33% of our
total income for the six month period ended September 30, 2010, Fiscal 2010, Fiscal 2009 and the nine month
period ended March 31, 2008, respectively.

Administration & other expenses

Our administration and other expenses primarily comprise expenses incurred towards applicable rates and taxes,
insurance coverage, directors‘ fees, directors‘ commission, assets written off, loss on sale of fixed assets,
deferred revenue expenditure written off, bad debts, provisions made for doubtful debts and bank charges,
traveling and other miscellaneous expenses. Our administration and other expenses accounted for 2.42%,
3.18%, 2.90% and 2.66% of our total income for the six month period ended September 30, 2010, Fiscal 2010,
Fiscal 2009 and the nine month period ended March 31, 2008, respectively.

Interest & financial charges

Interest and financial charges include interest paid on term loans, working capital facilities and cash credit and
processing fees. Interest and financial charges accounted for 3.74%, 4.35%, 5.25% and 5.64% of our total
income for the six month period ended September 30, 2010, Fiscal 2010, Fiscal 2009 and the nine month period
ended March 31, 2008, respectively.

Depreciation

Depreciation is provided on a pro-rata basis under the straight line method at rates of depreciation as prescribed
in Schedule XIV to the Companies Act, except in respect of furniture and fixtures and office equipment on
which depreciation is provided at rates higher than those prescribed in Schedule XIV to the Companies Act.
Depreciation accounted for 5.95%, 6.28%, 6.25% and 7.29% of our total income for the six month period ended
September 30, 2010, Fiscal 2010, Fiscal 2009 and the nine month period ended March 31, 2008, respectively.

Six month period ended September 30, 2010

The effect of the Scheme of Arrangement has been considered in the restated consolidated financial information
for the six month period ended September 30, 2010, as shown below:

(In ` crores)
S. No. Particulars
1. Assets as increased by transfer and vesting of the two undertakings from the Company to its 29.92
respective Subsidiaries
2. Capital Reserve 29.92

(i) The deferred tax liability of ` 4.53 crores has been adjusted against the general reserve.

(ii) The Company carried on the business of the two housing undertakings with effect from April 1, 2009
for and on behalf of its respective Subsidiaries.

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(iii) The necessary steps and formalities in respect of issue of redeemable debentures, issue and allotment of
shares as stated above and transfer of assets are under implementation.

For details of the Scheme of Arrangement, see ―History and Certain Corporate Matters‖ on page 87.

Income

Our total income was ` 606.78 crores for the six month period ended September 30, 2010.

Net sales

For the six month period ended September 30, 2010, our net sales was ` 613.16 crores, which constituted
101.05% of our total income, primarily driven by the sale of 93,966 MT of paper and allied products and 38,432
MT of packaging board products.

Other income

For the six month period ended September 30, 2010, our other income was ` 2.31 crores, which constituted
0.38% of our total income.

Expenditure

Our total expenditure was ` 526.97 crores for the six month period ended September 30, 2010.

Raw materials consumed

For the six month period ended September 30, 2010, expenditure incurred by us on the raw materials consumed
was ` 159.79 crores, which constituted 26.33% of our total income, primarily driven by cost of procurement of
raw materials for our paper and packaging board products, which was impacted by an increase in the prices of
imported pulp for our Unit CPM, as well as an increase in the prices of hardwood and bamboo, for both our
manufacturing facilities, i.e., the Unit CPM and the Unit JKPM.

Staff cost

For the six month period ended September 30, 2010, our staff cost amounted to ` 65.93 crores, which
constituted 10.87% of our total income, primarily driven by the expenses incurred towards employee salaries
and wages and bonuses, contribution towards employees‘ provident fund and other funds, staff welfare expenses
and employee benefits.

Other manufacturing expenses

For the six month period ended September 30, 2010, our other manufacturing expenses amounted to ` 202.59
crores, which constituted 33.39% of our total income, primarily driven by expenses amounting to ` 130.14
crores incurred towards consumption of stores, spares and chemicals, which was impacted by an increase in the
prices of industrial chemicals, expenses amounting to ` 67.44 crores incurred towards power, fuel and water,
which was impacted by lower sourcing of coal through coal linkage and consequently our purchasing coal at
higher negotiated rates from the open market, expenses amounting to ` 2.65 crores incurred towards repairs to
buildings and expenses amounting to ` 2.31 crores incurred towards repairs to our machinery, for both our
manufacturing facilities, i.e., the Unit CPM and the Unit JKPM.

Purchase of finished goods

For the six month period ended September 30, 2010, the expenditure incurred on purchase of finished goods
amounted to ` 8.31 crores, which constituted 1.37% of our total income, primarily driven by the costs incurred
towards purchase of paper products from third parties in our traded products segment. The purchase of finished
goods by our Company was affected due to floods in the factory premises of one of our suppliers in Fiscal 2010,
which severely impacted the operations of our supplier in this period. Therefore, this resulted in a steep fall in
the quantity of paper products sourced and traded.

Selling & distribution expenses

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For the six month period ended September 30, 2010, the selling and distribution expenses amounted to ` 16.90
crores, which constituted 2.79% of our total income, primarily driven by expenses amounting to ` 9.76 crores
incurred towards cash discounts offered on our products, expenses amounting to ` 2.78 crores incurred towards
transport clearing and forwarding charges, expenses amounting to ` 2.66 crores incurred towards sales
promotion, expenses amounting to ` 0.74 crore incurred towards payment of rent, expenses amounting to ` 0.61
crore incurred towards payment of commission on sales and expenses amounting to ` 0.35 crore incurred
towards advertisement expenses.

Administration & other expenses

For the six month period ended September 30, 2010, administration and other expenses amounted to ` 14.70
crores, which constituted 2.42% of our total income, primarily driven by expenses amounting to ` 10.86 crores
incurred towards bank charges, traveling and other miscellaneous expenditures, expenses amounting to ` 1.54
crores incurred towards provisions made for bad debts, expenses amounting to ` 0.98 crore incurred towards
payment of applicable rates and taxes, expenses amounting to ` 0.56 crore incurred towards bad debts, expenses
amounting to ` 0.44 crore incurred towards assets written off, expenses amounting to ` 0.27 crore incurred
towards payment of directors‘ commission, expenses amounting to ` 0.04 crore incurred towards deferred
revenue expenditure written off and expenses amounting to ` 0.03 crore incurred towards payment of directors‘
fees.

Interest and financial charges

For the six month period ended September 30, 2010, interest and financial charges amounted to ` 22.67 crores,
which constituted 3.74% of our total income, primarily driven by interest paid on term loans, working capital
facilities and cash credit and processing fees. This includes provision made for ` 3.82 crores towards 50% of the
one-time redemption premium payable on maturity of 2006 FCCBs which are due for redemption on March 30,
2011.

Depreciation

For the six month period ended September 30, 2010, expenses incurred on account of depreciation amounted to
` 36.08 crores, which constituted 5.95% of our total income, primarily driven by depreciation of our fixed assets
in the normal course of business.

Profit before tax

For the reasons mentioned above, our profit before tax was ` 79.81 crores for the six month period ended
September 30, 2010.

Provision for tax

We made a provision for tax of ` 22.16 crores comprising a provision for current tax of ` 26.21 crores and credit
of deferred tax amounting to ` 4.05 crores for the six month period ended September 30, 2010.

Adjusted profit after tax

Our adjusted profit after tax was ` 57.75 crores for the six month period ended September 30, 2010.

Fiscal 2010 compared with Fiscal 2009

Income

Our total income increased marginally by ` 10 crores, or 0.91%, from ` 1,104.74 crores in Fiscal 2009 to `
1,114.74 crores in Fiscal 2010. The increase was due to a ` 29.49 crores increase in our net sales, which was
marginally offset by a ` 3.57 crores decrease in our other income and a ` 15.92 crores decrease in our stocks
pursuant to higher demand for our products.

Net sales

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Our net sales increased marginally by ` 29.49 crores, or 2.70%, from ` 1,092.85 crores in Fiscal 2009 to `
1,122.34 crores in Fiscal 2010. The increase was primarily due to an increase in our quantity of sale of
packaging board products from 56,613 MT in Fiscal 2009 to 71,505 MT in Fiscal 2010. This was partially offset
by a decrease in our quantity of sale of paper and allied products from 2,00,305 MT in Fiscal 2009 to 1,93,540
MT in Fiscal 2010.

Other income

Our other income decreased by ` 3.57 crores, or 72.56%, from ` 4.92 crores in Fiscal 2009 to ` 1.35 crores in
Fiscal 2010. This decrease was primarily due to ` 4.24 crores excess provisions written back in Fiscal 2009 as
against ` 0.48 crore excess provisions written back in Fiscal 2010.

Expenditure

Our expenditure decreased by ` 62.82 crores, or 5.98%, from ` 1,050.66 crores in Fiscal 2009 to ` 987.84 crores
in Fiscal 2010. The decrease was primarily due to a ` 70.89 crores decrease in our expenses incurred towards
purchase of finished goods, a ` 8.73 crores decrease in our other manufacturing expenses, a ` 1.97 crores
decrease in our selling and distribution expenses and a ` 9.98 crores decrease in our expenses incurred towards
interest and financial charges, which were partially offset by a ` 5.36 crores increase in our expenses incurred
towards raw materials consumed, a ` 19.91 crores increase in our expenses incurred towards staff cost, a ` 3.13
crores increase in our administration and other expenses and a ` 0.35 crore increase in our expenses incurred
towards depreciation.

Raw materials consumed

Our cost of raw materials consumed increased marginally by ` 5.36 crores, or 1.90%, from ` 281.43 crores in
Fiscal 2009 to ` 286.79 crores in Fiscal 2010. This increase was primarily due to an increase in our consumption
of imported pulp as a raw material for production in our packaging board segment. However, the cost incurred
due to the requirement for other raw materials for our paper manufacturing operations did not witness any
significant changes. Also, as a result of this, raw material consumption, as a percentage of our total income,
increased marginally to 25.73% in Fiscal 2010 compared to 25.47% in Fiscal 2009.

Staff cost

Our staff cost increased by ` 19.91 crores, or 19.95%, from ` 99.79 crores in Fiscal 2009 to ` 119.70 crores in
Fiscal 2010. This increase was primarily due to increment in salaries and wages of our employees in the normal
course of the business of our Company. Also, as a result of this, staff cost, as a percentage of our total income,
increased marginally to being 10.74% in Fiscal 2010 compared to being 9.03% in Fiscal 2009.

Other manufacturing expenses

Our other manufacturing expenses decreased by ` 8.73 crores, or 2.37%, from ` 367.88 crores in Fiscal 2009 to
` 359.15 crores in Fiscal 2010. This decrease was primarily due to a ` 4.45 crores reduction in our expenses
incurred towards power, fuel and water, which was caused by higher sourcing of coal through coal linkage
compared to purchase from the open market, a ` 1.97 crores reduction in our expenses incurred towards
consumption of stores, spares and chemicals, a ` 1.59 crores reduction in our expenses incurred towards repairs
to machinery and a ` 0.20 crore reduction in our expenses incurred towards repairs to building, on account of
operating efficiencies achieved in our manufacturing units. Also, as a result of this, our other manufacturing
expenses, as a percentage of our total income, decreased marginally to being 32.22% in Fiscal 2010 compared to
being 33.30% in Fiscal 2009.

Purchase of finished goods

Our expenses incurred on purchase of finished goods decreased by ` 70.89 crores, or 61.71%, from ` 114.87
crores in Fiscal 2009 to ` 43.98 crores in Fiscal 2010. Our Company sources certain paper products from other
non-integrated paper mills from within India. In Fiscal 2010, due to domestic shortage in pulp, the quantity of
paper products sourced from and produced by other mills and purchased by our Company was lower compared
to Fiscal 2009. Further, floods in the factory premises of one of our suppliers forced them to close their

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operations. This resulted in a steep fall in the quantity of paper products sourced and traded. However, this
shortfall was partially offset by our sourcing copier paper from a leading international paper manufacturer. Also,
as a result of this, expenses incurred on purchase of finished goods, as a percentage of our total income,
decreased to being 3.95% in Fiscal 2010 compared to being 10.40% in Fiscal 2009.

Selling & distribution expenses

Our selling and distribution expenses decreased by ` 1.97 crores, or 7.51%, from ` 26.22 crores in Fiscal 2009
to ` 24.25 crores in Fiscal 2010. This decrease was primarily due to a ` 1.61 crores reduction in our expenses
incurred towards transport, clearing and forwarding charges owing to lower export volumes of paper and
packaging board products in comparison to Fiscal 2009, as well as a ` 0.90 crore reduction in our expenses
incurred towards payment of commission on sales and a ` 0.87 crore reduction in our expenses incurred towards
sales promotion, which was partially offset by a ` 1.14 crores increase in our expenses incurred cash discount
offered on our products, a ` 0.23 crore increase in our expenses incurred towards payment of rent and a ` 0.04
crore increase in our expenses incurred towards advertisement expenses. Also, as a result of this, our selling and
distribution expenses, as a percentage of our total income, decreased marginally to being 2.18% in Fiscal 2010
compared to being 2.37% in Fiscal 2009.

Administration & other expenses

Our administration and other expenses increased by ` 3.13 crores, or 9.69%, from ` 32.31 crores in Fiscal 2009
to ` 35.44 crores in Fiscal 2010. This increase was primarily due to a ` 3.00 crores increase in our expenses
incurred towards payment of applicable rates and taxes as well as donations made to educational and charitable
institutions, a ` 2.16 crores increase in our expenses incurred towards our provision for doubtful debts, a ` 1.73
crores increase in our expenses incurred towards bank charges, travelling and miscellaneous expenses, a ` 0.36
crore increase in our expenses incurred towards assets written off and a ` 0.30 crore increase in our expenses
incurred towards payment of our Directors‘ commissions, which was marginally offset by a ` 4.00 crores
decrease in our expenses incurred towards bad debts, a ` 0.18 crore decrease in our expenses incurred towards
deferred revenue expenditure written off and a ` 0.01 crore decrease in our expenses incurred towards payment
of our Directors‘ fee. Also, as a result of this, our administration and other expenses, as a percentage of our total
income, increased marginally to being 3.18% in Fiscal 2010 compared to being 2.92% in Fiscal 2009.

Interest and financial charges

Interest and financial charges decreased by ` 9.98 crores, or 17.07%, from ` 58.47 crores in Fiscal 2009 to `
48.49 crores in Fiscal 2010. This decrease was primarily due to repayment of term loans aggregating to ` 123.09
crores as well as tighter credit and stocking policies adopted by our Company, leading to a reduction in working
capital funds. Additionally, in Fiscal 2010, our inventory levels decreased as compared to in Fiscal 2009,
leading to lower requirement of funds from lenders towards working capital. Also, as a result of this, our interest
and financial charges, as a percentage of our total income, decreased to being 4.35% in Fiscal 2010 compared to
being 5.29% in Fiscal 2009.

Depreciation

Our expenses incurred on account of depreciation increased by ` 0.35 crore, 0.50%, from ` 69.69 crores in
Fiscal 2009 to ` 70.04 crores in Fiscal 2010. This increase was primarily due to an increase in our asset base, on
account of capital expenditure incurred in the normal course of business of our Company. Also, as a result of
this, depreciation, as a percentage of our total income, increased marginally to 6.28% in Fiscal 2010 from 6.31%
in Fiscal 2009.

Profit before tax

As a result of the above, profit before tax increased by ` 72.82 crores, or 134.65%, from ` 54.08 crores in Fiscal
2009 to ` 126.90 crores in Fiscal 2010.

Provision for tax

Primarily due to the reasons described above, our provisions for tax liabilities increased by ` 19.83 crores, or
123.40%, from ` 16.07 crores in Fiscal 2009 to ` 35.90 crores in Fiscal 2010. This increase was primarily due
to an increase in provision for current tax and provision for deferred tax, which were partially offset by an

201
increase in MAT credit entitlement and abolition of fringe benefit tax under the Income Tax Act. Additionally,
the increase in our tax liabilities was also caused by a higher profit before tax, which was partially offset by
deductions allowed in relation to our profits on power assets under Section 80IA of the Income Tax Act with
respect to our Unit CPM.

Adjusted profit after tax

Our adjusted profit after tax was ` 91.98 crores in Fiscal 2010 and our adjusted profit after tax (after exceptional
items) was ` 37.46 crores in Fiscal 2009, an increase of ` 54.52 crores, or 145.54%.

Nine Month Period Ended March 31, 2008

Significant events

In this period, our Company commenced the commercial production of packaging board products in our Unit
CPM in October 2007, which had an impact on our income and expenditures in this period.

Income

Our total income was ` 629.17 crores for the nine month period ended March 31, 2008.

Net sales

For the nine month period ended March 31, 2008, our net sales were ` 617.21 crores, which constituted 98.10%
of our total income, primarily driven by the sale of 1,47,605 MT of our paper and allied products and 12,008
MT of our packaging board products.

Other income

For the nine month period ended March 31, 2008, our other income was ` 7.87 crores, which constituted 1.25%
of our total income.

Expenditure

Our total expenditure was ` 594.25 crores for the nine month period ended March 31, 2008.

Raw materials consumed

For the nine month period ended March 31, 2008, the expenditure incurred by us on raw material consumed was
` 150.54 crores, which constituted 23.93% of our total income, primarily driven by cost of procurement of raw
materials for our paper and packaging board products, and which was particularly impacted by the procurement
of imported pulp as raw material due to the commencement of our packaging board business in October 2007 at
our Unit CPM.

Staff cost

For the nine month period ended March 31, 2008, our staff cost was ` 71.00 crores, which constituted 11.28%
of our total income, primarily driven by the expenses incurred towards employee salaries and wages and
bonuses, contribution towards employees‘ provident fund and other funds, staff welfare expenses and employee
benefits.

Other manufacturing expenses

For the nine month period ended March 31, 2008, our other manufacturing expenses were ` 203.37 crores,
which constituted 32.32% of our total income, primarily driven by expenses amounting to ` 135.59 crores
incurred towards consumption of stores, spares and chemicals, which was impacted by a reduction in the rates of
industrial chemicals, expenses amounting to ` 63.19 crores incurred towards power, fuel and water, which was
impacted by an increase in the cost of sourcing of coal at both our manufacturing units, expenses amounting to `
3.11 crores incurred towards repairs to buildings and expenses amounting to ` 2.39 crores incurred towards
repairs to our machinery, for both our manufacturing facilities, i.e., the Unit CPM and the Unit JKPM.

202
Purchase of finished goods

For the nine month period ended March 31, 2008, the expenditure incurred on purchase of finished goods was `
56.68 crores, which constituted 9.01% of our total income, primarily driven by the costs incurred towards
purchase of paper products from third parties in our traded products segment, which was marginally affected by
an increased focus of our Company in the domestic markets where the demand for paper products was higher.

Selling & distribution expenses

For the nine month period ended March 31, 2008, our selling and distribution expenses were ` 14.63 crores,
which constituted 2.33% of our total income, primarily driven by expenses amounting to ` 9.63 crores incurred
towards cash discounts offered on our products, expenses amounting to ` 3.18 crores incurred towards sales
promotion, expenses amounting to ` 1.14 crores incurred towards payment of commission on sales, expenses
amounting to ` 1.04 crores incurred towards payment of rent and expenses amounting to ` 0.42 crore incurred
towards advertisement expenses.

Administration & other expenses

For the nine month period ended March 31, 2008, our administration and other expenses were ` 16.71 crores,
which constituted 2.66% of our total income, primarily driven by expenses amounting to ` 14.55 crores incurred
towards bank charges, traveling and other miscellaneous expenditures, expenses amounting to ` 1.28 crores
incurred towards deferred revenue expenditure written off, expenses amounting to ` 0.39 crore incurred towards
payment of applicable rates and taxes, expenses amounting to ` 0.32 crore incurred towards payment for
insurance coverage, expenses amounting to ` 0.16 crore incurred towards payment of directors‘ commission and
expenses amounting to ` 0.01 crore incurred towards payment of directors‘ fees.

Interest and financial charges

For the nine month period ended March 31, 2008, our interest and financial charges were ` 35.46 crores, which
constituted 5.64% of our total income, primarily driven by interest paid on term loans, working capital facilities
and cash credit and processing fees.

Depreciation

For the nine month period ended March 31, 2008, our expenses incurred on account of depreciation were `
45.86 crores, which constituted 7.29% of our total income, primarily driven by depreciation of our fixed assets
in the normal course of business.

Profit before tax

For the reasons mentioned above, our profit before tax was ` 34.92 crores for the nine month period ended
March 31, 2008.

Provision for tax

We made a provision for tax of ` 0.12 crores comprising a provision for current tax of ` 6.13 crores, MAT
credit entitlement of ` 6.13 crores, credit of deferred tax amounting to ` 0.78 crore and provision for fringe
benefit tax amounting to ` 0.99 crore, for the nine month period ended March 31, 2008.

Adjusted profit after tax

Our adjusted profit after tax (after exceptional items) was ` 31.84 crores for the nine month period ended March
31, 2008.

Liquidity and Capital Resources

As of September 30, 2010, we had cash and bank balances of ` 13.74 crores. Cash and bank balances comprise
cash on hand, cheques on hand and deposit accounts. Our primary liquidity requirements have been to finance
our working capital requirements. We have met these requirements from cash flows from operations, and short-

203
term and long-term borrowings. Our business requires a significant amount of working capital. We expect to
meet our working capital requirements for the next 12 months primarily from the cash flows from our business
operations, project specific borrowings from banks and financial institutions as may be expedient and to a
certain extent from the proceeds of this Issue.

Cash flows

Set forth below is a table of selected information from our Company‘s consolidated statements of cash flows for
the period indicated.

(In ` crores)
Particulars Six Month Period Fiscal 2010 Fiscal 2009 Nine Month
Ended September Period Ended
30, 2010 March 31, 2008
Net cash from / (used 156.35 243.80 202.77 93.85
in) operating activities
Net cash from / (used (49.44) (66.03) (25.18) (93.67)
in) investing activities
Net cash from / (used (101.11) (204.05) (146.87) (1.51)
in) financing activities
Increase / (decrease) in 5.80 (26.28) 30.72 (1.33)
cash and cash
equivalents
Cash and cash 7.94 34.22 3.50 4.83
equivalents at the
beginning of the year
Cash and cash 13.74 7.94 34.22 3.50
equivalents as at the end
of the year

Net cash from operating activities

Net cash from operating activities in the six month period ended September 30, 2010, was ` 156.35 crores and
our operating profit before working capital changes for that period was ` 140.13 crores. The difference was
attributable to a ` 16.46 crores increase in trade and other payables due to increased scale of operations and
longer credit period provided to us by our suppliers, a ` 7.76 crores decrease in our inventories, primarily due to
a reduction in our finished goods, a ` 4.81 crores decrease in our trade and other receivables, primarily due to a
shorter credit period availed by our customers, and as adjusted by the payment of ` 12.81 crores as taxes paid.

Net cash from operating activities in Fiscal 2010 was ` 243.80 crores and our operating profit before working
capital changes for that period was ` 255.68 crores. The difference was attributable to a ` 27.01 crores increase
in trade and other payables due to increased scale of operations and longer credit period provided to us by our
suppliers, a ` 9.78 crores increase in our inventories due to increased scale of our operations, a ` 10.23 crores
increase in our trade and other receivables due to an increase in our sales, and as adjusted by the payment of `
18.88 crores as taxes paid.

Net cash from operating activities in Fiscal 2009 was ` 202.77 crores and our operating profit before working
capital changes for that period was ` 190.41 crores. The difference was attributable to a ` 41.80 crores decrease
in trade and other receivables due to sale of our lime kiln assets of ` 41.70 crores which was held for sale to JK
Enviro-tech Limited (our associate company), a ` 3.23 crores decrease in our inventories due to lower stock
holding of raw materials by our Company, a ` 23.06 crores decrease in our trade and other payables due to early
payment made by us to our suppliers, and as adjusted by the payment of ` 9.43 crores as taxes paid and ` 0.18
crores as miscellaneous expenditure incurred.

Net cash from operating activities in the nine month period ended March 31, 2008, was ` 93.85 crores and our
operating profit before working capital changes for that period was ` 115.48 crores. The difference was
attributable to a ` 14.19 crores increase in trade and other payables, a ` 23.93 crores increase in our inventories,
a ` 4.66 crores increase in our trade and other receivables, all primarily due to commencement of our packaging
board business in October 2007 from our Unit CPM, and as adjusted by the payment of ` 5.67 crores as taxes
paid and ` 1.56 crores as miscellaneous expenditure incurred.

204
Net cash used in investing activities

Net cash used in investing activities in the six month period ended September 30, 2010, was ` 49.44 crores. This
primarily reflected the payment of ` 32.91 crores towards the purchase of our investments in our Subsidiaries as
well as investment of surplus cash in certain mutual funds, and the payment of ` 21.99 crores towards the
purchase of fixed assets in the normal course of business of our Company. This was partially offset by ` 4.39
crores interest received primarily on fixed deposits maintained with banks as well as deposits maintained with
the JK Paper Employees‘ Welfare Trust and JK Enviro-tech Limited.

Net cash used in investing activities in Fiscal 2010 was ` 66.03 crores. This primarily reflected the payment of `
39.06 crores towards the purchase of our investments in certain mutual funds with surplus cash, and the payment
of ` 35.93 crores towards the purchase of fixed assets in the normal course of business of our Company. This
was partially offset by ` 7.83 crores interest received primarily on fixed deposits maintained with banks as well
as deposits maintained with the JK Paper Employees‘ Welfare Trust and JK Enviro-tech Limited.

Net cash used in investing activities in Fiscal 2009 was ` 25.18 crores. This primarily reflected the payment of `
33.99 crores towards the purchase of fixed assets in the normal course of business of our Company. This was
partially offset by ` 6.68 crores interest received primarily on fixed deposits maintained with banks as well as
deposits maintained with the JK Paper Employees‘ Welfare Trust and JK Enviro-tech Limited.

Net cash used in investing activities in the nine month period ended March 31, 2008, was ` 93.67 crores. This
primarily reflected the payment of ` 102.39 crores towards the purchase of fixed assets which primarily consist
of assets purchased for the purpose of our packaging board plant in our Unit CPM which commenced operations
in October 2007 as well as purchase of fixed assets in the normal course of business of our Company, and the
payment of ` 1.70 crores towards the purchase of our investments in JK Enviro-tech Limited (our associate
company). This was partially offset by ` 9.28 crores interest received primarily on fixed deposits maintained
with banks as well as deposits maintained with the JK Paper Employees‘ Welfare Trust.

Net cash used in financing activities

Net cash used in financing activities in the six month period ended September 30, 2010, was ` 101.11 crores.
This reflected the repayment of ` 50.99 crores towards certain long-term borrowings, payment of ` 21.74 crores
as interest and financial charges towards our short-term and long-term loans, payment of ` 18.19 crores as
dividend (including dividend tax) on our Equity Shares and preference shares issued, repayment of ` 17.96
crores towards certain short-term borrowings availed for our working capital requirements, and payment of `
5.57 crores towards redemption of 11,000 10% CRPS (Series E) issued to lenders of JKLC on November 29,
2001, pursuant to the order of the High Court of Gujarat dated August 30, 2001, approving the Scheme of
Compromise. This was partially offset by the receipt of ` 13.34 crores as proceeds from certain long-term
borrowings.

Net cash used in financing activities in Fiscal 2010 was ` 204.05 crores. This reflected the repayment of `
123.09 crores towards certain long-term borrowings, payment of ` 53.28 crores as interest and financial charges
towards our short-term and long-term loans, payment of ` 16.01 crores as dividend (including dividend tax) on
our Equity Shares and preference shares issued, repayment of ` 6.01 crores towards certain short-term
borrowings availed for our working capital requirements, and payment of ` 5.66 crores towards redemption of
21,000 10% CRPS (Series D) issued to lenders of JKLC on November 29, 2001, pursuant to the order of the
High Court of Gujarat dated August 30, 2001, approving the Scheme of Compromise.

Net cash used in financing activities in Fiscal 2009 was ` 146.87 crores. This reflected the repayment of ` 87.08
crores towards certain long-term borrowings, payment of ` 61.83 crores as interest and financial charges
towards our short-term and long-term loans, repayment of ` 50.19 crores towards certain short-term borrowings
availed for our working capital requirements, payment of ` 13.75 crores as dividend (including dividend tax) on
our Equity Shares and preference shares issued, and payment of ` 5.85 crores towards redemption of 40,000
10% CRPS (Series C) issued to lenders of JKLC on November 29, 2001, pursuant to the order of the High Court
of Gujarat dated August 30, 2001, approving the Scheme of Compromise. This was partially offset by the
receipt of ` 71.83 crores as proceeds from certain long-term borrowings.

Net cash used in financing activities in the nine month period ended March 31, 2008, was ` 1.51 crores. This
reflected the repayment of ` 142.23 crores towards certain long-term borrowings, payment of ` 39.52 crores as
interest and financial charges towards our short-term and long-term loans, payment of ` 20.67 crores as
205
dividend (including dividend tax) on our Equity Shares and preference shares issued, and payment of ` 2.40
crores as one time additional interest pursuant to prepayment of a high-cost loan availed from UTI Asset
Management Company Limited. This was offset by the receipt of ` 129.27 crores as proceeds from certain long-
term borrowings and the receipt of ` 74.04 crores as proceeds from certain short-term borrowings availed for
our working capital requirements.

Financial indebtedness

The following table sets forth our Company‘s consolidated secured and unsecured debt position as at September
30, 2010.

(In ` crores)
Particulars Amount Outstanding as at September 30, 2010
Unsecured Loans
Fixed Deposits 30.58
1.25% Foreign Currency Convertible Bonds 22.46
Buyers Credit Facilities from Various Banks 16.89
Foreign Currency Term Loan 3.73
Total (A) 73.66
Secured Loans
Financial Institutions 85.65
Banks 245.70
Working Capital Loans 92.79
Total (B) 424.14

Total (A + B) 497.80

Contingent liabilities

As of September 30, 2010, we had the following contingent liabilities that have not been provided for in our
consolidated restated financial statements:
(In ` crores)
S. No. Description As of September 30, 2010
1. Excise duty liability in respect of matters in appeal 8.12
2. Sales tax liability in respect of matters in appeal 2.44
3. Forest matters 5.73
4. Income tax matters 1.79
5. Other matters 3.34
Total 21.42

In addition to the above, the following have also been classified as a contingent liability as of September 30,
2010:

1. In respect of certain disallowances and additions made by the Income Tax Authorities, appeals are
pending before the Appellate Authorities and adjustment, if any, will be made after the same are finally
determined.

2. The Company has entered into a Take or Pay agreement for the purpose of sourcing lime from JK
Enviro-tech Limited. The Company has given an undertaking that on the happening of certain events, it
will takeover Loan taken by JK Enviro-tech Limited from IDFC Limited of the value of ` 40 Crore.

Off-Balance Sheet Arrangements

Except for certain forward contracts and future contracts entered into by our Company for the purpose of
hedging of interest rate and exchange rate risks, we do not have any off-balance sheet arrangements, derivative
instruments, swap transactions or other relationships with unconsolidated entities or financial partnerships that
would have been established for the purpose of facilitating off-balance sheet transactions.

Quantitative and Qualitative disclosure about market risk

Interest rate risk

206
We are exposed to market rate risk due to changes in interest rates on our credit facilities that we entered into.
As of September 30, 2010, we had ` 390.98 crores of our outstanding indebtedness (comprising ` 370.36 crores
from our secured loan facilities and ` 20.62 crores from our unsecured loan facilities) was subject to floating
rates of interest linked to six month LIBOR or the State Bank of India prime lending rate and are thereby
exposed to changes in interest rates. In addition, the interest rates for our indebtedness are subject to periodic
resets. We undertake debt obligations to support our working capital needs and capital expenditure. Upward
fluctuations in interest rates increase the cost of new debt and interest cost of outstanding variable rate
borrowings. Although we currently hedge some of our interest rate risk through interest rate swaps, we may not
be able to sufficiently offset the increase in interest rates. An increase in interest rates may adversely affect our
ability to service long-term debt and to finance development of new projects, all of which may in turn adversely
affect our results of operations.

Commodity price risk

We compete in different markets within the paper and packaging board industry on the basis of the quality of
our products, customer service, product development activities, price and distribution. All of our markets are
highly competitive. Competitive conditions in some of our segments have caused us to incur lower net selling
prices and reduced gross margins and net earnings. Therefore, we are exposed to the market fluctuations in the
selling price of our products.

We are dependent upon various suppliers for our fuel requirements. We have entered into coal supply
agreements with Western Coalfields Limited and Mahanadi Coalfields Limited for our captive power plants
located at the Unit CPM and the Unit JKPM, respectively. For a summary of key terms of these agreements, see
―History and Certain Corporate Matters‖ on page 87. However, prices for fuel under these coal supply
agreements fluctuate according to notifications issued by Coal India Limited or other statutory authorities from
time to time. In addition to this, we also procure coal through open market sources.

We are also exposed to fluctuations in the price, availability and quality of the primary raw materials required
for manufacturing of paper and allied products and packaging boards. For information, see ―-Factors Affecting
our Results of Operations‖. We may not be able to pass increased cost for raw materials or energy to our
customers if the market or existing agreements with our customers do not allow us to raise the prices of our
finished products. Even if we are able to pass through increased cost of raw materials or energy, the resulting
increase in the selling prices for our products could reduce the volume of products we sell and decrease our
revenues. While we may try, from time to time, to hedge against price increases, we may not be successful in
doing so.

Foreign currency exchange rate risk

We are exposed to significant foreign exchange rate risk. We export approximately 3% of our paper and allied
products and packaging boards and import approximately 20% of the total pulp requirement from Europe, South
America and South East Asian countries for manufacture of our packaging boards. Further, we also have `
180.57 crores of secured and unsecured loans denominated in foreign currency as of September 30, 2010. As on
September 30, 2010, our unhedged foreign currency exposure was as follows:

(In Crores)
S. No. Foreign Currency Amount in Foreign Currency Amount as converted in
Rupees
1. USD 0.162 7.28
2. Euro (0.0003) (0.02)
3. Sterling Pound (0.0003) (0.02)
4. Swedish Krona 0.026 0.17

Although our Company hedges approximately 70% of its forex liabilities, there may still be an impact of foreign
currency exchange rate fluctuations on our business, financial condition and results of operations. For details,
see ―Risk Factors‖ on page ix. Accordingly, any depreciation of the Rupee against these currencies may
significantly increase the Rupee cost to us of servicing and repaying our foreign currency payables.

Unusual or infrequent events or transactions

Except as described in this Draft Letter of Offer, there have been no events or transactions which may be
207
described as ―unusual‖ or ―infrequent‖.

Significant regulatory changes

Except as described in ―Regulations and Policies‖ on page 83, there have been no significant regulatory
changes that materially affect or are likely to affect the income from continuing operations.

Known trends or uncertainties

Our business has been impacted and we expect will continue to be impacted by the trends identified above in ―-
Factors Affecting Our Results of Operations‖ and the uncertainties described in ―Risk Factors‖ on page ix. To
our knowledge, except as we have described in this Draft Letter of Offer, there are no known trends or
uncertainties that have had, or are expected to have, a material adverse impact on our revenues or income from
continuing operations.

Future relationship between income and expenditure

Except as described in ―Risk Factors‖ and ―Our Business‖ on pages ix and 62, respectively, to the best of our
knowledge, there is no future relationship between income and expenditure which will have a material adverse
impact on the operation and finances of our Company.

New product or business segment

We do not have any new products or business segments.

Seasonality of business

Our revenues and results may be affected by seasonal factors. For example, inclement weather, such as heavy
monsoons, may delay or disrupt the harvest of hardwood or bamboo for the particular crop period. Further,
some of our customers may have businesses which may be seasonal in nature and a downturn in demand for our
products by such customers could reduce our revenues during such periods. For details, see ―Risk Factors –
External Risk Factors no. 36 - Our raw material availability depends to a major extent on monsoon and
weather conditions. Any lack of or an abnormal monsoon could negatively impact harvests and in turn have
a material adverse effect on our business growth and prospects, financial condition and results of operations‖
on page xxiv.

Significant dependence on a single or few suppliers or customers

As described in ―Risk Factors‖ and ―Our Business‖ on pages ix and 62, respectively, we have long term
contracts for the supply of paper products with a limited number of customers, and a bulk of our hardwood,
bamboo and coal requirements are supplied by a limited number of suppliers. For details, see ―History and
Certain Corporate Matters‖ on page 87.

Competitive conditions

For details on competition, see the sections titled ―Risk Factors‖, ―Our Business‖ and ―Industry Overview‖ on
pages ix, 62 and 51, respectively.

Transactions with associate companies and related parties

We have certain transactions with our associate companies and related parties. For details, see ―Related Party
Transactions‖ on page 140.

Recent accounting pronouncements

There are no recent accounting pronouncements that were not yet effective as on September 30, 2010, which
will result in a change in our Company‘s significant accounting policies.

Significant developments after September 30, 2010

208
As stated above, the Scheme of Arrangement for transfer and vesting of all assets, rights, liabilities and
obligations of the CPM Staff Housing Undertaking to Songadh Infrastructure & Housing Limited, and the
JKPM Staff Housing Undertaking to Jaykaypur Infrastructure & Housing Limited, both of which are our wholly
owned Subsidiaries, was filed with the High Court of Gujarat on March 19, 2010, and with the High Court of
Orissa on March 25, 2010, for their approval, pursuant to Sections 391 to 394 of the Companies Act. The High
Court of Gujarat and the High Court of Orissa sanctioned this Scheme of Arrangement by their orders dated
December 24, 2010 and October 1, 2010, respectively. The certified copies of the orders of the High Court of
Gujarat, approving the Scheme of Arrangement with effect from April 1, 2009, the appointed date as per the
Scheme of Arrangement, have been filed with the RoC on January 20, 2011. For details of the Scheme of
Arrangement, see ―History and Certain Corporate Matters‖ and ―-Note regarding Presentation‖ on pages 87
and 190, respectively.

In addition, in terms of a resolution passed by our Board on October 29, 2010, and a special resolution passed by
the shareholders of our Company on December 1, 2010, our Company has been authorized to issue securities,
including foreign currency convertible bonds, for an amount aggregating upto ` 250 crores. Our Company is,
subject to market conditions and applicable statutory and regulatory requirements, contemplating to offer, issue
and allot the 2011 FCCBs. In the event our Company proceeds with the allotment of 2011 FCCBs, our
Company shall make reservation of such number of Equity Shares to which the holders of the 2011 FCCB are
entitled to as on the Record Date, in favour of such holders.

Further, our Company has also availed of certain borrowing after September 30, 2010, as mentioned below.

Lender Particulars Amount sanctioned (` in

crore)
Yes Bank Limited Term loan pursuant to a sanction letter dated September 50.00
27, 2010 and loan agreement dated October 20, 2010
ICICI Bank Limited Tern loan pursuant to a sanction letter dated July 5, 125.00
2010, modified by letter dated September 9, 2010 and
loan agreement dated November 2, 2010
Exim Bank Term loan pursuant to a sanction letter dated January 10, 100.00
2011
Indian Bank Term loan pursuant to a sanction letter dated October 150.00
20, 2010
State Bank of India Term loan pursuant to a sanction letter dated September 250.00
28, 2010
DZ Bank Term loan pursuant to a sanction letter dated December 351.00*
21, 2010
* Calculated on exchange rate of ` 65.00 = 1 EURO, as provided in Appraisal Report.

For details, see ―Financial Indebtedness‖ on page 213.

Further, information as required pursuant to the SEBI ICDR Regulations and Government of India, Ministry of
Finance Circular No. F2/5/SE/76 dated February 5, 1997 as amended pursuant to Circular of even number dated
March 8, 1997 is set forth below.

Standalone (limited review) Financial Results for the quarter ended December 31, 2010

(` in crores)
Year
Third Quarter Ended Nine Months Ended
Particulars Ended
S.

No. 31.12.2010 31.12.2009 31.12.2010 31.12.2009 31.03.2010

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)

1. Gross Sales 367.46 311.39 1,069.65 951.57 1,299.57

Net Sales ( Net of

(a) Discounts & Excise Duty) 313.77 265.33 917.17 811.32 1,105.53

(b) Other Operating Income - 0.13 1.08 0.46 0.96

209
 Year
Third Quarter Ended Nine Months Ended
Particulars Ended
S.

No. 31.12.2010 31.12.2009 31.12.2010 31.12.2009 31.03.2010

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)

Total (1=a + b) 313.77 265.46 918.25 811.78 1,106.49

2. Expenditure:
(Increase) / Decrease in
stock-in-trade and Work in
(a) Progress (0.23) (16.74) 8.46 (13.38) 8.95
Consumption of Raw
(b) Materials 89.80 73.87 249.59 213.78 286.79

(c) Purchase of Traded Goods 11.10 18.07 19.41 37.04 43.98

(d) Power, Fuel and Water 35.67 30.87 103.11 90.64 118.49
Consumption of Stores,
(e) Spares and Chemicals 70.59 58.16 200.73 174.74 231.47

(f) Employees Cost 30.79 30.17 96.72 89.00 119.70

(g) Depreciation 18.19 17.94 53.81 53.05 70.04

(h) Other Expenditure 10.66 10.41 37.43 35.13 52.04

Total (2) 266.57 222.75 769.26 680.00 931.46

Profit from Operation before
Other Income, Interest &
3. Exceptional Items (1-2) 47.20 42.71 148.99 131.78 175.03

4. Other Income 0.54 0.10 1.77 0.31 0.39

Profit before Interest &
5. Exceptional Items ( 3+ 4) 47.74 42.81 150.76 132.09 175.42

6. Interest & Financial Charges -

(a) Interest Charges 8.82 11.04 25.86 34.16 44.66

Redemption Premium on
FCCBs ( refer Note No 5
(b) below ) 1.92 - 5.74 - -
(c) Forex :
- Forward
Premium/Realised Foreign
Exchange Loss (Gain) 1.23 0.84 3.07 0.91 1.99
- Unrealised Foreign
Exchange Loss (Gain) (0.25) 0.16 (0.28) 0.23 1.84
Profit after Interest but before
7. Exceptional Items (5-6) 36.02 30.77 116.37 96.79 126.93

8. Exceptional items - - - - -
Profit from Ordinary Activities
9. before Tax (7+8) 36.02 30.77 116.37 96.79 126.93
10. Tax Expense:

- Provision for Current Tax 11.17 5.18 37.38 17.57 23.57

- MAT Credit Entitlement - (5.18) - (17.51) (12.29)

- Provision for Deferred Tax (0.26) 10.42 (4.31) 32.80 24.62

210
 Year
Third Quarter Ended Nine Months Ended
Particulars Ended
S.

No. 31.12.2010 31.12.2009 31.12.2010 31.12.2009 31.03.2010

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)

Net Profit from Ordinary
11. Activities after Tax (9-10) 25.11 20.35 83.30 63.93 91.03
Extraordinary Items (net of tax
12. expenses) - - - - -

13. Net Profit (11-12) 25.11 20.35 83.30 63.93 91.03

Paid-up Equity Share Capital (Face
14. value Rs.10/-) 78.15 78.15 78.15 78.15 78.15
Reserves excluding Revaluation
15. Reserve 391.99
Earnings Per Share (`)
(before/after extraordinary items,
16. not annualised)

- Basic 3.21 2.60 10.66 8.18 11.64

- Diluted 3.21 2.53 10.66 7.96 11.33

- Cash 5.51 5.57 16.99 16.92 22.18

17. Public Shareholding :

- No.of Shares 4,72,50,400 4,72,50,400 4,72,50,400 4,72,50,400 4,72,50,400

- Percentage of Shareholding 60.46 60.46 60.46 60.46 60.46

Promoters and Promoter Group

18. Shareholding
a)Pledged /Encumbered
-Number of Shares NIL NIL NIL NIL NIL
-Percentage of Shares NIL NIL NIL NIL NIL

b)Non-encumbered

- No.of Shares 3,08,99,539 3,08,99,539 3,08,99,539 3,08,99,539 3,08,99,539

- Percentage of Shares ( as a % of
total shareholding of promoter and
promoter group) 100.00 100.00 100.00 100.00 100.00
- Percentage of Shares ( as a % of
total share capital of the Company) 39.54 39.54 39.54 39.54 39.54

Notes:

1. The Board has declared an Interim Dividend of ` 2.25 per share (22.5%) on Equity amounting to ` 17.58 crores
for the year 2010-11.
2. The Board has approved issue of further equity capital by way of Rights upto ` 250 crores for part funding of
Company's expansion project.
3. Pursuant to a Scheme of Arrangement under Sections 391-394 of the Companies Act, 1956, sanctioned by the
Hon'ble High Courts of Gujarat and Orissa, becoming effective on 20th January, 2011 and operative from 1st
April, 2009 (Appointed Date under the Scheme), the Staff Housing Undertakings of the Company stood
transferred and vested in the wholly owned subsidiaries namely "Songadh Infrastructure & Housing Ltd" ( SIHL)
and "Jaykaypur Infrastructure & Housing Ltd" ( JIHL) from the appointed date as going concerns. Impact of
scheme has been given in these results and all profits and / or losses and assets & liabilities relating to the Staff
Housing Undertakings have accordingly been transferred to SIHL and JIHL. The excess of consideration over the
book value of assets, net of liabilities, amounting to ` 29.92 crores has been credited to Capital Reserve Account
of the Company. Necessary steps for issue of securities as consideration by SIHL and JIHL are under
implementation.

211
4. The Company has redeemed 11,000 (Nos), 10% Cumulative Redeemable Preference Shares (Series E) of ` 100
each alongwith accrued dividend of ` 0.01 crore and premium payable on redemption on 30th June, 2010.
5. As on 31st December, 2010, provision has been made for 75% of the one time redemption premium payable on
maturity of FCCBs which are due for redemption on 30th March, 2011.
6. Information on the investors complaints for the quarter ended 31.12.2010 (Nos.) : Opening Balance - NIL, New -
2, Disposal – 2, Pending - NIL.
7. The Company has only one business segment namely, 'Paper and Board'.
8. The figures for the previous period have been regrouped / rearranged, wherever necessary.
9. These results have been reviewed by the Audit Committee and approved by the Board of Directors, at their
respective meetings held on 28th January, 2011. Limited Review of these results has been carried out by the
Auditors.

212
 FINANCIAL INDEBTEDNESS

Set forth below is a brief summary of our Company‘s significant secured borrowings of ` 424.14 crore and
unsecured borrowings of ` 73.66 crore, together with the amount outstanding as on September 30, 2010, and a
brief description of certain significant terms of such financing arrangements.

A. Secured loans of our Company

A.1 Domestic Borrowings

A.1.1 Term Loans

S. No Lender Facility and purpose of facility Repayment terms Amount Rate of

outstanding as interest as
on September on
30, 2010 (` in September
crore) 30, 2010
1. State Bank of Loan of ` 40 crore pursuant to Repayment of the 13.28 State Bank
India sanction letters dated October principal amount after of India
12, 2004 and October 25, 2004 a moratorium of 2 Applicable
and loan agreement dated years from the date of Rate minus
October 29, 2004 for the first disbursement, in 2.55%, i.e.;
purposes of import and 23 quarterly 9.70%
installation of an offline coating installments,
plant, a sheet cutter and a paper commencing on
machine head box December 31, 2006, in
terms of the repayment
schedule contained in
the loan agreement
dated October 29,
2004
2. Axis Bank Rupee term loan of ` 40 crore Repayment of the 26.00 Prime
Limited pursuant to sanction letter dated principal amount lending rate
June 15, 2007 and term loan within a period of five minus 3.50%
agreement dated September 13, years in 20 equal p.a.
2007, for the purpose of part quarterly installments, presently
financing capital expenditure of commencing on 11.75%
our Company in the ordinary January 2009, of ` 2
course of business crore each after a
moratorium of 12
months from the date
of first disbursement
3. State Bank of Loan of ` 37.11 crore pursuant Repayment of the 16.91 For the first
India to sanction letter dated March principal amount in 24 three years at
14, 2005 and loan agreement quarterly instalments 8.50%,
dated March 23, 2005, and the commencing on thereafter it
revised letter dated January 16, September 30, 2006, in would be
2007, for pre-repayment of the manner provided in reset at the
cumulative redeemable the loan agreement end of every
preference shares converted dated March 23, 2005 three years at
term loans from other banks. SBAR minus
1.75%,
presently
10.50%
4. State Bank of Rupee term loan of ` 50 crore Repayment of the 34.50 SBAR minus
India pursuant to sanction letter dated principal amount of 1.25%,
April 10, 2007 and loan the loan in 20 quarterly presently
agreement dated May 28, 2007, instalments, 11.00%
and modification letter dated commencing on March
January 24, 2008 for the purpose 31, 2008, in the
of inter alia part-financing of manner provided in the
capital expenditure for loan agreement dated
replacement of machinery parts, May 28, 2007
commissioning of a chlorine di-
oxide plant, installation of a

213
S. No Lender Facility and purpose of facility Repayment terms Amount Rate of
outstanding as interest as
on September on
30, 2010 (` in September
crore) 30, 2010
power project boiler, in ordinary
course of business
5. IDBI Bank Rupee loan of ` 70 crore Repayment in 50 equal 39.60 BPLR minus
Limited1 pursuant to sanction letter dated monthly instalments 1.75% with
August 1, 2008, and loan/facility beginning from April yearly reset,
agreement dated October 16, 2010 and ending May presently
2008, and reset letter dated 2014 11.50%
October 21, 2009 for the
purpose of part financing the
normal capital expenditure of
our Company and working
capital margin.
6. IDBI Bank Rupee term loan of ` 50 crore Repayment of 29.17 11% p.a.
Limited pursuant to sanction letter dated principal amount
January 29, 2008 and loan beginning from
agreement dated March 20, October 2009, in 12
2008 for the purpose of inter equal quarterly
alia meeting the capital instalments till July
expenditure of our Company in 2012
the ordinary course of business,
foreclosure of zero coupon loans
and investment in an SPV for
setting up lime kilns.
7. IDBI Bank Rupee term loan of ` 5.19 crore Repayment in eight 2.60 At 8.70%
Limited pursuant to loan agreement equal annual p.a. for the
dated July 1, 2006, for the instalments starting first three
purpose of refinancing a high from June 30, 2007, years from
cost loan availed by our and ending on June 30, the date of
Company 2014 first
disbursement
and
thereafter
every three
years the
sum of the
benchmark
rate plus 257
basis points,
presently
9.41%
8. IDBI Bank Rupee term loan of ` 45.70 Repayment in eight 22.85 At 8.70%
Limited crore pursuant to loan agreement equal quarterly p.a. for the
dated July 1, 2006, for the instalments starting first three
purpose of conversion of a part from June 30, 2007, years from
of 10% non-convertible and ending on June 30, the date of
redeemable preference shares 2014 disbursement
and
thereafter
every three
years the
sum of the
benchmark
rate plus 257
basis points,
presently
9.44%
9. Housing Rupee term loan of ` 28.75 Repayment of the two 4.34 CPLR minus
Development crore (divided in two tranches of tranches of ` 25 crore 0.50%,
Finance ` 25 crore and 3.75 crore and ` 3.75 crore in 84 presently
Corporation respectively) pursuant to a consecutive equated 14.25% with
Limited sanction letter dated March 15, monthly instalments quarterly

214
 S. No Lender Facility and purpose of facility Repayment terms Amount Rate of
outstanding as interest as
on September on
30, 2010 (` in September
crore) 30, 2010
2007, and a loan agreement commencing from reset
dated March 27, 2007, for the May 2009 and ending
purpose of financing of existing April 2016
immovable and movable
properties located at the Unit
JKPM and the Unit CPM and
residential colony of the Unit
CPM
10. IFCI Limited Pursuant to the Scheme of Eight equal annual 4.50 8.50% p.a.
Compromise and the approval of instalments
our shareholders in general commencing from
meeting on December 2, 2004, June 30, 2007 and
and letter dated March 23, 2005, ending on June 2014
for conversion of 10% CRPS of
approximately ` 8.99 crore (out
of ` 9.27 crore) into term loan
11. Yes Bank Term loan of ` 50 crore for (a) Repayment of the Nil2 For the term
Limited meeting capital expenditure/ term loan in eight loan and the
long term working capital and equal half yearly sub-limit - at
revolving short term loan as a instalments the banks‘
sub limit of the term loan for ` commencing from the base rate
50 crore pursuant to a sanction date of the loan plus 1.75%
letter dated September 27, 2010 agreement p.a. payable
and loan agreement dated (b) Repayment of the monthly
October 20, 2010 sub limit of the term presently
loan, i.e. the revolving 9.25%
short term loan will be
bullet repayment at the
end of each tenor
12. ICICI Bank Rupee term loan A of ` 95.00 Rupee term loan A is Nil3 3.00% plus
Limited crore and rupee term loan B of ` repayable in 20 ICICI bank-
30.00 crore for the purposes of quarterly installments base rate at
part refinancing of the existing with first installment the time of
debt obligations of our being due 27 months disbursement
Company and normal capital from the first of each
expenditure, respectively, drawdown date with a tranche and
pursuant to a sanction letter total period of seven shall be reset
dated July 5, 2010, modified by years from the date of at the end of
letter dated September 9, 2010 first drawdown. every 12
and loan agreement dated months from
November 2, 2010. Rupee term loan B is the date of
repayable in 20 first
quarterly installments disbursement
with first installment of first/each
being due 15 months tranche,
from the first presently
drawdown date with a 10.50%
total period of six
years from the date of
the first drawdown
1
Our Company has taken disbursement of ` 45 crores only and the balance undrawn portion of ` 25 crores has been cancelled by IDBI
Bank pursuant to its letter dated October 16, 2010.
2
Our Company has not yet taken disbursement.
3
Our Company has taken a disbursement of ` 30 crore on December 21, 2010.

Further, ICICI Bank and HDFC Bank have granted vehicle loans to our Company, aggregating to ` 0.94 crore,
at varying rate of interest. The security for the loans is hypothecation of the vehicle. The total amount
outstanding as on September 30, 2010 is ` 0.12 crore.

215
A.1.2. Working Capital Loans (Fund Based Limits)

S. Lender Facility and purpose of Repayment terms Amount Rate of interest as on

N facility outstanding September 30, 2010
o as on
September
30, 2010 (` in
crore)
13. Axis Bank Limited Working capital loan of ` Repayable on 11.10 (a) For cash credit –
35 crore (along with a demand. BPLR minus 3.75%
sub-limit for export p.a., presently 11.50%
packing credit of ` 9 (b) For export
crore, foreign bills packing credit- BPLR
purchased/discounted of minus 4.25% p.a.,
` 6 crore) pursuant to presently 11.00% p.a.
sanction letter dated (c) For foreign bills
October 26, 2009 and purchased/discounted-
loan agreement dated (i) for demand bills
July 8, 2010 for the for transit period-
purpose of meeting BPLR minus 4.25%
working capital p.a., presently 11.00%
requirements valid for a p.a.
period of 1 year (ii) for usuance bills-
BPLR minus 4.00%
p.a., presently 11.25%
14. IDBI Bank Limited Working capital loan of ` Repayment on due 9.59 BPLR minus 1.00%
17.50 crore pursuant to date p.a., presently 12.25%
sanction letter dated p.a.
October 3, 2009, and
loan agreement dated
July 8, 2010 valid for a
period of one year for the
purposes of meeting
working capital
requirements of our
Company
15. State Bank of India Working capital loan of ` Repayment on a) 41.93 (a) For cash credit at
105 crore (along with a demand BPLR, presently
sub-limit of ` 14 crore as b) 20.00 – 12.25%;
export packing credit and working (b) for export packing
` 11 crore as foreign bills capital credit and foreign
purchased/discounted) demand loan bills
pursuant to sanction purchased/discounted,
letter dated January 4, as per RBI directives;
2010 and loan agreement and
dated July 8, 2010, valid (c) for working
for a period of one year capital demand loan,
for the purposes of 7.75% p.a.
meeting working capital
requirements of our
Company
16. Canara Bank Working capital loan of ` Repayable on demand 10.17 BPLR – 1.00%,
17.50 crore pursuant to presently 11.50%
sanction letter March 5,
2010 and loan agreement
dated July 8, 2010, for
the purposes of meeting
working capital
requirements of our
Company

A.1.3. Working Capital Loans (Non-Fund Based Limit)

S. No Lender Facility and purpose of facility

1. Axis Bank Letter of credit of ` 30 crore (along with a sub-limit of ` 6 crore as loan equivalent risk and of `
Limited 5 crore as cash management service facility) pursuant to sanction letter dated October 26, 2009

216
 S. No Lender Facility and purpose of facility
and loan agreement dated July 8, 2010 for the purpose of procurement of raw material packing
material stores and spares
2. IDBI Bank Letter of credit/ bank guarantee of ` 35.00 crore pursuant to sanction letter dated October 3,
Limited 2009 and loan agreement dated July 8, 2010 for the purposes of meeting working capital
requirements of our Company
3. State Bank of Letter of credit for ` 60 crores (with sub-limit of ` 25 crores for one time capital expenditure)
India and bank guarantee for ` 25 crores, pursuant to sanction letter dated January 4, 2010 and loan
agreement dated July 8, 2010

A. 2. Foreign Currency Borrowings

S. No. Lender Facility and purpose of facility Repayment terms Amount Rate of
outstanding as interest as on
on September September 30,
30, 2010 (in 2010
crore)
1. IDBI Bank Foreign currency loan dated Repayable in 14 equal JPY 104.97 175 basis
September 15, 2006 for half yearly installments crore points over the
approximately JPY 120.74 crore commencing on July (equivalent to ` six months
pursuant to a foreign currency 15, 2009, as per the 56.37 crore as LIBOR for
loan agreement for amortization schedule per the Japanese yen
diversification into contained in the foreign prevailing RBI payable semi
manufacturing of packaging currency loan reference rate annually,
board at the Unit CPM agreement September of ` 0.5370 = 1 presently
15, 2006. The loan is JPY as on approximately
for a period of seven September 30, 2.22%
years, with a 2010)
moratorium of three
years, beginning from
July 2009 to January
2016. The loan in
Japanese Yen is only
up to January 15, 2011,
thereafter it shall be
designated in such
currency and on such
terms as may be
mutually decided
subject to the
repayment of loan
being completed by
January 15, 2016
2. Landesbank Loan agreement (No. 10 equal, consecutive EUR 0.07 crore EURIBOR (i.e.
Baden- 664/32055206) dated November semi-annual (equivalent to ` the Eurozone
Wurttemberg 13, 2006 for approximately EUR instalments beginning 4.30 crore as Interbank
(―LBW‖) 0.24 crore for financing 85% of August 2007 and per the Offered Rate
the value of an export contract ending on February prevailing RBI for six months
for packaging molding line 2012 reference rate deposits) plus a
model 32 dated March 6, 2005. of ` 61 = 1 margin of
EUR as on 0.30% p.a.,
September 30, presently
2010) 1.45%
3. International Loan agreement (Investment no. Repayment of principal USD 1.41 crore Sum of 2.20%
Finance 24171) dated March 8, 2006 for amount due of Tranche (equivalent to ` p.a over the
Corporation tranche A loan of USD 1 crore A Loan in 15 semi- 63.34 crore as principal
(―IFC‖) (―Tranche A Loan‖) and stand- annual installments per the amount plus
by tranche B loan of USD 0.5 commencing on June prevailing RBI LIBOR on the
crore (―Tranche B Loan‖) and 15, 2009, in the manner reference rate date of
additional loan agreement provided in the loan of ` 44.92 = 1 determination
(Investment no. 24171) dated agreement dated March USD as on of interest,
February 6, 2008 for activating 8, 2006. September 30, presently
the Tranche B Loan, and 2010) 2.95%;
modification letter dated May 19, The Tranche B Loan is
2008 (the ―IFC Loans‖). repayable in 15
approximately equal

217
S. No. Lender Facility and purpose of facility Repayment terms Amount Rate of
outstanding as interest as on
on September September 30,
30, 2010 (in 2010
crore)
The purpose of IFC Loans is to semi-annual
incur capital expenditure in installments starting on
relation to setting up of following June 15, 2011.
new facilities at Unit CPM:
60,000 tpa capacity coated
duplex board plant based on
re-cycled waster paper and
surplus pulp;
a coal and pet coke fired boiler
of 70 tons per hour capacity
and 12 MW turbo generator
set;
an oxygen delingnification
plant comprising a oxygen
generation plant of 170 m3/hr
and oxidation plant of 2.1
m3/hr;
projects related to lime kiln,
A4 cutter, ―ERP‖ and
modernization.
Cleaner Production Loan Repayment of principal USD 0.30 crore The sum of the
Agreement (Investment no. amount in three equal, (equivalent to ` relevant spread
28233) dated June 15, 2009 of consecutive semi- 13.48 crore as i.e. 2.65% p.a.
USD 0.30 crore to finance the annual instalments per the and LIBOR as
cleaner production project starting on January 15, prevailing RBI on the interest
consisting of a series of 2012. reference rate determination
investments in energy and water of ` 44.92 = 1 date for that
efficiency and improved product USD as on interest period
quality through increased fiber September 30, for six months,
recovery. 2010) presently
3.38%

Under the terms of the above-mentioned domestic secured loans, we have undertaken not to do any of the
following without the prior written consent of our lenders:

effect any change in our capital structure including the shareholding pattern of our Company;
undertake any new project, diversification, modernization or substantial expansion of the project for the
purposes of which the loan was taken;
issue any debentures, loans, accept deposits from the public, or equity or preference capital, or change the
capital structure of our Company;
repay any loans and deposits and discharge other liabilities except those shown in the funds flow statement
submitted from time to time;
conclude any fresh borrowing arrangement with any bank or financial institution, and create any further
charge over the fixed assets of our Company;
invest by way of share capital in or advance to or place deposits with any other concern;
enter into any transaction of merger, consolidation, re-organization, scheme of arrangement or compromise
or effect any scheme of amalgamation or reconstruction or formulate any scheme of amalgamation with any
other borrower or reconstruction, or acquire any borrower;
declare dividend for any year except out of profits relating to that year;
make any substantial change in the constitution and management set-up of our Company;
create any subsidiary or permit any company to be its subsidiary;
make any change in our MoA or Articles of Association; and
withdraw monies brought into the business of our Company, the principal shareholders, directors and
depositors of our Company.

Under the terms of the above mentioned foreign currency borrowings, we have undertaken not to do any of the
following without the prior written consent of the lenders:

218
 declare dividends or make any distribution on its share capital (other than dividends or distribution payable
in shares of our Company);
make a payment under any subordinated debt or shareholder loans (except bridge loans/inter-corporate
deposits);
purchase, redeem or otherwise acquire any shares of our Company or any option over them unless the
proposed payment or distribution is out of retained earnings and our Company no earlier than 60 days nor
later than 30 days prior to doing so certifies the lender in a form as agreed between them.;
undertake any new project, diversification, modernization or substantial expansion of the projects for which
our Company has availed the financial assistance;
issue any debentures, raise any loans, deposits from the public, issue equity or preference capital, change its
capital structure or create any charge on its assets or give any guarantees;
create any subsidiary or permit any company to become its subsidiary;
undertake or permit any merger, consolidation, reorganization, scheme of arrangement or compromise with
its creditors and shareholders, or effect any scheme of amalgamation or reconstruction;
pay any commission to its promoters, directors, managers or any other persons for furnishing guarantees,
counter guarantees, or indemnities or for any other financial assistance;
carry out any alterations to the MoA/AoA as may be deemed necessary in the opinion of the lenders to
safeguard the interests of the lenders arising out of the loan agreements;
make any investments including by way of deposits, loans, share capital in any concern;
revalue assets at any time during the currency of the financial assistance;
remove any person from the Board, exercising substantial powers of management of affairs of our
Company during the currency of the financial assistance; and
recognize or register any transfer of shares in the share capital of our Company made or to be made by
promoters, their friends or associates as specified by the lenders.

The borrowings (both domestic and foreign) have been secured by:

A first pari passu mortgage/charge on the fixed assets of our Company both present and future in favour of
the lenders save and except specific assets exclusively charged in favour of the specified lenders of our
Company;
A first pari passu mortgage/charge on the fixed assets of our Company save and except specific asstes
exclusively charged in favour of specified lenders and/or a second charge on the current assets of our
Company;
A first charge by way of hypothecation in favour of the lenders of all the movable properties pertaining to
our Company, both present and future, including book debts, movable machinery, machinery spares, tools
and accessories, stocks of raw materials, semi-finished and finished goods, stock-in process, consumable
stores and spare parts and such other movables as may be agreed by the lender for securing the financing,
and second charge on fixed assets of the Company; and
Specific items of plant and machinery and equipments purchased by our Company.

B. Unsecured loans of our Company:

S. Lender Facility and purpose of Repayment terms/ Amount Rate of interest as on

No. facility Due date outstanding September 30, 2010
as on
September,
2010 (In `
crore)
1. Fixed Public deposit under Section 0-1 Year 6.52 crore 30.58 (a) for 1 year 8.00%
Deposits 58A of the Companies Act. 1-2 Year 5.20 crore (b) for 2 years 8.25%
2-3 Year 18.86 crore (c) for 3 years 8.50%

For outstanding fixed

deposits, rate of
interest varies from
8.00%-10.00%.
2. State Bank Buyers credit of USD 0.125 February 1, 2011 5.60 6 month Libor plus
of India crore pursuant to letter dated 120 basis point
August 6, 2010, for the presently, 1.84%
purposes of purchase of pulp
for our Company

219
 S. Lender Facility and purpose of Repayment terms/ Amount Rate of interest as on
No. facility Due date outstanding September 30, 2010
as on
September,
2010 (In `
crore)
3. State Bank Buyers credit of USD 0.123 February 16, 2011 5.52 6 month Libor plus
of India crore pursuant to letter dated 140 basis point,
August 21, 2010, for the presently 1.96%
purposes of purchase of pulp
for our Company
4. State Bank Buyers credit of USD 0.043 February 16, 2011 1.93 6 month Libor plus
of India crore pursuant to letter dated 140 basis point,
August 21, 2010, for the presently 1.96%
purposes of purchase of pulp
for our Company
5. IDBI Bank Buyers credit of USD 0.021 January 21, 2011 0.94 6 month Libor plus
Limited crore pursuant to letter dated 130 basis point,
July 26, 2010, for the purposes presently 2.00%
of purchase of pulp for our
Company
6. IDBI Bank Buyers credit of USD 0.023 January 25, 2011 1.02 6 month Libor plus
Limited crore pursuant to letter dated 130 basis point
July 29, 2010, for the purposes presently 1.98%
of purchase of pulp for our
Company
7. Axis Bank Buyers credit of USD 0.042 February 14, 2011 1.87 6 month Libor plus
Limited crore pursuant to letter dated 140 basis point
August 18, 2010, for the presently 1.98%
purposes of purchase of pulp
for our Company
8. Landesbank Loan agreement (No. 10 equal half yearly 3.74 6 month Libor plus a
Baden- 664/31010608) dated May 22, installments, margin of 0.40% p.a.
Wurttemberg 2008 for approximately EURO beginning from April presently 0.86%
0.075 crore for equivalent 2009 and ending on
amount of USD 0.119 crore October 2013
for financing head box
9. Foreign currency convertible bonds* 22.46

*Our Company by way of an offering circular dated March 30, 2006 (the ―Offering Circular‖), issued 1.25%
unsecured foreign currency convertible bonds for an aggregate value of USD 50,00,000 due for redemption on
March 30, 2011 at 130.441% of their principal amount (the ―FCCBs‖), and 77,00,000 global depositary receipts
(the ―GDRs‖). The FCCBs are listed on the Luxembourg Stock Exchange. As of the date of this Draft Letter of
Offer, none of the FCCBs have been redeemed, cancelled or converted. For further details on our unsecured
borrowings see, ―Financial Statements‖ on page 141. Further in terms of the Offering Circular and the trust
deed with The Bank of New York (acting through its London branch), as trustees for the FCCB holders dated
March 30, 2006 (the ―Trust Deed‖), our Company has agreed to a negative pledge as one of the terms and
conditions for the issue of the FCCBs. Under the covenant of negative pledge our Company has agreed, amongst
other things, that, (a) it will not and will procure that none of its Principal Subsidiary (as defined in the Offering
Circular) will create, or permit to subsist or have outstanding any mortgage, charge, pledge, lien (other than a
lien arising by operation of law) or other form of encumbrance or security interest (the ―Security‖) upon, or
with respect to, the whole or any part of its undertaking, assets, business, property, uncalled capital or revenues,
(including any right to receive revenues) (the ―Assets‖) present or future wherever situated to secure any
Relevant Debt (as defined in the Offering Circular), or any guarantee of or indemnity in respect of any Relevant
Debt, (b) it will not, and will procure that no other person, create or permit to subsist any Security upon the
whole or any part of the Assets present or future of that other person to secure (i) any of our Company's or any
Principal Subsidiary's Relevant Debt, or any guarantee of or indemnity in respect of any of our Company's or
any Principal Subsidiary's Relevant Debt, or (ii) where the person in question is a Principal Subsidiary of our
Company, any of the Relevant Debt of any person other than that Principal Subsidiary, or any guarantee of or
indemnity in respect of any such Relevant Debt, and (iii) it will procure that no other person gives any guarantee
of, or indemnity in respect of, any of our Company's or any Principal Subsidiary's Relevant Debt; unless, at the
same time or prior thereto, our Company's obligations under the FCCBs and the Trust Deed, (aa) are secured
equally and rateably therewith or benefit from a guarantee or indemnity in substantially identical terms thereto,
as the case may be, in each case to the satisfaction of the trustee or (bb) have the benefit of such other security,
220
guarantee, indemnity or other arrangement not materially less beneficial to the FCCB holders as approved by an
extraordinary resolution (as defined in the Trust Deed) of the FCCB holders.

C. Sanctions obtained by our Company for financing the proposed expansion of Unit JKPM

S. Lender Date of Amount Rate of interest Repayment terms

No sanction sanctioned (` in
crore)
1. Axis Bank September 150.00 Base rate + Repayment in 28 equal quarterly
21, 2010 3.00% installments after a moratorium of 2.5 years
from the date of first disbursement.
2. Exim Bank January 10, 100.00 SBI Base rate + Repayment in 25 equal quarterly
2011 250 bps installments commencing after two years
from the date of project completion.
3. Indian October 20, 150.00 Base Rate + TP Repayment in 36 equal quarterly
Bank 2010 (1.50%) + 0.50% installments after a moratorium of four years
from the date of first disbursement.
4. State Bank September 250.00 Base rate + Repayment in 25 equal quarterly
of India 28, 2010 2.75% installments commencing from March 31,
2014.
5. DZ Bank December 351.00* 6-month Repayment in 20 equal consecutive semi-
21, 2010 EURIBOR + annual installments commencing from
0.85% March 31, 2013.
Total 1001.00
* Calculated on exchange rate of ` 65.00 = 1 EURO, as provided in Appraisal Report.

As certified by Lodha & Co., Chartered Accountants vide their certificate dated January 28, 2011, as of December 31, 2010,
the Company has not drawn down the aforementioned facilities.

Under the terms of the above-mentioned borrowings, we have undertaken not to do any of the following without
the prior written consent of our lenders:

effect any change in our capital structure;

permit transfer of controlling interest or make any drastic change in the management set-up;
formulate any scheme of amalgamation or reconstruction;
declare dividend except out of profits relating to that year, only after making due provisions and provided
further that no default had occurred in any repayment obligations;
create any charge, lien or encumbrance over assets or any part thereof in favour of any financial
institution, bank, company, firm or persons;
sell, assign, mortgage or otherwise dispose of any fixed assets which are charged;
enter into any contractual obligation of a long term nature, affecting our Company financially to a
significant extent;
make further investment in subsidiary/ group companies either in the form equity or loans and advances;
invest in capital assets;
extend financial guarantee;
repay unsecured loans extended by the promoters;
undertake modernization/ expansion/ diversification/ new project schemes;
enter into borrowing arrangements either secured or unsecured, with any other bank, financial institution,
and company or otherwise or accept deposits apart from the arrangements indicated in the funds flow
statements submitted to the lenders;
undertake job works.

The above-mentioned borrowings have been secured by first pari-passu charge over the entire fixed assets of
Unit JKPM, both present and future, save and except specific assets exclusively charged in favour of the
specified lenders of our Company.

221
 STOCK MARKET DATA FOR EQUITY SHARES OF THE COMPANY

The Company‘s Equity Shares are listed on the Stock Exchanges. As the Company‘s shares are actively traded
on the Stock Exchanges, stock market data has been given separately for each of these Stock Exchanges.

The closing price of the Equity Shares on Janauary 28, 2011, the day on which the resolution of the Board of
Directors approved this Issue, was ` 51.00 and ` 51.15 on the BSE and the NSE, respectively.

The high and low closing prices recorded on the BSE and NSE for the preceding three years and the number of
Equity Shares traded on the days the high and low prices were recorded are stated below.

BSE

Volume on Volume on
Year date of high date of low Average
ending (no. of Date of (no. of price for the
March 31 High (`) Date of High shares) Low (`) Low shares) year (`)
January 18, April 1,
2010 52.30 2010 2,93,488 16.05 2010 9,877 36.06
March 12,
2009 41.55 May 5, 2009 47,433 14.12 2009 3,738 25.66
March 24,
2008 64.45 January 7, 2008 7,74,620 33.05 2008 27,916 42.23
Source: www.bseindia.com

NSE

Volume on Volume on
Year date of high date of low Average
ending (no. of Date of (no. of price for the
March 31 High (`) Date of High shares) Low (`) Low shares) year (`)
January 18, April 1,
2010 52.30 2010 5,29,324 16.05 2010 9,040 36.12
March 9,
2009 41.30 May 5, 2009 62,644 14.10 2009 8,235 25.65
March 24,
2008 64.45 January 7, 2008 6,92,912 33.10 2008 20,482 42.24
Source: www.nseindia.com

The average volume of Equity Shares traded in the BSE and the NSE were 1,01,918 and 1,66,433 Equity Shares
per day respectively for the six month period from July 1, 2010 to December 31, 2010. The number of trading
days in this period was 129 days. The high and low prices and volume of Equity Shares traded on the respective
dates during the last six months is as follows:

BSE

Volume on Volume on
date of high date of low Volume of
Month, (no. of (no. of trade on
Year High (`) Date of High shares) Low (`) Date of low shares) monthly basis
December December 2, December 9,
2010 58.55 2010 39,516 53.55 2010 88,446 8,50,490
November November 1, November 26,
2010 71.70 2010 91,695 56.30 2010 54,502 8,55,154
October October 27, October 1,
2010 73.65 2010 2,93,140 65.85 2010 36,126 22,30,969
September September 20, September 3,
2010 69.80 2010 3,77,044 60.65 2010 61,758 36,36,641
August August 2,
2010 61.60 August 23, 2010 1,55,169 55.50 2010 58,387 36,29,442

July 2010 58.70 July 15, 2010 1,13,773 54.10 July 30, 2010 37,829 19,44,781
Source: www.bseindia.com

222
NSE

Volume on Volume on
Volume of
Month, date of high date of low
High (`) Date of High Low (`) Date of low trade on
Year (no. of (no. of
monthly basis
shares) shares)
December December 2, December 9,
2010 58.90 2010 79,803 53.25 2010 1,61,423 12,81,429
November November 1, November 26,
2010 71.85 2010 3,27,485 56.15 2010 86,418 18,55,039
October October 28, October 1,
2010 73.60 2010 3,38,686 65.95 2010 37,851 35,31,676
September September 20, September 3,
2010 69.80 2010 6,44,911 60.75 2010 54,125 54,12,077
August August 23, August 2,
2010 61.35 2010 1,81,438 55.25 2010 1,07,644 55,80,158

July 2010 58.70 July 15, 2010 3,19,635 54.05 July 30, 2010 74,264 38,09,420
Source: www.nseindia.com

223
 SECTION VI – LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS

Except as stated below there are no outstanding litigation, suits, criminal or civil prosecutions, proceedings or
tax liabilities against our Company, our Subsidiaries and Directors and there are no defaults, non-payment of
statutory dues, over-dues to banks/financial institutions, defaults against banks/financial institutions, defaults in
dues payable to holders of any debenture, bonds and fixed deposits and arrears of preference shares issued by
our Company, defaults in creation of full security as per terms of issue/other liabilities, proceedings initiated for
economic/civil/any other offences (including past cases where penalties may or may not have been awarded and
irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act)
other than an unclaimed liability of our Company or Subsidiaries and no disciplinary action has been taken by
SEBI or any stock exchanges against our Company, our Subsidiaries or Directors.

Litigation involving our Promoter and Group Companies

Except as stated below there is no (i) outstanding litigation against the Promoter and the Group Companies
whose outcome could have a material adverse effect on the consolidated results of operations or financial
condition of such entity; (ii) default to the financial institutions or banks; (iii) non-payment of statutory dues and
dues towards instrument holders such as debt instrument holders, fixed deposits and arrears on cumulative
preference shares, by the Promoter and the Group Companies; (iv) proceeding initiated for economic offences or
civil offences (including the past cases, if found guilty), any disciplinary action taken by SEBI or any
recognized stock exchange against the Promoter or the Group Companies; (v) default or litigation relating to
lock-outs or strikes against the Promoter or the Group Companies; (vi) litigation against the Promoter or Group
Companies involving violation of statutory regulations or alleging criminal offence; (vii) adverse finding in
respect of the persons/entities connected with the Promoter or Group Companies in respect of compliance with
securities laws; and (viii) past case in which penalties were imposed by relevant authorities.

With respect to litigation information on our Promoter and Group Companies disclosed pursuant to sub clause
(i) above, we have included pending matters which, in such entities reasonable judgment, if determined
adversely, may result in a material adverse effect on the consolidated results of operations or financial condition
of such entity.

I. Litigation Involving our Company:

Set forth below are the details of all civil cases, tax related cases, arbitration proceedings, land
acquisition/compensation cases, land encroachment cases, labour disputes and consumer cases involving our
Company.

A. Cases filed against our Company

1. Civil Cases

There are three civil cases pending in various courts against our Company. These cases primarily relate
to land acquisition and environment related matters. The total amount of claims, against our Company
aggregates to approximately ` 7.56 crore. Material cases are described below.

(i) N.M. Shah filed a petition in the High Court of Gujarat, against the acquisition proceedings carried out
by the land acquisition officer for acquisition of 34.67 acres of land at Gunsada village, to be
transferred to the Company. N.M. Shah alleged that he did not get an opportunity for hearing under
section 4A of Land Acquisition Act, and therefore the entire acquisition proceedings should be
cancelled. Pursuant to its order dated March 5, 2007, the High Court of Gujarat did not grant a stay on
acquisition proceedings. Against the order of the High Court of Gujarat, N.M. Shah filed a petition for
special leave to appeal before the Supreme Court. In terms of the order dated April 10, 2007, the
Supreme Court ordered that the status quo shall continue to operate, as the point in issue has already
been referred by the Supreme Court to the Constitutional Bench. The matter is pending.

(ii) Mr. N. Subramaniyam and four others have filed a writ petition (OJC 9752/97) under Articles 225 and
227 of the Constitution of India against JKLC, and five others including, State of Odisha, District
Magistrate-cum-Collector, Rayagada, District Agriculture Officer, Rayagada, Central Institute for
Cotton Research and the State Pollution Control Board, before the Orissa High Court on July 16, 1997.

224
 The petitioners have alleged that JKLC has been polluting the environment and discharging waste
effluents created in the manufacturing process in to the river Nagavali as well as discharging dust and
smoke contaminated with poisonous chemicals into the air of the locality where the petitioners along
with other farmers are cultivating cotton crops on a commercial basis, causing damage to such cotton
crops. The petitioners have also challenged inaction on the part of the other five respondents in
preventing JKLC from causing such environmental pollution. As part of the JK Group restructuring
exercise carried out in September 2001, the paper division of JKLC (then named as ‗J.K. Corp
Limited‘) was transferred to our Company, and accordingly JKLC was replaced by our Company as the
petitioner in the case. The petitioners have estimated a loss at the rate of ` 26,000 per acre of land on
which cotton cultivation is carried out and total damages of approximately ` 90 lakhs. The petitioners
have prayed before the Orissa High Court to issue show cause to the other five respondents as to why
they have not prevented the Unit JKPM from carrying out such environmental pollution, to issue a writ
of mandamus directing the other five respondents to assess the total damage of cotton crops and realize
the same from our Company and pay the same to the affected farmers of the locality and to ensure that
our Company takes necessary steps for prevention of pollution. JKLC and the other five respondents
have submitted their written submissions to the Orissa High Court. The matter is currently pending.

(iii) SVA Agencies Private Limited has filed a recovery suit (B-33 of 2000) before the Civil Judge (Senior
Division), Bardoli against the Company. S.V. Agencies has claimed an amount aggregating to ` 6.66
crores in the form of dues in relation to arrangement between SVA Agencies and our Company
operating for the period from October 1989 and January 1991.

2. Labour Cases

There are 21 labour cases pending in various courts against our Company. These cases primarily relate
to recovery of subsistence allowances, payment of provident fund, applicability of productivity norms
to employees, compensation claims, re-instatement claims, back wages claims and termination related
matters. The total amount of claims, against our Company aggregates to approximately ` 0.56 crore.
Material cases are described below.

(i) JK Paper Mills Contract Sramika Sangh, a union representing 1,800 workers engaged with 31
contractors working for the Unit JKPM and unrecognized by our Company, filed a complaint on
November 23, 2004 before the Regional Provident Fund Commissioner, Bhubaneshwar, alleging that
the 1,800 workers were not extended the benefits of the employee provident fund. A detailed inquiry
was conducted by the Regional Provident Fund Commissioner, Bhubaneshwar and, acting on the
findings of the inquiry, proceedings were initiated before the Assistant Provident Fund Commissioner,
Berhampur. The Assistant Provident Fund Commissioner, Berhampur delivered an order dated June 12,
2006, stating that an amount of ` 33,23,592 along with applicable interest should be paid by our
Company as contribution towards the employee provident fund for the 1,800 workers. Our Company
filed an appeal before the Orissa High Court against the order of the Assistant Provident Fund
Commissioner, Berhampur dated June 12, 2006 and the Orissa High Court passed an interim order
dated September 11, 2006, stating that no coercive action for realisation of the employee provident
fund dues should be taken against our Company subject to our Company depositing a sum of `
5,00,000 as deposit. Our Company has subsequently deposited ` 5,00,000 with JK Paper Limited (JK
Paper Mills) Compulsory Employees Provident Fund Trust on September 21, 2006. The Company
filed a writ petition dated September 1, 2006, against the order of the Assistant Provident Fund
Commissioner before the High Court of Orissa, with a prayer to direct the Assistant Provident Fund
Commissioner to review its order dated June 12, 2006. In terms of the order dated March 28, 2008, the
High Court of Orrissa remitted the matter back to Assistant Provident Fund Commissioner, Behrampur
for fresh equiry and with a direction to provide reasonable opportunity to all the concerned parties. The
matter is pending. The total amount involved is ` 0.33 crore. The matter is currently pending.

3. Excise cases

Our Company is involved in 47 payment of excise duty related legal proceedings before various
statutory authorities and courts in India, comprising an aggregate claim of approximately ` 40.94 crores
against our Company. Some of the important proceedings among these are described below:

Proceedings in relation to Unit JKPM

225
Our Company is involved in 39 payment of excise duty related legal proceedings before various
statutory authorities and courts in India, comprising an aggregate claim of approximately ` 40.13 crores
against our Company. Some of the important proceedings among these are described below:

(i) Our Company received a show cause notice (C.No.V(48)15/B-

1/ADJN/CENVAT/41/04/3362A) dated February 10, 2005, from the Commissioner of Central
Excise and Customs, Bhubaneshwar-I Commissionerate, alleging that for the period from
April 1, 2000 to February 28, 2002, our Company had contravened the provisions of Rule
57CC of the Central Excise Rules, 1944 by not maintaining separate accounts and by not
reversing the credit of MODVAT/CENVAT on inputs used in the manufacture of pulp, which
were sold or cleared without payment of the necessary duty of 8% of the sale price.
Accordingly, the Commissioner of Central Excise and Customs, Bhubaneshwar-I
Commissionerate has made a demand of ` 58,39,343 along with interest and penalty. Our
Company has filed a reply on May 4, 2005 and attended the personal hearing on November
30, 2005. The matter is pending.

(ii) Our Company received a show cause notice (C.No.V(48)15/B-

1/ADJN/CENVAT/41/04/3365A) dated February 10, 2005, from the Commissioner of Central
Excise and Customs, Bhubaneshwar-I Commissionerate, alleging that for the period from
March 1, 2002 to March 31, 2004, our Company had contravened the provisions of Rule
57CC of the Central Excise Rules, 1944 by not maintaining separate accounts and by not
reversing the credit of MODVAT/CENVAT on inputs used in the manufacture of pulp, which
were sold or cleared without payment of the necessary duty of 8% of the sale price.
Accordingly, the Commissioner of Central Excise and Customs, Bhubaneshwar-I
Commissionerate has made a demand of ` 3,61,64,615 along with interest and penalty. Our
Company has filed a reply on May 4, 2005 and attended the personal hearing on November
30, 2005. The matter is pending.

(iii) Our Company received a show cause notice (C.No.V(48)15/B-

1/ADJN/CENVAT/41/04/8933A) dated May 6, 2005, from the Commissioner of Central
Excise and Customs, Bhubaneshwar-I Commissionerate, alleging that for the period from
April 1, 2004 to February 28, 2005, our Company had contravened the provisions of Rule
57CC of the Central Excise Rules, 1944 by not maintaining separate accounts and by not
reversing the credit of MODVAT/CENVAT on inputs used in the manufacture of pulp, which
were sold or cleared without payment of the necessary duty of 8% of the sale price.
Accordingly, the Commissioner of Central Excise and Customs, Bhubaneshwar-I
Commissionerate has made a demand of ` 2,88,98,923 along with interest and penalty. Our
Company has filed a reply on June 6, 2005 and attended the personal hearing on November
30, 2005. The matter is pending.

(iv) Our Company received a show cause notice (C.No.V(48)15/ADJN/B-1

/CENVAT/39/05/10394A) dated May 30, 2005, from the Commissioner of Central Excise and
Customs, Bhubaneshwar-I Commissionerate, alleging that for the period from March 1, 1999
to February 28, 2002, our Company had contravened the provisions of Rules 57CC and 57AD
of the Central Excise Rules, 1944, Rule 6(3) of the CENVAT Credit Rules, 2001 as amended
by schedule 4 to Section 82 and schedule 5 to Section 83 of Finance Act, 2005 by not
maintaining separate accounts and by not reversing the credit of MODVAT/CENVAT on
inputs used in the manufacture of pulp, which were sold or cleared without payment of the
necessary duty of 8% of the sale price. Accordingly, the Commissioner of Central Excise and
Customs, Bhubaneshwar-I Commissionerate has made a demand of ` 5,89,26,261 along with
interest and penalty. Our Company has filed a reply on July 6, 2005 and attended the personal
hearing on November 30, 2005. The matter is pending.

(v) Our Company received a show cause notice (C.No.V(47&48)15/Adjn/B-1 /IIA/65/05/6190A)

dated April 4, 2006, from the Commissionerate of Central Excise, Customs and Service Tax,
Bhubaneshwar-I, alleging that for the period from March 2005 to August 2005, our Company
had contravened the provisions of Rule 6(3) of the CENVAT Credit Rules, 2001 by not
maintaining separate accounts and by not reversing the credit of MODVAT/CENVAT on
inputs used in the manufacture of pulp, which were sold or cleared without payment of the
necessary duty of 10% of the sale price. Accordingly, the Commissionerate of Central Excise,

226
 Customs and Service Tax, Bhubaneshwar-I has made a demand of ` 1,49,24,188 along with
interest and penalty. Our Company has filed a reply on June 2, 2006. The matter is pending.

(vi) Our Company received a show cause notice (C.No.V(47&48)15/Adjn/B-1

/IIA/30/06/18102A) dated September 21, 2006, from the Commissionerate of Central Excise,
Customs and Service Tax, Bhubaneshwar-I, alleging that for the period from September 2005
to March 2006, our Company had contravened the provisions of Rule 6(3) of the CENVAT
Credit Rules, 2001 by not maintaining separate accounts and by not reversing the credit of
MODVAT/CENVAT on inputs used in the manufacture of pulp, which were sold or cleared
without payment of the necessary duty of 10% of the sale price. Accordingly, the
Commissionerate of Central Excise, Customs and Service Tax, Bhubaneshwar-I has made a
demand of ` 91,68,650 along with interest and penalty. Our Company has filed a reply on
October 17, 2006. The matter is pending.

(vii) Our Company received a show cause notice (C.No.V(47&48)15/Adjn/B-1

/11A/70/09/17225A) dated October 21, 2009, from the Commissionerate of Central Excise,
Customs and Service Tax, Bhubaneshwar-I, alleging that for the period from January 2009 to
June 2009, our Company had contravened the provisions of Rule 6(3) of the CENVAT Credit
Rules, 2004 by not maintaining separate accounts and by not reversing the credit of
MODVAT/CENVAT on inputs used in the manufacture of pulp, which were sold or cleared
without payment of the necessary duty of 10% of the sale price. Accordingly, the
Commissionerate of Central Excise, Customs and Service Tax, Bhubaneshwar-I has made a
demand of ` 1,18,78,304 along with interest and penalty. Our Company has filed a reply on
December 4, 2009. The matter is pending.

(viii) Our Company received a show cause notice (C.No.V(48)15/Adjn/B-1 /11A/33/09/16A) dated
April 1, 2009, from the Commissionerate of Central Excise, Customs and Service Tax,
Bhubaneshwar-I, alleging that for the period from March 2008 to December 2008, our
Company had contravened the provisions of Rule 6(3) of the CENVAT Credit Rules, 2004 by
not maintaining separate accounts and by not reversing the credit of MODVAT/CENVAT on
inputs used in the manufacture of pulp, which were sold or cleared without payment of the
necessary duty of 10% of the sale price. Accordingly, the Commissionerate of Central Excise,
Customs and Service Tax, Bhubaneshwar-I has made a demand of ` 2,33,94,132 along with
interest and penalty. Our Company has filed a reply on April 10, 2009. The matter is pending.

(ix) Our Company received a show cause notice (C.No.V(47&48)15/ADJN/B-1 /IA/02/08/1044A)

dated January 9, 2008, from the Commissionerate of Central Excise, Customs and Service
Tax, Bhubaneshwar-I, alleging that for the period from January 2007 to June 2007, our
Company had contravened the provisions of Rule 6(3) of the CENVAT Credit Rules, 2004 by
not maintaining separate accounts and by not reversing the credit of MODVAT/CENVAT on
inputs used in the manufacture of pulp, which were sold or cleared without payment of the
necessary duty of 10% of the sale price. Accordingly, the Commissionerate of Central Excise,
Customs and Service Tax, Bhubaneshwar-I has made a demand of ` 1,08,37,192 along with
interest and penalty. Our Company has filed a reply on January 25, 2008. The matter is
pending.

(x) Our Company received a show cause notice (C.No.V(48)15/Adjn/B-1 /11A/33/08/11703A)

dated May 13, 2008, from the Commissionerate of Central Excise, Customs and Service Tax,
Bhubaneshwar-I, alleging that for the period from July 2007 to December 2007, our Company
had contravened the provisions of Rule 6(3) of the CENVAT Credit Rules, 2004 by not
maintaining separate accounts and by not reversing the credit of MODVAT/CENVAT on
inputs used in the manufacture of pulp, which were sold or cleared without payment of the
necessary duty of 10% of the sale price. Accordingly, the Commissionerate of Central Excise,
Customs and Service Tax, Bhubaneshwar-I has made a demand of ` 1,25,49,408 along with
interest and penalty. Our Company has filed a reply on June 24, 2008. The matter is pending.

(xi) Our Company received a show cause notice (C.No.V(47&48)15/ADJN/B-1

/11A/06/07/9777A) dated March 30, 2007, from the Commissionerate of Central Excise,
Customs and Service Tax, Bhubaneshwar-I, alleging that for the period from April 2006 to
December 2006, our Company had contravened the provisions of Rule 6(3) of the CENVAT

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 Credit Rules, 2004 by not maintaining separate accounts and by not reversing the credit of
MODVAT/CENVAT on inputs used in the manufacture of pulp, which were sold or cleared
without payment of the necessary duty of 10% of the sale price. Accordingly, the
Commissionerate of Central Excise, Customs and Service Tax, Bhubaneshwar-I has made a
demand of ` 2,44,14,976 along with interest and penalty. Our Company has filed a reply on
April 12, 2007. The matter is pending.

(xii) Our Company received a show cause notice (DGCEI F.No.42/KZU/RKL/05/593) dated April
29, 2005, from the Commissionerate of Central Excise, Customs and Service Tax,
Bhubaneshwar-I, alleging that for the period from April 2000 to February 2003, our Company
had contravened the provisions of Rule 57AD of the Central Excise Rules, 1944 and Rule 6(3)
of the CENVAT Credit Rules, 2001/2002 by not maintaining separate accounts for inputs for
manufacturing of paper and suppressed the actual use of certain inputs, thereby availing
irregular CENVAT credit. Accordingly, the Commissionerate of Central Excise, Customs and
Service Tax, Bhubaneshwar-I has made a demand of ` 3,19,04,001 along with interest and
penalty and has asked for clarification as to why personal penalty should not be imposed upon
Mr. P.C. Tripathy, Deputy Manager (Sales), under Rule 26 of CENVAT Credit Rules, 2002.
Our Company has filed a reply on July 13, 2005 and attended the personal hearing on
November 30, 2005. The matter is pending.

(xiii) Our Company received a show cause notice (DGCEI F.No.42/KZU/RKL/05/592) dated April
29, 2005, from the Commissionerate of Central Excise, Customs and Service Tax,
Bhubaneshwar-I, alleging that for the period from April 2000 to February 2003, our Company
had contravened the provisions of Rule 57AD of the Central Excise Rules, 1944 and Rule 6(3)
of the CENVAT Credit Rules, 2001/2002 by not maintaining separate accounts for inputs for
manufacturing of paper and suppressed the actual use of certain inputs, thereby availing
irregular CENVAT credit. Accordingly, the Commissionerate of Central Excise, Customs and
Service Tax, Bhubaneshwar-I has made a demand of ` 3,19,04,001 along with interest and
penalty and has asked for clarification as to why personal penalty should not be imposed upon
Mr. S.K. Agarwal, Vice president (Commercial), under Rule 26 of CENVAT Credit Rules,
2002. Our Company has filed a reply on July 13, 2005 and attended the personal hearing on
November 30, 2005. The matter is pending.

(xiv) Our Company received a show cause notice (DGCEI F.No.42/KZU/RKL/05/591) dated April
29, 2005, from the Commissionerate of Central Excise, Customs and Service Tax,
Bhubaneshwar-I, alleging that for the period from April 2000 to February 2003, our Company
had contravened the provisions of Rule 57AD of the Central Excise Rules, 1944 and Rule 6(3)
of the CENVAT Credit Rules, 2001/2002 by not maintaining separate accounts for inputs for
manufacturing of paper and suppressed the actual use of certain inputs, thereby availing
irregular CENVAT credit. Accordingly, the Commissionerate of Central Excise, Customs and
Service Tax, Bhubaneshwar-I has made a demand of ` 3,19,04,001 along with interest and
penalty and has asked for clarification as to why personal penalty should not be imposed upon
Mr. S.K. Agarwal, Vice president (Commercial) and Mr. P.C. Tripathy, Deputy Manager
(Sales), under Rule 26 of CENVAT Credit Rules, 2002. Our Company has filed a reply on
July 13, 2005 and attended the personal hearing on November 30, 2005. The matter is
pending.

(xv) Our Company received a show cause notice (C.No.V(48)15/B-1/Adjn/ 11A/1/04/27680A)

dated December 6, 2004, from the Office of the Commissioner, Central Excise & Customs,
Bhubaneshwar-I, alleging that for the period from April 1, 2000 to March 31, 2004, our
Company had contravened the provisions of Section 4(1)(b) of Central Excise Act, 1944 read
with Rule 7 of Central Excise Valuation (Determination of the Price of Excisable Goods),
2000, Rule 173G of Central Excise Rules, 1944 and Rules 4 and 8 of Central Excise Rules,
2001/2002. The show cause notice mentions that there was under-valuation of certain goods
cleared by way of not paying duty on value at which the brand owner of such goods, M/s
Xerox Modi Corporation Limited, sold such goods from its depots to wholesale dealers by
adopting incorrect method of valuation with an intent to evade payment of duty, and asks for
clarification from our Company as to why the incidental charges and equalized freight in
respect of similar goods sold from our depots should not be added to assessable value of goods
sold to M/s Xerox Modi Corporation Limited, and accordingly, why a sum of ` 75,65,534

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 along with interest and penalty should not be imposed upon our Company. Our Company has
filed a reply on January 7, 2005 and attended the personal hearing on November 30, 2005. The
matter is pending.

(xvi) Our Company received a show cause notice (DGCEI F.No.26/KZU/RKL/05/622) dated
February 9, 2005, from the Commissionerate of Central Excise, Customs and Service Tax,
Bhubaneshwar-I, alleging that for the period from April 2000 to August 31, 2004, our
Company had contravened the provisions of Rules 9, 173C, 173F and 173G of Central Excise
Rules, 1944, Section 4(1)(b) of Central Excise Act, 1944, Rule 6 of Central Excise Valuation
(Determination of the Price of Excisable Goods), 2000 read with Section 4 of Central Excise
Act, 1944, and Rule 8 of Central Excise Rules, 2001 read with Central Excise Rules, 2002, by
not including money value of free supply of packing material by M/s Xerox Modi Corporation
Limited, resulting in short payment of duty. Accordingly, the Commissionerate of Central
Excise, Customs and Service Tax, Bhubaneshwar-I has made a demand of ` 52,65,270 along
with interest and penalty and has asked for clarification as to why personal penalty should not
be imposed upon Mr. S.K. Agarwal, Vice president (Commercial), under Rule 26 of Central
Excise Rules, 2001/2002. Our Company has filed a reply on May 4, 2005. The matter is
pending.

(xvii) Our Company received a show cause notice (DGCEI F.No.26/KZU/RKL/05/623) dated
February 9, 2005, from the Commissionerate of Central Excise, Customs and Service Tax,
Bhubaneshwar-I, alleging that for the period from April 2000 to August 31, 2004, our
Company had contravened the provisions of Rules 9, 173C, 173F and 173G of Central Excise
Rules, 1944, Section 4(1)(b) of Central Excise Act, 1944, Rule 6 of Central Excise Valuation
(Determination of the Price of Excisable Goods), 2000 read with Section 4 of Central Excise
Act, 1944, and Rule 8 of Central Excise Rules, 2001 read with Central Excise Rules, 2002, by
not including money value of free supply of packing material by M/s Xerox Modi Corporation
Limited, resulting in short payment of duty. Accordingly, the Commissionerate of Central
Excise, Customs and Service Tax, Bhubaneshwar-I has made a demand of ` 52,65,270 along
with interest and penalty and has asked for clarification as to why personal penalty should not
be imposed upon Mr. S.K. Agarwal, Vice president (Commercial), under Rule 26 of Central
Excise Rules, 2001/2002. Our Company has filed a reply on May 4, 2005. The matter is
pending.

(xviii) Our Company received a show cause notice (C.No.V(48)15/Adjn/B-1/ 11A/52/08/20297A)

dated November 20, 2009, from the Commissionerate of Central Excise, Customs and Service
Tax, Bhubaneshwar-I, alleging that for the period from December 2004 to June 2005, our
Company had contravened the provisions of Rules 4, 8(1)(a) and 11 of Central Excise Rules,
2002 by non-payment of duty on 2,801 MTs of base paper with an intent to evade payment of
duty by classifying the said amount of paper as waste. Accordingly, the show cause notice
demands a payment of ` 1,59,68,007 along with interest and penalty. Our Company has filed a
reply on July 20, 2010. The matter is pending.

(xix) Our Company received a show cause notice (C.No.V(47&48)15/Adjn/B-1/

Cenvat/58/2009/6592A) dated June 25, 2009, from the Commissionerate of Central Excise,
Customs and Service Tax, Bhubaneshwar-I, alleging that for the period from June 28, 2008 to
April 1, 2009, our Company had contravened the provisions of Rule 4 of Central Excise
Rules, 2002 and Rules, 2, 3, 4 and 9 of CENVAT Credit Rules, 2004 by non-payment of
applicable duty on capital goods used in the lime kiln plant an willful suppression of facts with
an intent to evade payment of duty. Accordingly, the show cause notice demands a payment of
` 2,37,20,987 along with interest and penalty. Our Company has filed a reply on November 5,
2009 and January 16, 2010. Pursuant to an order (CCE/BBSR-I/28/2010) dated September 28,
2010, the Commissionerate of Central Excise, Customs and Service Tax, Bhubaneshwar-I, has
confirmed the demand and recovery of an amount of Rs. 2,37,20,987 along with interest and
penalty under CENVAT Credit Rules, 2004. The Company is in the process of filing an
appeal against the said order.

There are 20 other payment of excise duty related proceedings pending involving an aggregate claim,
wherever the claims have been quantified in monetary terms, of approximately ` 1.09 crores,
comprising (i) 10 proceedings pending before various central excise authorities in Odisha, relating to

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short payment of duty on sale of certain items and involving an aggregate claim of ` 0.74 crores; and
(ii) 10 proceedings pending before various central excise authorities in Odisha, relating to short
payment of duty due to undervaluation and involving an aggregate claim of ` 0.35 crores.

Proceedings in relation to the Unit CPM

Our Company is involved in eight payment of excise duty related legal proceedings before various
statutory authorities and courts in India, comprising an aggregate claim of approximately ` 0.80 crore
against our Company:

(i) Our Company received a show cause notice from the Office of the Assistant Commissioner,
Central Excise, Division – II, Surat–I bearing no. (F.No.IV/16-22/SCN/08-09) dated July 21,
2008, alleging that the Unit CPM of the Company in the period from January 2006 to March
2007 had offered cash discount to customers through depot sales in case of early payments
within certain stipulated time, and that the Unit CPM had deducted the cash discount at the
time of removal of goods from the value to be assessed for excise tax computation and had
accordingly not paid the requisite duty of ` 1,50,611 along with applicable interest and
penalty, as required under the provisions of Rule 8 of Central Excise Rules, 2002 and Section
11AB of Central Excise Act, 1944. The Company subsequently filed its reply on August 21,
2008. The Office of the Assistant Commissioner, Central Excise, Division – II, Surat–I
delivered its order (No. SRT-1/Div.II/ADJ/SS/DEM/05/09-10) dated May 8, 2009, stating that
the requisite duty of ` 1,50,611 and a penalty of ` 1,50,611 is required to be paid by the
Company. Subsequently, the Company filed an appeal under Section 35 of the Central Excise
Act, 1944 against the order dated May 8, 2009 before the Commissioner of Central Excise
(Appeals) on July 20, 2009. The Commissioner of Central Excise (Appeals) delivered its order
(F.No.V-2(54) 339/SRT-1/Div.II/2009/3555) on May 4, 2010, confirming that a duty of `
1,50,611 is required to be paid by the Company and the penalty was reduced to ` 37,652.75,
provided the requisite duty and penalty was paid within 30 days of receipt of the order, on
failure of which the option of reduced penalty would lapse. The Company has subsequently
filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad,
on August 4, 2010, and has prayed that cash discount on sales made be allowable as deduction
from ‗transaction value‘. The Company has also filed a stay application before the before the
Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad, on August 4, 2010 for
obtaining stay on demand of ` 1,50,611 and the levy of interest and penalty. The matter is
pending.

(ii) Our Company received a show cause notice from the Office of the Commissioner, Central
Excise & Customs, Surat –I bearing no. (F.No.V(CH.48)15-16/D/JC/08-09) dated February
26, 2009, alleging that the Unit CPM of the Company in the period from Fiscal 2004 to Fiscal
2007 had cleared scraps valued at ` 1,90,82,259 for which excise duty was not paid, thereby
contravening provisions of Rules 4, 6, 8,10, 11 and 12 of Central Excise Rules, 2002.
Accordingly, a demand of duty of ` 31,14,225 along with applicable interest and penalty, as
required under the provisions of Sections 11A(1) and 11AB of Central Excise Act, 1944. The
Company subsequently filed its reply to the Joint Commissioner, Central Excise & Customs,
Surat–I, on April 13, 2009. The Central Excise & Customs Commissionerate, Surat–I
delivered its order (No. 47/ADJ/ADC-VKS/DEM/2009-10) dated February 26, 2010,
imposing a duty of ` 3,95,924 along with applicable interest and a penalty of ` 3,95,924 is
required to be paid by the Company along with a penalty of ` 40,000 to be paid by Mr. D.C.
Goyal, General Manager (Accounts) of the Unit CPM under Rule 26 of Central Excise Rules,
2002. Further, the order stated that the scrap valued at ` 24,26,004 is liable for confiscation
under Rule 25 of the Central Excise Rules, 2002. Subsequently, the Company filed a stay
application against the order dated February 26, 2010 before the Commissioner of Central
Excise (Appeals) on May 7, 2010 and filed an appeal under Section 35 of the Central Excise
Act, 1944 against the order dated February 26, 2010 before the Commissioner of Central
Excise (Appeals) on May 10, 2010.

(iii) Our Company filed an application claiming for certain service tax refund of ` 1,60,786 in a
letter filed to Assistant Commissioner, Central Excise & Customs, Division-II, Surat-I, dated
February 13, 2009. Subsequently, our Company received a show cause notice from the Deputy
Commissioner, Central Excise, Division-II, Surat –I bearing no. (F.No.V(CH.54)18-19/D/08-

230
 09/R) dated December 31, 2009, alleging that the Company had not submitted necessary
documents in order to claim the service tax refund and to show cause as to why the application
made by the Company should not be rejected. The Company subsequently filed its reply to the
Deputy Commissioner, Central Excise & Customs, Division-II, Surat–I, on February 10, 2010.
The Deputy Commissioner, Central Excise & Customs, Division-II, Surat–I delivered its order
dated February 26, 2010, rejecting the claim of service tax refund. Subsequently, the
Company filed an appeal under Section 85 of the Finance Act, 1994 against the order dated
February 26, 2010 before the Commissioner of Central Excise (Appeals) on May 21, 2010.

(iv) Our Company received a show cause notice from the Office of the Additional Commissioner,
Central Excise & Customs, Surat–I bearing no. (F.No.V(CH-48)15-29/D/ADC/09-10) dated
November 16, 2009, alleging that the Unit CPM had utilized ‗E.T. Sludge‘ as input for
production of card board/corrugated paper board after categorizing the said item as waste
material and had accordingly not paid the requisite duty of ` 11,19,882 under Section 11A(1)
of Central Excise Act, 1944 along with applicable interest under Section 11AB of Central
Excise Act, 1944 and penalty, as required under the provisions of Section 11AC of Central
Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002. The Company subsequently filed
its reply on December 23, 2009. The matter is pending.

(v) Our Company received a show cause notice from the Office of the Deputy Commissioner of
Central Excise & Customs, Division-II, Surat–I bearing no. (F.No.IV/16-72/SCN/09-10) dated
December 17, 2009, alleging that the Unit CPM of the Company had wrongly availed credit of
service tax on outward transportation of finished goods from the place of removal in the
period from January 2005 to August 2009. Accordingly, the show cause notice requires
recovery of ` 2,23,913 under Rule 14 of CENVAT Credit Rules, 2004 read with proviso to
Section 11A(1) of Central Excise Act, 1944 and proviso to Section 73 of the Finance Act,
1994, along with applicable interest under Rule 14 of CENVAT Credit Rules, 2004 and
penalty, as required under the Rule 15(4) of CENVAT Credit Rules, 2004 read with Section
78 of the Finance Act, 1994. The Company subsequently filed its reply on January 16, 2010.
The matter is pending.

(vi) Our Company received a show cause notice from the Office of the Additional Commissioner,
Central Excise & Customs, Surat–I bearing no. (F.No.V(CH-48)15-32/D/ADC/09-10) dated
January 12, 2010, alleging that the Unit CPM of the Company in the period from April 2007
to August 2009 had cleared certain waste materials and scraps arising during manufacturing
process without payment of requisite duty. Accordingly, the show cause notice requires
recovery of ` 30,90,308 under Section 11A(1) of Central Excise Act, 1944 along with
applicable interest under Section 11AB of Central Excise Act, 1944 and penalty, as required
under the provisions of Section 11AC of Central Excise Act, 1944 and Rule 25 of Central
Excise Rules, 2002. The show cause notice also stated that relevant waste materials and scraps
are liable to be confiscated under Rule 25 of Central Excise Rules, 2002. The Company
subsequently filed its reply on March 17, 2010. The matter is pending.

(vii) Our Company received a show cause notice from the Office of the Additional Commissioner,
Central Excise & Customs, Surat–I bearing no. (F.No.V(CH.48)15-33/D/ADC/09-10) dated
January 27, 2010, alleging that the Unit CPM of the Company in the period from April 2007
to August 2009 had offered cash discount to customers through factory sales and depot sales
in case of early payments within certain stipulated time, and that the Unit CPM had deducted
the cash discount at the time of removal of goods from the value to be assessed for excise tax
computation and had accordingly not paid the requisite duty of ` 24,53,239 under Section
11A(1) of Central Excise Act, 1944, along with applicable interest under Section 11AB of
Central Excise Act, 1944 and penalty, as required under the provisions of Section 11AC of
Central Excise Act, 1944. The Company subsequently filed its reply on March 9, 2010. The
matter is pending.

(viii) Our Company received a show cause notice from the Office of the Deputy Commissioner,
Central Excise, Division-II, Surat–I bearing no. (F.No.IV/16-67/SCN/09-10) dated April 13,
2010, alleging that the Unit CPM of the Company had wrongly availed credit of service tax on
the document evidencing premium paid on works man compensation (medical insurance),
motor vehicles and group insurance which was not a specified document for the purpose of

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 taking credit, in the period from Fiscal 2005 to August 2009. Accordingly, the show cause
notice requires recovery of ` 4,25,098 under Rule 14 of CENVAT Credit Rules, 2004 read
with proviso to Section 11A(1) of Central Excise Act, 1944 and Section 73 of the Finance Act,
1994, along with applicable interest under Rule 14 of CENVAT Credit Rules, 2004 read with
Section 75 of Finance Act, 1994 and Section 11AB of Central Excise Act, 1944 and penalty,
as required under the Rule 15(4) of CENVAT Credit Rules, 2004 read with Section 78 of the
Finance Act, 1994. The Company subsequently filed its reply on April 27, 2010. The matter is
pending.

5. Income Tax cases

There are seven income tax cases pending in various courts against our Company. The total amount of
claims, against our Company aggregates to approximately ` 13.44 crore. The cases are currently
pending adjudication. Material cases are set forth below.

Assessment year 2007-2008

i) The Additional Commissioner of Income Tax (the ―ACIT‖), Range- 1, Surat, passed an
assessment order under Section 143(3) of the Income Tax Act, 1961, as amended (the ―I.T.
Act‖) assessing the total income of the Company as ―Nil‖, and computing the book profit of
the Company under Section 115 JB of the I.T. Act at ` 72.65 crore. Aggrieved by this order
the Company filed an appeal (Appeal No. CAS-I/251/09-10) before the Commissioner of
Income Tax (Appeals)- I on account of amongst other things, disallowance of certain expenses
incurred by the Company for certain licenses utilized and set off against the provisions of
previous years, disallowance of expenses as expenses not wholly and exclusively incurred for
the purposes of the business and holding them as agricultural expenses, addition of certain
expenses as adjustments under Section 145A of the I.T. Act while computing the book profit
of the Company. The Commissioner of Income Tax (Appeals)- I, by its order dated March 31,
2010, partly allowed the appeal. Aggrieved by this order, the Company filed an appeal before
the Income Tax Appellate Tribunal, Ahmedabad, on account of the disallowances made by the
Commissioner of Income Tax (Appeals)- I in its order dated March 31, 2010. The matter is
currently pending.

Assessment year 2006-2007

ii) The ACIT passed an assessment order dated December 26, 2008, assessing total book profit of
the Company under Section 115JB of the I.T. Act as approximately ` 53.70 crore, determining
the tax liability as ` 4.52 crore, along with interest payable under Section 234B and Section
234D of the I.T. Act. Aggrieved by this order, the Company filed an appeal (Appeal No. CAS-
I/211/08-09) before the CIT (A)-IV, Surat, challenging the order of the ACIT. The CIT (A)-
IV, Surat passed an order dated November 12, 2009, upholding certain of the
additions/disallowances. Aggrieved by the order of the CIT (A), both the Company and the
Income Tax Department have filed appeals before the ITAT. The Company has challenged the
order of the CIT (A) disallowing, amongst other things, certain expenditures on account of
forestry expenditures and excess stock, interest paid to financial institutions. The Income Tax
Department has alleged that, amongst other things, CIT (A) erred in deleting the disallowance
of expenses and addition in income, made by the assessing order. The matter is pending.

Assessment Year 2005-06

iii) The Joint Commissioner of Income Tax, Range-1, Surat (the ―JCIT‖) passed an assessment
order dated December 24, 2007, assessing the total income of the Company as ` 36.07 crore,
and determining a total tax liability of ` 2.83, crore on account of among other things,
disallowance of certain expenses incurred for the business as not agricultural income and
disallowance of claims of depreciation. The JCIT separately initiated penalty proceedings
against the Company under Section 271(1)(c) of the I.T. Act. Aggrieved by this order, the
Company filed an appeal (CAS-I/280/07-08) before the CIT (A)-I, Surat. The CIT(A)-I, Surat
passed an order dated October 10, 2008, partly allowing the appeal. Aggrieved by this order,
both the Company and the Income Tax Department have filed appeals before the ITAT
(Appeal no. 4080/Ahd-2008) and (Appeal no. 4027/Ahd-2008), respectively), against the

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 order of the CIT(A)-I, Surat. The matter is pending.

Assessment Year 2004-05

iv) The Additional Commissioner of Income Tax, Range-1, Surat (the ―ACIT‖), passed an
assessment order dated December 26, 2006, under Section 143(3) of the I.T.Act, demanding a
total income tax of approximately ` 5.03 crore. Aggrieved by this order, the Company filed an
appeal (Appeal No. CAS-I/303/06-07) before the Commissioner of Income Tax (Appeals) (the
―CIT(A)‖), which was decided pursuant to an order dated November 30, 2007. Aggrieved by
the order of the CIT(A) both the Company and the Income Tax Department filed appeals
(346/Ahd-2008 and 390/Ahd-2007, respectively) before the Income Tax Appellate Tribunal,
Ahmedabad (the ―ITAT‖). The Company has alleged that the CIT(A) has erroneously
disallowed certain expenses, including expenses incurred for plantation activities, made
certain additions, such as addition on account of adjustment under Section 145A of the I.T.
Act The matters are pending.

The ACIT separately initiated penalty proceedings under Section 271(1)(c) of the I.T.Act. The
Deputy Commissioner of Income Tax, Surat (the ―DCIT‖) passed an order dated March 26,
2008, levying penalty of approximately, ` 14.39 crore. Against this order of the DCIT, the
Company filed an appeal (Appeal No. CAS-I/54/09-10) before the CIT (A) I, Surat. In terms
of the order dated November 12, 2009, the CIT (A) I, Surat partly allowed the appeal of the
Company and has granted a relief of ` 14.31 crore to the Company. Pursuant to a notice dated
December 3, 2009, the DCIT has demanded a revised penalty of ` 0.08 crore. Being aggrieved
by the order of the CIT(A), the Income Tax Department has filed an appeal (Appeal no.
128/Ahd-2010) before the ITAT. The matter is pending.

Assessment Year 2003-04

v) In terms of an order dated February 27, 2006, the assessing officer raised a demand of ` 0.31
crore on the Company, upon disallowance of certain expenses claimed by the Company and
addition of certain income. Against the said order, our Company filed an appeal (No.
CAS/1/84/05-06) before CIT(A), Surat. The appeal was partly allowed. Aggrieved by the
order of CIT(A), the assessing officer and our Company have filed appeals (No.
738/Ahd/2007 and No. 578/Ahd/2007, respectively) before Income Tax Appellate Tribunal,
Ahmedabad. Both the appeals are pending before Income Tax Appellate Tribunal.

Assessment Year 2002-03

vi) In terms of an order dated March 28, 2005, the assessing officer raised a demand of ` 0.40
crore, by disallowing certain expenses claimed by the Company and addition of certain
income. Aggrieved by said order, our Company filed an appeal (No.CAS/1/14/05-06) before
CIT(A). The Appeal was partly allowed. Aggrieved by the order of CIT(A), the assessing
officer and our Company have filed appeals (No. 790/Ahd/2006 and No. 979/Ahd/2006,
respectively) before Income Tax Appellate Tribunal, Ahmedabad. Both the appeals are
pending before Income Tax Appellate Tribunal.

Assessment Year 2001-02

vii) In terms of an order dated February 27, 2004, the assessing officer raised a demand of ` 0.27
crore, by disallowing certain expenses claimed by the Company and addition of certain
income. Aggrieved by said order, our Company filed an appeal (No.CAS/1/67/03-04) before
CIT(A). The appeal was partly allowed. Aggrieved by the order of CIT(A), the assessing
officer and the Company have filed appeals (No. 2442/Ahd/2004 and No.2429/Ahd/2004)
before Income Tax Appellate Tribunal, Ahmedabad. Both the appeals are pending before
Income Tax Appellate Tribunal.

6. Sales and Entry Tax

There are nine sales/entry cases pending in various courts against our Company. The total amount of
claims, against our Company aggregates to approximately ` 4.39 crore. Some of these cases are in

233
relation to refunds claimed by our Company. The cases are currently pending. The material cases in
this regard are described below.

(i) Pursuant to the assessment order dated January 12, 2004, the Commercial Tax Officer,
Rayagada (the ―CTO‖), raised an additional demand of ` 2,22,88,359 from the Company for
the year 2002-03 under the C.S.T Act. The CTO held that the Company did not submit Form
H and Form C for certain transactions undertaken by it. Further, the Company was unable to
submit certain documents including purchase orders of foreign buyers. It also held that the
Company was liable to pay tax on packaging material supplied by the Xerox Modi
Corporation. Being aggrieved by the order of the CTO, the Company filed an appeal and a
stay petition before the Assistant Commissioner of Sales Tax, Koraput Range, Jeypore (the
―ACST‖). Pursuant to an order of the ACST dated March 10, 2004, the Company deposited `
1,10,00,000 in order to obtain stay from demand of balance amount pending disposal of
appeal. The ACST, in terms of the order dated March 11, 2005, confirmed a demand to the
extent of ` 80,83,836 on account of non-submission of Form H, non-submission of certain
documents and tax on packaging material supplied by Xerox Modi Corporation. The
Company has filed appeal before the Sales Tax Tribunal, Orissa against the order of the
Assistant Commissioner of Sales Tax. The matter is pending.

(ii) Pursuant to the assessment order dated December 31, 2004, the Sales Tax Officer, Karaput II
Circle, Rayagada (the ―STO‖) raised an additional demand of ` 1,62,85,083 from the
Company for the year 2003-04 under the C.S.T. Act. The STO held that the Company had not
submitted Form C and Form H and other documents in relation to certain transactions. It also
rejected certain Forms H alleging that they were required to be accompanied by foreign
buyers‘ purchase orders. Being aggrieved by the said order, the Company filed an appeal and
a stay petition before the Assistant Commissioner of Sales Tax, Koraput Range, Jeypore (the
―ACST‖). In terms of the order dated March 17, 2005, the ACST ordered for deposit of `
1,00,00,000 for obtaining stay on demand of the remaining amount pending disposal of the
appeal. The Company filed an application for revision of stay order passed by the ACST
before the Commissioner of Sales Tax, Cuttack. Pursuant to the order dated March 23, 2005,
the Additional Commissioner of the Commercial Taxes, South Zone, Berhampur, directed for
deposit of ` 50,00,000 for stay of demand of balance amount pending disposal of appeal. The
Company duly deposited the required amount. In terms of order dated December 30, 2005, the
ACST confirmed demand to the extent of ` 49,59,359 on account of non submission of Form
C, disallowance of cash discount, and rejection and non-submission of Form H. The Company
has filed appeal before the Sales Tax Tribunal, Orissa against the order of the ACST. The
matter is pending.

(iii) Pursuant to the assessment order dated July 9, 2009, the Assistant Commissioner of Sales Tax,
Koraput Range, Jeypore (the ―ACST‖) raised a demand of ` 78,701 from the Company under
the C.S.T. Act for the period from July 1, 2007 to December 31, 2007 for non-submission of
declaration forms C and I. The Company filed an appeal against the order of ACST before the
Additional Commissioner of Sales Tax (Appeals), South Zone, Behrampur. The Company has
alleged that it was not given sufficient time to submit the relevant declaration forms and is in
the process of collecting the said forms. The Company also filed an application for stay of
realization of demand before the Additional Commissioner of Sale Tax, South Zone, Cuttack.
Pursuant to an order dated May 3, 2010, the Commissioner of Commercial Taxes, Orissa,
Cuttack, observed that the Company has already paid ` 15,800 before filing of the appeal, and
granted stay on the demand pending disposal of the appeal. The matter is pending before the
Additional Commissioner of Sales Tax (Appeals), South Zone, Behrampur.

(iv) Three cases are pending against the Company for the years 2001-02, 2003-04 and 2004-05,
before the Assistant Commissioner of Sales Taxes, Jeypore (the ―ACST‖) in relation to
liability of the Company for payment of entry tax under the provisions of Orissa Entry Tax
Act. The Company had filed appeals against the assessment orders for the aforesaid periods
before the ACST. The ACST had confirmed the demands made by the assessing officer. The
Company filed writ petitions before the High Court of Orissa, which set aside the orders of
ACST as the same were passed without expressing any opinion on the merits of the case. The
High Court directed the Company to appear before the ACST. The matters are pending. The
aggregate amount involved is ` 14,27,377.

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 (v) The assessment of year 1997-98 of the Company was reopened under the O.S.T. Act by the
assessing officer upon receipt of an adverse order. Pursuant to an order dated July 20, 2002,
the Sales Tax Officer, Koraput, raised an additional demand of ` 15,81,213 including a
penalty of ` 9,10,091 from the Company. The Company filed an appeal before the Assistant
Commissioner of Sales Tax, Jeypore, which confirmed the assessment. Being aggrieved by
the order Assistant Commissioner of Sales Tax, Jeypore, the Company preferred an appeal to
the Sales Tax Tribunal and also filed a revision petition before the Commissioner of
Commercial Taxes, Cuttack (the ―CCT‖). In terms of order dated October 30, 2003, the CCT
ordered that if the Company pays ` 0.06 crores, the balance amount shall be stayed until
disposal of the appeal. The Company has duly paid the amount. The matter is pending.

(vi) The Company has taken on lease a coal fired boiler from M/s. Ashok Leyland Finance
Limited (the ―Ashok Leyland‖). The Sales Tax Department, government of Odisha, assessed
the lease rental received by Ashok Leyland and charged sales tax, surcharge and penalty. The
total amount demanded was ` 6,52,000 from December 1996 to September 1997 and `
12,22,000 from December 1997 to March 1999. Being aggrieved by the order, the Company
filed an appeal before the Assistant Commissioner of Sales Tax (the ―ACST‖). The ACST
upheld the assessment order. Being aggrieved by the order of ACST, the Company filed an
appeal before the Orissa Sales Tax Tribunal, Cuttack. The Company has alleged that the sales
tax has already been paid at the time of sale of the coal fired boiler and cannot be levied
subsequently at the point of lease of the boiler also. Out of the total demand, ` 3,25,000 have
been deposited. The matter is pending.

(vii) For the assessment year 2005-06, the Company paid entry tax at the rate of 5% of value of
goods at the time of importing of goods in the State of Uttar Pradesh. On sale of such goods to
the parties in the State of Uttar Pradesh, the Company charged sales tax at the then prevailing
rate of 6%. Further, the Company paid tax at the rate of 1% to the government. In terms of
order dated October 30, 2008, the assessing officer held that the differential amount of 5% of
sales tax retained by the Company is not in accordance with the law and therefore, directed the
Company to pay the said amount aggregating to approximately ` 0.76 crore. The Company
filed an appeal before the first appellate authority which confirmed the demand of ` 0.76
crore, in terms of its order dated July 31, 2010. The Company has filed an appeal against the
order of the first appellate authority before the Sales Tax Tribunal on August 10, 2010.
Further, the Company has deposited ` 0.76 crore under protest.

(viii) For the assessment year 2006-07, the Company paid entry tax at the rate of 5% of value of
goods at the time of importing of goods in the state of Uttar Pradesh. On sale of such goods to
the parties in the State of Uttar Pradesh, the Company charged sales tax at the then prevailing
rate of 6%. Further, the Company paid tax at the rate of 1% to the government. In terms of
order dated March 16, 2009, the assessing officer held that the differential amount of 5% of
sales tax retained by the Company is not in accordance with the law and therefore, directed the
Company to pay the said amount aggregating to approximately ` 1.08 crore. The Company
filed a writ petition before the High Court of Allahabad. In terms of order dated December 4,
2009, the High Court of Allahabad has granted a stay on demand of ` 1.08 crore raised by the
assessing officer.

(ix) Pursuant to an order dated March 16, 2009, the Sales Tax Officer, Sahibabad, raised a demand
of ` 1,08,15,607 for the assessment year 2006-07. Aggrieved by the assessment order, the
Company filed a writ petition and application for stay of demand before the High Court of
Orissa. In terms of order dated December 4, 2009, the of the High Court of Orissa directed the
Company to deposit ` 3,08,197 for obtaining stay on recovery proceedings. The Company has
deposited the said amount.

7. Other Tax cases

There are 21 other tax cases pending in various courts against our Company. These cases primarily
relate to octroi duty and water tax. The total amount of claims, against our Company aggregates to
approximately ` 2.24 crore. The cases are currently pending adjudication. Brief details of the material
cases are set forth below.

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 (i) The Irrigation Officer-cum-Tahsildar, Rayagada has issued a demand notice (No. 5204/95 Irr)
against our Company dated September 1, 1995, stating that our Company has been lifting
water from the government water sources for use in the Unit JKPM and that during the period
September 26, 1994 to July 31, 1995, a license fee of ` 10,66,050 as per the Orissa Irrigation
(Amendment) Rules, 1994, which came into effect from September 26, 1994. JKLC (then
named as ‗J.K. Corp Limited‘) filed an appeal (OJC No. 6348 of 1995) before the Orissa High
Court against the demand notice against the State of Odisha, Union of India and the Officer-
cum-Tahsildar, Rayagada, on September 11, 1995, challenging the constitutionality of the
provisions of the Orissa Irrigation (Amendment) Rules, 1994 stating that as water is taken for
the plant from a natural resource and prayed for the quashing of the demand notice dated
September 1, 1995 and issue a writ in this regard accordingly. The Orissa High Court,
pending final settlement of the case, passed an interim order dated September 15, 1995,
ordering that no coercive steps should be taken against the petitioner by the respondents for
realization of any amount as license fee provided that the petitioner pays 50% of the amount
and furnish bank guarantee for the balance. As part of the JK Group restructuring exercise
carried out in September 2001, the paper division of JKLC (then named as ‗J.K. Corp
Limited‘) was transferred to our Company, and accordingly JKLC was replaced by our
Company as the petitioner in the case. Our Company has been paying 50% of the license fee
computed by the state authority and furnishing bank guarantee for the balance under protest,
and the total amount paid as bank guarantee under protest until date amounts to ` 1,14,17,417.
In relation to the appeal (OJC No. 6348 of 1995) filed by our JKLC before the Orissa High
Court against the demand notice against the State of Odisha, Union of India and the Officer-
cum-Tahsildar, Rayagada, on September 11, 1995, challenging the constitutionality of the
provisions of the Orissa Irrigation (Amendment) Rules, 1994, our Company has filed a
miscellaneous case (No. 178) of 2007 against the State of Odisha, Union of India and the
Officer-cum-Tahsildar, Rayagada, before the Orissa High Court on March 8, 2007. The
petition seeks to challenge the legislative competence of the State of Odisha to enact and
incorporate the provisions of Orissa Irrigation (Amendment) Act, 1993 and Orissa Irrigation
(Amendment) Rules, 1994 and the constitutional validity of the impugned statutes. Our
Company has prayed before the Orissa High Court to pass appropriate order to stay the
demands raised by the Office of the Executive Engineer, harabhangi Irrigation Division No.
III, as licence fee for water taken from river Nagavali. The matter is currently pending.

8. Notices

There are 34 notices pending in various courts against our Company. These notices primarily relate to
winding up petitions, recovery of dues, land acquisition, water cess, provident fund and rent related
disputes. The total amount of claims, against our Company aggregates to approximately ` 7.5 crores.
Material notices are described below.

(i) The State Pollution Control Board, Orissa, has issued a show cause notice dated September 21,
2010, to the Company directing to show cause as to why consent granted under Section 21of
the Air Act and Section 25 of the Water Act shall not be revoked and direction of closure
under Section 31A of the Air Act and Section 33A of the Water Act shall not be issued to stop
operation of the Unit JKPM. The Company submitted its point wise reply to the said notice,
indicating its compliance, in terms of letters dated September 29, 2010 and December 1, 2010.

(ii) The Divisional Forest Officer, Phulbani ordered our Company to pay ` 0.50 crore as the
balance of the minimum royalty payable by our Company for bamboos harvested from the
government forests by March 15, 1984 and any failure on the part of our Company to make the
payment would lead to stoppage of work of harvesting bamboos. Our Company filed a stay
petition (No. 807 of 1984) before the High Court of Orissa dated March 22, 1984 against the
State of Odisha and various other Divisional Authorities. The High Court vide order dated
April 3, 1984 sanctioned the stay in favour of our Company. Subsequently, the High Court
vide order dated May 2, 1990 ruled in the favour of our Company asserting that our Company
was correct in its interpretation that the rebate was applicable on the total production of the
bamboos per year and not on per each unit of bamboo produced in excess of the minimum
production in the preceding four years relating to each division as claimed by the government
of Odisha. Aggrieved by the order the Odisha government filed an appeal (No. 12895 of 1990)

236
 before the Supreme Court dated August 13, 1990 claiming that our Company‘s interpretation
of the rebate over harvesting bamboos were incorrect and the state government was within its
rights to clarify any clauses of the lease conditions. The Supreme Court vide order dated
December 3, 1993 ruled in the favour of the state government. Our Company filed a review
petition before the Supreme Court dated January 15, 1994 which was eventually dismissed.
The amount to be paid is still under reconciliation between the Company and the Odisha
government.

(iii) The Orissa Forest Development Corporation vide its letter dated April 17, 1999 (No. 8946)
imposed a penalty for ` 0.67 crore on our Company for not meeting the production and
transportation target of bamboos. The empowered Committee vide its meeting held on
September 2, 2002 suggested the appointment of an arbitrator for the settlement of the claim.
The arbitrator is yet to be appointed.

(iv) The Orissa Forest and Environment Department vide letter (No. 6F(A)-20/03/3937/F &E)
dated March 9, 2004 raised a demand of ` 1.39 crore against our Company towards the
payment of the cost of re-plantation of the area given to our Company and the license fee for
the license (No. 5F-C-50/85-17837/FFAH) dated May 16, 1986. our Company filed a petition
before the High Court of Orissa praying for the stay of the government order dated March 9,
2004 against the payment of the re-plantation costs and the license fee along with the refund of
the excess amount of royalty paid as ordered by the Supreme Court vide order dated
November 11, 2003. The High Court vide order dated May 17, 2006 has granted a stay in
favour of our Company. The matter is currently pending.

(v) Pursuant to a notice (no. 7273) dated March 6, 2003, the Orissa Forest Development
Corporation Limited (the ―OFDC‖) has levied a penalty of ` 0.58 crore on the Company on
account of forest loss and transit loss of bamboo from the years 1995-1996 to 1999-2000. The
Company has replied to the notice of the OFDC stating that the reasons for forest loss and
transit loss of bamboo were, amongst others, late handing over of coupes, no permission for
transportation of new stock, requisition of trucks for election, damage to roads. The parties
have agreed to appoint an arbitrator to resolve the issue. The matter is pending.

(vi) Pursuant to a notice (no. 7273) dated March 6, 2003, the Orissa Forest Development
Corporation Limited (the ―OFDC‖) has levied a penalty of ` 0.68 crore on the Company on
account of penalty for less production or non-achievement of targets for the years 1998-1999
to 1999-2000. The Company has replied to the notice of the OFDC stating that the reasons for
less production or non-achievement of targets were, amongst others, fixing of unrealistic
targets, poor weather and road conditions, . The parties have agreed to appoint an arbitrator to
resolve the issue. The matter is pending.

(vii) On November 18, 1998, the Regional Provident Fund Commissioner, Surat attached the
Company‘s bank account for recovery of damages in respect of alleged provident fund dues of
the Unit CPM. Aggrieved by this, the Company filed a petition before the High Court of
Gujarat. The High Court of Gujarat granted a stay order against the recovery of damages on
November 23, 1998. The Company submitted that it is eligible for relief and concessions as
per the policy guidelines applicable to sick industrial units. The Company further alleged that
the new management is exempted from the liability of any penal proceedings/ prosecutions
and penalties under any statute by state government, GoI in respect of past defaults of previous
promoters of M/s. Central Pulp Mills Limited, committed prior to its take over. The BIFR by
its order dated November 2, 2000 agreed for waiving damages levied by the Regional
Provident Fund Commissioner, Surat as directed by the High Court of Gujarat. The Company
filed an appeal before the AAIFR, alleging that the waivers/ concessions provided in the
scheme sanctioned by the BIFR were not extended by certain authorities, such as the EPF
organisation, to the Unit CPM. Pursuant to the order dated September 21, 2007, the AAIFR
remanded the case to BIFR for rectification of irregularities. The EPF organization, Ministry
of Labour, subsequently issued a show cause notice dated April 15, 2010, to the Company
regarding recovery of arrear demand of ` 0.53 crore in respect of the Unit CPM. The Company
has filed its reply to the said show cause notice on December 6, 2010.

(viii) The Company hired 72 quarters from the Irrigation Department, Gujarat on rent for its staff

237
 and workers. The monthly rent agreed was ` 4,158 per month. In the year 1986, the Irrigation
Department increased the rent to ` 19,241 per month and to ` 21,424 per month in the year
1999. The rent was further increased in the year 2000, and the total outstanding amount
claimed by the Irrigation Department was ` 0.51 crore. The Irrigation Department claimed that
the rent was increased on account of increase in economic rent and market rent. The Company
is in the process of negotiating the amount of rent to be paid to the Irrigation Department. The
total amount involved is ` 0.67 crore. The Irrigation Department disconnected the essential
services such as supply of electricity and water, given to the quarters. The Company filed a
petition before the Civil Court Senior Division, Bardoli which, in terms of order dated
September 30, 2010, directed the Irrigation Department not to disconnect the essential services
given to the quarters hired by the Company.

(ix) There are 25 claims/notices/demands raised by the Forest Department, Gujarat, Forest
Department, Odisha and Railways authorities pending against the Company in relation to
penalties for converting long bamboos into pieces, compensation claims for irregularities in
forest working, penalties for forest and transport storages, less production and non-
achievement of targets, demands for depots rents, insurance claims, dummy wagon charges
and wharfage charges. These proceedings are pending against various authorities including
before the Conservator of Forests, Forest Officers, Railway Boards, Suprintendent of Railways
and others. In some of the proceedings, the parties have agreed to appoint arbitrators. The total
amount involved is ` 2.16 crore.

(x) Our Company has received certain assessment orders issued by the Orissa State Pollution
Control Board, not allowing rebates on water cess for certain periods and computing the same
on the basis of maximum rates permissible. Our Company has not paid the full amount as
mentioned in the respective assessment orders and has made payments computed on the basis
of normal rates and after deducting rebate of 25%. Further, our Company has filed certain
appeals before the Cess Appellate Committee of the Orissa State Pollution Control Board
against some of the assessment orders issued by the Orissa State Pollution Control Board, for
not allowing rebates on water cess and charging the maximum rates permissible, for the
periods from September 2001 to October 2001, from December 2001 to January 2002, for the
month of April 2003, and from February 2004 to August 2004. The Cess Appellate Committee
has given orders for reassessment of the water cess to be paid by our Company after due
analysis of all relevant factors. Our Company has not received any revised reassessment orders
from the Orissa State Pollution Control Board and the balance amount for which our Company
has not made any payment until date as per the respective assessment orders amounts to ` 0.32
crore.

B. Cases filed by our Company

1. Civil Cases

(i) The Company has filed a writ petition (no. 6885 of 2006) in the High Court of Orissa against the
government of Odisha and others. The state government of Odisha has raised a demand of ` 1.39 crores
towards alleged cost of replantation and license fee in the ―Machhkund Catchment Area‖. The state
government has alleged that it had to replant the areas harvested by the Company as the Company
failed to do so. The Company has alleged that it has not violated the terms of its license until it was
restrained by the government from plantation activities on the harvested areas. Further, the Company
alleged that it had replanted most of the areas where it had harvested and had incurred heavy costs for
the same. The Company has also alleged inaction on the part of government of Odisha to refund the
excess amount of royalty paid by the Company to the tune of ` 66,69,625.85. The Company filed a
petition (n. 6057 of 2006) for stay of orders of the state government raising the aforesaid demands and
license fees. Pursuant to an order dated May 17, 2006, the High Court of Orissa has granted a stay on
operation of the orders. The matter is pending.

(ii) The Company has filed a writ petition (no. 1490/2004) in the High Court of Allahabad, Lucknow
against Commissioner of Trade Tax for claiming refund of excess tax paid on purchase of hardwood.
The Company had paid tax at the rate of 16% in stead at the applicable rate of 4%. The total amount
involved in ` 45,89,000. The matter is pending.

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2. Excise cases:

Our Company had submitted an application to the Assistant Commissioner, Central Excise & Customs,
Rayagada Division dated August 2, 2003, for refund of excise duty involved in cash discount offered by our
Company and availed by our customers in the period between August 2000 and June 2001. The Assistant
Commissioner, Central Excise & Customs, Rayagada Division delivered five separate orders, all dated January
6, 2004, whereby an aggregate of ` 39,31,833 was allowed to be refunded to the Company. The Central Excise
& Customs, Rayagada Division appealed against this order before the Commissioner (Appeal), Central Excise
and Customs, Bhubaneshwar, which dismissed the appeal by its order dated September 24, 2004. The Central
Excise & Customs, Rayagada Division appealed against this order to the Customs, Excise & Service Tax
Appellate Tribunal (―CESTAT‖), Kolkata, which allowed the appeal and set aside the refund claim in our
favour by its order dated June 6, 2007. Subsequently, our Company has filed an appeal against the order dated
June 6, 2007 before the High Court of Orissa on January 9, 2008.

II. Litigation involving our Directors

Mr. M.H. Dalmia

SEBI issued a show cause notice dated July 17, 2007 to promoters of OCL India Limited (―OCL‖), including
Mr. M.H. Dalmia, (―Respondents‖), alleging that the Respondents contravened Regulation 11(1) of the
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
(―Takeover Code‖) in respect of their further acquisition of 12.44% shareholding in OCL from 62.56%
previously held. The Respondents claimed that the increase in their shareholding was as a result of buyback of
shares by OCL, which did not attract Regulation 11(1) of the Takeover Code. Pursuant to an order dated January
28, 2010, SEBI held that the Respondents had contravened Regulation 11(1) of the Takeover Code and directed
initiation of adjudication proceedings against the Respondents.

Pursuant to an order dated October 26, 2010, SAT directed the Respondents to seek an exemption from SEBI,
under the provisions of the Takeover Code, and the adjudication officer was directed not to pronounce his order
till such time the application for exemption is finally disposed off by SEBI. The matter is pending.

Mr. Shailesh Vishnu Haribhakti

The Office of Official Liquidator, High Court of Delhi, issued notices dated March 26, 2008 and July 31, 2008,
to Mr. Shailesh Vishnu Haribhakti, amongst others, to furnish certain details in the matter of Inalsa Appliances
Limited (in liquidation) (company petition no. 128/04). Mr. Shailesh Vishnu Haribhakti replied to the said
notices on August 6, 2008, stating that he was an independent director of Inalsa Appliances Limited up to
October 3, 2000, and since then he does not have any access or any particulars or information about any matters
of Inalsa Appliances Limited.

On September 20, 2010, summons was issued to Mr. Shailesh Vishnu Haribhakti by High Court of Delhi,
requiring his attendance to answer the charge of non-filing of statement of affairs of Inalsa Appliances Limited.

III. Litigation involving our Subsidiaries

Songadh Infrastructure & Housing Limited (“SIHL”)

A. Litigation against SIHL

Nil

B. Litigation by SIHL

Nil

Jaykaypur Infrastructure & Housing Limited (“JIHL”)

A. Litigation against JIHL

Nil

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B. Litigation by JIHL

Nil

IV. Litigation involving our Promoter

Litigations filed against our Promoter

Our Promoter is involved in seven income tax proceedings, amounting to ` 0.37 crore. Details of material
proceedings are mentioned below:

1. The Assessing Officer has made disallowances under section 14A of the Income Tax Act for the
assessment years 2003-04, 2005-06, 2006-07 and 2007-08. CIT(A) also confirmed the disallowances.
Our Promoter has filed appeals before the ITAT. Certain matters are pending before the ITAT and in
others ITAT has redirected the matters to the Assessing Officer. In certain matters, Assessing Officer
has initiated penalty proceedings under section 271(1)(c) of the I.T. Act. The total amount involved is
approximately ` 0.30 crore

2. The income tax officer has made addition to the income of our Promoter for the assessment years 1995-
96, 1996-97, 1997-98, 1998-99, 1999-00, 2001-02, 2002-03 and 2007-08, on account of property not
being used for business purposes by our Promoter. Our Promoter filed appeals before CIT(A), which
confirmed the addition. Subsequently, our Promoter filed appeals before the ITAT which remanded the
matters back to the CIT(A). The matters are pending. The total amount involved is ` 0.04 crore.

V. Litigation involving our Group Companies

JK Tyres & Industries Limited (“JK Tyres”)

Litigation against JK Tyres

1. Civil Cases

There are 9 civil cases that have been instituted against us that are pending before various courts and authorities.
These cases primarily relate to suits for recovery of monies and applications made by certain third parties to
evict JK Tyres from its administrative office in New Delhi and notice under Monopolies and Restrictive Trade
Practices Act, 1969, as amended. The total amount of claims against us in these cases aggregate to
approximately ` 11.29 crore. The material case is described below.

Norten Intex Rubbers Private Limited has filed an application (No. MSEFC/CR/37/2007) against JK Tyres
before the Micro and Small Enterprises Facilitation Council, Chennai for delay in payment of ` 29.52 crore and
interest thereon for supply of tubes. Subsequently, Norten raised its claim to ` 90.04 crore by filing an amended
application. JK Tyres has challenged this application before the High Court of Madras which disposed off the
application and referred the matter to the Micro and Small Enterprises Facilitation Council to hear JK Tyres‘
objections regarding limitation and jurisdiction. However, the Micro and Small Enterprises Facilitation Council
by its order dated June 3, 2010, held that the claim is within limitation and it has the jurisdiction to hear the
matter. JK Tyres has filed a writ petition before the High Court of Madras against the order of the Micro and
Small Enterprises Facilitation Council. The High Court of Madras dismissed the said writ petition along with
other writ petitions filed challenging the validity of Micro and Small Enterprises Development Act, 2006.
Against the said dismissal, a writ appeal was preferred and the same was admitted. In the mean time the Council
passed the final award on September 21, 2010 whereby the council has directed JK Tyres to pay an amount of
approximately ` 10 crore. The said final award of the Council has since been challenged by JK Tyres by way of
writ petition in the Madras High Court along with an appeal under section 34 of the Arbitration and Conciliation
Act, 1996, as amended (―Arbitration Act‖).

2. Land Acquisition/Compensation and Land Encroachment Cases

There are 47 cases pending in relation to disputes concerning the acquisition of land occupied by JK Tyres
including one land encroachment case pending before the High Court of Madhya Pradesh and the Additional
Tehsildar, Banmore. The claims against JK Tyres in the land acquisition cases have presently been quantified as

240
` 1.15 crore, whereas the claim against JK Tyres for the land encroachment case is not quantifiable.

3. Labour Disputes and Civil Cases/Criminal Cases

(i) There are 11 cases filed before the Labour Court, Mysore and the High Court of Karnataka, against JK
Tyres. These cases primarily relate to claims for reinstatement with back wages and allegations of
wrongful termination by JK Tyres. Out of these 11 cases, only two cases have been quantified which
aggregates to approximately ` 0.47 crore. Further, two appeals have been filed by the dismissed
workmen before the High Court of Karnataka, challenging the order of the Labour Court, Mysore,
upholding their dismissal. In addition, one appeal has been filed by JK Tyres before the High Court of
Karnataka, challenging the order of single bench of the High Court for reinstatement of dismissed
worker. Two more appeals have been filed by JK Tyres before the High Court of Karnataka, against the
Labour Department challenging registration under the applicable Shops and Establishment Act. One
case filed by the Ex.Technical Service Representative, Jaipur, before the High Court of Rajasthan
(Divisional Bench), challenging the dismissal.

(ii) The trade union has filed three cases before the Industrial Tribunal against JK Tyres. These cases
primarily relate to claims for unlawful termination of services and demands raised by workmen
threatening to go on strike. The total amount of claims, against us aggregates to approximately ` 4.05
crore along with interest. One case pending before the Industrial Tribunal, Mysore, filed by JK Tyres,
against the Employee State Insurance Liability, towards the dues of former canteen contractor.

(iii) There are eight cases pending against JK Tyres before the Workmen‘s Compensation Authority.
Additionally, there are four appeals pending before the High Court of Karnataka challenging various
orders of the Workmen‘s Compensation Authority. These cases primarily relate to compensation
sought for injuries suffered during the course of employment and accidents resulting in death. The total
amount of claims against us is approximately ` 0.05 crore.

(b) Kankroli Tyre Plant, Rajasthan

(i) There are 12 cases pending before various forums against JK Tyres. These cases primarily relate to
termination of employment and claims for reinstatement with back wages along with interest. The
aggregate claims against JK Tyres in these cases is ` 0.11 crore approximately.

(c) Banmore Tyre Plant, Madhya Pradesh

(i) There are 16 cases pending before the Labour Court II, Gwalior against JK Tyres. These cases
primarily relate to termination of employment and the claims are for reinstatement with back wages.
The aggregate value of the claims against us is approximately ` 0.45 crore.

(ii) There are five writ petitions pending against JK Tyres which primarily relate to claims for
compensation. The claims in these cases have not been quantified.

4. Arbitration Matters

There are three arbitration cases pending against JK Tyres. These cases primarily relate to claims alleging non-
fulfillment of our contractual obligations and non-payment of bills. The aggregate claims against us is ` 10.13
crore and USD 0.31 crore approximately. Brief details of the material arbitral proceedings are set forth below:

(i) D.S. Strategem Trade AG, Switzerland has initiated an arbitration proceeding before the International
Chamber of Commerce against JK Tyres alleging that JK Tyres has failed to discharge its obligations in
relation to an agreement for supply of certain products. D.S. Strategem Trade AG has claimed an amount
of USD 0.30 crore with interest and costs. The International Chamber of Commerce passed the award of
USD 0.15 crore on September 24, 2004. D.S. Strategem Trade AG filed a petition (No. 30 of 2005) for
the execution of the said award. JK Tyres filed an application for the dismissal of the execution petition.
JK Tyres has also filed an application (No. 484 of 2004) challenging the said award, the hearing for the
same has been concluded and the judgment is reserved. The execution petition is currently pending
adjudication.

(ii) The High Court of Kanataka held that the award passed in favour of Technoexport Foreign Trade

241
 Company (―Technoexport‖) by the Czech Arbitration Court was null and void in relation to an
agreement entered into between JK Tyres and Technoexport for supply of truck radial plant with respect
to exchange rate differences and an arbitration clause. Technoexport challenged the same before the
Supreme Court (CA No.5190/2005). JK Tyres also filed civil appeals before the Supreme Court on the
points decided against (CA Nos.5403, 5404 and 5405/2005). The matters are pending. The petition filed
by JK Tyres for setting aside the award (OS 225/1998 and AS 4/2000) / execution petition filed by the
Technoexport in Mysore Court (Execution 48/2000) are pending.

(iii) Mr. G. Jayaramu filed a suit before the Court of Civil Judge (Junior Division), Mysore against JK Tyres
for restraining JK Tyres from accepting the claim of Technoexport with respect to exchange rate
differences as noted above. Mr. Jayaramu has not claimed any monetary damages from JK Tyres. Interim
stay was granted by the Court of Civil Judge (Junior Division), Mysore. The matter has been posted for
arguments.

5. Consumer Cases

There are 22 consumer cases pending before various consumer forums against JK Tyres. These cases primarily
relate to compensation for supply of defective tyres. The aggregate amount of claims against us is ` 0.15 crore
approximately.

6. Motor Vehicle Compensation

There is one motor vehicle compensation case pending before the High Court of Madhya Pradesh against JK
Tyres. The total amount of claim, against us is approximately ` 0.02 crore.

7. Taxation Cases

Income Tax Cases

There are 31 income tax cases pending before various courts and authorities against JK Tyres. The aggregate
claims amount to ` 614.71 crore. The cases are currently pending adjudication. Material cases are described
below.

Assessment Year (2005-06)

JK Tyre has claimed deduction of payment made to IIT, Chennai, of ` 1.43 Crore, as a research and
development expense. The said amount was allowed by the Assessing Officer in the assessment. The CIT in its
order u/s 263 disallowed the entire amount of ` 1.43 Crore. JK Tyre has filed an appeal before the ITAT,
Kolkata against the order of the CIT.

Assessment Year (2003-04)

(i) JK Tyre claimed long term capital loss of ` 503.64 crore on transmission of investments by JK Tyre to
JK Agri Genetics Limited as a part of scheme of arrangement approved by the High Court of Calcutta
u/s 391 to 394 of the Companies Act. The assessing officer allowed the said loss and also allowed set off
of capital gains arising from transfer of sugar and agri genetics undertakings on slump sale basis, but by a
rectification order passed u/s 154 of the I.T. Act, the assessing officer disallowed the said capital loss by
treating the transmission of investments as demerger within the meaning of Section 2(19AA). JK Tyre
has filed an appeal before the ITAT against the order of the CIT-A.

(ii) The Income Tax department has filed an appeal (No.2040/K/09) before the ITAT against the order of the
CIT (A), Kolkata for the assessment year 2003-04. The order inter alia pertains to CIT(A) holding that
the addition of negative net worth of ` 7.17 crore in sales consideration for computing long term capital
gain on slump sale of sugar undertaking against Nil value taken in return is not a mistake apparent from
record which could be rectified by order u/s 154 of the I.T Act. The Total amount in dispute is ` 7.17
Crore. The case is currently pending for hearing.

Assessment Year (2001-02)

The Income Tax Department has filed an appeal (No. 3301/07) before the High Court of Calcutta against the

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order of the ITAT dated June 26, 2004 for the assessment year 2001-2002. The ITAT upheld the finding of the
CIT-A, that deductions under section 80HHC for the purpose of computation of book profit under section
115JB is to be calculated on the basis of net profit as disclosed in the profit and loss account and not on the
basis of the assessed business income. The total amount involved is ` 1.65 crore.

Assessment Year (2000-01)

(i) JK Tyre has filed an appeal before the High Court of Calcutta against the order of the ITAT for the
assessment year 2000-01. The order inter alia pertains to the disallowance out of foreign travel
expenses by the income tax department. The total amount involved is ` 0.08 crore.

(ii) The income tax department has filed an application before the High Court of Calcutta for condonation
of delay and admission of appeal against the order of the CIT-A. The order inter alia relates to
allowance of contribution to Lakshmipat Singhania Education Foundation and deduction for an amount
transferred from revaluation reserve and credited to profit and loss account. The total amount involved
is ` 20.71 crore and the tax liability is ` 2.37 crore. The condonation application is pending before the
High Court.

Assessment Year (1999-00)

(i) JK Tyre has filed an appeal before the High Court of Calcutta against the order of the ITAT for the
assessment year 1999-00, pursuant to which it disallowed the claim of foreign travel expenses. The
total amount involved is ` 0.07 crore.

(ii) The Income Tax Department has filed an application before the High Court of Calcutta for condonation
of delay and admission of appeal under section 260 A of the IT Act against the order of the CIT-A.
The order related to allowance of contribution to Lakshmipat Singhania Education Foundation. The
total amount involved is ` 0.16 crore.

Assessment Year (1998-99)

(i) JK Tyre has filed an appeal before the High Court of Calcutta against the order of the ITAT for the
assessment year 1998-99. The order inter alia pertains to the disallowance out of foreign travel
expenses. The total amount involved is ` 0.09 crore.

(ii) The Income Tax Department has filed an application before the Calcutta High Court for condonation of
delay and admission of appeal under section 260 A of the IT Act against the order of the CIT-A. The
order related to allowance of contribution to Lakshmipat Singhania Education Foundation. The total
amount involved is ` 0.05 crore.

(iii) JK Tyre has filed an appeal before the High Court of Karnataka challenging the assessment order on
the ground that the assessing officer has not allowed the deduction claimed before set off of the loss
carried forward from the assessment year 1995-96. The total amount involved is ` 7.12 crore.

Assessment Year (1997-98)

(i) JK Tyre has filed a writ petition before the High Court of Calcutta, against the notice under section 148
of the IT Act, issued by the assessing officer for reopening of the assessment. The notice relates to the
excess claim of deferred revenue expenses by JK Tyre in relation to finished goods transferred to JK
Drugs and Pharmaceuticals Limited and that the excise duty was not included in the value of closing
stock of finished goods. The amount involved is ` 24.85 crore. Pursuant to an interim order, the High
Court has ordered the Income Tax Department to proceed with the notice.

(ii) JK Tyre has filed an appeal before the High Court of Calcutta, against the order of the ITAT pertaining
to the disallowance out of foreign travel expenses. The total amount involved is ` 0.05 crore.

(iii) JK Tyre has filed an appeal before the High Court of Karnataka challenging the assessment order on
the ground that the Assessing Officer has not allowed the deduction of export profits claimed before
setting off of the unabsorbed depreciation for the years 1993-94, 1994-95 and 1995-96. The total
amount involved is ` 7.53 crore.

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Assessment Year (1996-97)

(i) JK Tyre has filed a writ petition before the High Court of Calcutta, against the notice under section 148
of the I.T. Act, issued by the assessing officer for reopening of the assessment. The notice relates to the
depreciation claimed on sugar plant and that the excise duty was not included by JK Tyre in the value
of closing stock of finished goods. The amount involved is ` 13.51 crore. The High Court has vide an
interim order, ordered the department to proceed with the notices.

(ii) JK Tyre has filed an appeal before the High Court of Calcutta, against the order of the ITAT pertaining
to the disallowance out of foreign travel expenses. The total amount involved is ` 0.07 crore.

(iii) The Income Tax Department has filed an application before the Calcutta High Court for condonation of
delay and admission of appeal under section 260 A of the IT Act against the order of the order of the
CIT-A. The order related to allowance of contribution to Lakshmipat Singhania Education Foundation
and interest on interest free loans to subsidiary companies. The total amount involved is ` 0.78 crore.

Assessment Year (1995-96)

(i) JK Tyre has filed a writ petition before the High Court of Calcutta against the notice issued by the
Assessing Officer. The notice relates to the reopening of assessment on the grounds that the
miscellaneous income capitalized was not offered for taxation and that the excise duty was not included
in the value of closing stock of finished goods, by JK Tyre. The total amount involved is ` 5.90 crore.
The High Court has vide an interim order dated May 16, 2002 ordered the Income Tax Department to
proceed with the notices.

(ii) The Income Tax Department has filed an application before the Calcutta High Court for condonation of
delay and admission of appeal against the order of the CIT-A. The order inter alia relates to allowance
of contribution to Lakshmipat Singhania Education Foundation, pre-operative expenses of
pharmaceutical and steel projects capitalized in books of accounts and claimed as deduction under I.T
Act. The total amount involved is ` 1.11 crore.

Assessment Year (1994-95)

The Income Tax Department has filed an application before the Calcutta High Court for condonation of delay
and admission of appeal against the order of CIT-A. The order inter alia relates to contribution to Lakshmipat
Singhania Education Foundation and interest on 14% partially convertible debentures capitalized in books of
accounts but claimed as deduction under I.T Act. The total amount involved is ` 15.44 crore.

Assessment Year (1988-89)

The Income Tax Department has filed an application before the High Court for Calcutta for condonation of
delay and admission of appeal against the order of the CIT-A. The order inter alia relates to allowance of
contribution to Lakshmipat Singhania Education Foundation. The total amount involved is ` 0.06 crore.

Assessment Year (1987-88)

(i) The Income Tax Department has filed an appeal before the Calcutta High Court against the order of the
ITAT alleging that the ITAT erred in directing the AO to allow JK Tyre an investment allowance on
additional liability on account of fluctuation in foreign exchange. The total amount involved is ` 0.41
crore.

(ii) The Income Tax Department has filed an application before the Calcutta High Court for condonation of
delay and admission of appeal against the order of the CIT-A. The order relates to allowance of
contribution to the Lakshmipat Singhania Education Foundation. The total amount involved is ` 0.03
crore.

Assessment Year (1986-87)

The Income Tax Department has filed an application before the Calcutta High Court for condonation of delay

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and admission of appeal against the order of the CIT-A. The order inter alia relates to allowance of contribution
to Lakshmipat Singhania Education Foundation. The amount involved is ` 50,000.

Assessment Year (1985-86)

(i) JK Tyre has filed a writ petition before the High Court of Calcutta against the notice issued by the
Commissioner of Income Tax relating to the claim of sales promotion expenses on commission,
brokerage and discounts not considered by the A.O for disallowance. The total amount involved is `
0.24 crore.

(ii) The Income Tax Department has filed an application before the High Court of Calcutta for condonation
of delay and admission of appeal against the order of the CIT-A .The order inter alia relates to
allowance of contribution to Lakshmipat Singhania Education Foundation. The total amount involved
is ` 90,000.

Assessment Year (1984-85)

(i) The Income Tax Department has filed an appeal before the High Court of Calcutta against the order of
the ITAT alleging that the ITAT erred in directing the AO to allow JK Tyre an investment allowance
on additional liability on account of fluctuation in foreign exchange. The amount involved is ` 0.04
crore.

(ii) The Income Tax Department has filed an application before the High Court of Calcutta for condonation
of delay and admission of appeal against the order of the CIT-A. The order inter alia relates to
allowance of contribution to Lakshmipat Singhania Education Foundation. The amount involved is `
0.05 crore.

Assessment Year (1983-84)

The Income Tax Department has filed an appeal before the High Court Calcutta against the order of the ITAT
alleging that the ITAT erred in directing the AO to allow JK Tyre an investment allowance on additional
liability on account of fluctuation in foreign exchange. The amount involved is ` 0.02 crore.

Assessment Year (1982-83)

The Income Tax Department has filed an appeal before the High Court Calcutta against the order of the ITAT
alleging that the ITAT was not justified in deleting the addition of ` 40,000 made by the assessing officer as
profit on sale of asset.

Assessment Year (1981- 82)

The Income Tax Department has filed a reference application before the Calcutta High Court, against the order
of the CIT-A. The order relates to the withdrawal of depreciation on assets by the assessing officer that was not
claimed by JK Tyre. The amount involved is ` 2.43 crore.

7. Service Tax Cases

(a) Vikrant Tyre Plant-I and Truck Radial Plant-II, Mysore

There are 15 service tax cases pending before various courts and authorities against JK Tyres- Vikrant Tyre
Plant-I and Truck Radial Plant-II, Mysore. These claims primarily related to non availability of service tax
credit as alleged by the authorities on freight charges on clearances at the factory gate and non eligibility of
CENVAT credit for outdoor catering services in factory premises. The total amount of claims, against us
aggregates to approximately ` 0.37 crore. The cases are currently pending adjudication before various
authorities including the CESTAT, and the Commissioner of Central Excise or the relevant assessing officer.

(b) Banmore Tyre Plant, Madhya Pradesh

(i) There are four cases pending before the Additional Commissioner, Central Excise and Customs, Indore
and one case is pending before the Assistant Commissioner, Central Excise and Customs, Gwalior for

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 payment of service tax on the royalty paid by JK Tyres to its technical collaborator, Continental AG for
the period between October 2004 to September 2009. The concerned authorities issued show cause
notices to JK Tyres for payment of ` 2.85 crore.

(ii) There are five cases pending before the Deputy Commissioner, Central Excise and Customs and 12
cases are pending before the Joint Commissioner, Central Excise and Customs on availment and use of
credit of service tax paid pertaining to outward freight amounting to ` 1.53 crore for the period starting
from April 2006 to Sept 2009. Show cause notices were issued by the relevant authorities to JK Tyres
and are currently pending adjudication.

8. Excise Cases

There are 128 excise tax cases pending before various courts and authorities against JK Tyres. The total amount
of claims against us aggregates to approximately ` 21.51 crore. These claims primarily relate to among other
things non-availability or wrongful availment of MODVAT credit, duty charged along with interest on set off of
duty/proforma credit on inputs for certain years and challenge of refunds. The cases are currently pending
adjudication.

(a) Kankroli Tyre Plant, Rajasthan

There are 25 excise tax cases pending before various courts, tribunals and authorities against JK Tyres. The total
amount of claims against us aggregates to approximately ` 1.60 crores. These cases primarily relate to wrongful
utilization of CENVAT credit in contravention of the CENVAT Credit Rules, 2004 in relation to among other
things, outward freight paid by JK Tyres on goods cleared for export, wielding electrodes/rods used in the repair
of plant, machinery and building, outdoor catering services and for certain other services such as cab services,
repair and maintenance charges. The cases are currently pending adjudication.

(b) Banmore Tyre Plant, Madhya Pradesh

(i) There are 10 excise cases pending on the denial of credit on man made fabric, used in the
manufacturing process as liner for covering the rubberized fabric to avoid self adhesion in between the
layers of fabric during rolling process amounting to ` 0.31 crore under the MODVAT Rules, 1986 read
with the Central Excise Act, 1944 and under CENVAT Credit Rules, 2004 read with the Central Excise
Act, 1944. The quasi judicial authorities below the Commissioner of Excise level (Joint Commissioner
of Excise or Deputy Commissioner of Excise) rejected the credits on the ground that the man made
fabric is used for storage of rubberized fabric and is not embodied in the in-process material or in
finished products hence it can not be termed as an input for the purposes of allowance of credits under
the MODVAT/CENVAT Credit Rules and issued show cause notices to JK Tyres. JK Tyres has replied
to all the show cause notices appropriately and till date no further proceedings have been initiated by
the Deputy or Joint Commissioner of Excise.

(ii) There are 27 excise cases pending on the denial of credit on multi-layer co-extruded film amounting to
` 1.09 crore under the MODVAT Rules, 1986 read with the Central Excise Act, 1944 and under
CENVAT Credit Rules, 2004 read with the Central Excise Act, 1944. Multi-layer co-extruded film is
used in the manufacturing process as liner for covering the tread profiles to avoid moister, dust and
foreign material. The quasi judicial authorities below the Commissioner of Excise level (Joint
Commissioner of Excise or Deputy Commissioner of Excise) rejected the credits on the ground that the
multi-layer co-extruded film is used for storage of rubberized fabric and is not embodied in final
products hence it can not be termed as an input for the purposes of allowance of credits under the
MODVAT/CENVAT Credit Rules and issued show cause notices to JK Tyres. JK Tyres has replied to
all the show cause notices appropriately and till date no further proceedings have been initiated by the
Deputy or Joint Commissioner of Excise.

(iii) There are 11 excise cases pending on the denial of credit on un-dipped leader liner amounting to ` 0.11
crore under the MODVAT Rules, 1986 read with the Central Excise Act, 1944 and under CENVAT
Credit Rules, 2004 read with the Central Excise Act, 1944. Un-dipped leader liner is used in the
manufacturing process as liner for covering the rubberized fabric to avoid self adhesion in between the
layers on fabric during the rolling process. The quasi judicial authorities below the Commissioner of
Excise level (Joint Commissioner of Excise or Deputy Commissioner of Excise) rejected the credits on
the ground that the un-dipped leader liner is used for storage of rubberized fabric and is not embodied

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 in the in-process or in the finished products hence it can not be termed as an input for the purposes of
allowance of credits under the MODVAT/CENVAT Credit Rules and issued show cause notices to JK
Tyres. JK Tyres has replied to all the show cause notices appropriately and till date no further
proceedings have been initiated by the Deputy or Joint Commissioner of Excise.

(iv) There are three cases are pending before the Deputy/Assistant Commissioner of Excise amounting to `
0.28 crore. In these cases, certain raw materials including carbon black, zinc oxide, steel tyre cord,
purchased by JK Tyres, were directly sent to the job workers. The processed goods were received by
JK Tyres and JK Tyres claimed credit on the basis of the relevant duty paying documents. The
Deputy/Assistant Commissioner issued show cause notices rejecting the credit on the ground that raw
materials were not received by JK Tyres in their original forms. JK Tyres has responded to these
notices appropriately. These matters are pending before the Deputy/Assistant Commissioner of Excise.

(v) JK Tyres on October 24, 1996 and on December 24, 1996 received two show cause notices from the
Assistant Commissioner, Central Excise, Gwalior Division rejecting the exemption claimed by JK
Tyres amounting to ` 0.20 crore and amounting to ` 0.26 crore for the period from May 1996 to July
1996. JK Tyres has replied to the notices appropriately. Subsequently, the matters were heard by the
Assistant Commissioner, Central Excise and the authority rejected the exemption by its order dated
May 21, 1997 and March 31, 1997. JK Tyres preferred appeals against such orders before the
Commissioner of Central Excise (Appeals). The Commissioner of Central Excise (Appeals) by its
order dated September 19, 1997 disposed of the appeals against JK Tyres. Subsequently, JK Tyres
preferred appeals to the Custom Excise and Gold Control Appellate Tribunal. The Tribunal by its order
dated January 4, 2000 disposed of both the appeals and remanded back to the Assistant Commissioner
for fresh adjudication. The matter is pending before the Assistant Commissioner, Central Excise.

(c) Vikrant Tyre Plant, Karnataka

There are 50 excise tax cases pending before various courts and authorities against Vikrant Tyre Plant. The total
amount of claims aggregate to approximately ` 17.66 crores. These claims primarily relate to, among other
things, non-availability or wrongful availment of MODVAT credit, duty charged along with interest on set off
of duty/proforma credit on inputs for certain years and challenge of refunds.

Customs Cases:

There are two customs cases pending before various courts and authorities against JK Tyres. The total amount
of claims against us aggregates to approximately ` 0.14 crore. These cases primarily relate to refund claim in
respect of cess on imported natural rubber and nylon yarn. The cases are currently pending adjudication.

Sales Tax Cases:

There are two sales tax cases relating to sales tax exemption for the year 2000-01 pending before the Supreme
Court of India as special leave petitions. The total amount involved in these cases is ` 1.32 crore. Further, there
are eight writ petitions pending before the High Court of Karnataka on the sales tax demand under the central
sales tax for the years 1985-86 to 1992-1993. The total amount involved in these writ petitions including the
penalty imposed by the order of reassessment is ` 14.89 crore. There is also one entry tax appeal pending before
the Sales Tax Appellate Tribunal, Karnataka, and the total amount involved is ` 0.94 crore. These cases
primarily relate to imposition of sales tax arrears and penalty, denial of the benefit of exemption from sales tax
on radial tyres, and non eligibility for retention of sales tax exemptions along with penalty on the same.

9. Anti- Dumping cases

Set forth below is the brief description of anti-dumping cases filed against JK Tyres pending before various
tribunals and authorities:

Three cases have been filed against JK Tyres and other Tyre Companies in India (represented by Automotive
Tyre Manufacturers‘ Association (―ATMA‖) by local manufactures of certain rubber chemicals, raw materials
used for manufacture of tyres, alleging that anti-dumping and safeguard duties should be levied on certain
rubber chemicals, imported by JK Tyres from countries such as China and Korea. These cases are pending
before Directorate General of Anti-Dumping and Allied Duties and Directorate General of Safeguard Duties.
ATMA of which JK Tyre is a member has also filed two cases before the CESTAT challenging the levy of anti

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dumping duty on carbon black and curing presses. In respect of Nylon Tyre Cord Fabric the Anti-dumping duty
is in place and the Tyre Industry represented by the ATMA of which JK Tyres is a member, has filed a case in
Supreme Court challenging the imposition of this duty.

II. Litigation by JK Tyres

1. Criminal Cases

JK Tyres has filed 145 criminal complaints before various courts. These cases primarily relate to dishonour of
cheques and claims for delivery of goods without the requisite permission of JK Tyres. The total amount of
claim raised by JK Tyres aggregates to approximately ` 5.63 crore.

(i) JK Tyres has filed 144 criminal cases under section 138 of the Negotiable Instruments Act, 1881 for
the dishonour of cheques that were issued in favour of JK Tyres towards discharge of debts owed to JK
Tyres. The total amount aggregates to approximately ` 5.48 crore. The cases are currently pending
adjudication

(ii) JK Tyres has filed a criminal case (No. 172/94) before the Magistrate against Economic Transport
claiming a sum of ` 0.15 crore for delivering the goods to various parties without requisite permission
of JK Tyres. The matter is currently pending.

2. Civil Cases

JK Tyres has filed 54 civil cases before various courts. These cases primarily relate to suits for recovery of
money, suits for permanent injunctions, removal of unauthorized constructions, enhancement of certain bank
guarantees, challenge of legislation in Mysore, Karnataka regarding water rates/cess and the arrears accrued
thereto and challenge of certain formula prescribed under the value based advanced licensing scheme announced
by the Central Government for permitting reversal of MODVAT credit availed by an exporter of goods. The
total amount of claim raised by JK Tyres aggregates to approximately ` 4.53 crore. The cases are currently
pending adjudication.

3. Anti-Dumping Cases

Set forth below is the brief description of anti-dumping cases filed by JK Tyres pending before various tribunals
and authorities:

(i) JK Tyres filed a case against importers of truck and bus radial tyres, before the Directorate General of
Anti-Dumping and Allied Duties, claiming that anti-dumping duties should be levied on truck and bus
radial tyres imported from countries such as China and Thailand. Pursuant to a notification dated
February 19, 2010, the GoI notified various rates of Anti Dumping duty ranging from 25USD to 99
USD per set of tyre, tube and flap on imports from various exporters from China and Thailand. The
tyre industry represented by the ATMA of which JK Tyres is a member, has filed a case before
CESTAT challenging the credentials of All India Tyre Dealers‘ federation (―AITDF‖) which was one
of the interested parties in this case. Similarly, AITDF has filed appeal before the CESTAT challenging
imposition of this duty.

(ii) JK Tyres filed a case against importers of truck and bus bias tyres, before the Directorate General of
Anti-Dumping and Allied Duties, claiming that anti-dumping duties, which was already in place on
truck and bus bias tyres imported from China and Thailand, should be reviewed for enhancement.
Pursuant to notification dated November 18, 2010 an antidumping duty of 0.37 per kilogram from
Thailand and 1.64 per kilogram from China for a set of tyre, tube and flap. The tyre industry
represented by the ATMA of which JK Tyres is a member, has filed a case before CESTAT for review
of the duty and also challenging the credentials of AITDF which was one of the interested parties in
this case. Similarly, AITDF has filed appeal before the CESTAT challenging the imposition of this
duty.

JK Lakshmi Cement Limited (“JKLC”)

A. Cases filed against JKLC

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1. Civil suits

There are 10 civil cases filed against JKLC. These cases mainly deal with levy of land tax on mineral bearing
land, non fulfillment of targets for dispatch of cement, charges of operating staff cost, water cess, coal cess, land
tax and eviction suits along with recovery of mesne profits. The total amount of claims, against JKLC
aggregates to approximately ` 28.11 crore. The description of the material legal case is set forth below:

(i) The Rajasthan Electricity Regulatory Commission, Jaipur issued a notification, under Section 86(1)(e)
and Section 181 of the Electricity Act, 2003 prescribing rules for purchase of renewal energy from the
respective distribution companies. JKLC filed a writ petition (W.P. No. 11285 of 2008) before the
Rajasthan High Court against this notification. The Rajasthan High Court by its order dated November
4, 2008, has granted a stay on the operation of this notification. JKLC has authorised Jodhpur Vidyut
Vithran Nigam Limited to purchase renewable electricity on its behalf as per the terms of this
notification, however no such electricity has been purchased until date due to lack of a convenient or
economical resource. The penalty for non compliance of this notification is ` 3.59 per unit of
electricity. The total liability of the JKLC in this regard is approximately ` 14.61 crore.

2. Labour Cases

The Employee State Insurance Corporations has filed three cases against JKLC Cement Limited claiming non-
deposits of contribution payable by JKLC Cement Limited on account of overtime, personal allowance and
bonus. The total amount of claims against JKLC aggregates to approximately ` 0.16 crore. The cases are
currently pending adjudication.

3. Income Tax Cases

There are 12 cases in relation to income tax that are pending before various courts. The aggregate tax demanded
where ascertainable in such cases is ` 32.59 crore. There is an outstanding demand of ` 24.01 crore pertaining to
assessment year 2007-08 which is payable by JKLC. The material cases in this regard are:

Assessment Year 2007-08

The assessing officer by his order dated November 19, 2009 disallowed the claim of JKLC for allowance of
expenditure amounting to ` 0.56 crore in normal computation and thereby reducing returned loss by ` 0.56
crore. However, the assessing officer has determined the book profit under Section 115JB of the I.T. Act at `
182.34 crore and thus raised an tax demand of ` 26.55 crore including interest. The addition in book profit was
on account of rejecting the set off of unabsorbed depreciation. Against the order passed by the assessing officer,
JKLC filed an appeal before the Commissioner of Income Tax (Appeals) which allowed in contest of normal
income by its order dated April 7, 2010. However, the Commissioner of Income Tax (Appeals) confirmed the
action of assessing officer for computation of book profit. Aggrieved by the order of Commissioner of Income
Tax (Appeals), JKLC filed an appeal before the Income Tax Appellate Tribunal which is pending. Out of the
total demand of ` 26.55 crore, JKLC has deposited ` 4.00 crore under protest.

Assessment Year 1993-94

The assessing officer by its order dated March 29, 1996 rejected the claim of JKLC for set-off of losses and
unabsorbed depreciation amounting to ` 47.44 crores of the amalgamating company (Orissa Synthetics Limited)
against profits of JKLC. Against order passed by the assessing officer, JKLC filed an appeal (No. 64/CC-
VI/CIT(A)C-1/96-97) before Commissioner of Income Tax (Appeals) which was dismissed by its order dated
January 31, 1997. JKLC filed an appeal (No.1099/C/1997) before the Income Tax Appellate Tribunal, which
reversed the order of the lower authorities and decided the appeal in favour of JKLC by its order dated March
18, 1999. Aggrieved by the order of the Income Tax Appellate Tribunal the income tax department filed an
appeal (No. 209 of 1999) before High Court of Calcutta. The matter is currently pending.

Assessment Year 1992-93

The assessing officer by his order dated March 31, 1995 passed under Section 143(3) of the I.T. Act rejected the
claim of JKLC for set-off of losses and unabsorbed depreciation amounting to ` 94.98 crore of the
amalgamating company (Orissa Synthetics Limited) against profits of JKLC. Against the order passed by the
assessing officer, JKLC filed an appeal (No. 94/CC-VI/CIT(A)C-I/95-96) before the Commissioner of Income

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Tax (Appeals) which was dismissed by its order dated March 18, 1996. Against the order of the Commissioner
of Income Tax (Appeals), JKLC filed an appeal (No.1650/C/1996) before the Income Tax Appellate Tribunal,
which reversed the order of the lower authorities and decided the appeal in favour of JKLC by its order dated
June 9, 1998. Aggrieved by order of Income Tax Appellate Tribunal, the assessing officer filed an appeal
before High Court of Calcutta. The matter is currently pending.

4. Excise and service tax cases

There are five excise and service tax cases against JKLC primarily relating to levy of cenvat, excise duty on
transfer of limestone, cenvat credit on petcoke, interest on cenvat on custom duty, service tax on F.O.R sale. The
cases are pending before various authorities, tribunals and courts. The total amount involved is ` 16.32 crores.
Material cases are described below:

JKLC received a show cause notice amounting to ` 9.91 crores from Commissioner, Central Excise, Jaipur-II for
cenvat utilized for the items like refactories, pollution control equipments, steel liners, castables, steel plates,
cooler plates and hammers which were not covered under the definition of capital goods or inputs under the
Cenvat Rules and hence the same has been disallowed. The Company had filed a writ petition in High Court of
Rajasthan.

5. Sales and Entry Tax cases

There are 26 cases including 10 sales tax cases and 16 entry tax cases. The aggregate amount involved in sales
tax cases is approximately ` 6.92 crore. In relation to entry tax cases, the aggregate amount involved is
approximately ` 43.41 crore. The material cases in this regard are as follows:

(i) The state government of Rajasthan levied entry tax for the period 2002-2010, on certain goods brought in
the state of Rajasthan by JKLC. JKLC challenged the levy of entry tax before the High Court of
Rajasthan claiming that CENVAT amount should not be added to the purchase value for entry tax
calculation, entry tax should not be levied on pet coke since it is not a petroleum product and that entry
tax on HDPE bags, to the extent such bags are re-exported out of state of Rajasthan, is not applicable.
JKLC has also challenged the validity of The Rajasthan Tax on Entry of Goods into Local Area Act,
1999, before the Supreme Court. The total amount involved is ` 30.63 crores.

(ii) The state government of Uttar Pradesh levied entry tax for the period 2007-2010, on certain goods
brought in the state of Uttar Pradesh by JKLC. JKLC challenged the levy of entry tax before the High
Court of Uttar Pradesh claiming that entry tax is not applicable in the state of Uttar Pradesh, as it has
been combined with the value added tax. The total amount involved is ` 8.18 crores.

(iii) The Assistant Commissioner, Anti Evasion, Pali issued a show cause notice dated February 5, 1998 for
the year 1996-1997 and 1997-1998 alleging as to why discount allowed to the dealers should not be
disallowed and consequential tax interest and penalty should be imposed on JKLC. JKLC has filed two
applications (No. 119/98 and 120/98) before then Rajasthan Taxation Tribunal, Jodhpur for the year
1996-1997 and 1997-1998 respectively. The Rajasthan Taxation Tribunal granted stay in both the cases.
On abolition of Rajasthan Taxation Tribunal both cases were transferred to Rajasthan High Court as writ
petitions (No. 3529/99 and 3563/99 respectively). Both matters are now pending before the Rajasthan
High Court and the stay is continuing. The total amount under these notices and if the case is not decided
in favour of JKLC is ` 8.07 crore.

B. Cases filed by JKLC

1. Civil suits

There are two civil cases filed by JKLC in relation to claims made by North Western Railway against
fulfillment of certain loading targets and operating staff cost. The total amount of claims against JKLC
aggregates to approximately ` 1.50 crore, brief details of which are set forth below.

(i) JKLC received eight notices from the Chief Commercial Manager, North Western Railway for
adjustment of ` 2.44 crore against station-to-station claims in relation to claims made by North Western
Railway against fulfillment of certain loading targets for the year 2003-2004 and have demanded `
0.50 crore. JKLC filed a writ petition (No. 6083/2006) before the Rajasthan High Court on October 7,

250
 2006 challenging the demand notices issued by the North-Western Railway. The matter is pending
before the High Court.

(ii) JKLC has filed a writ petition (No. 208/2007) before the Rajasthan High Court against the Indian
Railways for charging operating staff cost. In 1985, the Indian Railways has issued a circular that in
case of peripheral yard where the freight is charged from furtherst point of siding to the destination the
operating staff cost should be borne by Indian Railways. JKLC is contending that its yard was officially
declared as peripheral yard in 1987 and the Indian Railways started charging freight from the furthest
point of the yard to the destination instead from Banas to the destination. The bill raised by the railways
as of March 31, 2005 was ` 1 crore. The High Court has granted stay in favour of JKLC. The matter is
currently pending.

JK Agri Genetics Limited

A. Cases filed against JK Agri Genetics Limited (“JKAL”)

1. Criminal Cases

There are five criminal complaints pending in various courts, including district munsif magistrates, against
JKAL. These cases primarily relate to poor quality of seeds and non-compliance of seed quality standard filed
by the Department of Agriculture of the relevant states. These cases are currently pending adjudication.

2. Civil Cases

There are four civil cases pending, one case is before the Civil Judge, Agra, Uttar Pradesh case, two cases before
the Second Additional District Judge Madanapally, Chittoor and a case before City Civil Court, Dholpur,
relating to trade disputes, recovery of advance booking scheme amout from JKAL and accident cases of ex-
employee of JKAL. The total amount of claim, against JKAL aggregates approximately ` 0.06 crore. These
cases are currently pending adjudication.

3. Consumer Forum Cases

There are 295 consumer dispute cases pending in various Consumer Forums against JKAL. These cases
primarily relate to alleged poor quality of seeds and poor yield from the seeds supplied by JKAL. The total
amount of claims, against JKAL aggregates to approximately ` 2.76 crores. These cases are currently pending
adjudication.

Out of these 295 cases, 167 cases belong to alleged poor performance of certain cotton seeds produced and
supplied by a third party (Rasi Seeds Private Limited) and marketed by JKAL. The amount involved in these
cases is ` 1.01 crore which is being jointly contested by JK Agri Genetics Limited and Rasi Seeds Private
Limited, under joint liability of both the companies.

B. Cases filed by JK Agri Genetics Limited

1. Criminal Cases

JK Agri Genetics Limited has filed seven criminal complaints before court of Chief Metropolitan Magistrate,
Secunderabad. These cases primarily relate to case for dishonor of cheques and claims made under Section 138
of the Negotiable Instruments Act, 1881. The total amount of dishonored cheques aggregates to approximately `
0.18 crore. These cases are currently pending adjudication.

2. Civil Cases

JK Agri Genetics Limited has filed two civil cases before the City Civil Court, Secunderabad which are
currently pending adjudication. One of these cases relate to recovery of outstanding against seed supplies and
other for recovery of advance paid for purchase of plot of land for construction of biotech lab. The total amount
claimed by JKAL aggregates to approximately ` 0.33 crore.

Fenner (India) Limited

251
A. Cases filed against Fenner (India) Limited

Civil Cases

There is one civil case against Fenner (India) Limited pending before the Additional Chief Judge, Small Causes
Court, Mumbai. The case primarily relates to grant of possession of certain premises located at Fort, Mumbai
and payment of certain unrealized rent along with interest and mesne profits. The aggregate liability of Fenner
(India) Limited is ` 3.27 crores.

Income Tax Cases

There are two income tax cases which are on appeal and are pending before the High Court of Madras. These
cases primarily relate to disallowance of deduction of upfront lease payment and imposition of interest on
income tax demand. The aggregate amount involved in these cases is ` 4.24 crore

Excise Cases

There is one excise case which is on appeal before the Commissioner (Appeals), Meerut-II. The case primarily
relates to disallowance of refund under Section 57F(4) of the I.T. Act. The aggregate amount involved is ` 1.17
crore.

B. Cases filed by Fenner (India) Limited

Arbitration proceedings

There are two arbitration proceedings pending before the respective arbitration tribunals. These primarily relate
to payment of certain fees under certain contracts and refund against encashment of certain bank guarantees.
Fenner (India) Limited has raised claims aggregating to ` 30.22 crore and the counter claims raised against it is
` 10.51 crore.

Udaipur Cement Works Limited

A. Cases filed against Udaipur Cement Works Limited

Udaipur Cement Works Limited is a sick company registered with BIFR in November 2003. There are a number
of legal proceedings pending against Udaipur Cement Works Limited. The material case in this regard is:

1. Pursuant to an order dated January 29, 2004, the Collector (Stamps), Udaipur determined stamp duty
liability of UCWL at ` 8.04 crores along with equal amount of penalty. UCWL filed a revision petition
against the said order before the Revenue Board, Ajmer, which was subsequently transferred to
Rajasthan Tax Board, Ajmer, which vacated the stay order against recovery of stamp duty, earlier
granted by the Revenue Board. Consequently, the Collector (Stamps) initiated recovery proceedings by
attaching the properties of UCWL. UCWL filed a writ petition in the High Court of Rajasthan against
the said attachment. Pursuant to an order dated May 8, 2006, the High Court allowed the writ petitions
filed by UCWL. Pursuant to an order dated October 6, 2006, the Rajasthan Tax Board dismissed the
revision petition filed by UCWL. The Collector (Stamps) again initiated recovery proceedings. UCWL
has filed writ petition before the High Court of Rajasthan challenging the said order of Rajasthan Tax
Board and action of the Collector (Stamps). The High Court has granted a stay on any further action by
the Collector (Stamps), Udaipur.

J.K. Sugar Limited (“JK Sugar”)

A. Cases filed against JK Sugar

1. Criminal Cases

There are five criminal cases pending before various courts, judicial magistrates and authorities in India, against
JK Sugar. The cases primarily relate to cases filed by farmers against employees of the Company.

2. Civil cases

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There are six civil cases pending before various courts and authorities in India. These cases primarily relate to
injunction suit against payment of rent, suits relating to weights and measurement laws and suits for recovery of
money. The aggregate claim involved in these cases is ` 0.89 crore.

3. Labour cases

There are 18 labour cases pending before various courts and authorities in India. These cases primarily relate to
regularization, restitution of service along with back wages and illegal termination of employment. The
aggregate amount involved in these cases is ` 0.02 crores.

4. Income Tax

The Deputy Commissioner of Income Tax, Kolkata, issued a demand notice of ` 0.40 crore for the financial
year 2004-2005 to JK Sugar Limited. JK Sugar Limited filed an appeal to Commissioner of Income tax
(Appeals) against the order the Deputy Commissioner of Income Tax.

5. Trade Tax

There are four trade tax cases pending before various courts, tribunals and authorities against JK Sugar. These
cases primarily relate to liability of differential rate of sales tax payable for assessment years 1996-1997, 1997-
1998, 1998-1999, and for the interest for sales tax not paid for the period up to January 31, 2003. The aggregate
amount involved in such cases is ` 0.94 crore. The detail of the material case is as follows:

The Deputy Commissioner issued a notice of demand dated February 19, 2003, to JK Sugar demanding a sales
tax of ` 1.31 crore on account of interest payable on sales tax collected but not paid for the period up to January
31, 2003. Aggrieved by this order JK Sugar filed an appeal before the High Court of Luknow. The High Court
of Lucknow by its order dated February 27, 2003, has issued a stay on the collection of the interest payable until
January 31, 2003. The aggregate amount involved is ` 0.79 crore.

6. Excise duty

There are three matters pending before various authorities such as assistant commissioner, commissioner of
appeals and CESTAT. These cases primarily relate to imposition of excise duty on electricity, cenvat credit on
various goods, such as MS plate, jointing sheets and electrodes. The total amount involved is ` 8.43 crores.

7. Entry tax

There are seven cases pending before various authorities, tribunals, courts against JK Sugar. The cases primarily
relate to entry tax on sugar and machinery purchased. The total amount involved is ` 2.28 crores.

B. Cases filed by JK Sugar

1. Criminal cases

There are seven criminal cases filed by JK Sugar, pending before various courts and authorities in India. These
cases are primarily filed on behalf of the employees of JK Sugar against farmers.

2. Civil cases

There are six civil cases filed by JK Sugar, pending before various courts and authorities in India. These cases
primarily relate to recovery of money and demand of employment upon land acquisition The aggregate amount
involved in these cases is 0.03 crore.

BMF Investments Limited

A. Cases filed against BMF Investments Limited

Nil.

253
B. Cases filed by BMF Investments Limited

Nil.

Florence Alumina Limited

A. Cases filed against Florence Alumina Limited

Nil.

B. Cases filed by Florence Alumina Limited

Nil.

Pranav Investment (M.P.) Company Limited

A. Cases filed against Pranav Investment (M.P) Company Limited

Nil.

B. Cases filed by Pranav Investment (M.P) Company Limited

Nil.

Southern Spinners and Processors Limited

A. Cases filed against Southern Spinners and Processors Limited

Nil.

B. Cases filed by Southern Spinners and Processors Limited

Nil.

Modern Cotton Yard Spinners Limited

A. Cases filed against Modern Cotton Yard Spinners Limited

Nil.

B. Cases filed by Modern Cotton Yard Spinners Limited

Nil.

Hansdeep Industries and Trading Company Limited

A. Cases filed against Hansdeep Industries and Trading Company Limited

Nil.

B. Cases filed by Hansdeep Industries and Trading Company Limited

Nil.

Dwarkesh Energy Limited

A. Cases filed against Dwarkesh Energy Limited

Nil.

254
B. Cases filed by Dwarkesh Energy Limited

Nil.

JK Enviro-Tech Limited

A. Cases filed against JK Enviro-Tech Limited

Nil.

B. Cases filed by JK Enviro-Tech Limited

Nil.

J.K. Risk Managers and Insurance Brokers Limited

A. Cases filed against J.K. Risk Managers and Insurance Brokers Limited

Nil.

B. Cases filed by J.K. Risk Managers and Insurance Brokers Limited

Nil.

Panchmahal Properties Limited

A. Cases filed against Panchmahal Properties Limited

Nil.

B. Cases filed by Panchmahal Properties Limited

Nil.

Acorn Engineering Limited

A. Cases filed against Acorn Engineering Limited

Nil.

B. Cases filed by Acorn Engineering Limited

Nil.

Umang Dairies Limited

A. Cases filed against Umang Dairies Limited

Dinson Indian (P) Limited had engaged Umang Dairies Limited for processing and packing of milk.
Subsequently, Umang Dairies Limited closed its operations of processing of milk due to commercial reasons.
Dinson Indian (P) Limited filed a petition under Section 11 of the Arbitration & Conciliation Act, 1996, in the
High Court of Delhi. Umang Dairies Limited filed a reply stating that it has already compensated Dinson Indian
(P) Limited. The High Court of Delhi ordered that it is not a fit case of arbitration and directed Dinson Indian
(P) Limited to file a civil suit. Subsequently, M/s Dinson Indian (P) Limited filed a suit before High Court of
Delhi on May 23, 2007. Umang Dairies Limited has filed its reply on November 14, 2007. The matter is
pending. The total amount involved is ` 0.21 crore.

B. Cases filed by Umang Dairies Limited

Nil

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LVP Foods Private Limited

A. Cases filed against LVP Foods Private Limited

Nil

B. Cases filed by LVP Foods Private Limited

Nil

VI. Amount owed to small scale undertakings/ creditors

There are no small scale undertakings or any other creditors to whom our Company owes a sum exceeding ` 1
lakh which is outstanding for more than 30 days, other than in ordinary course of business.

VII. Material Developments

Except as stated in ―Management‟s Discussion and Analysis of Financial Condition and Results of
Operations – Significant developments after September 30, 2010‖ on page 209, there have not arisen, since the
date of the last financial statements disclosed in this Draft Letter of Offer, any circumstances which can
materially and adversely affect or are likely to affect our profitability taken as a whole or the value of our
consolidated assets or our ability of pay our liabilities within the next 12 months.

256
 GOVERNMENT AND OTHER APPROVALS

We have received the necessary consents, licenses, permissions and approvals from the GoI and various
governmental agencies required for our present business and except as mentioned below, no further material
approvals are required for carrying on our present business operations.

The main objects clause of the Memorandum of Association and objects incidental to the main objects enable
our Company to undertake its existing activities.

I. Approvals in relation our incorporation

Certificate of incorporation dated July 4, 1960, as ‗The Central Pulp Mills Limited‘ under the Companies
Act from the Registrar of Companies, Maharashtra.

Certificate of commencement of business dated August 27, 1960, under the Companies Act, from the
Registrar of Companies, Maharashtra.

Fresh certificate of incorporation dated November 5, 2001, consequent to change of name from ‗The
Central Pulp Mills Limited‘ to ‗JK Paper Limited‘ from the RoC.

II. Approvals in relation to the Issue

Corporate approvals

(i) Our Board of Directors have pursuant to resolution dated January 28, 2011, authorised the Issue, in terms of
Section 81(1) of the Companies Act.

In-principle approvals from BSE and NSE

We have applied for in-principle approvals for listing of the Equity Shares to be issued pursuant to this Issue
from the BSE and the NSE by letters dated [●] and [●], respectively.

III. Approvals in relation to our operations

(a) Taxation related approvals

Permanent Account Number (AAACT6305N) dated July 4, 1960 issued by the Income Tax
Department to our Company.

Permanent Account Number (AACCJ2050L) dated December 30, 2008, issued by the Income Tax
Department to JIHL.

Permanent Account Number (AANCS2597L) dated January 2, 2009, issued by the Income Tax
Department to SIHL.

Taxation account deduction number (DELJ04706C) dated June 25, 2004, issued by the Income
Tax Department to our Company.

Taxation account deduction number (DELJ08169A) dated July 7, 2010, issued by the Income Tax
Department to JIHL.

Taxation account deduction number (DELS41840B) dated July 7, 2010 issued by the Income Tax
Department to SIHL.

Certificate of registration (24723600101) dated September 6, 2005, issued by the Sales Tax
Officer, Vyara, under the Central Sales Tax (Registration and Turnover) Rules, 1957, to our
Company.

Certificate of registration (TIN-21351600306) dated March 15, 2005 under the Orissa Value

257
 Added Tax Act, 2004, for our Unit JKPM.

Certificate of registration (STC Code – AAACT6305NST001) dated October 22, 2008 pursuant to
the Finance Act, 1994, by the Suprintendent, Central Excise and Customs, Surat –I, for payment of
service tax for the Unit CPM.

Certificate of registration (STC Code – AAACT6305NST002) dated January 16, 2009, pursuant to
under the Finance Act, 1994, issued by the Superintendent, Central Excise and Customs,
Jaykaypur Range, for payment of service tax for the Unit JKPM.

Certificate of registration (AAACT6305NXM001) dated December 17, 2002, from the Deputy
Commissioner of Central Excise, under Central Excise Rules, 2002, registering the Unit CPM for
manufacturing excisable goods at Songadh, Gujarat.

Certificate of registration (AAACT6305NEM002) dated May 17, 2010, from the Office of the
Deputy Commissioner of Central Excise, Customs and Service Tax, Rayagada, registering the Unit
JKPM for manufacturing excisable goods at Jaykaypur, Odisha.

(b) Intellectual property related approvals

Certificate of registration of trade mark (no. 1218903) dated October 28, 2005, valid for a period
of 10 years from July 30, 2003, under Section 23(2), Rule 62(1) of the Trademarks Act, from
Registrar of Trademarks, GoI, for JK Copier Plus under class 16 in respect of paper and paper
products.

Certificate of registration of trade mark (no. 1218901) dated October 3, 2005, valid for a period of
10 years from July 30, 2003, under Section 23(2), Rule 62(1) of the Trademarks Act, from
Registrar of Trademarks, GoI, for JK Bond under class 16 in respect of paper and paper products.

Certificate of registration of trade mark (no. 1218902) dated October 3, 2005, valid for a period of
10 years from July 30, 2003, under Section 23(2), Rule 62(1) of the Trademarks Act, from
Registrar of Trademarks, GoI, for JK Excel Bond under class 16 in respect of paper and paper
products.

Certificate of registration of trade mark (no. 1218906) dated October 3, 2005, valid for a period of
10 years from July 30, 2003, under Section 23(2), Rule 62(1) of the Trademarks Act, from
Registrar of Trademarks, GoI, for JK MICR Cheque Paper under class 16 in respect of paper and
paper products.

Certificate of registration of trade mark (no. 1218904) dated October 21, 2005, valid for a period
of 10 years from July 30, 2003, under Section 23(2), Rule 62(1) of the Trademarks Act, from
Registrar of Trademarks, GoI, for JK SS Maplitho(SHB) under class 16 in respect of paper and
paper products.

Certificate of registration of trade mark (no. 1218905) dated December 28, 2005, valid for a period
of 10 years from July 30, 2003, under Section 23(2), Rule 62(1) of the Trademarks Act, from
Registrar of Trademarks, GoI, for JK SS Maplitho(CG) under class 16 in respect of paper and
paper products.

Applications pending in relation to change in name to JK Paper Limited and rectification application

Applications dated January 6, 2009, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 287102) for logo under class 16 in
respect of paper and paper stationary products. The current registration is valid up to April 2, 2018.

Applications dated January 6, 2011, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 797966) for JK Copier under class 16

258
 in respect of paper and paper products. The current registration is valid up to April 7, 2018.

Applications dated January 6, 2011, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 874163) for Sparkle under class 16 in
respect of paper and paper products in respect of paper and paper stationary products. The current
registration is valid up to September 1, 2019.

Applications dated January 6, 2011, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 874161) for CEDAR under class 16
in respect of paper, paper articles, paper products and printed matters. The current registration is
valid up to September 1, 2019.

Applications dated January 6, 2009, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 797968) for JK Easy Copier under
class 16 in respect of paper and paper products. The current registration is valid up to April 7,
2018.

Applications dated January 6, 2009, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 797965) for JK Laser Copier under
class 16 in respect of paper and paper products. The current registration is valid up to April 7,
2018.

Applications dated January 6, 2009, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 878490) for JK Evervite under class
16 in respect of paper and paper products. The current registration is valid up to September 27,
2019.

Applications dated January 6, 2009, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 885971) for Deodar under class 16 in
respect of paper and paper products. The current registration is valid up to November 9, 2019.

Applications dated January 6, 2009, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 885973) for Prairie under class 16 in
respect of paper and paper products. The current registration is valid up to November 9, 2019.

Applications dated January 6, 2009, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 874162) for Pine under class 16 in
respect of paper and paper products. The current registration is valid up to September 1, 2019.

Applications dated January 6, 2009, to the Registrar of Trademarks, GoI, for change in name from
‗J.K. Corp. Limited‘ to ‗The Central Pulp Mills Limited‘ and from ‗The Central Pulp Mills
Limited‘ to ‗JK Paper Limited‘ in relation to trade mark (no. 885972) for Savannah under class 16
in respect of paper and paper products. The current registration is valid up to November 9, 2019.

Trademark application (no. 1555408) dated July 30, 2010, for rectification in name from ‗Zaildar‘
to ‗JK Excel‘ under class 16 in respect of paper and paper products, stationery products, note pads,
and note books.

Applications pending in relation to Intellectual property

Trademark application (no. 1704340) dated June 26, 2008, for JK TuffPac under class 16 in

259
 respect of paper, paper products and paper boards.

Trademark application (no. 1704341) dated June 26, 2008, for JK TuffCote under class 16 in
respect of paper, paper products and paper boards.

Trademark application (no. 1704339) dated June 26, 2008, for JK CoolPac under class 16 in
respect of paper, paper products and paper boards.

Trademark application (no. 1552101) dated April 23, 2007, for Photovista under class 16 in respect
of photo paper.

Trademark application (no. 1832896) dated June 25, 2009, for Notepal under class 16 in respect of
paper, paper products and stationary items.

Trademark application (no. 1819278) dated May 18, 2009, for JK PrintBlanc under class 16 in
respect of paper and paper products.

Trademark application (no. 2031664) dated September 30, 2010, for JK Copier (label) under class
16 in respect of paper, paper products and stationery products.

Trademark application (no. 2031313) dated September 29, 2010, for JK Easy Copier under class
16 in respect of paper, paper products and stationery products.

(c) Miscellaneous Approvals

Certificate of importer-exporter code (3496003154) dated February 14, 1997, by the Office of the
Joint Director General of Foreign Trade, to our Company.

Approval dated January 2, 2004, by the FIPB Unit, Department of Economic Affairs, Ministry of
Finance, GoI, for foreign collaboration with M/s. Edgefield Securities Limited for engaging in
manufacture and sale of paper.

Approval dated April 2, 2004, by the Reserve Bank of India, for transfer of 25,000 equity shares of
the Company to M/s. Edgefield Securities Limited, at a price of ` 40 per equity share, for a total
consideration of ` 10 crores.

Approval dated June 16, 2005 with effect from July 1, 2004, as amended by letters dated
November 11, 2008 and December 14, 2009, by the Commissioner of Income Tax, Surat, to the
Employee Group Gratuity Fund of our Company, under the provisions of the Income Tax Act.

Certificate of registration (code 44-1355-81) dated July 8, 2004, w.e.f September 26, 1970, from
the Regional Officer, Panchdeep Bhawan, Bhubaneshwar, Employees State Insurance Corporation,
for the Unit JKPM.

Approvals in relation to our Unit CPM

Factory license (no. 006481) dated February 3, 2004 valid up to December 31, 2011, under Rule 5
of the Factories Act, 1948, by Chief Factory Inspector, Surat,.

Consolidated consent and authorization (consent order no. 35230) dated November 17, 2009, valid
up to August 7, 2011, in terms of amendment to consents and authorization dated August 10, 2010,
under Section 25 of the Water (Prevention and Control of Pollution), Act, 1974, Section 21 of the
Air (Prevention and Control of Pollution), Act, 1981 and Authorization under Rules 3(c) and 5(5)
of the Hazardous Waste (Management and Handling and trans Boundary Movement) Rules, 2008
framed under the Environmental (Protection) Act, 1986, by the Gujarat Pollution Control Board.

Consent to establish (no. 40311) dated January 4, 2010 valid up to January 3, 2015, under Section
25 of the Water Act and Section 21 of the Air Act for setting up of an industrial plant/activities for
manufacturing of writing and printing paper and pulp of capacity of 800 MT/month and duplex
260
coated board of capacity of 2000 MT/month, by the Gujarat Pollution Control Board.

Environment clearance (no. J-11011/416/2008-IA-II(I)) dated October 17, 2008, under EIA
Notification, by the Ministry of Environment and Forests, GoI, for expansion of pulp and paper
plant (4,200 MT/month to 5000 MT/month) by installation of oxygen delignification plant with
new screening system.

Certificate of registration (CL/III/CLA/Regi/368/(398)) dated May 19, 1975, under the Contract
Labour (Regulation and Abolition) Act, 1970, issued by the Commissioner of Labour, Gujarat.

Certificate of registration (GJ/3370/APP/49) dated April 17, 1976, for applicability of the
Employees‘ Provident Funds Act, 1952, by the Labour, issued by Regional Provident
Commissioner, Ahmedabad.

Provisional certificate dated January 29, 2008, with effect from March 27, 2007 to March 26,
2012, under which the Unit CPM was granted concessions/benefit as a ‗new industrial
undertaking‘, entitled to exemption from payment of electricity duty for motive power purposes
(except the energy consumed for residence, office, commerce, sports club, library, canteen or such
other purposes), under Clause (VII) of Sub-section (2) of Section 3 of Bombay Electricity Duty
Act, 958, issued by Collector of Electricity Duty, Gandhinagar.

License (no. G/WC/GJ/06/946 (G14139)) dated February 15, 2007, valid up to September 30,
2016, under the Gas Cylinder Rules, 2004 and Indian Explosives Act, 1884 to store compressed
chlorine gas in 114 cylinders, issued by the Deputy Chief Controller of Explosives, Baroda.

License (no. P/HQ/GJ/15/4753(P126259)) dated September 24, 2009 valid up to December 31,
2012, under the Petroleum Rules, 2002, for importation and storage of 340 KL of petroleum class
C, issued by the Controller of Explosives, Nagpur.

License (no. S/HO/GJ/03/923(S29678)) dated March 9, 2009 valid up to March 31, 2012, under
the Static and Mobile Pressure Vessels (Unfired) Rules, 1981, for storage of propane gas in two
pressure vessels, issued by the Controller of Explosives, Petroleum and Explosives Safety
Organisation, Ministry of Commerce and Industry, GoI.

License (no. S/HO/GJ/03/890 (S26960)) dated March 9, 2009 valid up to March 31, 2012, under
the Static and Mobile Pressure Vessels (Unfired) Rules, 1981 and Indian Explosives Act, 1884 for
storage of oxygen gas in pressure vessels, issued by the Controller of Explosives, Petroleum and
Explosives Safety Organisation, Ministry of Commerce and Industry, GoI.

License (no. 1 of 2006) dated January 1, 2010 valid up to December 31, 2010, for conversion of
200 MT of sodium chlorate for manufacturing (ammunition of category – VI) under Schedule I of
the Arms Rules, 1962 (in connection with manufacture of paper), by the District Magistrate, Tapi
district, Vyara.

Certificate (no. 2394) for use of boiler (no. GT 1902) dated January 21, 2010 with effect from
December 24, 2009 valid up to December 23, 2010, under the Indian Boilers Act.

Certificate for use of boiler (no. 3264) dated June 26, 2009 with effect from May 27, 2009, valid
up to May 26, 2010, by Assistant Director, Boilers, under the Indian Boilers Act.

Certificate (no. 2420) for use of a boiler (no. GT 1841) dated April 1, 2010 with effect from
February 6, 2010 valid up to February 5, 2011, by the Assistant Inspector, Gujarat Boiler
Inspection Department under the Indian Boilers Act.

No objection/ standing clearance certificate dated July 22, 2010 valid up to August 21, 2010 for
sale of 6 MW from ex-bus periphery through collective transaction issued by Gujarat Energy
Transmission Corporation Limited.

Provisional certificate dated January 29, 2007 with effect from March 27, 2007 valid up to March
261
 26, 2012, that Company‘s new coated duplex board plant is ‗new industrial undertaking‘ and is
entitled to exemption from payment of electricity duty under Section 3(2)(vii) of the Bombay
Electricity Duty, 1958.

Letter dated March 5, 2001 from Gujarat Electricity Board in relation to reduction in contract
demand from 7,100 KVA to 4,400 KVA with effect from March 1, 2001.

Applications pending in relation to our Unit CPM

Letter dated November 28, 2008 to the Principal Secretary, Irrigation Department, Gujarat and
letter dated December 21, 2008 to the government of Gujarat, regarding extension of net of use
facility for water charges and water reservation charges to the Company after December 31, 2008
up to the year 2016.

Application dated March 23, 2010, to the Collector and District Magistrate, regarding renewal of
revolver license (no. 27) to B.P. Biyani for 0.32 bore revolver for three years up to December 31,
2012.

Application dated March 23, 2010, to the Collector and District Magistrate, regarding renewal of
revolver license (no. 26) to O.P. Goyal for 0.32 bore revolver for three years up to December 31,
2012.

Approvals in relation to our Unit JKPM

Certificate (no. 6088) dated December 6, 2001 with effect from January 6, 2001, issued by Sales
Tax Officer, Koraput, Rayagarh, certifying that Unit JKPM has been registered as dealer under
section 7(1)/7(2) of the Central Sales Tax Act.

Certificate of registration (no. 6087) dated December 6, 2001 with effect from January 6, 2001,
issued by Sales Tax Officer, Koraput, Rayagarh, under the provisions of section 9 and 9A of the
Orissa Sales Tax Act.

Tax Identification (no. 21351600306) dated March 15, 2005, issued by the Commercial Tax
Officer, Koraput II Cirle, Rayagada to the Unit JKPM.

Central excise registration certificate (no. AAACT6305NEM002), dated May 17, 2010, issued by
the Deputy Commissioner, Central Excise, Customs and Service Tax, Rayagada, under Rule 9 of
the Central Excise Rules stating that the Unit JKPM is registered for operating as a manufacturer
of excisable goods.

Service tax registration certificate (code AAACT6305NST002) dated January 16, 2009, issued by
the Superintendent, Central Excise, Customs and Service Tax, under section 69 of the Finance Act,
1994, in relation to goods transport agency service, scientific and technical consultancy service,
business auxiliary service, renting of immovable property, banking and other financial service.

Clearance certificate (form VAT 612) dated May 13, 2010, valid up to March 31, 2011, issued by
Joint Commissioner of Sales Tax, Koraput Range, Jeypore, certifying that Unit JKPM is not in
arrear of tax/interest/penalty and has filed return up to the period ending on March 31, 2010.

Relaxation order (no. Exp.11/65/10289/RPF) dated November 9, 1965, issued by the state
government of Odisha, granting exemption to the Unit JKPM under section 17(1)(a) of the EPF
and Family Pension Fund Act, 1952.

Letter (no. 44-G-32/11/6/2009 (I.T.) dated December 2, 2009 from Employees State Insurance
Corporation to the Company in relation to conversion of existing employer code number from 44-
1355-0 to 44000013550000801.

Certificate of registration (code 11646(3)) dated June 14, 1976, for applicability of the Employees‘
Provident Funds and Family Pension Fund Act, 1952, by the Labour, Employment and Housing

262
Department, government of Odisha, to our Unit JKPM.

Consent order (no. 30963) dated December 19, 2006, valid up to March 31, 2011, issued by the
State Pollution Control Board, Orissa, under section 21 of the Air Act, to operate industrial plant in
the air pollution control area and to continue to make existing discharge/ new discharge of
emissions from the stacks/ chimneys.

Consent order (no. 30965) dated December 19, 2006 valid up to March 31, 2011, issued by the
State Pollution Control Board, Orissa, under Section 25/26 of the Water Act, authorizing to
continue to or bring into use any new or altered outlet or begin to make any new discharge of
sewage and/or trade effluent.

Consent to establish (no. 29277), dated November 29, 2006 valid for a period of 5 years, issued by
the State Pollution Control Board, Orissa, under Section 25 of the Water Act and Section 21 of the
Air Act, for production/manufacturing of burnt lime in the existing premises of Unit JKPM.

License (no. P/HQ/OR/15/95(P104)) dated July 7, 2010, valid up to December 31, 2010, from
Chief Controller of Explosives, Petroleum and Explosives Safety Organisation, in relation
importation of 50 KL of petroleum.

License (no. G/EC/OR/06/68(G7751)) dated May 10, 2007, valid up to September 30, 2012, from
Deputy Chief Controller of Explosives, Petroleum and Explosives Safety Organisation, under the
Gas Cylinder Rules and Indian Explosives Act, for possession of cylinder filled with compressed
gas (oxygen) in the licensed premises.

License (no. G/EC/OR/06/74 (G7769)) dated September 30, 2008, valid up to September 30, 2011,
by the Joint Chief Controller of Explosives, Petroleum and Explosives Safety Organisation, under
the provisions of Gas Cylinder Rules and Indian Explosives Act, in relation to storage of chlorine
gas in cylinders.

License (no. P/HQ/OR/15/10132 (P66101)) dated January 11, 2008 valid up to December 31,
2010, issued by Chief Controller of Explosives, Petroleum and Explosives Safety Organisation, for
importation and storage of 400 KL of petroleum subject to provisions of Petroleum Act.

Consent no. (AERB/RSD/NG/ER080/2010/39) dated January 21, 2010 valid up to January 20,
2011 from Radiological Safety Division, GoI, under Section 16 of Atomic energy Act and Atomic
Energy (Radiation Protection) Rules, regarding authorization to import and handle radioactive
material (radioisotope – Cs-137)

Consent no. (AERB/RSD/NG/ER080/2010/1034) dated January 27, 2010, valid up to January 26,
2011 from Radiological Safety Division, GoI, under section 16 of Atomic energy Act and Atomic
Energy (Radiation Protection) Rules, regarding authorization to import and handle radioactive
material (radioisotope Kr – 85).

Provisional order dated August 21, 2010 valid for a period of six months, issued by Assistant
Director of Factories and Boilers, Rayagada Zone, Rayagada, under section 9 of the Indian Boilers
Act permitting to use the boiler (no. OR/160).

Certificate for use of boiler (no. OR/161) with effect from May 7, 2010 valid up to May 6, 2011,
issued by the Chief Inspector, Orissa Boiler Inspection Department, under the provisions of the
section 7/8 of the Indian Boilers Act.

Certificate for use of boiler (no. OR/340) with effect from January 8, 2010 valid up to January 7,
2011, issued by the Chief Inspector, Orissa Boiler Inspection Department, under the provisions of
the section 7/8 of the Indian Boilers Act.

Certificate for use of boiler (no. OR/446) with effect from May 22, 2010 valid up to May 21, 2011,
issued by the Chief Inspector, Orissa Boiler Inspection Department, under the provisions of the
section 7/8 of the Indian Boilers Act.

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 Provisional order dated October 6, 2010 valid for a period of six months, issued by Inspector of
Boilers, under section 9 of the Indian Boilers Act permitting to use the boiler (no. OR/532).

Certificate for use of boiler (no. OR/428) with effect from June 11, 2010 valid up to June 10, 2011,
issued by the Chief Inspector, Orissa Boiler Inspection Department, under the provisions of the
section 7/8 of the Indian Boilers Act.

Provisional order dated December 15, 2010 valid for a period of six months, issued by Inspector of
Boilers, under section 9 of the Indian Boilers Act permitting to use the boiler (no. OR/556).

License for the acquisition, possession and carrying of arms and ammunition for
sport/protection/display of two double barrel guns and single barrel rifle (bearing no. 2758 and
8201 and 40185) dated December 27, 2008 valid up to December 31, 2011 issued by Additional
District Magistrate, Rayagada, under the provisions of Arms Act and Arms Rules.

License for the acquisition, possession and carrying of arms and ammunition for
sport/protection/display for two double barrel guns and single barrel rifle (bearing nos. 2727 and
55331 and 401930A) dated December 27, 2008 valid up to December 31, 2011 issued by
Additional District Magistrate, Rayagada, under the provisions of Arms Act and Arms Rules.

License (no. 2/2000) for two 12 bore double barrel guns (nos. 2286 and 25647) and a .275 bore
single barrel rifle (no. 40193), dated December 13, 2007 valid upto December 31, 2010, issued by
Additional District Magistrate, Rayagada, under the provisions of Arms Act and Arms Rules.

Authorisation (no. 2032) dated September 24, 2010, valid up to March 31, 2013, issued by the
State Pollution Control Board, Orissa, under Biomedical Waste (Management and Handling)
Rules, 1998 for operating a facility for collection, transport, reception, storage, treatment and
disposal of biomedical waste.

Applications pending in relation to the Unit JKPM

Combined application for establishment of industries in relation to the proposed expansion, dated
May 21, 2010, made to the state government of Odisha, under the Orissa Industries (Facilitation)
Act, 2004. This includes clearance for investment in plant and machinery, approval of building and
land use plan, and approval under pollution control regulations. Terms of reference dated August
16, 2010, were issued by MoEF. A public hearing in accordance with the rules prescribed in the
EIA Notification was held on December 22, 2010. The final approval in relation to the proposed
expansion is awaited.

Applications dated October 25, 2010 and December 17, 2010, to the Labour Commissioner,
Government of Orissa, requesting for government orders declaring the Unit JKPM as public utility
service for the purpose of the Industrial Disputes Act.

Application (no. JKPW/WO/345/2010) dated January 29, 2010 to the Joint Chief Controller of
Explosives in relation to renewal of license (no. S/HO/OR/03/39 (S21725)) for storage of liquid
oxygen in tanks in Company‘s premises under the provisions of Indian Explosives Act and the
Static and Mobile Pressure Vessels (Unfired) Rules, 1981.

Application dated November 3, 2009 to the Joint Chief Controller of Explosives for renewal of
license (no. P/HQ/OR/15/27 (P-34)) for storage of LDO in tanks.

Letter dated July 26, 2010 to the Joint Chief Controller of Explosives regarding renewal of license
(no. P/EC/OR/14/54(P44037)) for petrol and HSD storage/dispensing pump.

Application dated October 18, 2010, to the Director of Factories and Boilers, government of
Odisha, for renewal of license to work a factory (no. RG-20) dated January 25, 2010, under Rule 7
of the Orissa Factories Rules, 1950, for the period from January 1, 2011 to December 31, 2015.

264
Application dated August 9, 2010, to the Deputy Controller of Explosives, for renewal of license
(no. G/EC/OR/06/200 (G8167) for storage of nitrogen cylinders (100 nos.), for a period from
October 1, 2010 to September 30, 2013.

265
 STATUTORY AND OTHER INFORMATION

Authority for the Issue

Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on January 28,
2011, it has been decided to make the rights offer to the Equity Shareholders of the Company with a right to
renounce.

Prohibition by SEBI

Neither the Company nor its Subsidiaries nor the Promoter nor the Promoter Group nor the Directors nor the
Group Companies, or companies with which the Company‘s Directors are associated with as directors or
promoters, have been prohibited from accessing or operating in the capital markets under any order or direction
passed by the SEBI or any other authority. Further, Mr. Hari Shankar Singhania, the natural person in control
behind our Promoter, has not been prohibited from accessing the capital market under any order or direction
passed by the SEBI or any other authority. Further neither the Promoter nor the Company nor its Subsidiaries
nor the Group Companies have been declared as willful defaulters by RBI / government authorities.

Except as stated below, none of our Directors are associated with the securities market in any manner:

1. Mr. Shailesh Vishnu Haribhakti, non-executive independent Director, is on the board of Future Capital
Holdings Limited and Fortune Financial Services India Limited, none of which have been prohibited
from accessing or operating in the capital markets.

Except as stated above, SEBI has not initiated any action against the entities mentioned above.

Eligibility for the Issue

The Company is an existing company registered under the Companies Act whose Equity Shares are listed on the
Stock Exchanges. It is eligible to offer this Issue in terms of Chapter IV of the SEBI ICDR Regulations.

Compliance with Part A and Part E of Schedule VIII of the SEBI ICDR Regulations

This Draft Letter of Offer is in compliance with Part A and Part E, to the extent applicable, of Schedule VIII of
SEBI ICDR Regulations.

Disclaimer Clause

AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI.
IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THIS 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 DRAFT LETTER OF OFFER.
THE LEAD MANAGER, ICICI SECURITIES 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 COMPANY IS PRIMARILY

RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT
INFORMATION IN THE DRAFT LETTER OF OFFER, THE 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 HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED
JANUARY 28, 2011, WHICH WILL READ AS FOLLOWS:

266
1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
LITIGATION SUCH AS COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH
COLLABORATORS, ETC. AND OTHER MATERIALS MORE PARTICULARLY REFERRED
TO IN THE ANNEXURE HERETO 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 ISSUER, ITS
DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND INDEPENDENT
VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE,
PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS AND OTHER PAPERS
FURNISHED BY THE ISSUER, WE CONFIRM THAT:

A. THE DRAFT LETTER OF OFFER FILED WITH THE SEBI IS IN CONFORMITY WITH
THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
B. ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE AS ALSO THE
REGULATIONS, GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE SEBI,
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 SEBI AND THAT TILL DATE
SUCH REGISTRATION IS VALID;

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS

TO FULFIL THEIR UNDERWRITING COMMITMENTS; NOT APPLICABLE

5. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTER HAS BEEN OBTAINED FOR
INCLUSION OF ITS SPECIFIED SECURITIES AS PART OF PROMOTER‟S
CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED
TO FORM PART OF PROMOTER‟S CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT BE
DISPOSED / SOLD / TRANSFERRED BY THE PROMOTER DURING THE PERIOD STARTING
FROM THE DATE OF FILING THE DRAFT LETTER OF OFFER WITH THE SEBI TILL THE
DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER
OF OFFER; NOT APPLICABLE

6. WE CERTIFY THAT REGULATION 33 OF THE SEBI (ISSUE OF CAPITAL AND

DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED
SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTER‟S 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 /
LETTER OF OFFER; NOT APPLICABLE

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 PROMOTER‟S
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 SEBI. WE FURTHER CONFIRM THAT
ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTER‟S
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

267
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 MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE
BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF SECTION 73 OF
THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE
SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK
EXCHANGES MENTIONED IN THE LETTER OF OFFER. WE FURTHER CONFIRM THAT
THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE
ISSUER SPECIFICALLY CONTAINS THIS CONDITION; NOTED FOR COMPLIANCE,
SUBJECT TO COMPLIANCE WITH REGULATION 56 OF SEBI ICDR REGULATIONS.

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 THE APPLICABLE DISCLOSURES MANDATED IN THE SEBI
(ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE
BEEN MADE IN ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND
ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION;

12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE
DRAFT LETTER OF OFFER:

A. AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME, THERE

SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE
ISSUER; AND
B. AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH
DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE SEBI FROM TIME
TO TIME.

13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO

ADVERTISEMENT IN TERMS OF THE SEBI (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 OR
THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK
FACTORS, PROMOTER‟S EXPERIENCE, ETC.;

15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH

THE APPLICABLE PROVISIONS OF THE SEBI (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 this Draft Letter of Offer does not, however, absolve the Company from any liabilities under
Section 63 or Section 68 of the Companies Act or from the requirement of obtaining such statutory 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 irregularities or lapses in this Draft Letter of Offer.

Caution

The Company and the Lead Manager accept no responsibility for statements made otherwise than in this Draft

268
Letter of Offer or in any advertisement or other material issued by and at the instance of the Company and
anyone placing reliance on any other source of information would be doing so at his own risk.

Investors who invest in the Issue will be deemed to have represented to the Company and Lead Manager and
their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable
laws, rules, regulations, guidelines and approvals to acquire Equity Shares, and are relying on independent
advice / evaluation as to their ability and quantum of investment in the Issue.

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

Disclaimer with respect to jurisdiction

This Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and
regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate
court(s) in New Delhi, India only.

Selling restrictions

The distribution of this Draft Letter of Offer and the issue of the Equity Shares on a rights basis to persons in
certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions.
Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and
observe such restrictions. The Company is making this Issue on a rights basis to the Equity Shareholders of the
Company and will dispatch the Letter of Offer/Abridged Letter of Offer and CAF to Equity Shareholders who
have an Indian address.

No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for
that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the
Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be
distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction.
Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal
to make such an offer and, in those circumstances, this Draft Letter of Offer must be treated as sent for
information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft
Letter of Offer should not, in connection with the issue of the Equity Shares or the Rights Entitlements,
distribute or send the same in or into the United States or any other jurisdiction where to do so would or might
contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such
territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights
Entitlements referred to in this Draft Letter of Offer.

Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create
any implication that there has been no change in the Company‘s affairs from the date hereof or that the
information contained herein is correct as at any time subsequent to this date.

United States Restrictions

The rights and the Equity Shares of the Company have not been and will not be registered under the Securities
Act, or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the
United States of America or the territories or possessions thereof or to, or for the account or benefit of, ―U.S.
persons‖ (as defined in Regulation S under the Securities Act), except in a transaction exempt from the
registration requirements of the Securities Act. The rights referred to in this Draft Letter of Offer are being
offered in India, but not in the United States. The offering to which this Draft Letter of Offer relates is not, and
under no circumstances is to be construed as, an offering of any securities or rights for sale in the United States
or as a solicitation therein of an offer to buy any of the said securities or rights. Accordingly, the Draft Letter of
Offer/ Letter of Offer/ Abridged Letter of Offer and the enclosed CAF should not be forwarded to or transmitted
in or into the United States at any time.

Neither the Company nor any person acting on behalf of the Company will accept subscriptions or renunciation
from any person, or the agent of any person, who appears to be, or who the Company or any person acting on

269
behalf of the Company has reason to believe is, either a ―U.S. person‖ (as defined in Regulation S) or otherwise
in the United States when the buy order is made. Envelopes containing CAF should not be postmarked in the
United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal
to make an offer under the Letter of Offer, and all persons subscribing for the Equity Shares and wishing to hold
such Equity Shares in registered form must provide an address for registration of the Equity Shares in India. The
Company is making this issue of Equity Shares on a rights basis to the Equity Shareholders of the Company and
the Letter of Offer/Abridged Letter of Offer and CAF will be dispatched to Equity Shareholders who have an
Indian address. Any person who acquires rights and the Equity Shares will be deemed to have declared,
represented, warranted and agreed, (i) that it is not and that at the time of subscribing for the Equity Shares or
the rights entitlements, it will not be, in the United States when the buy order is made, (ii) it is not a ―U.S.
person‖ (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the
United States, and (iii) is authorized to acquire the rights and the Equity Shares in compliance with all
applicable laws and regulations.

The Company reserves the right to treat as invalid any CAF which: (i) does not include the certification set out
in the CAF to the effect that the subscriber is not a ―U.S. person‖ (as defined in Regulation S), and does not
have a registered address (and is not otherwise located) in the United States and is authorized to acquire the
rights and the Equity Shares in compliance with all applicable laws and regulations; (ii) appears to the Company
or its agents to have been executed in or dispatched from the United States; (iii) where a registered Indian
address is not provided; or (iv) where the Company believes that CAF is incomplete or acceptance of such CAF
may infringe applicable legal or regulatory requirements; and the Company shall not be bound to Allot or issue
any Equity Shares or Rights Entitlement in respect of any such CAF. The Company is informed that there is no
objection to a United States shareholder selling its rights in India. Rights Entitlement may not be transferred or
sold to any U.S. Person.

European Economic Area Restrictions

In relation to each Relevant Member State of the European Economic Area which has implemented the
Prospectus Directive, an offer of the Equity Shares to the public may not be made in that Relevant Member
State prior to the publication of a prospectus in relation to the Rights Entitlement or the Equity Shares which has
been approved by the competent authority in that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent authority in that Relevant Member State, all in
accordance with the Prospectus Directive, except that an offer of Equity Shares or Rights Entitlement to the
public in that Relevant Member State from and including the Relevant Implementation Date may be made:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last
Financial Year; (2) a total balance sheet of more than Euro 43,000,000 and (3) an annual net turnover
of more than Euro 50,000,000, as shown in its last annual or consolidated accounts; or
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive;

provided that no such offer of Equity Shares shall result in the requirement for the publication by the Company
or the Lead Manager pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an ―offer to the public‖ in relation to any Equity Shares in any
Relevant Member State means the communication in any form and by any means of sufficient information on
the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or
subscribe the Equity Shares, as the same may be varied in that Member State by any measure implementing the
Prospectus Directive in that Member State and the expression ―Prospectus Directive‖ means Directive 2003/7
1/EC and includes any relevant implementing measure in each Relevant Member State. In the case of any Rights
Entitlement or Equity Shares being offered to a financial intermediary as that term is used in Article 3(2) of the
Prospectus Directive, such financial intermediary will be deemed to have represented, acknowledged and agreed
that the Rights Entitlement or Equity Shares acquired by them in the Issue have not been acquired on a non-
discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in
circumstances which may give rise to an offer of any Rights Entitlement or Equity Shares acquired by them in
the Issue to the public other than their offer or resale in a Relevant Member State to qualified investors as so
defined who are not financial intermediaries or in circumstances in which the prior consent of the Lead Manager
has been obtained to each such proposed offer or resale.

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United Kingdom Restrictions

This Draft Letter of Offer is only being distributed to and is only directed at (i) persons who are outside the
United Kingdom, or (ii) to investment professionals falling within Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 or (iii) high net worth entities, and other persons to whom
it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together
being referred to as ―relevant persons‖). The Equity Shares are only available to, and any invitation, offer or
agreement to subscribe, purchase or otherwise acquire such Equity Shares will be engaged in only with, relevant
persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

Designated Stock Exchange

The Designated Stock Exchange for the purposes of this Issue will be the [●].

Disclaimer Clause of the BSE

As required, a copy of this Draft Letter of Offer has been submitted to BSE. The Disclaimer Clause as intimated
by BSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing
with the Stock Exchanges.

Disclaimer Clause of the NSE

As required, a copy of this Draft Letter of Offer has been submitted to NSE. The Disclaimer Clause as intimated
by NSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing
with the Stock Exchanges.

Filing

This Draft Letter of Offer was filed with SEBI, Plot No. C 4-A, 'G' Block, Bandra Kurla Complex, Bandra
(East), Mumbai 400 051, India for its observations. After SEBI gives its observations, the Letter of Offer will be
filed with the Designated Stock Exchange as per the provisions of the Companies Act.

Impersonation

As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub-section
(1) of Section 68A of the Companies Act which is reproduced below:

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

Dematerialized dealing

Our Company has entered into agreements dated January 10, 2002 and December 31, 2003, with National
Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL)
respectively, and our Equity Shares bear the ISIN INE789E01012.

Listing

The existing Equity Shares are listed on the Stock Exchanges. We have received in-principle approvals for
listing of the Equity Shares to be issued pursuant to this Issue from the BSE and the NSE by letters dated [●]
and [●], respectively.

If the permission to deal in and for an official quotation of the Equity Shares is not granted by any of the Stock
Exchanges mentioned above, within 15 days from the Issue Closing Date, the Company shall forthwith repay,
without interest, all monies received from applicants in pursuance of the Letter of Offer. If such money is not
repaid within eight days from the day the Company becomes liable to repay it, the Company and every Director
of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally
liable to repay the money with interest as prescribed under Section 73 of the Companies Act.

271
Consents

Consents in writing of the Auditor of the Company, Lead Manager to the Issue, Legal Advisor to the Issue,
Registrar to the Issue, Bankers to the Issue to act in their respective capacities have been obtained and filed with
SEBI, along with a copy of this Draft Letter of Offer and such consents have not been withdrawn up to the time
of delivery of this Draft Letter of Offer to SEBI.

Lodha & Co., the Auditors of the Company have given their written consent for the inclusion of their Report in
the form and content as appearing in this Draft Letter of Offer and such consents and reports have not been
withdrawn up to the time of delivery of this Draft Letter of Offer to SEBI.

Lodha & Co. have given their written consent for inclusion of tax benefits in the form and content as appearing
in this Draft Letter of Offer, accruing to the Company and its members.

All the necessary consents required for this Issue including consents from the lenders, industry sources and other
third parties have been obtained by our Company. To the best of the Company‘s knowledge, there are no other
consents required for this Issue. However, should the need arise, necessary consents shall be obtained by the
Company.

Expert Opinion

Except as stated in ―Financial Statements‖ and ―Statement of General and Special Tax Benefits‖ on pages 141
and 45, respectively, no expert opinion has been obtained by the Company in relation to this Draft Letter of
Offer.

Issue Related Expenses

The expenses of this Issue include, among others, management fees, printing and distribution expenses, legal
fees, advertisement expenses and listing fees. The estimated Issue expenses are as follows:

(` in crores, unless stated otherwise)

Activity Estimated expenses* As a % of the As a % of the
total estimated total Issue size*
Issue expenses*
Fees payable to the Lead Manager [●] [●] [●]
Advertising and marketing expenses [●] [●] [●]
Fees payable to the Registrar [●] [●] [●]
Fees payable to the Bankers to the Issue and SCSBs [●] [●] [●]
Others (legal fees, listing fees, etc.) [●] [●] [●]
Total estimated Issue expenses [●] [●] [●]
*Will be incorporated at the time of filing of the Letter of Offer.

Fees Payable to the Lead Manager to the Issue

The fees payable to the Lead Manager to the Issue are set out in the engagement letter issued by the Company to
the Lead Manager, a copy of which is available for inspection at the Registered Office of the Company.

Fee payable to the Registrar to the Issue

The fee payable to the Registrar to the Issue is as set out in the engagement letter issued by the Company to the
Registrar to the Issue, a copy of which is available for inspection at the Registered Office of our Company.

Previous public/rights issues by the Company in the last five years

Our Company has not made any previous rights or public issues in India or abroad in the five years preceding
the date of this Draft Letter of Offer.

Issues for consideration other than cash

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The Company has not issued Equity Shares for consideration other than cash or out of revaluation reserves,
other than issuances mentioned in ―Capital Structure‖ on page 23.

Commission or brokerage on previous issues

As our Company has not made any previous rights or public issues in India or abroad in the five years preceding
the date of this Draft Letter of Offer, our Company has not paid any commission or brokerage on previous
issues with respect to these five years.

Promise versus Performance

In the last 10 years from the date of filing of this Draft letter of Offer, our Company has undertaken one issue of
underlying Equity Shares for the issue of GDRs. The particulars of promise versus performance in this issue has
been set forth below.

Issue details Objects of the issue Performance

Issue of 77,00,000 GDRs representing To fund the cost of setting up 60,000 The proceeds of the issue of GDRs
77,00,000 Equity Shares of face value ton per annum paperboard project, have been fully utilized for the
of ` 10 each (along with the issue of and de-bottling of existing plants objects of the issue.
the underlying Equity Shares) together
with the issue of the 2006 FCCBs in
Fiscal 2006.

JK Tyres & Industries undertook a rights issue in 2008. The particulars of the rights issue including promise
versus performance have been set forth below.

Name of the company Issue details Objects of the issue Performance

JK Tyres & Industries Issue of 1,02,64,836 equity
Limited shares of ` 10 each at a
premium of ` 75 per equity
share aggregating ` expansion
87,25,11,060 to the equity
shareholders on rights basis
in the ratio of one (1) equity
share for every three (3)
equity shares held on the
record date i.e. July 14,
2008
The net proceeds of the issue The proceeds of rights
were utilised to part finance issue have been fully
expansion projects which are (i) utilized for the objects of
program for the issue.
enhancing the capacity of a
truck/bus radial plant, (ii)
implementation of the project
for manufacturing of specialty
tyres/ special application tyres,
and (iii) implementation of
certain energy saving projects

Outstanding debentures or bonds and redeemable preference shares

The Company has issued foreign currency convertible bonds, and is contemplating a further issue of foreign
currency convertible bonds, as detailed in ―Capital Structure‖ on page 23. Additionally, 6,000 10% CRPS as
part of Series F are required to be redeemed on June 30, 2011 and the remaining 3,000 10% CRPS as part of
Series G are required to be redeemed on June 30, 2012, as per the terms of issuance of the 10% CRPS. For
details, see ―Capital Structure‖ on page 23.

Option to subscribe

Other than the present Issue, and except the outstanding foreign currency convertible bonds as disclosed in
―Capital Structure‖ on page 23, the Company has not given any person any option to subscribe to the Equity
Shares of the Company.

The Lead Manager and the Company shall update the Draft Letter of Offer and keep the public informed of any
material changes until the listing and trading commences.

Investor Grievances and Redressal System

The Company has adequate arrangements for redressal of Investor complaints. A well-arranged correspondence
system has been developed for letters of routine nature. The share transfer and dematerialization for the
Company is being handled by MCS Limited. Letters are filed category wise after having attended to. Redressal
norm for response time for all correspondence including shareholders complaints is within 5 days.

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The contact details of the Registrar to the Issue are:

MCS Limited
F-65, Okhla Industrial Area
Phase I, New Delhi 110 020
Tel: (91 11) 4140 6149
Fax: (91 11) 4170 9881
E-mail id: admin@mcsdel.com
Website: www.mcsdel.com
Contact Person: S.K. Gupta
Registration No. INR000000056

Status of Complaints

(a) Total number of complaints received during the period of three years preceding the filing of the Draft
Letter of Offer: 22
(b) Total number of complaints disposed off during the period of three years preceding the filing of the
Draft Letter of Offer: 22
(c) Total number of shareholder complaints pending as on December 31, 2010: Nil
(d) Time normally taken by our Company for disposal of various types of Investor grievances: 15 days

With respect to details of investor complaints with respect to the listed Group Companies and other companies
under Section 370(1B) of the Companies Act, see ―Our Promoter and Group Companies‖ on page 117.

Investor Grievances arising out of this Issue

The Company‘s Investor grievances arising out of the Issue will be handled by MCS Limited, who is the
Registrar to the Issue. The Registrar will have a separate team of personnel handling only post-Issue
correspondence.

The agreement between the Company and the Registrar will provide for retention of records with the Registrar
for a period of three years from the last date of dispatch of Allotment Advice/ share certificate / refund orders to
enable the investors to approach the Registrar for redressal of their grievances.

All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio
no., name and address, contact telephone / cell numbers, email id of the first applicant, number and type of
shares applied for, CAF serial number, amount paid on application and the name of the bank and the branch
where the application was deposited, along with a photocopy of the acknowledgement slip. In case of
renunciation, the same details of the Renouncee should be furnished.

The average time taken by the Registrar for attending to routine grievances will be 15 days from the date of
receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the
endeavour of the Registrar to attend to them as expeditiously as possible. The Company undertakes to resolve
the Investor grievances in a time bound manner.

Investors may contact the Compliance Officer / Company Secretary in case of any pre-Issue/ post -Issue
related problems such as non-receipt of allotment advice/share certificates/ demat credit/refund orders
etc. His address is as follows:

Mr. Suresh Chander Gupta

Nehru House
4, Bahadur Shah Zafar Marg
New Delhi- 110 002, India
Tel: (91 11) 41509716
Fax: (91 11) 2373 9475
Email: jkpaper.rights@jkmail.com

Changes in Auditors during the last three years

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 Name of Auditor Date of change Reasons for the change
M/s. S.S. Kothari Metha & Co. August 3, 2009 Auditor‘s inability to offer re-
appointment.

Capitalisation of Reserves or Profits

The Company has not capitalized any of its reserves or profits for the last five years other than as mentioned in
―Capital Structure‖ on page 23.

Revaluation of Fixed Assets

There has been no revaluation of the Company‘s fixed assets for the last five years.

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 SECTION VII - TERMS OF THE PRESENT ISSUE

The Equity Shares proposed to be issued on rights basis, are subject to the terms and conditions contained in the
Letter of Offer, the enclosed CAF therein, the Memorandum of Association and Articles of Association of the
Company, the provisions of the Companies Act, the terms and conditions as may be incorporated in the Foreign
Exchange Management Act, 1999, as amended (―FEMA‖), guidelines and regulations issued by SEBI,
regulations, notifications and regulations for issue of capital and for listing of securities issued by GoI and/or
other statutory authorities and bodies from time to time, terms and conditions as stipulated in the Allotment
advice or security certificate and rules as may be applicable and introduced from time to time.

Authority for the Issue

This Issue is being made pursuant to a resolution passed by the Board of Directors of the Company under
section 81(1) of the Companies Act at its meeting held on January 28, 2011.

Basis for the Issue

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 the Equity
Shares held in physical form at the close of business hours on the Record Date, fixed in consultation with the
Designated Stock Exchange.

Rights Entitlement

As your name appears as beneficial owner in respect of the Equity Shares held in the electronic form or appears
in the Register of Members as an Equity Shareholder as of the Record Date, you are entitled to the number of
Equity Shares shown in Block I of Part A of the enclosed CAF.

Principal Terms of Equity Shares

Face Value

Each Equity Shares will have the face value of ` 10.

Issue Price

Each Equity Share shall be offered at an Issue Price of ` [●] (including a premium of ` [●] per Equity Share) for
cash. The Issue Price has been arrived in consultation between the Company and the Lead Manager.

Rights Entitlement Ratio

The Equity Shares are being offered on rights basis to the Equity Shareholders in the ratio of [●] Equity Shares
for every [●] Equity Shares held on the Record Date.

Terms of Payment

Full amount of ` [●] per Equity Share is payable on application.

Fractional Entitlements

For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the Equity
Shareholders is less than [●] Equity Shares or not in the multiple of [●], the fractional entitlement of such Equity
Shareholders shall be ignored. Shareholders whose fractional Rights Entitlements are being ignored would be
given preference in Allotment of one additional Equity Share each if they apply for Equity Shares over and
above their rights entitlement.

For example, if an Equity Shareholder holds between [●] and [●] Equity Shares, he will be entitled to [●] Equity
Shares on a rights basis. He will also be given a preference for Allotment of one additional Equity Share if he
has applied for the same.

276
Those Equity Shareholders who have a holding of less than [●] Equity Shares and therefore entitled to zero
Equity Shares under this Issue shall be despatched a CAF with zero entitlement. Such Equity Shareholders are
entitled to apply for additional Equity Shares. However, they cannot renounce the same in favour of third
parties. CAF with zero entitlement will be non-negotiable/non-renounceable.

For example, if an Equity Shareholder holds between one and [●] Equity Shares, he will be entitled to zero
Equity Shares on a rights basis. He will be given a preference for Allotment of one additional Equity Share if he
has applied for the same.

Ranking

The Equity Shares being issued shall be subject to the provisions of our Memorandum of Association and
Articles of Association and shall rank pari passu, in all respects including voting and dividend, with our existing
Equity Shares.

Listing and trading of Equity Shares proposed to be issued

The Company‘s existing Equity Shares are currently traded on the Stock Exchanges under the ISIN
INE789E01012. The fully paid up Equity Shares proposed to be issued on a rights basis shall be listed and
admitted for trading on the Stock Exchanges under the existing ISIN for fully paid up Equity Shares of the
Company.

The listing and trading of the Equity Shares shall be based on the current regulatory framework applicable
thereto. Accordingly, any change in the regulatory regime would affect the schedule.

The Equity Shares Allotted pursuant to this Issue will be listed as soon as practicable but in no case later than
seven working days from the finalisation of the basis of Allotment. The Company has made an application for
in-principle approval for listing of the Equity Shares respectively to the Stock Exchanges through letters dated
[●] and [●], respectively.

Rights of the Equity Shareholders

Subject to applicable laws, the Equity Shareholders shall have the following rights:

Right to receive dividend, if declared;

Right to attend general meetings and exercise voting powers, unless prohibited by law;
Right to vote in person or by proxy;
Right to receive offers for rights shares and be allotted bonus shares, if announced;
Right to receive surplus on liquidation;
Right to free transferability of Equity Shares; and
Such other rights as may be available to a shareholder of a listed public company under the Companies
Act and Memorandum of Association and Articles of Association.

General Terms of the Issue

Market Lot

The Equity Shares of the Company are tradable only in dematerialized form. The market lot for the Equity
Shares in dematerialised mode is one. In case of holding of Equity Shares in physical form, the Company would
issue to the Allottees one certificate for the Equity Shares Allotted to each folio (―Consolidated Certificate‖).

Joint Holders

Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the
same as joint tenants with the benefit of survivorship subject to the provisions contained in the Articles of
Association.

Nomination

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In terms of Section 109A of the Companies Act, nomination facility is available in case of Equity Shares. The
investor can nominate any person by filling the relevant details in the CAF in the space provided for this
purpose.

In case of Equity Shareholders who are individuals, a sole Equity Shareholder or the first named Equity
Shareholder, along with other joint Equity Shareholders, if any, may nominate any person(s) who, in the event
of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity
Shares. A person, 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 advantages to which he would be entitled if he 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 of the Equity Shares by the person nominating. A transferee will be entitled to make a fresh nomination
in the manner prescribed. When the Equity Shares are held by two or more persons, the nominee shall become
entitled to receive the amount only on the demise of all the holders. Fresh nominations can be made only in the
prescribed form available on request at the registered office of the Company or such other person at such
addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant
portion of the CAF.

Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already
registered the nomination with the Company, no further nomination needs to be made for Equity Shares that
may be Allotted in this Issue under the same folio.

Where the Allotment of Equity Shares is in dematerialised form, there is no need to make a separate
nomination for the Equity Shares to be Allotted in this Issue. Nominations registered with respective
Depositary Participant (“DP”) of the investor would prevail. Any investor desirous of changing the
existing nomination is requested to inform its respective DP.

Notices

All notices to the Equity Shareholders 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 one regional language
daily newspaper with wide circulation in Gujarat and/or, will be sent by ordinary post/registered post/speed post
to the registered holders of the Equity Shares from time to time.

The distribution of the Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain
jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions.

The Company is making this issue of Equity Shares on a rights basis only to the Equity Shareholders who have
an Indian address.

Minimum Subscription

If the Company does not receive minimum subscription of 90% of the Issue or the subscription level falls below
90% after the closure of the Issue on account of cheques having being returned unpaid or withdrawal of
applications, the Company shall forthwith refund the entire subscription amount received within 15 days from
the date of the closure of the Issue. If there is a delay in refund of the subscription amount beyond eight days
after the date the Company becomes liable to pay such amount (i.e. fifteen (15) days after closure of the Issue or
the date of the refusal by the Stock Exchange(s), whichever is earlier), the Company and every Director of the
Company who is an officer in default shall be jointly and severally liable to repay the money with interest for
the delayed period as prescribed under Section 73 of the Companies Act.

Additional Subscription by the Promoter

In terms of the letter dated January 28, 2011, our Promoter has confirmed that it intends to subscribe to the full
extent of its Rights Entitlement in the Issue. Subject to compliance with the Securities and Exchange Board of
India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended (the ―Takeover Code‖)
and other applicable rules and regulations, our Promoter reserves its right to subscribe for Equity Shares in this
Issue by subscribing for renunciations, if any, made by any other Equity Shareholder.

278
Our Promoter has further confirmed that it, along with the Promoter Group entities shall subscribe to additional
Equity Shares to the extent such Equity Shares remain unsubscribed in the Issue, subject to the Takeover Code
and the applicable laws. As a result of this subscription and consequent Allotment, our Promoter and the
Promoter Group entities may acquire Equity Shares over and above their Rights Entitlement in the Issue, which
may result in an increase of their shareholding being above their current shareholding with the Rights
Entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by
our Promoter and the Promoter Group entities, if any, will not result in change of control of the management of
the Company and shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code.

Our Promoter has undertaken that, subscription by it and the Promoter Group entities for the Equity Shares in
the Issue and the Allotment of the Equity Shares in the Issue will be in continuous compliance with the
minimum public shareholding requirement specified under Clause 40A of the Equity Listing Agreement with
the Stock Exchanges and other applicable laws.

For details, see ―Terms of the Present Issue - Basis of Allotment‖ on page 283.

Procedure for Application

The CAF for Equity Shares would be printed in black ink for all Equity Shareholders. In case the original CAFs
are not received by the investor or is misplaced by the investor, the investor may request the Registrar to the
Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID
Number and their full name and address. In case the signature of the Equity Shareholder(s) does not agree with
the specimen registered with the Company, the application is liable to be rejected.

Acceptance of the Issue

You may accept the offer to participate in this Issue and apply for the Equity Shares offered, either in full or in
part, by filling Part A of the enclosed CAFs and submit the same along with the application money payable to
the Bankers to the Issue or any of the collection branches as mentioned on the reverse of the CAFs 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. Investors at centers not covered by the branches of collecting
banks can send their CAFs together with the cheque drawn at par on a local bank at New Delhi/demand draft
payable at New Delhi 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. For further details on the mode of payment, see ―Mode of
Payment for Resident Equity Shareholders/Investors‖ and ―Mode of Payment for Non-Resident Equity
Shareholders/Investors‖, both on page 296.

Options available to the Equity Shareholders

The CAFs will clearly indicate the number of Equity Shares that the Equity Shareholder is entitled to.

If the Equity Shareholder applies for an investment in Equity Shares, then he can:

Apply for his Rights Entitlement of Equity Shares in full;

Apply for his Rights Entitlement of Equity Shares in part;
Apply for his Rights Entitlement of Equity Shares in part and renounce the other part of the Equity
Shares;
Apply for his Rights Entitlement in full and apply for additional Equity Shares;
Renounce his Rights Entitlement of Equity Shares in full.

Additional Equity Shares

You are eligible to apply for additional Equity Shares over and above your Rights Entitlement, provided that
you are eligible to apply under applicable law and 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, subject to sectoral caps and
in consultation if necessary with the Designated Stock Exchange and in the manner prescribed under ―Terms of
the Present Issue - Basis of Allotment‖ on page 283.

If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for

279
additional Equity Shares in Part A of the CAF. The Renouncees applying for all the Equity Shares renounced in
their favour may also apply for additional Equity Shares.

Where the number of additional Equity Shares applied for exceeds the number available for Allotment, the
Allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.

Renunciation

This Issue includes a right exercisable by you to renounce the Equity Shares offered to you either in full or in
part in favour of any other person or persons. Your attention is drawn to the fact that the Company shall not
Allot and/or register the Equity Shares in favour of more than three persons (including joint holders),
partnership firm(s) or their nominee(s), minors, HUF, any trust or society (unless the same is registered under
the Societies Registration Act, 1860 or the Indian Trust Act, 1882 or any other applicable law relating to
societies or trusts and is authorized under its constitution or bye-laws to hold Equity Shares, as the case may be).
Additionally, existing Equity Shareholders may not renounce in favour of persons or entitites in the United
States or who would otherwise be prohibited from being offered or subscribing for Equity Shares or Rights
Entitlement under applicable securities laws.

Any renunciation from non-resident Indian Shareholder(s) to resident Indian(s) is subject to the
renouncer(s)/renouncee(s) obtaining the approval of the FIPB and/or necessary permission of the RBI under the
FEMA and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid
approvals are liable to be rejected. Additionally, any renunciation by any Equity Shareholder resident in/outside
India to any non-resident is prohibited.

By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies
(―OCBs‖) have been derecognized as an eligible class of investors and the RBI has subsequently issued the
Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs))
Regulations, 2003. Accordingly, the existing Equity Shareholders of the Company who do not wish to subscribe
to the Equity Shares being offered but wish to renounce the same in favour of Renouncee(s) shall not renounce
the same (whether for consideration or otherwise) in favour of OCB(s).

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. Submission of the enclosed CAF to the Bankers to the
Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (Part ‗B‘ of the
CAF) duly filled in shall be conclusive evidence for the Company of the Renouncees applying for Equity Shares
in Part ‗C‘ of the CAF to receive Allotment of such Equity Shares. The Renouncees applying for all the Equity
Shares renounced in their favour may also apply for additional Equity Shares. Part ‗A‘ of the CAF must not be
used by the Renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to
renounce any Equity Shares in favour of any other person.

Procedure for renunciation

To renounce all the Equity Shares offered to an Equity Shareholder in favour of one Renouncee

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

To renounce in part/or renounce the whole to more than one person(s)

If you wish to either accept this offer in part and renounce the balance or renounce the entire offer under this
Issue in favour of two or more Renouncees, the CAF must be first split into requisite number of forms. Please
indicate your requirement of Split Application Forms (―SAFs‖) 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 the last date of receiving requests for SAFs. On receipt of the required number of SAFs from
the Registrar to the Issue, the procedure as mentioned in paragraph above shall have to be followed.

In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the
specimen registered with the Company, the application is liable to be rejected.

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Renouncee(s)

The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part ‗C‘ of the CAF and
submit the entire CAF to the Bankers to the Issue on or before the Issue Closing Date along with the application
money in full.

Change and/ or introduction of additional holders

If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is/are not
already a joint holder with you, it shall amount to renunciation and the procedure as stated above for
renunciation 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.

However, this right of renunciation is subject to the express condition that the Board shall be entitled in its
absolute discretion to reject the request for Allotment from the Renouncee(s) without assigning any reason
thereof.

Instructions for Options

The summary of options available to the Equity Shareholder is presented below. You may exercise any of the
following options with regard to the Equity Shares offered, using the enclosed CAF:

Option Available Action Required

1. Accept whole or part of your Rights
Entitlement without renouncing the balance.
2. Accept your Rights Entitlement in full and
apply for additional Equity Shares
3. Renounce your Rights Entitlement in full to
one person (Joint Renouncees are considered
as one).
4. Accept a part of your Rights Entitlement and
renounce the balance to one or more
Renouncee(s)
OR
Fill in and sign Part A (All joint holders must sign)
Fill in and sign Part A including Block III relating to the
acceptance of entitlement and Block IV relating to additional
Equity Shares (All joint holders must sign)
Fill in and sign Part B (all joint holders must sign) indicating
the number of Equity Shares renounced and hand it over to the
Renouncee. The Renouncee must fill in and sign Part C (All
joint Renouncees must sign)
Fill in and sign Part D (all joint holders must sign) requesting
for SAFs. Send the CAF to the Registrar to the Issue so as to
reach them on or before the last date for receiving requests for
SAFs. Splitting will be permitted only once.
On receipt of the SAF take action as indicated below.

Renounce your Rights Entitlement to all
the Equity Shares offered to you to more
than one Renouncee
5. Introduce a joint holder or change the
sequence of joint holders
For the Equity Shares you wish to accept, if any, fill in and
sign Part A.
For the Equity Shares you wish to renounce, fill in and sign
Part B indicating the number of Equity Shares renounced and
hand it over to the Renouncee. Each of the Renouncee should
fill in and sign Part C for the Equity Shares accepted by them.
This will be treated as a renunciation. Fill in and sign Part B
and the Renouncee must fill in and sign Part C.

Please note that:

Part ‗A‘ of the CAF must not be used by any person(s) other than the Equity Shareholder to whom this
Draft Letter of Offer has been addressed. If used, this will render the application invalid.

Request for SAF should be made for a minimum of one Equity Share or, in either case, in multiples
thereof and one SAF for the balance Equity Shares, if any.

Request by the investor for the SAF should reach the Registrar to the Issue on or before [ ].

Only the Equity Shareholders to whom this Draft Letter of Offer has been addressed shall be entitled to
renounce and to apply for SAFs. Forms once split cannot be split further.
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 SAFs will be sent to the investor(s) by post at the investor‘s risk.

Equity Shareholders may not renounce in favour of persons or entities in the United States or who
would otherwise be prohibited from being offered or subscribing for Equity Shares or Rights
Entitlement under applicable securities laws.

Availability of duplicate CAF

In case the original CAF is not received, or is misplaced by the investor, the Registrar to the Issue will issue a
duplicate CAF on the request of the investor 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 within [●] days from the Issue Opening Date. 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 investor violates any of these
requirements, he / she shall face the risk of rejection of both 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 Issue on plain paper, along with a demand draft, net of bank
and postal charges payable at New Delhi which should be drawn in favor of the ―[●]‖ and the Equity
Shareholders should send the same by registered post directly to the Registrar to the Issue.

The envelope should be superscribed ―[●]‖ and should be postmarked in India. 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 and should contain
the following particulars:

Name of Issuer, being JK Paper Limited;

Name and address of the Equity Shareholder including joint holders;
Registered Folio Number/ DP and Client ID no.;
Number of Equity Shares held as on Record Date;
Number of Equity Shares entitled to;
Number of Equity Shares applied for;
Number of additional Equity Shares applied for, if any;
Total number of Equity Shares applied for;
Total amount paid at the rate of ` [●] 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;
Except for applications on behalf of the GoI or state government and the officials appointed by the
courts, PAN number of the investor and for each investor in case of joint names, irrespective of the
total value of the Equity Shares applied for pursuant to the Issue;
Signature of Equity Shareholders to appear in the same sequence and order as they appear in the
records of the Company; and
Additionally, all applicants shall include the following:

“I/We understand that neither the Rights Entitlement nor the Equity Shares have been, and will be, registered
under the United States Securities Act of 1933, as amended (the “US Securities Act”) or any United States state
securities laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the
territories or possessions thereof (the “United States”). I/we understand the Equity Shares referred to in this
application are being offered in India but not in the United States. I/we understand the offering to which this
application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or
Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said
Equity Shares or Rights Entitlement in the United States. Accordingly, I/we understand this application should
not be forwarded to or transmitted in or to the United States at any time. I/we understand that none of the
Company, the Registrar, the Lead Manager or any other person acting on behalf of the Company will accept
subscriptions from any person, or the agent of any person, who appears to be, or who the Company, the

282
Registrar, the Lead Manager or any other person acting on behalf of the Company has reason to believe is, a
resident of the United States.

I/We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any
jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom
it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance
with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all
suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of
our residence.

I/We understand and agree that the Rights Entitlement and Equity Shares may not be reoffered, resold, pledged
or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US
Securities Act.

I/We (i) am/are, and the person, if any, for whose account I/we am/are acquiring such Rights Entitlement and/or
the Equity Shares is/are, outside the United States, and (ii) is/are acquiring the Rights Entitlement and/or the
Equity Shares in an offshore transaction meeting the requirements of Regulation S.

I/We acknowledge that the Company, the Lead Manager, their affiliates and others will rely upon the truth and
accuracy of the foregoing representations and agreements.”

Please note that those who are making the application otherwise than on original CAF 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. The Company shall refund such application amount to the applicant without any
interest thereon.

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 Bankers to the Issue/ Registrar to the Issue
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 the 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 the section ―Terms of the Present Issue – Basis of Allotment‖ on page 283.

INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE
TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM

Basis of Allotment

Subject to the provisions contained in the Letter of Offer, the Articles of Association of the Company and the
approval of the Designated Stock Exchange, the Board will proceed to Allot the Equity Shares in the following
order of priority:

(a) Full Allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full
or in part and also to the Renouncee(s) who has/ have applied for Equity Shares renounced in their
favour, in full or in part.

(b) Allotment pertaining to fractional entitlements in case of any shareholding other than in multiples of
[●].

(c) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as
part of the Issue and have also applied for additional Equity Shares. The Allotment of such additional
Equity Shares will be made as far as possible on an equitable basis having due regard to the number of
Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after

283
 making full Allotment in (a) and (b) above. The Allotment of such Equity Shares will be at the sole
discretion of the Board / Committee of Directors in consultation with the Designated Stock Exchange,
as a part of the Issue and will not be a preferential Allotment.

(d) Allotment to Renouncees who having applied for all the Equity Shares renounced in their favour, have
applied for additional Equity Shares provided there is surplus available after making full Allotment
under (a), (b) and (c ) above. The Allotment of such Equity Shares will be at the sole discretion of the
Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the
Issue and not preferential Allotment.

After taking into account Allotment to be made under (a) above, if there is any unsubscribed portion, the same
shall be deemed to be ‗unsubscribed‘ for the purpose of Regulation 3(1)(b) of the Takeover Code which would
be available for allocation under (b), (c) and (d) above. In terms of the letter dated January 28, 2011, our
Promoter has confirmed that it intends to subscribe to the full extent of its Rights Entitlement in the Issue.
Subject to compliance with the Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997, as amended (the ―Takeover Code‖) and other applicable rules and regulations,
our Promoter reserves its right to subscribe for Equity Shares in this Issue by subscribing for renunciations, if
any, made by any other Equity Shareholder.

Our Promoter has further confirmed that it, along with the Promoter Group entities shall subscribe to additional
Equity Shares to the extent such Equity Shares remain unsubscribed in the Issue, subject to the Takeover Code
and the applicable laws. As a result of this subscription and consequent Allotment, our Promoter and the
Promoter Group entities may acquire Equity Shares over and above their Rights Entitlement in the Issue, which
may result in an increase of their shareholding being above their current shareholding with the Rights
Entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by
our Promoter and the Promoter Group entities, if any, will not result in change of control of the management of
the Company and shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code.

Our Promoter has undertaken that, subscription by it and the Promoter Group entities for the Equity Shares in
the Issue and the Allotment of the Equity Shares in the Issue will be in continuous compliance with the
minimum public shareholding requirement specified under Clause 40A of the Equity Listing Agreement with
the Stock Exchanges and other applicable laws.

Allotment to the Promoter of any unsubscribed portion, over and above their Rights Entitlement shall be done in
compliance with Clause 40A of the Listing Agreement and the other applicable laws prevailing at that time.

Procedure for Application through the Applications Supported by Blocked Amount (“ASBA”) Process

This section is for the information of the 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 Draft
Letter of Offer. Equity Shareholders who are eligible to apply under the ASBA Process are advised to
make their independent investigations and to ensure that the CAF is correctly filled up.

The list of banks who have been notified by SEBI to act as SCSB for the ASBA Process are provided on
http://www.sebi.gov.in/pmd/scsb.pdf. For details on designated branches of SCSB collecting the CAF, please
refer the above mentioned SEBI link.

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 Equity
Shareholders of the Company on the Record Date and who:

hold the Equity Shares in dematerialised form as on the Record Date and have applied towards his/her
Rights Entitlements or additional Equity Shares in the Issue in dematerialised form;
has not renounced his / her Rights Entitlements in full or in part;
are not in the United States and are eligible under applicable securities laws to subscribe for the Rights
Entitlements and the Equity Shares in the Issue; and
are not a Renouncee.

284
CAF

The Registrar to the Issue will despatch the CAF to all Equity Shareholders as per their Rights 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. Application in electronic mode will only be available with such SCSB
who provides such facility. 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, either in full or in part, by filling Part A of the
respective CAFs sent by the Registrar to the Issue, 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 in this regard.

Mode of payment

The Equity 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 Registrar to the Issue. Upon receipt of intimation from the Registrar to the Issue, the
SCSBs shall transfer such amount as per Registrar to the Issue‘s instruction from the bank account with the
SCSB mentioned by the Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI
ICDR Regulations, into the separate bank account maintained by the Company as per the provisions of section
73(3) of the Companies Act. The balance amount remaining after the finalisation of the basis of Allotment shall
be either unblocked by the SCSBs or refunded to the investors by the Registrar to the Issue on the basis of the
instructions issued in this regard by the Registrar to the Issue and the Lead Manager to the respective SCSB.

The Equity 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 Equity 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 the
application by the SCSB, the Company would have a right to reject the application only on technical grounds.

Options available to the Equity Shareholders applying under the ASBA Process

The summary of options available to the Equity Shareholders is presented below. You may exercise any of the
following options with regard to the Equity Shares, using the respective CAFs received from Registrar to the
Issue:

Option Available Action Required

1. Accept whole or part of your Rights Entitlement without Fill in and sign Part A of the CAF (All joint holders
renouncing the balance must sign)

2. Accept your Rights Entitlement in full and apply for Fill in and sign Part A of the CAF including Block III
additional Equity Shares relating to the acceptance of entitlement and Block IV
relating to additional Equity Shares (All joint holders
must sign)

The Equity Shareholder applying under the ASBA Process will need to select the ASBA Process option in
285
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 Equity 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 are eligible to apply for Equity Shares under applicable law, and (ii) you have
applied for all the Equity Shares (as the case may be) 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 ―Terms of the Present Issue - Basis of Allotment‖ on page 283.

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

An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate
CAF and who is not applying under the ASBA Process may make an application to subscribe to the Issue on
plain paper, along with Demand Draft, net of bank and postal charges payable at New Delhi which should be
drawn in favor of the ―[●]‖ and the Equity Shareholders should send the same by registered post directly to
SCSB. Application on plain paper will not be accepted from any U.S. address.

The envelope should be superscribed ―[●]‖ and should be postmarked in India. The application on plain paper,
duly signed by the investors 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 and should contain
the following particulars:

Name of Issuer, being JK Paper Limited;

Name and address of the Equity Shareholder including joint holders;
Registered Folio Number/ DP and Client ID no.;
Number of Equity Shares held as on Record Date;
Number of Equity Shares entitled to;
Number of Equity Shares applied for;
Number of additional Equity Shares applied for, if any;
Total number of Equity Shares applied for;
Total amount paid at the rate of ` [●] per Equity Share;
Particulars of cheque/draft;
Bank account number maintained with the SCSB in which an amount equivalent to the amount payable
on application as stated in the plain paper application will be blocked by the SCSB;
Except for applications on behalf of the GoI or state government and the officials appointed by the
courts, PAN number of the investor and for each investor in case of joint names, irrespective of the
total value of the Equity Shares applied for pursuant to the Issue;
Signature of Equity Shareholders to appear in the same sequence and order as they appear in the
records of the Company; and
Additionally, all applicants shall include the following:

“I/We understand that neither the Rights Entitlement nor the Equity Shares have been, and will be, registered
under the United States Securities Act of 1933, as amended (the “US Securities Act”) or any United States state
securities laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the
territories or possessions thereof (the “United States”). I/we understand the Equity Shares referred to in this
application are being offered in India but not in the United States. I/we understand the offering to which this

286
application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or
Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said
Equity Shares or Rights Entitlement in the United States. Accordingly, I/we understand this application should
not be forwarded to or transmitted in or to the United States at any time. I/we understand that none of the
Company, the Registrar, the Lead Manager or any other person acting on behalf of the Company will accept
subscriptions from any person, or the agent of any person, who appears to be, or who the Company, the
Registrar, the Lead Manager or any other person acting on behalf of the Company has reason to believe is, a
resident of the United States.

I/We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any
jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom
it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance
with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all
suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of
our residence.

I/We understand and agree that the Rights Entitlement and Equity Shares may not be reoffered, resold, pledged
or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US
Securities Act.

I/We (i) am/are, and the person, if any, for whose account I/we am/are acquiring such Rights Entitlement and/or
the Equity Shares is/are, outside the United States, and (ii) is/are acquiring the Rights Entitlement and/or the
Equity Shares in an offshore transaction meeting the requirements of Regulation S.

I/We acknowledge that the Company, the Lead Manager, their affiliates and others will rely upon the truth and
accuracy of the foregoing representations and agreements.”

Please note that those who are making the application otherwise than on original CAF 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.

Last date of Application

The last date for submission of the duly filled in CAF is [●], 2011. 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 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 the 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‖ below.

Option to receive Equity Shares in Dematerialized Form

EQUITY 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 Equity Shareholders applying under the ASBA Process

(a) Please read the instructions printed on the respective CAF carefully.

(b) Application should be made on the printed CAF 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 the Letter of Offer are liable to be rejected. The CAF
must be filled in English.

287
(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 to the Issue or Lead
Manager.

(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. Except for applications on behalf of GoI or state government, the residents of Sikkim
and the officials appointed by the courts, CAFs without PAN will be considered incomplete and are
liable to be rejected. With effect from August 16, 2010, the demat accounts for applicants for
which PAN details have not been verified shall be “suspended credit” and no Allotment and
credit of Equity Shares pursuant to the Issue shall be made into the accounts of such applicants.

(e) Applications will have deemed to be made if applications are submitted to the SCSB and the relevant
amount in the bank account maintained with the SCSB is blocked. 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) 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.

(h) All communications in connection with application for the Equity Shares, including any change in the
address of the Equity Shareholder, 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 Equity Shares have been offered and not renouncee(s) shall be
eligible to participate under the ASBA Process.

(j) Only persons outside United States and who are eligible to subscribe for Rights Entitlement and Equity
Shares under applicable securities laws are eligible to participate.

Do‟s:

a. Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled
in.

b. 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.

c. 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.

d. Ensure that the CAFs are submitted at the SCSBs whose details of bank account have been provided in
the CAF.

e. Ensure that you have mentioned the correct bank account number in the CAF.

f. Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied
for} X {Issue Price of Equity Shares, as the case may be}) 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.

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g. 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.

h. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in
physical form.

i. Except for applications on behalf of GoI or state government, the residents of Sikkim and the officials
appointed by the courts, each applicant should mention their PAN allotted under the I.T. Act.

j. 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.

k. Ensure that the Demographic details are updated, true and correct, in all respects.

Don‟ts:

a. Do not apply if you are in the United States or are not eligible to participate in the Issue under the
securities laws applicable to your jurisidiction.

b. Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB.

c. Do not pay the amount payable on application in cash, by money order or by postal order.

d. Do not send your physical CAFs to the Lead Manager / Registrar to the Issue / 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.

e. Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this
ground.

f. Do not instruct your respective banks to release the funds blocked under the ASBA Process.

Grounds for Technical Rejection under the ASBA Process

In addition to the grounds listed under ―Grounds for Technical Rejection‖ on page 295, applications under the
ABSA Process are liable to be rejected on the following grounds:

a. Application for Rights Entitlements or additional Equity Shares in physical form.

b. DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available
with the Registrar to the Issue.

c. Sending CAF to a Lead Manager / Registrar to the Issue / 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.

d. Renouncee applying under the ASBA Process.

e. Insufficient funds are available with the SCSB for blocking the amount.

f. Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen
pursuant to regulatory orders.

g. Account holder not signing the CAF or declaration mentioned therein.

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h. CAFs that do not include the certification set out in the CAF to the effect that the subscriber does not
have a registered address (and is not otherwise located) in the United States and is authorized to acquire
the rights and the Equity Shares in compliance with all applicable laws and regulations.

i. CAFs which have evidence of being executed in/dispatched from the United States.

Depository account and bank details for Equity Shareholders applying under the ASBA Process

IT IS MANDATORY FOR ALL THE EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA
PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL EQUITY
SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR
DEPOSITORY PARTICIPANT‟S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION
NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. EQUITY 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.

Equity Shareholders applying under the ASBA Process should note that on the basis of name of these
Equity Shareholders, 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 Equity Shareholders such as address, bank account details for printing on
refund orders and occupation (“Demographic Details”). Hence, Equity 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 Equity Shareholders including
mailing of the letters intimating unblock of bank account of the respective Equity Shareholder. The
Demographic Details given by Equity Shareholders in the CAF would not be used for any other purposes by the
Registrar to the Issue. Hence, Equity Shareholders are advised to update their Demographic Details as provided
to their Depository Participants.

By signing the CAFs, the Equity 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 (if any) would be mailed at the address of the Equity
Shareholder applying under the ASBA Process as per the Demographic Details received from the
Depositories. Refunds, if any, will be made directly to the bank account linked to the DP ID. Equity
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 or the change in address has not been updated against the account as of the date of
closure of the Issue. In such an event, the address and other details given by the Equity 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 Equity Shareholders applying under the ASBA
Process and none of the Company, the SCSBs or the Lead Manager shall be liable to compensate the
Equity Shareholder applying under the ASBA Process for any losses caused to such Equity 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 matches three parameters, namely, names
of the Equity Shareholders (including the order of names of joint holders), the DP ID and the beneficiary
account number, then such applications are liable to be rejected.

Underwriting

The Issue is not underwritten.

Issue Schedule

290
 Issue Opening Date: [●]
Last date for receiving requests for SAFs: [●]
Issue Closing Date: [●]

The Board may however decide to extend the Issue period as it may determine from time to time but not
exceeding 30 days from the Issue Opening Date.

Allotment Advices / Refund Orders

The Company will issue and dispatch Allotment advice / share certificates / advice for demat credit and/ or
letters of regret along with refund order or credit the Allotted Equity Shares to the respective beneficiary
accounts, if any, within a period of 15 days from the Issue Closing Date. If such money is not repaid within
eight days from the day the Company becomes liable to repay it, (i.e. 15 days after the Issue Closing Date or the
date of the refusal by the Stock Exchange(s), whichever is earlier) the Company and every Director of the
Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to
repay the money with interest as prescribed under Section 73 of the Companies Act.

Applicants residing at centres where clearing houses are managed by the RBI will get refund through Electronic
Clearing Service (―ECS‖) only except where applicants have not provided the details required to send electronic
refunds.

In case of those applicants who have opted to receive their Rights Entitlement in dematerialized form by using
electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given
separately. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter
through ordinary post intimating them about the mode of credit refund with a period of 15 days from the Issue
Closing Date.

In case of those applicants who have opted to receive their Rights Entitlement in physical form and the
Company issues letter of Allotment, the corresponding share certificates will be kept ready within three months
from the date of Allotment thereof or such extended time as may be approved by the Company Law Board
under Section 113 of the Companies Act or other applicable provisions, if any. Investors are requested to
preserve such letters of Allotment, which would be exchanged later for the share certificates.

Any letter of Allotment / refund order exceeding ` 1,500 will be dispatched by registered post/ speed post to the
sole/ first applicant‘s registered address. Refund orders up to the value of ` 1,500 would be sent under the
certificate of posting. Such cheques or pay orders will be payable at par at all place where the applications were
originally accepted and will be marked ‗Account Payee only‘ and would be drawn in the name of the sole/ first
applicant. Adequate funds would be made available to the Registrar to the Issue for this purpose.

Payment of Refund

Mode of making refunds

The payment of refund, if any, would be done through any of the following modes:

1. ECS – Payment of refund would be done through ECS for applicants having an account at any centre where
such facility has been made available. This mode of payment of refunds would be subject to availability of
complete bank account details including the MICR code as appearing on a cheque leaf, from the
Depositories / records of the Registrar to the Issue. The payment of refunds is mandatory for applicants
having a bank account at any centre where ECS facility has been made available by the RBI (subject to
availability of all information for crediting the refund through ECS).

2. NEFT – Payment of refund shall be undertaken through NEFT wherever the applicants‘ bank has been
assigned the Indian Financial System Code (―IFSC‖), which can be linked to an MICR, allotted to that
particular bank branch. IFSC will be obtained from the website of RBI as on a date immediately prior to the
date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their
nine digit MICR number and their bank account number with the registrar to the Company or with the
Depository participant while opening and operating the demat account, the same will be duly mapped with
the IFSC of that particular bank branch and the payment of refund will be made to the applicants through
this method.

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3. Direct Credit – Applicants having bank accounts with the Bankers to the Issue shall be eligible to receive
refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by
the Company.

4. RTGS – If the refund amount exceeds ` 0.50 crore, the applicants 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 in the CAF. In the event the same is not provided, refund shall be made through ECS or
any other eligible mode. Charges, if any, levied by the refund bank(s) for the same would be borne by the
Company. Charges, if any, levied by the applicant‘s bank receiving the credit would be borne by the
applicant.

5. For all other applicants, including those who have not updated their bank particulars with the MICR code,
the refund orders will be despatched under certificate of posting for value up to ` 1,500 and through Speed
Post/ Registered Post for refund orders of ` 1,500 and above. Such refunds will be made by cheques, pay
orders or demand drafts drawn in favour of the sole/first applicant and payable at par.

6. Credit of refunds to applicants in any other electronic manner permissible under the banking laws, which
are in force, and is permitted by the SEBI from time to time.

Printing of Bank Particulars on Refund Orders

As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement,
the particulars of the applicant‘s bank account, where available, are mandatorily required to be given for
printing on the refund orders. Bank account particulars, where available, will be printed on the refund
orders/refund warrants which can then be deposited only in the account specified. The Company will in no way
be responsible if any loss occurs through these instruments falling into improper hands either through forgery or
fraud.

Allotment Advice / Demat Credit

Allotment advice / share certificates / demat credit or letters of regret will be dispatched to the registered address
of the first named applicant or respective beneficiary accounts will be credited within 15 days from the Issue
Closing Date. In case the Company issues Allotment advice, the relative shared certificates will be dispatched
within one month from the date of Allotment. Allottees are requested to preserve such Allotment advice (if any)
to be exchanged later for share certificates

Option to receive Equity Shares in Dematerialized Form

Applicants shall be Allotted the Equity Shares in dematerialized (electronic) form at the option of the applicant.
The Company has signed a tri-partite agreement with NSDL on January 10, 2002, which enables the applicants
to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of
physical certificates. The Company has also signed a tripartite agreement with CDSL on December 31, 2003
which enables the applicants to hold and trade in Equity Shares in a dematerialized form, instead of holding the
Equity Shares in the form of physical certificates.

In this Issue, the Allottees who have opted for Equity Shares in dematerialized form will receive their Equity
Shares in the form of an electronic credit to their beneficiary account as given in the CAF, after verification with
a depository participant. Applicants will have to give the relevant particulars for this purpose in the appropriate
place in the CAF. Allotment advice, refund order (if any) would be sent directly to the applicant by the Registrar
to the Issue but the applicant‘s depository participant will provide to him the confirmation of the credit of such
Equity Shares to the applicant‘s depository account. CAFs, which do not accurately contain this information,
will be given the Equity Shares in physical form. No separate CAFs for Equity Shares in physical and/or
dematerialized form should be made. If such CAFs are made, the CAFs for physical Equity Shares will be
treated as multiple CAFs and is liable to be rejected. In case of partial Allotment, Allotment will be done in
demat option for the Equity Shares sought in demat and balance, if any, will be Allotted in physical Equity
Shares.

INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE
TRADED ON THE STOCK EXCHANGES ONLY IN THE DEMATERIALISED FORM.

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Procedure for availing the facility for Allotment of Equity Shares in this Issue in the electronic form is as under:

Open a beneficiary account with any depository participant (care should be taken that the beneficiary
account should carry the name of the holder in the same manner as is exhibited in the records of the
Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the
holders in the same order as with the Company). In case of applicants having various folios in the Company
with different joint holders, the applicants will have to open separate accounts for such holdings. Those
Equity Shareholders who have already opened such beneficiary account(s) need not adhere to this step.

For Equity Shareholders already holding Equity Shares of the Company in dematerialized form as on the
Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later
or those who change their accounts and wish to receive their Equity Shares pursuant to this Issue by way of
credit to such account, the necessary details of their beneficiary account should be filled in the space
provided in the CAF. It may be noted that the Allotment of Equity Shares arising out of this Issue may be
made in dematerialized form even if the original Equity Shares of the Company are not dematerialized.
Nonetheless, it should be ensured that the depository account is in the name(s) of the Equity Shareholders
and the names are in the same order as in the records of the Company.

The responsibility for correctness of information (including applicant‘s age and other details) filled in the
CAF vis-à-vis such information with the applicant‘s depository participant, would rest with the applicant.
Applicants should ensure that the names of the applicants and the order in which they appear in CAF should
be the same as registered with the applicant‘s depository participant.

If incomplete / incorrect beneficiary account details are given in the CAF, the applicant will get Equity
Shares in physical form.

The Equity Shares Allotted to applicants opting for issue in dematerialized form, would be directly credited
to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any)
would be sent directly to the applicant by the Registrar to the Issue but the applicant‘s depository
participant will provide to him the confirmation of the credit of such Equity Shares to the applicant‘s
depository account.

Renouncees will also have to provide the necessary details about their beneficiary account for Allotment of
Equity Shares in this Issue. In case these details are incomplete or incorrect, the application is liable to be
rejected.

General instructions for Investors

(a) Please read the instructions printed on the enclosed CAF carefully.

(b) Application should be made on the printed CAF, provided by the Company except as mentioned under
the head ―Application on Plain Paper‖ on page 286 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 the Letter of Offer are liable to be rejected and the
money paid, if any, in respect thereof will be refunded without interest and after deduction of bank
commission and other charges, if any. The CAF must be filled in English and the names of all the
applicants, details of occupation, address, father‘s / husband‘s name must be filled in block letters.

The CAF together with cheque/demand draft should be sent to the Bankers to the Issue/Collecting
Bank or to the Registrar to the Issue and not to the Company or the Lead Manager. Applicants residing
at places other than cities where the branches of the Bankers to the Issue have been authorised by the
Company for collecting applications, will have to make payment by demand draft payable at New
Delhi of an amount net of bank and postal charges and send their CAFs to the Registrar to the Issue by
registered post. If any portion of the CAF is/are detached or separated, such application is liable to be
rejected.

Applications where separate cheques/demand drafts are not attached for amounts to be paid for
Equity Shares are liable to be rejected.

293
(c) Except for applications on behalf of the GoI or state government, the residents of Sikkim and the
officials appointed by the courts, all applicants, and in the case of application in joint names, each of
the joint investors, should mention his/her PAN allotted under the I.T. Act, irrespective of the amount
of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.

(d) Applicants are advised that it is mandatory to provide information as to their savings/current account
number and the name of the bank with whom such account is held in the CAF to enable the Registrar to
the Issue to print the said details in the refund orders, if any, after the names of the payees. Application
not containing such details is liable to be rejected.

(e) All payment should be made by cheque/demand draft only. Application through the ASBA Process as
mentioned above is acceptable. 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.

(g) In case of an application under power of attorney or by a body corporate or by a society, a certified true
copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the
relevant investment under this Issue and to sign the application and a copy of the Memorandum of
Association and Articles of Association and / or bye laws of such body corporate or society must be
lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the
above referred documents are already registered with the Company, the same need not be a furnished
again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after
the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be
attached to the application submitted to the Bankers to the Issue.

(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. Further, in case of joint applicants who are
Renouncees, the number of applicants should not exceed three. 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.

(i) Application(s) received from Non-Residents / NRIs, or persons of Indian origin residing abroad for
Allotment of Equity Shares shall, inter alia, be subject to conditions, as may be imposed from time to
time by the RBI under FEMA in the matter of refund of application money, Allotment of Equity
Shares, interest, export of share certificates, etc. In case a Non-Resident or NRI Equity Shareholders
has specific approval from the RBI, in connection with his/her shareholding, he/she should enclose a
copy of such approval with the CAF. Additionally, applications will not be accepted from Non-
Residents / NRIs in the United States or its territories and possessions, or any other jurisdiction where
the offer or sale of the Rights Entitlements and Equity Shares may be restricted by applicable securities
laws.

(j) 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, folio numbers and CAF number.
Please note that any intimation for change of address of Equity Shareholders, after the date of
Allotment, should be sent to the Registrar and Transfer Agents of the Company, in the case of Equity
Shares held in physical form and to the respective depository participant, in case of Equity Shares held
in dematerialized form.

(k) SAFs cannot be re-split.

(l) Only the person or persons to whom Equity Shares have been offered and not Renouncee(s) shall be
entitled to obtain SAFs.

(m) Applicants must write their CAF number at the back of the cheque /demand draft.

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(n) Only one mode of payment per application should be used. The payment must be either by cheque /
demand draft drawn on any of the banks, 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 indicated on the reverse
of the CAF where the application is to be submitted.

(o) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-dated
cheques and postal / money orders will not be accepted and applications accompanied by such cheques
/ demand drafts / money orders or postal orders will be rejected. The Registrar to the Issue will not
accept payment against application if made in cash. (For payment against application in cash please
refer point (e) above).

(p) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank/
Registrar to the Issue will acknowledge receipt of the same by stamping and returning the
acknowledgment slip at the bottom of the CAF.

(q) The distribution of the Draft Letter of Offer and issue of Equity Shares and Rights Entitlements to
persons in certain jurisdictions outside India may be restricted to legal requirements in those
jurisdictions. Persons in the United States and such other jurisdictions are instructed to disregard the
Draft Letter of Offer and not to attempt to subscribe for Equity Shares.

Grounds for Technical Rejections

Investors 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;

Bank account details (for refund) are not given and the same are not available with the DP (in the case of
dematerialized holdings) or the Registrar and Transfer Agent of the Company (in the case of physical
holdings);
Age of applicant(s) not given (in case of renouncees);
Except for CAFs on behalf of the GoI or state government or the residents of Sikkim or the officials
appointed by the courts, PAN number not given for application of any value;
In case of CAF under power of attorney or by limited companies, corporate, trust, etc., relevant documents
are not submitted;
If the signature of the Equity Shareholder does not match with the one given on the CAF and for
Renouncee(s) if the signature does not match with the records available with their depositories;
If the applicants desires to have Equity 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 Letter of Offer;
CAFs not duly signed by the sole/joint applicants;
CAFs by OCBs unless accompanied by specific approval from RBI permitting the OCBs to participate in
the Issue;
CAFs accompanied by Stockinvest;
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;
CAFs that do not include the certification set out in the CAFs to the effect that, among other things, the
subscriber is not a ―U.S. person‖ (as defined in Regulation S), and does not have a registered address (and is
not otherwise located) in the United States and is authorized to acquire the Rights Entitlements and the
Equity Shares in compliance with all applicable laws and regulations;

CAFs which have evidence of being executed in/dispatched from the US or any other jurisdiction where the
offer for sale of the Rights Entitlements and Equity Shares may be restricted by applicable securities laws;
CAFs 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;
CAFs where the Company believes that CAF is incomplete or acceptance of such CAF may infringe
applicable legal or regulatory requirements;
Submission of GIR number instead of the PAN;

295
 Applications by Renouncees who are persons not competent to contract under the Indian Contract Act,
1872, including minors;
Applications where Separate cheque/demand drafts are not attached for amounts to be paid for Equity
Shares;
Duplicate Applications, including cases where an applicant submits CAFs along with a plain paper
application; and
Multiple CAFs, including cases where the applicant submits CAFs along with a plain paper application.

Please read the Letter of Offer and the instructions contained therein and in the CAF carefully before filling in
the CAF. The instructions contained in the CAF are each an integral part of the Letter of Offer and must be
carefully followed. CAF is liable to be rejected for any non-compliance of the provisions contained in the Letter
of Offer or the CAF.

Mode of payment for Resident Equity Shareholders/ Investors

All cheques / drafts accompanying the CAF should be drawn in favour of the Collecting Bank (specified on
the reverse of the CAF), crossed ‗A/c Payee only‘ and marked ―[●]‖;

Applicants residing at places other than places where the bank collection centres have been opened by the
Company for collecting applications, are requested to send their CAFs together with demand draft for the
full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed ‗A/c
Payee only‘ and marked ‗[●]‘ payable at New Delhi directly to the Registrar to the Issue by registered post
so as to reach them on or before the Issue Closing Date. The Company or the Registrar to the Issue will not
be responsible for postal delays or loss of applications in transit, if any.

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. In
accordance with foreign investment limits applicable to the Company, the total FII investment cannot exceed
24% of the total paid up capital of the Company.

Applications will not be accepted from FIIs in the United States or its territories and possessions, or any other
jurisdiction where the offer or sale of the Rights Entitlements and Equity Shares may be restricted by applicable
securities laws.

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.

Procedure for Applications by Mutual Funds

A separate application can be made in respect of 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.

Mode of payment for Non-Resident Equity Shareholders/ Applicants

As regards the application by non-resident Equity Shareholders, the following conditions shall apply:

Payment by non-residents must be made by demand draft payable at New Delhi /cheque payable drawn

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 on a bank account maintained at [●] or funds remitted from abroad in any of the following ways:

Application with repatriation benefits

By Indian Rupee drafts purchased from abroad and payable at New Delhi 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

New Delhi; or

By Rupee draft purchased by debit to NRE/FCNR Account maintained elsewhere in India and
payable in New Delhi; or FIIs registered with SEBI must remit funds from special non-
resident rupee deposit account.

Non-resident investors applying with repatriation benefits should draw cheques/drafts in

favour of ‗[●]‘ and must be crossed ‗account payee only‘ for the full application amount, net
of bank and postal charges.

Application without repatriation benefits

As far as non-residents holding Equity Shares on non-repatriation basis are 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 New Delhi or Rupee Draft purchased out of
NRO Account maintained elsewhere in India but payable at New Delhi. In such cases, the
Allotment of Equity Shares will be on non-repatriation basis.

All cheques/drafts submitted by non-residents applying on a non-repatriation basis should be

drawn in favour of ‗[●]‘ and must be crossed ‗account payee only‘ for the full application
amount, net of bank and postal charges. The CAFs duly completed together with the amount
payable on application must be deposited with the Collecting Bank indicated on the reverse of
the CAFs before the close of banking hours on or before the Issue Closing Date. A separate
cheque or bank draft must accompany each CAF.

Applicants may note that where payment is made by drafts purchased from NRE/ FCNR/
NRO 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/ NRO account
should be enclosed with the CAF. Otherwise 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.

Notes:

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 I.T.
Act.

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 CAFs 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.

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Impersonation

As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of
subsection (1) of Section 68A of the Companies Act which is reproduced below:

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

Dematerialized dealing

The Company has entered into agreements dated January 10, 2002 and December 31, 2003, with NSDL and
CDSL, respectively, and its Equity Shares bear the ISIN INE789E01012.

Payment by Stockinvest

In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003- 04 dated November 5, 2003, the Stockinvest
Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue.

Disposal of application and application money

No acknowledgment will be issued for the application moneys received by the Company. However, the Bankers
to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning
the acknowledgment slip at the bottom of each CAF.

The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part,
and in either case without assigning any reason thereto.

In case an application is rejected in full, the whole of the application money received will be refunded.
Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money
due on Equity Shares Allotted, will be refunded to the applicant within a period of 15 days from the Issue
Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to repay
it, the Company and every Director of the Company who is an officer in default shall, on and from expiry of
eight days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the
Companies Act.

For further instruction, please read the CAF carefully.

Utilisation of Issue Proceeds

The Board declares that:

(i) All monies received out of this Issue shall be transferred to a separate bank account other than the
account mentioned referred to in Section 73(3) of the Companies Act and the Company will have
access to the proceeds from the Issue after finalisation of the basis of Allotment and in accordance with
applicable laws, regulations and guidelines;

(ii) Details of all monies utilized out of the Issue shall be disclosed under an appropriate separate head in
the balance sheet of our Company indicating the purpose for which such monies have been utilized;
and

(iii) Details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate separate
head in the balance sheet of our Company indicating the form in which such unutilized monies have
been invested.

Undertakings by the Company

1. The complaints received in respect of the Issue shall be attended to by the Company expeditiously and
satisfactorily.

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2. All steps for completion of the necessary formalities for listing and commencement of trading at all
Stock exchanges where the Equity Shares are to be listed will be taken within seven working days of
finalization of basis of Allotment.

3. The funds required for making refunds to unsuccessful applicants as per the modes disclosed shall be
made available to the Registrar to the Issue by the Company.

4. That where refunds are made through electronic transfer of funds, a suitable communication shall be
sent to the applicant within 15 days of the Issue Closing Date, giving details of the bank where refunds
shall be credited along with amount and expected date of electronic credit of refund.

5. Save as otherwise disclosed in this Draft Letter of Offer, no further issue of securities shall be made
until the Equity Shares offered through this offer document are listed or until the application moneys
are refunded on account of non-listing, under subscription, etc.

6. The certificates of the securities/refund orders to the non-resident Indians shall be dispatched within the
specified time.

7. The Company accepts full responsibility for the accuracy of information given in this Draft Letter of
Offer and confirms that to best of its knowledge and belief, there are no other facts the omission of
which makes any statement made in this Draft Letter of Offer misleading and further confirms that it
has made all reasonable enquiries to ascertain such facts.

8. All information shall be made available by the Company to the investors at large and no selective or
additional information would be available for a section of the investors in any manner whatsoever
including at road shows, presentations, in research or sales reports, etc.

9. The Company undertakes that the investors, who are holding Equity Shares in physical form, shall be
given an option to get the Equity Shares in demat or in physical mode.

10. The Company undertakes that it shall comply with such disclosure, monitoring of the utilisation of
proceeds of the Issue and accounting norms specified by SEBI from time to time.

11. Adequate arrangements shall be made to collect all ASBA applications and to consider then similar to
non-ASBA applications while finalising the basis of Allotment.

12. The Company shall apply in advance for the listing of securities, including for the Equity Shares to be
issued on conversion of the foreign currency convertible bonds outstanding as on the Record Date to be
determined by the Company

Important

Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the
accompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefully
followed; otherwise the application is liable to be rejected.

All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for SAFs
must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and
the name of the first Equity Shareholder as mentioned on the CAF and superscribed ‗[●]‘ on the envelope
and postmarked in India) to the Registrar to the Issue at the following address:

MCS Limited
F-65, Okhla Industrial Area
Phase I, New Delhi 110 020
Tel: (91 11) 4140 6149
Fax: (91 11) 4170 9881
E-mail id: admin@mcsdel.com
Website: www.mcsdel.com
Contact Person: S.K. Gupta

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Registration No. INR000000056

It is to be specifically noted that this Issue is subject to ―Risk Factors‖ on page ix.

The Rights Entitlement and the Equity Shares are not intended to be offered or sold to persons in the United
States or any other jurisdiction where such offer or sale may be prohibited. The offering to which this Draft
Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any shares or
rights to sale in the United States, the territories or possessions thereof, or a solicitation therein of an offer
to buy any of the said shares or rights. Accordingly, this Draft Letter of Offer and the CAF should not be
dispatched or forwarded to or transmitted in or to, the United States at any time. The Company and the
Lead Manager reserve absolute discretion in determining whether to allow such participation as well as the
identity of the persons who may be allowed to do so. Any person who acquires Rights Entitlements or
Equity Shares will be deemed to have declared, warranted and agreed, by accepting the delivery of the
Letter of Offer, that it is not and that at the time of subscribing for the Equity Shares or the Rights
Entitlements, it will not be, in the United States or any other jurisdiction where such acquisition may be
prohibited.

The Issue will remain open for 15 days. However, the Board will have the right to extend the Issue period
as it may determine from time to time but not exceeding 30 days from and including the Issue Opening
Date.

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 SECTION VIII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

Capitalised terms used in this section have the meaning that has been given to such terms in the Articles of
Association. Pursuant to Schedule II of the Companies Act, 1956 and SEBI ICDR Regulations, the main
provisions of the Articles of Association of the Company are set forth below. Please note that the each provision
herein below is numbered as per the corresponding article number in the Articles of Association and defined
terms herein have the meaning given to them in the Articles of Association:

I. PRELIMINARY
Exclusion of Table 1. The Regulations contained in Table ‗A‘ in the First Schedule to the Companies Act, 1956,
„A‟ shall not apply to this Company save in so far as they are repeated, contained or expressly
made applicable by these Articles of Association or by the said Act, but in lieu thereof, the
Regulations for the management of this company and for the observance of the members
thereof and their representatives, shall subject to any excersice of the statutory powers of
this company, in reference to the repeal or alteration of, or addition to, its regulations by
Special Resolution as prescribed or permitted by said Companies Act 1956, be such as are
contained in these Articles of Association.

Interpretation of 2. The short titles and catch-lines hereto shall not affect the construction hereof. In these
Articles presents, unless there be something in the subject matter or content inconsistent therewith
or repugnant thereto:

(1) ―the Act‖ means the Companies Act, 1956 (Act. No. 1 of 1956), as amended from time
to time; and in case of any such amendment, any references in these Articles of Association
to the provisions of the Act shall be read as references to the amended provisions of the
Act;

(2) ―the company‖ or ―this company‖ means ―JK Paper Limited‖, established under the
Memorandum of Association to which these Articles of Association are appended;

(3) ―the office‖ means the registered office for the time being of the company;

(4) ―the seal‖ means the common seal for the time being of the company;

(5) ―Month‖ means calendar month;

(6)* ―Members‖ or ―Shareholder‖ means a duly registered holder from time to time of the
shares of the company and also one whose name is entered as beneficial owner in the
records of a Depository in the case of shares held in Depository.

(6A)** ―Beneficial Owner‖ shall have the meaning assigned thereto in section 2 of the
Depositories Act 1996.

(6B)** ―Depositories Act‖ shall mean the Depositories Act 1996 and includes any statutory
modification or re-enactment thereof for the time being in force.

(6C)** ―Depository‖ shall mean a Depository as defined in Depositories Act 1996.

(6D)** ―Securities‖ means the securities as defined in clause (h) of section 2 of the
Securities Contracts (Regulation) Act, 1956 and includes hybrids.‖

(7)* ―Dividend‖ includes any interim dividend and bonus.

(8) ―these presents‖ means and includes the foregoing memorandum of Association and
these articles of Association and any modification and alteration thereof for the time being
in force;

(9) ―in writing‖ or ―writing‖ means and includes printing, lithography, typing and any other
mode of representing or reproducing words in a visible form;

(10) ―The board‖ or ―the board of directors‖ or ―the Directors‖ means the board of directors
of company for the time being;

(11) words and expressions defined in the act shall have the same meaning in these
presents;

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 (12) words importing singular number also include plural number and vice versa;

(13) words importing masculine gender also includes feminine gender;

(14) words importing individuals includes firms or bodies corporate;

*Substituted by Special Resolution passed on 2-11-2001.

**Inserted by Special Resolution passed on 2-11-2001.

(15) ―Proxy‖ as an instrument means an instrument whereby and person is authorised to

vote for a member at a general meeting or on a poll;
(16) ―Proxy‖ as a holder of the instrument of the proxy does not include Attorney duly
constituted under a Power of Attorney;
(17)* ―The register‖ or the ―The register of members‖ means the register of members to be
kept pursuant to section 150 of the Act and unless it be repugnant to the context or
otherwise, the register of Beneficial owners in case of shares held in Depository.‖

II. CAPITAL, SHARES AND MEMBERSHIP

A SHARE CAPITAL
3.# The authorised share capital of the company shall be such amount and of such description
as is stated for the time being or at any time, in the capital clause of the Memorandum of
Association of the company and subject to memorandum of association of the company and
subject to the provision of the Act, the company shall have power to increase, reduce, vary,
alter or modify the share capital from time to time in accordance with the regulations of the
company and the legislative provisions for the time being in force in this behalf, and the
capital including unclassified capital of the company for the time being, whether original or
increased or reduced and any existing shares therein, may be divided into classes, with any
preferential, deferred, qualified or other rights, privileges, conditions or restrictions
attached thereto, whether in regard to dividend, voting, return of capital or otherwise as
may be determined by the Directors in this behalf.
B RIGHTS AND VARIATION OF RIGHTS OF MEMBERS
Rights of 4. Subject to any other provisions of these articles and of the Act, the preference and Equity
Shareholders shares shall respectively confer on the holders thereof the following rights and privileges:
(a) The redeemable cumulative preference shares, shall confer (i) the right to a fixed
cumulative preferential dividend on the capital for the time-being paid up thereon from the
date of allotment or receipt of allotment money whichever is later, (ii) the right to receive
arrears of cumulative dividend, if any, whether earned or declared or not, at time of
redemption of the said shares, and, (iii) the right in a winding up to have the capital paid up
on such shares and the arrears, if any, of the said preferential dividend, whether earned or
declared or not, down to the commencement of the winding up, paid off in priority to any
payment of capital on equity shares shall not confer the right to any further participation in
the profits or assets of the company.
(b) Subject as aforesaid and subject to the provisions of these Articles and of the Act, the
equity Shares shall confer (i) the right to receive out of balance of net profits remaining
after payment of dividend on the preference shares as aforesaid a dividend at such rate as
may be declared by the Company in the annual General Meeting on the capital for the time
being paid up thereon from the date of the allotment or receipt of allotment money
whichever is later, and, (ii) the right in a winding up to have the capital paid up on such
shares paid off out of the balance of assets remaining, if any, after payment of capital on
preference shares as aforesaid, and to have a share in surplus assets, if any, of the company
in proportion to their individual share of the paid up capital on the said shares.

# substituted by the special resolution passed on 29-12-1997.

*substituted by special resolution passed on 2-11-2001.

Shareholders 4A# On march 08, 2006 BMF Belting Limited, Fenner (India) Limited, JK Agri genetics
Agreement Limited, JK Industries Limited. JK Lakshmi Cement limited (referred to as ―the sponsors‖,
which expression shall include substitute entities who agree to be bound by their
covenants), international finance corporation, Washington (IFC) and the company have
signed a shareholders agreement (SHA) specific terms and conditions have been agreed to
inter-se the sponsors, IFC and the company and these are binding. The rights duties and
obligation provided in the SHA, inter-se the sponsors and IFC, to which the company is
also a party, is agreed to be an enforceable agreement between such parties and is deemed
to have been incorporated by reference in to these articles, if any term of these articles is at
variance or inconsistent with the SHA, the term and conditions of the SHA shall prevail as
a binding arrangement between the parties.

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 Variation of 5* The rights and privileges of the holders of redeemable preference shares and equity shares
Shareholder shall not be subject to modification, abrogation, commutation or variation except in the
Rights manner provided in the next following article.
Particulars of 6 (1) the rights attached to any class of shares or any of such rights (unless otherwise
Variation provided by the terms of issue of the shares of that class) may subject to the provisions in
that respect of the Act, and whether or not the company is being wound up, be varied with
the consent in writing of the holders of three-fourth of the issued shares of the class or with
the sanction of a special resolution passed at a separate general meeting of the holders of
the shares of that class.
(2) to every such separate general meeting, the provisions of these presents relating to
general meeting shall mutatis mutandis apply, but so that the necessary quorum shall be
two persons at least holding or representing by proxy one-third of the issued shares of the
class in question.
Rights not deemed 7. The rights conferred upon the holders of the shares of any class issued with preferred or
to be varied by other rights shall not (unless otherwise provided by the terms of issue of the shares of that
creation or issue of class) be deemed to be varied by the creation or issue of further shares ranking pari-passu
further shares of therewith.
the same class.

C. ISSUE AND ALLOTMENT OF SHARES

Power to issue 8** Subject to the provisions of section 80 of the Act, the company shall have the power to
Redeemable issue redeemable preference shares which are, or at the option of the company or of the
Preference Shares holders of such shares, liable to be redeemed. The terms of issue including the manner,
conditions and options of redemption of such preference shares shall be determined by the
directors.

*Amended by Special Resolution passed on 29-12-1997.

** Articles 8 substituted by Special Resolution passed on 29-12-1997.
# Inserted by Special Resolution passed on 15-05-2006.

Power of company 8A* Subject to the provisions of the Companied Act 1956 or any statutory modification or re-
to buy-back its enactment thereof and any other law for the time being in force permitting the company in
own shares. this behalf, the board of directors may from time to time buy back such quantity or
quantities of the fully paid shares or other securities of the company, whether or not they
are redeemable, for such consideration and on such terms as the board may deem proper
and provide for discharge of its obligations in this behalf including payment of
consideration therefore in cash or by issue of any other securities or any combination
thereof or in such other manner as the board may determine in this behalf.
Power to issue 9. The company shall have power to issue shares at premium, but, in doing so, it shall
shares at premium. comply with the provisions of the Act.
Power to issue 10. The company shall have power to issue shares at discount, but, in doing so, it shall comply
shares at Discount. with the provisions of the Act.
Allotment of 11.* Subject to the provisions of these Articles and of the Act, the shares (including any shares
shares under the forming part of any increased capital) of the company shall be under the control of the
control of directors, who may allot or otherwise dispose of the same to such person(s), in such
Directors. proportion, on such terms and conditions and at such times as the directors deem proper
and subject to the sanction of the company in general meeting, the directors may give any
person the option to call for or be allotted shares of any class of the company, such option
being exercisable after such time and for such consideration as the directors think fit. The
board shall cause to be filed the returns as to allotment provided for in section 75 of the
Act.
Power to issue 11A* Notwithstanding anything contained in any other Articles, but subject to the provisions of
shares with non- the companies act 1956 or any statutory modification or re-enactment thereof and any
voting and other law for time being in force permitting the company in this behalf, the company may
disproportionate from time to time and at any time issue to any person(s) as it may deem proper shares,
Rights. whether equity, preference or any other class, or any other financial instruments or
securities, by whatever name called, with non voting rights and the
shares/instruments/securities, so issued may carry right as to voting, dividend, capital or
otherwise which may be disproportionate to the rights attached to the other shares or
securities of the company.
Directors may allot 12 The directors may allot and issue fully paid-up shares or partly paid up shares as payment
fully paid-up pr or part payment for any property sold or transferred goods or machinery supplied, or for
partly paid-up services rendered to the company in the conduct of the business and such shares may be
shares. issued as and, if so issued, shall be deemed to be, fully or partly paid shares as may be
determined by the directors.
Numbering of 13 The shares in the company shall have assigned to them distinctive and consecutive

303
 Shares. numbers, and every forfeited or surrendered share shall continue to bear the number by
which the said share was originally distinguished.

*Article 11 substituted and Articles 8A & 11A inserted by Special resolution passed on 29-12-1997.

D. MEMBERSHIP
Becoming Member 14. An application signed or on behalf of the applicant for shares in the company followed by
an allotment by the directors of any shares therein shall be an acceptance of the offer to
take shares and every person who, thus, or otherwise, accepts any shares shall, for the
purposes of these presents, be deemed a shareholder.
Allotment money 15. The money, if any, which the directors shall, on the allotment of any shares being made by
and Calls on them, requires or direct to be paid by way of allotment money, deposit, call or otherwise
Shares. as the case may be in respect of any shares allotted by them, shall, immediately after such
allotment, become a debt due to and recoverable by the company from the allottee thereof
and shall be paid by the said allottee accordingly.
Liability of 16. Every member, his heir or successors, executors or administrators shall pay to the
successors, company the proportion of the capital represented by his share or shares which may for
Administrators etc. the time being remain unpaid thereon, at such time or times, and in such manner as the
to the company. Directors shall from time to time, in accordance with the company‘s regulation or fix for
the payment thereof.
Company not 17. Subject to the provisions of the Act in that respect, no person shall be recognised by the
recognise any company as holding any share upon any trust and the company shall not be bound by, or
trusts etc. in be compelled in any way to recognise (even when having notice thereof) any equitable,
shares. contingent, future or partial interest in any share or any interest in any fractional part of
share or any other rights in respect of any share except an absolute right to the entirety
thereof in the registered holders.
No exercise of right 18. No individual shall exercise any rights or privileges of a shareholder until he shall have
etc. as shareholder paid all calls and other moneys for the time being due on every share held by him or due
unless call etc. on any account or in any manner whatsoever to the company.
paid.
Registered Address 19. Every member who shall name in writing to the company a place in India to be registered
of the member. as his address and such address shall, for all purposes, be deemed, his place of residence.
Notice of change of 20. No member who shall change his name or address or who being a female, shall marry,
registered address shall be entitled in respect of the shares standing in the name of such member to recover
or name. any dividend or to vote until notice of the change of name or address or of marriage in the
case of a female member, and of the consequent change of name and/or address be given
in writing to the company in order that the same may be registered.

E. CERTIFICATES OF SHARES
Members entitled 21. (1)* ―Subject to Articles 23A to 23D and the provisions of the depositories Act, every
to share certificate. member or allottee‖ of each class of shares shall be entitled without payment to receive
one or more certificate(s) in market lots;
(2) Every certificate shall be under the seal which shall be affixed in a manner provided in
Article 134 hereof, and shall specify the number, class and distinctive numbers of shares
to which it relates and the amount paid-up thereon;
(3)**The company shall within three months after the allotment of any of its shares, and
within two months after the application for registration of the transfers of any such shares
or within such other period as the conditions of issue of the relevant shares provide,
complete and have ready for delivery the certificates of all the shares allotted or
transferred;
(4) The certificate given in accordance with the provision of this article shall be prima-
facie evidence of the title of the member to such shares.

*Substituted by special Resolution passed on 2-11-2001.

**Sub-clause (3) of Article 21 substituted by special resolution passed on 29-12-1997.

Renewal of 22. (1)* If a certificate be defaced, worn out or rendered useless from any cause whatsoever, it
certificates. may be renewed on surrendering it for cancellation, and if a certificate be lost or
destroyed, duplicate thereof may be issued on such terms, if any, as to the evidence and
indemnity, and after the payment of out-of-pocket expenses incurred by the company in
investigating the evidence as the directors think fit;
(2) The certificate shall be renewed on payment of a fee of one rupee and shall be marked
as such. The directors, may, at their discretion, waive the payment of such fee in the case
of any certificate or certificates.
Issue of new 23. Where under the powers in that respect herein contained, any shares are sold by the

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 certificates. directors for which the relevant certificates are not delivered to the company by the former
holder thereof, the directors may issue new certificates for such shares distinguishing them
in such manner as they may think fit from the certificates not so delivered up.

DEMATERIALISATION AND DEPOSITORY

Authority to 23A** (1) Notwithstanding anything to the contrary contained in these Articles, the Board may
dematerialize at any time decide to permit holding of and dealings in any or all the shares or debentures
securities. or other securities of the company (hereinafter referred to as ―the securities‖) in
dematerialised form under the provisions of the depositories Act and may offer the
securities of the company for subscription/allotment in dematerialised form in the manner
Options to hold provided by the said Act.
securities in (2) When any securities of the company are held or dealt in dematerialised form:-
certificates or with (a) Every person holding any securities of the company through allotment or otherwise
depository shall have the option to receive and hold the same in the form of certificates or to hold the
Securities with same with a depository.
depository to be (b) All securities held with a depository shall be dematerialised and the depository shall
dematerialised hold the same for the beneficial owners thereof in a fungible form.
Beneficial owner is (c) Every person holding securities of the company and whose name is entered as a
Member beneficial owner in the records of the depository shall be deemed to be a member of the
company. The beneficial owner of the securities shall be entitled to all the rights and
benefits and be subject to all the liabilities in respect of the securities held by him in a
depository.
Beneficial owner (d) Every person holding securities of the company with a depository, being the
may opt out of beneficial owner thereof, may at any time opt out of the depository in the manner
Depository provided under the provisions of the Depositories Act and on exercise of such option and
on fulfilment of the conditions and payment of the fees prescribed under the said act. The
company shall rematerialise the relevant securities and issue to the beneficial owner
thereof the requisite certificates of such securities.

*Sub-clause (1) Articles 22 altered by special resolution passed on 29-12-1997.

**Inserted by special Resolution Passed on 2-11-2001.

Intimation to 23B** (1) The Company shall make available to the depository copies of the relevant records in
Depository respect of securities held by such depository for the beneficial owner thereof.
(2) When a holder or an allottee of a security opts to hold the same with a depository the
company shall intimate such depository the details of his holdings or allotment of
securities and thereupon the depository shall enter in its records the name of the
holders/allottee as the beneficial owners of such securities.
Register and index 23C** The register and index of beneficial owners of securities maintained by a Depository
of Beneficial under section 11 of the Depositories Act shall be deemed to be and forming part of the
owner register and index of members or of holders of debentures or other securities of the
company.
Transfer of 23D** (1) Transfer of securities held in a depository will be governed by the provisions of the
securities held in a depositories Act.
depository (2) Every Depository about the transfer of securities, the name of beneficial owners at
such intervals and in such manner as may be specified under the provisions of the
Depositories Act.
(3) Section 108 of the Act shall not apply to transfer of securities effected by the
transferor and transferee both of whom are entered as beneficial owners in the records of
a Depository.

F. JOINT HOLDERS OF SHARES

Joint holders of 24. Where two or more persons are registered as the holders of any share, they shall be
shares deemed, so far as the company is concerned, to hold the same as joint tenants with
benefits of survivorship subject to the following and other provisions contained in these
presents:
(1) the company shall not be bound to register more than four persons as the holders of
any share;
(2) the joint holders of any share be liable severally as well as jointly for and in respect of
all calls or instalments and all other payments which ought to be made in respect of such
share;
(3) On the death of any one or more of such joint holders, the survivor or survivors shall
be the only person or persons recognised by the company as having any title to the share;
but the directors may require such evidence of death and title as they may deem fit, and,
nothing herein contained shall be taken to release the estate of a deceased joint holder
from any liability on shares held by him jointly with any other persons;

305
 (4) Any one of such joint holders may give effectual receipt of any dividend, bonus, or
return of capital or other moneys payable in respect of the share to such joint holder;
(5) Only the person whose name stands first in the register of members as one of the joint
holders of any share shall be entitled to delivery of the certificate relating to such share or
to receive notices and any notice given to such person shall be deemed notice to all joint
holders;
(6) Any one of two or more joint holders shall be entitled to attend, speak or vote at any
meeting of the company either personally or by an agent duly authorised under a power
of attorney or by proxy in respect of such share as if were solely entitled thereto and if
more than one of such joint holders be present at any meeting personally or by proxy or
by attorney, they shall be considered as one member for the purpose of quorum and one
of such persons so present whose name stands first or higher as the case may be on the
register as one of such holders in respect of such share shall alone be entitled to vote in
respect thereof.

**Inserted by Special Resolution passed on 2-11-2001

Provided that a person present at any meeting personally shall be entitled to vote in
preference to a person present by an agent duly authorised under a power of attorney or by
proxy although the name of such persons present by an agent or proxy stands first in the
register in respect of such share several executors or administrator of a deceased member
in whose (deceased member‘s) sole name any share shall for the purpose of this sub-
clause be deemed joint holders.
(7)* In respect of the shares or other securities of the company held in dematerialised
form, the provision relating to joint holders contained in these articles shall mutatis
mutandis apply to the joint beneficial owner.

G. COMMISSION, DISCOUNT & BROKERAGE

Commission 25. (1) the company may exercise the power conferred by the Act of paying commissions
provided that the rate percent or the amount of the commission paid or agreed to be paid
shall be disclosed in the manner required by the Act;
(2) The rate of commission shall not exceed the rate of five percent of the price at which
the shares in respect whereof the same is paid, are issued or an amount equal to five
percent of such price, as the case may be. In the case of debentures, the rate of
commission shall not exceed the rate of two and half percent of the price at which the
debentures in respect whereof the same is paid, are issued or an amount equal to two and
26. half percent of such price as the case may be;
(3) The commission may be satisfied by the payment in cash or by the allotment of full or
partly paid shares, or partly in one way and partly in the other;
(4) The company may also, on any issue of shares, pay such brokerage as may be lawful.
Deleted. **

H. CALLS ON SHARES
Calls: How and 27. (1)*** The board may from time to time subject to the terms on which shares may have
when made been issued and subject to the provisions of the Act, make calls upon members in respect
of all moneys unpaid on their shares (whether on account of the nominal amount of the
shares or by way of premium thereon) and not by the terms of issue thereof made payable
at any fixed time.
Provided that no call shall be payable at less than one month from the date fixed for the
payment of the last preceding call.
Provided further that option or right to call on shares shall not be given to any person
except with the sanction of the company in general meeting.

(2) Every member shall, subject to receiving at least fourteen days‘ notice specifying the
time or times and place or places of payment thereof pay to the company at the time or
times and place and places so specifies, the amount called on his shares;
(3) A call shall be deemed to have been made at the time when the Directors pass a
resolution authorising such call and may be made payable on a subsequent date to be
specified in the said resolution;
(4) A call may be made payable by instalments and may be revoked or postponed at the
discretion of the Directors.

*Inserted by Special Resolution passed on 2-11-2001.

** Deleted by Special Resolution passed on 29-12-1997.
***Substituted by Special Resolution passed on 24-09-2005.
Directors 28. The directors may from time to time at their absolute discretion extend the time fixed for

306
discretion to the payment of any call, and may extend such time to all or any of the Members whom,
extend time for from residence at a distance or any other cause, the Directors may deem entitled to
payment of call. extension, but no member shall be entitled to such extension except as a matter of grace.
Sums payable on 29. (1) Any sum which by the terms of issue of a share becomes payable on allotment or at any
allotment or at fixed date, whether on account of the nominal amount of the share, or by way of premium,
fixed date deemed shall, for the purpose of these presents be deemed to be a call duly made and payable on the
to be calls. date on which by the terms of the said issue, such sum becomes payable.
(2) In case of non-payment of any such sum, all the relevant provisions of these presents as
to payment of interest and expense, forfeiture or otherwise shall apply as if the sum had
become payable by virtue of a call duly made and notified.
Interest on calls 30. If the sum payable in respect of any call or any instalment of a call or any other sum,
in Arrears. which by the issue of any shares becomes payable at a fixed time whether on account of the
nominal amount of the shares or by way of premium, be not paid before or on the appointed
day of payment thereof, the holder for the time being of such shares shall be liable to pay
interest thereon from the day appointed for payment thereof to the time of actual payment
at such rate as the directors may determine, but the directors may at their discretion waive
the payment of such interest or any part thereof.
Application of 31. Any money due from the company to a member may, without the consent and
money due from notwithstanding any objection of such member, be applied by the company in or towards
company to the payment of any money due from to the company for calls or otherwise.
member against
payment of call or
instalment.
Part Payment of 32. Neither the receipt by the company of a portion of any money which shall, form time to
call etc. not to time, be due form any member to the company in respect of his shares, either by way of
preclude principal or interest, nor any indulgence granted by the company in respect of payment of
Forfeiture. any such money, shall preclude the company from thereafter proceedings to enforce a
forfeiture of such shares a hereinafter provided.
Receiving 33. Subject to the provisions of the Act, the board may, if it think fit, receive from any member
payments in willing to advance the same, all or any part of the money uncalled and unpaid on any shares
advance of calls. held by him; and upon all or any of the moneys so paid in advance, may until the same
would but for such advances becomes presently payable pay interest at such rates not
exceeding without the sanction of the company in general meeting six percent per annum as
may be agreed upon between the board and the member paying the moneys in advance
provided that money paid in advance of calls shall not confer a right to participate in profits
or dividends.

Proof on hearing 34. On trial or hearing of any action or suit for the recovery of any moneys due for a call it
of suit to recover shall be sufficient to prove that the name of the member sued is entered in the register as
money the holder or one of the holders of the shares in respect of which a call was made that the
resolution of the board making the call is duly accorded in the minute book and that notice
of such call was duly given to the member sued. It shall not be necessary to prove the
appointment of the directors who made call, not any other matters whatsoever, but the
proof of the matters aforesaid shall be conclusive evidence of the debt.
Calling uncalled 35. The company may be special resolution determine that any portion of its share capital
capital only in which has not already been called up, shall not be capable of being called up, except in the
winding up. event and for the purpose of the company being wound up and thereupon that portion of its
share capital shall not be capable of being called up except in that event and for those
purposes.
Notice requiring 36. If a member fails to pay any call or instalment of a call due from him or any sum by which
payment of call, the terms of issue of any shares becomes payable at a fixed time whether on account of the
instalment etc. amount of the share or by way of premium on the day appointed for payment of the same or
any interest due on such call or its instalment, or any expenses that may have been incurred
by the company thereon, the board or any person authorised by it for that purpose may at
time thereafter during such time as the said money remain unpaid, serve notice on such
member, requiring payment of the money payable in respect of such shares together with
such interest and expenses.
Content of Notice 37. The notice aforesaid shall:
(1) Name a day not being less than fourteen days from the date of the service of the notice
on or before which and a place or places at which such call or instalment and such expenses
and interest as required by the notice are to be paid; and
(2) State that in event of non-payment on or before the time and at the place or places
appointed the shares in respect of which the call was made or instalment was payable or
expenses incurred will be liable to be forfeited.
Forfeiture 38. If the requirement of any such notice as aforesaid are not complied with any share or shares
in respect of which the notice has been given may without further notice, at any time

307
 thereafter before the payment required by the notice has been made be forfeited by a
resolution of the board to that effect. Such forfeiture shall include all dividend declared or
any other moneys payable in respect of the forfeited shares and not actually paid before the
forfeiture.
Forfeited shares, 39. (1) Any share forfeited under these presents shall be deemed to be the property of the
Property of the company, and, may be sold, re-allotted or otherwise disposed off on such terms and in such
Company manner as the board thinks fit;
(2) The board may, at any time before a sale, or re-allotment or disposal otherwise as
aforesaid of a share, cancel the forfeiture thereof on such terms as it thinks fit.
Effect of 40. The forfeiture of a share shall involve and result in the total extinction of all interest in and
forfeiture also of all claims and demands against the company in respect of the share and all other
right incident to the share, except only such rights as by these presents are expressly saved.

Liability to pay 41. A person whose shares have been forfeited shall cease to be a member in respect of the
call etc. after forfeited shares, but, shall, notwithstanding any such forfeiture as aforesaid remain liable
forfeiture to pay to the company all moneys which were owing at the time of forfeiture, and all
interest and expenses to accrue in respect of a call, instalment or any other sum after
forfeiture shall continue to be due form the person who was liable to pay the same at the
time of forfeiture, or his representatives or the person entitled by transmission to the
shares but the liability of such persons shall cease if and when the company shall received
payment in full of such moneys in respect of the shares. The directors may if they think fit
remit the payment of interest or any part thereof.
Nature and extent 42. The company shall have a first and paramount lien upon all the shares (other than fully
of lien paid up shares) registered in the name of each member (whether solely or jointly with
others) and upon the proceeds of sale thereof for all moneys (whether presently payable or
not) called or payable at a fixed time in respects of such shares and no equitable interest in
any share shall be created except upon the footing and condition that clause 17 hereof is to
have full effect. And such lien extends to all dividend and bonuses from time to time
declared in respect of such shares. Unless otherwise agreed the registration of a transfer of
shares shall operate as a waiver of the company‘s lien, if any, on such shares. The
directors may at any time declare any share to be wholly or in part to be exempt for the
provision of this clause.
Sale of lien 43. The company may sell, in such manner, as the board thinks fit, any shares on which the
company has a lien:
Provided that no sale shall be made:
(a) Unless a sum in respect of which the lien exists is presently payable, or,
(b) Until the expiration of fourteen days after a notice in writing stating and demanding
payment such part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder for the time being of the share or the person
entitled thereto by reason of his death or insolvency.
Application of 44. The proceeds of the sale be received by the company and applied in payment of such part
sale proceeds of the amount in respect of which the lien exists as in presently payable. The residue if
any shall subject to like lien for sums not presently payable as existed upon the shares
before the sale be paid to the person entitled to the shares at the date of the sale.
Validity of sale 45. Upon any sale after forfeiture, or for enforcing a lien in purported exercise of the powers
after Forfeiture hereinbefore given, the board may appoint some person to execute the instrument of
and Lien transfer of the shares sold and cause the purchaser‘s name to be entered in the register in
respect of the shares sold and he shall be entitled to a certificate of title to the shares and
the purchasers shall not be bound to see the application of the purchase money, if any, nor
shall his title to the share be affected by any irregularity or invalidity in the proceeding in
reference to the forfeiture or sale of the share and after his name has been entered in the
register in respect of such share, the validity of the sale shall not be impeached by any
person, and the remedy of any person aggrieved by the sale shall be against the company
and in damages only.
Evidence of 46. An entry in the board‘s minute book of the forfeiture of any shares or that any shares have
Forfeiture and been sold to satisfy a lien of the company, the receipt of the company for the price of such
sale to satisfy shares and appropriate certificate shall constitute a good and clean title to such shares.
Lien
Application of 47. The provision of these presents as to forfeiture shall apply in the case of non-payment of
forfeiture any sum which, by the terms of issue of a share, become payable at a fixed time whether
provisions to on account of the nominal amount of the shares or by way of premium as if the same had
sums payable been payable by virtue of a call duly made and notified.
otherwise than on
calls

NOMINATION INTER VIVOS

308
 Nomination 47A* (1) Every holder of shares in, or debenture of, the company may at any time nominate in
the manner prescribed under the Act, a person to whom his shares in, or debentures of, the
company shall vest in the event of death of such holder.
(2) where the shares in or debenture of the company are held by more than one person
jointly the joint holders may together nominate in the prescribed manner a person to
whom all the rights in the shares or the debentures of the company shall vest in the event
of death of all the joint holders.
(3) Notwithstanding anything contained in any other law for the time being in force or in
any disposition whether testamentary or otherwise or in these articles in respect of such
shares in or debentures of the company, where a nomination made in the prescribed
manner purports to confer on any person the right to vest the shares in or debenture of the
company, the nominee shall on the death of the shareholders or holder of debentures of
the company or as the case may be on the death of the joint holder become entitled to all
the rights in the share or debentures of the company of the deceased holder or as the case
may be of all the other person unless the nomination is varied or cancelled in the manner
prescribed under the Act.
(4)Where the nominee is a minor, it shall be lawful for the holder of the shares or
debentures to make the nomination to appoint in the manner prescribed under the
provision of the Act, any person to become entitled to shares in or debentures of the
company in the event of his death during the minority.
(5) The provision of this Article shall apply mutatis mutandis to a depositor of money
with the company as per the provisions of section 58A of the Act.
Transmission in 47B* (1) Any person who becomes a nominee by virtue of Articles 47A upon production of
name of Nominee such evidence as may be required by the board and subject as herein provided, elect,
either-
(i) to be register himself as holder of the shares or debentures, as the case may be; or
(ii) to make such transfer of the shares or debentures, as the case may be, as the deceased
shareholder or debenture holder, could have made.
(2) If the nominee elects himself to be registered as holder of the shares or debentures, as
the case may be, he shall deliver or send to the company notice in writing signed by him
stating that he so elects and such notice shall be accompanied by the death certificate of
the deceased holder and the certificate of the shares or debentures as the case may be, held
by the deceased in the company.

*Inserted by Special Resolution passed on 2-11-2001.

(3) Subject to the provision of the Act and these Articles, the board may register the
relevant shares or debentures as the case may be in the name of the nominee or the
transferee as if the death of the holder of the shares or debentures had not occurred and the
notice or transfer were a transfer signed by the registered holder.
(4) A nominee on becoming entitled to any shares or debentures by reason of the death of
the holder or joint holders shall be entitled to the same dividends and other advantages to
which he would have been entitled if he were the registered holder of the shares or
debenture, be entitled in respect of them to exercise any right conferred on a member or
debenture holder in relation to meeting of the company.
(5) the board may, at any time, give notice requiring any such person to elect either to be
registered himself or to transfer the shares or debentures, and if the notice is not complied
with within ninety days, the board may thereafter withhold payment of all dividend,
bonuses, interest, or other moneys payable in respect of the relevant shares or debenture,
until the requirements of the notice have been complied with.
(6) the provisions of this Article shall apply mutatis mutandis to a depositor of money
with the company as per the provisions of section 58A of the Act.

I. TRANSFER OF SHARES
Application for 48. (1) An application for the registration of transfer of shares of a member in the company
Transfer may be made either by the transferor or by the transferee;
(2) Where the application made by the transferor relates to partly paid shares, the transfer
shall not be registered unless the company gives notice of the application to the transferee
and the transferee makes no objection to the transfer within two weeks from the receipt of
the notice;
(3) For the purpose of sub-clause (2) hereof, notice to the transferee shall be deemed to
have been duly given if it is dispatched by prepaid registered post to the transferee at the
address given in the instrument of transfer and shall be deemed to have been duly
delivered at the time at which it would have been delivered in the ordinary course of post.

Transfer to whom 49. No transfer shall be made to a minor, insolvent or a person of unsound mind.

309
 cannot be made
Execution of the 50. The instrument of transfer of any share in the company shall be executed by or on behalf
Instrument of of both the transferor and the transferee. The transferor shall be deemed to remain a
transfer holder of the share until the name of the transferee is entered in the register in respect
thereof.
Form of 51* Subject to company‘s right to refuse transfer, the shares in and debentures of the company
instrument of shall be transferred by an instrument in the prescribed form and/ or as the board may
Transfer approve.

**XX
*Substituted by Special Resolution passed on 29-12-1997.
** Form deleted pursuant to Section 108(1A) of the Act.

Board‟s right to 52. The board may, subject to the right of appeal conferred under the Act, at its absolute
refuse to register discretion decline to register or acknowledge any transfer of shares and shall not be bound
Transfer to give any reasons for refusal and in particular, may so refuse in respect of shares upon
which the company has lien or whilst any moneys in respect of the shares desired to be
transferred or any of them remain unpaid or unless the transferee is approved by the
Directors, and such refusal shall not be affected by the fact that the proposed transferee is
already a member. In case of refusal, the company shall within three months from date on
which the proper instrument of transfer duly stamped and executed was delivered to the
company send notice of refusal to the transferor and transferee or to the person giving
intimation of such transfer as the case may be and thereupon the provisions of section 111
of the Act will apply.
Provided that the registration of a transfer shall not be refused on the ground of the
transferor being either alone or jointly with any other person or persons indebted to the
company on any account whatsoever except a lien on shares.
Registration of 53. The company shall not register a transfer of shares in the company unless a proper
Transfer and instrument of transfer of only one class of shares duly stamped and executed by or on
Transmission behalf of the transferor and by or on behalf of the transferee. Accompanied by the
certificate of the share to be transferred, and such other evidence as the board may
reasonably require showing the right of the transfer or to make the transfer has been
delivered to the company.
Provided that where on an application in writing made to the company by the transferee
and bearing the stamp required for the instrument of transfer, it is proved to the
satisfaction of the board that the instrument of transfer, signed by or on behalf of the
transferee has been lost, the company may register the transfer on such terms as to
indemnify as the board may think fit.
Provided further that nothing in this Article shall prejudice any power of the company to
register as shareholder any person to whom the right to any shares in the company has
been transmitted by operation of law.
Custody of 54. The instrument of transfer shall, after registration be retained by the company and the
instrument of directors may cause to be destroyed all instruments of transfer lying with the company
Transfer after such period as they may determine. An instrument of transfer which the Director‘s
decline to register shall, on demand, in writing by the person depositing the same, be
returned to him provided the said person makes such demand within four months of his
receipt of the board‘s refusal to register such transfer.
Closure of 55* The Register of transfers and the register of members may be closed, on giving not less
Register of than seven days‘ previous notice by advertisement in some newspaper in the district in
Transfer and which the registered office of the company is situated during such time as the Directors
Register of think fit but not exceeding in the whole forty-five days in each year and not exceeding
Members thirty days at any one time.
Company not 56. The company shall incur no liability or responsibility whatever in consequence of its
liable for registering or giving effect to any transfer of shares made or purporting to be made, by an
disregard of any apparent legal owner thereof (as shown or appearing in the Register), to the prejudice of
notice prohibiting any person or persons having or claiming any equitable right, title or interest to or in the
Registration of same shares, notwithstanding that the company may have had notice of such equitable
Transfer right, title or interest, or notice prohibiting registration of such transfer and may have
entered such notice or referred thereto in any book of the company and the company shall
not be bound or required to regard or attend or give effect to any notice which may be
given to it of any equitable right, title or interest, or be under any liability whatsoever for
refusing or neglecting to do so, though it may have been entered or referred to in some
book of the company; but the Company shall nevertheless be at liberty to regard and
attend to any such notice and give effect thereto if the board shall so think fit.

*Proviso under Article 55 deleted by Special Resolution passed on 29-12-1997.

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Title to Shares of 57.* The executors or administrators or a holder of a succession certificate in respect of the
deceased member estate of a estate of a deceased Member (whether a Hindu, Mohammedan, Parsi, Christian
or otherwise) shall be the only person recognised by the Company as having any title to
the Shares registered in the name of such member; except in cases of joint holders in
which case, the surviving holders shall be the only persons entitled to be so recognised ,
but nothing herein contained shall release the estate of a deceased joint holder from any
liability in respect of any Share jointly held by him. The Company shall not be bound to
recognise such executor, administrator unless he shall have first obtained Probate or
Letters of Administration or other legal representation from a duly constituted Court in
India having effect in the State of Gujarat;
Provided nevertheless that in case where the Board in its absolute discretion think fit, it
shall be lawful for the Board to recognised the title of any person claiming to be entitled to
the Share whether in a representative capacity or not and to dispense with production of
Probate or Letters of Administration or the production of such other evidence of title as
the Board may require and upon such terms as to indemnity and otherwise as it may think
fit.
Transmission 58 Any person becoming entitled to a Share in consequence of the death or insolvency of a
Member or the marriage of any female Member or any lawful means other than by a
transfer subject to the provisions of these Presents and the Act, may, if the Directors think
fit, be registered in the Register as holder of such Share upon the terms that may be
required by the Directors and upon his producing such evidence and upon his giving such
indemnity as to the title and otherwise as the Directors may deem sufficient; but, the
Directors shall have the same right to refuse registration in their absolute discretion as
they would have had in the case of a transfer of Shares by that member before his death or
insolvency as the case may be.
Conditions to be 59. (1) If the person becoming entitled as aforesaid shall elect to be registered as holder of the
fulfilled on Share himself, he shall deliver and send to the company a notice in writing signed by him
electing to be a stating that he so elect;
member or to (2) If the person aforesaid shall elect to transfer the Share, he shall testify his election by
transfer Shares executing a transfer of the Share;
(3) All the limitations, restrictions and provisions of these Presents relating to the right to
transfer, and the registration of transfers of Shares shall be applicable to any such notice
of transfers as aforesaid as if the death or insolvency of the member had not occurred and
the notice of transfer were a transfer signed by that Member.
Transmission 60. Every transmission of a Share shall be verified in such a manner as the Directors may
evidence require, and the Directors, at their absolute discretion, may refuse to register any such
transmission until the same to be verified, or until or unless an indemnity be given to the
company with regard to such registration which the Directors at their discretion may
consider sufficient: Provided nevertheless that there shall not be any obligation on the
Directors to accept any such indemnity.

Limitation of 61. A person becoming entitled to Share by reason of the death or insolvency of the holder
rights before shall be entitled to the same dividends and the other advantages to which he would be
Registration entitled if he were the registered holder of the Share, except that he shall not, before being
registered as a member in respect of the Share, be entitled in respect of it to exercise any
right conferred by membership in relation to Meetings of the company:
Provided that the board may, at any time, give notice requiring any such person to elect
either to be himself registered or to transfer the Share, and if the notice is not complied
with within 90 days, the board may thereafter withhold payment of all dividends, bonuses
and all other moneys payable in respect of the Shares until the requirements of the notice
have been complied with.
J STOCK

Conversion of 62. The company by ordinary resolution:

Shares into stock (a) Convert any paid-up Share into stock; and
(b) Re-convert any stock into paid-up Shares of any denomination.
Transfer of stock 63 The holder of stock may thereafter transfer the same or any part thereof in the same
manner as and subject to the same regulations under which the Shares the Shares from
which the stock arise might before the conversion have been transferred, or as near
thereto as circumstances admit:
Provided with the board may from time to time fix the minimum amount of stock
transferable, so however that such minimum shall not exceed the Nominal amount of the
Shares from which the stock arose.
Rights of 64 The holder of the stock shall, according to the amount of stock held by them have the

311
stockholders same rights, privileges and advantages as regards Dividends, voting at the Meetings of the
company, and other matters, as if they held the Shares from which the stock arose; but no
such privilege or advantage (except participation in the dividends and profits of the
company and in the assets on winding up) shall be conferred by an amount of stock which
would not, if existing in Shares have conferred that privilege or advantage.
Application of the 65. Such of the regulations of the company (other than those relating to Share warrants) as are
regulations to the applicable to paid-up Shares shall apply to stock and the words ―Share‖ and ―Shareholder‖
stock in those regulations shall apply to ―stock‖ and ―stockholder‖ respectively.
K SHARE WARRANTS
Issue of Share 66 The company may issue Share warrants subject to and in accordance with, the provisions
warrants of the Act and accordingly the board , may, in its discretion, with respect of any Share
which is fully paid up, on the application in writing signed by the person registered as
holder of the Share, and authenticated such evidence(if any) as the board may , from time
to time, require as to the identity of the person signing the application, and on receiving
the certificate, if any, of the Share, and the amount of the stamp duty on the warrant and
such fee as the board may from time to time require , issue under its Common seal a
Share warrant stating the bearer thereof is entitled to the Share specified therein, and may
provide by coupons or otherwise for the payment of future dividends on the Share
specified in the Share warrant.
Transfer and 67 The provisions of these presents with respect to transfer and transmission of Shares shall
transmission not apply to Share warrants.
Articles not to
apply to Share
warrants
Deposit of Share 68 (1) The bearer of a Share warrant may at any time deposit the warrant at the office of
warrants the company, and so long as the warrant remains so deposited, the depositor shall
have the same right of signing a requisition for calling a Meeting of a company, and
of attending, and voting and exercising the other privileges of a member at any
Meeting held after the expiry of two clear days from time of deposit, as if name
were inserted in the Register of members as the holder of Shares included in the
deposited Warrant;
(2) Not more than one person shall be recognised as depositor of the Share warrant;
(3) The company shall, on two days‘; written notice return the deposited Share warrant
to the depositor.
Surrender for 69 (1) The bearer of a Share warrant shall be entitled on surrendering the Share warrant for
Cancellation cancellation and paying such fee to the company as the board of Director s from
time to time may determine, to have his name entered as a member in the register
and the date of surrender shall be entered in register;
(2) The company shall be responsible for any loss incurred by any person of the
company entering in the register the name of a bearer of a Share warrant in respect
of the Share therein specified without the warrant being surrendered and cancelled.

Bearer of the 70. (1) Subjects as herein otherwise expressly provided, no person shall, as bearer of a Share
Share warrants warrant, sign a requisition for calling of the company, or attend or vote or exercise
not to exercise any other privilege of a member at a Meeting of the company or be entitled to
privileges of receive any notices from the company;
Members (2) The bearer of a share warrant shall be entitled in all other respects to the same
privileges and advantages as if he were named in the register of members as the
holder of the Shares included in the warrant, and he shall be a member of the
company.
Renewal of Share 71. The board may, from time to time, make rules as to the terms on which, if it shall think fit,
warrant a new Share warrant or coupon may be issued by way of renewal in case of defacement,
loss or destruction.
L ALTERATION OF CAPITAL, INCREASE, DECREASE ETC.
Power to alter 72 Subject to the provisions of section 94 of the Act or any statutory modification thereof, the
Capital company shall have the power to alter the conditions of its memorandum of association as
follows, that is to say, it may by ordinary resolution:
(1) Increase its Share capital by such amount as it think expedient by issuing new
Shares subject to the provision of the Act;
(2) Consolidate and divide all or any of its Share capital into larger amounts than its
existing Shares;

312
 (3) Sub-divide its Shares or any of them into Shares of smaller amount than is fixed by
the memorandum, subject to the provision of clause (d) of sub-section (i) of section
94 of the Act;
(4) Convert all or any of its fully paid-up Shares into stock and reconvert that stock into
fully paid-up Shares of any denomination;
(5) Cancel Shares which , at the date of the passing of the resolution in that behalf, have
not been taken or agreed to be taken by persons, and diminish the amount of its
Share capital by the amount of the Shares so cancelled.
Provided , however, the cancellation of Shares in pursuance of the exercise of this
power shall not be deemed to be a reduction of Share capital within the meaning of
the Act.
Increase of capital 73 (1) The company may be by resolution in General Meeting, from time to time increase
its Share capital by the issue of new Shares of such amount as it thinks expedient;
(2) Subject to the provisions of the Act, the new Shares shall be issued upon such terms
and conditions and with such rights and privileges attached thereto as by the
General Meeting creating the same shall be directed and if no direction be given by
the General Meeting as the Directors shall determine; and in particular such Shares
may be issued with a preferential or qualified right to dividends and in the
distribution of assets of the company and any preference Shares may be issued on
the terms that they are, or at the option of the company are, to be liable to be
redeemed.
New capital to be 74 Except in so far as otherwise provided by the conditions of issue or by these presents, any
treated as apart of capital raised by the issue of new or additional Shares shall be considered part of the
original capital original capital and shall be subject to the same provisions with reference to the payment
of calls, instalments or other sums, lien, forfeiture, transfer, transmission, surrender,
voting or otherwise as if it had been part of such original capital.
Reduction of 75. Subject to confirmation by court, the company may, by special resolution, reduce the
Share capital Share capital in accordance with section 100 of the Act.
Reduction of 76. The company may reduce the Share premium account, if any, in accordance with sections
Share premium 78 and 100 of the Act, and the capital redemption reserve, if any, in accordance with
account sections 80 and 100 of the Act.
Surrender of 77. The Directors may, subject to the provisions of section 100 to 105(both inclusive) of the
Shares act, accept a surrender of any Share from or any member desirous of surrendering it on
such terms as they deem fit.
III. GENERAL MEETINGS

Annual and Extra- 78.* An Annual General Meeting in addition to any other Meetings in that year of the
ordinary General Company shall be held within six months of the expiry of every financial year or within
Meetings such further times as the registrar may allow or as may be permitted under the act from
time to time. The Annual General Meeting will be held on a day that is not a public
holiday , during business hours, at the registered office of the company are at such other
place within the city, town or village in which the registered office is situate as the
Directors may determine from time to time.
Calling of extra- 79 All General Meetings other than Annual General Meetings shall be called ―Extra-ordinary
ordinary General General Meetings‖. The board may, whenever, it thinks fit, call an Extra-ordinary General
Meeting Meeting. If at any time there are not, within India, Directors capable of acting who are
sufficient in number to form a quorum, any Director or any two members of the members
of the company may call an Extra-ordinary General Meeting in the same manner, as
nearly as possible, as that in which such a Meeting may be called by the board. An Extra-
ordinary General Meeting shall also be called by the board on requisitions by the member
or in case of default by the board in that respect by the requisitions as provided in Section
169 of the act.
Length of the 80. (1) The Annual General Meeting may be called by giving not less than 21 days notice in
notice writing or the minimum number of days notice as laid down under the act in writing or
after giving a shorter notice in writing with the consent of all the members entitled to vote
thereat:
(2) An Extra-ordinary General Meeting may be called by giving not less than 21 days
notice in writing or after giving a shorter notice with the consent of the members holding
not less than 95 % of such part of the paid-up capital as gives a right to vote at the
Meeting: Provided that where any members of the company are entitled to vote only on
some resolution or resolutions to be moved at the Meeting and not on the others, those
members shall be taken into account for the purposes of this sub-clause in respect of the
former resolution or resolutions , but not in respect of the latter;
(3) The notice shall be exclusive of the day on which it is served or deemed to be served
on the member and also of the day for which it is given.

313
 Other matters 81. The provisions in respect of the contents of, the manner of service of, service on persons
relating to Notice of and explanatory statement to be annexed to in respect of Special Business, if any, to be
mentioned in every notice of the company, shall be the same as those in the Act.
Accidental 82. Any accidental omission to give notice to or the non-receipt of any notice by, any member
omission to give or other person to whom it should be given shall not invalidate the notice or the
Notice not to proceedings at the Meeting or Meetings held pursuant to that notice.
invalidate it
Documents 83 The documents, if any, to be sent to the members alongwith any notice or those to be
presented to or laid on the table at the Meeting or Meetings held pursuant to the said
notice shall be those prescribed by the Act.
Business at 84 (1) All business to be transacted at an Annual General Meeting, with the exception of
Meetings business relating to:
(i) The consideration of the accounts, balance sheet and the reports of the board of
Directors and auditors;
(ii) The declaration of dividend;
(iii) The appointment of Directors in the place of those retiring; and
(iv) The appointment of, and fixing of the remuneration of the auditors, and all
business to be transacted at an Extra-ordinary General Meeting shall be
deemed special;
(2) The business at an Annual General Meeting shall also include any resolution by
members of which notice is given in accordance with Section 188 of the Act.
Quorum 85 Five persons personally present shall be the quorum for a Meeting of the company No
business shall be transacted at any General Meeting unless a quorum of members is
present when the Meeting proceeds to transact business.
Dissolution and 86. If within half an hour from the time appointed for holding a Meeting , quorum is not
adjournment of present, the Meeting, if called upon the requisition of the members shall stand dissolved.
Meeting for want In any other case, the Meeting shall stand adjourned to the same day in the next week at
of quorum the same time and place or to such other day and at such other time and place as the Board
may determine.
Quorum at 87. If, at the adjourned Meeting also, a quorum is not present within half an hour from the
adjourned time appointed for holding the Meeting, the member present shall be the quorum and may
Meeting do all business which a quorum might have done.
No business to be 88. No business shall be transacted at any General Meeting except the election of chairman,
transacted , whilst whilst the chair is vacant.
chair is vacant
Chairman of the 891. The chairman of the board of Directors or in his absence the vice-chairman, if any, shall
General Meeting be entitled to take the chair at every General Meeting, whether Annual or Extra-ordinary,
but if there be no such Chairman or vice-chairman or in case of his not being present or
being unwilling to take the chair within 15 minutes if the time appointed for holding such
Meeting, the members present shall choose one of the Director to be the chairman , and if
all the Director present decline to take the chair, or if there be no Director present, then the
member present shall choose one of the number to be the chairman of the Meeting. If a
poll is demanded, it shall be taken forthwith in accordance with the provision of the act
the chairman elected on a show of hands exercising all the powers of the chairman for the
purpose of such poll if some other person is elected chairman as a result of such poll, he
shall be the chairman for the rest of the Meeting.
Power to 90.2 (1) the chairman of a General Meeting , may, with the consent of the Meeting, adjourned
adjourned the same from time to time, and place to place but no business shall be transacted at any
General Meeting adjourned Meeting other than the business left unfinished at the Meeting from which the
adjournment took place
(2) in case of disorder at any Meeting or any other circumstances making difficult
peaceful conduct after meeting the chairman of the Meeting may at his discretion
adjourned the Meeting to such date, time and venue as he may decide by announcing or
notifying the same in the manner practicable

Business at 91. No business shall be transacted at any adjourned Meeting other than the business left
adjourned unfinished at the Meeting from which the adjournment took place.
Meeting
Notice of adjourn 92. When a Meeting is adjourned or re-adjourned for a thirty days or more, notice of adjourn
or re-adjourn or re-adjourn the Meeting, as the case may be, shall be given as in the case of an original
Meeting Meeting, with the exception that the provision of the act and these presents as to the length
of the notice shall not apply to the said notice. Such notice shall also prominently state

3. Substituted by Special Resolution passed on 30-12-1992

4. Substituted by Special Resolution passed on 2-11-2001

314
 that the Meeting to be held pursuant to the notice is an adjourn or re-adjourn Meeting as
the case may be
Save as aforesaid, it shall not be necessary to give any notice of an adjourn Meeting or of
the business to be transacted thereat.
Vote of members 93 (1)* A depository shall be deemed to be the registered owner for the purpose of effecting
transfer of ownership of Shares, debentures or other securities on behalf of beneficial
owner but shall not have any voting rights or any other rights in respect of Shares or
debenture or other securities held by it. The beneficial owner as per the register of
beneficial owner maintained by the depository shall only be entitled to all rights including
voting rights and benefits in respect of the securities held by him with the depository.
(2)** subject to Article 96 and subject to any special rights , privileges or restrictions for
the time being attached to any class or classes of Shares-
(a) on a show of hand , every member present in person shall have one vote
(b) on a poll, the voting rights of every member present in person or by proxy or by
attorney shall be in proportion to his Share of the paid-up capital.
(3)** Joint holder of a share shall vote in accordance with Article 24 hereof.
(4)** A holder of preference Shares shall have no right to vote either in person or a proxy
at any General Meeting by virtue of his holding preference Shares unless,
(a) any resolution is placed before the company which directly affect the rights attached to
the preference Shares or
(b) any dividend due on such preference Shares or any part such dividend has remained
unpaid in respect of the aggregate period of not less than 2years proceeding the date of
commencement of Meeting.

(5)**Where the holder of any preference Share has a right to vote of any resolution in
accordance with the provisions of this sub clause, he shall on show of hands, when present
in person have one vote and his voting right on a poll as the holder of such Share, when
present in person or by agent duly authorised under a power of attorney or by proxy or in
accordance with section 187 and 187 A of the Act shall, subject to the provisions of the
Sub section 2 of section 92 of the Act, be in the same proportion as the capital paid up in
respect of the preference Share bears to the total paid up equity capital of the company.

* Substituted by Special Resolution passed on 2-11-2001

** Substituted by Special Resolution passed on 20-12-1997

Vote of Insane 94 A member of unsound mind or in respect of whom an order had been made by any court
Members having jurisdiction, in lunacy, may vote, whether on a show of hand or in a poll, by his
committee or other legal guardian and any such committee or guardian may, on poll, vote
by proxy.

Proxies 95 (1) The provisions by these presents regarding proxies shall be the same as laid down by
the Act :
Provided further that a vote given in accordance with the terms of an instrument of
proxy shall be valid notwithstanding the death or insanity of the appointer, revocation
of the proxy, or the authority under which the proxy was executed or the transfer of
the Share in respect of which the proxy is given unless notice in writing of such
death, insanity, revocation or transfer as aforesaid, shall have been received by the
company at its registered office before the commencement of the Meeting or
adjourned Meeting or poll at which the vote was given.

(2) The instrument appointing a proxy or any other document necessary to show the
validity of, or otherwise relating to the appointment of proxy, shall be deposited at
the registered office of the company not less than 48 hours before the time fixed for
holding the Meeting, or adjourned Meeting at which the person named in such
instrument is authorised to vote and in default, the instrument of proxy shall not be
treated as valid.

Member entitled 96 No member shall be entitled to vote at any General Meeting unless all calls or other sums
to Vote only if all presently payable by him in respect of Shares in the company, have been paid by him.
calls paid
Objection to 97 (1) No objection shall be raised to the qualification of any voter except at the Meeting or
qualification of adjourned Meeting at which the vote objected to is given or tendered and every vote
voter not disallowed at such Meeting shall be valid for all purpose.
(2) Any such objection made in due time shall be referred to the chairman of the

315
 Meeting, whose decision shall be final and conclusive.
Poll 98*3 (1) Before or on the declaration of the result of the voting on any resolution on a show of
hands, a poll maybe ordered to be taken by the chairman of the Meeting of his own
motion, and shall be ordered to be taken by him on a demand made in that behalf by
any member or members present in person or by, proxy and holding Shares in the
company –
(a) Which confer a power to vote on the resolution not being less than 1/10th of the
total voting power in respect of the resolution, or
(b) On which an aggregate sum of not less then ` 50000 has been paid up, or
(c) By any member or members present in person or by proxy and holding Shares
in company conferring a right to vote on the resolution being Shares on which
an aggregate sum has been paid up which is not less than 1/10th of the total sum
paid up on all the Shares conferring that right

(2) The demand for a poll maybe withdrawn at any time by the person(s) who made the
demand.
Time of taking the (3) A poll demanded on a question of adjournment shall be taken forth with. A poll
poll demanded on any other question (not being a question relating to the election of a
chairman which is provided for in Article 89) shall be taken at such time not being
latter than 48 hours from the time when the demand was made and in such manner
and place as the chairman of the Meeting may direct.
Poll how to be (4) Every such poll may be taken either by open voting or by ballot as the chairman of
taken the Meeting at which the poll was demanded may direct. The result of the poll shall
be deemed to be the decision of the Meeting on the resolution on which the poll was
taken.
Appointment of (5) Two scrutinisers shall be appointed by the chairman to scrutinize the votes given on
Scrutineers the poll and to report to him. The chairman shall have the power at anytime before
the result of the poll is declared to remove a scrutiniser from office and to fill
vacancies in the office of the scrutineer arising from such removal or from any other
cause. Atleast one scrutineer shall be a member present at the Meeting not being an
officer or employee of the company, provided such a member is available and willing
to be appointed
Manner of taking (6) Subject to the provisions of the acts, the chairman of the Meeting shall have power
poll and result to regulate the manner in which a poll shall be taken.
thereof (7) The decision of the chairman on any difference between the scrutineers shall be
conclusive.
Other business (8) The demand for a poll shall not prevent the continuance of the Meeting for the
may proceed transaction of any business other than the question on which the poll has been
notwithstanding demanded.
demand for poll
Casting vote of the 98A In case of any equality of votes, the chairman of any Meeting shall vote on the show of
4
chairman hands at a poll( if any) has pursuant to a demand made at such Meeting, have a casting
vote in addition to the vote or votes to which he maybe entitled as a member.
995
Dele
ted
IV DIRECTORS AND THE MANAGEMENT OF THE COMPANY‟S BUSINESS
Number of 1006 The number of Directors shall not be less than three, nor more than eighteen excluding the
Directors nominee Directors to the extent permitted by the central government or under the act.
Notice of 100 (1) No person, not being a retiring Director shall be eligible for election to the office of
Candidature for A7 Director at any General Meeting unless he or some other member intending to
office of Director propose him has, atleast fourteen days before the Meeting, left at the office a notice
except in certain in writing under his hand signifying his candidature of the office of Director or the
cases intention of such member to propose him as a Director for that office as the case
maybe along with the deposit of a sum of ` 500 or such other sums as maybe
prescribed by the act which shall be refunded to such person or, as the case maybe, to
such member, if the person succeeds in getting elected as a Director.
(2) The company shall inform its members of the candidature of the person for the office
of Director or the intention of a member to propose such person as a candidate for
that office by serving individual notices of the members not less than seven days
before the Meeting:

5.Substituted by Special Resolution passed on 30-12-1992

4
Inserted by Special Resolution passed on 30-12-1992
5
Article 99 deleted and Article 100 substituted by Special Resolution passed on 29-12-1997
6
Article 99 deleted and Article 100 substituted by Special Resolution passed on 29-12-1997
7
Inserted by Special Resolution passed on 30-12-1992

316
 Provided that it shall not be necessary for the company to serve individual notice
upon the members as aforesaid if the company advertises such candidature or
intention not less than seven days before the Meeting in at least two newspapers
circulating in the place where the registered office of the company is located, of
which one is published in the English language and the other in the regional of that
place.
(3) Every person (other than a Director retiring by rotation or otherwise or a person who
has left at the office of the company a notice under section 257 of the act signifying
his candidature for the office of a Director) proposed as a candidate for the office of a
Director, shall sign and file with the Company his consent in writing to act as a
Director, if appointed.
(4) A person other than-
(a) A Director re-appointed after retirement by rotation immediately on the expiry
of his term of office, or
(b) An additional or alternate Director or a person filling a casual vacancy in the
office under section 262 of the act, appointed as a Director or re-appointed as an
additional or alternate Director immediately on the expiry of his term of office,
shall not act as a Director of the company unless he has within thirty days of his
appointment signed and filed with the registrar his consent in writing to act as
such Director.
Rotational and no- 1018 (1) Subject to the provisions of Section 255 of the act, the number of Directors liable to
rotational retire by rotation shall be two-third of the total number of Directors or such lower
Directors number as may be permitted by the act or any statutory modification or re-enactment
thereof. The remaining number of Directors of the company shall be Directors not
liable to retire by rotation.
(2) Subject to sub-clause(1) above, so long as the constitutes of the group hold in the
aggregate not less than 26% of the total paid equity capital of the company, the group
shall have the right to appoint one third of the total number of Directors on the board
of Directors not liable to retire by rotation. If however, the aggregate holding of the
constituents of the group in the paid-up equity capital of the company is less than
26% and not less than 10%, such right of the group to appoint Directors not liable by
rotation shall be restricted to one-fourth of the total number of Directors. Such
Directors shall be appointed by the constituents of the group, who are the first
largest, second largest and third largest holders amongst themselves in the company
by mutual consent, failing which proportionate to their respective holdings, subject to
a minimum of one such Director being appointed by each such constituent of the
group. The appointment shall be made by a communication in writing addressed to
the company under the hand of a duly authorised representative of such constituent(s)
of the group, which shall have right to recall, withdraw, or remove any Director(s) so
appointed and to so appoint or re-appoint any other person in place of the person so
re-called, withdrawn or removed as aforesaid.
Explanation : for the purpose of exercise of the right to appoint the Directors
proportionate to the holdings of the specified constituents of the group in sub clause
(2) above, fractional entitlements of 0.5 and above shall be rounded off to the next
higher integer.
(3) Subject to the provision of the act and these Articles, each of the constituents of the
group [holding not less than 5% of the total paid-up of the company, may nominate
for appointment one Director who shall be liable to retire by rotation and the
company shall accept such nomination. Such right shall include the right to nominate
any other person if any vacancy is called in the office of such Director.
Explanation: the term ―constituents of the group‖ appearing in sub-clause (2) and (3)
above shall mean the persons constituting the group as disclosed in the Annual report
of the company from time to time.
(4) Subject as aforesaid and subject to Article 130A, at every Annual General Meeting of
the company, one third of such of the Directors for the time being as are liable to
retire by rotation or, if there their number is not three or a multiple of three, then the
number nearest to one third, shall retire from office
1029 Deleted
Nominee Directors 103 The company may accept nomination of any person(s) as Director or Directors in
10
pursuance of any arrangement(s) or agreement(s) between the company of one part and
any financial institution , bank, debenture trustee or other party of the other part, on such
terms as may be agreed to between the company and such institution, trustee or party.

8
Substituted by Special Resolution passed on 15.05.2006 as approved by the Central Government vide their letter No. 12/109/2006-CL.vii DATED 18.4.2007,
which was further amended vide their letter of even number dated 07.09.2007.
9
Article 102 deleted Article 103 substituted and Article 104& 105 altered by Special Resolution passed on 29-12-1997.
10
Article 102 deleted Article 103 substituted and Article 104& 105 altered by Special Resolution passed on 29-12-1997.

317
 Additional 104 The board of Directors shall have power to appoint additional Directors, so as not to
11
directors exceed the maximum strength fixed under Article 101 hereof:
Provided such additional Director shall hold office only upto the date of the next Annual
General Meeting of the company, but subject to the provisions of the act shall be eligible
for the appointment by the company as a Director at such Meeting.
Casual vacancy 104 Any casual vacancy occurring among the Directors may be filled up by the Directors, but
A12 any person so chosen shall remain in office so long as the vacating Director would have
retained the same if no vacancy had occurred.
Alternate 105 The board may appoint an alternate Director to act for a Director(herein after in this
13
Directors Article called ― the original Director‖) during his absence for a period of not less than
three month from the state in which the Meetings of the board are ordinarily held provided
such alternate Director is a person recommended by the original Director.
Validity of 106 Acts done by a person as Director shall be valid, not withstanding that it may afterwards
Director‟s acts not be discovered that his appointment was invalid by a reason of any defect or
withstanding disqualification or by virtue of any provisions contained in the act or these presents:
defective Provided that nothing in act or these presents shall be deemed to give validity to the acts
appointment done by a Director after his appointment has been shown to the company to be invalid or
to have terminated.
107 Deleted
14

Remuneration of 108 (a)*** each Director shall be entitled to receive out of the funds of the company by way of
Directors remuneration for his services in attending Meetings of the board or any committee of
Directors attended by him such sum as may be determined by the Directors from time to
time subject to the provisions of the act and the rule made thereunder.
(b)****the Directors may also appropriate out of the net proceeds of the company during
any year, a sum not exceeding 1% of such net profits if the company shall have a
managing Director or whole time Director or manager and otherwise not exceeding 3% of
such net profits and distribute the sum so appropriated amongst others in such proportions
as they may mutually agree upon or equally in the absence of any such agreement. The
amounts so appropriate shall be deemed to be apart of the working expenses of the
company
(c) the Directors may also allow and pay to any Director who incurs travelling and other
Directors may expenses for attending a Meeting of the company or of the board of Directors or of a
receive travelling committee, such sum as the Directors may consider fair and reasonable for his travelling
expenses and other expenses in addition to his fee for attending a Meeting of the board of Directors
or of a committee as above specified.
(d) the Directors shall be entitled to be repaid any travelling and other expenses incurred
in connection with the business of the company.

***Article 107 deleted, Article 108(a) substituted by Special Resolution passed on 30-12-
1992.
****Sub-clause (b) of Article 108 altered by Special Resolution passed on 29-12-1997.

109 Deleted
15

Remuneration for 110 If any Director, being willing, shall be called upon to do any work other than that which
extra services would be his duty as Director to do, or to make any special exertion in going out or
residing out or otherwise in the interest of the company, the Directors may, in addition to
reimbursing him in respect of any expenses incurred by him on behalf of the company and
in addition to any remuneration to which under these Presents he is entitled, award,
subject to the provisions of the act, such special remuneration as may be determined by
them to such Directors of his extra services.
Other provisions 111 The provisions under these Presents as regards the disqualification of the Directors, their
regarding rights, duties, liabilities, retirement because of age limit, rotation, vacation of office and
Directors removal shall be those as laid down under the act.
Board to exercise 112 (1) The business of the company shall be managed by the Directors who, subject to the
all powers of provision of the act and these presents shall be entitled to exercise all such powers
company except and to do all such acts and things as the company is authorised to exercise or to do;
those exercised by
company in Provided that the board shall not exercise any power or do any act acts or things
General Meeting which is directed or required, whether by the act or by any other act or by these

11
Article 102 deleted Article 103 substituted and Article 104& 105 altered by Special Resolution passed on 29-12-1997.
12
Inserted by Special Resolution passed on 2-11-2001.
13
Article 102 deleted Article 103 substituted and Article 104& 105 altered by Special Resolution passed on 29-12-1997.
14
Article 107 deleted, Article 108(a) substituted by Special Resolution passed on 30-12-1992.
15
Article 109 deleted by Special Resolution passed on 30-12-1992

318
 presents or otherwise, to be exercised or done by the company in General Meeting;

Provided further that in exercising any such power or doing any such act or thing, the
board shall be subject to the provisions contained in that behalf in the act or these
presents or any regulations not inconsistent therewith and duly made thereunder
including those made by the company in General Meeting.

(2) No regulation made by the company in General Meeting shall invalidate any prior act
of the board which would have been valid if that regulation had not been made
Powers to be 113 (1) The board of Directors shall exercise the following powers in behalf of the company
exercised by board and it shall do so only by means of resolution passed at the Meetings of the board:
only at Meetings (a) The power to make calls on the Shareholders in respect of money unpaid on the
Shares;
(b) The power to issue debentures;
(c) The power to borrow moneys otherwise than on debentures;
(d) The power to invest the funds of the company;
(e) The power to make loans;

Provided that the board may, by resolution passed at a Meeting, delegate to any Director
or Directors, committee of Directors , managing Directors….16, the manager or any other
principal designated officer of the company and in the case of the branch office of the
company, the principal officer of such branch office the powers specified in (c), (d) and
(e) of this sub-clause to the extent specified below:
(i) Every resolution delegating the powers referred to in sub-clause (1)(c) shall specify
the total amount outstanding at any time upto which moneys may be borrowed by the
delegates;
(ii) Every resolution delegating the power referred to sub-clause (1)(d) shall specify the
total amount upto which the funds may be invested and the nature if the investments
which may be made by the delegates;
(iii)Every resolution delegating the power referred to the sub-clause (1)(e) shall specify
the total amount upto which loans may be made by delegates, purpose for which the
loans may be made and the maximum amount of loans which may be made for each
purpose in individual cases: provided further that nothing contained in this Article
shall be deemed to affect the right of the company in General Meeting to impose
restrictions and conditions on the exercise by the board of any of the powers referred
to in sub-clause(a) (b) (c) (d) and (e) of clause(1) of this Article.
Explanation : in respect of dealings between company and its bankers, the exercise of
powers specified in sub-clause (1) (c) of this Article shall mean the arrangements for
borrowing by way of overdraft or cash credit or otherwise of the bankers and not the
actual day to day operation of the overdraft, cash credit or other accounts or
arrangements by means of which credit facilities so arranged are actually availed of.
(2) The following powers shall also be exercised by the board only by means of
resolutions passed at Meetings of the board:
(a) the power to fill a casual vacancy in the board;
(b) the power to sanction contract in which Directors, their relatives and firms are
interested ;
(c) the power to accept disclosure of Director‘s interest in any contract or arrangement;
(d) the power to accept disclosure by a Director of his Shareholding ;
(e) the power to appoint as managing Director a person who is already a managing
Director or manager of another company;
(f) the power to appoint as manager a person who is already a manager or managing
Director of another company.
Powers to be 114. Subject to the provisions of Section 293 of the Act, the Board of Directors shall not, except
exercised with the with the consent of the Company in General Meeting:
consent of General a) Sell, lease or otherwise dispose of the whole, or substantially the whole, of the
Meeting undertaking of the company;
b) Remit or give time for the repayment of any debt due by a Director;
c) Invest otherwise than in trust securities the compensation received by the Company in
respect of the compulsory acquisition or requisitioning of any such undertaking as is
referred to in sub-clause (a) of the Article or of any premises or properties used for any
such undertaking and without which it cannot be carried on or can be carried on only
with difficulty or only after a considerable time;
d) Borrow moneys in excess of limits provided in Article 115 thereof;
e) Contribute to Charitable and other funds not directly related to the business of the

16
Deleted by Special Resolution passed on 30-12-1992.

319
 Company or the Welfare of its employees any amount the aggregate of which will, in
any financial year, exceed fifty thousand rupees or five per cent of its average net profit
as determined in accordance with the Act during the three financial years immediately
preceding, whichever is greater.
Borrowing powers 11520 Subject to the provisions of the Act and theses presents, the Directors shall have the power
of Directors from time to time and at any time at their discretion to raise or borrow any sum or sums of
money for the purposes of the company.
Conditions of 116 The Directors may secure the repayment of or raise any such money as aforesaid by
borrowing mortgage or charge upon the whole or any part of the property and assets of the company,
present and future, including its uncalled capital or by the issue at such price as they may
think fit, of Debentures, either charged upon the whole or any part of the property or assets
of the Company or not so charged or in such other way as the Directors may deem fit and
expedient. No lender or any other person dealing with the Company shall be concerned to
see or enquire whether the limit imposed hereby is observed or not. Any debt incurred or
security given in excess of the said limit shall not be invalid or ineffectual if express notice
is given to the lender or recipient of the security at the time when the debt was incurred or
security given that the said limit had been or was thereby exceeded.
Debentures with the right to allotment of or conversion into shares shall not be issued
except with the sanction of the Company in General Meeting
Mortgage of 117 If any uncalled capital of the Company is included or charged by any mortgage or any other
uncalled capital security, the Directors shall, subject to the requirements of the Act and these Presents make
Calls on the members in Respect in of such uncalled capital in trust for the person in whose
favour such mortgage or security is executed or if permitted by the Act may be instrument
under the Seal authorise the person in whose favour such mortgage is executed or any other
person in trust for him to make calls on the member in respect of such uncalled capital and
the provisions hereinbefore contained in regard to calls shall mutatis mutandis apply to
calls made under such authority and such authority may be made exercisable either
conditionally or unconditionally and either presently or contingently and either to the
exclusion or otherwise of the Directors power and shall be assignable if expressed so to be.

Specific Powers 118 Subject to the provisions of the Act and subject to the specific limitation imposed by the
Act and these Articles in that respect and without prejudice to the other powers specifically
conferred by theses Presents, its is hereby, declared that the Directors shall have the
following powers that is to say, power:
1) To pay the cost, charges and expenses preliminary and incidental to the promotion.
Formation, establishment and registration of the Company;
2) To carry out the objects and exercise powers contained in clause 3 of the
Memorandum Of Association of the Company;
3) To have the superintendence, control and direction over….. * the managing Directors,
Wholetime Directors, Managers and all other officers and all other employees of the
Company;
4) *…to appoint and at their discretion remove or suspend such managers, Secretaries,
officers, clerks, agents, servants and employees for permanent, temporary or special
services as they may from time to time and at any time deem fit and expedite and to
determine theirs powers and duties and fix their salaries and emoluments and require
security in such instances and to such amounts as they may think fit and expedient;
5) To pay and charge to capital account of the Company and interest lawfully payable
thereon and there out under the applicable provisions of the Act.
6) To purchase or otherwise acquire for the Company any property, movable or
immovable, rights and/ or privileges which the Company is authorised to acquire, at or
for such price or such other consideration and generally on such terms and conditions
as they deem fit and expedient; and in any such purchase or other acquisition to accept
such title as the Directors may believe or may be advised to be reasonably satisfactory;
7) At their discretion, to pay for and make advances for any property rights and/or
privileges acquired by or services rendered to the Company, either wholly or partly in
cash or in Shares, Bonds, Debentures and Debenture Stock or other securities of the
Company and such Shares may be issued either as fully paid or with such other
amount credited as paid thereon as may be agreed upon; and any such Bonds,
Debentures, Debenture Stock or other securities may be either specifically charged
upon all or any part of the property of the Company and its uncalled capital or not so
charged;
8) To apply for, register, purchase or by other means acquire and protect, prolong and
renew whether in India or elsewhere, any patents‘ right, brevets d‘invention, licences,
trade marks, designs, protection, and concessions which may appear to them likely to
be advantageous or useful to the Company and to use and to turn to account and to
manufacture under or grant licenses or privileges in respect of the same, and to expend
moneys in experimenting upon and in improving or seeking to improve any patents,

320
 inventions or rights which the Company may acquire, propose to acquire and has
already acquired;
9) To build, rebuild, erect, construct, reconstruct, replace, alter, enlarge, maintain, pull
down, remove any buildings, factories, office workshops or other structures, roads,
machinery, equipment etc. necessary and convenient as appears to them for the
purpose of the Company;
10) To improve, manage, cultivate, develop, exchange, pledge, hypothecate, sell, dispose
of, turn to account, grant rights and privilege in respect of or otherwise deal with all or
any part of the property, movable or immovable and the rights of the Company upon
such terms and conditions as the deem fit and accept payment or satisfaction of the
same in cash or otherwise;
11) To insure and keep insured against loss or damage by fire and/or otherwise for such
period and to such extent as they may think proper all or any part of the buildings,
machinery, goods, stores, produce and other movable property of the Company, either
separately or conjointly; also to insure all or any portion of the goods, produce,
machinery and other articles imported or exported by the company and to sell, assign,
surrender or discontinue any policies of assurance effected in pursuance of this power;
12) To attach to any Shares to be issued as a consideration for any contract with or
property acquired by the company, such conditions as the transfer thereof as the
Directors think fit;
13) To appoint any person or persons, firm or company to accept and hold in trust for the
Company any property belonging to the company or in which it is interested or for any
other purposes and to execute and do all such deeds and things as may be requisite in
relation to any such trust and to provide for the remuneration of such trustee or
trustees;
14) To secure the fulfilment of any contract or engagements entered into by the Company
by mortgage or charge of all or any of the property of the Company and its unpaid
capital for the time being or in such other manner as they may think fit;
15) To enter into, subject to the provisions of the Act, all such negotiations and contracts
or engagements and rescind and vary all such contracts and deeds and other things in
the name and on behalf of the company as they may consider fit and expedient for or
in relation to any of the matters herein mentioned or otherwise for the purposes and
business of the Company
16) To accept from any member on such terms and conditions as shall be agreed a
surrender of his shares or stock or any part thereof in so far as may be permissible
under the Act;
17) To act on behalf of the Company in all matters relating to the insolvency and
bankruptcy of any person or firm having dealings or business with the Company
18) To refer any claims or demands by or against the Company or any Difference to
arbitration in accordance with the provisions of the Act and observe and perform any
award made thereon;
19) To make and give receipts, releases and other disclosures for moneys payable to the
company and for the claims and demands of the Company.

20) To institute, conduct, defend, compound or abandon any legal proceedings by or

against the Company or its officers and employees or otherwise concerning the
business of the Company and to compound and allow time for the payment of any
debts or any claims or demands by or against the company;
21) To open accounts with the bank or bankers or with any person or Government
Department, treasury or sub-treasury and to pay money into and draw from any such
account from time to time as the Directors think fit and expedient;
22) To determine from time to time who shall be entitled to sign on behalf of the
Company bills, notes, hundies, receipts, acceptances, endorsements, cheques,
warrants, releases, contracts and documents and to give and to delegate the necessary
authority for such purposes;
23) To sanction, pay and reimburse the managing Director…. 17other officers, servants
and employees of the Company in respect of any expenses incurred by him/them on
behalf of the Company;
24) To invest and deal with any of the moneys of the company not immediately required
for the purpose thereof, upon such shares, securities or investments(not being Shares
in this Company) and in such manner as they may think fit and from time to time to
vary, sell or realise such investments;
25) To execute in the name and on behalf of the Company in favour of any Director or
other person who may incur or be about to incur any personal liability for the benefit

17
Substituted by special Resolution passed on 30-12-1992

321
 of the Company such mortgages of the Company‘s property(present and future) as
they think fit and such mortgage may contain a power to sale and such other powers,
covenants and provisions as shall be agreed upon;
26) To give to any Director, Officer or any other person or persons or firms employed by
the Company an interest in any particular business transaction either by way of
commission on the gross expenditure thereon or otherwise or a share in the general
profits of the Company and such interest, commission or share of profit shall be
treated as a part of the working expenses of the Company;
27) To set aside out of profits of the company such sums as they think proper a reserve or
reserves which shall at their absolute discretion be applicable for any purpose to which
the company‘s profit may be properly applied, including provision for meeting
contingencies or for equalising Dividends; and pending such application to employ the
same either in the business of the Company or invest in such investments (other than
the Shares of the Company) as they may from time to time deem fit and to carry
forward any profits which they may deem it prudent to divide, without setting them
aside as a reserve;
28) To comply with the requirements of any local law which in their opinion it shall in the
interests of the Company be necessary or expedient to comply with;
29) Without in any way prejudicing the appointment of Managing Director… 18from time
to time and at any time to establish any Local Board for managing any of the affairs of
the Company in any specified locality and to appoint any persons to be members of
any Local Board and to Fix their remuneration and from time to time and at any time
to delegate to any person so appointed any of the powers, authorities and discretion for
the time being vested in the Directors, other than their power to make calls and to
authorise the members for the being of any such local Board or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such appointment
or delegation may be made on such terms and subject to such conditions as the
Directors may think fit and the Directors may at any time remove any person so
appointed and may annul or vary such delegation;
30) At any time and from time to time, by power of attorney to appoint any person or
persons to be attorney or attorneys of the company for such purposes and with such
powers, authorities and discretions(not exceeding those vested in or exercisable by the
directors under these Presents) and for such period and subject to such conditions as
the Directors may from time to time think fit and any such appointment(if the
Directors think fit) be made in favour of the Members or any Company or the
Members, Directors, Nominees or Managers of any Company or firm or otherwise in
favour of any fluctuating body or persons whether nominated directly or indirectly by
the Directors and any such power of attorney may contain such powers for the
protection or convenience of persons dealing with such attorneys as the Directors may
think fit and may contain powers enabling any such delegates or attorneys as aforesaid
to sub- delegate all or any of the powers, authorities and discretion for the time being
vested in them;
31) To pay and give gratuities, compensations, pensions and allowances to any person or
persons including Director, his widow, children or dependent that may appear to the
Directors just and proper whether any such person, widow, children or other
dependents have or have not a legal claim upon the Company and whether such person
is still in the service of the Company or has retired from the service or has left it; to
make contributions to any funds and pay premiums for the purchase of provision of
any such gratuity, pension, compensation or allowance;
32) To provide for the welfare of employees or ex-employees of the Company and the
wives, widows and families or the dependents or connections of such persons, by
building or contributing to the building of houses, dwellings or quarters or by grant of
money, pensions, allowances, bonus or other payments and/ or by creating from time
to time subsidising or contributing to provident fund, other associations, institutions,
funds and/or trust and by providing or subscribing or contributing toward places of
instruction and recreations, hospitals, dispensaries, medical, and other attendance and
other assistance as the Directors shall think fit and to subscribe or contribute or
otherwise assist, support, endow or to guarantee money to charitable, benevolent,
religious, scientific, national or any other institutions, societies, clubs, funds or objects
which shall have any moral or other claim to support or aid by the Company either by
reason and locality of operation or of public and general utility or otherwise;
33) To delegate, subject to the provisions of Section 292 of the Act, by a resolution passed
at a Meeting to any Committee of Directors, Managing Directors19… or the principal
officer of the company or principal officer of the Branch of the Company or the

18
Substituted by special Resolution passed on 30-12-1992
19
Deleted by special Resolution passed on 30-12-1992

322
 manager of the Company:
(a) The power to borrow money otherwise than on Debentures
(b) The power to invest the funds of the Company; and
(c) The power to make loans
Provided, however, that every resolution delegating the power in clause (a) shall specify
the total amount outstanding upto which moneys may be borrowed by the delegate; every
resolution delegating the power referred to in clause (b) shall specify the total amount up to
which the funds may be invested and the nature of investments which may be made and
every resolution delegating the power in clause (c) shall specify the total amount upto
which loans may be made and the maximum amount of loans which may be made for each
such purpose in individual cases;
Provided further that nothing in this article shall be deemed to affect the right of the
company in General Meeting to impose restrictions and conditions on the exercise by the
Board of any of the powers specified above;

34) Generally, subject to the provisions of the Act and these Presents, to delegate the
powers, authorities and discretions in the directors to any person, firm, company or
fluctuating body of persons as aforesaid;
35) To make, vary and repeal from time to time and at any time by-laws for the
regulations of the affairs of the Company, its officers and servants, not inconsistent
with the provisions of the Act or the Memorandum and Articles of Association of the
Company.
Provisions in 119 The provisions of these Articles in respect of matters relating to the contracts of the
respect of Company with a Director in which the Directors is interested in one way or the other shall
contracts in which be those laid down under the Act.
Directors are
interested

Director may 120 A Director of this Company may be or become a Director of any Company promoted by
become Director this Company or in which it may be interested as a vendor, Shareholder or otherwise and no
of other Company such Director shall be accountable for any benefits received as Director or Member of any
promoted by the such Company.
Company
Meeting of 121 (1) The board of Directors may meet for the dispatch of business adjourn and otherwise
Directors regulate its meetings as it thinks fit
20
Provided, however, that the board shall meet at least once in every three months; and
at least four such meetings shall be held in a year.
(2) Any Director or the Managing Director…..21 may, and the Manager or Secretary on
the requisition of a Director shall, at any time, summon a Meeting of the Board.

Notice of Meetings 122 Notice of every meeting of the board shall be given in writing to every Director for the time
being in India and at his usual address to every other Director.
Chairman and 123 (1) The Board may elect one of the directors to be the Chairman and one else to be the
Vice-Chairman Vice-Chairman of the Board of Directors and may determine the period for which they
are to hold their respective offices. The Chairman, or, if he be absent, the Vice-
Chairman shall preside at the meeting of the Board.
(2) If no such Chairman or Vice-Chairman is elected, or, if at any Meeting of the Board,
the Chairman or the Vice-Chairman is not present within fifteen minutes after the time
appointed for holding that Meeting, the Directors present may choose one of their
member to be Chairman of the Meeting.

Majority of votes 124 (1) Save as otherwise expressly provide in the Act, Questions arising at any Meeting of
to decide the the Board shall be Decided be a Majority of votes;
questions (2) In case of equality of votes, the Chairman of the meeting shall have second or casting
vote.
Appointment of 125 Subject to the provisions of the Act and these Presents, the Board may delegate any of its
Committees powers other than those to make calls and issue Debentures to Committees consisting of
such member or members of its body as it thinks fit, and may from time to time revoke and
discharge any such Committee either wholly or in part and either as to persons or purposes.
Functioning and 126 (1) Any committee so formed shall, in the exercise of the powers so delegated conform to
procedure of the regulations that may be imposed on it by the Board and all acts done by the
Committees Committee in conformity with such Regulations and on fulfilment of the purpose of its
appointment, but not otherwise, shall have the like force and effect as if done by the

20
Substituted by special Resolution passed on 2-11-2001
21
Substituted by special Resolution passed on 30-12-1992

323
 Board itself.
(2) The regulations herein contained for the meetings and the proceedings of the
Directors, shall so far as not altered by any Regulations made by the Directors, apply
mutatis mutandis to the Meeting and proceedings of any Committee.
Passing of 127 Save as otherwise provided in the Act and these Articles, a resolution shall be deemed to
Resolution by have been duly passed by the Board or by a Committee thereof by circulation if the
Circulation resolution has been circulated in draft, together with all the necessary papers, if any, to all
Directors or to all the Members of the Committee then in India not being in either case less
than a quorum fixed for a meeting of the Board or the Committee as the case may be, and
to all other Directors and the members to theirs usual address in India, or by a majority if
such of them as are entitled to vote on the resolution.
Quorum for 128 The provisions for these Presents in respect of a Quorum for a Meeting of the Board shall
Meetings be the same as Laid down by the Act.
129 DELETED22
Appointment of 130 (1) Subject to the provisions in that respect of the Act, the Board shall from time to time
23
Managing appoint any Director(s) appointed by the constituents of the group as Directors not
Director, Whole- liable to retire by rotation, as provided in Article 101, to be the Managing Directors(s)
time Director or Whole-time Directors for such period not exceeding 5 years at a time and on such
terms as it thinks fit.
(2) Subject to the provisions in that respect of the Act, the board may also from time to
time, appoint any other Director(s) to be the Managing Director(s) and Whole-time
Directors(s) for such period not exceeding 5 years at a time and on such terms as it
thinks fit.

130 Subject to the provisions of Section 255 of the Act, the Managing Director or Managing
A24 Directors or Whole-time Director or Whole-time Directors, while he or they continue to
hold that office shall not be subject to retirement by rotation and shall not be taken into
account in determining the retirement by rotation of the Director or the number of Director
to retire, but he or they shall be subject to the same provisions as to resignation or removal
of the Directors of the Company and he or they shall ipso facto immediately cease to be a
Managing Director or Managing Directors or Whole-time Director or Whole-time
Directors if he or they cease to hold the office of a Director or Directors for any cause.
Terms of 131 (1) The terms of the appointment of managing Director shall be determined by the
appointment of Company and the said Director subject to the Applicable provisions of the Act;
Managing (2) The Board may, subject to its superintendence, control and direction, entrust to confer
Director upon a managing Director any of the powers of Management which would not
otherwise be exercisable by him upon such terms and conditions and with such
restrictions as the Board deems fit, and either collaterally with or to the exclusion of
its own powers and may from time to time revoke, withdraw, alter or vary all or any
such powers;
(3) The provisions contained in sub-clause(1) and (2) of the Article shall apply mutatis
mutandis to a Whole-time Director.
Appointment of 132 (1) A manager and/or Secretary may be appointed by the board, subject to the provisions
Manager and/or of the act in that respect, for such term, at such remuneration and on such conditions
Secretary as it may think fit; and any Manager and/or Secretary so appointed may be removed
by the Board;
(2) A Director may be appointed as Manager or Secretary.
Satisfaction of 133 A provision of the Act or these Presents requiring or authorising a thing to be done by or to
provision a Director and the manager and/or Secretary shall not be satisfied by its being done by or to
the same person acting both as a Director and as or in place of a Manager and/or Secretary.
Seal: its custody 134 (1) The Board shall provide a Seal and shall also provide for the safe custody thereof and
and use shall have the power to destroy the same and substitute a new one in lieu of thereof;
(2) 25The seal shall not be affixed to any instrument except by the authority of the Board
of Directors or of a Committee of the Board previously given and in the presence of at
least one Director of the Company and the Secretary or any other person as the Board
may authorise from time to time, who shall sign every instrument to which the said
Seal is so affixed in their presence.

Board to 135 (1) The Company in General Meeting on the Recommendations in that Respect contained
recommend in the Report of the Directors to be laid before it in that Meeting, may declare
Dividend Dividends to be paid, but such Dividend shall not exceed the amount recommended by

22
Deleted by special Resolution passed on 30-12-1992
23
Substituted by special Resolution passed on 15-05-2006 as approved by the Central Government vide their letter No. 12/109/2006-CL. VII dated 18-04-2007,
which was further amended vide their letter of even number dated 7-09-2007.
24
Substituted by special Resolution passed 24-09-2005
25
Substituted by special Resolution passed on 30-12-1992

324
 the Board
(2) The Board may, from time to time, pay to its members such Interim Dividends as
appear to it to be justified by the profits of the Company.
Dividend to be 136 No dividend shall be paid otherwise than out of the profits of the year or any other
paid only out of undistributed profits of the Company of the previous year or out of both. The Board‘s
Profits declaration as to the amount of the net profit of the Company for the year shall be
conclusive.
Setting aside 137 The Board may, prior to recommending any Dividend, set aside from the profits of the
reserves Company for a year such sums as it thinks proper for Depreciation or to Depreciation Fund,
General reserve, Reserve Fund, Sinking Fund or any special or other fund or funds or
account or accounts to meet contingencies, to repay Redeemable Preference Shares, if any,
Debentures, Debenture Stock, for Special Dividends or for equalising Dividends, for bad
and/or doubtful debts and for improving extending, maintaining, replacing any part of the
property of the Company and/or for such purpose including welfare of employees and
contributions to charitable purposes, as the Board may in its absolute discretion, deem
conducive to the interest of the Company.

Investment 138 The Board may invest the several sums set aside pursuant to the last preceding Article or so
much thereof as required to be invested upon such investments, subject to the restrictions
imposed by the Act, as the Directors deem fit and from time to time deal with and vary
such investments and dispose of and apply and expend all or any part thereof for the benefit
of the company in such manner and for such purposes as the Director in their absolute
discretion deem conducive to the interest of the company notwithstanding that the matters
to which the Directors apply or upon which they expend the same or any part thereof may
be matters to or upon which the capital moneys might rightly be applied or expended and
may divide the General Reserve or the Reserve Fund into such Special reserves or funds
respectively as the Board may think fit or consolidate or split up or abolish any such fund
or funds, reserve or reserves, and employ the assets constituting any of the above funds,
reserves and accounts in the business of the Company or in the purchase or repayment of
Redeemable Preference Shares, Debentures or Debenture Stock and that without being
bound to keep the same separate from other assets and without being bound to pay or allow
interest thereon with power, however, to the Board at its discretion to pay or allow to the
credit of such fund, interest at any rate not exceeding six per cent per annum.
Carry forward of 139 The Board may carry forward to the accounts of the succeeding year or years any profit or
Profits balance of profit which it may think prudent not to divide or place it to reserve.
General Reserve 140 All moneys placed to the General Reserve or the Reserve Fund shall nevertheless remain
and be profits applicable subject to due provisions being made for actual loss of
depreciation and for payment of Dividends.
Dividend: How 141 The profit of the Company which shall be from time to time determined to de divided
26
Paid amongst the members in respect of any year or other period shall first be applied in paying
to the holders of the Redeemable Preference Shares a preferential Dividend for the year on
the amounts paid or Credited as paid for the time being on the said Preference shares. The
balance shall be divided amongst the holders of Equity Shares. All Dividends shall be
declared and paid according to the amounts paid or credited as paid on the Shares in respect
whereof Dividend is paid; but no amount paid in advance of calls shall be treated for the
purposes of this Article as paid on the Share. Dividends shall be apportioned and paid
proportionately to the amounts paid or credited as paid on the Shares during any portion or
portions of the period in respect of which the Dividend is paid; but, if a Share is issued on
terms providing that it shall rank for Dividend as from a Particular Date, it shall so rank .
Rights in respect 142 No member shall be entitled, subject to the applicable provisions of the Act, to receive
of Dividend when payment of any interest or Dividend in respect of his Share or Shares, whilst any moneys
moneys due may be due or owing from him to the Company in respect of such Share or Shares either
alone or jointly with any person or persons, and the Board may deduct from his payable
interest or Dividend any sums of money so due and presently payable by him to the
Company.
Setting of 143 Any General Meeting declaring Dividend may make a call on the Members for such
Dividend against amounts as the Meeting appoints, but so that a call on each Member shall not exceed the
call Dividend payable to and so that the Call be Made payable simultaneously with Dividends
and the Dividend may, if so arranged between the Company and the Members be set off
against the calls.
Transfer to be 144 A transfer of Shares shall not pass the right to any Dividend declared thereon before
27
registered to pass registration of such transfer.
Dividend Right

26
Altered by special Resolution passed on 29-12-1997
27
Altered by special Resolution passed on 29-12-1997

325
 Production of 145 The Board may, if it deems fit, call upon Members, when applying for Dividends, to
Share Certificates produce their Share Certificates to the person or persons appointed by it in that behalf.
when applying for
Dividend
Dividend and 146 The Board, if it thinks fit, may retain Dividends payable upon Shares in respect of which
Transmission any person under the Transmission Article is entitled to become a Member or which any
Article person under the same Article is entitled to transfer until such person shall become a
Member in respect thereof or shall duly transfer the same.
147 Deleted
28

Payments of 148 (1) Any Dividend, interest or other moneys payable in cash in respect of Shares may be
Dividends paid by cheque or warrant sent through the post directed to the Registered address of
that one of the joint holders who is first named on the Register of Members or to such
address as the holder or the joint holders may in writing direct;
(2) Every such cheque or warrant shall be made payable to the order of the person to
whom it is sent and in the case of joint holders, to the order of the person first named
in the Register of Members
Dividend not to 149 No Dividend shall bear interest against the Company
bear interest
Unclaimed 150 Dividends unclaimed or unpaid will be dealt with in accordance with the provisions of the
29
Dividends and act
their utilization
Payment of 151 The Company may make payments of interest out of capital in the events mentioned by and
Interest out of subject to the provisions of Section 208 of the Act.
Capital

V. ACCOUNTS AND AUDIT

Books of account 15214 The Directors shall cause proper books of account to be kept at the Registered Office of
the Company or at such other place in India as the Directors think fit with respect to :
(a) All sums of money received and expended by the Company and the matter in respect
of which the receipt and the expenditure take place;
(b) All sales and/or purchases of goods by the company; and
(c) The assets and liabilities of the Company.
Inspection of 153 (1) The Board shall from time to time determine whether and to what extent and at what
Books by members times and places and under what conditions and regulations the accounts and books
not being Directors of the company or any of them shall be open to the inspection of Members not being
Directors who shall have the right of inspecting the books of the Company during
business hours alone.
(2) No member ( not being a Director) shall have any right of inspecting any account or
book or document of the Company except as conferred by or authorised by the Board
or by the Company in General Meeting.
Balance Sheet and 154 The Balance Sheet and the Profit and Loss Account to be laid before the Annual General
Profit and Loss Meeting in accordance with the Section 210 of the Act, shall comply with the applicable
Account provisions of the Act, but, save as aforesaid, the Board shall be bound to disclose greater
details or extent of the trading and transactions of the Company than they may deem
expedient.
Provisions in 155 The provisions of these Articles in respect of matters relating to the authentication and
respect of Balance signing of the Balance Sheet and the Profit and Loss Account, the attachment of the
Sheet, Auditors‟ Auditor‘s Report thereto, the Report of the Board of Directors, its contents, conditions of
Report etc. submission and service on members of the Balance Sheet, Profit and Loss Account and the
Directors Report shall be those as laid down in the Act.
Capitalisation 156 1) The Company in General Meeting may, upon the recommendation of Board, resolve:
a) That it is desirable to capitalise any part of the amount for the time being standing to
the credit of any of the Company‘s reserve accounts or to the credit of the Profit and
Loss Account or otherwise available for distribution; and
b) That such sum be accordingly set for free distribution in the manner specified in the
following clause (2) amongst the Member who would have been entitled thereto, if
distributed by way of Dividend and in the same proportions.
2) The sum aforesaid shall not be paid in cash but shall be applied subject to the
provisions contained in clause (3) either in or towards:
a) Paying up any amounts for the time being un-paid on any shares held by such

28
Deleted by special Resolution passed on 29-12-1997
29
Article 150 substituted and Article 152 altered by Special Resolution passed on 29-12-1997

326
 members respectively
30
b) Paying up in full, unissued Shares or other securities or financial instruments of the
Company to be allotted and distributed, credited as fully paid up, to and amongst
such members in the proportions aforesaid; or
c) Partly in the way specified in sub-clause(a) and partly in that specified in sub-clause
(b)
3) A Share Premium Account and a Capital Redemption Reserve Fund may, for the
purpose of the Regulation only be applied in the paying up of unissued Shares to
be issued to members of the Company as fully paid Bonus Shares.
4) The Board shall give effect to the resolution passed by the Company in
pursuance of this Regulation.

Power of 157 (1) Whenever such a resolution as aforesaid shall have been passed, the board shall,
Appropriation a)31make all appropriations and applications of the undivided profits resolved to be
capitalised thereby and all allotments and issues of fully paid shares or other
securities or financial instruments, if any; and
b) Generally do all the acts and things required to give effect thereto.
(2) The Board shall have full power:
a) 31 to make such provisions by the issue of fractional Certificates or by payment
in cash or otherwise as it thinks fit, for the case of Shares or other securities or
financial instruments becoming distributable in fractions; and also
b) 31to authorise any person to enter, on behalf of all the members entitled thereto
into an agreement with the Company providing for the allotment to them
respectively, credited as fully paid up for any further Shares or other securities
or financial instruments to which they may be entitled upon such capitalisation
or ( as the case may require) for the payment by the company on their behalf, by
the application thereto of their respective proportions of the profits resolved to
be capitalised or the amounts or any part of the amounts remaining unpaid on
their existing Shares.
(3) Any agreement made under such authority shall be effective and binding on all
such members.
Audit 158 Once at least in every year, the accounts of the Company shall be examined and the
correctness of the Balance sheet and the Profit and Loss Account ascertained by one or
more auditor or auditors.
Provisions in 159 The provision for these Presents in respect of matters relating to the appointment and re-
respect of Audit appointment of auditors, their resignation, removal, qualifications and disqualification,
power and duties, remuneration, report, rights in relation to the Company and all other
matters relating to the auditors shall be those laid down under the act.

Conclusiveness of 160 Every account of the Company when audited and approved by the General Meeting, shall
the account and be conclusive, except as regard any error discovered therein, within three months next
rectification of after the approval thereof. Whenever such error is discovered within that period, the
error account shall forthwith be corrected and henceforth shall be conclusive.
Service of 161 The provisions for these Presents in respect of matters relating to the service of documents
Documents on the Company and by the Company on the Registrar of Companies and the member and
to the service of the documents by post shall be those laid down by the Act. Besides the
provisions of the Act, the following provisions shall apply in that respect for the purposes
of these Presents:
(a) Any notice required o be given by the Company to the members or any of them and
not expressly provided for by these Presents or by the Act shall be sufficiently given
by advertisement;
(b) Any notice required to be, or, which may be given by advertisement shall be
advertised once in one or more newspaper circulating in the District of Surat32 in
which the Registered Office of the Company is situated and shall be deemed to have
been served on the day on which the advertisement first appears;
(c) Every person who by operation of law, transfer or other means whatsoever shall
become entitled to any Share, shall be bound by any and every notice or other
document which, previously to his name and address being entered on the Register of
Members in respect of such Share, shall be duly given to the person from whom he
derives his title to such Share.
(d) Subject to the provisions of Article 82, any notice or document delivered or sent by
post to or left at the registered address of any member in pursuance of these Articles
shall, notwithstanding such Member be then deceased and whether or not the

30
Altered by special Resolution passed on 29-12-1997
31
Altered by special Resolution passed on 29-12-1997
32
Amended pursuant to the order dated 13-5-1992 of the Hon‘ble Board for Industrial and Financial Reconstruction and the Board Resolution dated 9-7-1992

327
 Company has notice of his/her death be deemed to have been duly served in respect
of any registered Shares, whether held solely or jointly with other persons by such
members, until some other person be registered in his/her stead as the holder or joint
holder thereof and such service shall for all purposes of these Present be deemed a
sufficient service of such notice or document on his or her heirs, executors or
administrators and all person, if any, jointly interested with him/her in any such
Share.
Manner of keeping 162 (1) Any register, index, minute book or books or account required by the Act to be kept
books by the Company may be kept either by making entries in bound books or by
recording the matter in question in any other manner;
(2) Where any such register, index, minute book or books of account is not kept by
making entries in a bound book, but by some other means, adequate precautions shall
be taken for guarding against falsification and facilitating its discovery.
Keeping registers 163 (1) The registers, indexes, returns and copies of Certificates and other documents kept at
etc. required under the registered office of the Company shall in accordance with the provision of
the Act open for Section 49(8), 118(4), 144(1) and (2), 163(2), 176(7), 196(1), 209(4), 230, 301(5),
inspection 302 (6) and (7), 304(1), 307(5), 362, 417, 418 and Schedule VIII to the Act, except
when the Register of Members or Debenture holders is closed under the provisions of
the Act, be open during business hours( subject to such reasonable restrictions, as the
Company may impose, so that no less than two hours in each day are allowed for
inspection) to the inspection:
a) Of any member or Debenture holder, without fee; and
b) Of any other person on payment of a fee of one rupee for each inspection
(2) The said registers, indexes, returns and documents shall be open to the inspection of
the persons entitled thereto at the Registered Office of the Company between the
hours of 2.00p.m.And 4.00p.m. on any working day except when the registers and
books are closed under the provisions of the Act: provided, however, that the register
required to be kept under Section 307 of the Act shall be open to the inspection of the
members or holder of the Debentures of the Company, if any, as laid down in Section
307(5)(a) of the Act only during the period beginning fourteen days before the date of
the Annual General Meeting and ending three days after the date of its conclusion.
(3) Any such Member, Debenture holder or other person may:
a) Make extracts from any register, index or copy referred to in sub-clause(1)
without fee or additional fee, as the case may be, or
b) Require copy of any register, index or copy or any part thereof, on payment of
six annas for every one hundred words or fractional part thereof required to be
copied.
(4) The company shall cause any copy required by any person under clause (b) of sub-
clause (2) to be sent to that person in accordance with the provisions of Section 39,
113, 118, 163, 192, 196, 219(2), 223, 301(5). 302(6) and (7), 307(6)and 362 of the
Act and Schedule VIII to the Act within the period mentioned therein, or where no
such period is mentioned within a period of ten days, exclusive of non-working days,
commencing on the day next after the day on which the requirement is received by
the Company.

VI MISCELLANEOUS PROVISIONS
Procedure on sale 164 On any sale of the undertaking of the Company, the Board of Directors or the liquidators on
or winding up a winding up may, if authorised by a special Resolution accept fully paid or partly paid up
shares, debentures or securities of any other company whether incorporated in India or in
any other place whatsoever either then existing or to be formed, for the purchase in whole
or in part of the property of the company and the Board of Directors(if profits of the
Company permit) or the liquidation(on a winding up) may distribute such share or
securities or any other property of the Company amongst the Members without realisation
or vest the same in trustees for them and any Special resolution may provide for the
distribution or appropriation of the cash, shares or other securities, benefits or property,
otherwise than in accordance with the legal rights of the Members or contributories of the
Company and for the valuation of such securities or property at such price and in such
manner as the Meeting may approve and all holders of shares shall be bound to accept and
shall be bound by any valuation or distribution or authorised and waive all rights in relation
thereto, save only in case the company is proposed to be or is in the course of being wound
up, such statutory rights(if any), under Section 494of the Act as are incapable of being
valued or excluded by theses Articles.
Secrecy Clause 165 Every Director….33Manager, Auditor, Trustee, Member of a Committee, officer, Servant,
Agent, Accountant or other person employed in the business of the Company shall, if so

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Deleted by special Resolution passed on 30-12-1992

328
 required by the directors, before entering upon his duties sign a declaration pledging
himself to observe a strict secrecy respecting all transactions of the Company with its
customers and the state of accounts with individuals and in matters relating thereto and
shall by such declaration pledge himself not to reveal any of the matters which may come
to his knowledge in the discharge of his duties, except when required so to do by the
Directors or by any Meeting or by the Court of law and except so far as may be necessary
in order to comply with any of the provisions in these Article contained.
Prohibition on 166 No Member or other person ( unless he is a Director or any other person in the management
seeking of affairs of the Company) shall be entitled to visit or to inspect or examine the company‘s
information etc. premises or properties of the Company without the Permission of the Directors…34 or
officers authorised by the Director for the time being, or to require discovery of or any
information respecting any detail of the Company‘s trading or any matter which is or may
be in the nature of a trade secret, mystery of trade or secret process or of any matter
whatsoever which may relate to the conduct of the business of the Company and which in
the opinion of the Directors…34 or officers authorised by the Director, it will be in-
expedient in the interest of the Members of the Company to communicate.
Indemnity Clause 167 Subject to the provisions of Section 201 of the Act, every…34 Managing Director, Director,
Manager, Secretary, Trustee, Auditor and other officer or employee or servant of the
Company, shall be indemnified by the Company against and it shall be the duty of the
Directors out of the funds of the Company to pay all losses, costs and expenses which any
such…34 Managing Director, Director, Manager, Secretary, Trustee, Auditor and other
officer or employee or servant may incur or become liable to pay by reason of any contract
entered into or any act or thing done by him as such…* Managing Director, Director,
Manager, Secretary, Trustee, Auditor. Officer or employee or servant in defending any
proceedings, whether civil or criminal, in which judgment is given in his favour or he is
acquitted or in connection with any application under Section 633 of the Act in which relief
is granted by the court and the amount for which such indemnity is provide shall
immediately attach as in lien upon the property of the company and have priority as
between the member over all other claims.
Conditions of 168 Subject to provisions of section 201 of the Act, no Director…. 34 Auditor, Manager,
Liability Secretary or other officer of the company shall be liable for the act, receipt, neglects or
default of any other officer or for joining in any receipt or other act for the sake of
conformity merely or for any loss or expense happening to the company through the
insufficiency or deficiency in point of title or value of any property acquired by the order of
the Directors for or on behalf of the Company or mortgaged to the company or for the
insufficiency of any security in or upon which any of the moneys of the Company shall be
invested or for any loss or damage arising from the bankruptcy, insolvency or tortuous act
of any person or with whom any moneys, securities or effects of the Company shall be
entrusted or deposited or for any loss occasioned by any error of judgment, omission,
default or oversight on his part or for any other loss, damage or misfortune whatever which
shall happen in relation to the execution or performance of the duties of his office or in
relation thereto, unless any liability arises by virtue of any rule of law in respect of any
negligence, default, misfeasance, breach of duty or breach of trust of which he may be
guilty in relation to the company.
Application of 169 If the Company shall be wound up, the assets remaining after the payment of the debts and
Assets on winding liabilities of the Company and the Costs of the liquidation shall be applied: first, in
up repaying to the holders of Preference Shares the amounts paid up or credited as paid up on
such Preference Shares respectively, together with all arrears, if any, and accruals of
preferential Dividends thereon, whether earned or declared or not, down to the date of such
payment, secondly, in repaying to the holders of Equity Shares the amounts paid up or
credited as paid up on such Equity Shares respectively; and the balance, if any, shall be
distributed among the holders of Equity Shares in proportion to the number of Equity
Shares held by them respectively. If, however, the surplus assets shall be insufficient to
repay the whole of the capital paid up on the Equity Shares, such surplus assets shall be
distributed so that, as near as may be, the losses shall be borne by the holders of Equity
shares in proportion to the capital paid up or credited as paid up or which ought to have
been paid up on the Equity shares held them respectively.
Division of assets 170 If the Company shall be wound up, whether voluntarily or otherwise, the liquidator may
with the sanction of a Special Resolution of the Company and any other sanction required
by the Act divide among the Members in specie or kind, the whole or any part of the assets
of the Company and may with the like sanction, vest the whole or any part of the assets of
the Company in trustees upon such trusts for the benefit of the contributions or any of them

34
Deleted by special Resolution passed on 30-12-1992

329
 as the liquidator with the like sanction shall think fit. The liquidation of the Company may,
thereupon be closed and the Company dissolved but so that no member shall be compelled
to accept any share whereon there is any liability.
Arbitration 171 Whenever any difference shall arise between the Company on the one hand and any of the
members, their executors, administrators, assigns on the other hand, touching the true intent
or construction or the incidents of consequences of theses Articles or the statutes or
enactments of the Legislature or touching anything then or thereafter done, executed
omitted, suffered in pursuance of theses Articles or of the Statutes or enactments or
touching any breach or alleged breach of theses Articles or any claim on account of any
such breach or alleged breach or otherwise relating to these articles, every such difference
shall be referred to the arbitration of two arbitrators, one to be appointed by each party or in
the event of difference between the Arbitrators, of an Empire appointed by them( i.e. the
Arbitrators) before entering on the reference or failing such agreement by the court or to the
arbitration of a single Arbitrator if the parties to the difference agree to such reference. The
Arbitration Act 1940, shall apply to such arbitration proceedings.

330
 SECTION IX – OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following contracts (not being contracts entered in to in the ordinary course of business carried on by the
Company or entered into more than two years before the date of this Draft Letter of Offer) which are or may be
deemed material have been entered or are to be entered in to by the Company. These contracts and also the
documents for inspection referred to hereunder, may be inspected at the Registered Office of the Company,
from 10 a.m. to 4 p.m. on any Business Day, from the date of this Draft Letter of Offer until the Issue Closing
Date.

Material Contracts

1. Shareholders‘ agreement dated March 8, 2006, among our Company, JK Agri Genetics Limited, JK
Lakshmi Cement Limited, JK Tyre and Industries Limited (formerly, JK Industries Limited), BMF
Beltings Limited, Fenner (India) Limited, and International Finance Corporation.

2. Share subscription agreement dated March 8, 2006 between our Company and International Finance
Corporation.

3. Agreement for extraction of bamboo from forest areas between Orissa Forest Development Corporation
Limited, and the Company dated January 5, 2011.

4. Forest working contract dated November 25, 1960, among the Company, the Governor of Gujarat and
the Paper and Pulp Conversions Limited (as the confirming party).

5. Agreement between the Company and Mr. Hari Shankar Singhania, dated March 26, 2007, and
supplemental agreement dated October 30, 2008.

6. Agreement between the Company and Mr. Harsh Pati Singhania, dated March 26, 2007, and
supplemental agreement dated October 30, 2008.

7. Agreement between the Company and Mr. Om Prakash Goyal, dated September 3, 2009.

Material Documents
1. Memorandum and Articles of Association of the Company.

2. Certificate of incorporation of the Company dated July 4, 1960.

3. Consents of the Directors, Company Secretary, Auditors, Lead Manager to the Issue, Bankers to the
Issue, legal advisor, Registrars to the Issue to include their names in this Draft Letter of Offer to act in
their respective capacities.

4. Shareholders Resolution passed at the Annual General Meeting held on August 2, 2010, appointing
Lodha & Co., Chartered Accountants as statutory auditors of the Company.

5. Copy of the Board Resolution dated January 28, 2011, approving this Issue and other related matters
thereto.

6. Letter dated January 28, 2011 from the Auditors of the Company confirming Statement of Tax Benefits
as mentioned in this Draft Letter of Offer.

7. The Report of the Auditors dated January 28, 2011 as set out herein in relation to the restated
consolidated and standalone financials of the Company, as applicable.

8. Annual Report of the Company as also that of Subsidiary (wherever applicable) for the last five
financial years.

9. In-principle listing approvals dated [●] and [●] from the BSE and NSE respectively.

10. Letter No. [●] dated [●] issued by the SEBI for the Issue.

331
11. Due Diligence Certificate dated January 28, 2011 from Lead Manager to the Issue.

12. Agreement dated January 10, 2002 between the Company and NSDL for offering depository option to
the applicants.

13. Agreement dated December 31, 2003, between the Company and CDSL for offering depository option
to the applicants.

14. Feasibility report dated December 19, 2010, provided by Poyry Management Consulting Oy.

332
 DECLARATION

No statement made in this Draft Letter of Offer contravenes any of the provisions of the Companies Act, 1956
and the rules made thereunder. All the legal requirements connected with the said Issue as also the regulations,
guidelines, instructions, etc. issued by SEBI, GoI and any other competent authority in this behalf have been
duly complied with. We further confirm that all the statements in this Draft Letter of Offer are true and correct.

Signed by all the Directors of the Company

Hari Shankar Singhania Harsh Pati Singhania

Chairman Managing Director

__________________ ___________________

Om Prakash Goyal Dhirendra Kumar

Whole-time Director Non-Executive Non-Independent Director

___________________ ___________________

Vinita Singhania Arun Bharat Ram

Non Executive Non-Independent Director Independent Director

___________________ ___________________

M.H. Dalmia R.V. Kanoria

Independent Director Independent Director

___________________ ___________________

Shailesh Vishnu Haribhakti S.K. Pathak

Independent Director Independent Director

___________________ ___________________

Udayan Bose
Independent Director

___________________

_____________________

V. Kumaraswamy
Chief Financial Officer

Place: New Delhi

Date: January 28, 2011

Enclosure: Composite Application Form

333