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RADICO KHAITAN LIMITED


(Incorporated with limited liability under the laws of the Republic of India)
US$40,000,000 3.5% CONVERTIBLE BONDS DUE 2011
convertible into ordinary shares of Radico Khaitan Limited
Issue Price: 100%
(subject to an increase of up to an additional
US$10,000,000 principal amount
pursuant to an option for additional bonds)

The US$40,000,000 3.5% convertible bonds due 2011 (the ""Bonds'') will be offered by Radico Khaitan Limited (the ""Issuer'' or the
""Company''). The Bonds will bear interest at a rate of 3.5% per annum, payable semi-annually in arrears on six and 12 months after issue
date of each year. The issue and offering of the Bonds are subject to the approval of the Board of Directors of the Issuer and the passing of
a resolution by the shareholders of the Issuer.
The Issuer has granted to the Manager an option, exercisable in whole or in part, on one or more occasions, solely at the discretion of
the Manager and at any time prior to the date which is 30 days from the date the Bonds are issued pursuant to the subscription agreement
between the Manager and the Issuer relating to the offering of the Bonds, to purchase or procure purchasers for an additional
US$10,000,000 principal amount of the Bonds.
Unless previously redeemed, converted, purchased or cancelled, the Bonds are convertible at any time on or after First Conversion Date
up to Final Conversion Date by holders of the Bonds (""Bondholders'') into fully paid equity shares of the Issuer with full voting rights and
a par value of Rs.2 each (""Shares''), at an initial conversion price of Rs.Conversion Price per Share (""Conversion Price''), with a fixed
rate of exchange on conversion of Rs.Fixed Exchange Rate • US$1.00. The Conversion Price is subject to adjustment in certain
circumstances. For the terms and obligations of conversion, including certain closed periods during which the Bonds may not be
converted, see ""Terms and Conditions of the Bonds''.
On or about the date of the offering of the Bonds, the Issuer proposes to enter into a subscription agreement with the Manager pursuant
to which the Issuer proposes to offer US$20,000,000 of unlisted 6.75% Cumulative Compulsory Convertible Preference Shares
(""CCPSs''), each of which is convertible into one fully paid equity share of the Issuer with full voting rights and a par value of Rs.2 each
subject to the approval of the Board of Directors and the shareholders of the Issuer. For a further description of the issue and offering of
the CCPSs, see ""Description of the Shares Ì Issue of the CCPSs''.
The Bonds may be redeemed in whole, but not in part, at the option of the Issuer at any time on or after First Redemption Date and
prior to Final Redemption Date, subject to the satisfaction of certain conditions, at the Early Redemption Amount if the Closing Price for
25 consecutive Trading Days immediately prior to the date upon which notice of such redemption is published is greater than or equal to
Redemption Percentage of the Early Redemption Amount then in effect and (converted into US dollars at the rate of Rs.46.0020 •
US$1.00) (in each case as such terms are defined under ""Terms and Conditions of the Bonds''). The Bonds may also be redeemed in
whole, but not in part, at any time during such period at the option of the Issuer if 10% or less in aggregate principal amount of the Bonds
originally issued is outstanding or in the event of certain changes relating to taxation in India, in each case at the Early
Redemption Amount. Unless previously converted, redeemed, or cancelled, the Bonds will be redeemed in US dollars on Maturity Date
(the ""Maturity Date'') at 130.3961% of their principal amount. The Issuer will, at the option of any holder of any Bonds, redeem such
Bonds at the Early Redemption Amount at such time as the Shares cease to be listed or admitted to trading on the Bombay Stock
Exchange Limited (""BSE'') or the National Stock Exchange of India Limited (""NSE'') (together, the ""Indian Exchanges''), or upon
the occurrence of certain change of control events in respect of the Issuer. Any redemption prior to the Maturity Date, however, whether
at the option of the Issuer or the Bondholders, is subject to the prior receipt of approval from the Reserve Bank of India (the ""RBI''). The
Issuer cannot be certain that such approval will be given.
Application will be made to list the Bonds on the Official List of Singapore Exchange Securities Trading Limited (the ""Singapore
Stock Exchange''). The Singapore Stock Exchange assumes no responsibility for the correctness of any statements made, opinions
expressed or reports contained herein. Admission of the Bonds to the Singapore Stock Exchange is not to be taken as an indication of the
merits of the Issuer or the Bonds. The Issuer has applied for in-principle approval for listing of the Shares issuable upon conversion of the
Bonds on the BSE and the NSE.
The outstanding Shares of the Issuer are listed on the BSE and the NSE. The closing price of the Shares as at 29 June 2006 on the
BSE and the NSE was Rs.146.2 and Rs.145.9, respectively.

INVESTING IN THE BONDS AND THE SHARES INVOLVES RISK. SEE ""RISK FACTORS''.
The outstanding shares, the Bonds and the Shares to be issued upon the conversion of the Bonds have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the ""Securities Act'') and, unless the outstanding shares, the Bonds and
such Shares are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available,
neither the Bonds nor the Shares may be offered or sold within the United States. The Bonds and the Shares to be issued upon conversion
of the Bonds are being offered and sold only outside the United States to non-US persons in reliance on Regulation S under the Securities
Act (""Regulation S''). The Bonds also may not be offered or sold directly or indirectly in India or to, or for the account or benefit of, any
resident of India.
A copy of this offering circular will be delivered to the RBI, the NSE and the BSE for record purposes only.

Sole Manager
JEFFERIES INTERNATIONAL LIMITED
Offering Circular dated 30 June 2006
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The Bonds will be represented initially by a single Global Certificate (as defined under ""Global
Certificate'') in registered form, deposited with and registered in the name of The Bank of New York
Depository (Nominees) Limited, a nominee of the common depository for Euroclear Bank S.A./N.V., as
operator of the Euroclear System (""Euroclear''), and Clearstream Banking, societ
π eπ anonyme (""Clearstream,
Luxembourg''), on or about 26 July 2006, the closing date (the ""Closing Date'') for the accounts of their
respective account holders.

The Company accepts full responsibility for the information contained in this offering circular and,
having made all reasonable enquiries, confirms that this offering circular contains all information with respect
to the Company, the Bonds and the Shares which is material in the context of the issue and the Offering of the
Bonds. The statements contained in this offering circular relating to the Company, the Bonds and the Shares
are in every material respect true and accurate and not misleading. The opinions and intentions expressed in
this offering circular with regard to the Company, the Bonds and the Shares are honestly held and have been
reached after considering all relevant circumstances and information which is presently available to the Issuer
and are based on reasonable assumptions. There are no other facts in relation to the Issuer, the Bonds and the
Shares the omission of which would, in the context of the issue and offering of the Bonds, make any statement
in this offering circular misleading in any material respect and all reasonable enquiries have been made by the
Issuer to ascertain such facts and to verify the accuracy of all such information and statements.

This offering circular does not constitute an offer of, or an invitation by or on behalf of the Company,
Jefferies International Limited (""Manager''), The Bank of New York, London branch (as ""Trustee'',
""Principal Agent'', ""Paying Agent'', ""Transfer Agent'' and ""Conversion Agent'', each, an ""Agent'' and
together, the ""Agents'') or The Bank of New York (as ""Registrar''), to subscribe for or purchase any of the
Bonds and may not be used for the purpose of an offer to, or a solicitation by, any person in any jurisdiction in
which such offer or invitation would be unlawful. The distribution of this offering circular and the offering of
the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this offering circular
comes are required by the Company and the Manager to inform themselves about and to observe any such
restrictions. For a description of certain further restrictions on offers and sales of the Bonds and distribution of
this offering circular, see ""Subscription and Sale'' and ""Transfer Restrictions.''

None of the Manager, the Trustee, the Registrar or the Agents have separately verified the
information contained in this offering circular. Accordingly, no representation, warranty or undertaking,
express or implied, is made and no responsibility or liability is accepted by the Manager, the Trustee, the
Registrar or the Agents as to the accuracy or completeness of the information contained in this offering
circular or any other information supplied in connection with the Bonds or the Shares. Each person receiving
this offering circular acknowledges that such person has not relied on the Manager, the Trustee, the Registrar,
the Agents or any person affiliated with the Manager, the Trustee, the Registrar or the Agents in connection
with its investigation of the accuracy of such information or its investment decision and each such person must
rely on its own examination of the Issuer and the merits and risks involved in investing in the Bonds.

No person is authorised to give any information or to make any representation not contained in this
offering circular and any information or representation not so contained must not be relied upon as having
been authorised by or on behalf of the Company, the Manager, the Trustee, the Registrar or the Agents. The
delivery of this offering circular at any time does not imply that the information contained in it is correct as at
any time subsequent to its date.

Certain monetary amounts in this offering circular have been subject to rounding adjustments;
accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which
precede them.

Market data and certain industry forecasts used throughout this offering circular have been obtained
from market research, publicly available information and industry publications. Industry publications generally
state that the information that they contain has been obtained from sources believed to be reliable but that the
accuracy and completeness of that information is not guaranteed. Similarly, internal surveys, industry forecasts
and market research, while believed to be reliable, have not been independently verified, and none of the

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Company, the Manager, the Trustee, the Registrar or the Agents makes any representation as to the accuracy
of that information.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


Certain statements in this offering circular constitute ""forward-looking statements''. Such forward-
looking statements involve known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous assumptions regarding the Issuer,
present and future business strategies and the environment in which the Issuer will operate in the future.
Additional factors that could cause actual results, performance or achievements to differ materially include,
but are not limited to, those discussed under ""Risk Factors'', ""Industry'' and ""Business''. These forward-
looking statements speak only as at the date of this offering circular. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any forward-looking statement
contained herein to reflect any changes in the Company's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statements are based.

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TABLE OF CONTENTS

Page

Conventions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1
Summary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2
Summary of the Terms of the Offering of the BondsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5
Risk FactorsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10
Market Price Information and other Information concerning the SharesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25
Use of ProceedsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27
Capitalisation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 28
Selected Financial Information ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29
Exchange Rates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 31
Dividends and Dividend Policy ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 32
Management's Discussion and Analysis of Financial Condition and Results of OperationsÏÏÏÏÏÏÏÏÏÏ 33
Industry ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 40
Business ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44
Management and Employees ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 56
Principal Shareholders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 62
Terms and Conditions of the Bonds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 63
Global Certificate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100
Clearance and Settlement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 102
Description of the Shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 104
Indian Government and Other Approvals ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 111
Enforcement of Civil Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 113
Taxation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 114
Subscription and Sale ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 117
Transfer Restrictions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 121
Legal Matters ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 123
Independent Auditors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 124
General Information ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 125
Summary of Significant Differences between Indian GAAP and IFRSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 128
Index to the Financial Statements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-1
Appendix A: Indian Securities MarketÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-1
Appendix B: Foreign Investment and Exchange Controls ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ B-1

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CONVENTIONS
In this offering circular, the terms ""Radico Khaitan Limited'', ""Radico Khaitan'', ""Radico'' the
""Issuer'' and ""the Company'', unless otherwise specified or the context otherwise implies, refer to Radico
Khaitan Limited. In this offering circular, unless otherwise specified or the context otherwise requires: all
references to ""Holders'' or ""Bondholders'' are to holders of the Bonds from time to time; all references to
""India'' are to the Republic of India and its territories and possessions; all references to the ""US'' and ""United
States'' are references to the United States of America and its territories and possessions; all references to the
""Indian Government'' or the ""Government'' are to the Government of India; all references to the ""Companies
Act'' are to the Companies Act, 1956, as amended; and all references to the ""Terms and Conditions'' or any
""Condition'' are to the terms and conditions of the Bonds or any condition contained therein set out in the part
of this offering circular entitled ""Terms and Conditions of the Bonds''. All references herein to ""Rupees'' and
""Rs.'' are to Indian Rupees, and all references to ""US dollars'' and ""US$'' are to United States Dollars.
The Company's financial year ended on 31 March of each year up until 2006; therefore, all references
to a particular financial year or fiscal year are to the 12 months ended 31 March. The Company prepares its
financial statements in accordance with generally accepted accounting principles in India (""Indian GAAP'').
The Company's financial statements included in this offering circular include its audited financial statements
as at and for the financial years ended 31 March 2004, 2005 and 2006 prepared in accordance with Indian
GAAP. Unless stated otherwise, all financial information presented in this offering circular is derived from the
Company's financial statements prepared in accordance with Indian GAAP and included in this offering
circular. The Company is also providing investors, for their convenience, its unaudited financial statements as
at and for the years ended 31 March 2004, 2005 and 2006 prepared in accordance with International Financial
Reporting Standards (""IFRS'').
The Company publishes its financial statements in Indian Rupees. All translations from Indian
Rupees to United States dollars are made (unless otherwise indicated) on the basis of the exchange rate on
31 March 2006 of Rs.44.622 • US$1.00 provided by Bloomberg. All amounts translated into United States
dollars as described above are provided solely for the convenience of the reader, and no representation is made
that the Indian Rupees or United States dollar amounts referred to herein could have been or could be
converted into United States dollars or Indian Rupees, as the case may be, at any particular rate, the above
rates or at all.

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SUMMARY

The following discussion should be read in conjunction with the Company's financial statements and
the notes to such statements included elsewhere in this offering circular.

Business Description

Radico Khaitan is the second largest producer and distributor of branded liquor in India. The
Company produces and distributes a variety of liquors, including whisky, rum, brandy, vodka and gin. The
Company manufactures its products at its distillation facility located in Rampur, in the state of Uttar Pradesh,
and maintains five owned bottling units and 32 contract bottling units (each, a ""Contracted Bottling Unit'').
The Company owns and produces three brands with sales of over one million cases per annum (""MCA''),
referred to in the domestic market as ""millionaire brands'', namely, 8PM whisky (4.1 MCA), Contessa rum
(2.3 MCA) and Old Admiral brandy (1.3 MCA), each as at 31 March 2006. The Company also continues its
historic business of producing extra-neutral alcohol (""ENA''), the purified form of alcohol derived from the
distillation of molasses, which it sells to other companies in India and worldwide for use in the manufacture of
various alcoholic beverages. In the fiscal year ended 31 March 2006, Radico generated consolidated total net
revenues of Rs.4,945.11 million (US$111.71 million), and consolidated EBITDA of Rs.872.09 million
(US$19.54 million).

The Indian market for liquor has been growing at a compound annual growth rate (""CAGR'') of 9%
over the past decade with higher growth rates of approximately 12% in each of 2005 and 2006. The total value
of the current market has grown to an estimated US$7.5 billion from US$4.0 billion three years ago. This
growth has been driven by a number of factors, including the growing acceptance of alcohol consumption in
India, particularly among younger people, the emergence of a middle class with growing disposable incomes
and the increasing urbanisation of the country. Additional growth is being driven by gradual deregulation of
the liquor industry by various state governments. According to third-party industry reports, in addition to the
domestic liquor market in India, there exists an unregulated and unorganised sector, which does not comply
with all industry and government laws and regulations, including the payment of excise taxes. Although there
are no reliable figures on the size of the unregulated liquor producing sector, it is estimated to be at least as
large as the regulated sector. The regulated market, in which the Company operates, is comprised of
approximately 25 premium liquor manufacturers and 41 distillers. The UB Group has the largest share of the
liquor market in India at 55% and Radico, the second largest, has a 10% market share.

The Company has gradually changed its primary focus from being largely a spirits manufacturer and
bottler for other liquor companies towards being a manufacturer of its own branded liquors. The Company is
now focusing its marketing efforts on fast growing segments of the Indian liquor market Ì namely, ""foreign''
liquors such as whisky, rum, brandy and vodka, supported by a team of marketing professionals who promote
the Company's Indian-made foreign liquor (""IMFL''). IMFL is an industry term of art used to describe
""foreign'' liquors that are now made in India, which are distinguished from traditional ""country'' liquor, which
has been historically manufactured in India. Within each sector of the IMFL industry, the Company has
launched brands with price positioning aimed at the emerging middle class. The Company's brand portfolio
includes 8PM, Whytehall, Contessa and Old Admiral. In response to rapid growth in vodka consumption, the
Company also has recently launched Magic Moments vodka. In addition, the Company produces lower-end
branded ""country'' liquor, which accounted for approximately 13% of the Company's consolidated revenues
for the fiscal year ended 31 March 2006. The Company does not anticipate that ""country'' liquor will be a
significant line of its business going forward.

The Company owns and operates three modern distilleries for the production of molasses-based,
grain-based and malt-based spirits, with an annual capacity of 60 million, 27 million and 0.46 million litres,
respectively. The molasses-based and malt-based distilleries operate at over 95% of capacity and the molasses-
based spirit has received recognition internationally, including accreditation by Bacardi International for
meeting its international production specifications. The plant was also the first Indian distillery to receive the
ISO 9001:2000 certification in 2001.

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The Company's primary raw material is molasses, which it sources from local producers and then
ferments and distills into potable liquor. The Company also sources raw materials such as wheat, sorghum,
rice and barley for its grain- and malt-based spirits from neighbouring states. Finished liquor is then bottled by
either the Company's bottling facilities or Contracted Bottling Units. The Company seeks to control quality
and efficiency throughout each step of the process from the procurement of raw material through final
distribution. In addition, the Company's plants are supported by its bio-gas co-generation facility which
provides a reliable and cost-effective power supply.

The Company's shares are listed on the Indian Exchanges. In the fiscal year ended 31 March 2006,
Radico Khaitan had consolidated net revenues of Rs.4,945.11 million (US$111.71 million) compared to
Rs.4,329.24 million (US$97.01 million) in fiscal 2005, representing an increase of 14.22%. In fiscal 2006, the
Company recorded a profit after tax of Rs.450.33 million (US$10.20 million), compared to Rs.358.56 million
(US$8.04 million) in fiscal 2005, representing an increase of 25.96%.

Competitive Strengths

Radico Khaitan believes its competitive strengths are:

Strong Brands and Distribution: The Company's portfolio includes its three ""millionaire brands'':
8PM whisky, Contessa rum and Old Admiral brandy, which sold 4.1 MCA, 2.3 MCA and 1.3 MCA,
respectively, in the fiscal year ended 31 March 2006. The Company also has recently launched its Magic
Moments vodka, which is targeted primarily at the younger generation, and is continuing to strengthen and
broaden the Magic Moments brand. The Company has successfully launched various liquor brands in India
over the last 10 years. The Company's brand-building activities are complemented by competitive pricing
strategies and a team of marketing and distribution professionals who reach a wide range of liquor points of
sale throughout India.

Well Established Company with National Presence: The Company is a well established participant
in the Indian liquor industry and has a presence throughout India. The Company has an extensive regulatory
compliance system, including state bottling licences and Indian Government industrial licences for the
distillation and production of alcohol, which allow it to operate on a national level. These licences are difficult
to obtain, and presently the Indian Government is not issuing any new licences. In addition to the regulatory
licences, the industry is subject to a ban on advertising liquor products. However, the Company already has
well established brands, which the Company believes have strong brand loyalty. The Company has an
extensive network of bottling facilities across India and maintains modern distillation facilities. In addition, the
Company has established an effective marketing presence, which requires significant cost and effort to
promote the brands.

Lower Cost of Production: The Company enjoys cost advantages due to the economies of scale of its
operations and the location of its manufacturing facilities, which are close to molasses-producing regions in the
state of Uttar Pradesh. Radico Khaitan is also able to derive cost savings from its co-generation plant, which
enables the Company to be self-sufficient for its power needs. Further, the Company's modern production
facilities enable it to process raw materials more efficiently.

Product Quality: The Company has won a number of awards for both the quality of its products and
the standards of its facilities. Several of the Company's brands won the Monde Selection Awards in Brussels
in 2006, including a gold medal awarded to 8PM Bermuda rum. The Company's molasses-based spirits
frequently command a premium, and are supplied to other liquor manufacturers in India as well as exported.
The Company's malt-based spirit is matured in imported sherry oak wood casks and is made to an
international standard. The Company's facilities include a recently installed grain-based distillery in Rampur
which employs modern technology and a molasses distillery that holds an ISO:2000 9001 certification.

Experienced Management Team: The Company is led by Lalit Khaitan, who has several decades of
experience in the liquor industry along with his son, Abhishek Khaitan, an industrial engineer. Together they
are supported by an experienced management team with extensive knowledge of the Indian liquor market.

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Business Strategy

Radico Khaitan aspires to be India's largest domestic liquor and spirits provider, while at the same
time pursuing growth opportunities in both the domestic and international markets. In order to achieve these
objectives, the Company has adopted the following business strategies:

Focus on Brand Building: The Company intends to continue to build its brand and product portfolio
by launching a number of new brands and developing new products under existing brands. In addition, the
Company plans to continue to expand into sectors of the liquor industry where it does not currently have a
significant presence, such as the vodka market. Concurrently, the Company intends to pursue opportunities to
acquire brands which it believes will complement its existing product portfolio and its established production
and distribution networks. For example, in September 2005, the Company acquired several brands of Brihans
Maharastra Sugar Syndicate Ltd (""Brihans''), an established participant in the liquor industry. The
Company's products are on the approved list for the Canteen Stores Department (""CSD'') of the Indian
armed forces, a significant purchaser of liquor products in India.

Strengthen Presence in the Domestic Market: The Company plans to expand its domestic presence
by continuing to develop alliances with distributors and to focus on marketing. In recent years, the Company
has established a presence in several southern Indian states to complement what it believes to be an already
strong presence in northern India. The Company also intends to continue to move into the development of
higher-end IMFL products and away from the production of lower-end ""country'' liquor brands.

Expand into the International Markets: The Company has begun to move into the international
markets by launching its brands in foreign markets that have a demand for its products and by beginning to
produce certain of its products overseas in collaboration with joint venture partners. This is expected to enable
the Company to achieve greater visibility internationally, particularly where there is a large Indian diaspora.
The Company intends to establish a new brand segment to cater to these consumers and to take advantage of
other opportunities that may arise as global economic growth continues.

Pursue Strategic Acquisitions and Minority Investments: Radico Khaitan is participating in and
exploring selective strategic acquisitions, joint ventures and minority investments both in India and interna-
tionally to augment its capabilities and broaden its product offering. The Company is also pursuing the
establishment or acquisition of bottling facilities to augment its production and distribution strategies. A
portion of the proceeds of the sale of the Bonds will be deployed towards the Company's continuing to
participate in and explore appropriate acquisitions, joint venture and investment opportunities in India and
internationally.

Corporate Information

Radico Khaitan Limited was originally incorporated in 1943 at Rampur in the state of Uttar Pradesh
under the name The Rampur Distillery & Chemical Company Limited. The name was thereafter changed to
Radico Khaitan Ltd in 1992, ""Radico'' being the abbreviated name of Rampur Distillery Company. It was
later merged into Abhishek Cements Ltd, an associate company, during 2003, pursuant to an order of the
Board for Industrial and Financial Reconstruction (Delhi) dated 30 December 2002, case no. 114/90. Under
the terms of that order, the name of the merged company was changed to Radico Khaitan Limited and the
focus of the business activities, the address of the registered office and the share capital remained that of the
erstwhile Radico Khaitan Limited. The Company's current registered office is located at Bareilly Road,
Rampur, Uttar Pradesh, 244 901, India, tel: °91 59 5235 0601, fax: °91 59 5235 0009. Information contained
on the Company's website http://www.radicokhaitan.com is not, and should not be, construed as part of this
offering circular.

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Summary of the Terms of the Offering of the Bonds


The following is a general summary and should not be relied on as being a complete description of the
terms and conditions of the Bonds. This summary is derived from, and should be read in conjunction with, the
full text of the Terms and Conditions of the Bonds and the Trust Deed constituting the Bonds, which prevail to
the extent of any inconsistency with the summary of the terms set out in this section. Capitalised terms used
herein and not otherwise defined have the respective meanings given to such terms in the detailed Terms and
Conditions of the Bonds.
Issuer ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Radico Khaitan Limited, a public company incorporated in and sub-
sisting under the laws of the Republic of India with limited liability.
The Offering ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ US$40,000,000 unsecured 3.5% convertible bonds due 2011 (the
""Bonds'') subject to an increase of up to an additional US$10,000,000
principal amount pursuant to an option for additional bonds.
Issue Price ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bonds will be issued at 100% of their principal amount.
Issue Date ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26 July 2006.
Maturity Date ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27 July 2011.
Option for Additional BondsÏÏÏÏ The Issuer has granted to the Manager an option, exercisable in whole or
in part, on one or more occasions, solely at the discretion of the Manager
and at any time prior to the date which is 30 days from the date the
Bonds are issued pursuant to the subscription agreement between the
Manager and the Issuer relating to the offering of the Bonds, to purchase
or procure purchasers for an additional US$10,000,000 principal amount
of the Bonds.
Interest Rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bonds will bear interest at a rate of 3.5% per annum payable semi-
annually in arrears on 15 January and 15 July of each year. The first
interest payment shall be made on 15 January 2007.
Redemption at Maturity ÏÏÏÏÏÏÏ Unless previously converted, redeemed or cancelled, the Issuer will
redeem each Bond at 130.3961% of its principal amount on the Maturity
Date.
Status of the Bonds ÏÏÏÏÏÏÏÏÏÏÏ The Bonds will constitute direct, unsubordinated, unconditional and
unsecured obligations of the Issuer and will at all times rank pari passu
and without any preference or priority among themselves. The payment
obligations of the Issuer under the Bonds shall, save for such exceptions
as may be provided by mandatory provisions of applicable law, at all
times rank at least equally with all of its other present and future direct,
unsubordinated, unconditional and unsecured obligations.
Conversion Right ÏÏÏÏÏÏÏÏÏÏÏÏÏ Except during certain Closed Periods, the Bonds are convertible by
holders of the Bonds (""Bondholders'') into fully paid equity shares of the
Issuer with full voting rights with par value Rs.2 per share of the Issuer
(""Shares'') or into cash as per Condition 6.2 of the Terms and Condi-
tions at any time on or after 26 August 2006 (or such earlier date as is
notified to the Bondholders by the Issuer) and prior to the close of
business on 26 June 2011, unless previously redeemed, converted or
cancelled.
Conversion Price ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The conversion price at which the Bonds may be converted into Shares
(subject to adjustment in the manner provided in the ""Terms and
Conditions of the Bonds'') (the ""Conversion Price'') will initially be
Rs.172.5 per Share, with a fixed rate of exchange on conversion of

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Rs.46.0020 • US$1.00. The Conversion Price will be reset downwards


by up to 7.7% of the initial Conversion Price on 26 July 2007 and/or
26 July 2008 (each a ""Reset Date'') if the average Closing Price (as
defined in the ""Terms and Conditions of the Bonds'') of the Shares in
the fifteen consecutive Trading Days (as defined in the ""Terms and
Conditions of the Bonds'') immediately before the Reset Date is less
than the Conversion Price. The Conversion Price may not be reset below
92.3% of the initial Conversion Price.

Adjustment to Conversion
Price ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Conversion Price of the Bonds will be adjusted if certain events
occur after the Issue Date, including upon (i) bonus issues of Shares,
(ii) a free distribution of Shares, (iii) sub-division, consolidations and
reclassification of Shares, (iv) an issuance of rights to acquire Shares,
(v) the issuance of warrants at a discount to the prevailing market price
(vi) the issuance of convertible bonds and exchangeable bonds at below
market price and (vii) the issuance of Shares at below market price. The
Conversion Price will not be adjusted in the event of securities issued by
the Issuer to the promoters to counter the dilution of their holdings from
the issuance of the CCPSs and the conversion of the Bonds until the
maturity of the Bonds following the Original Issue Date (as such term
shall be defined in Condition 9.2).

Mandatory Conversion ÏÏÏÏÏÏÏÏÏ The Bonds may be converted into Shares at the option of the Issuer from
26 July 2009 until 26 July 2011 subject to the Volume-Weighted
Average Price during each of 20 consecutive Trading Days being higher
than 130% of the Conversion Price. Bondholders will receive a minimum
of 130% of the principal amount of the Bonds plus Accreted Value.

Trust DeedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bonds will be issued under a trust deed, to be dated as at on or about
26 July 2006 (the ""Trust Deed'') between the Issuer and The Bank of
New York, London branch.

Redemption at the Option of the


Issuer ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bonds may be redeemed, in whole but not in part, at the option of
the Issuer, at any time on or after 26 July 2009 and prior to 27 July 2011,
subject to satisfaction of certain conditions, at the Early Redemp-
tion Amount if the Closing Price translated into US Dollars at the Fixed
Exchange Rate of the Shares for each of 25 consecutive Trading Days
immediately prior to the date on which notice of such redemption is
published, is at least 130% of the Early Redemption Amount. The Bonds
may be redeemed, in whole but not in part, at any time at the option of
the Issuer, subject to the satisfaction of certain conditions, at the Early
Redemption Amount if 10% or less in aggregate principal amount of the
Bonds issued (including such principal amount of the Bonds issued
pursuant to the Option for Additional Bonds) remains outstanding.

Redemption for TaxationÏÏÏÏÏÏÏ The Bonds may be redeemed at the option of the Issuer, in whole but not
in part, subject to the satisfaction of certain conditions, including
obtaining Reserve Bank of India (""RBI'') approval, at the Early Re-
demption Amount on the date fixed for redemption in the event of
certain changes affecting taxes as specified in ""Terms and Conditions of
the Bonds Ì Redemption, Purchase and Cancellation Ì Redemption
for Taxation Reasons''.

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Redemption of Bonds in the


Event of DelistingÏÏÏÏÏÏÏÏÏÏÏ To the extent permitted by applicable law, unless the Bonds have been
previously redeemed, cancelled or converted, in the event that the Shares
cease to be listed or admitted to trading on the BSE or the NSE
(a ""Delisting''), each Bondholder shall have the right, at such Bond-
holder's option, to require the Issuer to redeem all of such Bondholder's
Bonds at the Early Redemption Amount. See ""Terms and Conditions of
the Bonds Ì Redemption, Purchase and Cancellation Ì Redemption of
Bonds in the Event of Delisting''.

Redemption of Bonds in the


Event of Change of Control ÏÏ To the extent permitted by applicable law, unless the Bonds have been
previously redeemed, cancelled or converted, each Bondholder shall have
the right, at such Bondholder's option, upon the occurrence of certain
Change of Control events, to require the Issuer to redeem all of such
Bondholder's Bonds at the Early Redemption Amount. See ""Terms and
Conditions of the Bonds Ì Redemption, Purchase and Cancellation Ì
Redemption of Bonds in the Event of Change of Control''.

RBI Approval Required for


Redemption ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Under current regulations of the RBI applicable to convertible bonds,
the Issuer will require the prior approval of the RBI before providing
notice for or effecting any redemption or repurchase of the Bonds prior to
the Maturity Date.

Form and Denomination of


Bonds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bonds will be issued in registered form in denominations of
US$10,000 each or integral multiples thereof. The Bonds will be repre-
sented by the Global Certificate which on the Issue Date will be
deposited with, and registered in the name of a nominee of a common
depository for Euroclear and Clearstream, Luxembourg (collectively, the
""Clearing Systems'').

Share Ranking ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Shares issued upon conversion of the Bonds will be fully paid with full
voting rights and will rank pari passu with the Shares in issue on the
relevant Conversion Date. Shares shall not be entitled to any rights the
record date for which preceded the relevant Conversion Date. See
""Description of the Shares Ì Dividends'' and ""Terms and Conditions of
the Bonds Ì Conversion''.

Market for the Shares, Listing


and Share Ownership
Restrictions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The outstanding Shares of the Issuer are listed on the BSE and the NSE,
and an application has been made to list the Shares issuable upon
conversion of the Bonds on the BSE and the NSE. There are certain
restrictions applicable to investments in shares and other securities of
Indian companies, including the Shares, by persons who are not residents
of India. See ""Appendix B: Foreign Investment and Exchange
Controls''.

Clearance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bonds will be cleared through the Clearing Systems. The Clearing
Systems each hold securities for their customers and facilitate the
clearance and settlement of securities transactions by electronic book-
entry transfer between their respective account holders.

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Global Certificate ÏÏÏÏÏÏÏÏÏÏÏÏÏ For as long as the Bonds are represented by the Global Certificate, the
Global Certificate is held by a common depository for the Clearing
Systems, payments of principal and premium in respect of the Bonds
represented by the Global Certificate will be made against presentation
for endorsement and, if no further payment falls to be made in respect of
the Bonds, surrender of the Global Certificate to or to the order of the
Paying Agent for such purpose. The Bonds which are represented by the
Global Certificate will be transferable only in accordance with the rules
and procedures for the time being of the relevant Clearing System.
Indian Taxation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Payment of premium and interest (if any) on the Bonds made by the
Issuer will be made after deduction or withholding in respect of Indian
taxation to the extent required by law. The Issuer will gross up the net
taxable amount and will be required to account separately to the Indian
tax authorities for any withholding taxes applicable to payments attribu-
table to such tax except as provided in Condition 10 of the Terms and
Conditions. The Bonds will have the benefit of the tax concessions
available under the provisions of Section 115AC of the Income Tax Act,
as amended, of India. Under current Indian laws, tax is not payable by
the recipients of dividends on Shares.
Selling Restrictions ÏÏÏÏÏÏÏÏÏÏÏ There are restrictions on the offer, sale and/or transfer of the Bonds in,
among others, the United Kingdom, the United States, India, Switzer-
land, Singapore, France, Hong Kong and Germany. For a description of
the selling restrictions on offers, sales and deliveries of the Bonds, see
""Subscription and Sale''.
Listing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Application has been made for the listing of the Bonds on the Singapore
Stock Exchange. The Bonds will trade on the Singapore Stock Exchange
in a minimum lot size of US$200,000 so long as any of the Bonds remain
listed on the Singapore Stock Exchange. The Company has applied for
the in-principle approval for the Shares issuable upon conversion of the
Bonds to be listed on the Indian Exchanges.
Trustee ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bank of New York, London branch.
Principal Agent, Paying Agent,
Conversion Agent and Transfer
Agent ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bank of New York, London branch.
Registrar ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bank of New York.
Governing Law ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The Bonds will be governed by, and construed in accordance with,
English law.
Use of Proceeds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ The net proceeds of the issue of the Bonds (after the deduction of fees,
commissions and expenses) are expected to be approximately
US$38.4 million and will be used by the Issuer as set out in ""Use of
Proceeds''. The use of the net proceeds shall be in accordance with the
end-use restrictions specified by the RBI and the Indian Government.
Bond Identifiers ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ ISIN: XS0257326933 Common Code: 025732693.
Government of India ApprovalsÏÏ The Issue of Foreign Currency Convertible Bonds and Ordinary Shares
(through the Depositary Receipt Mechanism) Scheme, 1993, as
amended, the Foreign Exchange Management (Transfer or Issue of any
Foreign Security) Regulations, 2000, as amended, and the RBI circulars
dated 1 July 2005 and 1 August 2005, respectively, permit Indian

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companies to issue foreign currency convertible bonds above


US$20 million and up to US$500 million under the ""automatic route''
(i.e. without the prior approval of the RBI), subject to compliance with
certain conditions specified therein. The Issuer is undertaking the pre-
sent issue of the Bonds in accordance with the guidelines and regulations
described above.

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RISK FACTORS
An investment in the Bonds involves risks. Prospective investors should consider carefully all of the
information contained in this offering circular, especially the following, in evaluating the risks associated with
any investment in the Bonds. Any potential investor in or purchaser of the Bonds should pay particular
attention to the fact that the Company is governed by Indian legal and regulatory requirements which may
differ from those prevailing in other countries. Prospective investors should also note that certain of the
statements in this offering circular, including information with respect to the Company's plans and strategy,
constitute ""forward-looking statements'' as discussed in the section entitled ""Special Note Regarding Forward-
Looking Statements''.

Risks Related to Investments in Indian Companies

Political instability could adversely affect business and economic conditions in India generally and the
Company's business, results of operations and financial condition in particular.
Radico Khaitan Limited is an Indian company and all of its assets and employees are located in
India. Consequently, its financial performance and the market price of its Shares and the Bonds will be
affected by changes in exchange rates and controls, interest rates and Governmental policies, including
taxation policies, as well as political, social and economic developments affecting India.
During the past decade, the Indian Government has generally pursued policies of economic
liberalisation, including significantly relaxing restrictions on the private sector. Nevertheless, the role of the
Indian central and state governments in the Indian economy as producers, consumers and regulators has
remained significant. The general election in 2004 resulted in no party winning an outright majority and a
coalition government was formed. The Company can make no assurances that these liberalisation policies will
continue in the future. Government corruption, scandals, delays, irregularities and protests against privatisa-
tion could slow down the pace of liberalisation and deregulation. The rate of economic liberalisation could
change, and specific laws and policies affecting foreign investment, currency exchange rates and other matters
affecting investment in the Company's securities could change as well. A significant change in India's
economic liberalisation and deregulation policies could materially adversely affect business and economic
conditions in India generally and the Company's business, results of operations and financial condition in
particular.

Regional conflicts or natural disasters in South Asia and elsewhere could adversely affect the Indian
economy, disrupt the Company's operations and cause the Company's business to suffer.
South Asia has from time to time experienced instances of civil unrest and hostilities among
neighbouring countries, notably involving India and Pakistan. In recent years, military confrontations between
India and Pakistan have occurred in Kashmir and disputed border regions. Military activity or terrorist attacks
in the future could influence the Indian economy by disrupting communications and making travel more
difficult, and such political tensions could create a perception that investments in Indian companies involve
higher degrees of risk. This, in turn, could have a material adverse effect on the market for securities of Indian
companies, including the Company's Bonds and Shares and on the market for the Company's products. In
December 2004, certain parts of India were severely affected by a tsunami triggered by an earthquake in the
Indian Ocean. Although the Company's operations were not affected by the disaster, the Company cannot
provide any assurance that this will not occur in the event of future disasters.

You may be subject to Indian taxes arising out of capital gains on the sale of the Company's Shares
following your exercise of conversion rights.
Sale of the Shares issued on conversion of the Bonds, whether to an Indian resident or to a person
resident outside India and whether in India or outside India, would be subject to tax in India. Under
applicable Indian laws, a sale of Shares may be chargeable to a transaction tax and/or tax on income by way of
capital gains in India. See ""Taxation''.

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Investors are advised to consult their own tax advisers and to consider carefully the potential tax
consequences of an investment in the Bonds or Shares under the laws of India or any other applicable
jurisdiction.

The Company's ability to acquire companies located outside India depends on the approval of the RBI,
and a failure to obtain such approvals could negatively impact the Company's business and financial
prospects.
Foreign exchange laws in India presently permit Indian companies to acquire or invest in foreign
companies without any prior Governmental approval if the transaction amount does not exceed 200% of the
net worth of the Indian company as at the date of its most recent audited balance sheet. Acquisitions in excess
of the 200% net worth threshold require prior RBI approval. It is possible that a required approval from the
RBI may not be obtained. The Company's failure to obtain approvals for acquisitions of companies located
outside India in the future may restrict the Company's international growth, which could adversely affect the
Company's business and financial prospects.

The ability to sell Shares to a resident of India may be subject to certain pricing restrictions.
A person resident outside India (including a non-resident Indian) is generally permitted to transfer
by way of sale the shares held by him to any other person resident in India without the prior approval of the
RBI or the Foreign Investment Promotion Board (""FIPB''). However, it should be noted that the price at
which the aforesaid transfer takes place must comply with the pricing guidelines prescribed by the RBI in its
Circular dated 4 October 2004. The guidelines stipulate that where the shares of an Indian company are
traded on a stock exchange:
(i) the sale may be at the prevailing market price on the stock exchange if the sale is effected
through a merchant banker registered with the Securities and Exchange Board of India
(""SEBI'') or through a stock broker registered with the stock exchange; or
(ii) if the transfer is other than that referred to above, the price shall be arrived at by taking the
average quotations (the average of the daily high and low) for one week preceding the date of
application with a 5% variation.

There may be less information available on the Company in Indian securities markets than in securities
markets in developed countries.
There is a difference between the level of regulation and monitoring of the Indian securities markets
and the activities of investors, brokers and other participants and that of markets in the European Union, the
United States and other developed economies. SEBI is responsible for approving disclosure and other
regulatory standards for the Indian securities markets. SEBI has issued regulations and guidelines on
disclosure requirements, insider trading and other matters. There may, however, be less publicly available
information about Indian companies than is regularly made available by public companies in developed
economies. Consequently, an investment in an Indian company, such as Radico Khaitan Limited, may be
riskier than an investment in a European or American company if investors assume that Indian markets are
subject to the same level of regulation and make available the same level of information as Western markets.

Volatile conditions in the Indian securities market may affect the price or liquidity of the Bonds and the
Shares.
The Indian securities markets are smaller and can be more volatile than securities markets in more-
developed economies. The Indian Stock Exchanges have in the past experienced substantial fluctuations in the
prices of listed securities and the price of the Company's shares has also been volatile. For example, the
Company's stock price on the BSE ranged from a high of Rs.174.90 (approximately US$3.92) in the first
quarter of the 2006 calendar year to a low of Rs.120.35 (approximately US$2.70) in the second quarter of the
2006 calendar year until 29 June 2006. As at 29 June 2006, the closing price of the Shares on the BSE and the
NSE was Rs.146.2 and Rs.145.9, respectively (approximately US$3.28 and US$3.27, respectively).

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Indian stock exchanges have also experienced problems that have affected the market price and
liquidity of the securities of Indian companies. These problems have included temporary exchange closures,
broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock
exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price
movements and margin requirements. Further, from time to time, disputes have occurred between listed
companies and stock exchanges and other regulatory bodies, which in some cases may have had a negative
effect on market sentiment. Similar problems could happen in the future and, if they do, they could affect the
market price and liquidity of the Shares and Bonds.

Any downgrading of India's debt rating by an international rating agency could have a negative impact on
the Company's business.
Any adverse revisions to India's credit ratings for domestic and international debt by international
rating agencies may adversely impact the Company's ability to raise additional financing, and the interest rates
and other commercial terms at which such additional financing is available. This could have a material
adverse effect on the Company's business and future financial performance, its ability to obtain financing for
capital expenditures and the trading price of the Bonds or the Shares.

You may not be able to enforce a judgment of a foreign court against the Company.
Radico Khaitan Limited is a limited liability company incorporated under the laws of India. All of the
Company's Directors and its executive officers and some of the experts named in this offering circular are
residents of India and nearly all of the Company's assets are located in India.
India is not a party to any international treaty in relation to the recognition or enforcement of foreign
judgments; however, Section 44A of the Code of Civil Procedure 1908, provides for execution of decrees
passed by courts in reciprocating territories, such territories having been declared by the Government by
notification in the Indian Official Gazette. If a decree is passed by a court of a non-reciprocating country, then
that foreign judgment if conclusive under Section 13 of the Code of Civil Procedure 1908 can only be enforced
by filing a suit upon that judgment. Section 13 of the Code of Civil Procedure 1908 governs the recognition
and enforcement of foreign judgments. The said Section 13 lists certain exceptions where foreign judgment
cannot be held to be conclusive. This provision provides that foreign judgments shall be conclusive regarding
any matter directly adjudicated upon except where:
‚ the judgment has not been pronounced by a court of competent jurisdiction;
‚ the judgment has not been given on the merits of the case;
‚ it appears on the face of the proceedings to be founded on an incorrect view of international law or a
refusal to recognise the law of India in cases where such law is applicable;
‚ the proceedings in which the judgment was obtained were opposed to natural justice;
‚ the judgment has been obtained by fraud; or
‚ the judgment sustains a claim founded on a breach of any law in force in India.

Significant differences exist between Indian GAAP and IFRS, which may be material to the financial
information prepared and presented in accordance with Indian GAAP contained in this document.
As stated in the reports of the Company's auditors included in this offering circular, the audited
financial statements and other financial information included in this offering circular, unless otherwise
specified, are prepared and presented in conformity with Indian GAAP consistently applied during the periods
stated in those reports, except as otherwise provided therein, and no attempt has been made to reconcile
certain of the financial information given in this offering circular to any other principles or to base it on any
other standards. The IFRS financial statements included herein, for example, do not cover all periods for
which Indian GAAP financial statements are included. Indian GAAP differs from accounting principles and
auditing standards with which prospective investors may be familiar in other countries, such as IFRS.

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Significant differences exist between Indian GAAP and IFRS, which may be material to the financial
information prepared and presented in accordance with Indian GAAP contained in this offering circular. The
financial statements set forth herein and prepared in accordance with IFRS have not been audited or opined
on by any firm of independent auditors. In making an investment decision, investors must rely upon their own
examination of the Company, the terms of the offering of the Bonds and the financial information contained in
this offering circular.

Risks Related to the Bonds and the Company's Trading Market


There is no prior market for the Bonds and no assurance one will develop to provide liquidity for the
Bonds.
The Bonds are a new issue of securities for which there is currently no trading market. The Company
will apply to list the Bonds on the Singapore Stock Exchange. There is no assurance of such listing being
obtained. No assurance can be given that an active trading market for the Bonds will develop or as to the
liquidity or sustainability of any such market, the ability of Holders to sell their Bonds or the price at which
Holders of the Bonds will be able to sell their Bonds. If an active market for the Bonds fails to develop or is not
sustained, the trading price of the Bonds could fall. If an active trading market were to develop, the Bonds
could trade at prices that may be lower than the initial offering price of the Bonds. Whether or not the Bonds
will trade at lower prices depends on many factors, including: (i) prevailing interest rates and the market for
similar securities; (ii) general economic and political conditions and the condition of the Indian industry; and
(iii) the Company's financial condition, financial performance and future prospects.

The Company may not be in a position to meet its obligations to pay or redeem the Bonds.
In certain circumstances, Bondholders may require the Company to redeem all or a portion of the
Bonds, and the Company would be required to pay all amounts then due under the Bonds. The Company may
not be able to make required payments in connection with the Bonds if the requisite regulatory approval is not
received or if the Company does not have sufficient cash flows for those payments. In particular, upon a
change of control of the Company or a Delisting of the Shares from the BSE, Bondholders may require the
Company to repurchase all (or a portion of) such Bondholders' Bonds. Following the acceleration of the
Bonds upon an event of default, the Company would be required to pay all amounts then due under the Bonds
which it may not be able to meet for reasons described elsewhere in these risk factors.

Bondholders will face the risk of fluctuations in the price of the Shares.
The market price of the Bonds is expected to be affected by fluctuations in the market price of the
Shares, and it is not possible to predict whether the price of the Shares will rise or fall. Trading prices of the
Shares will be influenced by, among other things, the Company's financial position and the results of
operations and political, economic, financial and other factors. Any decline in the price of the Shares may
have an adverse effect on the market price of the Bonds.

Bondholders' equity stakes and potential equity stakes in the Company could become diluted in the future.
The promoters currently hold approximately 57.54% of the Shares issued by Company. When the Bonds
are converted, promoters' stakes in the Company will be diluted. In order to maintain their holdings, the Issuer
will issue securities to the promoters to counter the dilution of their holdings from the conversion of the Bonds.
Regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 as amended
(""Regulation 10'') provides that no acquirer is permitted to acquire shares or voting rights through market
purchases and preferential allotment pursuant to a resolution passed under section 81 of the Companies Act
1956 or any other applicable law which (taken together with shares or voting rights, if any, held by such
acquirer or by persons acting in concert with the acquirer) would entitle such to exercise more than 55% of the
voting rights in a company. Upon the issuance of those securities to the promoters the Bondholders' equity
stakes and potential equity stakes in the Company may become diluted. See ""Principal Shareholders'' for
further details.

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Concurrently with the offering of the Bonds, the Issuer is entering into a subscription agreement with the
Manager pursuant to which it will issue securities convertible into the equity shares of the Issuer. Upon such
conversion, the Bondholders' equity stakes and potential equity stakes in the Company may become diluted.
See ""Description of the Shares Ì Issue of CCPSs'' for further details.

Holders of the Bonds will have no rights as Shareholders until they acquire the Shares upon conversion
of the Bonds.

Unless and until they acquire the Shares upon conversion of the Bonds, the holders of the Bonds will
have no rights with respect to the Shares, including any voting rights or rights to receive any regular dividends
or other distributions with respect to the Shares. Holders of Bonds who acquire the Shares upon the exercise
of a Conversion Right will be entitled to exercise the rights of holders of the Shares only as to actions for
which the applicable record date occurs after the Conversion Date.

There are limitations on the ability of Bondholders to exercise conversion rights.

The Bonds are convertible into Shares at the option of the holders pursuant to the terms of the Bonds.
Holders of the Bonds will be able to exercise their conversion right only within the Conversion Period specified
in the Bonds and will not be able to exercise their conversion right during the Closed Periods (as defined in the
""Terms and Conditions of the Bonds''). As a result, holders of Bonds cannot convert for 40 days from the date
of the Closing. In addition, Conversion Rights may not be exercised during certain other limited periods,
including (i) the date falling 20 days prior to the date of the Company's annual general shareholders' meeting
and ending on the date of that meeting, (ii) the date falling 30 days prior to an extraordinary shareholders'
meeting and ending on the date of that meeting, (iii) the date that the Company notifies the BSE and the
NSE of the record date for the determination of the shareholders entitled to receive dividends, the
subscription of shares due to capital increase or other benefits, and ending on the record date for the
distribution or allocation of the relevant dividends, rights and benefits or (iv) for such period as the Company
determines in accordance with Indian law applicable from time to time that the Company is required to close
its stock transfer books. As such, a Bondholder's ability to exercise conversion rights will be restricted during
these periods.

The Bonds and the Shares are subject to transfer restrictions.

The Bonds and the Shares are being offered in transactions not required to be registered under the
Securities Act. Therefore, the Bonds and the Shares may be transferred or resold only in a transaction
registered under or exempt from the registration requirements of the Securities Act and in compliance with
any other applicable securities laws.

Fluctuations in the exchange rate between the Rupee and the US dollar may have a material adverse
effect on the value of the Bonds in US dollar terms.

Although the principal amount of the Bonds is denominated in US dollars, the Shares are listed on
the Indian Exchanges, on which the Shares are quoted and traded in Rupees. As a result, fluctuations in the
exchange rate between the Rupee and the US dollar will affect, among other things, the secondary market
price of the Bonds and the US dollar equivalent of the Shares received upon conversion of the Bonds.

The exchange rate between the Rupee and the US dollar has changed substantially in the last two
decades and could fluctuate in the future. In recent years, the Rupee has appreciated against the US dollar. As
per the noon buying rate in the City of New York for cable transfers in Indian Rupees as certified for customs
purposes by the Federal Reserve Bank of New York, the Rupee appreciated from a rate of Rs.46.5669 •
US$1.00, an average for 2003, to a rate of Rs.43.6880 • US$1.00, an average for the third quarter of 2005.
The exchange rate on 31 March 2006 was Rs.44.6225 • US$1.00.

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The imposition of foreign exchange restrictions may have an adverse effect on foreign investors' ability to
acquire Indian securities, including the Bonds and Shares, or repatriate the interest, dividends or sale
proceeds from those securities.
The Indian Government may impose foreign exchange restrictions in certain emergency situations,
including situations where there are sudden fluctuations in interest rates or exchange rates, where the Indian
Government experiences extreme difficulty in stabilising the balance of payments or where there are
substantial disturbances in the financial and capital markets in India. These restrictions may require foreign
investors to obtain the Indian Government's approval before acquiring Indian securities or repatriating the
interest or dividends from those securities or the proceeds from the sale of those securities. No assurance can
be given that these restrictions will not adversely affect, among other things, the secondary market price of the
Bonds.

Future issues or sales of Shares may significantly affect the trading price of the Bonds or the Shares.
The market price of the Bonds could decline as a result of sales of a large number of Shares on an
Indian stock exchange or elsewhere after the Offering, or the perception that such sales could occur. Such
sales also might make it more difficult for the Company to issue Shares in the future at a time and at a price
that the Company deems appropriate or favourable. Immediately after the closing of the Offering, the
Company will have an aggregate of up to 96,447,940 ordinary shares outstanding and fully subscribed.

The Bonds are unsecured making them a riskier investment than if they were secured.
The Bonds are unsecured and will rank pari passu, with no preference among Bondholders, with all
the Company's other outstanding unsecured obligations, present and future, subject to provisions of law
relating to creditors' rights generally.

No payment of principal or interest on the Bonds may be made unless the requisite approvals of the RBI
have been obtained in the event of early redemption of the Bonds.
The terms and conditions of the Bonds provide that no payments of principal or interest may be made
if requisite approvals of the RBI have not been obtained in the event of early redemption of the Bonds prior to
Maturity Date or any other applicable Indian laws and restrictions have not been complied with, which
approvals the Company will use reasonable endeavours to obtain, but the Company will not be in default for
not making payment if the requisite approvals have not been obtained.

Indian dividend taxes or surcharges could negatively affect the Company's tax liability.
The Finance Act, 2005 has fixed the tax on dividends declared, distributed or paid by Indian
companies at 12.5%, and levied a surcharge of 10% on tax and education cess of 2% on tax and surcharge. The
dividends are taxable in the hands of the companies at the rates applicable to them. The corporate tax rates
presently applied to the income of the Company in India is 30% plus a surcharge of 10% of such tax and
education cess of 2% on tax and surcharge, aggregating to 33.66%. If the Company declares or distributes a
dividend, it is required to pay additional income tax at a rate of 14.025% (including a surcharge of 10% and
education cess of 2% on tax and surcharge) on the dividend so declared or distributed. Any future changes in
tax rates in India on income or the imposition of any additional taxes or surcharges could negatively affect the
Company's tax liability.

There may be a delay from when a holder decides to convert Bonds into Shares until the time the
resulting Shares are approved to be listed and traded on the Indian Exchanges and, therefore, it is
possible that the share price may fluctuate during that period.
There will be a time gap of at least 40 days from the date on which a Bondholder advises the Paying
Agent and Conversion Agent of the intention to convert the Bonds into Shares and the date on which the
Indian Exchanges grant final approval for the Shares to be listed and traded. Within this gap, the price of the
Shares may fluctuate, which may have an adverse effect on the price that the Bondholder anticipated to

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receive for the transfer of Shares. Further, any trade of the Shares will have to be made on a spot delivery basis
and the trade will have to be settled within the next settlement cycle.

Certain of the Company's lenders and other contractual parties may not have consented to the issue of
the Shares.
The Company is of the view that the terms of certain of its existing loan facilities and other
agreements do not require it to seek the consent of the parties to those agreements to issue the Shares.
However, certain of these parties may take a different view and in the future seek to assert such a requirement.
While the Company would resist any such assertion, in the event that a competent court or tribunal finds such
consents to have been necessary, it is likely that the Company would be considered to be in breach of such
agreements, and in the case of lending agreements, be required to repay outstanding loan amounts to relevant
lenders. The Company estimates that the maximum amount it would be required to pay in the case of loans
would amount to approximately Rs.150 million. If the Company were ordered to prematurely repay the loan, it
could have an adverse effect on the business.

The Company's landlord of the property on which its Uttar Pradesh facility is situated may not have
consented to the Issue of the Shares.
The Company has stated that certain of its existing leases may require the consent of the parties to
those agreements. However, the Company is unlikely to obtain such consent prior to the Offering of the
Bonds. Certain of these parties may seek in the future to assert such a requirement. While the Company would
resist any such assertion of a requirement to have obtained such parties' consents, in the event that a
competent court or tribunal finds such consents to have been necessary, it is likely that the Company would be
considered to be in breach of such leases and may be required to vacate the premises. If the Company were
ordered to prematurely vacate the premises, it could have an adverse effect on the Company's financial
condition, financial performance and future prospects.

Risks Related to the Company's Business


The Company's future operating results are difficult to predict and may fluctuate.
The Company's operating results may fluctuate in the future due to a number of factors, many of
which are beyond the Company's control. The Company's results of operations during any fiscal year and from
period to period are difficult to predict. The Company's business, results of operations and financial condition
may be materially adversely affected by:
‚ changes in growth and demand for the Company's products in the Indian and global markets;
‚ a decrease in international and domestic prices for the Company's products;
‚ an increase in interest rates at which the Company can raise debt financing;
‚ adverse fluctuations in the exchange rate of the Rupee versus major international currencies,
including the US dollar;
‚ an increase in Indian import tariffs or in domestic duties;
‚ increasing transportation costs, including freight to key export markets, or the non-availability of
transportation due to strikes, shortages or for any other reason;
‚ strikes or work stoppages by the Company's employees;
‚ changes in Government policies affecting the Company's industries in India or globally; and
‚ accidents, natural disasters, outbreaks of diseases or heavy rains.
Due to these factors, Radico's past performance should not be relied upon to predict the Company's
future performance.

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The Company does not have long-term contracts with its buyers.
Purchases by the Company's customers are mainly through purchase orders on a short-term basis or
on a fixed delivery basis. It does not have any long-term contracts with any of its customers and there is no
guarantee that its present customers will continue to procure orders from it. Any loss of its major customers
arising out of competition or from cheaper sources can lead to reduced margins and the Company's results of
operations may be affected.

Depreciation of the Rupee against foreign currencies may have a material adverse effect on the
Company's results of operations.
The Company may have long-term foreign currency exposure relating to its external commercial
borrowings from time to time. See ""Management's Discussion and Analysis of Financial Condition and
Results of Operations Ì Indebtedness''. The Company may also have short-term foreign currency exposure
relating to letters of credit for imports and exports such exposure will be increased, following the issue of the
Bonds, by a further US$70 million. The Company is exposed to foreign exchange risks by virtue of being an
exporter of its products and by maintaining overseas production, marketing and distribution ventures.
Although the Company has a policy of hedging any foreign currency exposure, given the expansion of its
export business and its international production and distribution interests, it may not be able to hedge its
exposure on suitable terms or adequately predict the necessary level of hedging. Depreciation of the Indian
rupee against the US dollar may increase the Indian rupee cost to the Company of servicing and repaying its
foreign currency borrowings and other financing arrangements.

Risks Related to the Company's Manufacturing Facilities


The Company's business is dependent on its manufacturing facilities. The loss or shutdown of operations
at any of the manufacturing facilities may have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company's principal manufacturing facilities are subject to operating risks, such as the
breakdown or failure of equipment, power supply or processes, performance below expected levels of output or
efficiency, obsolescence, labour disputes, strikes, lock-outs, the continued availability of the services of its
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 the Company's operating results. The Company carries out planned shutdowns of its plants for
maintenance. Although it takes precautions to minimise the risk of any significant operational problems at its
facilities, its business, financial condition and results of operations may be adversely affected by any disruption
of operations at its facilities, including due to any of the factors mentioned above.

The Company maintains a grain-based distillery, which has only recently become fully operational.
The Company maintains a grain facility which was completed in January 2006 but did not become
fully operational until April 2006. Although the facility is currently fully operational, there can be no
guarantee that it will not suffer occasional disruptions. In addition, the Company anticipates that the facility
will enable it to increase its presence in the market for grain-based spirits, and there can be no assurance that
there will be sustainable demand to offset the investment in the facility. This could have an adverse effect on
the business and the results of operations of the Company.

Most of the Company's manufacturing facilities are located in Rampur, Uttar Pradesh.
The majority of the Company's existing manufacturing facilities are located in Rampur, Uttar
Pradesh. Many companies have set up their manufacturing facilities in Uttar Pradesh and many more
companies are in the process of doing the same. Over time this could create pressure on infrastructural
facilities and the business logistics in Uttar Pradesh. While the Company does not believe that such industrial
growth will create pressure on power and labour availability, there can be no guarantee that such shortages will
not occur. These factors may have a material adverse effect on the Company's business.

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Changes in technology may impact the Company's business by making its plants less competitive.
Advancements in technology may require the Company to make additional capital expenditure for
upgrading its manufacturing facilities or may make its competitor's plants more competitive. If the Company
is not able to adequately respond to such technological advancement in time, its competitiveness may be
adversely affected.

Risks Related to the Company's Trading Activities


The Company relies on third-party suppliers of raw materials and is sensitive to fluctuations in price and
availability of such raw materials.
In order to manufacture its products the Company requires raw materials, including, grain, malt,
molasses and water. The Company purchases such materials on a purchase order basis and, where possible,
relies on a wide range of suppliers to mitigate its reliance on any one supplier. However, there can be no
guarantee that the Company will be able to maintain its diversity of suppliers. Additionally, the prices of the
Company's primary raw materials are volatile and fluctuate based on a number of factors outside the
Company's influence, including the vagaries of nature, overall demand, manufacturing capacity, cultivation
area and the price of key feedstocks for raw materials. The Company estimates that raw materials comprise
approximately 44% of its production costs. The Company does not have any long-term price guarantees with
its raw materials suppliers although it seeks to negotiate prices in advance for fixed periods. There can be no
assurance that the price of the Company's raw materials will not increase in the future or that the Company
will be able to pass on such increases to its customers. The Company's failure to achieve corresponding sales
price increases in a timely manner, sales price erosion without a corresponding reduction in raw materials
costs, a significant shortage of supply of these goods, delays in availability or any failure to renegotiate
favourable raw materials supply contracts are all factors that could have a material adverse effect on the
Company's business, financial condition and results of operations.

The cost of molasses could fluctuate and alternative uses of molasses could increase costs.
The cost of molasses has been subject to fluctuations in the past and there is no guarantee that it will
not continue to see fluctuations in the future. These fluctuations are related, at least in part, to the supply of
and demand for sugar cane. Sugar cane production varies greatly from state to state, and thus the availability
and costs varies on a per-state basis. In addition, the import levies imposed when sugar cane is transported into
a different state, combined with the volume limits on total export from the state of origination, contribute
further to the price of molasses. The Company is fortunate to have operations in the sugar-producing belt of
Uttar Pradesh; however, like other members of the liquor industry, the high level of regulation and taxation
related to the transport of materials between states increases costs. There is no guarantee that such regulation
and taxation will not increase, and any such increase could have an adverse effect on the Company's business.
In addition, the Indian Government recently permitted the use of 5% ethanol in petrol, and molasses can be
used to produce ethanol. Since there are tax benefits to producing molasses-derived ethanol over using
molasses for IMFL, there could be an increase in the cost of molasses for the production of liquor. The
Company, like its competitors in the liquor industry, will suffer an adverse impact on its costs of operations if
molasses costs increase.

The Company relies on third parties to bottle its products.


As at 31 March 2006, a significant proportion of the sales of the Company's IMFL own-branded
products were bottled and distributed through Contracted Bottling Units. The Company relies on its
arrangements with these third parties, particularly in locations where it does not maintain its own facilities, to
reach wholesalers and retailers. The Company's contracts with its third-party bottlers are for an average term
of three years and bottlers are required to keep the Company's proprietary information confidential. However,
if the bottling companies were to terminate or significantly alter their arrangements with the Company, it
could have an adverse impact on the results of operations.

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The Company relies on third-party providers of its packaging, and such costs are considerable and could
increase.
The Company relies on third-party vendors to supply packaging and is currently seeking to lower its
costs for such packaging. Additional costs related to packaging include expenditures related to labelling,
bottling and boxing the Company's products.
The Company uses tamper-resistant ""guala'' caps on its bottles to help protect against counterfeiting.
There is only one company in India, Guala Closures India Private Limited, which manufacturers these caps. If
this company ceased or significantly altered their trading arrangements with the Company, the Company's
costs of operations could increase. Any such increase would have an adverse affect on the financial condition
of the Company's business.

The Company is dependent upon consumer preferences and spending habits with regards to liquor
products.
The levels and patterns of consumer preferences and spending habits in relation to liquor products in
India are subject to change due to a number of factors, including the general state of the economy and
consumer income levels as well as the social perception of alcohol consumption and alcohol-related health
issues. A significant change in such preferences and spending patterns could have an adverse impact on the
Company's results of operations.

The seasonality of the liquor industry requires the Company to predict demand and build up inventory
accordingly.
The liquor industry is characterised by seasonal demands for its products. Demand is highest during
the months of November through January. Accordingly, the Company must plan its annual production levels
based on its predictions of demand, including a build-up of inventory prior to peak sales periods. The Company
makes these predictions from its own market assessments as well as sales targets provided by its customers.
However, if the Company were to make an inaccurate prediction of such demands, it could have an adverse
effect on the business.

Key Persons, Significant Shareholders, Related Party Transactions and Restricted Covenants

The success of the Company's business is substantially dependent upon the services of a few management
personnel, the loss of any of whom could adversely affect the Company's business.
The Company has built a team of experienced senior professionals to oversee the operations and
growth of its business, including its Chairman, a Managing Director, a President of Finance, a President of
Sales and Marketing and certain other members of senior management. The Company's success is
substantially dependent upon the expertise and services of these members of the management team. The loss
of the services of such persons could have an adverse effect on the Company's business, results of operations
and financial condition.

Significant shareholders of and lenders to the Company will continue to have considerable influence over
the Company's business.
The promoters, through various investment companies, currently have an equity holding of 57.54%.
The Company's promoters have, and will continue to have, considerable influence over the Company's
business and may take actions that do not reflect the will or best interests of the other shareholders, or the best
interests of the Company.
The Company has entered into various financing arrangements that grant the lenders certain rights to
determine how the Company is operated. Most of these financings are secured by substantially all of the
movable and immovable assets of the Company. Pursuant to certain of these agreements, the Company
requires the consent of the lenders to undertake significant actions, including, among other things, to assume

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additional debt, alter of the capital structure, change the beneficial ownership of or control of the Company,
enter into any merger/amalgamation, invest in new projects, transfer or change the key managerial personnel,
change the constitutional documents, declare or pay dividends, etc. There can be no assurance that lenders will
grant the Company any required consents on time or at all. Failure to obtain such consents may lead to the
termination of credit facilities and the acceleration of all amounts due under the relevant facilities.

The Company may face conflicts of interest in transactions with related parties.

Certain decisions concerning the Company's operations or financial structure may present conflicts of
interest among its controlling shareholder(s), other shareholders, directors, executive officers and the holders
of the Bonds and the Shares. Commercial transactions in the future between the Company and related parties
could result in conflicting interests. The Company's shareholders, directors and executive officers may have an
interest in pursuing transactions which, in their judgment, enhance the value of their equity investment, even
though such transactions may involve risks to the holders of the Bonds and the Shares. There can be no
assurance that the Company's directors and executive officers will be able to address these conflicts of
interests or others in an impartial manner.

The Company's Involvement in Disputes and Other Litigation

There are various legal proceedings and disputes against the Company.

The Company is party to various legal proceedings before judicial and quasi-judicial authorities.
Some of these proceedings involve potential substantial liability for the Company and could materially and
adversely affect its financial condition, results of operations and ability to meet its obligations under the Bonds.
Further details concerning the legal proceedings against the Company are set out in the chapter on Legal
Proceedings. See ""Business Ì Legal Proceedings''.

Certain key personnel of the Company may be subject to criminal proceedings on behalf of the Company
under Indian law, and any subsequent incarceration could have an effect on the Company's business.

Under Indian law a company cannot be charged with offences that could result in incarceration.
Should any criminal charge be made against the Company, it is those responsible for the day-to-day
operations of the Company, and usually the Managing Director, who shall be deemed to be responsible and be
prosecuted on behalf of the Company.

In addition, under Indian law, the Company must have at least one designated statutory ""Occupier''
who accepts being the person who is charged on behalf of the company for any violations by the Company of
their obligations under the Factories Act 1948 (the ""Factories Act''). The Company currently has one
Occupier, K. P. Singh, who is the wholetime director of the Company. Should any prosecution be made
against the Company under the Factories Act result in a term of incarceration for its Occupier, the Company's
ability to meet its business and other financial obligations could be hindered through the loss of its Occupier or
any other representative the Company decides to appoint to that position. The Company's reputation could
also suffer as a result. Additionally, there can be no assurance that an Occupier will avoid incarceration if
found guilty of any other charge which could have a potential material adverse effect upon the Company and
the success of its business.

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Risks Associated with the Expansion of the Company's Business

The Company faces risks and uncertainties associated with the implementation of its expansion projects.
The Company plans to continue to expand its brand and product portfolios and its production and
distribution networks in India and abroad in the near future. In taking these and any other such expansion
initiatives, the Company faces risks and uncertainties, including that:
‚ funding anticipated to be deployed towards the cost of the project will not become available in a
timely manner or at all;
‚ cost overruns could adversely affect the Company's operating results;
‚ the Company may not be able to obtain or install production equipment on time or to its satisfaction
due to unforeseen and unavoidable circumstances;
‚ the Company may not be able to source a constant supply of quality inputs for its products or
maintain its reputation for producing consistently high-quality products;
‚ the Company may face difficulties in recruiting, training and retaining sufficient skilled technical,
marketing and management personnel;
‚ the Company may be unable to manage client and customer expectations in India and internationally;
and
‚ the Company may be unable to develop adequate internal administrative functions and systems and
controls, particularly the financial, operational, communications and other internal systems.
While the Company has successfully implemented expansion projects in the past, there can be no
assurance that the Company will be able to execute any current or future expansion strategies on time or
within budget or that the Company will achieve its objectives. Any failure to do so could materially adversely
affect the Company's business, results of operations and financial condition.

The Company has capital requirements and may require additional financing in the form of debt or
equity to meet its requirements to pursue its expansion plans.
Sources of the Company's additional financing requirements may include commercial banks or the
sale of equity or debt securities in private or public offerings. If the Company decides to incur more debt, its
interest payment obligations will increase, and the Company may be subject to additional conditions from
lenders, who could place restrictions on how it operates its business and result in reduced cash flows. If the
Company decides to issue equity, the ownership interest of the Company's existing shareholders will be
diluted.
The Company cannot give any assurance that it will be able to raise adequate financing on acceptable
terms, in time or at all. The Company's failure to obtain sufficient financing could result in a lack of cash flow
to meeting its operating requirements and, therefore, have an adverse effect on the Company's business,
results of operations and financial condition.

The Company may not be able to integrate expanded operations into its existing business operations.
The integration of expanded operations, particularly outside India, into the Company's existing
operations may consume a considerable amount of management and financial resources. There may be
unforeseen operating difficulties and expenditures. The expansion may also require significant management
attention that would otherwise be available for the on-going development of the Company's existing business.
The Company's inability to manage and finance such undertakings while managing its existing operations may
have a material adverse impact on its overall operations and its financial condition. Any failure to integrate the
expanded operations into the Company's existing business operations or any failure to manage these
successfully could materially and adversely affect its financial performance.

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The Company's Competition

The Company faces growing competition from Indian and non-Indian producers.

The Indian Government has been reducing the import duties on liquor products, in compliance with
India's commitments to the World Trade Organisation (""WTO''). As a result, the Company may become
subject to increased competition from foreign liquor companies. The Company has sought to curtail the
impact of this competition through its avoidance of the super premium liquor sector, which it sees as the most
vulnerable to foreign competition. The Company has also sought strategic alliance with foreign companies
such as Highland Distillers Limited and Ernest & Julio Gallo in order to profit from the influx of non-Indian
brands. However, there is no guarantee that these measures will be sufficient to protect the Company from
foreign competition, which could have a negative impact on its business.

The Company's principal domestic competitor is the UB Group of Companies, which is substantially
larger, more diversified and has greater financial, personnel and marketing resources than the Company and
therefore may have certain competitive advantages. Although the Company has broad product lines and is
continually developing its products, there can be no assurance that the Company will be able to compete
effectively in the markets in which it operates currently or in which it proposes to operate in the future.

The Company is Subject to Regulatory Risks and Government Regulation

An unfavourable determination of investigations by the Indian tax authorities could have an adverse effect
on the financial condition of the business.

The Company is currently being investigated by the Indian income tax authorities in connection with
its income tax payments in prior years. From February 2006 to April 2006, these authorities carried out a
series of searches, seizures and investigations at the Company's corporate offices, certain of the Company's
distilling and bottling facilities, and the residences of key officials and promoters for records and other
information relating to the Company's assets and prior tax payments. The income tax authorities also
conducted similar searches at the premises of several other liquor companies and the residences of their
respective promoters, in the states of Delhi and Uttar Pradesh and at the offices of the Uttar Pradesh
Distillers' Association, an industry and trade body.

In addition to the materials collected during their search, the income tax authorities subsequently
asked the Company for additional financial records, which was promptly provided to them. These materials
and additional records are currently being reviewed by the income tax authorities and, in due course, upon
completion of the tax assessment procedures, the Company may receive from them a demand for payment of
additional taxes and accrued interest thereon. The Company and its key officials and promoters have not yet
received any show-cause notices from the Income Tax Department in this regard; however, proceedings may
be initiated against them in the near future. The Company is unable to quantify the amount of additional sums
it likely will be asked to pay, if any, but it has the right to appeal to the appropriate regulatory and judicial
authorities against a demand for payment of additional taxes. The Company may, however, be required to
deposit a percentage of any such additional sums prior to making an appeal and will be entitled to a full or
partial refund of the deposited sums in the event that its appeal is wholly or partially successful. The Company
continues to co-operate fully with the Indian income tax authorities in their investigations and requests for
information. If the Company were to receive a demand for payment and was unsuccessful in its appeals, the
Company's results of operations could be materially adversely affected.

Taxes on liquor products could increase.

The demand for liquor products is comparatively inelastic. As a result, the liquor industry could be
the first target for increased taxation either directly or indirectly through levies on industry participants by any
Indian State. Any such increase would have a material adverse effect on the Company's profitability.

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The Company is subject to a complex and diverse tax structure.

The manufacture and distribution of liquor products is subject to a complex and diverse tax structure
by both the Indian Government and the government of each state of India (a ""State Government''). The
Company is subject to the regulatory systems of each of the states in which it operates manufacturing
facilities, and these systems may vary greatly from one state to the next. Such regulations include licensing
requirements, labelling restrictions and restrictions on advertising.

Currently, the manufacture, sale and consumption of liquor products is regulated and permitted (with
the exception of four states) by each Indian state. In general, each Indian state earns a substantial amount of
revenue from the sale of liquor products. Although it is the Company's belief that prohibition is unlikely,
prohibition in any state in which it operates could happen, and any such prohibition would have a material
adverse effect on the Company's business and financial prospects.

The Company does not have all regulatory approvals for carrying on its manufacturing facilities.

The consents under the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention
and Control of Pollution) Act, 1981 for one of the Company's manufacturing units at Rampur, Uttar Pradesh,
have expired. In addition, the Company's excise licence under the United Provinces Excise Act, 1910, for the
grain-based distillery in Rampur has been applied for but not yet received. The Company has applied for
renewals of these consents but has not received the renewed consents to date. Even though renewals are
generally obtained after the expiry of the relevant licence period, there is no assurance that such renewals will
be granted.

There is an advertising ban on liquor products in India.

In India, there is a ban on advertising of liquor products in the media. The liquor industry has become
the focus of increased social and political attention in India as a result of public concern over problems relating
to alcohol abuse, including health consequences, drinking by persons under the legal age and driving while
under the influence of alcohol. As a result the Company is unable to advertise its products by traditional
means but must rely on word-of-mouth, surrogate advertising and high-profile product launches, which is less
effective than more orthodox forms of advertising. The inability to launch national advertising campaigns are
detrimental to the development of any business in the liquor industry, including the Company's.

There are strict labelling requirements for liquor products in India.

There are strict requirements of the labelling of liquor products in India. Each Indian state has its
own requirements as to the information that must appear on the label of any liquor product manufactured and
sold in that state. As a result, the Company must produce labels on a state-by-state basis, preventing it from
fully maximising the economies of scale that would be created if labels could be uniformly produced.

Many of the distributors, wholesalers and retailers of the liquor industry are state-operated, affecting the
Company's trade and pricing practices.

The distribution network for liquor products is controlled by the relevant State Government in all of
the states in which the Company operates. The State Governments set the prices and determine with which
manufacturers they will trade. The pricing and purchasing policies of the State Governments are subject to
change and may differ from past policies. In order to mitigate the Company's dependence on any one state, it
has established operations in every state in which it is legal to sell and manufacture liquor products. As a
result, the Company cannot fully maximise the economies of scale that would be created with a centralised
production facility. In addition, if any state-owned wholesaler ceases or reduces their trade activity with the
Company, there could be an adverse effect on its financial condition.

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Increased environmental regulation and changing consumer environmental awareness could affect the
Company's operations.
Actions by federal, state or local governments in India and abroad concerning environmental matters
could result in laws or regulations that could increase the cost of producing the products manufactured by the
Company or otherwise adversely affect demand for its products. The operations of the Company are subject to
significant environmental regulations in every state in which it operates. The Indian Government maintains a
""zero tolerance'' policy regarding effluent, a by-product of the molasses distillation process when creating
extra neutral alcohol (""ENA''). Accordingly, the Company must undertake certain capital expenditures in
order to properly treat effluent at its molasses distilleries. The Company also must comply with environmental
regulations relevant to its operations such as, among others, waste disposal, soil groundwater contamination
and air emissions. In addition, certain governmental authorities may adopt ordinances prohibiting or restricting
the use or disposal of certain products that are among the types of products produced by the Company. If such
prohibitions or restrictions were to be widely adopted, such regulatory and environmental measures could
adversely affect demand for the Company's products and thereby have a material adverse effect upon the
Company. Moreover, there can be no assurance that the Company will be able to maintain its environmental
licences and permits in order to be able to continue its operations. Additionally, a decline in consumer
preference for the Company's products due to environmental considerations could have a material adverse
effect upon the Company's business. Currently unknown environmental problems or conditions may be
discovered. If any of the Company's facilities are shut down, the Company will continue to incur costs
complying with regulations, appealing decisions affecting those facilities, maintaining production if possible
and continuing to pay labour and other costs. The Company could, therefore, be materially and adversely
affected by existing environmental requirements.

The Company's Intellectual Property

The Company may not be able to adequately protect its intellectual property.
The Company relies on trademarks such as 8PM, Whytehall and Contessa to protect its intellectual
property, which is critical to its business. The Company has approximately 77 registered trademarks in India,
of which approximately 10 are in the process of being renewed. Applications for registration have been made
in respect of approximately 108 other trademarks. Of these trademarks, approximately 12 unregistered
marks/brands were assigned by Brihan Maharashtra Sugar Syndicate Limited to the Company, which has
applied to register these marks/brands in its own name. The Company also relies on unpatented proprietary
know-how, continuing technological innovation and other trade secrets to develop and maintain its competitive
position. The Company constantly seeks to protect its trademarks against unauthorised use or infringement,
but any such precautions may not provide meaningful protection against competitors or protect the value of
the Company's trademarks.

The Company may not be able to prevent the counterfeiting of its products.
The Company, like its competitors in the liquor industry, is at risk of being counterfeited by third
parties re-using the Company's packaging to sell their products. These products are formulated differently and
are of inferior quality. The Company has implemented certain safeguards against these actions through special
tamper-resistant packaging; however, if the Company's reputation were to suffer as a result of such
counterfeiting, its results of operations could be adversely affected.

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MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE SHARES


The erstwhile Radico Khaitan Limited's shares were originally listed on the BSE in 1991 and the
NSE in 2000. Following its merger into Abishek Cements Ltd in 2003, the Company's Shares were re-listed
and have been listed on the BSE and on the NSE since 18 June 2003, pursuant to the order of the Board for
Industrial and Financial Reconstruction (Delhi). The following table shows the high/low market prices and
the total trading volume of the Company's shares on the BSE and on the NSE during the indicated periods.

Market Price for Shares on the BSE


(Rs. per share)
BSE
Calendar Period High Low Last Volume

2003
Second Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.00 6.10 7.03 429,305
Third Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9.00 6.76 7.98 3,693,910
Fourth Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19.42 7.68 14.74 5,760,045
2004
First QuarterÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26.60 13.33 24.56 8,606,665
Second Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27.20 17.40 22.02 2,249,465
Third Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 34.60 21.86 32.73 5,018,240
Fourth Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 55.48 31.80 50.12 6,883,730
2005
First QuarterÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 84.20 50.39 66.86 5,720,800
Second Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86.10 61.46 82.44 6,986,465
Third Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 154.00 78.20 141.34 6,633,210
Fourth Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 150.00 112.64 144.12 4,158,825
2006
January ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 174.90 144.50 159.10 1,366,648
February ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 172.00 135.10 142.45 3,111,711
March ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 165.50 142.00 160.80 1,534,283
April ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 199.00 154.10 171.60 1,380,164
May ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 194.90 135.00 169.30 2,032,889
29 June ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 171.20 120.35 146.20 188,847

Source: Bombay Stock Exchange Ltd, www.bseindia.com

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Market Price for Shares on the NSE


(Rs. per share)
NSE
Calendar Period High Low Last Volume

2003
Second Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.00 5.67 7.00 449,545
Third Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.80 6.60 8.00 4,097,120
Fourth Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19.20 7.70 14.97 9,695,920
2004
First Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26.29 13.45 24.60 16,613,200
Second Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26.96 17.00 21.96 8,610,375
Third Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 34.88 21.60 32.65 15,281,745
Fourth Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 53.00 31.92 50.12 17,065,075
2005
First Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 78.80 45.98 66.03 10,647,275
Second Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86.38 61.61 82.24 10,071,930
Third Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 160.00 81.64 140.32 14,749,785
Fourth Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 146.20 112.03 143.95 10,594,890
2006
JanuaryÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 174.30 144.63 158.10 3,122,503
FebruaryÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 175.00 135.20 143.20 6,340,722
MarchÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 165.70 140.00 161.65 2,708,379
April ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 197.80 155.00 171.40 3,438,414
May ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 212.00 120.00 168.60 5,289,406
29 JuneÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 169.95 119.15 145.90 220,850

Source: Bloomberg

There is no public market outside India for the Shares. As at 31 March 2006, there were 96,447,940
outstanding and fully subscribed Shares of Rs.2 par value, and no outstanding preference shares.
The Indian Exchanges have experienced significant fluctuations in the prices of listed securities and
there are currently limits on the range of daily price movements. For more information, see ""Appendix A:
Indian Securities Markets Ì Listing''.
For more information on the Shares, see ""Description of the Shares''.

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USE OF PROCEEDS
The Company estimates that the net proceeds of the issue of the Bonds (after the deduction of fees,
commissions and expenses) are expected to be approximately US$38.4 million and will be used by the Issuer
for (i) capital expenditure for the expansion of its operations in India, (ii) investments in its operations and
potential strategic acquisitions overseas (to the extent permitted by the RBI and the Indian Government) and
(iii) for such other purposes as may be permitted from time to time in compliance with the applicable
guidelines issued by the RBI and the Indian Government.

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CAPITALISATION
The following table sets out the Company's actual capitalisation as at 31 March 2006, and on a pro
forma basis after giving effect to the issuance of the Bonds and the CCPSs, and the net proceeds therefrom.
The following information should be read in conjunction with the Company's financial statements and the
notes thereto prepared in accordance with Indian GAAP and included elsewhere in this offering circular.
Other than the matters referred to in this offering circular, there has been no material change in the
capitalisation of the Company since 31 March 2006. The amounts expressed in US dollars do not form a part
of any of the Company's financial statements and are provided solely for the convenience of the reader.
As at 31 March 2006
Actual Pro Forma(3)
1
Rs. US$ Rs. US$1
(Amounts in millions)
Cash2 4 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 42.94 0.96 4,112.51 92.16
Debt
Secured
Term borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,053.79 23.62 1,053.79 23.62
Working capital facilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,274.94 28.57 1,274.94 28.57
Total secured borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,328.73 52.19 2,328.73 52.19
Unsecured borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,091.09 24.45 1,091.09 24.45
The Bonds now being offered ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.00 0.00 1,784.90 40.00
Total unsecured borrowings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,091.09 24.45 2,875.99 64.45
Total debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,419.82 76.64 5,204.72 116.64
Shareholders' Funds
Issued capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 192.90 4.32 204.44 4.58
Reserve & surplus ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,236.44 27.71 2,117.35 47.45
Total shareholders' funds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,429.34 32.03 2,321.79 52.03
Total capitalisation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,849.16 108.67 7,526.51 168.67

1
The exchange rate as reported by Bloomberg, at the close of business on 31 March 2006 was Rs.44.6225 • US$1.00.
2
Pro forma cash and reserves and surplus have been adjusted for fees and expenses of in aggregate US$3.80 million, incurred in
connection with the Bond offering (and CCPS offering).

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SELECTED FINANCIAL INFORMATION

The following table sets out selected consolidated financial information as at and for the fiscal years
ended 31 March 2003, 2004, 2005 and 2006. The financial information as at and for the fiscal years ended 31
March 2003, 2004, 2005 and 2006 is qualified in its entirety by reference to the Company's audited financial
statements and the related notes thereto prepared in accordance with Indian GAAP and included elsewhere in
this offering circular. The financial statements prepared in accordance with Indian GAAP as at and for the
fiscal years ended 31 March 2003, 2004, 2005 and 2006 was audited by V. Sankar Aiyar & Co., Chartered
Accountants, and each of their audit reports in relation to the fiscal years ended 31 March 2004, 2005 and
2006 are included elsewhere in this offering circular. The amounts expressed in US dollars do not form part of
any of the Company's financial statements and are provided solely for the convenience of the reader.

PROFIT & LOSS ACCOUNT


For the Fiscal Year ended 31 March (audited)
Particulars 2003 2004 2005 2006 2006
Rs. Rs. Rs. Rs. US$4
(Amounts in Millions)
Sales1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,590.85 2,911.48 4,329.24 4,945.11 111.71
Other Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23.63 33.81 67.70 51.51 1.16
Accreditation/Decretion To Stocks ÏÏÏÏÏÏÏÏÏÏÏ ¿10.42 75.77 63.11 7.33 0.17
Total IncomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,604.06 3.021.06 4,460.05 5,003.96 113.04
Expenditure
Purchases And Materials Consumed ÏÏÏÏÏÏÏÏÏÏ 1,189.17 1,219.59 2,292.81 2,422.51 54.72
Salaries, Allowances And Benefits ÏÏÏÏÏÏÏÏÏÏÏÏ 170.75 196.02 240.26 285.94 6.46
Other Expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 860.84 1,189.94 1,292.07 1,423.42 32.16
Financial ExpensesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 102.65 45.25 164.88 237.52 5.37
Depreciation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 46.26 50.93 84.98 112.63 2.54
Total ExpenditureÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,369.66 2,701.72 4,074.99 4,482.02 101.25
Profit/(Loss)Before Taxation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 234.39 319.34 385.06 521.94 11.79
Provision for Tax
Current Tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 39.00 62.50 25.50 57.60 1.30
Deferred TaxÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 32.40 0.00 1.00 14.00 0.32
Excess Provision written backÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22.80 0.00 0.00 0.00 0.00
Profit/(Loss) After Taxation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 185.79 256.84 358.56 450.34 10.17
EBITDA2 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 383.30 415.51 634.91 872.08 19.70
EBIT3 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 337.04 364.58 549.94 759.45 17.16

1
Net of excise duty.
2
Earnings Before Interest, Tax, Depreciation and Amortisation.
3
Earnings Before Interest and Tax.
4
The average exchange rate, as reported by Bloomberg, for the fiscal year ending 31 March 2006 was Rs.44.2670 • US$1.00.

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BALANCE SHEET
For the Fiscal Year ended 31 March (audited)
Particulars 2003 2004 2005 2006 2006
Rs. Rs. Rs. Rs. US$1
(Amounts in Millions)
SOURCES OF FUNDS
Share Capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 192.90 192.90 192.90 192.90 4.36
Reserves And Surplus ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 543.78 678.56 889.83 1,235.20 27.90
Secured Loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 673.68 1,096.26 1,435.41 2,328.73 52.61
Unsecured Loans ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 324.22 254.81 710.34 1,091.09 24.65
Deferred CreditsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7.08 5.08 1.34 0.02 0.00
Deferred Tax Balance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 175.90 168.70 204.90 218.90 4.94
TOTAL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,917.54 2,396.29 3,434.71 5,066.84 114.46
APPLICATION OF FUNDS
Total Fixed Assets (Net) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 809.72 981.73 1,506.42 2,574.49 58.16
Capital Work In Progress ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10.20 26.91 173.68 37.62 0.85
InvestmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 88.98 86.49 0.08 24.30 0.55
Current Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,260.57 1,688.57 2,303.78 3,032.28 68.50
Current Liabilities & Provisions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 475.30 528.13 627.05 630.29 14.24
Net Current Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 785.27 1,160.44 1,676.72 2,401.99 54.26
Miscellaneous Expenditure (To The Extent Not
Written Off or Adjusted) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 223.37 140.72 77.80 28.42 0.64
TOTAL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,917.54 2,396.29 3,434.71 5,066.82 114.46

1
The average exchange rate, as reported by Bloomberg, for the fiscal year ending 31 March 2006 was Rs.44.2670 • US$1.00.

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EXCHANGE RATES
The following table sets forth, for the periods indicated, certain information concerning the exchange
rates between Rupees and US dollars based on the inter-bank market mid-rates (which are the average of the
bid and ask rates), as reported by Bloomberg:

Indian Rupees per US$1.00


Mid Period
Average1 High Low End Rate2

1999ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43.06 43.62 42.35 43.53


2000ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44.94 46.88 43.49 46.71
2001ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 47.18 48.27 46.35 48.20
2002ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 48.59 49.05 47.94 47.98
2003ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 46.57 48.01 45.22 45.56
2004ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45.30 46.47 43.46 43.58
First Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45.22 45.64 43.60 43.72
Second Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44.86 46.25 43.54 46.02
Third Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 46.15 46.47 45.67 45.96
Fourth Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44.96 45.90 43.46 43.58
2005ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44.09 46.31 43.18 45.08
First Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43.71 43.93 43.42 43.77
Second Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43.59 43.83 43.29 43.50
Third Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43.68 44.15 43.18 44.05
Fourth Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45.37 46.31 44.02 45.08
2006ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45.06 45.09 45.05 44.98
First Quarter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45.06 45.09 45.05 45.07

Source: Bloomberg.
1
Represents the average of the daily inter-bank closing mid-rates for the period.
2
Determined on the basis of the mid-price of the high and low prices on the last date in the period.

The Company publishes its financial statements in Rupees. This offering circular contains transla-
tions of Rupee amounts into US dollars at specific rates solely for the convenience of the reader. For
convenience only and unless otherwise noted, all translations from Indian Rupees to US dollars and from US
dollars to Rupees in this offering circular were made at a rate of Rs.44.6225 • US$1.00, the exchange rate on
31 March 2006 as reported by Bloomberg. No representation is made that the Rupees or US dollar amounts
referred to in the offering circular could have been or could be converted into US dollars or Rupees, as the
case may be, at any particular rate or at all.

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DIVIDENDS AND DIVIDEND POLICY

The Company declares and pays dividends in the fiscal year following the year to which they relate.
Under Indian law, a company pays a dividend upon the recommendation of its board of directors and the
approval of a majority of shareholders at the annual general meeting of the shareholders held within six
months of the end of each fiscal year.

The shareholders have the right to decrease but not increase the dividend amount recommended by
the board of directors.

The following table sets out the last three dividends declared by the Company:
Total dividend
Dividend per share No. of shares entitled Face Value payout
Year (Rs.10 each) for dividend (Rs.) (Rs.million)

2002-03 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18% 19,289,588 192,895,880 34.72


2003-04 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20% 19,289,588 192,895,880 38.58
2004-05 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22% 19,289,588 192,895,880 42.44
Total dividend
Dividend per share No. of shares entitled Face Value payout
Year (Rs.10 each) for dividend (Rs.) (Rs.million)

2005-06 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25% 96,447,940 192,895,880 48.22

Currently, under Indian tax laws, companies are required to pay a direct tax by way of a corporate
dividend tax of 12.50%, a surcharge of 10% and an education cess of 2% in respect of dividends declared by it.
These are direct taxes to be paid by the company. These taxes are not payable by the shareholders and not
withheld or deducted from the dividend payments set forth above.

See ""Taxation'' for a summary of the certain Indian, United Kingdom and US federal tax
consequences of dividend distribution to holders and beneficial owners of Shares.

The form, frequency, and amounts of future dividends will depend on revenues, cash flows, financial
condition (including capital position) and other factors and shall be at the discretion of the Board of Directors
and subject to the approval of the shareholders.

The Company may not declare any dividend unless the Board of Directors recommends it do so. No
dividend may be paid except out of the Company's profits or pursuant of Section 205 of the Companies Act.
Although the Company has declared dividends for the past three years, it may or may not declare or pay
dividends in the future.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS


OF OPERATIONS

The following discussion and analysis is based on and should be read in conjunction with, the
Company's audited financial statements for the fiscal years ended 31 March 2004, 31 March 2005 and
31 March 2006 and notes thereto in accordance with Indian GAAP appearing elsewhere in this Offering
Circular.

Background

Radico Khaitan Limited is the second largest producer and distributor of branded liquor in India,
including whisky, rum, brandy, gin and vodka. The Company manufacturing facilities are located in Rampur,
Uttar Pradesh and include a molasses-based distillery with a capacity of 60 million litres per annum, a grain-
based distillery with a capacity of 27 million litres per annum, and a malt-based distillery with a capacity of
0.46 million litres per annum. The Company also maintains five bottling units and has contracts with an
additional 32 Contracted Bottling Units.

Results of Operations

Fiscal 2006 (""FY2006'') compared to Fiscal 2005 (""FY2005'') (year-end 31 March)

Income
Sales (net of excise duty)

The Company generated sales of Rs.4,945.11 million in FY2006, an increase of 14.22% from the sales
of Rs.4,329.24 million generated in FY2005. The increase in total income is due to the growth in the IMFL
industry and the continued success of Radico's IMFL brands, both in domestic and international markets.

Other Income

The Company generated other income of Rs.51.51 million in FY2006, a decrease of 23.91% from
other income of Rs.67.70 million generated in FY2005. This decrease is due to a reduction in miscellaneous
income and a decrease in insurance claims.

Increase/Decrease of stocks

The Company realised a decretion of stocks of Rs.7.33 million in FY2006, a decrease of 88.39%
compared to Rs.63.11 million during FY2005. This is because the Company maintained a higher quantity of
finished goods in FY2005.

Expenditure
Purchases and raw material expenses

Purchases and material consumed during FY2006 cost Rs.2,422.51 million, an increase of 5.66% from
Rs.2,292.81 million in FY2005. This is because, despite the fall in price of molasses (the principal raw
material for the Company's manufacturing process), the Company spent more money on purchases and raw
materials due to the increase in sales.

Salaries, Allowances and Benefits

Salaries, allowances and benefits cost Rs.285.94 million during FY2006, a 19.01% increase from
Rs.240.26 million during FY2005. The increase is mainly due to the recruitment of additional employees,
principally in the middle and lower management levels. Employee salaries were also increased in line with
industry and economic trends.

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Other expenses
Other expenses were Rs.1,422.15 million during FY2006, an increase of 10.07% compared to
Rs.1,292.07 million during FY2005. This is due to provisions made by the Company for bad debts in their
accounts.

Financial Expenses
Financial expenses were Rs.237.48 million during FY2006, a 44.03% increase from financial expenses
of Rs.164.88 million during fiscal 2005. The increase was due to the higher borrowings of the Company during
FY2006, which increased to Rs.3,419.83 million in FY2006 from Rs.2,147.08 million in FY2005. In addition,
there was a hardening of interest rates in both domestic and international markets increased.

Depreciation
Depreciation expense was Rs.112.63 million during FY2006, a 32.54% increase from depreciation
expenses of Rs.84.98 million during FY2005. The increase was primarily due to capital expenditure of
Rs.1,185 million during FY2006 related to the brand acquisitions from Brihans Maharastra Sugar Syndicate
and installing a new greenfield grain-based distillery in Rampur Uttar Pradesh.

Total expenditure
Total expenditure was Rs.4,480.70 million during FY2006, an increase of 9.96% compared to
Rs.4,074.99 million during FY2005. This is due to an increase in the Company's operations.

Profit Before Taxation


Profit before taxation was Rs.523.26 million during FY2006, an increase of 35.89% compared to
Rs.385.06 million during FY2005. The increase is due to the sales having increased more than expenses.

Income Tax Expense


Income tax expense (net of deferred tax provisions) was Rs.57.60 million during FY2006, an increase
of 125.88% compared to Rs.25.50 million during FY2005. This was due to the Company's acquisition of the
Whytehall India operation in FY2005, which, due to it having previously accumulated losses, was tax
beneficial to the Company, and provided relief, thereby reducing the Company's tax payments in FY2005.

Net Profit after Tax


Profit after tax was Rs.451.66 million during FY2006, an increase of 25.96% compared to
Rs.358.56 million during FY2005. The increase is due to the Company's improvement in operational
efficiency, reduction in raw material prices and increase in sale prices in certain markets.

Fiscal 2005 (""FY2005'') compared to Fiscal 2004 (""FY2004'') (year-end 31 March)


Income
Sales (net of excise duty)
The Company generated net sales of Rs.4,329.24 million in FY2005, an increase of 48.70% from
Rs.2,911.48 million in FY2004. The increase in total income was due to the growth in the IMFL industry and
the continued success of Radico's IMFL brands, both in domestic and international markets.

Other Income
The Company generated other income of Rs.67.70 million in FY2005, an increase of 100.24%
compared to Rs.33.81 million generated in FY2004. The increase was mainly due to a loan waiver by

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American Beverages Mauritius Limited, pursuant to the company's acquisition of the Whytehall India
operation.

Increase/Decrease of stocks

The Company realised a decretion of stocks in FY2005 of Rs.63.11 million, a decrease of 16.71%
compared to Rs.75.77 million during FY2004. The decrease was due a reduction in the percentage increase in
finished stock.

Expenditure
Purchases and raw material expenses

Purchases and raw material expenses during FY2005 were Rs.2,292.81 million, an increase of 88.00%
from Rs.1,219.59 million in FY2004. This was due to the sharp rise in the cost of molasses (the principal raw
material for the Company's manufacturing process) during the fiscal year because of low sugar cane
production. The increase was also due to an increase in operations of the company.

Salaries, Allowances and Benefits

Salaries, allowances and benefits costs were Rs.240.26 million during FY2005, a 22.57% increase
from Rs.196.02 million during FY2004. The increase was mainly due to the recruitment of additional
employees, principally in the middle and lower management levels. Employee salaries were also increased in
line with industry and economic trends.

Other expenses
Other expenses were Rs.1,292.07 million during FY2005, an increase of 8.58% compared to
Rs.1,189.94 million during FY2004. This was due to increased costs of repair and maintenance of the
Company's facilities, increased insurance costs and increased travelling expenses.

Financial Expenses
Financial expenses were Rs.164.88 million during FY2005, a 264.38% increase from financial
expenses of Rs.45.25 million during FY2004. This increase was due to an increase in the borrowings of the
Company from Rs.1,356.137 million in FY2004 to Rs.2,147.081 million in FY2005. Additionally both
domestic and international markets saw an increase of interest rates during FY2005, resulting in an increase in
financial expenses increasing. Also, during FY2004, the Company entered into foreign exchange derivative
swaps, thereby reducing financials expenses in FY2004.

Depreciation
Depreciation expense was Rs.84.98 million during FY2005, a 66.86% increase from depreciation
expenses of Rs.50.93 million during FY2004. This increase was primarily due to an increase in gross fixed
assets of the Company.

Total expenditure
Total expenditure was Rs.4,074.99 million during FY2005, compared to Rs.2,701.72 million during
FY2004, an increase of 50.83%. This was due to an increase in the Company's operations.

Profit Before Tax


Profit before tax was Rs.385.06 million during FY2005, an increase of 20.58% from Rs.319.34 million
during FY2004. The increase was due to the sales having increased more than expenses.

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Income Tax Expense


Income tax expense was Rs.25.50 million in FY2005, a decrease of 59.20% from Rs.62.50 million in
FY2004. This was due to the Company's acquisition of the Whytehall India operation in FY2005, which, due
to it having previously accumulated losses, was tax beneficial to the Company, and provided relief, thereby
reducing the Company's tax payments in FY2005 .

Profit after Taxation


Profit after tax was Rs.358.56 million in FY2005, an increase of 39.60% from Rs.256.84 in FY2004.
The increase was due to the improvement in the Company's operational efficiency, a reduction in raw material
prices and an increase in sale prices in certain markets.

Liquidity and Capital Resources


Cash Flow
The following table summarises the Company's cash flows for FY2006 AND FY2005:
Year Ended 31 March
2005 2006
(RS.million)
Net cash flow from operating facilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 133.09 99.83
Net cash flow (used) in investing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (659.3) (1,110.2)
Net cash flow from financing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 570.10 985.27

Operating activities
Net cash generated from operating activities was Rs.99.83 million during FY2006 compared to
Rs.133.09 million during FY2005. The decrease in cash from operating activities is due to an increase in
receivables, inventories, loans and advances, including advances to Contracted Bottling Units.

Investing Activities
Net cash used in investing activities was Rs.1,110.2 million during FY2006, compared to
Rs.659.3 million in FY2005. The Company's use of cash in investing activities in FY2006 primarily relates to
investment in a grain-based distillery and acquired brands from Brihans Maharashta Sugar Syndicate, in
addition to normal capital expenditures of the Company. The Company's use of cash in investing activities in
FY2005 was related primarily to the merger of Anab-e-Shahi and Whytehall India Ltd as well as capital
expenditures in the normal course of business.

Financing Activities
Net cash provided by financing activities was Rs.985.27 million during FY2006, primarily to fund
operating and investing activities.
Net cash provided by financing activities was Rs.570.10 million during FY2005, primarily also to
fund operating and investing activities.
The Company is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to the US dollar. Foreign exchange risk arises from commercial transactions and recognised
assets and liabilities. To manage its foreign exchange risk arising from future commercial transactions and
recognised assets and liabilities, the Company uses forward contracts. Foreign exchange risk arises when
future commercial transactions, recognised assets and liabilities are denominated in a currency that is not the
entity's functional currency. The finance department is responsible for managing the net position in each
foreign currency by using external forward currency contracts. The Company also strives to maintain
minimum credit period for foreign exchange denominated recognised assets.

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The Company's interest rate risk arises from long-term borrowings. Borrowings obtained at variable
rates expose the Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company
to fair value interest rate risk. The Company also negotiates the terms of the borrowings with financial
institutions to convert its high interest bearing borrowings with lower interest bearing borrowings.

Indebtedness
Secured Term Loans
Name of the Lender Amount sanctioned Rate of interest Amount outstanding
(Rs.million) (Rs.million)
1. State Bank of Mysore ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 120.00 8.50% 70.00
2. State Bank of India ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.00 0.00 0.00
3. Infrastructure Leasing & Financial Services 50.00 8.00% 42.31
Bank of India, London
4. (Foreign Currency Loan) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 453.00 Libor ° 150 bps 311.47
ICICI Bank Ltd
5. (Foreign Currency Loan) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 437.75 Libor ° 181 bps 437.75
Standard Chartered Bank
6. (Foreign Currency Loan) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 132.27 Libor ° 150 bps 132.27
State Bank of India FCNRB
7. LoanÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 59.99 Libor ° 250 bps 59.99
1,053.79

Secured Fund Based limits


Amount sanctioned Amount outstanding
(Rs.million) (Rs.million)
1. Punjab National Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 500.00 467.03
2. State Bank of India ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 410.00 293.91
3. State Bank of Travancore ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 230.00 226.00
4. UTI Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100.00 89.00
5. State Bank of Mysore ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 200.00 199.00
Sub Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,440.00 1,274.94

Secured Non Fund Based limits


Amount sanctioned Amount outstanding
(Rs.million) (Rs.million)
1. Punjab National Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 200.00 11.82
(Bank Guarantee-15, Letter of Credit-185)
2. State Bank of India ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25.00 13.40
(Letter of Credit/Bank Guarantee)
3. UTI Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20.00 11.20
(Letter of Credit)
4. Yes Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 180.00 38.20
(Bill Discounting/Letter of Credit)
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 425.00 74.62

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Unsecured Term Loans


The Company has the following unsecured term loans:
Amount outstanding as Rate of
Name of 31 March 2006 Interest
(Rs. Million)
GE Capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25.00 8.38%
Rabo India Finance (Pvt.) Ltd. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 133.30 8.50%

Unsecured Working Capital Facilities


The Company has the following unsecured working capital facilities:
Amount outstanding as Rate of
Name of 31 March 2006 Interest
(Rs. Million)
UTI Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 150.00 9.00%
State Bank of Hyderabad ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100.00 7.75%
SBI Factors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86.59 8.25%
HDFC Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44.61 7.12%
HDFC Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44.61 7.71%
ING Vysya Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44.61 7.31%
ING Vysya Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 60.00 7.00%
ING Vysya Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 50.00 9.50%
ING Vysya Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20.00 9.50%
ABN Amro BankÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20.12 7.32%
ABN Amro BankÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20.12 7.35%
ABN Amro BankÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20.18 6.76%
ABN Amro BankÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19.54 7.31%
ABN Amro BankÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19.51 7.34%
Standard Chartered Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 158.70 10.50%
Standard Chartered Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29.00 8.10%
Standard Chartered Bank ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29.00 8.10%

Debentures
The following unsecured debentures have been issued by the Company:
A. 0% Non Convertible Debentures issued to ICICI Bank Limited
The Company has issued 10,835,811 0% unsecured redeemable non convertible debentures of Rs.1
each aggregating Rs.10,835,811 evidenced by debenture certificates dated 30 December 2002 in favour of
ICICI Bank Limited. These debentures were issued pursuant to the order of the Board for Industrial and
Financial Reconstruction (""BIFR'') dated 30 December 2002, pursuant to which the reverse merger of the
erstwhile Radico Khaitan Limited with Abhishek Cements Limited was sanctioned. The debentures are to be
redeemed in the following three equal annual instalments:
30 December 2005 Ì Rs.3,611,937 (paid)
30 December 2006 Ì Rs.3,611,937
30 December 2007 Ì Rs.3,611,937
B. 0% Non Convertible Debentures issued to Industrial Development Bank of India Limited
The Company has issued 8,694,915 0% unsecured redeemable non convertible debentures of Rs.1
each aggregating Rs.8,694,915 evidenced by debenture certificates dated 30 December 2002 in favour of the
Industrial Development Bank of India Limited. These debentures were issued pursuant to the order of the
BIFR dated 30 December 2002 pursuant to which the reverse merger of the erstwhile Radico Khaitan

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Limited with Abhishek Cements Limited was sanctioned. The debentures are to be redeemed in the following
three equal annual instalments:
30 December 2005 Ì Rs.2,898,305 (paid)
30 December 2006 Ì Rs.2,898,305
30 December 2007 Ì Rs.2,898,305
C. 0% Non Convertible Debentures issued to Madhya Pradesh State Industrial Corporation Limited
The Company has issued 4,689,663 0% unsecured redeemable non convertible debentures of Rs.1
each aggregating Rs.4,689,663 evidenced by debenture certificates dated 30 December 2002 in favour of the
Madhya Pradesh State Industrial Corporation Limited. These debentures were issued pursuant to the order of
the BIFR dated 30 December 2002 pursuant to which the reverse merger of the erstwhile Radico Khaitan
Limited with Abhishek Cements Limited was sanctioned. The debentures are to be redeemed in the following
three equal annual instalments:
30 December 2005 Ì Rs.1,563,221 (paid)
30 December 2006 Ì Rs.1,563,221
30 December 2007 Ì Rs.1,563,221

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INDUSTRY

The information in this section, some of which is reproduced elsewhere in this offering circular, has
been derived from the following sources: S.S. Kantila Ishwarlal Securities Pvt. Ltd, ""Alcoholic Beverages,
Hic!!Hic!!! Hurray...'', dated 19 December 2005; India Infoline, ""Radico Khaitan Limited, In High Spirits'',
dated September 2004; Stratcap Securities (India) Private Limited, Equity Research Report, dated 3 May
2004; Edelweiss Capital, ""Radico Khaitan, In high spirits'', dated 16 February 2005; and DATAMONITOR,
Global Spirits, ""Industry Profile'', Ref. Code 0199-0801. The Company and the Manager make no
representation as to the accuracy or completeness of the information provided by these sources. This
information has not been independently verified.

India's spirits industry is growing on favourable age demographics, rising disposable incomes and
greater social acceptability of alcohol consumption within domestic India.

The Indian economy is likely to maintain a robust economic growth rate of greater than 7% per
annum in the next few years. A higher GDP and rapid export growth have led to a considerable increase in per
capita income, while falling prices of certain essentials have provided many Indian consumers with higher
disposable incomes.

Indian GDP Growth (%)

The Indian liquor market is progressing rapidly owing to favorable demographics, rapid economic
growth and lightening Government regulation surrounding alcohol distribution within Indian states. The liquor
segment is also highly concentrated, with the top three participants accounting for 64% of the industry
volumes. These factors are contributing to the industry's pro forma CAGR of 12% for fiscal year 2005, which
is expected to continue through fiscal year 2008.

India has traditionally been among the world's lowest per capita consumers of ""foreign'' liquors such
as whisky, rum, brandy, vodka and gin. Per capita consumption of Indian Made Foreign Liquor (""IMFL''), or
""foreign'' liquor produced in India, stands at 0.82 litres per annum as compared to the global average of
4.63 litres per annum. Indian alcohol consumption tends to begin at age 16-18 and peak at age 30-35. The
18-35 year age group, currently estimated to comprise 247 million people, is growing at a rate of 3.4% per
annum. Alcohol demand from this age group is expected to aggregate 40 million cases of liquor for the five
fiscal years through 2010, of which IMFL is expected to account for about 45-50%, owing to anticipated
higher consumption by younger consumers. With more than 50% of India's population below the age of 25,
expectations are for the Indian IMFL industry to sustain a growth rate of 9.7% over the medium term.

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Litres Per Capita Consumed Per Annum

The proportion of youth and the middle aged Ì the largest customer base for liquor companies Ì is
expected to grow from 45% in 2001 to 47% by 2006 and to 51% by 2013. In absolute terms this suggests a 27%
rise in the target population base from 2001 to 2010 and a 35% rise in target population by 2013. Rising
income levels and a changing social environment have lead to an increase in the liquor drinking population in
the country. The emergence of bars, nightclubs and entertainment centres and the entry of international
brands in the country have been among the factors driving the rising consumption of alcohol or alcohol based
products. Economic growth in recent years has created a large base of youth with high income levels and
changing lifestyles in most cities and towns. The number of Indians who drink alcohol has risen from 1 in 300
to 1 in 20 in the last two decades. The shift in higher consumption is expected to continue to rise with
increased alcohol affordability, availability and popularity. The upper-class social groupings of Indian alcohol
consumers continues to grow alongside the economy and income per household is expected to increase with
58% of the population set to be included in the ""Consuming'' or ""Very Rich'' class by 2012, those classes
having an income range per household of US$975-US$4,675 and over $4,675 respectively.

m HHs•millions of households

The domestic organized Indian liquor market stands at Rs.180bn, consisting of 25 IMFL manufactur-
ers and 41 distilleries. The low cost IMFL and country liquor segment account for approximately Rs.120bn
and the balance Rs.60bn is distinguished as the regular and premium product segment. The country liquor
market is distinguished as a regional market with a large number of small manufacturers spread across the
country. The total IMFL market stands at 100MM cases, which has grown at 9% over the past 10 years. This
market consists of whisky, rum, brandy, gin and vodka.

IMFL is manufactured from molasses, as well as from grains such as barley, rye, wheat, corn and oat.
Raw material for fermentation usually differs from liquor to liquor. Corn malt is used in whisky, molasses in
the case of rum and country liquor, grapes in brandies and wine, any starch for gin and vodka and barley for
beer. Production of alcohol drinks from non-molasses sources is very small in India. Molasses accounts for
4-5% of total cane crushed by sugar mills within the country. Raw material availability is a key concern
depending on cane crop as well as sugar production, which is also highly regulated by the Government.

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Molasses is the key raw material for alcohol and accounts for 40% of raw material costs. Forecasts are
predicting a 55% jump in average molasses prices in fiscal year 2005 and a further 2% hike in prices in fiscal
year 2006. There is also a 20-25% increase in sugar production expected in fiscal year 2006. The alternative
uses of molasses, specifically in the production of ethanol (a crude oil substitute) could lead to an upsurge of
prices in the near term. The Indian Government has recently permitted use of 5% ethanol blended petrol. A
number of sugar mills have already set up ethanol plants as have some refineries. There is also a mid-season
price fluctuation of molasses as the sugar crushing season progresses. Sugar mills have limited storage
capacities and as the sugar crushing season progresses, the lack of storage capacity forces many sugar mills to
go in for distress sales. Competing uses of molasses could push up raw material prices and adversely impact
the IMFL industry.
Whisky: Whisky is the preferred drink for Indian consumers and consumption patterns match those
seen in many western countries. The main difference between domestically produced Indian whisky and
foreign whisky is that the alcohol is made from molasses instead of grain. Whisky is the second-largest liquor
segment in India and by far the most popular in the IMFL category. Whisky comprises 18.4% of the aggregate
liquor market and 59.7% of the IMFL market with a CAGR of 8.5%.
Rum: Rum is the second fastest growing segment among IMFL offerings, which is a result of the
shift in consumer preference. 17.6% of the IMFL market comprises of rum sales, as rum is considered very
popular among the younger population in India with a three year forward estimated CAGR of 15.7%.
Brandy: Brandy comprises 18.2% of the IMFL market. The brandy segment is one of the slower
growing products among IMFL, which is due to changing perceptions and domestic demographics. Brandy's
main age segment has not grown at the same pace as other IMFL markets and as a result has affected the
product's popularity. Brandy's three year forward estimated CAGR is projected at 7%.
Vodka: Vodka comprises 1.0% of the IMFL market and there has been substantial growth in this
segment of the IMFL due to the large consumption increase by young wealthy men and women in urban
areas. With population growth and more widely distributed wealth across a younger demographic of
professionals, the growth of this segment is expected to continue to intensify. The vodka market is projected to
have a forward three year CAGR of 40.0%.
Gin: Gin comprises 3.5% of the IMFL market and per capita consumption of gin and aggregate
growth has been declining in the past few years as gin is regarded as a drink for older consumers. With this
perception becoming increasingly settled amongst younger consumers there appear to be no changes in this
trend moving forward. The forecasts for this product segment remain at a three year forward CAGR of 0.5%.
Beer: Being the introductory alcohol of choice for most consumers, demand is expected to progress
from a very low per capita consumption rate, especially as there is serious pressure from State Governments to
lower duties on beer to dissuade people from purchasing hard liquor. With more than 50% of the Indian
population below 25 years of age forecasts place the segment's three year forward CAGR estimate at 14.3%,
with 136 million cases expected to be delivered in 2008.

Government Regulation
The Indian liquor business is built around a complex tax and licensing structure, creating very high
barriers of entry for newly burgeoning liquor companies. The Indian liquor industry is entirely controlled by
state commissioned governing bodies and as a result is the most highly taxed industry in the country. State
entities have recognized the revenue generating opportunity within the liquor industry, and being strained for
cash themselves have frequently levied new and higher taxes on manufacturing and the sale of liquor. State
Governments have levied 103 varieties of taxes on the industry and implemented an arbitrary licensing system
for manufacturing facilities. New licences have not been issued in several years, as this requires the applying
company to maintain production facilities in every state in which it sells. The Indian market is then effectively
an amalgam of 29 separate countries each establishing its own regulations and tax law.
In the case of distribution, certain states follow different dynamics for liquor sales. A few of the states
in India follow the open market system in which pricing is market determined and liquor companies can

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appoint their distributors who in turn can appoint their respective retailers. In this process, the State
Government determines the number of wholesalers/retailers with license issuance for a pre-defined period.
The second distribution model is based on an auction process, where private distributors participate in an
auction with the reserve price set by the Government. They in turn establish their own retail distribution
network and source from liquor companies. This model can lead to problems regarding recoveries for liquor
companies since the retailers can change depending on the distributor who has won the rights. The third and
most restrictive distribution model is the one where the state agencies themselves control the wholesale
channel, decide prices to be paid and fix consumer prices. This is designed to restrict new brand entry into the
specific state.

In spite of a history of heavy taxation and limits on distribution regarding IMFL producers, State
Governments have recently become more flexible in allowing liquor companies to raise prices, especially when
molasses prices rose in 2004. Moreover, the administration has taken a less hostile view towards the liquor
industry in general and excise and sales tax rates have been relatively stable over the past few years. A few
State Governments have also moved to convert their alcohol markets from auction controlled to Government
controlled to further free markets. State Governments are recognizing the need to open up the markets for
liquor distribution. A few southern states have also levied bans on homemade country liquor, which has lead to
an increase in IMFL consumption and a change in the local distribution model. Banning country made liquor
has emerged as a significant catalyst for IMFL consumption growth in Indian states.

With the progressive reduction in import duties and liberalization of the distribution system in sight,
several foreign liquor majors have launched their international brands within India. However, establishing a
national distribution system is extremely complicated, given the current regulated structure of distribution in
the country. New participants in the industry currently have no choice but to tie up with domestic companies
for distribution within India.

A change in the regulatory environment surrounding the distribution and taxation of alcohol could
lead to further industry growth. Currently efforts are being made to introduce legislation enabling uniform
taxation among states and revenue sharing agreements for interstate sales. Liberalization of distribution and
favorable state taxation policies should provide a stimulus for continued strong industry growth rates.

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BUSINESS

The following discussion should be read in conjunction with the Company's financial statements and
the notes to such statements included elsewhere in this offering circular.

Business Description

Radico Khaitan is the second largest producer and distributor of branded liquor in India. The
Company produces and distributes a variety of liquors, including whisky, rum, brandy, vodka and gin. The
Company manufactures its products at its distillation facility located in Rampur, in the state of Uttar Pradesh,
and maintains five owned bottling units and 32 contract bottling units (each, a ""Contracted Bottling Unit'').
The Company owns and produces three brands with sales of over one million cases per annum (""MCA''),
referred to in the domestic market as ""millionaire brands'', namely, 8PM whisky (4.1 MCA), Contessa rum
(2.3 MCA) and Old Admiral brandy (1.3 MCA), each as at 31 March 2006. The Company also continues its
historic business of producing extra-neutral alcohol (""ENA''), the purified form of alcohol derived from the
distillation of molasses, which it sells to other companies in India and worldwide for use in the manufacture of
various alcoholic beverages. In the fiscal year ended 31 March 2006, Radico generated consolidated total net
revenues of Rs.4,945.11 million (US$111.71 million), and consolidated EBITDA of Rs.872.09 million
(US$19.54 million).

The Indian market for liquor has been growing at a compound annual growth rate (""CAGR'') of 9%
over the past decade with higher growth rates of approximately 12% in each of 2005 and 2006. The total value
of the current market has grown to an estimated US$7.5 billion from US$4.0 billion three years ago. This
growth has been driven by a number of factors, including the growing acceptance of alcohol consumption in
India, particularly among younger people, the emergence of a middle class with growing disposable incomes
and the increasing urbanisation of the country. Additional growth is being driven by gradual deregulation of
the liquor industry by various state governments. According to third-party industry reports, in addition to the
domestic liquor market in India, there exists an unregulated and unorganised sector, which does not comply
with all industry and government laws and regulations, including the payment of excise taxes. Although there
are no reliable figures on the size of the unregulated liquor producing sector, it is estimated to be at least as
large as the regulated sector. The regulated market, in which the Company operates, is comprised of
approximately 25 premium liquor manufacturers and 41 distillers. The UB Group has the largest share of the
liquor market in India at 55% and Radico, the second largest, has a 10% market share.

The Company has gradually changed its primary focus from being largely a spirits manufacturer and
bottler for other liquor companies towards being a manufacturer of its own branded liquors. The Company is
now focusing its marketing efforts on fast growing segments of the Indian liquor market Ì namely, ""foreign''
liquors such as whisky, rum, brandy and vodka, supported by a team of marketing professionals who promote
the Company's Indian-made foreign liquor (""IMFL''). IMFL is an industry term of art used to describe
""foreign'' liquors that are now made in India, which are distinguished from traditional ""country'' liquor, which
has been historically manufactured in India. Within each sector of the IMFL industry, the Company has
launched brands with price positioning aimed at the emerging middle class. The Company's brand portfolio
includes 8PM, Whytehall, Contessa and Old Admiral. In response to rapid growth in vodka consumption, the
Company also has recently launched Magic Moments vodka. In addition, the Company produces lower-end
branded ""country'' liquor, which accounted for approximately 13% of the Company's consolidated revenues
for the fiscal year ended 31 March 2006. The Company does not anticipate that ""country'' liquor will be a
significant line of its business going forward.

The Company owns and operates three modern distilleries for the production of molasses-based,
grain-based and malt-based spirits, with an annual capacity of 60 million, 27 million and 0.46 million litres,
respectively. The molasses-based and malt-based distilleries operate at over 95% of capacity and the molasses-
based spirit has received recognition internationally, including accreditation by Bacardi International for
meeting its international production specifications. The plant was also the first Indian distillery to receive the
ISO 9001:2000 certification in 2001.

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The Company's primary raw material is molasses, which it sources from local producers and then
ferments and distills into potable liquor. The Company also sources raw materials such as wheat, sorghum,
rice and barley for its grain- and malt-based spirits from neighbouring states. Finished liquor is then bottled by
either the Company's bottling facilities or Contracted Bottling Units. The Company seeks to control quality
and efficiency throughout each step of the process from the procurement of raw material through final
distribution. In addition, the Company's plants are supported by its bio-gas co-generation facility which
provides a reliable and cost-effective power supply.

The Company's shares are listed on the Indian Exchanges. In the fiscal year ended 31 March 2006,
Radico Khaitan had consolidated net revenues of Rs.4,945.11 million (US$111.71 million) compared to
Rs.4,329.24 million (US$97.01 million) in fiscal 2005, representing an increase of 14.22%. In fiscal 2006, the
Company recorded a profit after tax of Rs.451.66 million (US$10.20 million), compared to Rs.358.56 million
(US$8.04 million) in fiscal 2005, representing an increase of 25.96%.

Competitive Strengths

Radico Khaitan believes its competitive strengths are:

Strong Brands and Distribution: The Company's portfolio includes its three ""millionaire brands'':
8PM whisky, Contessa rum and Old Admiral brandy, which sold 4.1 MCA, 2.3 MCA and 1.3 MCA,
respectively, in the fiscal year ended 31 March 2006. The Company also has recently launched its Magic
Moments vodka, which is targeted primarily at the younger generation, and is continuing to strengthen and
broaden the Magic Moments brand. The Company has successfully launched various liquor brands in India
over the last 10 years. The Company's brand-building activities are complemented by competitive pricing
strategies and a team of marketing and distribution professionals who reach a wide range of liquor points of
sale throughout India.

Well Established Company with National Presence: The Company is a well established participant
in the Indian liquor industry and has a presence throughout India. The Company has an extensive regulatory
compliance system, including state bottling licences and Indian Government industrial licences for the
distillation and production of alcohol, which allow it to operate on a national level. These licences are difficult
to obtain, and presently the Indian Government is not issuing any new licences. In addition to the regulatory
licences, the industry is subject to a ban on advertising liquor products. However, the Company already has
well established brands, which the Company believes have strong brand loyalty. The Company has an
extensive network of bottling facilities across India and maintains modern distillation facilities. In addition, the
Company has established an effective marketing presence, which requires significant cost and effort to
promote the brands.

Lower Cost of Production: The Company enjoys cost advantages due to the economies of scale of its
operations and the location of its manufacturing facilities, which are close to molasses-producing regions in the
state of Uttar Pradesh. Radico Khaitan is also able to derive cost savings from its co-generation plant, which
enables the Company to be self-sufficient for its power needs. Further, the Company's modern production
facilities enable it to process raw materials more efficiently.

Product Quality: The Company has won a number of awards for both the quality of its products and
the standards of its facilities. Several of the Company's brands won the Monde Selection Awards in Brussels
in 2006, including a gold medal awarded to 8PM Bermuda rum. The Company's molasses-based spirits
frequently command a premium, and are supplied to other liquor manufacturers in India as well as exported.
The Company's malt-based spirit is matured in imported sherry oak wood casks and is made to an
international standard. The Company's facilities include a recently installed grain-based distillery in Rampur
which employs modern technology and a molasses distillery that holds an ISO:2000 9001 certification.

Experienced Management Team: The Company is led by Lalit Khaitan, who has several decades of
experience in the liquor industry along with his son, Abhishek Khaitan, an industrial engineer. Together they
are supported by an experienced management team with extensive knowledge of the Indian liquor market.

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Business Strategy
Radico Khaitan aspires to be India's largest domestic liquor and spirits provider, while at the same
time pursuing growth opportunities in both the domestic and international markets. In order to achieve these
objectives, the Company has adopted the following business strategies:
Focus on Brand Building: The Company intends to continue to build its brand and product portfolio
by launching a number of new brands and developing new products under existing brands. In addition, the
Company plans to continue to expand into sectors of the liquor industry where it does not currently have a
significant presence, such as the vodka market. Concurrently, the Company intends to pursue opportunities to
acquire brands which it believes will complement its existing product portfolio and its established production
and distribution networks. For example, in September 2005, the Company acquired several brands of Brihans
Maharastra Sugar Syndicate Ltd (""Brihans''), an established participant in the liquor industry. The
Company's products are on the approved list for the Canteen Stores Department (""CSD'') of the Indian
armed forces, a significant purchaser of liquor products in India.
Strengthen Presence in the Domestic Market: The Company plans to expand its domestic presence
by continuing to develop alliances with distributors and to focus on marketing. In recent years, the Company
has established a presence in several southern Indian states to complement what it believes to be an already
strong presence in northern India. The Company also intends to continue to move into the development of
higher-end IMFL products and away from the production of lower-end ""country'' liquor brands.
Expand into the International Markets: The Company has begun to move into the international
markets by launching its brands in foreign markets that have a demand for its products and by beginning to
produce certain of its products overseas in collaboration with joint venture parties. This is expected to enable
the Company to achieve greater visibility internationally, particularly where there is a large Indian diaspora.
The Company intends to establish a new brand segment to cater to these consumers and to take advantage of
other opportunities that may arise as global economic growth continues.
Pursue Strategic Acquisitions and Minority Investments: Radico Khaitan is participating in and
exploring selective strategic acquisitions, joint ventures and minority investments both in India and interna-
tionally to augment its capabilities and broaden its product offering. The Company is also pursuing the
establishment or acquisition of bottling facilities to augment its production and distribution strategies. A
portion of the proceeds of the sale of the Bonds will be deployed towards the Company's continuing efforts to
participate in and explore appropriate acquisition, joint venture and investment opportunities.

Products and Manufacturing Processes


Overview
The Company's product portfolio is comprised principally of spirits, which include whisky, rum,
brandy, gin and vodka, under a total of 34 brands, including 8PM whisky, Contessa rum, Whytehall whisky,
Old Admiral brandy, Special Appointment whisky, 8PM Bermuda rum, 8PM Excellency brandy, Magic
Moments vodka and Magic Moments gin. The Company believes that it is currently the second largest liquor
manufacturer in India. The sales of its IMFL have continually increased in recent years.
Year Total Sales of IMFL Growth %

2001-02 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.6 million cases Ì


2002-03 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.7 million cases 28%
2003-04 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6.3 million cases 34%
2004-05 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10.0 million cases 58%
2005-06 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12.0 million cases 20%

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The following chart shows the Company's brands by segment in each of the product categories:
PRODUCTS AND BRANDS

Whisky Rum Brandy Gin Vodka

8PM Whisky, Contessa, Old Admiral, Magic Moments, Magic Moments


Whytehall, 8PM Bermuda, 8PM Excellency, Big Hit,
8PM Royale, 8 PM Bermuda Whitefield, Contessa.
Special White Rum, Royal Oak,
Appointment, Black Cat, Radico Gold,
Whitefield, Lord Nelson Brihans
Radico Gold Napolean brandy
Supreme, Gold Finger
Contessa Deluxe,
Rampur No. 1,
Gold Finger,
Brihans Premium
Whisky

The following table shows the total sales volume of each of the Company's product categories, for the
years ended 31 March 2004, 2005 and 2006:
Year Ended March 31
2003 2004 2005 2006
Cases % Cases % Cases % Cases %

Whisky ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.21 46.84 2.86 45.12 5.13 51.19 6.25 52.02
Rum ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.18 46.32 2.55 40.27 3.31 34.90 3.49 29.03
Brandy ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.31 6.67 0.87 13.84 1.47 19.80 1.98 16.47
Gin ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.007 0.14 0.04 0.60 0.10 2.60 0.26 2.16
Vodka ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.002 0.03 0.01 0.17 0.01 0.38 0.04 0.31
TOTAL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.72 100 6.35 100 10.02 100 12.02 100

Whisky
Sales of the Company's whisky products accounted for 52.02% of the total sales volumes for the year
ended 31 March 2006.
Whisky is categorised in accordance of price in the Indian market, starting at Economy and going up
through Regular, Deluxe, Semi-Premium, Premium, Super Premium to Scotch, which is the highest priced
whisky.

Brands
The Company's key whisky brands are 8PM, 8PM Royale, Whytehall and Special Appointment.
These brands represented approximately 77% of the Company's total sales volume from whiskies for the year
ended March 31, 2006.
8PM Whisky: Radico Khaitan flagship whisky brand, 8PM whisky, was launched in October 1999.
In the first year of production, it became a ""one million-case brand'' (i.e. selling over 1 million cases per
year). This accomplishment earned it a place in the Limca Book of World Records, making it the first Indian
liquor brand to achieve this distinction. In the year 2004-05, 8PM Whisky crossed another landmark, the
""3 million-case sales mark''. 8PM Whisky represented approximately 66% of the Company's total sales
volume from whiskies for the year ended 31 March 2006.

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Year Total Sales of 8PM Whisky Growth %

2001-02ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.78 million cases Ó


2002-03ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.90 million cases 7%
2003-04ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.39 million cases 26%
2004-05ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.28 million cases 37%
2005-06ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.11 million cases 25%

In 2004, the Company acquired the Whytehall brand from Bacardi and in September 2005, the
Company acquired eight brands from Brihans Maharastra Sugar Syndicate (BMSS), including Brihans
Premium Whisky. These brands are registered with the Canteen Stores Department of armed forces.

Manufacturing Process

Molasses is the main raw material used by the Company to make whisky. Molasses is a by-product of
the sugar manufacturing process used in Indian sugar mills, which is extracted from boiled sugar cane juice
after the raw sugar has been removed.

Molasses is delivered to the Company's plants and stored in large tanks. From these tanks, it is
delivered to the fermenter house, where it is fermented and diluted in a ratio of approximately 1:3 with yeast.
After approximately 24 hours of fermentation, the fermented molasses is distilled to produce either Rectified
Spirit (""RS'') or Extra Neutral Alcohol (""ENA''). The RS and ENA are subsequently sent to storage tanks,
from which it is transferred to either bottling units or directly to buyers of the raw spirit. Rectified Spirit is
used for production of country liquor while the Extra Neutral Alcohol is used for Indian Made Foreign Liquor.

The distilled spirit (RS or ENA) is diluted to the required strength depending upon the branded
product to be manufactured and is mixed with a blend at the bottling stage. Depending upon the brand
specifications, separate blends are prepared. The main ingredients of the blend are ethyl alcohol, matured
spirits, colours, demineralised water, caramel and flavourings.

Finally, the bottled product is packaged for distribution.

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The process can be summarised on the following chart:

Molasses
Sugar molasses Effluent
On-site Fermenter Distillery
Mill Storage Treatment Plant
Tanks

Stored for Sale Rectified Spirit

“Country” Liquor
Production and Bottling

Stored for Sale

Extra Neutral Alcohol

“IMFL” Liquor
Production and Bottling

Brandy
Sales of the Company's brandy products accounted for 16.47% of the total sales volumes for the year
ended 31 March 2006. The sales of brandy are generally stronger in the southern region of India, where it is a
preferred spirit.

Brands
The Company's key brandy brands are Old Admiral, 8PM Excellency and Brihans Napoleon.
Old Admiral: Old Admiral Brandy was launched in October 2002 and is Radico Khaitan's most
successful brandy. Its sales have increased by over 100% since its launch and exceeded 1.3 million cases per
annum in 2005-06. Old Admiral Brandy represented approximately 67% of the Company's total sales volume
from brandies for the year ended 31 March 2006.
Total Sales of
Year Old Admiral Brandy Growth %

2002-03 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.22 million cases Ó


2003-04 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.74 million cases 237%
2004-05 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.23 million cases 66%
2005-06 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.33 million cases 8%
During 2004-05, the Company launched 8PM Excellency brandy, which is blended with French
cognac. Because of its new blend, unique taste and flavour, this brandy is showing promising volume growth.
In addition, the Company also owns Brihans Napoleon brandy, recently acquired from the Brihans
Maharastra Sugar Syndicate.

Manufacturing Process
The Company also uses RS or ENA to manufacture its brandy products, which is manufactured in a
process similar to that described above for whisky. The RS and ENA are blended at the bottling stage to
produce the brandy. Depending upon the brand specifications, separate blends are again prepared, with the

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main ingredients being ethyl alcohol, matured spirits, colours, demineralised water, caramel and flavourings.
The Company's 8PM Excellency brandy is also blended with imported French cognac.

Rum
Sales of the Company's rum products accounted for 29.03% of the total sales volumes for the year
ended 31 March 2006.
Rum is mainly categorized in semi-premium and regular segments of Indian liquor products. Rum is
particularly popular with the Indian department of defense and comprises a significant proportion of sales to
the armed forces.

Brands
Contessa: Radico Khaitan's Contessa Rum is also a ""one million-case brand'' and represented
approximately 67% of the Company's total sales volume from rum for the year ended 31 March 2006.
Contessa rum is one of the highest selling rums in the Canteen Stores Department of the armed forces.
Total Sales of
Year Contessa Rum Growth %

2001-02 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.73 million cases Ó


2002-03 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.05 million cases 18%
2003-04 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.11 million cases 3%
2004-05 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.53 million cases 20%
2005-06 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.33 million cases ¿8%
The Company also owns other rum brands like 8PM Bermuda, Black Cat, Lord Nelson and 8PM
white rum.

Manufacturing Process
The Company also uses RS or ENA to manufacture its rum products, as described above for whisky.
The RS and ENA are blended at the bottling stage to produce the rum. Depending upon the brand
specifications, separate blends are again prepared, with the main ingredients being ethyl alcohol, matured
spirits, colours, demineralised water, caramel and flavour essence.

Vodka
Sales of the Company's vodka products accounted for 0.04% of the total sales volumes for the year
ended 31 March 2006. Vodka can be manufactured using molasses-based or grain-based spirit.

Brands
Magic Moments: The Company has recently launched Magic Moments vodka, which is manufac-
tured using grain-based spirits.

Manufacturing Process
Vodka is generally manufactured either from molasses-based spirit or grain-based spirit. In the case
of molasses-based spirit, the process used is similar to that described above for whisky, using ENA and RS.
For grain-based spirit, the main raw materials are grains like sorghum, rice, wheat and millet. The grains are
ground to produce flour, which is mixed with hot water, creating a ""flurry''. Various enzymes are added to this
flurry, which convert the starch content into sugar. The flurry is diluted in a ratio 1:3 and the diluted flurry is
fermentated for approximately 50 hours. The resulting mixture is then distilled to create ENA, which is
subsequently stored in tanks, from which it is either sent to the bottling plant to manufacture the final product
or sold directly to buyers of ENA. In the bottling section, the spirit is diluted to the appropriate strength and
mixed with the particular blend depending on the IMFL brand.

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Gin
Sales of the Company's gin products accounted for 0.26% of the total sales volumes for the year
ended 31 March 2006.

Brands
The Company has three main brands of gin, Magic Moments, Contessa, and Big Hit.

Manufacturing Process
The Company also uses RS or ENA to manufacture its gin products, as described above for whisky.
The RS and ENA are blended at the bottling stage to produce the gin. Depending upon the brand
specifications, separate blends are again prepared, with the main ingredients being ethyl alcohol, matured
spirits, demineralised water and flavour essence.

Owned Production Facilities


The Company owns and operates three efficient and modern distilleries for the production of
molasses-based, grain-based and malt-based spirits, with an installed capacity of 60 million, 27 million and
0.46 million litres per year, respectively. The molasses-based distillery operates at over 95% of capacity and
has received recognition from international sources, including accreditation by Bacardi as meeting its
international specifications for production. The plant was also the first Indian distillery to receive the ISO
9001:2000 certification in 2001. The grain-based distillery produces alcohol derived from grain, which is
distributed to other manufacturers throughout India and abroad, and is also used to manufacture the
Company's Magic Moments vodka. The malt-based distillery produces alcohol derived from barley, which is
distributed to other manufacturers and abroad.
Through its wholly owned subsidiary, Radico Global Ltd., the Company also recently has entered into
a joint venture with a UK-based distillery to market certain of its brands for sale primarily in the United
Kingdom and Eastern Europe.

Contracted Bottling Units


The Company has entered into arrangements with 32 Contracted Bottling Units in various states for
the manufacture and marketing of its own IMFL brands. Manufacturing under those arrangements is carried
out under the close supervision of the Company's staff. The Company procures orders, plans production,
arranges for material inputs, executes marketing, collects debts and is ultimately responsible for the profit or
loss resulting from the operations. The Contracted Bottling Unit provides the infrastructure for production
including labour, utility costs such as power and water and licensed production capacity. A fixed bottling fee is
paid by the Company to the Contracted Bottling Unit for these services. The difference between the sale price
and the direct costs are reflected as income in the sales schedule in the Company's balance sheet in their
accounts, which is also disclosed in the notes to those accounts.

Bottling and Packaging


The Company sources packaging material from various vendors throughout India to increase cost
efficiency. The primary packaging materials are bottles, labels, mono cartons and guala caps. The Company
primarily uses glass bottles, however, the Company also uses PET bottles in certain states. The bottle sizes
vary from 90 ml. to 1.5 litres according to the demand in various markets. The major brands of the Company
are packaged in mono cartons. About four to five brands use ""guala'' caps, which are secure caps designed to
help prevent counterfeiting of the Company's products.

Markets
The IMFL market in India is estimated to be close to 100 MCA. The major liquors are whisky, rum,
brandy and white spirits including vodka and gin. The southern part of India (including Andhra Pradesh,

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Tamil Nadu, Karnataka and Kerala) account for more than 50% of the entire liquor consumption in India.
The Canteen Stores Department of the armed forces is a major market for IMFL, which the Company
estimates to be approximately 12 MCA.
The Country Liquor market, which is lower quality liquor, is estimated to be close to 250 MCA.

Customers
The Company's most significant customer is the CSD, which, in the fiscal year ending 31 March
2006, accounted for 21.2% of the Company's total IMFL sales. The rest of the Company's customers come
from a diverse base, no one of which comprises a significant percentage of its revenues. These customers
include Andhra Pradesh Beverages Corporation Ltd, Kerela State Beverages (Marketing and Manufacturing)
Corporation Ltd, Karnataka State Beverages Corporation Ltd, Rajasthan State Beverages Corporation Ltd (A
Government of Rajasthan Undertaking) and Ashok Wadia & Co.

Competition
The major participants in the Indian liquor industry are the UB Group, Radico Khaitan Ltd,
Seagrams India Ltd, Jagatjit Industries Ltd, Mohan Meakins Ltd and Khoday Ltd. There are a few
international participants also present in India, including Bacardi International, although their presence is
relatively small.
Competition in the Indian liquor industry is intense. The Company seeks to remain competitive by
emphasising the quality of its products and packaging and the efficiency of distribution and supply. The
Company regularly undertakes consumer research to determine trends in packaging and consumer preferences
concerning liquor.
The Company has begun to expand its presence in international markets by participating in and
exploring appropriate acquisition, joint venture and investment opportunities as well as by continuing to export
certain of its brands. The Company recently has entered into a joint venture with a UK-based distillery to
market certain of its existing brands as well as to develop new brands primarily for the UK and Eastern
European markets. The Company anticipates that these markets will be the focus of its international
expansion efforts in the near future, along with continuing exports to the Middle East and Africa. The
Company also is exploring additional joint venture possibilities with various international liquor companies as
well as opportunities to acquire brands and bottling units primarily in India but also abroad.
The Company's wholly-owned subsidiary, Radico Global Ltd., located in the Middle East, is
expected to continue to be the holding entity for the Company's overseas operations. A portion of the proceeds
of the sale of the Bonds will be deployed towards the cost of developing the Company's international and
export operations, which are anticipated to become increasingly important components of the Company's
business and operations.

Sales, Marketing and Distribution


Radico has established a strong sales and distribution team throughout India. The Company sells its
products primarily through the ""wholesaler-to-retailer'' route, minimising the need to have distributors in the
supply chain. The Company currently sells to a number of wholesalers, some via sales depots, who in turn sell
to approximately 32,000 retail outlets. Apart from wholesalers, a total of about 300 employees, divided into
four zones, each headed by a general manager, ensure sales and distribution throughout India.
The Company launches brands after reviewing market research performed by A.C. Nielson.
Marketing decisions are generally taken at two levels. National campaigns are executed at Company
headquarters, while regional campaigns are effected at the relevant locations according to local markets. The
Company employs a marketing ""pull'' strategy, including both ""above the line'' and ""below the line''
methodology. Marketing investment decisions are taken to develop brand growth and brand recognition. From
time to time the performance of the brands is monitored to ensure marketing goals are being achieved.

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Raw Materials and Major Suppliers


The Company maintains a diverse base of suppliers from which it sources its raw materials. The
Company obtains molasses from the sugar mills in and around Uttar Pradesh, while grain is obtained from
suppliers throughout India. The Company's main supplier of glass bottles is Hindustan National Glass &
Industries Ltd, Universal Glass, Kwality Offset Press, 21st Century Printers Ltd and ITC Ltd. The other raw
materials for the Company's packaging, for example, its labels, are obtained from a number of suppliers across
India. The Company believes its raw material purchase price is close to the industry average and works
proactively with its suppliers as part of its procurement management approach.

Properties
The Company has approximately 40 acres of freehold property primarily in Rampur and 33 acres of
leasehold property throughout India for housing its manufacturing facilities and bottling facilities as well as for
its distribution and administrative offices, including its registered office at Uttar Pradesh and its corporate
office at New Delhi.

Freehold Properties
The Company owns the operating premises in Panwaria, Ajeethpur and Shadinagar villages in
Rampur, Uttar Pradesh where the distillery is located. It also holds a number of leasehold properties in
Rampur.
The Company's owned bottling unit in Bajpur, Uttaranchal is located on a property acquired on a
30-year lease from the Uttar Pradesh State Industrial Development Corporation Ltd. The Company recently
acquired additional property in Bajpur, Uttaranchal, for commencing its PET manufacturing business.
The Company's bottling unit in Reengus, Rajasthan is maintained on land leased from the Rajasthan
State Industrial Development and Investment Corporation Limited for a period of 99 years.
The Company sold property located in Rampur, Uttar Pradesh to Whyte and Mackay India Limited
(Whytehall India Limited) in 1997, which has reverted to the Company pursuant to the amalgamation of
Whytehall India Limited with the Company. The property owned by Anabeshahi Wines and Distilleries
Private Limited in Mahaboobanagar, Andhra Pradesh has also been acquired by the Company pursuant to the
merger of this subsidiary with the Company.
The Company also holds certain properties in Hyderabad, Bangalore, Mohali and Delhi on lease.
Certain of the Company's properties in Village Panwaria, Rampur have been leased by the Company
from the State Government of Uttar Pradesh, usually for periods of 30 years, with the option of further
renewal at the expiry of the 30 years' lease. Some of the properties initially held as leasehold for several years
were purchased by the Company from the State Government between 1997 and 2005.

Leasehold Properties
As regards the properties of the Company held by way of lease, or leave and license agreements, the
Company has acquired plots in certain industrial areas from the State Governments of Uttar Pradesh and
Rajasthan for periods ranging from 30-90 years. The Company has not obtained renewal of the lease with the
State Government of Uttar Pradesh pertaining to its property at Shadinagar and Panwaria. The lease expired
on 30 April 2003. Although the Company applied for a renewal of the lease in May 2002, no reply has been
forthcoming from the State Government. The Company continues to use the land for the purposes of its
distillery.

Intellectual Property
The Company relies on trademarks such as 8PM, Whytehall and Contessa to protect its intellectual
property, which is critical to its business. The Company has approximately 77 registered trademarks in India.
Applications for registration have been made in respect of approximately 108 other trademarks. Of these

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trademarks, approximately 12 unregistered marks/brands were assigned by Brihan Maharashtra Sugar


Syndicate Limited to the Company, which has applied to register these marks/brands in its own name. The
Company also relies on unpatented proprietary know-how, continuing technological innovation and other trade
secrets to develop and maintain its competitive position. The Company constantly seeks to protect its
trademarks against unauthorised use or infringement, but any such precautions may not provide meaningful
protection against competitors or protect the value of the Company's trademarks.
The Company also has registrations in respect of certain designs of bottles.

Trademarks
The Company's trademarks can be classified as either registered or pending registration. In addition,
the Company acquired four trademark brands pursuant to acquisition agreements. Acquisition of these
trademarks are achieved with each Company pursuant to a series of agreements, which include business
transfer, non-compete and trademark assignment provisions. Under the business transfer provisions, the
vendor agrees to transfer the business and goodwill associated with the particular brand(s). In addition, the
vendor agrees to cease carrying out specified businesses (such as using and advertising the transferred brands)
and, where applicable, to hand over all CSD brand registrations for the products to the Company and also give
a ""No Objection Certificate'' to the CSD for the transfer of the brand registrations pertaining to the specified
trademarks in favour of the Company. The Company typically assumes none of the liabilities of the particular
vendor. Under the non-compete provisions, the vendor undertakes not to compete directly or indirectly in any
business which involves, relates to, or competes with the specified businesses (including use or advertising of
the trademark). The vendor also agrees and undertakes not to register any trademark using the word or logo
similar or related to the acquired trademark(s).

Regulation and Environmental Matters


The Company's business operations, and its ownership and operation of real property, are subject to a
broad range of national, state, local and foreign environmental, health and safety laws and regulations
pertaining to release, emission and discharge of substances, remediation of contaminated soil and ground-
water, waste handling and disposal and employee health and safety. The Company has policies in place to
address these detailed and increasingly complex requirements and regularly review practices, operations and
compliance at its manufacturing facilities. The Company also has put in place procedures to take corrective or
preventative action where necessary. The Company believes that it is currently in material compliance with all
applicable laws and regulations, and have not incurred material capital expenditures relating to environmental
matters during years ended 31 March 2003, 2004, 2005 and 2006.
The consents under the Water Act and Air Act for one of the manufacturing units of the Company at
Rampur, Uttar Pradesh, have expired. The Company has applied for renewals of these consents but has yet to
receive the renewed consents.
The Company does not currently anticipate any material adverse effect on its business or competitive
position as a result of its efforts to comply with environmental, health and safety requirements. Nevertheless,
the Company's business inherently has some risk of environmental liability, and the Company could become
subject to material environmental claims in the future. Further, future actions by national, state, local and
foreign governments concerning environmental matters could result in new laws or regulations, changes to
existing laws or regulations, new interpretations of existing laws or regulations, or more vigorous enforcement
that could materially increase the cost of production activities or otherwise adversely affect demand for
products. See ""Risk Factors Ì The Company faces increased environmental regulation and changing
consumer environmental awareness and changing consumer environmental awareness''.

Employees and Labour Relations


As at 31 March 2006, the Company had a total of 850 employees at its production facilities and
corporate offices. The Company believes it generally has a good relationship with its workforce and there is

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constructive interaction between workers' representatives and the Company's management, with no working
day being lost due to any strike activity over the year.

Legal Proceedings

There are a number of consumer litigations filed against the Company in relation to its products.
However, the Company does not believe that any of these actions either individually, or in the aggregate, are
material and the compensation amounts sought from the Company in these litigations aggregate to
approximately Rs.3,480,000.

There are a number of suits and petitions filed by the employees of the Company seeking back wages
and reinstatement of service. The monetary liability of the Company in these litigations cannot be quantified,
however, the Company believes such suits and petitions to occur in the ordinary course of its business.

There are approximately 12 income tax related proceedings pending against the Company which
involve a tax liability on a sum of approximately Rs.57 million. These proceedings relate to inter alia a
disallowances of expenses on foreign travel and disallowances of depreciation claimed by the Company on
certain machinery. In addition to these proceedings, the Income Tax Department has during February 2006 to
April 2006 carried out series of searches and seizures on the premises of the Company, its godowns, and
residences of key officials and promoters. The Company and its key officials and promoters have not yet
received any show cause notices from the Income Tax Department in this regard. For more information,
please refer to the Risk Factors Ì The Company is subject to Regulatory Risks and Government Regulation.

Apart from the foregoing, from time to time, the Company is a party to litigation and legal
proceedings that it considers generally to be a part of the ordinary course of business. While no assurance can
be given, the Company believes that, taking into account insurance coverage and provisions, none of the
litigation or legal proceedings which the Company is currently involved in, including those noted above, could
reasonably be expected to have a material adverse effect on the Company's business, financial condition or
results of operations.

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MANAGEMENT AND EMPLOYEES

Board of Directors

Under the Articles of Association of the Company, the Company must have at least three but not
more than twelve Directors. One third of the Directors are liable to retire by rotation at the Annual General
Meeting of the Company. The Managing Directors and Joint/Deputy/Assistant Managing Director are not
liable to retire by rotation.

No qualification shares are prescribed for the Directors of the Company. At present, the Directors of
the Company are:
Name Title Appointed

Lalit Khaitan ÏÏÏÏÏÏÏÏÏÏÏÏ Chairman and Managing Director (Chairman of the 28 January 2003
Board for life as reflected in the Articles of
Association)
Abhishek Khaitan ÏÏÏÏÏÏÏÏ Managing Director 28 January 2003
K.P. Singh ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Whole time Director 28 January 2003
Karna Singh MehtaÏÏÏÏÏÏÏ Non-executive and independent 10 March 2003
Ashutosh PatraÏÏÏÏÏÏÏÏÏÏÏ Non-executive and independent 28 January 2003
Sanjay Jalan ÏÏÏÏÏÏÏÏÏÏÏÏÏ Non-executive and independent 28 January 2003
Raghupati Singhania ÏÏÏÏÏÏ Non-executive and independent 28 January 2003
Amit Burman ÏÏÏÏÏÏÏÏÏÏÏÏ Non-executive and independent 31 March 2005

Directors' Biographies

Dr. Lalit Khaitan:

Lalit Khaitan is the Chairman & Managing Director of the Company. He is an experienced
industrialist and has managed affairs of the Company for the last 25 years.

Lalit Khaitan is a member of the managing committee of the PHD Chamber of Commerce &
Industry. He is also a member of Associated Chambers of Commerce and Industry. All India Distillers
Association, U.P. Distillers Association and the Confederation of Indian Industry.

In the course of his career, Lalit Khaitan has won several awards in recognition of his services,
namely:

(a) ""Indira Gandhi National Unity Award'' presented by the former President of India, Giani Zail
Singh (instituted by All India National Unity Conference);

(b) ""Vijay Ratna Award'' presented by the Honourable Prime Minister of India, Shri Chandra
Sekhar (instituted by the International Friendship Society of India);

(c) ""National Builder of Eminence in the Ninetees'' award (instituted by International Business
Council).

Abhishek Khaitan:

Abhishek Khaitan is the Managing Director and the son of Lalit Khaitan. An alumnus of Modern
School, New Delhi, Abhishek Khaitan received his Bachelors of Engineering in Industrial Production from
BMS College of Engineering, Bangalore succeeded by a course in Managerial Finance and Managerial
Accounting at Harvard University. Abhishek Khaitan is a talented industrialist, under whose leadership the
Company has grown considerably.

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Karna Singh Mehta:


Karna Singh Mehta is a leading Chartered Accountant and is the Managing Partner of the firm of
Chartered Accountants, M/s. S.S. Kothari & Co. Karna Singh Mehta has vast experience in the field of
Finance and Accounting. He is on the board of directors of several large and leading companies of India and is
also a Member of Federation of Indian Chambers of Commerce and Industry.

Ashutosh Patra:
Ashutosh Patra is a Supreme Court lawyer and a leading legal expert. He is one of the partners of the
law firm M/s. O.P. Khaitan & Co. Ashutosh Patra has been in the legal practice for over 25 years.

K.P. Singh:
K.P. Singh is the whole time Director, designated as President (Operations). K.P. Singh heads the
Distillery Unit of the Company at Rampur and manages all operations. He is also the Occupier of the Rampur
Factory. K.P. Singh is a qualified technical specialist and has over 30 years of experience in the liquor industry
and has been associated with Radico Khaitan Ltd for over a decade. He has held the position of Chief
Executive of Kedia Distillery Ltd for a number of years.

Sanjay Jalan:
Sanjay Jalan is a practising Chartered Accountant by profession and has over 15 years of experience
in the field of Finance and Accounting. Sanjay Jalan is on the board of several companies.

Raghupati Singhania:
Raghupati Singhania is an experienced industrialist and is the Vice Chairman and Managing Director
of J.K. Industries Ltd. He is also on the board of other J.K. Group companies including J.K. Lakshmi Cement
Ltd and J.K. Agri Genetics Ltd.

Amit Burman:
Amit Burman is an experienced industrialist and is the Executive Director of Dabur India Ltd. He
received his Bachelor of Science in Industrial Engineering from Lehigh University Bethlehem, P.A. U.S.A. in
1990. He completed his Master's degree in the same subject from the Columbia University, N.Y., U.S.A. in
1993. Thereafter, he did his Master of Business Administration from the University of Cambridge in 1995. He
is also on the board of directors of several major companies of India.

Committees
In compliance with the provisions of its Listing Agreements and the Companies Act, the Company
has constituted different committees, including the Audit Committee, Shareholders' Grievances Committee
and Nomination Committee. The Company does not have a Finance Committee. The constitution of the
Audit Committee and the Shareholders' Grievances Committee is required under Indian law and a
constitution of Finance Committee is optional under Indian law. A brief detail of various committees
constituted by the Company is provided hereunder:

(i) Audit Committee


The Board of Directors has constituted an Audit Committee comprising of three independent
Directors.
The constitution of the Audit Committee satisfies the requirements of Section 292A of the
Companies Act, 1956 and Clause 49 of the Listing Agreement of the Bombay Stock Exchange Ltd and

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National Stock Exchange of India Ltd. The meetings of the Audit Committee are generally held every
quarter. The scope of work and main functions of the Audit Committee include:
(1) Reviewing the Company's financial reporting process, financial statements and financial risk
management policies;
(2) Reviewing the adequacy of the internal control system and functioning of the internal audit
term;
(3) Discussing with management and external auditors, deciding audit plans and conducting post
audit reviews of audit reports;
(4) Recommending the appointment and removal of the external auditors and determining the
external auditors fees; and
(5) Reviewing with the management, the annual and quarterly financial statements of the Company
before submission to the board.
The Audit Committee comprises of the following persons:
(1) Sanjay Jalan (Chairman);
(2) Ashutosh Patra; and
(3) Raghupati Singhania.

(ii) Shareholders' Grievances Committee


The Board of Directors has constituted a Shareholders' Grievances Committee to investigate investor
issues, with an emphasis on redressal of complaints of shareholders and investors that relate to transfer and
transmission of shares, non-receipt of annual reports, dividends and redressal of investors' queries etc. The
meetings of the Shareholders' Grievances Committee are held every quarter.
The Shareholders' Grievances Committee comprises the following persons:
(1) Ashutosh Patra (Chairman);
(2) Sanjay Jalan; and
(3) K.P. Singh.

(iii) Nomination Committee


Nomination Committee of the Board of Directors of Radico was constituted in order to lay down the
guidelines for appointment/reappointment of Directors of the Company.
The scope of work and main functions of the Nomination Committee include:
(1) To lay down the criteria and guidelines for the appointment/re-appointment of the Directors;
(2) To recommend the induction of the Board Members to various committees;
(3) To decide the sitting fees to be paid to the Directors for attending the Board Meetings and
Committee Meetings from time to time; and
(4) To review the candidacy of various professionals and experts and recommend their appoint-
ment/re-appointment to the Board for the purpose of inducting new directors and raising the
profile of the board.
The Nomination Committee comprises the following persons:
(1) Lalit Khaitan (Chairman);
(2) Ashutosh Patra; and
(3) K.S. Mehta.

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Compensation of Directors

Lalit Khaitan, Chairman & Managing Director Ì Rs.8.1 million per annum for the year ended
31 March 2006.

Lalit Khaitan presently draws a basic salary of Rs.700,000 per month. He is entitled to several
perquisites and benefits, including provision of residential accommodation, reimbursement of medical
expenses incurred, leave, travel allowance for himself and his family, contribution to provident fund and other
benefits and allowances, including the premium on personal accidents insurance and mediclaim policy. He is
also entitled to the payment of a commission from the Company, subject to a maximum of 2% of the net
profits of the Company for each financial year.

Abhishek Khaitan, Managing Director Ì Rs.5.7 million per annum for the year ended 31 March
2006.

Abhishek Khaitan presently draws a basic salary of Rs.600,000 per month. He is entitled to several
perquisites and benefits including provision of residential accommodation, reimbursement of medical expenses
incurred, leave, travel allowance for himself and his family, contribution to provident fund and other benefits
and allowances, including the premium on personal accidents insurance and mediclaim policy. He is also
entitled to the payment of a commission from the Company, subject to a maximum of 2% of the net profits of
the Company for each financial year.

K P Singh, Whole time Director & President (Operations) ÌRs.2.92 million per annum.

K.P. Singh presently draws a basic salary of Rs.105,000 per month. He is entitled to several
perquisites and benefits including provision of residential accommodation, reimbursement of medical expenses
incurred, leave, travel allowance for himself and his family and contribution to provident fund and other
benefits and allowances.

Non-Executive Directors

Non-executive directors are paid a sitting fee of Rs.5,000 per board meeting and Rs.5,000 per board
committee meeting.

Shareholding of Directors
Sl. No. Name No. of Shares

1. Lalit Khaitan ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 163,400


2. Abhishek Khaitan ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86,065
3. Ashutosh Patra ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ NIL
4. K.S. Mehta ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ NIL
5. K.P. Singh ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,755
6. Raghupati SinghaniaÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ NIL
7. Sanjay Jalan ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ NIL
8. Amit Burman ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ NIL

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Senior Management
Name Designation DOB

LALIT KHAITAN CHAIRMAN & MANAGING DIRECTOR 02.06.1943


ABHISHEK KHAITAN MANAGING DIRECTOR 29.04.1973
RK MEHROTRA PRESIDENT (Finance) 25.02.1939
RAJU VAZIRANEY PRESIDENT (Sales and Marketing) 15.07.1961
K.P. SINGH PRESIDENT (Operations) 01.01.1952
KULBIR CHAUDHRY HEAD OF HR 27.07.1957
SANJAY LAMBA EXECUTIVE VICE PRESIDENT 12.04.1965
JITENDRA JAIN VICE PRESIDENT 25.04.1971
PARITOSH SWARUP HEAD OF MATERIALS 29.08.1956
ANIL CHAWLA GENERAL MANAGER AND COMPANY 22.09.1964
SECRETARY

Employees
The Company has the following categories of employees:
Permanent Employee: a full-time employee appointed as such, in writing, by the Company. The
permanent employees are further categorised as:
(a) President;
(b) Vice President/Head of Department;
(c) Assistant Vice President;
(d) General Manager/Deputy General Manager/Zonal Manager;
(e) Senior Manager/Manager/ Regional Sales Manager;
(f) Area Manager/Deputy Manager/Assistant Manager; and
(g) Executive/Officer/Supervisor.
In addition, the Company has trainees, who are appointed for a short duration ranging from 2 months
to 1 year as part of his/her academic pursuits. There are three categories of trainees Ì summer trainee,
industrial trainee and management trainee.

Gratuity
The Company pays its employees gratuity in accordance with the provisions of Payment of Gratuity
Act 1972 pursuant to which an employee is entitled to 15 days' salary for every completed year of service,
payable upon completion of five years with the Company. The liability in respect of the employees is provided
through a policy taken from Life Insurance Corporation of India.

Superannuation
The Company maintains a scheme through Life Insurance Corporation of India under which 15% of
the basic salary of the employee is contributed for employees with a salary in excess of Rs.6,000 per month
payable upon completion of five years with the Company.

Provident Fund
The Company maintains an Employees' Provident Fund trust in compliance with the Employees'
Provident Fund and Miscellaneous Provisions Act, 1952 (the ""EPF Act''). The benefits are payable on
termination of service either due to (a) retirement; (b) discharge or (c) retrenchment or resignation. The

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trust also provides for a family pension scheme. The employees and the employer covered under the EPF Act
have to contribute equally to the trust. The statutory rate of contribution under the EPF Act at present is 12%
of the basic salary.

ESI
The Company is subject to the provisions of the Employees State Insurance Act 1968, pursuant to
which every employee with wages up to a maximum of Rs.7,500 per month is covered and 4.75% of the
contribution is paid by the Company.

Additional Benefits
Employees of the Company receive, in addition to the benefits described above, annual holiday, sick
leave, leave encashment, medical insurance and accident insurance.

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PRINCIPAL SHAREHOLDERS
The following is the summary of the Issuer's shareholding structure as at 31 March 2006.
Category No. of Shares Held % of Share Holding

Promoters ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 55,500,640 57.54


Institutional Investors
Mutual Funds and UTI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,671,546 5.88
Insurance Companies and BanksÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,939,505 2.01
FIIs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,158,994 10.53
Others
Private Corporate Bodies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,272,438 4.44
Indian Public ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15,937,832 16.52
NRIs/OCBsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,769,265 2.87
Any Other
Relatives of Promoters ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 197,720 0.21
GRAND TOTALÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 96,447,940 100.00

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TERMS AND CONDITIONS OF THE BONDS


The following terms and conditions (except for the sentences in italics) will be endorsed on the
certificates, if any, issued in respect of the Bonds:
The issue of up to US$50,000,000 3.5% convertible bonds due 2011 (the ""Bonds''), of Radico
Khaitan Limited (the ""Company'') was authorised by a resolution of the Board of Directors of the Company
adopted on 19 June 2006 and is subject to the passing of a special resolution by the shareholders of the
Company at its extraordinary general meeting of shareholders on 14 July 2006. The Bonds are constituted by a
trust deed (the ""Trust Deed'') to be dated on or about 26 July 2006 and made between the Company and The
Bank of New York, London branch as trustee (the ""Trustee'', which term includes any successor trustee
under the Trust Deed) for the holders of the Bonds (the ""Bondholders''). The Company has entered into a
paying and conversion agency agreement (the ""Agency Agreement'') to be dated on or about 26 July 2006
with The Bank of New York as registrar, The Bank of New York, London branch as the principal agent,
paying agent, conversion agent and transfer agent (together the ""Agents'', and each, an ""Agent'') and the
Trustee in relation to the Bonds. The registrar, principal, paying, conversion and transfer agents for the time
being are referred to below as the ""Registrar'', the ""Principal Agent'', the ""Paying Agent'', the ""Conversion
Agent'' and the ""Transfer Agent''. The statements in these Terms and Conditions (the ""Conditions'') include
summaries of, and are subject to, the detailed provisions of the Trust Deed. Copies of the Trust Deed and the
Agency Agreement are available for inspection at the principal office of the Trustee being at the date hereof at
The Bank of New York, 48th Floor, One Canada Square, London E14 5AL, United Kingdom and at the
Specified Offices of each of the Agents. The Bondholders are entitled to the benefit of the Trust Deed and are
bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement
applicable to them.

1. STATUS
The Bonds constitute (subject to Condition 7.3) direct, unconditional, unsubordinated and unsecured
obligations of the Company and rank pari passu among themselves and (subject as aforesaid and other than
any obligations preferred by mandatory provisions of law) with all other present and future unconditional,
unsubordinated and unsecured obligations of the Company. The Bonds are not, and are not expected to be,
rated by any rating agency.

2. FORM AND DENOMINATION


The Bonds are issued in registered form in minimum denominations of US$10,000 each or any
amount in excess thereof, which is an integral multiple of US$10,000. Subject to the following paragraph, a
bond certificate (each a ""Certificate'') will be issued to each Bondholder in respect of its registered holding of
Bonds. Each Bond and each Certificate will have an identifying number which will be recorded on the relevant
Certificate and in the register of Bondholders (""Register'') which the Company will procure to be kept by the
Registrar.
The Bonds will initially be represented by the Global Certificate deposited with, and registered in the
name of The Bank of New York Depository (Nominees) Limited, being a nominee for the Common
Depository for Euroclear Bank S.A./N.V., as operator of the Euroclear System (the ""Euroclear Operator'')
and Clearstream Banking societ π eπ anonyme (""Clearstream, Luxembourg''). Except in the limited circum-
stances described in the Global Certificate, owners of interests in Bonds represented by the Global Certificate
will not be entitled to receive definitive Certificates in respect of their individual holdings of Bonds. The Bonds
are not issuable in bearer form.

3. TITLE
Title to the Bonds passes only by transfer and registration in the Register. The Holder of any Bond
will (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is
overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, or the theft or
loss of, the Certificate issued in respect of it) and no other person will be liable for so treating the holder. In

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these Conditions, ""Bondholders'' and (in relation to a Bond) ""Holder'' means the person in whose name a
Bond is registered in the Register.

4. INTEREST

4.1 Interest Rates; Business Day

Subject to the Conditions, the Bonds will each bear interest on the outstanding principal amount of
the Bonds from (and including) 15 July 2006 (the ""Interest Commencement Date'') at the rates of 3.5% per
annum which will become payable semi-annually in arrears on 15 January and 15 July in each year (each an
""Interest Payment Date'') (or if such day is not a Business Day (as defined below), the next day that is a
Business Day) with (a) the first such payment being made on 15 January 2007 in respect of the period from
and including the Interest Commencement Date to but excluding the first Interest Payment Date, and (b) the
last such payment being made on 27 July 2011 (or if such date is not a Business Day (as defined below), the
next day that is a Business Day) for the period from 15 January 2011 through and including 27 July 2011.

Where interest is required to be calculated in respect of a period of less than a full year period, it shall
be calculated on the basis of a 360 day year consisting of 12 months of 30 days each and, in the case of an
incomplete month, the number of days elapsed on the basis of a month of 30 days.

In these Conditions ""Business Day'' means a day (other than a Saturday or Sunday) on which banks
are open for general banking business in London, New York City, Delhi, Mumbai, the city in which the
Specified Office of each Agent is located and in the case of surrender of Certificates, the place where such
Certificates are surrendered;

4.2 Accrual of Interest

Each Bond will cease to bear interest on the earlier of:

(A) where the Conversion Right (as defined in Condition 6.1(A)) shall have been exercised in
respect of that Bond, from the Interest Payment Date immediately preceding the relevant
Conversion Date (as defined in Condition 6.2(A)) or, if the Conversion Date falls prior to the
first Interest Payment Date, from 26 July 2006 (the ""Issue Date''); and

(B) the due date for redemption of that Bond unless, after surrender of the Certificate, payment of
principal or premium (if any) or interest is improperly withheld or refused or default is
otherwise made in respect of such payment. In such case interest will continue to accrue both
before and after judgement until whichever is the earlier of:

(1) the date on which all amounts due in respect of such Bond have been paid; and

(2) seven Business Days after the date on which the full amount payable in respect of that
Bond has been received by the Principal Agent and notice to that effect has been given to
the Bondholders in accordance with Condition 18.

5. TRANSFERS OF BONDS; ISSUE OF CERTIFICATES

5.1 Transfers

Subject to the terms of the Agency Agreement and Condition 5.4, a Bond may be transferred by
depositing the Certificate issued in respect of that Bond, with the form of transfer on the back duly completed
and signed, at the Specified Office of the Registrar or the Transfer Agent. No transfer of title will be valid
unless entered in the Register.

Transfers of interests in the Bonds evidenced by the Global Certificate(s) will be effected in
accordance with the rules of the relevant clearing systems.

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5.2 Delivery of New Certificates


Each new Certificate to be issued upon transfer of Bonds will, within five Business Days of receipt by
the Transfer Agent of the form of transfer, be mailed by uninsured mail at the expense of the Company and at
the risk of the Holder entitled to the Bond to the address specified in the form of transfer.
Except in the limited circumstances described in the Global Certificate(s) owners of interests in
Bonds represented by the Global Certificate(s) will not be entitled to receive definitive Certificates in respect
of their individual holdings of Bonds.
Where some but not all the Bonds in respect of which a Certificate is issued are to be transferred,
converted, purchased or redeemed, a new Certificate in respect of the Bonds not so transferred, converted,
purchased or redeemed will, within five Business Days of deposit or surrender of the original Certificate with
or to the Transfer Agent, be mailed by uninsured mail at the expense of the Company and at the risk of the
Holder of the Bonds not so transferred, converted or redeemed to the address of such Holder appearing in the
Register.

5.3 Formalities Free of Charge


Registration of transfer of Bonds and issuance of new Certificates will be effected without charge to
the Bondholders by or on behalf of the Company or any of the Agents, subject to payment by Bondholders (or
the giving of such indemnity as the Company or any of the Agents may require) in respect of any tax or other
governmental charges which may be imposed in relation to it.

5.4 Transfer Periods


No Bondholder shall require the transfer of a Bond to be registered (i) during the period of fifteen
(15) days ending on (and including) the due date for any payment of principal, premium or interest on such
Bond; (ii) during the period of fifteen (15) days ending on (and including) the dates for redemption pursuant
to Conditions 9.2 and 9.3; (iii) after a Bondholder Purchase Notice in respect of such Bond has been
delivered; or (iv) after the Certificate in respect of such Bond has been deposited for conversion pursuant to
Condition 6.

5.5 Regulations
All transfers of Bonds and entries in the Register will be made subject to the detailed regulations
concerning transfer of Bonds set forth in the Agency Agreement. The regulations may be changed by the
Company, with the prior written approval of the Trustee and the Registrar. A copy of the current regulations
will be mailed (at the Company's expense) by the Registrar to any Bondholder who asks for one and is
available for inspection at the Specified Office of the Principal Agent.

6. CONVERSION
6.1 The Conversion Right
(A) Conversion Right: Each Bondholder has the right to convert any Bond as provided in these
Conditions into Shares (as defined below) (the ""Conversion Right''). The Conversion Right
attaching to any Bond may be exercised, at the option of the Bondholder, at any time (subject
to the next paragraph) during the ""Conversion Period'' which starts on 26 August 2006 (the
""Conversion Period Commencement Date'') (or such earlier date as is notified to the
Bondholders by the Company in accordance with Condition 18) and (subject to the next
sentence) will end at the close of business (at the place where the Certificate is deposited for
conversion of a Bond) on 26 June 2011 (or, if that is not a Business Day, on the immediately
preceding Business Day). If a Bond is called for redemption by the Company under
Condition 9.2 or 9.3, the Conversion Period for that Bond ends at the close of business (at the
place where the Certificate is deposited for conversion of that Bond) on the fifth Business Day
before the date fixed for redemption (unless the Company defaults in making payment on the

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date fixed for redemption in which case the Conversion Period will continue until the earlier of
the day on which payment is made to the Bondholder or the day on which the Trustee gives
notice to the Bondholders that it or the Principal Agent has received payment of the amount
due in respect of all Bonds to be redeemed), or, if earlier, 26 June 2011.
Conversion Rights may not be exercised in relation to any Bond during the period (a ""Closed
Period'') commencing on (i) the Record Date (as defined in Condition 8.2) and ending on the
immediately succeeding Interest Payment Date (both dates inclusive), (ii) the date falling
20 days prior to the date of the Company's annual general shareholders' meeting and ending on
the date of that meeting, (iii) the date falling 30 days prior to an extraordinary shareholders'
meeting and ending on the date of that meeting, (iv) the date that the Company notifies the
National Stock Exchange of India Limited (the ""NSE'') and the Bombay Stock Exchange
Limited (the ""BSE'') of the record date for determination of the shareholders entitled to
receipt of dividends, subscription of shares due to capital increase or other benefits, and ending
on the record date for the distribution or allocation of the relevant dividends, rights and benefits
or (v) on such date and for such period as determined by Indian law applicable from time to
time that the Company is required to close its stock transfer books. The Company will give
notice of the Closed Period commencing in accordance with (ii), (iii), (iv) and (v) of this
Condition to the Trustee, the Bondholders and the Conversion Agent, simultaneously at the
time when the Company informs the stock exchanges (i.e. the NSE and the BSE) of the
happening of the events contemplated therein. The Company will give notice of the Closed
Period commencing in accordance with (i) of this Condition to the Trustee, the Bondholders
and the Conversion Agent if practical, five Business Days prior to the beginning of such period
contemplated therein.
The number of Shares to be issued upon conversion of a Bond will be determined by dividing
the principal amount of the Bond (translated into Rupees at the Fixed Exchange Rate (as
defined in Condition 6.4 below)) by the Conversion Price in effect at the Conversion Date
(both as defined below). The Shares so issued shall be delivered to or credited to the depositary
account notified by the converting Bondholder.
(B) Aggregating Bonds; Fractions of Shares: if a Holder wishes to convert more than one Bond at
any time where the Shares to be issued on such conversion are to be registered in the same
name, the number of Shares to be issued on conversion will be calculated on the basis of the
aggregate principal amount of such Bonds to be converted. Fractions of Shares will not be
issued on conversion and no cash adjustments will be made for them. However, in the event of
consolidation or re-classification of Shares by operation of law or otherwise occurring after
26 August 2006 which reduces the number of Shares outstanding, the Company will thereafter
upon conversion of the Bonds pay in cash (in US dollars) a sum equal to such portion of the
principal amount of the Bond or Bonds to be converted as corresponds to any fraction of a Share
not issued if that sum exceeds US$10.00 (which sum shall be translated into US dollars with
the Fixed Exchange Rate).
(C) Conversion Price: The price at which Shares will be issued upon conversion of the Bonds (the
""Conversion Price'') will initially be Rs.172.5. The Conversion Price will be subject to
adjustment in the manner provided in Conditions 6.3 and 6.4.
(D) Definition of Shares: As used in these Conditions, ""Shares'' means (1) shares of the class of
share capital of the Company which, at the date of the Trust Deed, are designated as equity
shares of the Company with full voting rights, together with shares of any class or classes
resulting from any sub-division, consolidation or re-classification of those shares, which as
between themselves have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation or winding-up of the Company, and (2) fully-
paid and non-assessable shares of any class or classes of the share capital of the Company
authorised after the date of the Trust Deed which have no preference in respect of dividends or

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of amounts payable in the event of any voluntary or involuntary liquidation or winding-up of the
Company; provided that, subject to the provisions of Condition 7.1, shares to be issued on
conversion of the Bonds means only ""Shares'' as defined in sub-clause (1) above.

(E) Revival and/or Survival after Default: Notwithstanding the provisions of Condition 6.1(A), if
(a) the Company shall default in making payment in full in respect of any Bond on the date
fixed for redemption thereof, (b) any Bond has become due and payable prior to the Maturity
Date by reason of the occurrence of any of the events under Condition 11, or (c) any Bond is
not redeemed on the Maturity Date in accordance with Condition 9.1, the Conversion Right
attaching to such Bond will revive and/or will continue to be exercisable up to, and including,
the close of business (at the place where the Certificate evidencing such Bond is deposited for
conversion) on the date upon which the full amount of the moneys payable in respect of such
Bond has been duly received by the Principal Agent or the Trustee and notice of such receipt
has been duly given to the Bondholders. Any Bond in respect of which the Certificate and
Conversion Notice are deposited for conversion prior to such date shall be converted on the
relevant Conversion Date (as defined below) notwithstanding that the full amount of the
moneys payable in respect of such Bond shall have been received by the Principal Agent or the
Trustee before such Conversion Date or that the Conversion Period may have expired before
such Conversion Date.

(F) Mandatory Conversion at the Option of the Company: The Company shall have from 26 July
2009 until 26 July 2011 have the option (the ""Mandatory Conversion Option'') to convert part
or all of the Bonds into Shares, provided that the Volume-Weighted Average Price on each of
twenty consecutive Trading Days is higher than 130 per cent. (130%) of the Conversion Price
(translated into US dollars at the Fixed Exchange Rate (as defined in Condition 6.4)) on that
date, such that the Share Value received by the Bondholders in respect of each Bond will be not
less than 130% of the principal amount of the Bond plus the Accreted Value of the Bond. If the
Share Value, pursuant to a conversion of the Bond in accordance with Condition 6.1(C), is less
than 130% of the principal amount of the Bond plus the Accreted Value, Bondholders will
receive MC Additional Shares.

If so notified, Bondholders shall be required to deposit the Bonds in compliance with the deposit
conditions set out at Condition 6.2 (""Deposit Conditions'') (save that any expense incurred by the
Bondholder will be borne by the Company) with the Conversion Agent. If a Bondholder does not
comply with the Deposit Conditions within 60 calendar days of the date of such notice (""Cut-off
Date''), then the Conversion Agent shall convert the Bonds into Shares to be registered in the name
of a custodian selected by the Company for such purposes. The Mandatory Conversion Notice shall
specify: (i) the mandatory conversion date; (ii) the Cut-off Date; and (iii) the then applicable
Conversion Price. The Company shall as soon as practicable following the expiration of such 60 day
period arrange for the sale of such Shares via the BSE or NSE and the net proceeds of sale, after
deduction of the custodian's expenses and any stamp duties or other taxes, shall be paid directly to the
relevant former Bondholder(s) and such Bondholder(s) shall be bound by such sales. Neither the
Trustee nor the Agents shall have any responsibility or liability to the Bondholders or any person
whatsoever in respect of (x) the Conversion Agent's compliance or non-compliance with any such
written instruction from the Company to convert the Bonds into Shares; or (y) any payments from
the Company to the former Bondholder in connection with the sale of such Shares. Notice of the
exercise of the Mandatory Conversion Option will be given to Singapore Exchange Securities Trading
Limited by the Company at the same time notice is given to the Bondholders.

""Volume-Weighted Average Price'' means the total value of Shares of the Company traded on the NSE
or the BSE, whichever has greater liquidity during the two months prior to the calculation (the ""Indian
Exchange'') on a single day divided by the total volume of Shares of the Company traded on the Indian
Exchange that day.

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""Share Value'' means the lower of either of the averages of the Volume-Weighted Average Prices of the
Shares during the three and twenty consecutive Trading Days immediately preceding the date of the
exercise of the Mandatory Conversion Option by the Company translated into US dollars at a fixed
exchange rate of Rs.46.0020 • US$1.
""Accreted Value'' means an amount such that: Accreted Value • (Early Redemption
Amount/1000) Ì 1.
""Early Redemption Amount'' is defined in Condition 9.2.
""MC Additional Shares'' means zero or, if the following calculation produces a positive number:

(Number of
MC Additional • (((Accreted ° 130%) £ Principal) Ó Shares Share)) Share
Shares Value Amount upon £ Value / Value
Conversion

6.2 Exercise of Conversion Right


(A) Conversion Notices; Conditions Precedent: To exercise the Conversion Right in respect of any
Bond, the holder must complete, sign and deposit at its own expense between 9 am, and 3 p.m.
at the place of the Specified Office of any Conversion Agent on any Business Day in such place
during the Conversion Period (subject as provided in this Condition 6) a notice of conversion (a
""Conversion Notice'') in duplicate in the form (for the time being current) obtainable from the
Specified Office of any Conversion Agent, together with the Certificate in respect of the
Bond(s) to be converted, certification by the Bondholder, in the form obtainable from any
Conversion Agent, that it is not a US person or located in the United States (within the
meaning of Regulation S of the Securities Act of 1933 of the United States) and any
certificates and other documents as may be required under the laws of the Republic of India or
the jurisdiction in which the Specified Office of such Conversion Agent shall be located. A
Conversion Notice deposited outside the hours specified above or on a day which is not a
Business Day at the place of the Specified Office of the Conversion Agent shall for all purposes
be deemed to have been deposited with such Conversion Agent on the next Business Day
following such Business Day. Any Bondholder who deposits a Conversion Notice during a
Closed Period will not be permitted to convert the Bonds into Shares (as specified in the
Conversion Notice) until after 9.00 am. on the next Business Day after the end of that Closed
Period, which (if all other conditions to conversion have been fulfilled) will be the Conversion
Date for such Bonds.
As a condition precedent to conversion the Bondholder must pay all stamp, issue, registration or
similar taxes and duties (""Taxes'') (if any) arising on Conversion (other than any such stamp,
issue, registration or similar taxes or duties payable in India on the exercise of Conversion
Rights and the issue and allotment of Shares on Conversion, which the Company will pay to the
relevant authorities). The Company will pay all other expenses arising on the issue of Shares on
conversion of the Bonds and all charges of the Agents and the share transfer agent for the
Shares (""Share Transfer Agent'') in connection with Conversion. The Bondholder must
provide the Conversion Agent with confirmation of (as provided in the Conversion Notice)
payment to the relevant tax authorities in settlement of Taxes payable pursuant to this
Condition 6.2(A) at or before the time of deposit of the Conversion Notice. The Conversion
Agent is under no obligation to determine whether a Bondholder is liable to pay any Taxes
including stamp, issue, registration or similar taxes or duties or the amounts payable (if any) in
connection with this Condition 6.2(A). A Bondholder exercising its Conversion Right for
Shares will be required to open a depositary account with a depository participant under the
Indian Depositories Act, 1996, for the purposes of receiving the Shares. The date which is one
Business Day after the date on which any Certificate and the Conversion Notice (in duplicate)

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relating to a Bond to be converted are deposited with the Conversion Agent and all conditions
precedent to conversion of the Bond are fulfilled is called in these conditions the ""Conversion
Date'' of that Bond and must fall on a date during the Conversion Period. A Conversion Notice
and the relevant Certificate or Certificates once deposited may not be withdrawn without the
consent in writing of the Company, such consent to be notified to the Conversion Agent.
(B) Delivery of Shares: Upon exercise by a Bondholder of its Conversion Right for Shares, the
Company will, as soon as practicable, and in any event not later than 40 days after the
Conversion Date cause the relevant securities account of the Bondholder exercising his
Conversion Right for Shares or of his/their nominee, to be credited with such number of
relevant Shares to be issued upon conversion (notwithstanding any retroactive adjustment of
the Conversion Price referred to below prior to the time it takes effect) and shall further cause
the name of the concerned Bondholder or its nominee to be registered accordingly, in the record
of the depositors, maintained by the depository registered under the Depositories Act 1996 with
whom the Company has entered into a depository agreement and, subject to any applicable
limitations then imposed by Indian laws and regulations, shall procure the Share Transfer
Agent to, as soon as practicable, and in any event within 40 days of the Conversion Date,
despatch or cause to be despatched to the order of the person named for that purpose in the
relevant Conversion Notice at the place and in the manner specified in the relevant Conversion
Notice at the expense of the Company (uninsured and the risk of delivery at any such place
being that of the converting Bondholder), a US dollar cheque drawn on a branch of a bank in
New York City in respect of any cash payable pursuant to Condition 6.1(B) required to be
delivered on conversion and such assignments and other documents (if any) as required by law
to effect the transfer thereof.
The crediting of the Shares to the relevant securities account of the converting Bondholder will
be deemed to satisfy the Company's obligation to pay the principal and premium on the Bonds.
If the Conversion Date in relation to any Bond is on or after a date from which an adjustment to
the Conversion Price takes retroactive effect pursuant to any of the provisions referred to in
Condition 6.3 and in Clause 7 of the Trust Deed and the relevant Conversion Date falls on a
date when the relevant adjustment has not yet been reflected in the then current Conversion
Price. the Company will use its best endeavours to procure that the provisions of this
Condition 6.2(B) shall be applied, with appropriate alterations, to such number of Shares
(""Additional Shares'') as is equal to the excess number of Shares which would have been
required to be issued on conversion of such Bond if the relevant retroactive adjustment had been
made as at the said Conversion Date and in such event and in respect of such Additional Shares
references in this Condition 6.2(B) to the Conversion Date shall be deemed to refer to the date
upon which such retroactive adjustment becomes effective (notwithstanding that the date upon
which it becomes effective falls after the end of the Conversion Period).
(C) Entitlements: The Shares issued upon conversion of the Bonds will in all respects rank
pari passu with the Shares in issue on the relevant Conversion Date (except for any right
excluded by mandatory provisions of applicable law) and such Shares shall be entitled to all
rights the record date for which falls on or after such Conversion Date to the same extent as all
other fully-paid and non-assessable Shares of the Company in issue as if such Shares had been
in issue throughout the period to which such rights relate except that a Holder of Shares issued
on conversion of Bonds (including the Depository) shall not be entitled to any rights the record
date for which precedes the relevant Conversion Date.

6.3 Adjustment to Conversion Price


The Conversion Price will be subject to adjustment upon the occurrence of the following events:
(A) Free Distribution, Declaration of Dividend, Bonus Issue, Sub-Division, Consolidation and Re-
Classification of Shares

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(1) Adjustment
If the Company shall
(a) make a free distribution of Shares;
(b) declare a dividend in Shares;
(c) make a bonus issue of its Shares, or
(d) sub-divide, consolidate or re-classify its Shares,
then the Conversion Price shall be appropriately adjusted by the Company (on the advice
of an independent financial adviser selected by the Company, where appropriate) so that
the Holder of any Bond, the Conversion Date in respect of which occurs after the coming
into effect of the adjustment described in this Condition 6.3(A)(1), shall be entitled to
receive the number of Shares and/or other securities of the Company which he would
have held or have been entitled to receive after the happening of any of the events
described above had such Bond been converted immediately prior to the happening of
such event (or, if the Company has fixed, or there is otherwise specified, a prior date for
the determination of shareholders entitled to receive any such free distribution or bonus
issue of Shares or other securities issued upon any such division, consolidation or re-
classification (the ""Determination Date''), immediately prior to such Determination
Date), but without prejudice to the effect of any other adjustment to the Conversion Price
made with effect from the date of the happening of such event (or such Determination
Date) or any time thereafter; provided, that, if the Company shall enter into any scheme
of arrangement or demerger (or any similar arrangement) (a ""Scheme'') pursuant to
which the Company's shareholders shall become entitled to receive stock, securities or
other interests of or in any person other than the Company, then, as a part of such
Scheme, lawful provision shall be made so that the Holder of any Bond shall thereafter be
entitled to receive upon exercise of conversion of such Bond, subject to the Conditions
contained herein, the number of shares of stock, securities or other interests of or in such
other person resulting from such Scheme that a Holder of Shares would have been
entitled to receive pursuant thereto had such Bond been converted immediately prior to
the effectiveness of such Scheme (or, if the Company has fixed a prior record date for the
determination of shareholders entitled to receive any such shares of stock, securities or
other interests of or in such other person issued pursuant to such Scheme, immediately
prior to such record date), all without prejudice to any other condition of this Condi-
tion 6.3(A)(1) and subject to further adjustment as provided in this Condition.
(2) Effective Date of Adjustment
An adjustment made pursuant to Condition 6.3(A)(1) above shall become effective
immediately on the relevant event referred to above becoming effective or, if a Determi-
nation Date is fixed therefor, immediately after such Determination Date; provided that in
the case of a free distribution or bonus issue of Shares which must, under applicable laws
of India, be submitted for approval to a general meeting of shareholders or be approved by
a meeting of the Directors of the Company before being legally paid or made, and which
is so approved after the Determination Date fixed for the determination of shareholders
entitled to receive such distribution or issue, such adjustment shall, immediately upon
such approval being given by such meeting, become effective retroactively to immediately
after such Determination Date.
(B) Concurrent Adjustment Events
If the Company shall declare a dividend in, or make a free distribution or bonus issue of, Shares
which dividend, issue or distribution is to be paid or made to shareholders as of a Determination
Date which is also:

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(1) the Determination Date for the issue of any rights or warrants which requires an
adjustment of the Conversion Price pursuant to Conditions 6.3(C) (Rights issues to
Shareholders for Shares), 6.3(D) (Options, rights or warrants issued to Shareholders) or
6.3(E) (Options, rights and warrants for equity related securities to Shareholders) below;
(2) the day immediately before the date of issue of any securities convertible into or
exchangeable for Shares which requires an adjustment of the Conversion Price pursuant
to Clause 6.3(H) (Issue of convertible or exchangeable securities other than to Share-
holders or on exercise of warrants) below;
(3) the day immediately before the date of issue of any Shares which requires an adjustment
of the Conversion Price pursuant to Clause 6.3(I) (Other issues of shares) below;
(4) the day immediately before the date of issue of any rights, options or warrants which
requires an adjustment of the Conversion Price pursuant to Clause 6.3(J) (Issues of
equity related Securities) below; or
(5) determined by the Company to be the relevant date for an event or circumstance which
requires an adjustment to the Conversion Price pursuant to Clause 6.3(K) (Analogous
events and modifications);
then (except where such dividend, bonus issue or free distribution gives rise to a retroactive
adjustment of the Conversion Price under Conditions 6.3(A) (Free distribution, declaration of
dividend, bonus issue, sub-division, consolidation and re-classification of Shares)) no adjust-
ment of the Conversion Price in respect of such dividend, bonus issue or free distribution shall
be made under this Condition 6.3(B), but in lieu thereof an adjustment shall be made under
Conditions 6.3(C) (Rights issues to Shareholders for Shares), 6.3(D) (Options, rights or
warrants issued to Shareholders), 6.3(E) (Options, rights and warrants for equity related
securities to Shareholders), 6.3(H) (Issue of convertible or exchangeable securities other than
to Shareholders or on exercise of warrants), 6.3(I) (Other issues of shares) or 6.3(J) (Issue of
equity related Securities) below (as the case may require) by including in the denominator of
the fraction described therein the aggregate number of Shares to be issued pursuant to such
dividend, bonus issue or free distribution and, in the case of such dividend, including in the
numerator of the fraction described therein the number of Shares which the aggregate par value
of Shares to be so distributed would purchase at the Current Market Price (as defined in
Condition 6.3(M)) per Share.
(C) Rights Issues to Shareholders for Shares
(1) Adjustment
If the Company shall grant, issue or offer to the holders of Shares rights entitling them to
subscribe for or purchase Shares:
(a) at a consideration per Share receivable by the Company (determined as provided in
Condition 6.3(N) (Consideration receivable by the Company) below) which is
fixed on or prior to the Determination Date mentioned below and is less than the
Current Market Price per Share or the Regulatory Floor (as defined below) at such
Determination Date; or
(b) at a consideration per Share receivable by the Company which is fixed after the
Determination Date mentioned below and is less than the Current Market Price per
Share or the Regulatory Floor on the date the Company fixes the said consideration,
then the Conversion Price in effect (in a case within (a) above) on the Determination
Date for the determination of shareholders entitled to receive such rights or (in a case
within (b) above) on the date the Company fixes the said consideration shall be adjusted
in accordance with the following formula:

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N°v
NCP • OCP £
N°n
where:

NCP • the Conversion Price after such adjustment


OCP • the Conversion Price before such adjustment.
N • the number of Shares outstanding (having regard to Condition 6.3(N)
(Consideration receivable by the Company) below) at the close of business in
India (in a case within (a) above) on such Determination Date or (in a case
within (b) above) on the date the Company fixes the said consideration.
n • the number of Shares initially to be issued upon exercise of such rights at the
said consideration being (aa) the number of Shares which underwriters have
agreed to underwrite as referred to in Condition 6.3(C)(3) (Rights not taken
up by shareholders) below or, as the case may be, (bb) the number of Shares
for which applications are received from shareholders as referred to below
save to the extent already adjusted for under (aa).
v • the number of Shares which the aggregate consideration receivable by the
Company would purchase at the greater of Current Market Price per Share
and the Regulatory Floor used in determining (a) or, as the case may be,
(b) above. In the event that the consideration per Share is less than the
Current Market Price and the Regulatory Floor, the number of Shares shall
be calculated using the greater of these.
""Regulatory Floor'' means, in the case of any preferential allotment of the Shares the
minimum price per Share calculated in accordance with the SEBI (Disclosure and
Investor Protection) Guidelines, 2000, as amended.
(2) Effective Date of Adjustment
Subject as provided below, such adjustment shall become effective immediately after the
latest date for the submission of applications for such Shares by shareholders entitled to
the same pursuant to such rights or (if later) immediately after the Company fixes the
said consideration but retroactively to immediately after the Determination Date men-
tioned above.
(3) Rights not Taken up by Shareholders
If, in connection with a grant, issue or offer to the holders of Shares of rights entitling
them to subscribe for or purchase Shares, any Shares which are not subscribed for or
purchased by the persons entitled thereto are underwritten by other persons prior to the
latest date for the submission of applications for such Shares, an adjustment shall be
made to the Conversion Price in accordance with the above provisions which shall
become effective immediately after the date the underwriters agree to underwrite the
same or (if later) immediately after the Company fixes the said consideration but
retroactively to immediately after the Determination Date mentioned above.
If, in connection with a grant, issue or offer to the holders of Shares of rights entitling
them to subscribe for or purchase Shares, any such Shares which are not subscribed for or
purchased by the underwriters who have agreed to underwrite as referred to above or by
the shareholders entitled thereto (or persons to whom shareholders have transferred such
rights) who have submitted applications for such Shares as referred to above are offered
to and/or subscribed by others, no further adjustment shall be made to the Conversion
Price by reason of such offer and/or subscription.

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(D) Options, Rights or Warrants Issued to Shareholders


(1) Adjustment
If the Company shall grant, issue or offer to the holders of Shares, options, rights or
warrants entitling them to subscribe for or purchase Shares:
(a) at a consideration per Share receivable by the Company (determined as provided in
Condition 6.3(N) (Consideration receivable by the Company) below) which is
fixed on or prior to the Determination Date for the determination of shareholders
entitled to receive such warrants and is less than the Current Market Price per
Share or the Regulatory Floor at such Determination Date; or
(b) at a consideration per Share receivable by the Company which is fixed after the
Determination Date mentioned above and is less than the Current Market Price per
Share or the Regulatory Floor on the date the Company fixes the said consideration,
then the Conversion Price in effect (in a case within (a) above) on the Determination
Date for the determination of shareholders entitled to receive such warrants or (in a case
within (b) above) on the date the Company fixes the said consideration shall be adjusted
in accordance with the following formula:

N°v
NCP • OCP £
N°n
Where:
NCP and OCP have the meanings ascribed thereto in Condition 6.3(C) (Rights issues to
Shareholders for Shares) above.

N • the number of Shares outstanding (having regard to Condition 6.3(O)


(Cumulative adjustments) below) at the close of business in India (in a case
within (a) above) on such Determination Date or (in a case within (b) above)
on the date the Company fixes the said consideration.
n • the number of Shares to be issued upon exercise of such warrants at the said
consideration which, where no applications by shareholders entitled to such
warrants are required, shall be based on the number of warrants issued. Where
applications by shareholders entitled to such warrants are required, the number
of such Shares shall be calculated based upon (aa) the number of warrants
which underwriters have agreed to underwrite as referred to in
Condition 6.3(D)(3) (Warrants not subscribed for by Shareholders) below or,
as the case may be, (bb) the number of warrants for which applications are
received from shareholders as referred to below save to the extent already
adjusted for under (aa).
v • the number of Shares which the aggregate consideration receivable by the
Company (determined as provided in Condition 6.3(N) (Consideration
receivable by the Company) below) would purchase at the greater of Current
Market Price per Share and the Regulatory Floor used in determining (a) or, as
the case may be, (b) above. In the event that the consideration per Share is less
than the Current Market Price and the Regulatory Floor, the number of Shares
shall be calculated using the greater of these.
(2) Effective Date of Adjustment
Subject as provided below, such adjustment shall become effective (i) where no
applications for such warrants are required from shareholders entitled to the same, upon
their issue and (ii) where applications by shareholders entitled to the same are required as

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aforesaid, immediately after the latest date for the submission of such applications or (if
later) immediately after the Company fixes the said consideration but in all cases
retroactively to immediately after the Determination Date mentioned above.

(3) Warrants not Subscribed for by Shareholders

If, in connection with a grant, issue or offer to the holders of Shares of warrants entitling
them to subscribe for or purchase Shares in the circumstances described in (i) and (ii) of
Condition 6.3(D)(1) (Adjustment) above, any warrants which are not subscribed for or
purchased by the shareholders entitled thereto are underwritten by others prior to the
latest date for the submission of applications for such warrants, an adjustment shall be
made to the Conversion Price in accordance with the above provisions which shall
become effective immediately after the date the underwriters agree to underwrite the
same or (if later) immediately after the Company fixes the said consideration but
retroactively to immediately after the Determination Date mentioned above.

If, in connection with a grant, issue or offer to the holders of Shares of warrants entitling
them to subscribe for or purchase Shares, any warrants which are not subscribed for or
purchased by the underwriters who have agreed to underwrite as referred to above or by
the shareholders entitled thereto (or persons to whom shareholders have transferred the
right to purchase such warrants) who have submitted applications for such warrants as
referred to above are offered to and/or subscribed by others, no further adjustment shall
be made to the Conversion Price by reason of such offer and/or subscription.

(E) Options Rights or Warrants for Equity Related Securities to Shareholders

(1) Adjustment

If the Company shall grant, issue or offer to the holders of Shares options, rights or
warrants entitling them to subscribe for or purchase any securities convertible into or
exchangeable for Shares:

(a) at a consideration per Share receivable by the Company (determined as provided in


Condition 6.3(N) (Consideration receivable by the Company) below) which is
fixed on or prior to the Determination Date mentioned below and is less than the
Current Market Price per Share or the Regulatory Floor at such Determination
Date; or

(b) at a consideration per Share receivable by the Company (determined as aforesaid)


which is fixed after the Determination Date mentioned below and is less than the
Current Market Price per Share or the Regulatory Floor on the date the Company
fixes the said consideration,

then the Conversion Price in effect (in a case within (a) above) on the Determination
Date for the determination of shareholders entitled to receive such rights or warrants or
(in a case within (b) above) on the date the Company fixes the said consideration shall
be adjusted in accordance with the following formula:

N°v
NCP • OCP £
N°n

where:

NCP and OCP have the meanings ascribed thereto in Condition 6.3(C) (Rights issues to
Shareholders for Shares) above.

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N • the number of Shares outstanding (having regard to Condition 6.3(O)


(Cumulative adjustments) below) at the close of business in India (in a case
within (a) above) on such Determination Date or (in a case within (b) above)
on the date the Company fixes the said consideration.
n • the number of Shares initially to be issued upon exercise of such rights or
warrants and conversion or exchange of such convertible or exchangeable
securities at the said consideration being, in the case of rights, (aa) the number
of Shares initially to be issued upon conversion or exchange of the number of
such convertible or exchangeable securities which the underwriters have agreed
to underwrite as referred to in Condition 6.3(E)(3) (Rights or warrants not
taken up by Shareholders) below or, as the case may be, (bb) the number of
Shares initially to be issued upon conversion or exchange of the number of such
convertible or exchangeable securities for which applications are received from
shareholders as referred to in Condition 6.3(E)(3) (Rights or warrants not taken
up by Shareholders) below save to the extent already adjusted for under (aa) and
which, in the case of warrants, where no applications by shareholders entitled to
such warrants are required, shall be based on the number of warrants issued.
Where applications by shareholders entitled to such warrants are required, the
number of such Shares shall be calculated based upon (aa) the number of
warrants which underwriters have agreed to underwrite as referred to in
Condition 6.3(E)(3) (Rights and warrants not taken up by Shareholders) below
or, as the case may be, (bb) the number of warrants for which applications are
received from shareholders as referred to below save to the extent already
adjusted for under (aa).
v • the number of Shares which the aggregate consideration receivable by the
Company (determined as provided in Condition 6.3(N) (Consideration
receivable by the Company) below) would purchase at the greater of Current
Market Price per Share and the Regulatory Floor used in determining (a) or, as
the case may be, (b) above. In the event that the consideration per Share is less
than the Current Market Price and the Regulatory Floor, the number of Shares
shall be calculated using the greater of these.
(2) Effective Date of Adjustment
Subject as provided below, such adjustment shall become effective (i) where no
applications for such warrants are required from shareholders entitled to the same, upon
their issue and (ii) where applications by shareholders entitled to the warrants are
required as aforesaid and in the case of convertible or exchangeable securities by
shareholders entitled to the same pursuant to such rights, immediately after the latest date
for the submission of such applications or (if later) immediately after the Company fixes
the said consideration; but in all cases retroactively to immediately after the Determina-
tion Date mentioned above.
(3) Rights or Warrants not Taken up by Shareholders
If, in connection with a grant, issue or offer to the holders of Shares of rights or warrants
entitling them to subscribe for or purchase securities convertible into or exchangeable for
Shares in the circumstances described in Condition 6.3(E)(1) (Adjustment) above, any
convertible or exchangeable securities or warrants which are not subscribed for or
purchased by the shareholders entitled thereto are underwritten by others prior to the
latest date for the submission of applications for such convertible or exchangeable
securities or warrants, an adjustment shall be made to the Conversion Price in accordance
with the above provisions which shall become effective immediately after the date the
underwriters agree to underwrite the same or (if later) immediately after the Company

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fixes the said consideration but retroactively to immediately after the Determination Date
mentioned above.
If, in connection with a grant, issue or offer to the holders of Shares of rights or warrants
entitling them to subscribe for or purchase securities convertible into or exchangeable for
Shares, any convertible or exchangeable securities or warrants which are not subscribed
for or purchased by the underwriters who have agreed to underwrite as referred to above
or by the shareholders entitled thereto (or persons to whom shareholders have transferred
such rights or the right to purchase such warrants) who have submitted applications for
such convertible or exchangeable securities or warrants as referred to above are offered to
and/or subscribed by others, no further adjustment shall be made to the Conversion Price
by reason of such offer and/or subscription.
(F) Distributions to Shareholders of Evidence of Indebtedness or Shares
(1) Adjustment
If the Company shall distribute to the holders of Shares evidence of its indebtedness, or of
shares or of securities of the Company (other than Shares), or of assets (other than
annual or regular periodic dividends in cash not constituting a Capital Distribution) or of
options, rights or warrants to subscribe for or purchase shares (other than Shares) or
securities (excluding Shares and those rights and warrants referred to in Condi-
tion 6.3(D) (Options, rights or warrants issued to Shareholders) and Condition 6.3(E)
(Options, rights and warrants for equity related securities to Shareholders) above), then
the Conversion Price in effect on the Determination Date for the determination of
shareholders entitled to receive such distribution shall be adjusted in accordance with the
following formula:

CMP ¿ fmv
NCP • OCP £
CMP
where:
NCP and OCP have the meanings ascribed thereto in Condition 6.3(C) (Rights issues to
Shareholders for Shares) above.

CMP • the Current Market Price per Share on the Determination Date for the
determination of shareholders entitled to receive such distribution.
fmv • the fair market value (as determined by the Company and notified to the
Trustee or, if pursuant to applicable law of India such determination is to
be made by application to a court of competent jurisdiction, as
determined by such court or by an appraiser appointed by such court) of
the portion of the evidences of indebtedness, equity share capital shares of
capital stock, assets, rights or warrants so distributed applicable to one
Share less any consideration payable for the same by the relevant
Shareholder.
In making a determination of the fair market value of any such evidences of indebtedness,
shares of capital stock, assets, rights or warrants, the Company shall consult a leading
independent securities company or bank of international repute in India selected by the
Company and shall take fully into account the advice received from such company or
bank.
(2) Effective Date of Adjustment
Such adjustment shall become effective immediately after the Determination Date for the
determination of shareholders entitled to receive such distribution. Provided that (i) in

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the case of such a distribution which must, under applicable law of India, be submitted for
approval to a general meeting of shareholders or be approved by a meeting of the
Directors of the Company before such distribution may legally be made and is so
approved after the Determination Date fixed for the determination of shareholders
entitled to receive such distribution, such adjustment shall, immediately upon such
approval being given by such meeting, become effective retroactively to immediately after
such Determination Date and (ii) if the fair market value of the evidences of indebted-
ness, shares of capital stock, assets, rights or warrants so distributed cannot be determined
until after the Determination Date fixed for the determination of shareholders entitled to
receive such distribution, such adjustment shall, immediately upon such fair market value
being determined, become effective retroactively to immediately after such Determina-
tion Date.
""Capital Distribution'' means:
(a) any distribution of assets in specie (whether on a reduction of capital or otherwise)
but excluding a distribution of assets in specie in lieu of, and to a value not
exceeding, a cash dividend which would not have constituted a capital distribution
under sub-paragraph (b) of this definition (and for these purposes a distribution of
assets in specie includes an issue of shares or other securities credited as fully or
partly paid up by way of capitalisation of reserves, evidence of indebtedness of the
Company or other rights); or
(b) any cash dividend or distribution of any kind howsoever described, to the extent that
it, prior to deduction of any withholding tax plus any corporate tax attributable to
that dividend and when taken together with the aggregate of any other cash
dividends paid or declared on the Shares in the 365 consecutive day period prior to
the effective date (the ""previous dividends''), except that where the date of
announcement for dividends for two different fiscal years has occurred in such
365 day period, such dividends relating to the earlier fiscal year will be disregarded
for the purpose of determining the previous dividend, equals or exceeds on a per
Share basis 1% of the average Closing Price of each Share on the fifteen Trading
Days prior to the board meeting declaring such dividend (the ""excess portion'') and
only the excess portion shall be taken into account in the determination of the Fair
Market Value (as defined in the Trust Deed) of the portion of the cash dividend or
distribution attributable to one Share.
(G) Capital Distribution to Shareholders
If and whenever the Company shall pay or make any Capital Distribution (except where the
Conversion Price falls to be adjusted under Condition 6.3(F) (Distributions to Shareholders of
evidences of indebtedness or shares) above), the Conversion Price shall be adjusted by
multiplying the Conversion Price in force immediately before such Capital Distribution by the
following fraction:

A¿B
A
where:

A • is the Current Market Price of one Share on the last Trading Day preceding the
date on which the Capital Distribution is publicly announced; and
B • is the fair market value on the date of such announcement, as determined in good
faith by a leading independent investment bank of international repute (acting as
expert), selected by the Company of the portion of the Capital Distribution
attributable to one Share.

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Such adjustment shall become effective on the date that such Capital Distribution is actually
made.
(H) Issue of Convertible or Exchangeable Securities other than to Shareholders or on Exercise of
Warrants
(1) Adjustment
If the Company shall issue any securities (other than the Bonds or in any of the
circumstances described in Condition 6.3(D) (Options, rights or warrants issued to
Shareholders) and Condition 6.3(E) (Options, rights and warrants for equity related
securities to Shareholders) above convertible into or exchangeable for, or which carry
rights to subscribe or purchase, Shares or grant or issue such options, rights or warrants in
respect of any existing securities and the consideration per Share receivable by the
Company (determined as provided in Condition 6.3(N) (Consideration receivable by the
Company) below) shall be less than the Current Market Price per Share or the
Regulatory Floor on the date in India on which the Company fixes the said consideration
(or, if the issue of such securities is subject to approval by a general meeting of
shareholders, on the date on which the Directors of the Company fixes the consideration
to be recommended at such meeting), then the Conversion Price in effect immediately
prior to the date of issue of such convertible or exchangeable securities shall be adjusted
in accordance with the following formula:

N°v
NCP • OCP £
N°n
where:
NCP and OCP have the meanings ascribed thereto in Condition 6.3(C) (Rights issues to
Shareholders for Shares) above.

N • the number of Shares outstanding (having regard to Condition 6.3(O)


(Cumulative adjustments) below) at the close of business in India on the
day immediately prior to the date of such issue.
n • the number of Shares to be issued upon conversion or exchange of such
convertible or exchangeable securities at the initial conversion or exchange
price or rate.
v • the number of Shares which the aggregate consideration receivable by the
Company would purchase at the greater of Current Market Price per Share
and the Regulatory Floor. In the event that the consideration per Share is
less than the Current Market Price and the Regulatory Floor, the number of
Shares shall be calculated using the greater of these.
(2) Effective Date of Adjustment
Such adjustment shall become effective as of the calendar day in India corresponding to
the calendar day at the place of issue on which such convertible or exchangeable
securities are issued.
(I) Other Issues of Shares
(1) Adjustment
If the Company shall issue any Shares (other than Shares issued upon conversion of the
Bonds or Shares issued upon conversion, exercise or exchange of securities in any of the
circumstances described in Condition 6.3(D) (Options, rights or warrants issued to
Shareholders) and Condition 6.3(E) (Options, rights and warrants for equity related

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securities to Shareholders) above) for a consideration per Share receivable by the


Company (determined as provided in Condition 6.3(N) (Consideration receivable by the
Company) below) less than the Current Market Price per Share or the Regulatory Floor
on the date in India on which the Company fixes the said consideration (or, if the issue of
such Shares is subject to approval by a general meeting of shareholders, on the date on
which the Directors of the Company fixes the consideration to be recommended at such
meeting), then the Conversion Price in effect immediately prior to the issue of such
additional Shares shall be adjusted in accordance with the following formula:

N°v
NCP • OCP £
N°n
where:
NCP and OCP have the meanings ascribed thereto in Condition 6.3(C) (Rights issues to
Shareholders for Shares) above.

N • the number of Shares outstanding (having regard to Condition 6.3(O)


(Cumulative adjustments) below) at the close of business in India on the day
immediately prior to the date of issue of such additional Shares.
n • the number of additional Shares issued as aforesaid.
v • the number of Shares which the aggregate consideration receivable by the
Company (determined as provided in Condition 6.3(N) (Consideration
receivable by the Company) below) would purchase at the greater of Current
Market Price per Share and the Regulatory Floor. In the event that the
consideration per Share is less than the Current Market Price and the
Regulatory Floor, the number of Shares shall be calculated using the greater
of these.
(2) Effective Date of Adjustment
Such adjustment shall become effective as of the calendar day in India of the issue of
such additional Shares.
(J) Issue of Equity Related Securities
(1) Adjustment
If the Company shall grant, issue or offer options, warrants or rights (excluding those
rights and warrants referred to in Conditions 6.3(C) (Rights issues to Shareholders for
Shares), 6.3(D) (Options, rights or warrants issued to Shareholders), 6.3(E) (Options,
rights or warrants for equity related securities to Shareholders) and 6.3(F) (Distributions
to Shareholders of evidence of indebtedness or shares)) to subscribe for or purchase
Shares or securities convertible into or exchangeable for Shares and the consideration per
Share receivable by the Company (determined as provided in Condition 6.3(N) (Consid-
eration receivable by the Company) below) shall be less than the Current Market Price
per Share or the Regulatory Floor on the date in India on which the Company fixes the
said consideration (or, if the offer, grant or issue of such rights, options or warrants is
subject to approval by a general meeting of shareholders, on the date on which the
Directors of the Company fixes the consideration to be recommended at such meeting),
then the Conversion Price in effect immediately prior to the date of the offer, grant or
issue of such rights, options or warrants shall be adjusted in accordance with the following
formula:

N°v
NCP • OCP £
N°n

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where:

NCP and OCP have the meanings ascribed thereto in Condition 6.3(C) (Rights issues to
Shareholders for Shares) above.

N • the number of Shares outstanding (having regard to Condition 6.3(O)


(Cumulative adjustments) below) at the close of business in India on the day
immediately prior to the date of such issue.
n • the number of Shares to be issued on exercise of such rights or warrants and
(if applicable) conversion or exchange of such convertible or exchangeable
securities at the said consideration.
v • the number of Shares which the aggregate consideration receivable by the
Company (determined as provided in Condition 6.3(N) (Consideration
receivable by the Company) below) would purchase at the greater of Current
Market Price per Share and the Regulatory Floor. In the event that the
consideration per Share is less than the Current Market Price and the
Regulatory Floor, the number of Shares shall be calculated using the greater
of these.

(2) Effective Date of Adjustment

Such adjustment shall become effective as of the calendar day in India corresponding to
the calendar day at the place of issue on which such rights or warrants are issued.

(K) Analogous Events and Modifications

If:

(1) the rights of conversion or exchange, purchase or subscription attaching to any options,
rights or warrants to subscribe for or purchase Shares or any securities convertible into or
exchangeable for, or which carry rights to subscribe for or purchase Shares are modified
(other than pursuant to and as provided in the terms and conditions of such options,
rights, warrants or securities); or

(2) a leading securities company of international repute in India (selected by, and at the
expense of, the Company) determines that any other similar event or circumstance has
occurred which has or would have an effect on the position of the Bondholders as a class
compared with the position of the holders of all the securities (and options and rights
relating thereto) of the Company, taken as a class which is analogous to any of the events
referred to in Conditions 6.3(A) to 6.3(J),

then, in any such case, the Company shall notify the Trustee thereof and the Company shall
consult with such securities company as to what adjustment, if any, should be made to the
Conversion Price to preserve the value of the Conversion Right of Bondholders and will make
any such adjustment.

(L) Simultaneous Issues of Different Classes of Shares

In the event of simultaneous issues of two or more classes of share capital comprising Shares or
rights or warrants in respect of, or securities convertible into or exchangeable for, two or more
classes of share capital comprising Shares, then, for the purposes of this Condition 6.3(L), the
formula

N°v
NCP • OCP £
N°n

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shall be restated as

N ° v1 ° v2 ° v3
NCP • OCP £
N ° n1 ° n2 ° n3
where v1 and n1 shall have the same meanings as ""v'' and ""n'' but by reference to one class of
Shares, v2 and n2 shall have the same meanings as ""v'' and ""n'' but by reference to a second
class of Shares, v3 and n3 shall have the same meanings as ""v'' and ""n'' but by reference to a
third class of Shares and so on.
(M) Current Market Price per Share
For the purposes of these Conditions, the ""Current Market Price'' per Share on any date means
the average of the daily Closing Prices quoted on the Indian Exchange for the 15 consecutive
Trading Days commencing 30 Trading Days before such date. If the Company has more than
one class of share capital comprising Shares, then the relevant Current Market Price for Shares
shall be the price for that class of Shares the issue of which (or of rights or warrants in respect
of, or securities convertible into or exchangeable for, that class of Shares) gives rise to the
adjustment in question.
If during the said 30 Trading Days or any period thereafter up to but excluding the date as of
which the adjustment of the Conversion Price in question shall be effected, any event (other
than the event which requires the adjustment in question) shall occur which gives rise to a
separate adjustment to the Conversion Price under the provisions of these Conditions, then the
Current Market Price as determined above shall be adjusted in such manner and to such extent
as a leading independent investment company or bank in Mumbai selected by the Company
shall in its absolute discretion deem appropriate and fair to compensate for the effect thereof.
The ""Closing Price'' of the Shares for each Trading Day shall be the last reported transaction
price of the Shares on the Indian Exchange for such day or, if no transaction takes place on
such day, the last available reported transaction price of the Shares on the Indian Exchange in
effect on the Trading Day immediately preceding such day or, if the Shares are not listed or
admitted to trading on such exchange, the average of the closing bid and offered prices of
Shares for such day as furnished by a leading independent securities firm licensed to trade on
the Indian Exchange selected from time to time by the Company for the purpose; and
""Trading Day'' means a day when the Indian Exchange is open for business, but does not
include a day when (a) no such last transaction price or closing bid and offered prices is/are
reported and (b) (if the Shares are not listed or admitted to trading on such exchange) no such
closing bid and offered prices are furnished as aforesaid.
(N) Consideration Receivable by the Company
For the purposes of any calculation of the consideration receivable by the Company pursuant to
Conditions 6.3(C) (Rights issues to Shareholders for Shares), 6.3(D) (Options, rights or
warrants issued to Shareholders), 6.3(E) (Options, rights or warrants for equity related
securities to Shareholders), 6.3(H) (Issue of convertible or exchangeable securities other than
to Shareholders or on exercise of warrants), 6.3(I) (Other issues of shares) or 6.3(J) (Issues of
equity related Securities) above, the following provisions shall be applicable:
(1) in the case of the issue of Shares for cash, the consideration shall be the amount of such
cash, provided that in no such case shall any deduction be made for any commissions or
any expenses paid or incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issue of Shares for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the fair value thereof as
determined by the Company (and in making such determination the Company shall
consult a leading independent securities company or bank in Mumbai of international

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repute selected by the Company and shall take fully into account the advice received from
such company or bank) or, if pursuant to applicable law of India such determination is to
be made by application to a court of competent jurisdiction, as determined by such court
or an appraiser appointed by such court, irrespective of the accounting treatment thereof;
(3) in the case of the issue (whether initially or upon the exercise of rights or warrants) of
securities convertible into or exchangeable for Shares, the aggregate consideration
receivable by the Company shall be deemed to be the consideration received by the
Company for such securities and (if applicable) rights or warrants plus the additional
consideration (if any) to be received by the Company upon (and assuming) the
conversion or exchange of such securities at the initial conversion or exchange price or
rate and (if applicable) the exercise of such rights or warrants at the initial subscription or
purchase price (the consideration in each case to be determined in the same manner as
provided in Conditions 6.3(N)(1) and 6.3(N)(2) above) and the consideration per
Share receivable by the Company shall be such aggregate consideration divided by the
number of Shares to be issued upon (and assuming) such conversion or exchange at the
initial conversion or exchange price or rate and (if applicable) the exercise of such rights
or warrants at the initial subscription or purchase price;
(4) in the case of the issue of rights or warrants to subscribe for or purchase Shares, the
aggregate consideration receivable by the Company shall be deemed to be the considera-
tion received by the Company for any such rights or warrants plus the additional
consideration to be received by the Company upon (and assuming) the exercise of such
rights or warrants at the initial subscription or purchase price (the consideration in each
case to be determined in the same manner as provided in Conditions 6.3(N)(1) and
6.3(N)(2) above) and the consideration per Share receivable by the Company shall be
such aggregate consideration divided by the number of Shares to be issued upon (and
assuming) the exercise of such rights or warrants at the initial subscription or purchase
price; and
(5) if any of the consideration referred to in any of the preceding paragraphs of this
Condition 6.3(N) is receivable in a currency other than Rupees, such consideration shall
(in any case where there is a fixed rate of exchange between the Rupee and the relevant
currency for the purposes of the issue of the Shares, the conversion or exchange of such
securities or the exercise of such rights or warrants) be translated into Rupees for the
purposes of this Condition 6.3(N) at such fixed rate of exchange and shall (in all other
cases) be translated into Rupees at the mean of the exchange rate quotations (being
quotations for the cross rate through US Dollars if no direct rate is quoted) by a leading
bank in India for buying and selling the relevant currency at the existing inter-bank rate
by telegraphic transfer against Rupees on the date as of which the said consideration is
required to be calculated as aforesaid.
(O) Cumulative Adjustments
If, at the time of computing an adjustment (the ""later adjustment'') of the Conversion Price
pursuant to any of Conditions 6.3(A) (Free distribution, declaration of dividend, bonus issue,
sub-division, consolidation and re-classification of Shares), 6.3(C) (Rights issues to Share-
holders for Shares), 6.3(D) (Options, rights or warrants issued to Shareholders), 6.3(H)
(Issue of convertible or exchangeable securities other than to Shareholders or on exercise of
warrants), 6.3(I) (Other issues of shares) or 6.3(J) (Issues of equity related Securities) above,
the Conversion Price already incorporates an adjustment made (or taken or to be taken into
account pursuant to the proviso to Condition 6.3(P) (Minor adjustments) below) to reflect an
issue of Shares or of securities convertible into or exchangeable for Shares or of rights or
warrants to subscribe for or purchase Shares or securities, to the extent that the number of such
Shares or securities taken into account for the purposes of calculating such adjustment exceeds

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the number of such Shares in issue at the time relevant for ascertaining the number of
outstanding Shares for the purposes of computing the later adjustment, such excess Shares shall
be deemed to be outstanding for the purposes of making such computation.
(P) Minor Adjustments
All calculations under this Condition 6.3 shall be rounded down to the nearest Rupee. No
adjustment of the Conversion Price shall be required if the adjustment would be less than
1 per cent of the Conversion Price then in effect; provided that any adjustment which by reason
of this Condition 6.3(P) is not required to be made shall be carried forward and taken into
account (as if such adjustment had been made at the time when it would have been made but
for the provisions of this Condition 6.3(P)) in any subsequent adjustment.
Where more than one event which gives rise to an adjustment to the Conversion Price occurs
within such a short period of time that, in the opinion of a leading securities company of
international repute in India (selected by, and at the expense of, the Company), a modification
to the operation of the adjustment provisions is required in order to give the intended result,
such modification shall be made to such operation as may be advised by such securities
company to be in its opinion appropriate to give such intended result.
(Q) Minimum Conversion Price
Notwithstanding the provisions of this Condition 6.3, the Company warrants that (i) the
Conversion Price shall not be reduced unless under applicable law then in effect Bonds may be
converted at such reduced Conversion Price into legally issued, fully-paid and non-assessable
Shares; and (ii) it will not take any corporate or other action which may result in the
Conversion Price being reduced below the Minimum Floor Price (as defined in Condition 6.4
below).
(R) Reference to ""fixed''
Any references herein to the date on which a consideration is ""fixed'' shall, where the
consideration is originally expressed by reference to a formula which cannot be expressed as an
actual cash amount until a later date, be construed as a reference to the first day on which such
actual cash amount can be ascertained.
(S) Trustee not Obliged to Monitor
The Trustee shall not be under any duty or obligation to monitor whether any events or
circumstances have happened or exist pursuant to this Condition 6.3, and it may assume until it
receives express notice in writing from the Company to the contrary that no such event has
occurred and will not be responsible or liable to the Bondholders or any other person for any loss
arising from any such assumption or failure by it to monitor so.
(T) Employee Share Schemes
Notwithstanding the provisions of this Condition, no adjustment will be made to the Conversion
Price where Shares or other securities or options, rights or warrants for shares or other
securities, are issued, offered, allotted, appropriated, modified or granted to employees (includ-
ing Directors) or former employees of the Company, its Subsidiaries and/or associated
companies, or persons related to such employees (including Directors) or former employees,
directly or indirectly, pursuant to any employee share scheme or arrangement for any one or
more employees or employees generally or as required by law, except to the extent that such
issues in any period of 12 months amount to, or entitle such persons to receive Shares in excess
of 5 per cent. of the average number of Shares outstanding during such period of 12 months.
For the purposes of these Conditions ""Subsidiary'' shall mean, in relation to any company or
person (together the ""First Person'') at any particular time, any other company or person

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which is then, directly or indirectly, either controlled, or more than 50 per cent. of whose issued
equity share capital is then beneficially owned directly or indirectly by the First Person.
(U) Issue of Securities
The provisions in this Condition 6.3 shall not apply to securities issued by the Company to the
promoters to counter the dilution of their holdings from the issuance of the 5,768,276 6.75%
cumulative compulsorily convertible preference shares of Rs.100 each pursuant to the Subscrip-
tion Agreement entered into between the Company and Jefferies International Limited dated
July 17, 2006 (""CCPSs'') and the conversion of the Bonds until the maturity of the Bonds
following the Original Issue Date (as such term shall be defined in Condition 9.2).
(V) Issue of CCPSs
The provisions in this Condition 6.3 shall not apply to the issue of CCPSs issued by the
Company or any payment paid solely to the holders of the CCPSs.

6.4 Special Conversion Price Reset


If the average of the Closing Prices of the Shares on the Indian Exchange, converted into US dollars
at a fixed rate of exchange of Rs.46.0020 • US$1.00 (the ""Fixed Exchange Rate''), on each Trading Day in
the period of fifteen consecutive Trading Days immediately prior to a Reset Date (the ""Dollar Reset
Reference Price''), is less than the Conversion Price on such Reset Date, converted into US dollars at the
Fixed Exchange Rate, the Conversion Price shall be adjusted in accordance with the following formula:
""Conversion Price'' • Fixed Exchange Rate £ Dollar Reset Reference Price
""Reset Date'' means each of 26 July 2007 and 26 July 2008.
""Reference Price'' means Rs.172.5.
Provided that:
(A) the Conversion Price shall not be reduced on a Reset Date below the relevant percentage of the
Reference Price as set out below:
Reset Date Percentage of Reference Price
26 July 2007 92.3%
26 July 2008 92.3%
(B) any adjustment may be made to the Conversion Price pursuant to this condition notwithstand-
ing that an adjustment may have been made in respect of a prior Reset Date;
(C) the Company provides the Trustee with an opinion of reputed legal counsel in India, stating that
the Conversion Price as proposed to be reset in accordance with this Condition 6.4 is higher
than or equal to the minimum floor price stipulated by the Ministry of Finance (the ""Minimum
Floor Price''), to the extent that, under applicable law, the Conversion Price prohibited from
being below the Regulatory Floor; and
(D) the proposed resetting of the Conversion Price would not require the approval of the Reserve
Bank of India, the Ministry of Finance, India and/or any other governmental/regulatory
authority in India or that such approval had been granted.
Any such adjustment shall become effective as of the relevant Reset Date and shall be notified by the
Company to the Bondholders (with a copy to the Trustee) within 10 days of the relevant Reset Date. The
Trustee and the Agents shall not be responsible to monitor whether any reset of the Conversion Price may
occur, and shall not be liable for (i) any failure to monitor so or (ii) any reset or lack of reset of the
Conversion Price.

6.5 Conversion upon Change of Control


If a Change of Control (as defined in Condition 9.5) shall have occurred, the Company shall give
notice of the fact to the Bondholders (the ""Change of Control Notice'') in accordance with Condition 18
within five Business Days of becoming aware of such Change of Control. Following the giving of a Change of
Control Notice, upon any exercise of the Conversion Right such that the relevant Conversion Date falls within

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30 days following a Change of Control, or, if later, 30 days following the date on which the Change of Control
Notice is given to Bondholders (such period, the ""Change of Control Conversion Period''), the Conversion
Price shall be adjusted in accordance with the following formula:

NCP • OCP £ ® OCP


1 ° (CP £ c/t) ©
where:

NCP and OCP have the meanings ascribed thereto in Condition 6.3(C). For the avoidance of doubt,
OCP for the purposes of this Condition 6.5 shall be the Conversion Price applicable on the relevant
Conversion Date in respect of any conversion pursuant to this Condition 6.5.

Conversion Premium (""CP'') • 14.5 per cent. expressed as a fraction.


c• the number of days from and including the first day of the
Change of Control Conversion Period to but excluding 27 July
2011
t• the number of days from and including 26 August 2006 to but
excluding 27 July 2011

6.6 Company's Obligation

The Company covenants that it shall not undertake any corporate action which would trigger an
adjustment to the Conversion Price pursuant to this Condition 6 such that (a) the adjusted Conversion Price
falls below the Minimum Floor Price and/or (b) the conversion of the Bonds to the Shares at such adjusted
Conversion Price requires the approval of the Reserve Bank of India, the Ministry of Finance, India and/or
any other governmental/regulatory authority in India. The Company further covenants that prior to taking any
corporate action which would cause an adjustment to the Conversion Price, the Company shall provide the
Trustee with an opinion of reputed legal counsel in India, stating that the Conversion Price as proposed to be
adjusted pursuant to such corporate action, would be higher than or equal to the Minimum Floor Price to the
extent that, under applicable law, it would be prohibited from being equal to or below (as the case may be) the
Minimum Floor Price and that the conversion of the Bonds to the Shares at such reset Conversion Price would
not require approval of the Reserve Bank of India, the Ministry of Finance, India and/ or any other
governmental/ regulatory authority in India or that such approval has already been granted.

6.7 Trustee and Agents not Responsible for Company's Failure

Neither the Trustee nor the Agents shall be responsible or liable to the Bondholders or any person for:

(A) any failure of the Company to make such cash payment or to issue, transfer or deliver any
Shares or other securities or property upon the surrender of any Bond for the purposes of
Conversion; or

(B) any failure of the Company to comply with any of its covenants in relation to Conversion as set
out in Condition 6.

The Trustee and the Agents shall not be under any duty to monitor whether any event or
circumstance has happened or exists which may require an adjustment to be made to the Conversion Price and
may assume until they have received notice in writing from the Company to the contrary that no such event
has occurred. None of the Trustee or the Agents will be responsible to the Bondholders for any loss arising
from any failure by it to monitor any event or circumstance which has happened or exists within Condition 6
or Clause 7 of the Trust Deed. Trustee and the Agents shall not be responsible for or liable to Bondholders or
any other person for any failure of the Company to comply with any of the covenants of the Company in
relation to Conversion as set out in this Condition 6 or Clause 7 of the Trust Deed.

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6.8 Calculations
All calculations relating to any adjustment (including an account of reset) of the Conversion Price
shall be performed by the Company. Neither the Trustee nor the Agents shall be liable in any respect for the
accuracy or inaccuracy in any mathematical calculation or formula under these Conditions, the Agency
Agreement or the Trust Deed, whether by the Company, its auditors or any other person so nominated or
authorised by the Company for the purposes of these Conditions, the Agency Agreement or the Trust Deed.

6.9 Expert Certificate Binding


If any Bondholder shall have any doubts as to any adjustment (including an account of reset) to the
Conversion Price, the Company shall at its expense and at the request of the Trustee (acting on the
instructions of the Bondholder) and as soon as practicable, provide the Trustee with a certificate signed by two
of its authorised officers setting out the method by which the adjustment is calculated and a certificate of a
leading investment company acting as an expert, certifying the appropriate adjustment to the Conversion Price
and such a certificate shall be conclusive and binding on all concerned.

6.10 Notice of Change in Conversion Price


The Company shall give notice of any change of the Conversion Price to (i) the Bondholders in
accordance with Condition 18 and (ii) either the Singapore Exchange Securities Trading Limited or such
other exchange as the Bonds may be listed on in accordance with these Conditions and the Trust Deed, as
required by the rules of the Singapore Exchange Securities Trading Limited or such other exchange, as the
case may be. Any notice under this Condition 6.10 shall at least set forth the event giving rise to the change,
the new Conversion Price and the effective date of such change.

7. Mergers, Undertakings and Negative Pledge


7.1 Mergers
No consolidation, amalgamation or merger of the Company with any other corporation (other than a
consolidation, amalgamation or merger in which the Company is the continuing corporation), or sale or
transfer of all, or substantially all, of the assets of the Company (whether as a single transaction or a number
of transactions, related or not, to any corporation, entity or person) shall take place without the prior written
consent of the Bondholders and, in addition, unless the Company and such corporation, entity or person shall
have executed a trust deed supplemental to the Trust Deed (in form and substance satisfactory to the
Trustee) whereby such corporation, entity or person assumes the obligations of the Company under the
Trust Deed, the Agency Agreement and the Bonds and to ensure that the holder of each Bond then
outstanding will have the right (during the period when such Bond shall be convertible) to convert such Bond
into the class and amount of shares, cash and other securities and property receivable upon such consolidation,
amalgamation, merger, sale or transfer by a holder of the number of Shares which would have become liable
to be issued upon conversion of such Bond immediately prior to such consolidation, amalgamation, merger,
sale or transfer. Such supplemental trust deed will provide for adjustments which will be as nearly equivalent
as may be practicable to the adjustments provided for in the foregoing provisions of this Condition 7. The
Trustee shall be entitled to require from the Company such certificate signed by two directors of the
Company, opinions, consents, documents and other matters at the expense of the Company in connection with
the foregoing as it may consider appropriate but shall have no responsibility for the terms of any such
consolidation, amalgamation, merger, sale or transfer or effect thereof upon the Bondholders or the
Conversion Rights. The above provisions of this Condition 7.1 will apply in the same way to any subsequent
consolidations, amalgamations, mergers, sales or transfers.

7.2 Company's Undertakings


The Company has undertaken in the Trust Deed that it will (a) use its best endeavours to (i) obtain
and maintain a listing for all the Shares issued on the exercise of the Conversion Rights attaching to the Bonds
on the BSE and the NSE and (ii) obtain and maintain a listing of the Bonds on the Singapore Exchange

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Securities Trading Limited and (b), if the Company is unable to obtain and maintain such listings, use its best
endeavours to obtain and maintain a listing for all the Shares issued on the exercise of the Conversion Rights,
or the Bonds, as the case may be, on any other stock exchange as the Company may from time to time
determine and will forthwith give notice to the Bondholders of the listing or delisting of the Shares (as a class)
or the Bonds by any stock exchange in accordance with Condition 18.
The Company has undertaken in the Trust Deed to pay the expenses of the issue of, and all expenses
of obtaining listing for, Shares arising on conversion of the Bonds, other than as may be expressed to be
payable by a Bondholder pursuant to Condition 6.2.
The Company has further undertaken in the Trust Deed (i) not to sell, dispose, transfer (except for a
transfer by way of security only) or otherwise divest itself of more than 50% of its shares in any of its
Subsidiaries to any third person other than any Subsidiary and (ii) to procure that no Subsidiary shall merge
or sell substantially all of its assets, without the consent of the Trustee acting on the instruction of the
Bondholders provided that any of the Subsidiaries may merge with or amalgamate with each other or with the
Company and the consent of the Trustee to such mergers or amalgamation shall not be required.
The Company has also undertaken not to sell, dispose of, transfer or allot any Shares or sell, dispose
of, transfer (except by way of security only) or otherwise divest itself of shares in any of its Subsidiaries to any
third person other than any Subsidiary until the expiry of ninety days following the Original Issue Date (as
such term is defined in Condition 9.2). During this 90 day period, the Company may issue securities entitling
the promoters to hold additional Shares in order to counter the dilution of their holdings from the conversion
of Bonds and the issue of CCPSs, thereby diluting Bondholders' potential shareholdings in the Company.
The Shares issued upon conversion of the Bonds are expected to be listed on the BSE and NSE and
will be tradable on such stock exchange once listed thereon, which is expected to occur within 40 days after
the Conversion Date.

7.3 Negative Pledge


(A) Restriction: So long as any Bond remains outstanding (as defined in the Trust Deed):
(1) the Company will not, and will procure that none of its Subsidiaries will, create or permit
to subsist any mortgage, charge, pledge, lien or other form of encumbrance or security
interest (""Security'') upon the whole or any part of its undertaking, assets or revenues
present or future to secure any Relevant Debt, or any guarantee of or indemnity in respect
of any Relevant Debt;
(2) the Company will procure that no other person creates or permits to subsist any Security
upon the whole or any part of the undertaking, assets or revenues present or future of that
other person to secure (x) any of the Company's or any Subsidiary's Relevant Debt, or
any guarantee of or indemnity in respect of any of the Company's or any Subsidiary's
Relevant Debt or (y), where the person in question is a Subsidiary of the Company, any
of the Relevant Debt of any person other than that Subsidiary, or any guarantee or
indemnity in respect of any such Relevant Debt;
(3) the Company will procure that no other person gives any guarantee of, or indemnity in
respect of, any of the Company's or any Subsidiary's Relevant Debt; unless, at the same
time or prior thereto, the Company's obligations under the Bonds 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 maybe, in each case to the satisfaction
of the Trustee, or (bb) have the benefit of such other security, guarantee, indemnity or
other arrangement as shall be approved by an Extraordinary Resolution (as defined in the
Trust Deed) of the Bondholders.
(B) Relevant Debt: For the purposes of this Condition, ""Relevant Debt'' means any present or
future indebtedness in the form of, or represented by, bonds, notes or other securities which are

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for the time being quoted or listed (or capable of being quoted or listed) on any stock exchange
or over-the-counter market and denominated, payable or optionally payable in a currency other
than Rupees or which are denominated in Rupees and more than 50% of the aggregate principal
amount of which is initially distributed outside India by or with the authority of the Company.

8. PAYMENTS
8.1 Principal, Premium and Interest
Payment of principal, premium and any accrued interest due other than on an Interest Payment Date
will be made by transfer to the registered account of the Bondholder or by US dollar cheque drawn on a bank
in New York City mailed to the registered address of the Bondholder. Such payment will only be made upon
surrender of the relevant Certificate at the Specified Office of any of the Agents.

8.2 Interest
Interest due on any Interest Payment Date, subject to Condition 4, will be paid to the Holder shown
on the Register at the close of business on the fifteenth calendar day prior to the Interest Payment Date (the
""Record Date''). Such payment will be made by transfer to the registered account of the Bondholder or by US
dollar cheque drawn on a bank in New York City mailed to the registered address of the Bondholder.
For the purposes of these Conditions, a Bondholder's ""registered account'' means the US dollar
account maintained by or on behalf of it with a bank in New York City details of which appear in the Register
at the close of business on the second Business Day before the due date for payment, and a Bondholder's
""registered address'' means its address appearing in the Register at that time.

8.3 Payments Subject to Fiscal Laws


All payments in respect of the Bonds are subject in all cases to any applicable fiscal or other laws and
regulations, but without prejudice to the provisions of Condition 9. No commissions or expenses shall be
charged to the Bondholders in respect of such payments.

8.4 Surrender of Certificates


Where payment is to be made by transfer to a registered account, payment instructions (for value the
due date or, if that date is not a Business Day, for value the next following Business Day) will be initiated, and,
where payment is to be made by cheque, the cheque will be mailed on the later of the Business Day on which
the relevant Certificate is surrendered at the Specified Office of any of the Agents and the due date for
payment or if the due date is not a Business Day, the next following Business Day. Bondholders will not be
entitled to any interest or other payment for any delay after the due date in receiving the amount due if the due
date is not a Business Day, if the Bondholder is late in surrendering its Certificate (if required pursuant to
these Conditions) or if a cheque mailed in accordance with this Condition arrives or is cleared after the due
date for payment.

8.5 Partial Payments


If the amount of principal, premium or interest which is due on the Bonds on any date is not paid in
full, the Registrar will annotate the Register and any Certificates surrendered for payment with a record of the
amount of principal or premium in fact paid and the date of such payment.

8.6 Yield Protection


Any unpaid amount of the Bonds shall bear interest at the rate of 8.5% per annum, compounded
semi-annually, both before and after judgment, until whichever is the earlier of (i) the day on which all sums
due in respect of such Bonds are received by or on behalf of the relevant Bondholder; and (ii) the day seven
days after the Trustee or the Principal Agent has notified the Bondholder of receipt of all sums due in respect
of all the Bonds of the relevant Bondholder up to that seventh day (except to the extent that there is a failure

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in the subsequent payment to the relevant holder under these Conditions). If interest is required to be
calculated for a period of less than one year, it will be calculated on the basis of a 360 day year of twelve
30 day months. Interest payable under this Condition will be payable in accordance with Condition 8.1.

9. REDEMPTION, PURCHASE AND CANCELLATION

9.1 Redemption at Maturity

Unless previously redeemed or converted or purchased and cancelled as herein provided, the
Company will redeem the Bonds at 130.3961% of their principal amount (the ""Redemption Amount'') in US
dollars on 27 July 2011. The Bonds may be redeemed in whole but not in part prior to that date only as
provided in Conditions 9.2 and 9.3 below (but without prejudice to Condition 11).

9.2 Redemption at the Option of the Company

(A) At any time on or after 26 July 2009 and prior to 27 July 2011, the Company may, having given
not less than 30 nor more than 60 days' notice to the Bondholders (which notice will be
irrevocable), redeem in whole, but not in part at the Early Redemption Amount on the date
fixed for redemption for the Bonds. However, no such redemption may be made in respect of
the Bonds unless the Closing Price translated into US dollars at the Fixed Exchange Rate of the
Shares for each of 25 consecutive Trading Days, the last of which occurs the Trading Day
immediately before the date upon which notice of such redemption is published, is at least
130% of the Early Redemption Amount then in effect translated into US dollars at the Fixed
Exchange Rate.

(B) At any time, the Company may, having given not less than 30 nor more than 60 days' notice to
the Bondholders (which notice will be irrevocable), with a copy to the Trustee, redeem all (and
not some only) of the Bonds at the Early Redemption Amount if less than ten per cent. in
aggregate principal amount of the Bonds originally issued is outstanding.

Upon the expiry of any such notice, the Company will be bound to redeem the Bonds to which
such notice relates at the price aforesaid applicable at the date fixed for redemption, together
with interest accrued to the date of redemption.

Under current regulations of the RBI applicable to convertible bonds, the Company would
require the prior approval of the RBI before providing notice for or effecting such a redemption
prior to the Maturity Date, such approval may or may not be forthcoming.

For purposes of the Conditions:

""Early Redemption Amount'' means an amount as calculated by the Company equal to 100%
of the principal amount of the Bonds redeemed plus the Redemption Premium and any accrued
and unpaid interest on the principal amount of such Bonds, ""Redemption Premium'' means an
amount as calculated by the Company that is determined so that such Redemption Premium
represents for each Bondholder, for each US$1,000 principal amount of the Bonds purchased at
the Issue Price on the Original Issue Date, a simple interest (without compounding) of 5% per
annum calculated on a semi-annual basis. The applicable Early Redemption Amount for each

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US$10,000 principal amount of Bonds is calculated in accordance with the following formula,
rounded (if necessary) to two decimal places with 0.005 being rounded upwards.
Early Redemption Amount • Previous Redemption Amount * (1°r/2) ° d/p ° AI
where:
Previous Redemption Amount • Early Redemption Amount for each US$1,000 principal
amount on the Semi-Annual Date immediately preceding the date fixed for redemption as set
out below (or if the bonds are to be redeemed prior to 26 January 2007, US$1,000).
Semi-Annual Date Early Redemption Amount of the Bonds (US$)

Six month ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,025.0000


One yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,051.0625
18 months ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,078.2327
2 years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,106.5575
2.5 years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,136.0862
3 years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,166.8699
3.5 years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,198.9619
4 years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,232.4178
4.5 years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,267.2955
5 years ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,303.9611

r • 5% in respect of the Bonds, expressed as a fraction.


d • number of days from and including the immediately preceding Semi-Annual Date
(or if the Bonds are to be redeemed on or before 26 January 2007, from and
including the Closing Date) to, but excluding, the date fixed for redemption,
calculated on the basis of a 360-day year consisting of 12 months of 30 days each
and, in the case of an incomplete month, the actual number of days elapsed.
p • 180.
AI • accrued and unpaid interest on the principal amount of the Bonds from and
including the immediately preceding Interest Payment Date to but excluding the
date fixed for redemption.
Upon calculation of the Early Redemption Amount and/or Redemption Premium, the
Company shall notify the Agents and the Trustee of the same, who shall be entitled to rely on
such calculation without any obligation or duty to confirm its accuracy. The Agents shall not be
liable for any non-fulfilment of their duties hereunder should the Company fail to notify them
of such amounts in a timely manner.
""Issue Price'' means 100% of the principal amount of the Bonds.
""Original Issue Date'' means 26 July 2006.
If there shall occur an event giving rise to a change in the Conversion Price during any such 30
Trading Day period, appropriate adjustments for the relevant days shall be made for the purpose
of calculating the Closing Price for such days.

9.3 Redemption for Taxation Reasons


To the extent permitted by applicable law and regulations, at any time the Company may, having
given not less than 30 nor more than 60 days' notice to the Bondholders (which notice shall be irrevocable)
(""Tax Redemption Notice'') with a copy to the Trustee, redeem all but not some only of the Bonds at the
Early Redemption Amount if the Company provides the Trustee with an opinion of independent legal counsel
of international recognised standing or the Company's auditors immediately prior to the giving of such notice
that (i) it has or will become obliged to pay Additional Amounts as provided or referred to in Condition 10 as

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a result of any change in, or amendment to, the laws or regulations of India or any political subdivision or any
authority thereof or therein having power to tax, or any change in the general application or official
interpretation of such laws or regulations, which change or amendment becomes effective on or after the Issue
Date, and (ii) such obligation cannot be avoided by the Company taking reasonable measures available to it,
provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on
which the Company would be obliged to pay such additional amounts were a payment in respect of the Bonds
then due. The Company shall not be entitled to redeem the Bonds unless the relevant withholding or
deduction in the case of payments of Redemption Premium or interest exceeds the rate of 10% plus applicable
surcharge on such tax payable.
If the Company gives a Tax Redemption Notice each Bondholder will have the right to elect that all
or a portion (being US$10,000 or an integral multiple thereof) of his Bond(s) shall not be redeemed and that
the provisions of Condition 9.2 shall not apply in respect of any payment of Early Redemption Amount to be
made in respect of such Bond(s) which falls due after the date of the relevant Tax Redemption Notice (the
""Tax Redemption Date''), whereupon no Additional Amount pursuant to Condition 10 shall be payable in
respect thereof and payment of all amounts shall be made subject to the reduction of withholding of the
relevant Indian tax required to be withheld or deducted pursuant to Condition 8.3. To exercise a right pursuant
to this Condition 9.3, the relevant Bondholder must deposit with the Company (with a copy to the Trustee and
Principal Agent) an irrevocable duly completed and signed notice of exercise in the form for the time being
current obtainable from the Specified Office of any Agent, on or before the day falling thirty (30) days prior
to the Tax Redemption Date.
Under current regulations of the RBI applicable to convertible bonds, the Company would require the
prior approval of the RBI before providing notice for or effecting such a redemption prior to the Maturity Date,
such approval may or may not be forthcoming.

9.4 Redemption of Bonds in the Event of Delisting


To the extent permitted by applicable law and regulations, in the event that the Shares cease to be
listed or admitted to trading on the BSE or NSE (a ""Delisting''), the Company shall, within ten Business
Days after the Delisting, notify the Bondholders (with a copy to the Trustee) of such Delisting, and each
Bondholder shall have the right (the ""Delisting Redemption Right''), at such Bondholder's option, to require
the Company to redeem all of such Bondholder's Bonds at a price equal to the Early Redemption Amount on
the Delisting Redemption Date (the ""Delisting Redemption Price'') on the date set by the Company for such
redemption (the ""Delisting Redemption Date''), which shall be not less than 30 days nor more than 60 days
following the date on which the Company notifies the Bondholders of the Delisting.
Under current regulations of the RBI applicable to convertible bonds, the Company would require the
prior approval of the RBI before providing notice for or effecting such a redemption prior to the Maturity Date,
such approval may or may not be forthcoming.

9.5 Redemption of Bonds in the Event of Change of Control


To the extent permitted by applicable law and regulations, if a Change of Control, as defined below,
occurs with respect to the Company, each Bondholder shall have the right (the ""Change of Control
Redemption Right''), at such Bondholder's option, to require the Company to redeem all of such Bond-
holder's Bonds on the date set by the Company for such redemption (the ""Change of Control Redemp-
tion Date''), which shall be not less than 30 days nor more than 60 days following the date on which the
Company notifies the Bondholders of the Change of Control, which notice shall be delivered not later than ten
Business Days after the Company becomes aware of a Change of Control, at a price equal to the Early
Redemption Amount with respect to the Bonds on the Change of Control Redemption Date (the ""Change of
Control Redemption Price'').
Under current regulations of the RBI applicable to convertible bonds, the Company would require the
prior approval of the RBI before providing notice for or effecting such a redemption prior to the Maturity Date,
such approval may or may not be forthcoming.

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The definition of certain terms used in this Condition are listed below:
The term ""Control'' means (a) control of more than 50 per cent. of the voting rights of the issued
share capital of the Company; or (b) the right to appoint and/or remove all or the majority of the members of
the Board, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the
possession of voting rights, contract or otherwise.
A ""Change of Control'' occurs when:
(A) any person or persons (as defined below) acting together acquires Control of the Company if
such person or persons does not or do not have, and would not be deemed to have, Control of
the Company on the Closing Date;
(B) the Company consolidates with or merges into or sells or transfers all or substantially all of the
Company's assets to any other person, unless the consolidation, merger, sale or transfer will not
result in the other person or persons acquiring Control over the Company or the successor
entity; or
(C) one or more other persons acting together acquires the legal or beneficial ownership of all or
substantially all of the Company's Voting Stock.
However, a Change of Control will not be deemed to have occurred solely as a result of the issuance
or transfer, with the Company's co-operation, of any preferred shares in the Company's capital.
For the purposes of the Change of Control Redemption Right, a ""person''includes any individual,
company, corporation, firm, partnership, joint venture, undertaking, association, organisation, trust, state or
agency of a state, in each case whether or not being a separate legal entity. A ""person'' does not include the
board of directors or any other governing board of the Company and does not include the Company's
Subsidiaries or affiliates.
For the purposes of this Condition 9.5:
""Capital Stock'' means, with respect to any person, any and all shares, ownership interests,
participation or other equivalents (however designated), including all common or ordinary stock and all
preferred stock, of such person.
""Voting Stock'' means any class or classes of Capital Stock pursuant to which the holders thereof
have the general voting power under ordinary circumstances to elect members of the board of directors,
managers or trustees of any person (irrespective of whether or not, at the time, stock of any other class or
classes shall have, or might have voting power by reason of the happening of any contingency).

9.6 Non-Permitted Conversion Price Adjustment Event Repurchase Right


To the extent permitted by applicable law, unless the Bonds have been previously redeemed,
repurchased and cancelled or converted, if at any time the adjusted Conversion Price with respect to the Bonds
is not in compliance with the Minimum Floor Price, the Company shall, within 10 Business Days after the
occurrence of the relevant event triggering such adjustment (a ""Non-Permitted Conversion Price Adjustment
Event''), notify the Bondholders of such Non-Permitted Conversion Price Adjustment Event, and each
Bondholder shall have the right (the ""Non-Permitted Conversion Price Adjustment Event Repurchase
Right''), at such Bondholder's option, to require the Company to repurchase all (or any portion of the
principal amount thereof which is US$10,000 or any integral multiple thereof) of such Bondholder's Bonds at
a price equal to their applicable Early Redemption Amount, on the date set by the Company for such
repurchase, which shall be not less than 30 days or more than 60 days following the date on which the
Company notifies the Bondholders of the Non-Permitted Conversion Price Adjustment Event.
The Trustee shall not be required to take any steps to ascertain whether a Non-Permitted Conversion
Price Adjustment Event or any event which could lead to the occurrence of a Non-Permitted Conversion
Price Adjustment Event has occurred and shall not be liable to any person for any failure to do so.

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Under current regulations of the RBI applicable to convertible bonds, the Company would require the
prior approval of the RBI before providing notice for or effecting such a redemption prior to the Maturity Date,
such approval may or may not be forthcoming.

9.7 Redemption Procedures

Promptly after becoming aware of, and in any event within ten Business Days after a Delisting or a
Change of Control, the Company will deliver to each Bondholder (with a copy to the Trustee and Agents), a
notice regarding such Delisting Redemption Right or Change of Control Redemption Right, as the case may
be, which notice shall state, as appropriate:

(A) the Delisting Redemption Date or the Change of Control Redemption Date, as the case may be
(each, a ""Purchase Date'');

(B) in the case of a Delisting, the date of such Delisting and, briefly, the events causing such
Delisting;

(C) in the case of a Change of Control, the date of such Change of Control and, briefly, the events
causing such Change of Control;

(D) the date by which the Bondholder Purchase Notice (as defined below) must be given;

(E) the Delisting Redemption Price or the Change of Control Redemption Price, as the case may
be, and the method by which such amount will be paid;

(F) the names and addresses of the Paying Agent;

(G) the current Conversion Price;

(H) the procedures that Bondholders must follow and requirements that Bondholders must satisfy in
order to exercise the Delisting Redemption Right or Change of Control Redemption Right, as
the case may be, or the Conversion Right; and

(I) that a Bondholder Purchase Notice, once validly given, may not be withdrawn.

To exercise its right to require the Company to redeem the Bonds, pursuant to the Delisting
Redemption Right or the Change of Control Redemption Right, as the case may be, the Bondholder must
deliver a written irrevocable notice of the exercise of such right (a ""Bondholder Purchase Notice'') to any
Paying Agent on any Business Day prior to the close of business at the location of such Paying Agent on such
day and which day is not less than 20 days prior to the Purchase Date.

Payment of the Delisting Redemption Price upon exercise of the Delisting Redemption Right or
payment of the Change of Control Redemption Price upon exercise of the Change of Control Redemp-
tion Right, for any Bond for which a Bondholder Purchase Notice has been delivered is conditional upon
(i) the Company obtaining all approvals required by applicable law and (ii) delivery of the Certificate relating
to such Bond (together with any necessary endorsements) to any Paying Agent on any Business Day together
with the delivery of such Bondholder Purchase Notice. Payment will then be made promptly following the
later of the Purchase Date and the time of delivery of such Certificate. If the Paying Agent holds on the
Purchase Date money sufficient to pay the Delisting Redemption Price or the Change of Control Redemp-
tion Price, as the case may be, of Bonds for which Bondholder Purchase Notices have been delivered in
accordance with the provisions of the Agency Agreement, then, whether or not such Bond is delivered to the
Paying Agent, on and after such Purchase Date, (i) such Bond will cease to be outstanding; (ii) such Bond
will be deemed paid; and (iii) all other rights of the Bondholder shall terminate (other than the right to
receive the Delisting Redemption Price or the Change of Control Redemption Price, as the case may be).

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9.8 Repurchase
The Company or any of its Subsidiaries may, if permitted under the laws of India, at any time
repurchase Bonds or interests therein. The Company or the relevant Subsidiary is required to submit to the
Registrar for cancellation any Bonds so purchased.

9.9 No Re-Issue
Bonds which have been redeemed or converted or purchased by the Company or its Subsidiaries may
not be re-issued or resold and shall be cancelled upon redemption, conversion or purchase. Certificates in
respect of all Bonds cancelled will be forwarded to or to the order of the Principal Agent.

9.10 Redemption Notices


All notices to Bondholders given by or on behalf of the Company pursuant to this Condition will
specify the date fixed for redemption, the redemption amount, the Conversion Price as at the date of the
relevant notice, the Closing Price of the Shares and the aggregate principal amount of the Bonds outstanding,
in each case, as at the latest practicable date prior to the publication of the notice, all in accordance with
Condition 18, and shall be copied to the Trustee and Agents.

9.11 Trustee and Agents Have No Duty to Monitor


The Trustee and the Agents shall not be under any duty to monitor whether a Delisting or Change of
Control has occurred or is likely to occur and may assume that no such event has occurred until they receive
written notice to the contrary from the Company, and shall not be liable to any person for any failure by them
to so monitor.

10. TAXATION
All payments in respect of the Bonds by the Company shall be made free and clear of and without any
deduction or withholding for or on account of any present or future taxes, duties, assessments, or governmental
charges of whatever nature (""Taxes'') unless deduction or withholding of such taxes, duties, assessments or
governmental charges is compelled by law; provided, however, in respect of any deduction or withholding from
any such payment, the Company shall pay such additional amounts (""Additional Amounts'') as will result in
the receipt by the Bondholders of the amounts that would have been receivable in the absence of any such
deduction or withholding, except that no Additional Amounts shall be payable in respect of any Bond:
(A) to a holder (or a third-party on behalf of a holder) who is subject to such taxes, duties,
assessments or governmental charges in respect of such Bond by reason of his having some
connection with India otherwise than merely by holding such Bond or by receipt of payments in
respect of such Bond;
(B) if the Certificate in respect of such Bond is surrendered more than 30 days after the relevant
date except to the extent that the holder would have been entitled to such additional amount on
surrendering the relevant Certificate for payment on the last day of such period of 30 days;
(C) where such withholding or deduction is imposed on a payment to an individual and is required
to be made pursuant to European Council Directive 2003/48/EC on the taxation of savings
income or any law implementing or complying with, or introduced in order to conform to, such
Directive; or
(D) presented for payment or on behalf of a Bondholder who would have been able to avoid such
withholding or deduction by presenting the relevant Bond to another paying agent in a Member
State of the European Union.
For purposes hereof ""relevant date'' means whichever is the later of (i) the date on which such
payment first becomes due and (ii) if the full amount payable has not been received in New York City by the

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Trustee or the Principal Agent on or prior to such due date, the date on which, the full amount having been so
received, notice to that effect shall have been given to the Bondholders.
References in these Conditions to payments in respect of the Bonds shall be deemed also to refer to
any Additional Amounts which may be payable under this Condition ten or any undertaking or covenant given
in addition thereto or in substitution thereof pursuant to the Trust Deed.

11. EVENTS OF DEFAULT


If any of the following events (each an ""Event of Default'') occurs the Trustee at its discretion may
(but shall not be obliged to), and if so requested in writing by the Holders of at least 25% in principal amount
of the Bonds then outstanding, shall (subject always to the Trustee having been indemnified or provided with
security to its satisfaction), give notice to the Company that the Bonds are, and they shall immediately
become, due and payable:
(A) Non-Payment: The Company fails to pay the principal, premium (if any) or interest (if any) of
any of the Bonds when due; or
(B) Failure to Deliver Shares: The Company fails to deliver the Shares as and when such Shares
are required to be delivered following conversion of a Bond; or
(C) Breach Of Other Obligations: The Company defaults in performance or observance of or
compliance with any of its other obligations set out in the Bonds or the Trust Deed which
default is incapable of remedy or, if it is capable of remedy, is not remedied within 30 days after
written notice of such default shall have been given to the Company by the Trustee (acting at
the written direction of Bondholders holding not less than 25% of the principal amount of the
Bonds then outstanding); or
(D) Cross Default:
(1) any other present or future indebtedness for borrowed money of the Company or any of its
Subsidiaries of at least US$1,000,000 in aggregate amount outstanding (or its equivalent
at the relevant time in any other currency) becomes (or becomes capable of being
declared) due and payable prior to its stated maturity by reason of an Event of Default or
a potential Event of Default; or
(2) any such indebtedness for borrowed money is not paid when due, as the case may be,
within any applicable grace period originally provided for; or
(3) the Company or any of its Subsidiaries fails to pay when due (or within any applicable
grace period originally provided for) any amount in excess of US$1,000,000 in aggregate
payable by it under any present or future guarantee or indemnity in respect of indebted-
ness for borrowed money (or its equivalent at the relevant time in any other currency); or
(E) Enforcement Proceedings: A distress, execution or other legal process is levied, enforced or
sued upon or against any material part of the property, assets or revenues of the Company or
any of its Subsidiaries by any person or entity and is not discharged or stayed within 60 days of
having been so levied, enforced or sued out; or
(F) Security Enforced: An encumbrancer takes possession or a receiver, manager or other similar
person is appointed over, or an attachment order is issued in respect of the whole of any material
part of the undertaking, property, assets or revenues of the Company or any of its Subsidiaries
and in any such case such possession, appointment or attachment is not stayed or terminated or
the debt on account of which such possession was taken or appointment or attachment was
made is not discharged or satisfied within 60 days of such possession, appointment or the issue
of such order; or
(G) Insolvency: The Company or any of its Subsidiaries is declared by a court of competent
jurisdiction to be insolvent, bankrupt or unable to pay its debts, or stops, suspends or threatens

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to stop or suspend payment of all or a material part of its debts as they mature or applies for or
consents to or suffers the appointment of an administrator, liquidator or receiver or other similar
person in respect of the Company or any of its Subsidiaries or over the whole or any material
part of the undertaking, property, assets or revenues of the Company or any of its Subsidiaries
pursuant to any insolvency law or takes any proceedings under any law for a readjustment or
deferment of its obligations or any part of them or makes or enters into a general assignment or
an arrangement or composition with or for the benefit of its creditors except, in any such case,
for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or
consolidation on terms approved by an Extraordinary Resolution of the Bondholders; or
(H) Winding-Up: An order of a court of competent jurisdiction is made or an effective resolution
passed for the winding-up or dissolution of the Company or any of its Subsidiaries or the
Company or any of its Subsidiaries ceases to carry on all or any material part of its business or
operations (other than in connection with any consolidation, amalgamation or merger of the
Company with, or the sale of all or substantially all the assets of the Company to, any other
corporation where all relevant trust deeds and supplemental trust deeds are executed pursuant
to, and to give full effect to, the rights of a Bondholder pursuant to Condition 7.1) except, in any
such case, for the purpose of and followed by a reconstruction, amalgamation, reorganisation,
merger or consolidation on terms approved by an Extraordinary Resolution of the Bondholders;
or
(I) Expropriation: Any governmental authority or agency compulsorily purchases or expropriates
all or any material part of the assets of the Company or any of its Subsidiaries without fair
compensation; or
(J) Analogous Events: Any event occurs which under the laws of India has an analogous effect to
any of the events referred to in paragraphs (D) through (H) above.
For the purposes of (C) above, any indebtedness which is in a currency other than US dollars shall be
translated into US dollars at the spot rate for the sale of US dollars against the purchase of the relevant
currency quoted by any leading bank selected by the Trustee on any day when the Trustee requests a quotation
for such purposes.
In this Condition, ""indebtedness for borrowed money'' means any present or future indebtedness
(whether being principal, premium, interest or other amounts) for or in respect of (i) money borrowed,
(ii) liabilities under or in respect of any acceptance or acceptance credit or (iii) any notes, bonds, debentures,
debenture stock, loan stock or other securities, issued or distributed whether by way of public offer, private
placing, acquisition consideration or otherwise and whether issued for cash or in whole or in part for a
consideration other than cash.
Upon such notice being given to the Company, the Bonds will immediately become due and payable
at their Early Redemption Amount.
The Trustee and the Agents shall not be under any duty to monitor whether an Event of Default has
occurred or is likely to occur and may assume that no such event has occurred until they receive written notice
to the contrary from the Company, and shall not be liable to any person for any failure by them to so monitor.
Under current regulations of the RBI applicable to convertible bonds, the Company would require the
prior approval of the RBI before providing notice for or effecting such a redemption prior to the Maturity Date
and such approval may or may not be forthcoming.

12. PRESCRIPTION
Claims against the Company for payment of principal, premium and/or interest in respect of Bonds
will become prescribed unless made within ten years in the case of principal and five years in the case of
premium (if any) or interest from the relevant date for payment. Neither the Trustee nor any of the Agents

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shall have any responsibility, obligation or liability with respect to any Bondholder for any amounts so
prescribed.

13. REPLACEMENT OF CERTIFICATES


If any Certificate is lost, stolen, mutilated, defaced or destroyed it may be replaced at the Specified
Office of the Principal Agent, subject to all applicable laws and stock exchange requirements, upon payment
by the claimant of the expenses incurred in connection with such replacement and the giving of such
indemnity and/or security and production of such evidence as the Company may require. Mutilated or
defaced Certificates must be surrendered before replacements will be issued.

14. AGENTS
The initial Agents and Registrar and their initial Specified Offices are listed below. Subject to the
terms of the Agency Agreement, the Company reserves the right at any time with the prior written approval of
the Trustee to vary or terminate the appointment of any Agent, the Registrar or the Share Transfer Agent and
appoint additional or other agents or a replacement registrar or share transfer agent, provided that it will
maintain (i) a principal agent, (ii) a registrar outside the United Kingdom, (iii) an agent having a Specified
Office in Singapore where the Bonds may be presented or surrendered for payment or redemption, so long as
the Bonds are listed on the Singapore Exchange Securities Trading Limited and the rules of that exchange so
require and (iv) a share transfer agent having a Specified Office in India. Notice of any change in the Agents,
the Registrar or the Share Transfer Agent or their Specified Offices will promptly be given to the Bondholders
in accordance with Condition 18.
Subject to the terms of the Agency Agreement, in acting hereunder and in connection with the
Bonds, the Agents shall act solely as agents of the Company and will not thereby assume any obligations
towards, or relationship of agency or trust for, any of the Bondholders.

15. MEETINGS OF BONDHOLDERS; MODIFICATION AND WAIVER


15.1 Meetings of Bondholders
The Trust Deed contains provisions for convening meetings of Bondholders to consider matters
affecting their interests, including the modification of any of these Conditions or any provisions of the
Trust Deed. Any such modification may be made if sanctioned by an Extraordinary Resolution (as defined in
the Trust Deed). The quorum for any meeting convened to consider an Extraordinary Resolution will be two
or more persons holding or representing over 50% in principal amount of the Bonds for the time being
outstanding, or at any adjourned meeting two or more persons being or representing Bondholders whatever the
principal amount of the Bonds held or represented, unless the business of such meeting includes consideration
of proposals, inter alia, (i) to modify the maturity of the Bonds, (ii) to reduce or cancel the principal amount
of or premium on the Bonds, (iii) to change the currency of payment of the Bonds, (iv) to modify or cancel
the Conversion Right, the Delisting Redemption Right or the Change of Control Redemption Right or shorten
the Conversion Period, or (v) to modify the provisions concerning the quorum required at any meeting of
Bondholders or the majority required to pass an Extraordinary Resolution, in which case the necessary quorum
will be two or more persons holding or representing not less than two-thirds, or at any adjourned meeting two
or more persons holding or representing not less than one-third, in principal amount of the Bonds for the time
being outstanding. Any Extraordinary Resolution duly passed shall be binding on Bondholders whether or not
they were present at the meeting at which such resolution was passed. The Trust Deed provides that a written
resolution signed by or on behalf of the Holders of not less than 90% of the aggregate principal amount of
Bonds outstanding shall be as valid and effective as a duly passed Extraordinary Resolution.

15.2 Modification and Waiver


The Trustee may agree (but shall not be obliged to agree), without the consent of the Bondholders, to
(i) any modification of any of the provisions of the Trust Deed which is of a formal, minor or technical nature
or is made to correct a manifest error, and (ii) any other modification (except as mentioned in the

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Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the
Trust Deed which is in the opinion of the Trustee not materially prejudicial to the interests of the
Bondholders. The Company agrees to provide the Trustee with all such information and certification that the
Trustee may request in relation to any such modification. Any such modification, authorisation, or waiver shall
be binding on the Bondholders and, if the Trustee so requires, shall be notified to the Bondholders as soon as
practicable.

15.3 Entitlement of the Trustee

In connection with the exercise of its functions (including but not limited to those in relation to any
proposed modification, authorisation or waiver) the Trustee shall have regard to the interests of the
Bondholders as a class and shall not have regard to the consequences of such exercise for individual
Bondholders and no Bondholder shall be entitled to claim from the Company, the Trustee or any other person
any indemnification or payment in respect of any tax consequences of any such individual Bondholders.

16. ENFORCEMENT

At any time after the Bonds become due and payable, the Trustee may. at its discretion and without
further notice. institute such proceedings against the Company as it may think fit to enforce the terms of the
Trust Deed and the Bonds, but it need not take any such proceedings unless (i) it shall have been so directed
by an Extraordinary Resolution or so requested in writing by Bondholders holding at least twenty five per cent,
of the principal amount of the Bonds outstanding and (ii) it shall have been indemnified and/or provided with
security to its satisfaction. No Bondholders may proceed directly against the Company unless the Trustee,
having become bound to proceed, fails to do so within a reasonable time and such failure is continuing for a
period of 60 days and no direction inconsistent with such written request or Extraordinary Resolutions has
been given to the Trustee during such 60 day period by the Holders of a majority in principal amount of the
outstanding Bonds.

17. INDEMNIFICATION OF THE TRUSTEE

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from
responsibility, including provisions relieving it from taking proceedings, unless indemnified and/or provided
with security to its satisfaction. The Trustee is entitled to enter into business transactions with the Company
and any of its Subsidiaries and affiliated companies without accounting for any profits.

18. NOTICES

Notices to Bondholders will be deemed to be validly given if sent by first class mail (airmail if
overseas) to them (or, in the case of joint holders, to the first-named in the Register) at their respective
address as recorded in the Register, and will be deemed to have been validly given on the fourth Business Day
after the date of such mailing, Notices will also be published, so long as the Bonds are listed on the Singapore
Exchange Securities Trading Limited and the rules of the Singapore Exchange Securities Trading Limited so
require, in a leading newspaper having general circulation in Singapore (which is expected to be The Business
Times Singapore Edition) or, if in the opinion of the Trustee such publication is not practicable, in an English
language newspaper having general circulation in Asia, and each such notice shall be deemed to have been
given on the date of such publication or, if published more than once on different dates, on the first date on
which publication is made.

So long as any of the Bonds are represented by the Global Certificate(s), notices required to be
published in The Business Times Singapore Edition may be given by delivery of the relevant notice to the
Euroclear Operator and Clearstream, Luxembourg for communication by them to the relevant ac-
countholders, provided: (i) that such notice is also delivered to the Singapore Exchange Securities Trading
Limited; and (ii) so long as the Bonds are listed on the Singapore Exchange Securities Trading Limited and
the rules of the Singapore Exchange Securities Trading Limited so require, publication will also be made in a

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leading daily newspaper having general circulation in Singapore (which is expected to be The Business Times
Singapore Edition).

19. GOVERNING LAW AND JURISDICTION


19.1 Governing Law
These Conditions shall be governed by and construed in accordance with English law.

19.2 Jurisdiction
The courts of England and Wales are to have jurisdiction to settle any disputes which may arise out of
or in connection with these Conditions or the Bonds and accordingly any legal action or proceedings arising
out of or in connection with these Conditions or the Bonds (""Proceedings'') may be brought in such courts.
The Company irrevocably submits to the jurisdiction of such courts and waives any objections to Proceedings
in such courts on the ground of venue or on the ground that the Proceedings have been brought in an
inconvenient forum. This submission is for the benefit of the Trustee and each of the Bondholders and shall
not limit the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the
taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other
jurisdiction (whether concurrently or not).

19.3 Service of Process


The Company irrevocably appoints Law Debenture Corporate Services Limited of Fifth Floor, 100
Wood Street, London EC2V 7EX, United Kingdom, telephone °44 (0)20 7606 5451, facsimile °44 (0)20
7606 0643, email sop@lawdeb.com as its authorised agent for service of process in England. Subject to
applicable law, such service shall be deemed to be completed on delivery to such process agent (whether or not it
is forwarded to and received by the Company). The Company will procure that, so long as any of the Bonds is
outstanding, there shall be in force an appointment of such a person with an office in England with authority to
accept service as aforesaid on behalf of the Company and, falling such appointment within 15 days after demand
by or on behalf of the Trustee, the Trustee shall be entitled by notice to the Company to appoint such person.
Nothing herein shall affect the right to serve process in any other manner permitted by law.

20. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999


No person shall have any right to enforce any term or condition of the Bonds under the Contracts
(Rights of Third Parties) Act 1999.
Bondholders should note that the exercise of the Conversion Right is subject not only to the provisions
of the Trust Deed and the Terms and Conditions, but also to applicable Indian laws and regulations.

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GLOBAL CERTIFICATE
The Global Certificate contains provisions which apply to the Bonds in respect of which the Global
Certificate is issued, some of which modify the effect of the terms and conditions of the Bonds (the
""Conditions'') set out in this offering circular. Terms defined in the Conditions have the same meaning in the
paragraphs below. The following is a summary of those provisions:

Registration of Title
Owners of interests in the Bonds in respect of which the Global Certificate is issued will be entitled to
have title to the Bonds registered in their names and to receive individual definitive Certificates if either
Euroclear or Clearstream, Luxembourg (or any other clearing system (an ""Alternative Clearing System'') as
shall have been designated by the Company and approved by the Trustee on behalf of which the Bonds
evidenced by the Global Certificate may be held) is closed for business for a continuous period of 14 days
(other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease
business or does in fact do so.
In such circumstances, the Issuer will cause sufficient individual definitive Certificates to be executed
and delivered to the Registrar for completion, authentication and dispatch to the relevant Bondholders. A
person with an interest in the Bonds in respect of which the Global Certificate is issued must provide the
Registrar with a written order containing instructions and such other information as the Issuer and the
Registrar may require to complete, execute and deliver such individual definitive Certificates.
The Global Certificate is evidence of entitlement only. Title to the Bonds passes only on due
registration in the register of Bondholders and only the duly registered holder is entitled to payments on Bonds
in respect of which the Global Certificate is issued.

Meetings
The registered holder hereof shall be treated as two persons for the purposes of any quorum
requirements of a meeting of Bondholders and, at any such meeting, as having one vote in respect of each
US$10,000 in principal amount of Bonds in respect of which the Global Certificate is issued. The Trustee may
attend and speak (but not to vote) at any meeting of Bondholders, any person with an interest in, which shall
include any accountholder (or the representative of any such person) of a clearing system entitled to, Bonds in
respect of which the Global Certificate is issued on confirmation of entitlement and proof of his identity.

Conversion
Subject to the requirements of Euroclear and Clearstream, Luxembourg (or any alternative clearing
system), the Conversion Right attaching to Bonds in respect of which the Global Certificate is issued may be
exercised by the presentation of one or more Conversion Notices (which may be by facsimile while the Bonds
are represented by the Global Certificate) duly completed by or on behalf of an account holder in such system
with an entitlement to such Bond. Deposit of the Global Certificate with the Conversion Agent together with
the relevant Conversion Notice shall not be required. The provisions of Condition 6 of the Bonds will
otherwise apply. The exercise of the Conversion Right shall be notified by the Conversion Agent to the
Registrar and the holder of the Global Certificate.

Trustee's Powers
In considering the interests of Bondholders while the Global Certificate is registered in the name of a
nominee for a clearing system the Trustee may, to the extent it considers it appropriate to do so in the
circumstances, (a) have regard to such information as may have been made available to it by or on behalf of
the relevant clearing system or its operator as to the identity of its account holders (either individually or by
way of category) with entitlements in respect of Bonds and (b) consider such interests on the basis that such
account holders were the Bondholders in respect of which the Global Certificate is issued.

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Enforcement

For the purposes of enforcement of the provisions of the Trust Deed against the Trustee, the persons
named in a certificate of the holder of the Bonds in respect of which the Global Certificate is issued shall be
recognised as the beneficiaries of the trusts set out in the Trust Deed to the extent of the principal amount of
their interest in the Bonds set out in the certificate of the holder as if they were themselves the Bondholders in
such principal amounts.

For all purposes the Bonds in respect of which the Global Certificate is issued, each person who is for
the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular
principal amount of such Bonds (in which regard any certificate or other document issued by Euroclear or
Clearstream, Luxembourg as to the principal amount of Bonds represented by a Global Certificate standing to
the account of any person shall be conclusive and binding for all purposes) shall be recognised as the holder of
such principal amount of Bonds.

Purchase and Cancellation

Cancellation of any Bond required by the Conditions to be cancelled following its redemption,
conversion or purchase by the Issuer will be effected by reduction in the principal amount of the Bonds in the
Register.

Redemption at Option of the Bondholders

The Bondholders' put options in Condition 9 may be exercised by the holder of the Global Certificate
giving notice to the Principal Agent of the principal amount of Bonds in respect of which the option is
exercised and presenting the Global Certificate for endorsement or exercise within the time limits specified in
such Conditions.

Payments

Payments of principal, interest and premium (if any) in respect of Bonds represented by the Global
Certificate will be made against presentation and, if no further payment falls to be made in respect of the
Bonds, surrender of the Global Certificate to or to the order of the Principal Agent or such other Paying Agent
as shall have been notified to the Bondholders for such purpose.

Transfers

Transfers of interests in the Bonds with respect to which the Global Certificate is issued shall be
made in accordance with the Agency Agreement.

Transfers of interests in the Bonds with respect to which the Global Certificate is issued shall be
effected through the records of Euroclear and Clearstream, Luxembourg and their respective participants in
accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg and their respective
direct and indirect participants.

Notices

So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on
behalf of Euroclear or Clearstream, Luxembourg or an alternative clearing system, notices required to be
given to Bondholders may be given by their being delivered to the relevant clearing system for communication
by it to entitled accountholders in substitution for notification, as required by the Conditions.

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CLEARANCE AND SETTLEMENT

The information set out below is subject to any change in or reinterpretation of the rules, regulations
and procedures of the Clearing Systems currently in effect. The information in this section concerning the
Clearing Systems has been obtained from sources that the Issuer believes to be reliable, but neither the Issuer
nor the Manager takes any responsibility for the accuracy of this section. Investors wishing to use the facilities
of any of the Clearing Systems are advised to confirm the continued applicability of the rules, regulations and
procedures of the relevant Clearing System. Neither the Issuer nor any other party to the Agency Agreement
will have any responsibility or liability for any aspect of the records relating to, or payments made on account
of, beneficial ownership interests in the Bonds held through the facilities of any Clearing System or for
maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

Custodial and depository links have been established with Euroclear and Clearstream, Luxembourg
to facilitate the initial issue of the Bonds and transfers of the Bonds associated with secondary market trading.

The Clearing Systems

Euroclear and Clearstream, Luxembourg

Euroclear and Clearstream, Luxembourg each hold securities for participating organisations and
facilitates the clearance and settlement of securities transactions between their respective participants through
electronic book-entry of changes in the accounts of their participants. Euroclear and Clearstream, Luxem-
bourg provide their respective participants with, among other things, services for safekeeping, administration,
clearance and settlement of internationally-traded securities and securities lending and borrowing. Euroclear
and Clearstream, Luxembourg participants are financial institutions throughout the world, including under-
writers, securities brokers and dealers, banks, trust companies, clearing corporations and certain other
organisations. Indirect access to Euroclear or Clearstream, Luxembourg is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a
Euroclear or Clearstream, Luxembourg participant, either directly or indirectly.

Distributions of principal with respect to book-entry interests in the Bonds held through Euroclear or
Clearstream, Luxembourg will be credited, to the extent received by the Paying Agent, to the cash accounts of
Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system's rules and
procedures.

Registration and Form of the Bonds

Book-entry interests in the Bonds held through Euroclear and Clearstream, Luxembourg will be
evidenced by the Global Certificate, registered in the name of a nominee of the common depository of
Euroclear and Clearstream, Luxembourg. The Global Certificate will be held by a common depository for
Euroclear and Clearstream, Luxembourg. Beneficial ownership in Bonds will be held through financial
institutions as direct and indirect participants in Euroclear and Clearstream, Luxembourg.

The aggregate holdings of book-entry interests in the Bonds in Euroclear and Clearstream,
Luxembourg will be reflected in the book-entry accounts of each such institution. Euroclear and Clearstream,
Luxembourg, as the case may be, and every other intermediate holder in the chain to the beneficial owner of
book-entry interests in the Bonds, will be responsible for establishing and maintaining accounts for their
participants and customers having interests in the book-entry interest in the Bonds. The Paying Agent will be
responsible for ensuring that payments received by it from the Issuer for holders of interests in the Bonds
holding through Euroclear and Clearstream, Luxembourg are credited to Euroclear or Clearstream, Luxem-
bourg, as the case may be.

The Issuer will not impose any fees in respect of the Bonds; however, holders of book-entry interest in
the Bonds may incur fees normally payable in respect of the maintenance and operation of accounts in
Euroclear and Clearstream, Luxembourg.

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Global Clearance and Settlement Procedures


Initial Settlement
Interests in the Bonds will be in uncertificated book-entry form. Purchasers electing to hold book-
entry interests in the Bonds through Euroclear and Clearstream, Luxembourg accounts will follow the
settlement procedures applicable to conventional Eurobonds. Book-entry interests in the Bonds will be
credited to Euroclear and Clearstream, Luxembourg participants' securities clearance accounts on the
Business Day following the Issue Date against payment (for value the Issue Date).

Secondary Market Trading


Secondary market sales of book-entry interests in the Bonds held through Euroclear or Clearstream,
Luxembourg to purchasers of book-entry interests in the Bonds through Euroclear or Clearstream, Luxem-
bourg will be conducted in accordance with the normal rules and operating procedures of Euroclear and
Clearstream, Luxembourg and will be settled using the procedures applicable to conventional participants.

General
Although the foregoing sets out the procedures of Euroclear and Clearstream, Luxembourg in order
to facilitate the transfers of interests in the Bonds among participants of Euroclear and Clearstream,
Luxembourg, none of Euroclear and Clearstream, Luxembourg is under any obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any time.
None of the Issuer, the Trustee or any of their agents will have any responsibility for the performance
by Euroclear or Clearstream, Luxembourg or their respective participants of their respective obligations under
the rules and procedures governing their operations.

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DESCRIPTION OF THE SHARES


Set forth below is certain information relating to the share capital of the Company, including brief
summaries of certain provisions of its Memorandum and Articles of Association, the Companies Act, the
Securities Contracts (Regulation) Act, 1956 and certain related legislation of India, all as currently in effect.

General
By a shareholders' resolution dated 26 December 2005, the existing equity shares of the Company of
Rs.10 each, fully paid up, were sub-divided into 5 equity shares of Rs.2 each. This was done on the premise
that the availability of a large number of shares with smaller denomination would improve the liquidity of the
shares which in turn would enhance the market valuation of the Company's shares and promote the
shareholders' interest. The authorised capital of the Company is now Rs.350,000,000 divided into
170,000,000 equity shares of Rs.2 each and 100,000 15% cumulative redeemable preference shares of Rs.100
each.

Issued Share Capital History


As at 31 March 2006, the issued and paid up capital of the Company was Rs.192,895,880 divided into
96,447,940 equity shares of Rs.2 each. Of this, 89,372,875 (92.66%) shares were in the de-materialised form
and 7,075,065 (7.34%)shares were held in the physical form.
The total number of shareholders of the Company as of 31 March 2006 was 26,929. The shareholding
pattern of the Company as at 31 March 2006, according to the filings of the Company with the NSE, is as
follows:
Shareholder No. of Shares held Percentage

Promoters' HoldingsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 55,500,640 57.54


Institutional Investors
Mutual Funds and UTI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,671,546 5.88
Banks, Financial Institutions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,939,505 2.01
FIIsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,158,994 10.53

Others
Private Corporate Bodies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,272,438 4.44
Indian Public ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15,937,832 16.52
NRIs/OCBs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,769,265 2.87
Any other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 197,720 0.21
TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 96,447,940 100.00

The top ten shareholders of the Company as at 31 March 2006 are as follows:
S.No. Name of Shareholder Number of Shares % of Shareholding

1. Sapphire Intrex Limited ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 33,324,010 34.55


2. Shailaja Finance Limited ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,131,680 13.62
3. Rampur International Limited ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,857,205 6.07
4. Kuroto Fund LP ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,018,030 4.16
5. Lloyd George Investment Management (Bermuda) Limited 2,786,298 2.89
A/c LG Asian Plus Limited ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
6. Reliance Capital Trustee Company A/c Reliance Growth 2,687,200 2.79
Fund ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
7. Classic Fintrex Limited ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,576,100 2.67
8. General Insurance Corpn of IndiaÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 971,190 1.01
9. Deutsche Securities Mauritius Limited ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,796,160 1.85
10. Arjun Sahay ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,111,990 1.53

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The Company had issued certain preference shares prior to the merger of 2003. The Company
redeemed 20 13.5% Redeemable Cumulative Preference Shares of Rs.100 each in March 2003. There are no
outstanding preference shares at present and the Company has not made any rights/bonus issue in the past
three years.

Issue of the CCPSs

On or about the same date as the offering of the Bonds, the Issuer is proposing to enter a subscription
agreement with the Manager pursuant to which it may issue by way of private placement US$20,000,000
unlisted 6.75% cumulative compulsory convertible preference shares (""CCPSs'') of par value Rs.100 per
share. The CCPSs are convertible into Shares at a conversion price of Rs.159.50 per Share, subject to the
regulations of India. The CCPSs may not be transferred during the twelve month period commencing date of
issue of the CCPSs and the CCPSs must be converted by the end of the 18 month period on the date of the
issue of the CCPSs. The CCPSs will bear dividend at a rate of 6.75% per annum, payable semi-annually after
the issue date of the CCPSs. The issue of the CCPSs is subject to approval by the shareholders of the Issuer at
an extraordinary general meeting (""EGM'') in August 2006 and the ""Regulatory Floor'' (i.e. the minimum
price per Share to be issued on the conversion of the CCPSs, calculated in accordance with the SEBI
(Disclosure and Investor Protection) Guidelines, 2000, as amended or otherwise) will be determined as of the
date which is 30 days prior to the date of the EGM. The offering of the CCPSs is pursuant to a subscription
agreement between the Manager and the Issuer that is to be entered into on or about the same date as the
offering Bonds. The offering of the Bonds is not conditional upon the offering or issue of the CCPSs.

Changes in Issued Share Capital

Other than as stated above, there have been no changes in the issued share capital since 1 April 2003.

Foreign Shareholdings

The non-resident shareholding in the Company before the merger in 2003 was 503,824 shares
constituting 2.63% of the total issued and paid up capital of the Company. Pursuant to the merger, the non-
resident shareholding was 503,824 shares constituting 2.61% of the total issued and paid up capital of the
Company.

There has been no issue of shares to non-residents after the merger. The existing shareholding of non-
residents in the Company has arisen by transfer of their shareholding from Radico Khaitan Limited pursuant
to the merger. The Company had obtained the approval of the RBI in letter no. EC CO.FID (II) /1497/
10.2.40(1568) 99-2000 dated September 16, 1999 under Section 19(1)(d) of the Foreign Exchange
Regulation Act, 1973 for the issue of equity shares to existing non-resident shareholders of Indian origin with
repatriation benefits under 40% scheme in the three resultant companies consequent on the scheme of
arrangement for the trifurcation of the erstwhile Radico Khaitan Limited. Under the terms of the approval the
shares allotted to the non-residents are not to be transferred by them without prior approval of the RBI unless
the transfer is to a close "relative' as the term is defined under the Companies Act.

The Company has relied on Regulation 7 of the FEMA (Transfer or issue of security by a person
resident outside India) Regulations, 2000 and on the BIFR order dated 30 December 2002 for allotting shares
in the Company to the said non-residents pursuant to the merger. In accordance with Regulation 7, the
Company has filed a report with the Reserve Bank of India providing the details of the foreign shareholding in
the Company and confirmation of compliance with the terms and conditions of the BIFR order.

By a shareholders' resolution dated 16 November 2005 the Company increased the investment limit
for investment by Foreign Institutional Investors (""FIIs'') in equity/debentures/convertible securities issued
by the Company under the Portfolio Investment Scheme subject to the condition that the total investment by
FIIs in the Company shall not exceed 35% of the paid up equity share capital/ debentures/convertible
securities of the Company, as the case may be.

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Dividends
Under Indian law unless the Company's board of directors (the ""Board'') recommends the payment
of a dividend, the shareholders at the general meeting have no power to declare any dividend. Dividends may
not be declared by the Company unless the shareholders of the Company so approve at a general meeting. The
shareholders at the general meeting may declare a dividend lower but not higher, than that recommended by
the Board. Dividends are generally declared as a percentage of the par value. The dividend recommended by
the Board and approved by the shareholders at the general meeting is distributed and paid to the shareholders
in proportion to the paid up value of the shares on the record date for which such dividend is payable. In
addition, as is permitted by the Company's Articles of Association, the Board may declare and pay interim
dividend. Under the Companies Act, dividend can only be paid in cash to shareholders listed on the register of
members on the date specified as the ""record date'' or ""book closure date''. In case of Shares held in de-
materialised form the dividend is payable to the beneficial owners of the Shares, as per the records of the
depository. ®No shareholder is entitled to a dividend in respect of any Share which has been forfeited in
accordance with the Articles of Association of the Company.©
Any dividend declared shall be deposited in a separate bank account within five days of the
declaration of such dividend. Dividends must be paid within 30 days from the date of the declaration and any
dividend which remains unpaid or unclaimed after that period must be transferred within seven days to a
special unpaid dividend account held at a scheduled bank. Any money which remains unpaid or unclaimed for
seven years from the date of such transfer must be transferred by the Company to the Investor Education and
Protection Fund established by the Government pursuant to which no claim shall lie against the Company or
the said Fund.
Under the Companies Act, the Company may only pay a dividend in excess of 10% of paid-up capital
in respect of any year out of the profits of that year after it has transferred to the reserves of the Company a
percentage of its profits for that year ranging between 2.5% to 10% depending on the rate of dividend proposed
to be declared in that year. The Companies Act further provides that if the profit for a year is insufficient, the
dividend for that year may be declared out of the accumulated profits earned in previous years and transferred
to reserves, subject to the following conditions: (i) the rate of dividend to be declared may not exceed the
lesser of the average of the rates at which dividends were declared in the five years immediately preceding the
year, or 10% of paid-up capital; (ii) the total amount to be drawn from the accumulated profits from previous
years and transferred to the reserves, may not exceed an amount equivalent to one tenth of the paid-up capital
and free reserves and the amount so drawn is first to be used to set off the losses incurred in the financial year
before any dividends in respect of preference or equity shares is declared; and (iii) the balance of reserves after
withdrawals must not be below 15% of paid-up capital.

Capitalisation of Reserves and Issue of Bonus Shares


The Company's Articles of Association permit the Company by a resolution of the shareholders in a
general meeting to resolve in certain circumstances that certain amounts standing to the credit of certain
reserves or securities premium can be capitalised by the issue of fully paid bonus shares or by crediting shares
not fully paid-up with the whole or part of any sum outstanding. Bonus shares must be issued pro rata to the
amount of capital paid-up on existing shareholdings. Any issue of bonus shares would be subject to the
guidelines issued by SEBI in this regard. The relevant SEBI guidelines prescribe that no company shall,
pending conversion of convertible securities, issue any shares by way of bonus unless similar benefit is
extended to the holders of such convertible securities, through reservation of shares in proportion to such
conversion. The bonus issue shall be made out of free reserves built out of the genuine profits or share
premium collected in cash only. The bonus issue cannot be made unless the partly paid shares, if any existing,
are made fully paid-up. Further, for the issuance of such bonus shares a company should not have defaulted in
the payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal
on redemption of such debentures. The declaration of bonus shares in lieu of dividend cannot be made.
Further a company should have sufficient reason to believe that it has not defaulted in respect of the payment
of statutory dues of the employees such as contribution to provident fund, gratuity and bonus. The issuance of
bonus shares must be implemented within six months from the date of approval by the board of directors.

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Pre-Emptive Rights and Alteration of Share Capital


Subject to the provisions of the Companies Act, the Company may increase its share capital by
issuing new shares. Such new shares shall be offered to existing shareholders listed on the members' register
on the record date in proportion to the amount paid-up on those shares at that date. The offer shall be made by
notice specifying the number of shares offered and the date (being not less than 15 days from the date of the
offer) after which the offer, if not accepted, will be deemed to have been declined. After such date the Board
may dispose of the shares offered in respect of which no acceptance has been received, in such manner as they
think most beneficial to the Company. The offer is deemed to include a right exercisable by the person
concerned to renounce the shares offered to him in favour of any other person.
Under the provisions of the Companies Act, new shares may be offered to any persons whether or not
those persons include existing shareholders either, if a special resolution to that effect is passed by the
shareholders of the company in a general meeting or where only a simple majority of shareholders present and
voting have passed the resolution, the Government's permission has been taken.
The issuance of the Shares upon conversion of the Bonds has been duly approved by a special
resolution of the shareholders of the Company and such shareholders have waived their pre-emptive rights
with respect to such Shares.

General Meetings of Shareholders


The Company must hold its annual general meeting each year within 15 months of the previous
annual general meeting, unless extended by the Registrar of Companies at the request of the Company for any
special reason. The Board may convene an extraordinary general meeting of shareholders when necessary or at
the request of a shareholder or shareholders holding in the aggregate not less than 10% of the paid-up capital
of the Company. Written notices convening a meeting setting out the date, place and agenda of the meeting
must be given to members at least 21 clear days prior to the date of the proposed meeting. A general meeting
may be called after giving shorter notice if consent is received from all shareholders entitled to vote, in the
case of an annual general meeting, and from shareholders holding not less than 95% of the paid-up capital of
the Company in the case of any other general meeting. Currently, the Company gives written notices to all
members and, in addition, gives public notice of general meetings of shareholders in a daily newspaper of
general circulation in the region of registered office of the Company. The quorum for a general meeting of the
Company is five shareholders personally present.
A company intending to pass a resolution relating to matters such as, but not limited to, amendment
in the objects clause of the memorandum, buy back of shares under the Companies Act, giving loans or
extending guarantee in excess of limits prescribed under the Companies Act, and guidelines issued thereunder,
is required to obtain the resolution passed by means of a postal ballot instead of transacting the business in the
general meeting of the company. A notice to all the shareholders shall be sent along with a draft resolution
explaining the reasons thereof and requesting them to send their assent or dissent in writing on a postal ballot
within a period of 30 days from the date of posting the letter. Postal ballot includes voting by electronic mode.

Voting Rights
At a general meeting upon a show of hands, every member holding shares and entitled to vote and
present in person has one vote. Upon a poll the voting rights of each shareholder entitled to vote and present in
person or by proxy is in the same proportion as the capital paid-up on each share held by such holder bears to
the total paid-up capital of the company. Voting is by show of hands, unless a poll is ordered by the Chairman
of the meeting or demanded by shareholder or shareholders holding at least 10% of the voting rights in respect
of the resolution or by those holding paid-up capital of at least Rs.50,000 (i.e. 25,000 shares of Rs.2 each).
The Chairman of the meeting has a casting vote.
Ordinary resolutions may be passed by simple majority of those eligible and voting. Special
resolutions require the vote of three fourths of the members eligible and voting. The Companies Act provides
that to amend the Articles of Association, a special resolution is required to be passed in a general meeting.

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Certain instances, including change in the name of the company, reduction of share capital, approval of
variation of rights of special classes of shares and dissolution of the company require a special resolution.
A shareholder may exercise his voting rights by proxy to be given in the form provided by
Schedule IX of the Companies Act. The instrument appointing a proxy is required to be lodged with the
Company at least 48 hours before the time of the meeting. Any shareholder of the Company may appoint a
proxy. A proxy shall not vote except on a poll and does not have a right to speak at meetings. A corporate
shareholder is also entitled to nominate a representative to attend and vote on its behalf at general meetings,
who shall not be deemed a proxy. Such an authorised representative can vote in all respects as if a member,
including on a show of hands and a poll.
The Companies Act allows for a company to issue shares with differential rights as to dividend, voting
or otherwise subject to certain conditions prescribed under applicable law. In this regard, the laws require that
for a public company to issue shares with differential voting rights the company must have had distributable
profits in terms of the Companies Act for a period of three financial years, the company has not defaulted in
filing annual accounts and annual returns for the immediately preceding three years, the articles of association
of the company allow for the issuance of such shares with differential voting rights and such other conditions
set forth in the Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001.

Convertible Securities/Warrants
The Company may issue from time to time debt instruments that are partly and fully convertible into
Shares and/or warrants to purchase Shares.

Register of Members and Record Dates


The Company is obliged to maintain a register of members at its registered office. The register and
index of beneficial owners maintained by a depository under the Depositories Act, 1996 is deemed to be an
index of members and register and index of debenture holders. The Company recognises as shareholders only
those persons who appear on its register of members and the Company cannot recognise any person holding
any Share or part of it upon any trust, express, implied or constructive, except as permitted by law. In the case
of shares held in physical form, the Company registers transfers of shares on the register of shareholders upon
lodgement of the share transfer form duly complete in all respects accompanied by a share certificate or if
there is no certificate, the letter of allotment in respect of shares to be transferred together with duly stamped
transfer forms. In respect of electronic transfers, the depository transfers shares by entering the name of the
purchaser in its books as the beneficial owner of the shares. In turn, the Company enters the name of the
depository in its records as the registered owner of the shares. The beneficial owner is entitled to all the rights
and benefits as well as the liabilities with respect to the shares that are held by the depository. Transfer of
beneficial ownership through a depository is exempt from any stamp duty.
For the purpose of determining the shareholders, the register of members may be closed for periods
not exceeding 45 days in any one year or 30 days at any one time. In order to determine the shareholders
entitled to dividends the Company keeps the register of members closed for approximately 10 to 20 days,
generally before the annual general meeting. Under the listing regulations of the stock exchanges on which the
Company's outstanding Shares are listed, the Company may, upon at least 15 days' advance notice to such
stock exchanges, set a record date and/or close the register of members in order to ascertain the identity of
shareholders. The trading of Shares and the delivery of certificates in respect thereof may continue while the
register of members is closed.

Annual Report and Financial Results


The Company's audited financial statements for the relevant financial year, the directors' report and
the auditors' report (collectively the ""Annual Report'') must be laid before the annual general meeting. These
also include certain other financial information of the Company, a corporate governance section and
management's discussion and analysis and are made available for inspection at the Company's registered
office during normal working hours for 21 clear days prior to the annual general meeting.

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Under the Companies Act, the Company must file the Annual Report with the Registrar of
Companies within 30 days from the date of the annual general meeting. As required under the listing
agreement, copies are required to be sent to the BSE and the NSE. The Company must also publish its
financial results in at least one English language daily newspaper circulating in the whole or substantially the
whole of India and also in a newspaper published in the language of the region where the registered office of
the Company is situated.
The Company files certain information on-line, including its Annual Report, interim financial
statements, report on corporate governance and shareholding pattern statement, in accordance with the
requirements of the Listing Agreement.

Transfer of Shares
Shares held through depositories are transferred in the form of book entries or in electronic form in
accordance with the regulations laid down by the SEBI. These regulations provide the regime for the
functioning of the depositories and the participants and set out the manner in which the records are to be kept
and maintained and the safeguards to be followed in this system. Transfers of beneficial ownerships of shares
held through a depository are exempt from stamp duty. The Company has entered into an agreement for such
depository services with National Securities Depository Limited and the Central Depository Services India
Limited.
The Shares of the Company are freely transferable, subject only to the provisions of the Companies
Act under which, if a transfer of Shares contravenes the SEBI provisions or the regulations issued under it or
the Sick Industrial Companies (Special Provisions) Act, 1985 (""SICA'') or any other law, the Indian
Company Law Board may, on an application made by the company, a participant, a depository incorporated in
India, an investor or the SEBI, direct a rectification of the register of records. If a company without sufficient
cause refuses to register a transfer of shares within two months from the date of which the instrument of
transfer is delivered to the company, the transferee may appeal to the Indian Company Law Board seeking to
register the transfer of equity shares. Under the Companies (Second Amendment) Act, 2002, the Indian
Company Law Board will be replaced with the National Company Law Tribunal. Further, under the Sick
Industrial Companies (Special Provisions) Repeal Act 2003, which is expected to come into force shortly, the
SICA is sought to be repealed and the Board of Industrial and Financial Reconstruction, as constituted under
the SICA, is to be replaced with the National Company Law Tribunal. Pursuant to the Listing Agreement, in
the event the Company has not effected the transfer of Shares within one month or where the Company has
failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of
one month, the Company is required to compensate the aggrieved party for the opportunity loss caused during
the period of delay. The Companies Act provides that the shares or debentures of the public listed company
(such as the Company) shall be freely transferable. The Articles of Association of the Company provide for
certain restrictions on the transfer of shares, including granting power to the board of directors in certain
circumstances, to refuse to register or acknowledge transfer of shares or other securities issued by the
Company. However, to the extent that the provisions of the Articles are in conflict with any of the provisions
of the Companies Act, the Companies Act shall prevail.

Buyback of Shares
The Company is prohibited from buying back its own shares unless the consequent reduction of
capital is effected and sanctioned by the High Court of competent jurisdiction. However, pursuant to certain
amendments to the Companies Act, a company has been empowered to purchase its own shares or other
specified securities out of its free reserves, or the securities premium account or the proceeds of any shares or
other specified securities (other than the kind of shares or other specified securities proposed to be bought
back) subject to certain conditions, including that:
‚ the buy back is authorised by the Articles of Association of the company;
‚ a special resolution has been passed in the general meeting of the company authorising the buy back;

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‚ the buy back is limited to 25% of the total paid up capital and free reserves;
‚ the ratio of debt owed by the company is not more than twice the capital and free reserves after such
buy back; and
‚ the buy-back is in accordance with the Securities and Exchange Board of India (Buy-Back of
Securities) Regulation, 1998.
The first two conditions mentioned above would not be applicable if the buy-back is for less than 10%
of the total paid-up equity capital and free reserves of the company and provided that such buy-back has been
authorised by the board of directors of the company at its meeting and in such a case the company buying
back its securities is not permitted to buy back any securities for a period of one year from the date of the
preceding buy-back, if any. A company buying back its securities is required to extinguish and physically
destroy the securities so bought back within seven days of the last date of completion of the buy-back. A
Company which has bought back its shares is not permitted to issue securities for six months except by way of
bonus issue or in the discharge of subsisting obligations such as conversion of warrants, stock option schemes,
sweat equity or conversion of preference shares or debentures into equity shares.

Liquidation Rights at the Time of Winding Up


All surplus assets after payments due to workmen, statutory creditors, and secured and unsecured
creditors belong to the holders of the equity shares in proportion to the amount paid up or credited as paid-up
on such shares respectively at the commencement of the winding-up.

Dematerialisation of Shares and Liquidity


The Shares of the Company are compulsorily traded in dematerialised form and are available for
trading under both the depository systems in India, which are the NSDL (National Securities Depository
Ltd) and the CDSL (Central Depository Services (India) Limited). Approximately 92.66% of the total
equity capital was held in dematerialised form with NSDL and CDSL as on 31 March 2006.
Under the depository system, the International Securities Identification Number (ISIN) allotted to
the Company's equity Shares is INE944F01028.

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INDIAN GOVERNMENT AND OTHER APPROVALS


This offering is being made entirely outside India. This offering circular may not be distributed
directly or indirectly in India or to residents of India and the Bonds are not being offered or sold and may not
be offered or sold directly or indirectly in India or to, or for the account or benefit of, any resident of India.
Each purchaser of Bonds will be deemed to represent that it is neither located in India nor a resident of India
and that it is not purchasing for, or for the account or benefit of, any such person, and understands that the
Bonds will bear a legend to the effect that the securities evidenced thereby may not be offered, sold, pledged or
otherwise transferred to any person located in India, to any resident of India or to, or for the Bonds account of,
such persons, unless the Issuer may determine otherwise in compliance with applicable law.

Automatic Route
In terms of the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through
Depositary Receipt Mechanism) Scheme, 1993, as amended and the Foreign Exchange Management
(Transfer or Issue of any Foreign Security) Regulations, 2000, as amended, read with the circulars dated
1 July 2005 and 1 August 2005 on external commercial borrowings issued by the Reserve Bank of India,
Indian companies are permitted to issue foreign currency convertible bonds (""FCCBs'') FCCBs in principal
amount above US$20 million and up to US$500 million or equivalent, with a minimum average maturity of
five years, under the automatic route in the manner set forth therein, subject to compliance with certain
conditions specified therein. The Company is required to make periodic filings with the RBI with respect to
the Bonds.
In terms of the extant policy on foreign investment in India (See ""Appendix B: Foreign Investment
and Exchange Controls Ì Foreign Direct Investment''), foreign direct investment in the Issuer is permitted
under the automatic route and non-resident investors are permitted to hold up to 100% of the equity capital of
the Issuer. The Shares issued on conversion of the Bonds are to be listed on the principal Indian stock
exchanges on which the Shares of the Issuer are now listed. The Issuer has applied for an in principle approval
from the BSE and the NSE for the listing of the Shares to be issued on conversion of the Bonds on such stock
exchanges. This offering circular will be filed with each Indian stock exchange on which the Issuer's Shares
are listed for information purposes only.

Pricing of an FCCB Issue


Pursuant to a recent amendment of the Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depositary Receipt Mechanism) Scheme, 1993, as amended by a circular dated 31 August 2005,
the Reserve Bank of India (the RBI) has, among other things, prescribed pricing norms for FCCB issues by
Indian companies. As per the said circular, the pricing of FCCB issues is required to be at a price not less than
the higher of the following two averages:
(i) The average of the weekly high and low of the closing prices of the related shares quoted on the
stock exchange during the six months preceding the relevant date;
(ii) The average of the weekly high and low of the closing prices of the related shares quoted on a
stock exchange during the two weeks preceding the relevant date.
The relevant date in this regard has been defined to mean the date thirty days prior to the date on
which the meeting of the general body of shareholders is held, in terms of section 81 (IA) of the Companies
Act, 1956, to consider the proposed issue of FCCBs.

Regulatory Filings
The Issuer is required to make the following filings in connection with issuance of the Bonds and at
the time of conversion of Bonds into Shares:
(i) Filing with the Reserve Bank of India (through Authorised Dealer in foreign exchange)
Form No. 83;

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(ii) Filing of information with the Reserve Bank of India subsequent to the issuance of the Bonds
which would include, total amount of the Bonds issued, names of the investors resident outside
India and number of the Bonds issued to each of them, and the amount repatriated to India
through normal banking channels duly supported by Foreign Inward Remittance Certificates;
(iii) Filing of return of allotment with the Registrar of Companies, Uttar Pradesh and Uttaranchal in
Kanpur, at the time of conversion of Bonds into Shares;
(iv) Filing of information with the Reserve Bank of India on conversion of Bonds into the Shares in
the prescribed Form FC-GPR; and
(v) Monthly filing with the Reserve Bank of India (through Authorised Dealer in foreign
exchange) in the prescribed Form No. ECB-2.

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ENFORCEMENT OF CIVIL LIABILITIES


The Issuer is a limited liability public company incorporated under the laws of India. Substantially all
of the Issuer's directors and executive officers are residents of India and all or a substantial portion of the
assets of the Issuer and such persons are located in India. As a result, it may not be possible for investors to
effect service of process upon the Issuer or such persons in jurisdictions outside of India, or to enforce against
them judgments obtained in courts outside of India. India is not a party to any international treaty in relation
to the recognition or enforcement of foreign judgments.
Recognition and enforcement of foreign judgments is provided for under Section 13 of the Code of
Civil Procedure, 1908 as amended (the ""Civil Code''). Section 13 of the Civil Code provides that a foreign
judgment shall be conclusive as to any matter directly adjudicated upon between the same parties or between
parties under whom they or any of them claim litigating under the same title except (i) where the judgment
has not been pronounced by a court of competent jurisdiction, (ii) where the judgment has not been given on
the merits of the case, (iii) where the judgment appears on the face of the proceedings to be founded on an
incorrect view of international law or a refusal to recognise the law of India in cases where such law is
applicable, (iv) where the proceedings in which the judgment was obtained were opposed to natural justice,
(v) where the judgment has been obtained by fraud or (vi) where the judgment sustains a claim founded on a
breach of any law in force in India. Section 44A of the Civil Code provides that where a foreign judgment has
been rendered by a superior court, as defined under Section 44A, in any country or territory outside India
which the Government has by notification declared to be a reciprocating territory for the purposes of
Section 44A, it may be enforced in India by proceedings in execution as if the judgment had been rendered by
the relevant court in India. However, Section 44A of the Civil Code is applicable only to a decree or judgment
of a superior court under which a sum of money is payable, not being a sum in respect of taxes of other charges
of a like nature or in respect of a fine or other penalty, and shall in no case include an arbitration award, even if
such award is enforceable as a decree or judgment.
The United Kingdom has been declared by the Government to be a reciprocating territory for the
purpose of Section 44A of the Civil Code. However, the United States has not been so declared. Accordingly,
a judgment of a court in the United States may be enforced only by a suit upon the judgment and not by
proceedings in execution. Such a suit must be filed in India within three years from the date of the judgment
in the same manner as any other suit filed to enforce a civil liability in India. A party seeking to enforce a
foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any amount
recovered.

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TAXATION

The following is a summary of the principal Indian tax consequences for non-resident investors of the
Bonds who acquire the Bonds pursuant to this offering circular. The summary details the tax consequences for
the non-resident investors only in relation to the Bonds and the Shares issuable upon conversion of the Bonds.
The summary only addresses the tax consequences for non-resident investors who hold the Bonds or the
Shares issued on conversion of Bonds as capital assets and does not address the tax consequences which may
be relevant to other classes of non-resident investors, including dealers. The summary proceeds on the basis
that the investor continues to remain a non-resident when the income by way of dividends and capital gains
are earned. The summary is based on Indian tax laws as are in force as at the date of this offering circular and
is subject to change. This summary is not intended to constitute a complete analysis of all the tax
consequences for a non-resident investor under Indian law in relation to the acquisition, ownership and
disposal of the Bonds or Shares issuable upon conversion of the Bonds. Potential investors should therefore
consult their own tax advisers on the tax consequences of such acquisition, ownership and disposal of the
Bonds or the Shares under Indian law including specifically, the tax treaty between India and their country of
residence and the law of the jurisdiction of their residence.

The following discussion describes the material Indian income tax, stamp duty and estate duty
consequences of the purchase, ownership and disposal of the Bonds and the Shares issuable upon conversion of
the Bonds. The Income Tax Act 1961 (the ""Income Tax Act'') is the law relating to taxation of income in
India. The Income Tax Act provides for the taxation of persons resident in India on their global income and
persons not resident in India on income received, accruing or arising in India or deemed to have been received,
accrued or arisen in India. This summary is based on the provisions of Section 115AC of the Income Tax Act
and other applicable provisions of the Income Tax Act and the Issue of Foreign Currency Convertible Bonds
and Ordinary Shares (through Depositary Receipt Mechanism) Scheme 1993 promulgated by the Govern-
ment of India (together referred to as the ""Tax Regime'').

Taxation of Income from Bonds

The Tax Regime provides that payment of interest on the Bonds paid to the non-resident Holders of
the Bonds will be subject to withholding tax at the rate of 10% plus surcharge at the applicable rate. The
Income Tax Act requires that such tax be withheld at source. Under the Issue of Foreign Currency
Convertible Bonds and Ordinary Shares (through Depositary Receipt Mechanism) Scheme, 1993, the
transfer of Bonds outside India by a non-resident holder to another non-resident shall not give rise to any
capital gains tax in India. However, Section 115AC of the Income Tax Act provides that income by way of
long-term capital gains arising from the transfer of Bonds outside India by the non-resident holder to another
non-resident is subject to tax at the rate of 10 per cent. In the circumstances, if at all, that capital gains arising
from a transfer of Bonds are taxable under the Income Tax Act, the same shall be subject to tax as long term
capital gains at the rate of 10 per cent plus surcharge at the applicable rate if such Bonds have been held by
the non-resident holder for more than three years. In the event that such Bonds have been held by the non-
resident holder for less than three years, the capital gains shall be subject to tax as short term capital gains at
the normal income tax rates applicable to non-residents under the provisions of the Income Tax Act. It is
unclear whether capital gains derived from the sale by a non-resident investor of rights in respect of Bonds will
be subject to tax liability in India. This will depend on the view taken by Indian tax authorities on the position
with respect to the situs of the rights being offered in respect of the Bonds. The premium payable by the
Company to a non-resident Bondholder upon redemption of the Bonds will be taxed as long term capital gains
at the concessional rate of 10 per cent. plus surcharge at the applicable rate if the Bonds have been held by the
non-resident holder for more than three years.

In the event that the Bonds have been held by the non-resident holder for less than three years, the
capital gains due to payment of premium on redemption of the Bonds shall be subject to tax as short term
capital gains at the normal income tax rates applicable to non-residents under the provisions of the Income
Tax Act. Withholding tax on capital gains due to payment of premium on redemption of the Bonds is required
to be deducted under Section 195 of the Income Tax Act at the prescribed rates.

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Taxation of Shares Issued upon Conversion of Bonds

The conversion of Bonds into Shares shall not give rise to any capital gains liable to income tax in
India. However, the issue of Shares by the Company upon conversion of Bonds will be chargeable to stamp
duty as described below under ""Stamp Duty''.

Taxation of Dividends

Dividends paid to a non-resident holder of Shares issued upon conversion of Bonds are not presently
liable to tax. However, the Company is liable to pay a ""dividend distribution tax'' currently at the rate of
approximately 12.5% (plus applicable surcharge) on the total amount distributed as dividend.

Taxation of Sale of the Shares

Sale of the Shares by any holder thereof may occasion certain incidence of tax in India, as is
discussed below. Under applicable law, a transaction of sale of Shares may be chargeable to a transaction tax
and/or tax on income by way of capital gains. Capital gains accruing to a non-resident investor on the sale of
the Shares, whether to an Indian resident or to a person resident outside India and whether in India or outside
India, may be subject to Indian capital gains tax in certain instances as described below.

Sale of the Shares on a Recognised Stock Exchange

In accordance with applicable Indian tax laws, any income arising from a sale of the equity shares of
an Indian company through a recognised stock exchange in India is subject to securities transaction tax. Such
tax is payable by a person irrespective of its residential status and is to be collected by the recognised stock
exchange in India on which the sale of the equity shares is effected.

Capital gains (calculated in the manner set forth in the following paragraph) realised in respect of
Shares held by the non-resident investor for more than 12 months will be treated as long-term capital gains
and will not be subject to tax in the event such transaction is chargeable to securities transaction tax. Capital
gains (calculated in the manner set forth in the following paragraph) realised in respect of Shares held by the
non-resident investor for 12 months or less will be treated as short term capital gains and will be subject to tax
at the rate of 10% plus surcharge at the rate of 2.5%, in the event such transaction is chargeable to securities
transaction tax. Withholding tax on capital gains on sale of the Shares is required to be deducted under
Section 195 of the Income Tax Act at the prescribed rates.

For the purpose of computing capital gains tax on the sale of the Shares, the cost of acquisition of the
Shares issued upon conversion of the Bonds would be the market price of the Shares on the BSE on the date
of conversion. For the purpose of computing capital gains on sale of Shares, the sale consideration received or
accruing on such sale shall be reduced by the cost of acquisition of such Shares and any expenditure incurred
wholly and exclusively in connection with such sale. However, there is no corresponding provision in the
Income Tax Act as to the cost of acquisition of the Shares being the price prevailing on the date of conversion
as explained above.

Sale of the Shares otherwise than on a Recognised Stock Exchange

Capital gains (calculated in the manner set forth above) realised in respect of Shares held by the
non-resident investor for more than 12 months will be treated as long-term capital gains and will be subject to
tax at the rate of 10% plus surcharge at the rate of 2.5%. Capital gains (calculated in the manner set forth
above) realised in respect of Shares held by the non-resident investor for 12 months or less will be treated as
short term capital gains and will be subject to tax at the normal income tax rates applicable to non-residents
under the provisions of the Income Tax Act. Withholding tax on capital gains on sale of the Shares is required
to be deducted under Section 195 of the Income Tax Act at the prescribed rates.

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Capital Losses

The losses arising from a transfer of a capital asset in India can only be set off against capital gains
and not against any other income in accordance with the Income Tax Act. A long-term capital loss may be set
off only against a long-term capital gain. To the extent that the losses are not absorbed in the year of transfer,
they may be carried forward for a period of eight assessment years immediately succeeding the assessment
year for which the loss was first computed and may be set off against the capital gains assessable for such
subsequent assessment years. In order to get the benefit of set-off of the capital losses in this manner, the non-
resident investor would be required to file appropriate and timely tax returns in India and undergo the usual
assessment procedures.

Tax Treaties

The above mentioned tax rates and the consequent taxation shall be subject to any benefits available
to a non-resident investor under the provisions of any agreement for the avoidance of double taxation entered
into by the Government of India with the country of residence of such non-resident investor.

Stamp Duty

Upon issuance of the Shares upon conversion of the Bonds, stamp duty as applicable would need to
be paid regardless of whether such Shares are issued in physical or dematerialised form. If the Shares are
issued in physical form, the transfer of the Shares would be subject to stamp duty at the rate of 0.25% (as
presently in force) of the value of the ordinary shares on the trade date and such stamp duty customarily is
borne by the transferee. However, if the Shares are issued in dematerialised form, no stamp duty is payable on
the transfer of the Shares in dematerialised form.

Wealth Tax, Gift Tax and Inheritance Tax

At present there are no taxes on wealth, gifts and inheritances which apply to the Bonds or Shares
issuable upon conversion of the Bonds.

Service Tax

Brokerage or commission fees paid to stockbrokers in connection with the sale or purchase of Shares
are now subject to an Indian service tax at a rate of 10%. A stockbroker is responsible for collection of such
service tax at the prescribed rate and for paying the same to the relevant authority.

Tax Credit

A non-resident investor would be entitled to tax credit with respect to any withholding tax paid by the
Issuer or any other person for its account in accordance with the laws of the applicable jurisdiction.

Education Cess

In all the above cases, the amount of income tax and surcharge and service tax as stated above would
be increased by an education cess of 2%.

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SUBSCRIPTION AND SALE


Under the terms and subject to the conditions contained in the Subscription Agreement dated
®Pricing Date©, between the Manager and the Issuer, the Manager has agreed to subscribe or procure
subscribers for US$40,000,000 principal amount of Bonds at 100% of their principal amount, less a selling and
underwriting commission and subject to expense reimbursement.
The Issuer has granted to the Manager an option, exercisable in whole or in part, on one or more
occasions, solely at the discretion of the Manager and at any time prior to the date which is 30 days from the
date the Bonds are issued pursuant to the subscription agreement between the Manager and the Issuer relating
to the offering of the Bonds, to purchase or procure purchasers for an additional US$10,000,000 principal
amount of the Bonds.
The Subscription Agreements provide that the obligations of the Manager to pay for and accept
delivery of the Bonds are subject to approval of certain legal matters by its counsel and to certain other
conditions and that the agreement may be terminated by the Manager in certain circumstances prior to its
payment for the Bonds to the Issuer.
The Issuer has agreed to indemnify, subject to prevailing RBI guidelines, the Manager against certain
liabilities in connection with its offer and sale of the Bonds.
The Issuer has agreed in the Subscription Agreements that neither it, nor any person acting on its
behalf (including any promoter, director or executive officer), will issue, offer, sell, contract to sell, pledge or
otherwise dispose of (or publicly announce any such issuance, offer, sale or disposal) (i) securities issued by
the Issuer, which are listed or quoted on any stock exchange or over-the-counter market outside India and
having a maturity of more than one year from the date of issue, (ii) any Shares of the Issuer or securities
convertible or exchangeable into or exercisable for Shares of the Issuer or (iii) warrants or other rights to
purchase Shares of the Issuer or any security or financial product whose value is determined directly or
indirectly by reference to the price of the Shares, including equity swaps, forward sales and options
representing the right to receive any Shares; save for Shares issued pursuant to the conversion provisions of the
Bonds or Shares, in any such case without the prior written consent of the Manager for a period of 90 days
after the Closing Date (as defined in the Subscription Agreements) or the closing date of the purchase of the
Bonds issuable upon exercise of the Manager's option to acquire additional Bonds as described above.
The Bonds are a new issue of securities with no established trading market. Application will be made
to list the Bonds on the Singapore Stock Exchange.
The distribution of this offering circular or any offering material and the offering, sale and delivery of
the Bonds is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this
offering circular or of any offering material are advised to consult with their own legal advisers as to what
restrictions may be applicable to them and to observe such restrictions. This offering circular may not be used
for the purpose of an offer or invitation in any circumstance in which such offer or invitation is not authorised.
In connection with this offering, the Manager may for its own accounts, enter into asset swaps, credit
derivatives, or other derivative transactions related to the Bonds and or the Shares issuable upon conversion of
the Bonds at the same time as the offer and sale of the Bonds or in secondary market transactions. Such
transactions may be entered into with affiliates of the Manager. As a result of such transactions, the Manager
may hold long or short positions in the Bonds or derivatives or in the Shares issuable on conversion. No
disclosure will be made of any such provisions. In addition, the Manager may purchase Bonds for proprietary
purposes and not with a view toward distribution or may arrange for purchases of Bonds on behalf of accounts
managed by it. Such transactions or purchases may involve a substantial portion of the Bonds.

General
No action has been or will be taken by the Issuer that would permit a public offering of the Bonds and
the Shares to be issued on conversion of the Bonds, or possession or distribution of this offering circular or any
offering or publicity material relating to the Bonds, in any country or jurisdiction where action for that purpose

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is required. No offers, sales or deliveries of any Bonds, or distribution or publication of any offering material
relating to the Bonds, may be made in or from any jurisdiction except in circumstances which will result in
compliance with any applicable laws and regulations and will not impose any obligations on the Issuer or the
Manager. The Manager has engaged in, and may in the future engage in, investment banking and other
commercial dealings in the ordinary course of business with the Company. It has received the customary fees
and commissions for these transactions.

United States

The Bonds and/or the Shares to be issued on conversion of the Bonds have not been and will not be
registered under the Securities Act, and may not be offered or sold within the United States except pursuant
to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
The Manager represents that it has not offered or sold, and agrees that it will not offer or sell, any Bonds
constituting part of its allotment within the United States except to non-US persons in accordance with
Rule 903 of Regulation S under the Securities Act (""Regulation S''). Terms used in this paragraph have the
meanings given to them by Regulation S.

United Kingdom

The Manager warranted and agreed that:

‚ it is a person who is a qualified investor within the meaning of Section 86(7) of the Financial Services
and Markets Act 2000 (the ""FSMA''), being an investor whose ordinary activities involve it in
acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of
its business; and

‚ it has not offered or sold and will not offer or sell the Bonds other than to persons who are qualified
investors within the meaning of Section 86(7) of the FSMA or who it reasonably expects will
acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their
businesses where the issue of the Bonds would otherwise constitute a contravention of Section 19 of
the FSMA;

‚ it has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the FSMA) received by it in connection with the issue or sale of the Bonds in
circumstances in which Section 21(1) of the FSMA does not apply to it; and

‚ it has complied and will comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to the Bonds in, from or otherwise involving the United Kingdom.

India

The Manager has represented and agreed that this offering circular has not been and will not be
registered as a prospectus with the Registrar of Companies in India and that the Bonds will not be offered in
India and that it has not offered or sold and will not offer or sell any Bonds, nor has it circulated or distributed
nor will it circulate or distribute this offering circular or any other offering document or material relating to the
Bonds, directly or indirectly, to the public or any members of the public in India.

Switzerland

The offering circular will only be circulated in Switzerland to a distinct and limited group of persons
only upon their unsolicited individual request. The offering circular will not constitute an offer to sell or an
invitation to purchase the Bonds in Switzerland, other than to persons to whom offers to sell or invitations to
purchase may be lawfully made.

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European Economic Area


In relation to each Member State of the European Economic Area which has implemented the
Prospectus Directive (each, a ""Relevant Member State''), the Manager has represented and agreed that, with
effect from and including the date on which the Prospectus Directive is implemented in the Relevant Member
State (the ""Relevant Implementation Date''), it has not made and will not make an offer of Bonds to the
public in that Relevant Member State prior to the publication of a prospectus in relation to the Bonds 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 it may, with effect from and including the Relevant
Implementation Date, make an offer of Bonds to the public in that Relevant Member State at any time:
‚ to legal entities which are authorised or regulated to operate in the financial markets or, if not so
authorised or regulated, whose corporate purpose is solely to invest in securities;
‚ to any legal entity which has two or more of (i) an average of at least 250 employees during the last
financial year, (ii) a total balance sheet of more than 443,000,000 and (iii) an annual net turnover of
more than 450,000,000, as shown in its last annual or consolidated accounts;
‚ to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus
Directive) subject to obtaining the prior consent of the Manager for any such offer; or
‚ in any other circumstances which do not require the publication of a prospectus pursuant to
Article 3(2) of the Prospectus Directive,
‚ provided that no such offer of Bonds shall result in a requirement for the publication by the Company
or the Manger of a prospectus pursuant to Article 3 of the Prospectus Directive.
‚ For the purposes of this provision, the expression an ""offer of Bonds to the public'' in relation to any
of the Bonds in any Relevant Member States means the communication in any form and by any
means, of sufficient information on the terms of the offer and the Bonds to be offered so as to enable
an investor to decide to purchase or subscribe for the Bonds, as the same may be varied in that
Member State by any measure implementing the Prospectus Directive in that Member State.

Germany
The Manager has acknowledged that no sales prospectus (Verkaufsprospekt) under the German
Securities Sales Prospectus Act (Wertpapier-Verkaufsprospektgesetz) has been, or will be, prepared in
connection with the offering of the Bonds. The Manager has represented, warranted and undertaken that it has
offered, sold, publicly promoted and advertised and will offer, sell, publicly promote and advertise the Bonds
only in full accordance with the German Securities Sales Prospectus Act.

Hong Kong
The Manager has represented and agreed that no Bonds have been offered or sold, and no Bonds may
be offered or sold, in Hong Kong, by means of any document, other than to persons whose ordinary business is
to buy or sell shares or debentures, whether as principal or agent; or to ""professional investors'' as defined in
the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or
in other circumstances which do not result in the document being a ""prospectus'' as defined in the Companies
Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of
the Companies Ordinance (Cap. 32) of Hong Kong. No document, invitation or advertisement relating to the
Bonds has been issued or may be issued, which is directed at, or the contents of which are likely to be accessed
or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than
with respect to Bonds which are intended to be disposed of only to persons outside Hong Kong or only to
""professional investors'' as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any
rules made under that Ordinance.

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Singapore
The Manager has represented and agreed that the Offering Circular has not been registered as a
prospectus with the Monetary Authority of Singapore. Accordingly, the Offering Circular and any other
document or material in connection with the offer or sale, or invitation for subscription or purchase, of the
Bonds may not be circulated or distributed, nor may the Bonds be offered or sold, or be made the subject of an
invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to
an institutional investor under Section 274 of the SFA, (ii) to a relevant person, or any person pursuant to
Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or
(iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the
SFA.
Where the Bonds are subscribed or purchased under Section 275 by a relevant person which is:
‚ a corporation (which is not an accredited investor) the sole business of which is to hold investments
and the entire share capital of which is owned by one or more individuals, each of whom is an
accredited investor; or
‚ a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and
each beneficiary is an accredited investor,
‚ shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights
and interest in that trust shall not be transferable for 6 months after that corporation or that trust has
acquired the Bonds under Section 275 except:
‚ to an institutional investor under Section 274 of the SFA or to a relevant person, or any person
pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the
SFA;
‚ where no consideration is given for the transfer; or
‚ by operation of law.

France
The Manager has acknowledged that no Bonds will be offered or sold directly or indirectly in the
Republic of France and neither this Offering Circular, which has not been submitted to the Autoriteπ des
Marches Financiers, nor any offering material or information contained therein relating to the Bonds, may be
supplied in the Republic of France nor used in connection with any offer for subscription or sale of the Bonds
in the Republic of France.

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TRANSFER RESTRICTIONS
Because of the following restrictions, purchasers are advised to consult with legal counsel prior to
making any resale, pledge or transfer of the Bonds or the Shares issuable upon conversion of the Bonds.
The Bonds and the Shares to be issued upon conversion of the Bonds have not been and will not be
registered under the Securities Act and, unless the Bonds and such Shares are registered under the Securities
Act or an exemption from the registration requirements of the Securities Act is available, neither the Bonds
nor the Shares may be offered or sold within the United States. The Bonds and the Shares to be issued upon
conversion of the Bonds are being offered and sold only outside the United States to non-U.S. persons in
reliance on Regulation S under the Securities Act. The Bonds may also not be offered or sold directly or
indirectly in India or to, or for the account or benefit of, any resident of India.

Transfer Restrictions Relating to the Bonds


The Bonds may not be offered or sold directly or indirectly in India. This offering is being made
pursuant to Regulation S under the Securities Act. The Bonds and the Shares issuable upon conversion
thereof, have not been registered under the Securities Act or with any securities regulatory authority of any
state in the United States or other jurisdiction and may only be offered, sold or delivered outside the United
States (as defined in Regulation S under the Securities Act) to persons other than US persons in offshore
transactions in reliance on Regulation S, and in each case in accordance with any other applicable law.
In addition, no transfer of any interest in the Global Certificate and no issuance or transfer of
Shares issuable upon conversion of the Bonds may be made to any US person outside the United States or
any person in the United States for a period of 40 days after the later of the commencement of this Offering
and the latest closing date of this Offering and any such transfer must be made offshore in accordance with
Rule 903 or 904 of Regulation S. Terms used in this section are defined in Regulation S.
Except in certain limited circumstances, interests in the Bonds may only be held through interests in
the Global Certificate. Such interests in the Global Certificate will be shown on, and transfers thereof will be
effected only through, records maintained by Euroclear and Clearstream and their respective direct and
indirect participants. See ""Terms and Conditions of the Bonds'' and ""Global Certificate''.
Each purchaser of the Bonds, by accepting delivery of this offering circular, will be deemed to have
acknowledged and represented and agreed as follows:
1. The Bonds and Shares issuable upon conversion of the Bonds have not been and will not be
registered under the Securities Act or with any securities regulatory authority of any state of the
United States and are subject to significant restrictions on transfer.
2. Each person purchasing the Bonds prior to the expiration of 40 days after the later of the
commencement of the Offering and the latest closing date (the ""Distribution Compliance
Period'') is a non-US person purchasing such Bonds in an offshore transaction meeting the
requirements of Rule 903 or 904 of Regulation S.
3. The Bonds and the Shares issuable upon conversion of the Bonds will not be sold, pledged or
transferred to, or for the account or benefit of, any US person outside the United States or any
person in the United States during the Distribution Compliance Period.
4. Such purchaser will not offer, sell, pledge or otherwise transfer any interest in the Bonds or
Shares issuable upon conversion of the Bonds except as permitted by the applicable legend set
forth in paragraph 5 below.
5. The Bonds will bear legends to the following effect, which restrictions the Company will
observe unless the Company determine otherwise in compliance with applicable law:
THE BONDS EVIDENCED HEREBY (THE ""BONDS'') AND THE SHARES OF RADICO
KHAITAN LIMITED (THE ""COMPANY'') ISSUABLE UPON CONVERSION OF THE BONDS
(THE ""SHARES'') HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED

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STATES SECURITIES ACT OF 1933, AS AMENDED (THE ""SECURITIES ACT''), AND PRIOR
TO THE EXPIRATION OF 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE
OFFERING OF THE BONDS AND THE LATEST CLOSING DATE (THE ""DISTRIBUTION
COMPLIANCE PERIOD''), THE BONDS AND THE SHARES ISSUABLE UPON CONVERSION
OF THE BONDS MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
TO ANY US PERSON OUTSIDE THE UNITED STATES OR ANY PERSON IN THE UNITED
STATES AND MUST BE SOLD IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 903 OR 904 OF REGULATION S. EACH HOLDER AND BENEFICIAL OWNER, BY ITS
ACCEPTANCE OF THE BONDS EVIDENCED HEREBY, REPRESENTS THAT IT UNDER-
STANDS AND AGREES TO THE FOREGOING AND FOLLOWING RESTRICTIONS. THIS
LEGEND WILL NO LONGER BE EFFECTIVE AFTER THE END OF THE DISTRIBUTION
COMPLIANCE PERIOD, AFTER WHICH THE BONDS EVIDENCED HEREBY AND THE
SHARES ISSUABLE UPON CONVERSION OF THE BONDS WILL NO LONGER BE SUBJECT
TO THE RESTRICTIONS SET FORTH IN THIS LEGEND, PROVIDED THAT AT SUCH TIME
AND THEREAFTER THE OFFER OR SALE OF THE BONDS EVIDENCED HEREBY OR THE
SHARES ISSUABLE UPON CONVERSION OF THE BONDS WOULD NOT BE RESTRICTED
UNDER ANY APPLICABLE SECURITIES LAWS OF THE UNITED STATES OR OF THE
STATES OR TERRITORIES OF THE UNITED STATES.

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LEGAL MATTERS
The validity of the Bonds will be passed upon for the Manager by Jones Day, an international law
firm. The validity of the Shares issuable upon conversion will be passed upon for the Manager by Amarchand
Mangaldas, Suresh A. Shroff & Co., an Indian law firm. Certain legal matters related to the issuance of the
Bonds and the Shares will be passed upon for the Issuer by Khaitan, Jayakar, Sud & Vohra, an Indian law
firm.

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INDEPENDENT AUDITORS
The financial statements for the Issuer prepared in accordance with Indian GAAP as at and for the
fiscal years ended 31 March 2004 and 2005 included herein have been so included in reliance of the reports of
V. Sankar Aiyar & Co., chartered accountants, given on the authority of such firm as expert in auditing and
accounting and the financial statements for the Issuer prepared in accordance with Indian GAAP as at and for
the fiscal year ended 31 March 2006 included herein have been so included in reliance on the report of
V Sankar Aiyar & Co., chartered accountants, given on the authority of such firm as expert in auditing and
accounting.

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GENERAL INFORMATION

1. Radico Khaitan Limited was originally incorporated in 1943 at Rampur in the state of Uttar Pradesh
under the name The Rampur Distillery & Chemical Company Limited. The name was thereafter
changed to Radico Khaitan Ltd in 1992, ""Radico'' being the abbreviated name of Rampur Distillery
Company. It was later merged into Abhishek Cements Ltd, an associate company, during 2003,
pursuant to an order of the Board for Industrial and Financial Reconstruction (Delhi) dated 30
December 2002, case no. 114/90. Under the terms of that order, the name of the merged company
was changed to Radico Khaitan Limited and the focus of its business activities, the address of its
registered office and the share capital remained that of the erstwhile Radico Khaitan Limited.

The authorised capital of the Company today is Rs.350 million divided into 170,000,000 equity shares
of Rs.2 each and 100,000 15% cumulative redeemable preference shares of Rs.100 each. The issued
and paid up capital of the Company is Rs.192,895,880. The promoters of the Company hold 57.54%
of the share capital of the Company.

Two subsidiaries of the Company, Whytehall India Limited and Anab-e-shahi Wines and Distilleries
Private Limited were amalgamated with the Company by the orders of the Allahabad High Court
dated 23 August 2005, of the Delhi High Court dated 10 March 2005 and of the Andhra Pradesh
High Court dated 17 March 2005. The merger became effective on September 14, 2005 and the
transfer date, in respect of the assets and liabilities, was 1 April 2004.

A wholly owned subsidiary of the Company was incorporated in UAE on 15 October 2005. In
accordance with the regulatory regime of UAE, the subsidiary cannot carry on business with persons
resident in UAE, nor own any interest in real property situated in the UAE other than by way of
lease.

Radico Khaitan Limited's principal corporate office is located at Plot No. J-I, Block B-I, Mohan Co-
operative Industrial Area, Mathura Road, New Delhi-110044, India, telephone
°91 26975405/26975406/26975408, fax °9126975339/340 and e-mail: rampur@del2.vsnl.net.in.
Radico Khaitan Limited's registered office and works are located at Bareilly Road, Rampur-244901
(U.P.) (India), telephone °91 0595-2350601/2, °91 2354161, or °91 2351703. fax
°91 0595-2350009 and e-mail rdccrmp@sancharnet.in. Information contained on the Company's
website, www.radicokhaitan.com, is not, and should not be, construed as a part of this offering
circular.

2. The Issuer's objects as set out in the Memorandum of Association of the Issuer include, among
others, to:

(i) to carry on all or any of the business of manufacturers of and dealers and workers in cement,
cement machineries, line plasters, whiting clay, gravel sand, minerals, earth, coke, stone and
builders requisites;

(ii) to purchase, hold, acquire mines, mining lease, licenses, rights, claims and metalliferous lands,
real estate, and to explore, search, work, exercise, develop, treat, refine, and to turn to account
ones all sorts of minerals, working deposits, sub-soil minerals and to crush, win, set, quarry,
smelt, calcine, refine, dress, preserve, manufacture and prepare for market, ore, metal and
mineral substances of all kinds, and to carry on metallurgical operations in all its branches;

(iii) to carry on the business of manufacturers, distillers and refiners of and dealers in methylated
spirit, rectified spirit, power alcohol, molasses, sugar or any other material;

(iv) to carry on the business of manufacturers, producing, processing, ageing, blending, rectifying,
compounding, bottling, warehousing, storing, importing, buying, selling, distributing and dealing
in all kinds of alcoholic and non-alcoholic beverages, including wines and spirits and all
ingredients and by products thereof;

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(v) to carry on business as brewers, distillers, manufacturers, traders, distributors, marketers, buyers
and sellers, merchant importers and dealers in wine, beer, ale, porter, stout, spirits, sugarcane
juices, molasses, aerated waters, liquors, and alcohol of all kinds whether intoxicating or not;
and

(vi) to carry on the business of wines and spirit makers (beverages), brewers and distillers, traders,
exporters, distributors, marketers, buyers and sellers and dealers of all kinds and types of wines,
spirits and to sell or otherwise trade in wines, spirits and alcoholic liquors and all alcoholic
beverages.

(vii) to carry on the business of packages, packaging material, containers, barrels etc., including PET
bottles;

3. The issue of the Bonds and the Shares to be issued on conversion is subject to the passing of a special
resolution passed at the extraordinary general meeting of the holders of Shares of the Issuer to be
held on 14 July 2006. The terms of the offering and the issue of the Bonds were approved by
resolution of the Board passed on 19 June 2006.

4. The Company has applied for the in-principle approval for the Shares issuable upon conversion of the
Bonds to be listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange
of India Limited (NSE), and ®has applied© to list the Bonds on the Official List of the Singapore
Stock Exchange. So long as the Bonds are listed on the Official List of the Singapore Stock Exchange
Limited and the rules of the Singapore Stock Exchange Limited so require, the Issuer shall appoint
and maintain a paying agent in Singapore, where the Bonds may be presented or surrendered for
payment or redemption, in the event that the Global Certificate is exchanged for Certificates in the
definitive form. In addition, in the event that the Global Certificate is exchanged for Certificates in
definitive form, announcement of such exchange shall be made through the Singapore Stock
Exchange and such announcement will include all material information with respect to the delivery of
the Certificates in definitive form, including details of the stated paying agent.

5. Copies of the Memorandum and Articles of Association of the Issuer and copies of the Trust Deed,
the Agency Agreement and the Subscription Agreement will be available for inspection during usual
business hours on any weekday (except Saturday, Sunday and public holidays) at the Issuer's
registered office and corporate office and at the specified offices of the Trustee.

6. Copies in English of the Issuer's latest audited annual financial statements for the years ended
31 March 2003, 2004 and 2005 prepared in accordance with Indian GAAP may be obtained at the
office of the Principal Paying Agent.

7. The Bonds have been accepted for clearance and settlement through Euroclear and Clearstream,
Luxembourg with a Common Code of 025732693. The International Securities Identification
Number (""ISIN'') for the Bonds is XS0257326933.

8. The Issuer has obtained all consents, approvals and authorisations in India required in connection
with the issue of the Bonds. The Company has applied for in-principle approval for the listing of the
Shares issuable upon conversion of the Bonds on the BSE and the NSE, but has not yet received the
same.

9. Other than as disclosed in this offering circular, there has been no significant change in the financial
or trading position of the Issuer since 31 March 2005 and no material adverse change in the financial
position or prospects of the Issuer since that date.

10. Other than as disclosed in this offering circular, the Issuer is not involved in any litigation or
arbitration proceedings or any regulatory investigations relating to claims or amounts which are
material in the context of the issue of the Bonds or to the Issuer's results of operations.

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11. V Sankar Aiyar & Co. audited and rendered audit reports on the Issuer's financial statements as at
and for the years ended 31 March 2004, 2005 and 2006, prepared by the Issuer in accordance with
Indian GAAP and included elsewhere in this offering circular.
12. Submission by the Issuer to the jurisdiction of the English courts, and the appointment of an agent for
service of process, are valid and binding under Indian law. The choice of English law as the governing
law, under the laws of India, is a valid choice of law and should be honoured by the courts of India,
subject to proof thereof and considerations of public policy.
13. The Trustee is entitled under the Trust Deed to conclusively rely, and shall be protected in acting or
refraining from acting, upon direction, opinions or advice of, as information obtained, whether by it,
the Issuer or any agent or any other person, from any lawyer, bank, valuer or other expert, whether
obtained by or addressed to the Issuer, the Trustee, the Agents or otherwise, and, notwithstanding any
monetary or other limit on liability in respect thereof, will not be responsible to anyone for any loss
occasioned by so acting or refraining from acting.
14. The Conditions of this Offering do not provide Bondholders with any participating rights in the event
of a takeover offer for the Shares except as provided in Condition 7.1.
15. Condition 6.3 of this Offering provides for adjustments to the conversion rights in the event of any
alteration to the capital of the Issuer to the extent provided therein.
16. On or about the date of the offering of the Bonds, the Issuer intends to enter into a subscription
agreement with the Manager pursuant to which the Issuer will offer US$25,000,000 unlisted
Compulsory Convertible Preference Shares (""CCPSs''), each of which are convertible into one share
of fully paid equity shares of the Issuer with full voting rights and a par value of Rs.2 each subject to
the applicable regulations of India. For a further description of the issue and offering of the CCPSs,
see ""Description of the Shares Ì Issue of the CCPSs''.

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SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IFRS


The Company's financial statements included in this offering circular have been prepared in
accordance with Indian GAAP, which differ in certain significant respects from IFRS. Certain significant
differences between IFRS and Indian GAAP relevant to the preparation of the Company's financial
statements are summarised below. This summary does not address all disclosures, presentation and classifica-
tion differences between IFRS and Indian GAAP and should not be construed to be exhaustive. In addition,
the Company has made no attempt to identify future differences between IFRS and Indian GAAP as a result
of prescribed changes in accounting standards that may affect the Company's financial statements. Regulatory
bodies that promulgate IFRS and Indian GAAP have significant projects ongoing that could affect future
comparisons of IFRS and Indian GAAP. The Company has made no attempt to identify all future differences
between IFRS and Indian GAAP that may affect its financial statements as a result of transactions or events
that may occur in the future.
Subject Indian GAAP IFRS

Cash flow statement ÏÏÏÏÏÏÏÏÏÏÏ For fiscal years prior to 1996, a Cash flows statement is required.
cash flow statement required was
not required. However, with
effect from fiscal year 1996 cash
flow statement is required in
respect of all the enterprise
except for the enterprises whose
turnover in the immediately
preceding accounting period on
the basis of audited financial
statements does not exceed
Rs.500 Millions and whose
aggregate commercial borrowings
during any time during the
accounting period does not
exceed Rs.100 Millions.
Asset lives ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Depreciation rates are prescribed Depreciation is based on
in the Companies Act for economic useful lives of assets.
minimum depreciation provision Impairment needs to be provided
for the purpose of payment of for when required in the
dividend out of profit for the accounts.
year. Asset lives are not
prescribed by the Companies Act
but can be derived from the
depreciation rates. Where
applicable, higher depreciation
based on useful life of the asset
is required to be provided. With
effective from 1st April 2004
Impairment needs to be provided
for when required in the
accounts.
Deferred taxation ÏÏÏÏÏÏÏÏÏÏÏÏÏ Deferred tax resulting from Deferred income taxes are
""timing differences'' between recognised for the future tax
accounting and taxable income is effects of temporary differences
accounted for using the tax rates between accounting and tax basis
and laws that have been enacted of assets at the enacted or
or substantively enacted as on the substantively enacted tax rates.

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Subject Indian GAAP IFRS

balance sheet date. Deferred tax Deferred tax assets and liabilities
assets relating to carry forward must be recognised regardless of
losses and unabsorbed when the timing difference is
depreciation should be recognised likely to reverse. Deferred tax
only to the extent that there is assets must be recognised when it
virtual certainty supported by is probable that sufficient taxable
convincing evidence that profits/reversible differences will
sufficient future taxable income be available against which the
will be available against which deferred tax assets can be
such deferred tax assets can be utilised.
realised.
All other deferred tax assets
should be recognised to the
extent that there is reasonable
certainty that future taxable
income will be available for such
deferred tax assets will be
realised.
Investments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Investments are classified as Investments are classified as
current or long term. trading, held-to-maturity or
Current Investments are carried available for sale. Investments
at lower of cost and quoted/fair acquired principally for the
value. Long term investments are purposes of generating profits
stated at cost. Provision for from short term price fluctuations
diminishing in the value of long or dealers' margins are classified
term investments is made only if as trading. Held-to-maturity
such decline is other than investments are investments with
temporary in the opinion of the fixed or determinable payments
management. and fixed maturity together with
the entity's intent and ability to
hold till maturity. Available for
sale investments are those that
do not qualify as either trading or
held-to-maturity investments.
Changes in fair values of trading
investments are recognise as
profit or loss in the income
statement. Held-to-maturity
investments are carried at
amortised cost. Changes in fair
values of available-for-sale
investments can either be
recognised in the income
statement or in the statement of
shareholders' equity.
Foreign currency transactions ÏÏÏ Foreign Exchange Difference All gains or losses arising out of
relating to acquisition of fixed foreign exchange differences are
assets is adjusted to the carrying required to be included in the
cost of such assets. determination of net income,
unless these differences are
regarded as an adjustment to

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Subject Indian GAAP IFRS

Other foreign exchange interest costs, which are eligible


differences are recognised in the for capitalisation as borrowing
profit and loss account. cost on fixed assets.
Premium or discount on foreign
exchange contracts is amortised
and recognised in the income
statement over the period of such
contact, except in respect of
contacts relating to liabilities for
purchase of fixed assets where
the amortisation is adjusted to
the carrying value of the fixed
assets.
Changes in accounting policy and Any change in an accounting Changes in accounting policies
prior period items ÏÏÏÏÏÏÏÏÏÏÏ policy, which has a material should be accounted for
effect, should be disclosed. The retrospectively, with comparative
impact of, and the adjustments information restated and the
resulting from, such change, if amount of the adjustment
material, should be shown in the relating to prior periods adjusted
financial statements of the period against the opening balance of
in which such change is made, to retained earnings of the earliest
reflect the effect of such change. year presented. An exemption
Where the effect of such change applies when it is impracticable
is not ascertainable, wholly or in to change comparative
part, the fact should be indicated. information. Policy changes made
If a change is made in the on the adoption of a new
accounting policies which has no standard must be accounted for
material effect on the financial in accordance with that
statements for the current period standard's transition provisions. If
but which is reasonably expected transition provisions are not
to have a material effect in later specified, the method described
periods, the fact of such change above must be used.
should be appropriately disclosed
in the period in which the change
is adopted. Policy changes made
on the adoption of a new
standard must be accounted for
in accordance with the standard's
transition provisions.
Share issue expensesÏÏÏÏÏÏÏÏÏÏÏ Share issue expenses can be Direct costs of issuing share
written off when incurred or capital are deducted from the
charged to the share premium related proceeds and the net
account or if incurred prior to amount is recorded in
1 April 2004 can also be Shareholders equity.
accounted for as deferred revenue
expenses and amortised.
Proposed dividends ÏÏÏÏÏÏÏÏÏÏÏÏ Proposed dividends are reflected Dividends are a charge to
in the financial statements of the retained earnings at the point of
year to which they relate even time they are formally declared

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Subject Indian GAAP IFRS

though proposed or declared after by the Board of Directors


the year end.
Provisions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Discounting of liabilities is not Where the effect of the time
permitted and all provisions are value of money is material, the
carried at their full values. amount of a provision may be the
present value of the expenditures
expected to be required to settle
the obligation. The discount rate
should be pre-tax rate that
reflects current market
assessments of time value of
money and risks specific to the
liability. The discount rate should
not reflect risks for which future
cash flow estimates have been
adjusted, and any change in
present value of provision is
recognised as Interest Cost.
Borrowing costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Costs attributable to the Borrowing Cost are recognised as
acquisition or construction of a expense in the period in which
qualifying asset are capitalised as they are incurred and should be
part of the cost of the asset. calculated using an effective
Other Borrowing costs are interest rate method. Borrowing
recognised as an expense in the cost include the amortisation of
period in which they are transaction cost included in the
incurred. Cost considered include initial arrangement of borrowing.
interest, and other upfront fees An acceptable alternative is to
paid in connection with the capitalise those borrowing costs
arrangement of funds. attributable to the acquisition,
construction or production of an
asset.
Derivative Contracts ÏÏÏÏÏÏÏÏÏÏÏ Gain or loss on derivative The FASB issued SFAS no 137
contracts entered into too hedge ""Accounting for derivative
exposures to interest rate instruments and hedging
fluctuations are recognised as and activities-deferral of the effective
when the underlying transactions date of FASB statement no 133'',
are settled. Accordingly which amends SFAS no 133,
proportionate amounts are ""Accounting for derivatives
accrued/provided for the period instruments and hedging
between the last settlement date activities'' with effect from
and the year end. April 1, 2001.
SFAS no 133 establishes
accounting and reporting
standards for derivative
instruments and hedging
activities, including certain
derivative instruments embedded
in other contracts, and requires
that an entity recognises all
derivatives as assets or liabilities
in the balance sheet and measure

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Subject Indian GAAP IFRS

them at fair values, with changes


in fair values being recognised in
earnings, unless qualifies the
criterion of an effective hedge, as
defined in SFAS no 133, in
which case the changes in fair
value is recognised as other
comprehensive income in under
shareholders' equity. The gain or
loss on derivative financial
instruments that is designated
and effective as hedges are
generally recognised in earnings
in the same period as the
corresponding gain or loss on the
underlying transaction being
hedged.
In a fair value hedge, a derivative
instrument is marked to its fair
value currently through earnings
with an off setting partial mark --
to-fair -- value of the hedged
item (for the risk being hedged)
currently through earnings. In a
cash flow hedge, a derivative
instrument is marked to its fair
value with the effective portion of
the gain or loss reported initially
in comprehensive income
(equity) and the ineffective
portion reported currently in
earnings. The gain or loss on the
derivative instrument is
reclassified from equity into
earnings in the same period as
the loss or gain on the hedged
cash flow.
Interest free financial liabilities ÏÏ No specific guidance. Recorded After initial recognition, all
at the amount received/ financial liabilities other than
disbursed. liabilities held all financial
liabilities for trading and
derivatives should be carried at
amortised cost.
Retirement Benefits ÏÏÏÏÏÏÏÏÏÏÏ The liability for defined benefit The liability for defined benefit
plan is actuarially determined. plan is reported at the present
Several alternative methodologies value of future benefits using the
are considered acceptable for the projected unit cost method, with
purposes of valuation and the a stipulated method to determine
actuary has discretion over assumptions. Actuarial gains and
selection of the assumptions. losses arising on periodic
valuation of liability would need

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Subject Indian GAAP IFRS

to be recognised based on certain


criteria. As a minimum,
amortisation of an unrecognised
net gain or loss shall be included
as a component of employee cost
for a year if, as of the beginning
of the year, that unrecognised net
gain or loss exceeds 10 percent of
the projected benefit obligation.
Actuarial gains or losses are
amortised based on the expected
average remaining working lives
of the employees. Other
systematic methods such as
immediate recognition of all
gains and losses is also permitted.
Compensated Absences ÏÏÏÏÏÏÏÏ Leave encashment or vacation Compensated absences
accrual is viewed as retirement outstanding at the balance sheet
benefit and is reported based on date reported as liability and is
actuarial valuation. priced at the salary rate prevalent
on the balance sheet date.
Revaluation of Fixed Assets ÏÏÏÏ Fixed assets are stated at An entity that elects to revalue
historical cost or revalued an item of property, plant and
amount less accumulated equipment, the entire class of
depreciation and accumulated property, plant and equipment to
impairment losses. If the carrying which the asset belongs should
amount is increased as a result of be revalued. Revaluation shall be
revaluation, the increase is made at sufficient regularity to
credited directly to equity under ensure that the carrying amount
the heading Revaluation Reserve. does not differ materially from
However, the increase shall be that which would be determined
credited in the income statement using the fair value at the
to the extent that it reverses a balance sheet date.
revaluation decrease of the same Recognition of an increase or
asset previously recognised in the decrease in revaluation is similar
income statement. If an asset's to Indian GAAP.
carrying amount is decreased as a
result of revaluation, the decrease
is recognised in the income
statement.
However, the decrease is directly
debited to equity under the
heading Revaluation Reserve to
the extent of any credit balance
existing in the revaluation reserve
in respect of that asset.

133
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INDEX TO THE FINANCIAL STATEMENTS

Audited Financial Statements under Indian GAAP


Auditors' Report for the fiscal year ended 31 March 2004ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-2
Balance Sheet as at 31 March 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-6
Profit & Loss Account for the fiscal year ended 31 March 2004ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-7
Cash Flow Statement for the fiscal year ended 31 March 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-24
Auditors' Report for the fiscal year ended 31 March 2005ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-27
Balance Sheet as at 31 March 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-32
Profit & Loss Account for the fiscal year ended 31 March 2005ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-33
Cash Flow Statement for the fiscal year ended 31 March 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-53
Auditors' Report to the Directors for the fiscal year ended 31 March 2006ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-56
Auditors' Report for the fiscal year ended 31 March 2006ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-73
Balance Sheet as at 31 March 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-78
Profit & Loss Account for the fiscal year ended 31 March 2006ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-79
Cash Flow Statement for the fiscal year ended 31 March 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-100
Unaudited Financial Statements under IFRS
Balance Sheets as at 31 December 2004, 2005 and 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-105
Income Statement for the fiscal years ended 31 December 2004, 2005 and 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-106
Statement of Changes in Shareholders' Equity as at 31 December 2004, 2005 and 2006 ÏÏÏÏÏÏÏÏÏ F-107
Statement of Cash Flows for the fiscal years ended 31 December 2004, 2005 and 2006 ÏÏÏÏÏÏÏÏÏÏ F-108
Notes to Financial Statements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F-110

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AUDITORS' REPORT TO THE SHAREHOLDERS OF RADICO KHAITAN LIMITED


1. We have audited the attached Balance Sheet of RADICO KHAITAN LIMITED as at 31st March,
2004 and also the annexed Profit and Loss Account and the Cash flow statement of the Company for the
year ended on that date. These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted the audit in accordance with auditing standards generally accepted in India. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the Companies (Auditors' Report) Order, 2003 issued by the Department of
Company Affairs, Government of India in terms of Section 227(4A) of the Companies Act, 1956, we
enclose in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order
on the basis of such checks as we considered appropriate and according to the information and
explanations given to us.
4. Further to our comments in the annexure referred to in paragraph 3 above, we report that:-
(a) We have obtained all the information and explanations, which to the best of our knowledge and
belief, were necessary for the purposes of our audit;
(b) In our opinion, proper Books of Accounts as required by law have been kept by the Company so
far as appears from our examination of the books;
(c) The Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this Report
are in agreement with the Books of Account;
(d) In our opinion, the Balance Sheet, Profit & Loss Account and cash flow statement dealt with by
this report comply with the accounting standards referred to in subsection (3C) of section 211
of the Companies Act, 1956 to the extent applicable.
(e) On the basis of written representations received from directors, as on 31st March, 2004 and
taken on record by the Board of Directors, we report that none of the directors of the Company
is, disqualified as on 31st March, 2004 from being appointed as a director in terms of
section 274(1)(g) of the Companies Act, 1956;
(f) In our opinion and to the best of our information and according to the explanations given to us,
the accounts, read with the notes on accounts, give the information required by the Companies
Act, 1956 in the manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March,
2004;
ii) in the case of Profit and Loss Account, of the profit for the year ended on that date; and
iii) in the case of cash flow statement, of the cash flow for the year ended on that date.
For V. SANKAR AIYAR & CO.
Chartered Accountants

Place: New Delhi V. RETHINAM


Date: May 4, 2004 Partner
Membership No.: 10412

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ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE


SHAREHOLDERS OF RADICO KHAITAN LIMITED
1. (a) The Company has maintained proper records, showing full particulars including quantitative
details and situation of fixed assets.
(b) We are informed that major part of the fixed assets located at the distillery at Rampur were
physically verified once during the year. The assets physically verified are under reconciliation
with the book records and discrepancies, if any, can be ascertained only after reconciliation is
complete.
(c) Since there is no substantial disposal of fixed assets during the year, the preparation of financial
statements on a going concern basis is not affected on this account.
2. (a) On the basis of information and explanations obtained, stocks of finished goods and raw
materials of the distillery at all its locations have been under physical check by the Excise
Department in coordination with the company's supervisory staff at frequent intervals. Stocks at
other locations, stores and spares have been physically verified by the management during the
year at reasonable intervals.
(b) The procedure of physical verification of stocks followed by the management are reasonable and
adequate in relation to the size of the company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticed on
verification between the physical stock and book records were not material.
3. The Company has not granted or taken any loans, secured or unsecured to/from companies, firms or
other parties covered in the register maintained u/s.301 of the Act.
4. In our opinion and according to the information and explanations given to us, there are adequate
internal control procedures commensurate with the size of the company and the nature of its business
for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit,
no major weaknesses in internal controls were either reported or noticed.
5. We are informed that there are no transactions during the year that need to be entered into a register
in pursuance of Sec.301 of the Act.
6. The Company has not accepted deposits from public within the meaning of Sec.58A of the
Companies Act, 1956 and the rules framed thereunder.
7. During the year, outside consultants have carried out internal audit and submitted their reports. In
our opinion, the company has an internal audit system commensurate with its size and nature of its
business.
8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules
made by the Central Government for the maintenance of cost records under section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records
have been maintained and the required statements are in the process of compilation. However, we
have not made a detailed examination of the records with a view to determine whether they are
accurate or complete.
9. (a) According to the records of the Company, the Company has been generally regular in
depositing with appropriate authorities the statutory dues including Provident Fund, Employees'
State Insurance, Income-tax, Sales tax, Wealth-tax, Customs duty, Excise duty, Cess and other
statutory dues. We are informed that there were no liabilities during the year towards Investor
Education and Protection Fund. According to the information and explanations given to us,
there are no undisputed amounts payable in respect of the aforesaid statutory dues, which have
remained outstanding as at 31-03-2004 for a period of more than 6 months from the date they
became payable.

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(b) As regards dues not deposited on account of disputes, the position as explained by the Company
is as under:
Disputed Forum where the
S. No. Nature of dues Amount dispute is pending
(Rs.lakhs)
i. Income-tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì
ii. Wealth-taxÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì
iii. Customs Duty ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì
iv. Cess ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì
v. Sales TaxÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
S. No. Year Amount Remarks Forum where pending
Rs.
1 1981-82 (Local) 58208 Demand on assessment Trade Tax Tribunal, Lucknow
2 1981-82 376671 Demand on assessment Trade Tax Tribunal, Lucknow
3 1985-86 117000 Penalty u/s.13(A) Trade Tax Tribunal, Lucknow
4 1999-00 411668 Entry Tax Trade Tax Tribunal, Moradabad
963547
5 2000-01 85126 Demand on assessment DC (Assessment), Rampur
6 2002-03 (C) 14592515 Demand on assessment Stayed by High Court (Allahabad)

vi) Excise Duty


S. No. Year Amount Remarks Forum
Rs.
1 1981 1737287 On IMFL redistillation wastage High Court Ì Lucknow Bench
(net of Rs.462,822 paid)
2 1985 to 1995-96 145510 Interest on disputed amount HC Ì Allahabad
3 1995 to Jun-02 2200000 Transit wastage on IMFL Excise Commissioner, UP
exported outside UP
4082797

10. The Company has no accumulated losses at the end of the financial year.

11. On the basis of the verification of records and information and explanations given by the management,
the Company has not defaulted in repayment of dues to financial institutions and banks. The Company
has not issued any debentures during the year.

12. The Company has not granted loans and advances on the basis of security by way of pledge of shares,
debentures or other securities.

13. The provisions of any special statutes applicable to chits do not apply to the Company.

14. The Company is not dealing or trading in shares, securities, debentures or other investments.

15. In respect of guarantees given to financial institutions and banks on behalf of bodies corporate for loan
facility, the terms and conditions are not prima facie prejudicial to the interest of the company.

16. According to the records of the company, term loans taken during the year have been applied for the
purpose for which they were obtained.

17. According to the information and explanations given to us, and on an overall examination of the balance
sheet of the Company, we report that funds raised on short terms basis have not been used for long term
investment and vice versa.

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18. During the year, the Company has not made any preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the Act.
19. Since no debentures have been issued during the year, question of creating securities does not arise.
20. Since there were no public issue of securities during the year by the Company, verification of the end-
use of the money does not arise.
21. Based on the audit procedures performed and the representation obtained from the management, we
report that no fraud on or by the Company has been noticed or reported during the year under audit.
For V. SANKAR AIYAR & CO.
Chartered Accountants

Place: New Delhi V. RETHINAM


Date: May 4, 2004 Partner
Membership No.: 10412

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BALANCE SHEET AS AT 31ST MARCH, 2004


SCHEDULE As at As at
NO. 31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
SOURCES OF FUNDS
1. SHAREHOLDERS' FUNDS
Share Capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1 192,896 192,896
Reserves and SurplusÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2
Revaluation Reserve ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 97,415 100,488
Other Reserves ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 581,141 678,556 443,278 543,766
2. LOAN FUNDS
Secured ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3 1,021,255 673,677
Unsecured ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4 329,806 324,221
Deferred CreditsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5 5,076 1,356,137 7,078 1,004,976
3. DEFERRED TAX BALANCE ÏÏÏÏÏÏÏÏ 168,700 175,900
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,396,289 1,917,538
APPLICATION OF FUNDS
1. FIXED ASSETS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6
Gross Block ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,442,200 1,225,733
Less: Depreciation to Date ÏÏÏÏÏÏÏÏÏÏÏÏ 460,466 416,018
Net Block ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 981,734 809,715
Capital work in progress ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7 26,907 1,008,641 10,200 819,915
2. INVESTMENTS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8 86,490 88,980
3. CURRENT ASSETS, LOANS &
ADVANCES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9
a) Accrued IncomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,216 443
b) Inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 288,797 171,604
c) Sundry Debtors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 547,465 499,969
d) Cash & Bank Balances ÏÏÏÏÏÏÏÏÏÏ 23,999 47,412
e) Loans & AdvancesÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 818,092 541,141
1,688,569 1,260,569
LESS: CURRENT LIABILITIES AND
PROVISIONS
Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10 472,430 427,684
Provisions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11 55,701 47,615
528,131 475,299
NET CURRENT ASSETS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,160,438 785,270
4. MISCELLANEOUS EXPENDITURE
(TO THE EXTENT NOT WRITTEN
OFF OR ADJUSTED)
Share Issue Expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 1,167
Advertisement & Sales Promotion
Expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 140,720 140,720 222,206 223,373
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,396,289 1,917,538
Significant Accounting Policies and
Notes Annexure to our Report of
Date ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19

For V. Sankar Aiyar & Co. Dr. Lalit Khaitan Abhishek Khaitan
Chartered Accountants Chairman & Managing Director Joint Managing Director

Place: New Delhi V. Rethinam R.K. Mehrotra Anil Chawla Ajay K. Agarwal
Dated: May 4, 2004 Partner President (Finance) Company Secretary Asst. Vice President
M. No. 10412 (Accounts)

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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2004
SCHEDULE
NO. Current Year Previous Year
Rs. in '000 Rs. in '000
INCOME
Sales* ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12 5,708,316 5,361,163
Less: Excise Duty ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,642,240 2,652,790
3,066,076 2,708,373
Other Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13 33,813 23,629
Accretion/Decretion to Stocks ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14 75,767 (10,421)
3,175,656 2,721,581
EXPENDITURE
Purchases and Materials Consumed ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15 1,219,590 1,189,168
Salaries, Allowances and Benefits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16 196,017 170,750
Other Expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17 1,344,535 978,363
Financial ExpensesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18 45,246 102,651
2,805,388 2,440,932
Profit Before Depreciation and Taxation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 370,268 280,649
Depreciation for the Year/PeriodÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 54,003 74,915
Less: Transfer from Revaluation Reserve ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,073 50,930 28,659 46,256
Profit Before Taxation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 319,338 234,393
Provision For Taxation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 62,500 39,000
Provision For Deferred TaxÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 32,400
62,500 71,400
Less: Excess Provision for Taxation of Earlier Years Written
BackÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 62,500 22,800 48,600
Profit After Taxation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 256,838 185,793
Add/(Less): Prior Period Adjustments & Extra Ordinary
Items (See Note 16)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (81,486) 48,447
Add: Deferred Tax Provision Relating to Earlier Period Written
Back (See Note No. 4(b) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,200 0
182,552 234,240
Add: Surplus Brought Forward From Last Year ÏÏÏÏÏÏÏÏÏÏÏÏÏ 126,141 31,078
Profit Available for Appropriation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 308,693 265,318
TRANSFERS TO:
General Reserve ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 127,831 100,000
Preference Shares Redemption Reserve ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 2
Preference Dividend Paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 5
Proposed Dividend on:
Equity Shares @ 20% ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 38,579 34,721
Provision of Tax on Above ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,943 4,449
43,522 39,170
Balance Carried to Balance Sheet (Schedule 2) ÏÏÏÏÏÏÏÏÏÏÏÏÏ 137,340 126,141
Earnings Per Share (See Note 12)
Basic & Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13.31 10.85

*Sales Through Tie up Units Rs. 19,998.14 Lacs not Included in the Above (Refer Note 18 Of Schedule 19) for the Current Year
(Previous Year Rs. 10,544.98 Lacs)

ANNEXURE TO OUR REPORT OF DATE

For V. Sankar Aiyar & Co. Dr. Lalit Khaitan Abhishek Khaitan
Chartered Accountants Chairman & Managing Director Joint Managing Director

Place: New Delhi V. Rethinam R.K. Mehrotra Anil Chawla Ajay K. Agarwal
Dated: May 4, 2004 Partner President (Finance) Company Secretary Asst. Vice President
M. No. 10412 (Accounts)

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SCHEDULES TO STATEMENT OF ACCOUNTS


As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
1. SHARE CAPITAL
AUTHORISED
340,00,000 EQUITY SHARES OF RS 10 EACHÏÏÏ 340,000 340,000
1,00,000 15% REDEEMABLE CUMULATIVE
PREFERENCE SHARES OF RS 100 EACH ÏÏÏ 10,000 350,000 10,000 350,000
ISSUED AND SUBSCRIBED
1,92,89,588 EQUITY SHARES OF RS 10 EACH
FULLY PAID UP ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 192,896 192,896
192,896 192,896

*Opening As at
01-04-2003 Additions Deductions 31-03-2004

2. RESERVES AND SURPLUS


REVALUATION RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100,488 0 3,073 97,415
CAPITAL RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,899 0 0 4,899
SHARE PREMIUM ACCOUNT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 38,067 0 1,167 36,900
GENERAL RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 272,169 127,831 0 400,000
PREFERENCE SHARES REDEMPTION
RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,002 0 0 2,002
417,625 127,831 4,240 541,216
SURPLUS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 126,141 137,340
543,766 678,556

As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
3. SECURED LOANS
1. TERM LOANS Ì FROM FINANCIAL
INSTITUTIONS/BANKS
i). ICICI BANK LIMITED (SEE NOTE 1
BELOW) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 53,125
ii). INDUSTRIAL DEVELOPMENT BANK
OF INDIA (SEE NOTE 1 BELOW)ÏÏÏÏÏÏ 0 62,500
iii). STATE BANK OF INDIA (SEE NOTE
1 & 2 BELOW)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44,513 86,038
iv). INFRASTRUCTURE LEASING &
FINANCIAL SERVICES LTD (SEE
NOTE 1 BELOW) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 46,154 50,000
v). BANK OF INDIA LONDON (FOREIGN
CURRENCY LOAN) SEE NOTE 1
BELOW) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 446,254 0

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As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
2. OTHER THAN TERM LOANS Ì FROM
BANKS
(GUARANTEED BY MANAGING
DIRECTOR AND JT. MANAGING
DIRECTOR Ì OTHER THAN OF UTI
BANK LTD. RS. 656.11 LACS) (SECURED
BY HYPOTHECATION OF INVENTORIES
AND BOOK DEBTS) (NOTE 3 BELOW) ÏÏÏ 484,334 422,014
1,021,255 673,677

NOTES:

1. SECURED BY A PARI-PASSU FIRST CHARGE ON GROSS BLOCK OF THE FIXED ASSETS OF THE COMPANY,
BOTH PRESENT AND FUTURE.

2. SECURED IN ADDITION BY SECOND CHARGE ON CURRENT ASSETS OF THE COMPANY; GUARANTEED


BY MANAGING DIRECTOR AND JOINT MANAGING DIRECTOR OF THE COMPANY.

3. SECURED IN ADDITION BY SECOND CHARGE ON FIXED ASSETS OF THE COMPANY.

4. IN RESPECT OF TERM LOAN, AMOUNT DUE WITHIN ONE YEAR Ì RS. 759.57 LACS

As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
4. UNSECURED LOANS
(a) LONG TERM
(i) STATE BANK OF MYSORE (PENDING
SECURITY TO BE CREATED) ÏÏÏÏÏÏÏÏÏÏÏÏ 75,000 0
(ii) ZERO INTEREST DEBENTURES
ICICI BANK LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,836 10,836
INDUSTRIAL DEVELOPMENT BANK OF
INDIA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,695 8,695
MADHYA PRADESH STATE
INDUSTRIAL DEVELOPMENT
CORPORATION LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,690 24,221 4,690 24,221
(iii) OTHERS Ì RABO INDIA FINANCE PVT.
LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100,000 0
(GUARANTEED BY MANAGING
DIRECTOR & JT. MANAGING
DIRECTOR)
(SECURED BY A CHARGE ON A SELF
GENERATED BRAND)
(b) OTHERS
(i) THE KARNATAKA BANK LTD. ÏÏÏÏÏÏÏÏÏÏ 0 50,000
(ii) COMMERCIAL PAPER LOAN (FROM
BANK) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 50,000 150,000
(iii) RABO INDIA FINANCE PVT. LTD. ÏÏÏÏÏÏÏ 0 100,000
(iv) SBI FACTORS & COMMERCIAL
SERVICES PVT. LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 80,585 0
329,806 324,221

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As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
5. DEFERRED CREDITS
FOR ASSETS PURCHASED Ì UNDER HIRE
PURCHASE AGREEMENTS WITH FINANCE
COMPANIES/BANKÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,076 7,078
5,076 7,078
AMOUNT DUE WITHIN ONE YEAR ÏÏÏÏÏÏÏÏÏÏ 2,611 4,238

6. FIXED ASSETS
COST/REVALUATION DEPRECIATION NET BLOCK

AS ON AS ON UP TO FOR THE WRITTEN UP TO AS ON AS ON


DESCRIPTION OF ASSETS 01.04.2003 ADDITIONS DEDUCTIONS 31.03.2004 31.03.2003 YEAR BACK 31.03.2004 31.03.2004 31.03.2003

BRANDS & TRADE MARKS ÏÏ 44,475 3,040 0 47,515 2,481 2,158 0 4,639 42,876 41,993
FREEHOLD LANDÏÏÏÏÏÏÏÏÏÏÏÏ 110,958 4,993 0 115,951 0 0 0 0 115,951 110,958
LEASEHOLD LAND ÏÏÏÏÏÏÏÏÏÏ 166,397 2,679 0 169,076 121,489 2,375 0 123,864 45,212 44,908
BUILDINGS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 68,108 19,447 0 87,555 13,609 2,340 0 15,949 71,606 54,499
PLANT & MACHINERY ÏÏÏÏÏÏ 757,233 188,215 9,240 936,208 258,963 39,833 9,233 289,563 646,645 498,270
FURNITURE & FITTINGS ÏÏÏÏ 19,624 1,356 0 20,980 6,125 1,223 0 7,348 13,632 13,499
VEHICLES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 38,105 6,598 621 44,082 11,026 3,761 322 14,465 29,617 27,079
LEASEHOLD
IMPROVEMENTS ÏÏÏÏÏÏÏÏÏÏÏÏ 20,833 0 0 20,833 2,325 2,313 0 4,638 16,195 18,508
TOTAL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,225,733 226,328 9,861 1,442,200 416,018 54,003 9,555 460,466 981,734 809,715
PREVIOUS YEARÏÏÏÏÏÏÏÏÏÏÏÏÏ 998,346 233,346 5,959 1,225,733 344,169 74,915 3,066 416,018 809,715 654,177

NOTES:

1. VALUES WRITTEN UP ON REVALUATION:


(BASED ON APPROVED VALUERS' REPORT)
As on As on
31.12.1994/31.12.1998 31.12.1985

FREEHOLD LAND ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 85,422 Ì


LEASEHOLD LAND ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 122,828 Ì
BUILDING ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 15,292
PLANT & MACHINERY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 8,709
TOTALÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 208,250 24,001

2. LAND INCLUDES RS. 4800 THOUSANDS FOR WHICH TITLE DEED IS STILL TO BE REGISTERED.

3. ADDITION TO PLANT & MACHINERY INCLUDES INTEREST OF RS. 3238 THOUSANDS CAPITALISED
DURING THE YEAR.

As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
7. CAPITAL WORK IN PROGRESS (AT COST)
(i) CIVIL WORKÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 0
(ii) PLANT & MACHINERY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26,907 10,200
26,907 10,200

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Face As at As at
Value 31-03-2004 31-03-2003
Rs. in '000 Rs. in '000 Rs. in '000
8. INVESTMENTS Ì LONG TERM (AT COST)
A. FULLY PAID UP EQUITY SHARES IN BODIES
CORPORATE.
(i) TRADE Ì UNQUOTED
Ì WHYTEHALL INDIA LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86,400 86,400 86,400
(ii) NON-TRADE Ì QUOTED
Ì PNB GILTS LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 2,490
B. NEW URBAN COOPERATIVE BANK LTD. ÏÏÏÏÏÏÏÏ 60 60 60
C. NATIONAL SAVINGS CERTIFICATES LODGED
WITH GOVERNMENT DEPARTMENTS AS
SECURITY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30 30 30
86,490 88,980

Book Value Book Value Market Value

AGGREGATE VALUE OF INVESTMENTS:


QUOTED ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 2,490 1,780
UNQUOTEDÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86,490 86,490
86,490 88,980

NOTE:

(1) NO INVESTMENT IS HELD IN BODIES CORPORATE UNDER THE SAME MANAGEMENT.

(2) INVESTMENT ACQUIRED AND SOLD DURING THE YEAR: UNITS IN MUTUAL FUND Ì COST RS. 100 LACS.

As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
9. CURRENT ASSETS, LOANS AND ADVANCES
a) ACCRUED INCOME
INTEREST ACCRUED ON INVESTMENT
AND FIXED DEPOSITS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 328 443
ACCRUED INCOME ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,888 0
10,216 443
b) INVENTORIES
(i) MATERIALS (AT COST)
RAW MATERIALS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 62,626 36,655
PACKING MATERIALS ÏÏÏÏÏÏÏÏÏÏÏÏÏ 33,107 23,350
STORES & SPARE PARTS ÏÏÏÏÏÏÏÏÏÏÏ 21,981 55,088 16,283 39,633
TOOLS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 613 613
(ii) STOCK IN TRADE
(AT LOWER OF COST AND
MARKET VALUE)
FINISHED GOODSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 144,409 79,725
STOCK IN PROCESSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26,061 170,470 14,978 94,703
288,797 171,604
c) SUNDRY DEBTORS (UNSECURED)
DEBTS OUTSTANDING FOR A PERIOD
EXCEEDING SIX MONTHS

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As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
CONSIDERED GOOD ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45,889 39,790
CONSIDERED DOUBTFULÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,342 7,003
LESS: ADJUSTED AGAINST
PROVISIONS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,231 5,111 4,541 2,462

OTHER DEBTS CONSIDERED GOOD ÏÏÏÏ 496,465 457,717


547,465 499,969
d) CASH AND BANK BALANCES
CASH IN HANDÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,108 1,809
CHEQUES IN HAND ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,698 4,426
BALANCE WITH SCHEDULED BANKS:
CURRENT ACCOUNTS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,101 34,299
DEPOSIT ACCOUNTS* ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,057 6,844
SAVING BANK ACCOUNTS
(EMPLOYEES' SECURITY DEPOSIT) ÏÏÏÏ 35 34
23,999 47,412
*DEPOSITED WITH GOVERNMENT
DEPARTMENT AND BANKS AS SECURITY/
MARGIN MONEY. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,634 4,427
e) LOANS AND ADVANCES
(UNSECURED Ì CONSIDERED GOOD,
UNLESS OTHERWISE STATED).
LOANS: ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 526 1,068
ADVANCES RECOVERABLE IN CASH OR IN
KIND OR FOR VALUE TO BE RECEIVED:*
CONSIDERED GOOD ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 752,798 453,746
CONSIDERED DOUBTFUL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,173 3,173
LESS: ADJUSTED AGAINST PROVISIONS ÏÏÏÏ 3,173 0 3,173 0
CLAIMS AND DUTIES RECOVERABLE FROM
EXCISE DEPARTMENT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 130 130
EXCISE AND OTHER DEPOSITS ÏÏÏÏÏÏÏÏÏÏÏÏÏ 54,410 68,633
INCOME TAX PAYMENTS (NET OF
PROVISIONS)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,837 17,102
SALES TAX PAID UNDER PROTESTÏÏÏÏÏÏÏÏÏÏ 391 462
818,092 541,141

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As at 31-03-2004 As at 31-03-2003
Rs. in '000 Rs. in '000
10. CURRENT LIABILITIES
CREDITORS
TRADE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 240,093 283,459
OTHERS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 146,510 386,603 67,111 350,570
SECURITY DEPOSITS FROM DEALERS ÏÏÏÏÏÏ 23,757 28,602
SECURITY DEPOSITS FROM OTHERS ÏÏÏÏÏÏÏ 32,941 18,786
UNCLAIMED DIVIDEND** ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,174 3,127
OTHER LIABILITIES* ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24,852 20,169
INTEREST ACCRUED BUT NOT DUE ÏÏÏÏÏÏÏÏ 103 6,430
472,430 427,684
*INCLUDES DUE TO DIRECTORS ÏÏÏÏÏÏÏÏÏÏÏ 13,600 9,000
**THE ACTUAL AMOUNT TO BE
TRANSFERRED TO INVESTER EDUCATION
AND PROTECTION FUND WILL BE
DETERMINED ON THE DUE DATES
As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
11. PROVISIONS
DIVIDEND (INCLUDING TAX THEREON) ÏÏÏ 43,522 39,170
PROVISION FOR LEAVE ENCASHMENTÏÏÏÏÏ 11,443 7,709
CONTINGENCIES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 736 736
55,701 47,615

As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
12. SALES
RECTIFIED SPIRIT AND OTHER
ALCOHOLIC PRODUCTS. (INCLUDING
EXCISE DUTY RECOVERY OF
Rs. 2,642,240 THOUSANDS PREVIOUS
YEAR Rs. 2,652,790 THOUSANDS)ÏÏÏÏÏÏÏÏÏÏ 5,077,599 4,981,564
INCOME FROM TIE UP OPERATIONS ÏÏÏÏÏÏÏ 438,853 230,661
EXPORT INCENTIVESÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,009 2,336
OTHERS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 31,257 29,076
SELF CONSUMPTION:
BIO GAS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 110,844 79,887
POWER ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43,754 37,639
5,708,316 5,361,163

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As at As at
31-03-2004 31-03-2003
Rs. in '000 Rs. in '000
13. OTHER INCOME
DIVIDEND (INCLUDING TDS RS NIL PREV
YEAR RS. 20916) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 208 199
EXCESS PROVISIONS WRITTEN BACK ÏÏÏÏÏÏ 588 3,222
INTEREST ON INCOME TAX REFUNDS ÏÏÏÏÏ 120 561
MODVAT CREDIT UTILISED ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 21,654 14,093
INSURANCE CLAIMS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,599 770
MISCELLANEOUS INCOME (INCL. TDS
RS 9,350, PREV. YEAR RS. 94,091) ÏÏÏÏÏÏÏÏÏÏ 4,925 3,358
CASH DISCOUNT FROM VENDORS ÏÏÏÏÏÏÏÏÏ 1,315 0
HIRE CHARGES (INCL. TDS RS 105525 PREV.
YEAR RS. 1,85,316) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 840 840
SERVICE CHARGES (INCLUDING TDS
RS. 59,547)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 932 0
PROFIT ON SALE OF INVESTMENTS ÏÏÏÏÏÏÏÏ 264 0
PROFIT ON SALE OF FIXED ASSETS ÏÏÏÏÏÏÏÏ 368 586
33,813 23,629

As at 31-03-2004 As at 31-03-2003
Rs. in '000 Rs. in '000
14. ACCRETION/(DECRETION) TO STOCKS
OPENING STOCK
FINISHEDÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 79,725 90,712
STOCK IN PROCESS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14,978 94,703 14,412 105,124
CLOSING STOCK
FINISHEDÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 144,409 79,725
STOCK IN PROCESS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26,061 170,470 14,978 94,703
75,767 (10,421)

Current Year Previous Year


Rs. in '000 Rs. in '000
15. PURCHASES AND MATERIALS CONSUMED
PURCHASES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,630 10,150
RAW MATERIALS CONSUMED
OPENING STOCK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 36,655 64,879
ADD: PURCHASES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 579,482 504,452
616,137 569,331
LESS: CLOSING STOCK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 62,626 553,511 36,655 532,676
PACKING MATERIALS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 628,595 627,283
STORES AND SPARESÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27,854 19,059
1,219,590 1,189,168

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Current Year Previous Year


Rs. in '000 Rs. in '000
16. SALARIES, ALLOWANCES AND BENEFITS
SALARIES, WAGES & BONUS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 152,546 130,764
GRATUITY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,035 2,088
CONTRIBUTION TO PROVIDENT AND
OTHER FUNDSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,551 13,588
CONTRIBUTION UNDER EMPLOYEES STATE
INSURANCE SCHEME ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 944 1,049
STAFF WELFARE EXPENSES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23,941 23,261
196,017 170,750

Current Year Previous Year


Rs. in '000 Rs. in '000
17. OTHER EXPENSES
POWER AND FUEL (INCLUDES TRANSFER
VALUE OF BIO GAS & POWER) ÏÏÏÏÏÏÏÏÏÏÏÏ 185,372 141,960
REPAIRS AND MAINTENANCE (INCLUDING
STORES & SPARES CONSUMED)
BUILDING ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,577 5,146
MACHINERY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18,325 14,938
OTHERS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,305 26,207 6,292 26,376
MACHINERY LEASE AND OTHER HIRE
CHARGES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 560 440
INSURANCE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,539 9,226
OTHER MANUFACTURING EXPENSES ÏÏÏÏÏÏÏ 10,495 6,278
RENT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15,641 15,849
RATES AND TAXES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 126,371 76,347
SALES TAX ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 102,361 106,016
TRAVELLING EXPENSES
DIRECTORS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 513 917
OTHERS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 64,027 64,540 45,082 45,999
DIRECTORS' FEEÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 175 88
DIRECTORS' COMMISSION ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,600 9,000
CHARITY AND DONATION ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 809 1,194
SUNDRY BALANCES WRITTEN OFF ÏÏÏÏÏÏÏÏÏ 795 3,850
MISC. ASSETS WRITTEN OFF ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 126
PROVISION FOR DOUBTFUL ADVANCESÏÏÏÏÏ 0 2,500
PROVISION FOR BAD & DOUBTFUL DEBTS ÏÏ 0 4,153
LOSS ON SALE OF ASSETSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 185 1,531
LOSS ON SALE OF SHARES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 89
STORES WRITTEN OFF ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 979
OTHER OVERHEADS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 104,994 77,376
SELLING AND DISTRIBUTION EXPENSES:
FREIGHT OUTWARDSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 99,567 81,093
SUPERVISION CHARGES-AFTER SALESÏÏÏÏÏÏ 162,471 90,876
SUPERVISION CHARGES TO SUPERVISORS ÏÏ 49,523 55,516
REBATE DISCOUNT AND ALLOWANCE ÏÏÏÏÏÏ 16,506 17,364
ADVERTISEMENT & SALES PROMOTION ÏÏÏÏ 354,824 204,137
682,891 448,986
1,344,535 978,363

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Current Year Previous Year


Rs. in '000 Rs. in '000
18. FINANCIAL EXPENSES
INTEREST ON:
Ì TERM LOANS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44,360 54,918
Ì OTHERS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 34,850 17,272
BILL DISCOUNTING CHARGES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 935 528
FOREIGN EXCHANGE FLUCTUATION ÏÏÏÏÏÏÏ (6,134) 18,403
BANK CHARGES AND INCIDENTAL
EXPENSESÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,219 11,865
87,230 102,986
LESS: INTEREST ON LOANS AND
DEPOSITS@ ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 470 335
GAIN ON SWAP TRANSACTIONS ÏÏÏÏÏÏÏÏÏÏ 41,514 0
45,246 102,651
@ INCLUDES TAX DEDUCTED AT SOURCE ÏÏ 8 34

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19. Significant Accounting Policies and Notes on Accounts 2003-04


(A) Significant Accounting Policies

1. Basis of Accounting

The financial statements are prepared on historical cost convention, unless stated otherwise, on a going concern basis and, in
accordance with the accounting standards issued by the Institute of Chartered Accountants of India, to the extent applicable.

2. Valuation of Fixed Assets

Fixed assets are stated at cost except to the extent revalued. Borrowing costs attributable to the qualifying assets and all significant
costs incidental to the acquisition of assets are capitalised.

Freehold and leasehold land at Rampur have been revalued as on 1st January, 1999. Building, Plant & Machinery relating to
distillery unit acquired/installed upto Dec, 1984 have been revalued as on 31st Dec 1985.

3. Depreciation

a) Cost of leasehold land and leasehold improvements are amortised over the period of lease.

b) Depreciation is charged for the year on straight line basis at the rates and in the manner specified in Schedule XIV of the
Companies Act, 1956.

c) On additions costing less than Rs. 5000, depreciation is provided on pro rata basis.

d) Depreciation on amount added on revaluation of assets is transferred from Revaluation Reserve.

4. Investments

Investments are valued at Cost. Provision for diminution in value is considered, if in the opinion of the Management, such a
decline is considered permanent.

5. Inventories

Finished goods and stock in process are valued at lower of cost or net realisable value. Cost includes cost of conversion and other
expenses incurred in bringing the goods to their location and condition. Raw materials, Packing Materials, Stores and spares are
valued at cost. Cost is ascertained on ""weighted average'' basis.

6. Revenue recognition

Sales are recognised on delivery or on passage of title of the goods to the customers. They are accounted net of trade discounts and
rebates but inclusive of Excise duty and Sales/Trade tax. Duty draw back is accounted for on the basis of exports sales effected
during the year.

7. Excise Duty

Keeping in view that State excise duty payable on finished products is not determinable, as it varies depending on the places to
which they are despatched, the excise duty on the stocks lying in factory is accounted for on clearances of such goods. The method
of accounting has no impact on the results of the year.

8. Transfer pricing of Bio-gas/Power

Since it is not possible to compute the actual cost, inter unit transfer of bio-gas &power have been valued on the basis of savings in
direct fuel cost/prevailing purchase price of power. The same has been considered for valuation of inventories.

9. Treatment of Employee benefits

The Company makes regular contributions to duly constituted funds set up for Provident Fund, Family Pension Fund,
Superannuation and Gratuity, which are charged to Revenue. The Employees are allowed the benefit of leave encashment as per
the rules of the Company, for which provision for accruing liability is made on actuarial valuation.

10. Misc. Expenditure (to the extent not written off or adjusted)

i) Advertisement and Sales Promotion: (Incurred upto 31.03.2003): Considering the anticipated future benefits, this is amortised
over a period of five years.

ii) Share issue expenses: This is amortised over a period of ten years. The write off is charged to Share Premium Account.

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11. Foreign Currency Transactions

Transactions in foreign currencies are accounted for at the exchange rate prevailing on the day of the transaction. The outstanding
liabilities/receivables are translated at the year end rates or forward rate. The resultant gain or loss are adjusted to the Profit &
Loss Account.

12. Derivative Transactions

These transactions have been undertaken to hedge the cost of borrowing and comprise of principal/interest rate swaps. The
income/expenses are recognised when earned/incurred.

13. Research and Development

Fixed assets used for Research and Development are depreciated in the same manner as in the case of similar assets; the revenue
expenses are charged off in the year of incurrance.

14. Taxation

Deferred tax is recognised, subject to consideration of prudence, on timing differences being the difference between taxable
income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

(B) Notes on Accounts

Current Year Previous Year


Rs. in '000 Rs. in '000
1. Estimated amount of capital commitments (Net of advances)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,362 8,021
2. Contingent Liabilities not provided for:
i) Claims against the Company, not acknowledged as debts (Company's counter claims
aggregate to Rs. 33.65 Lacs)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20,654 10,612
ii) Guarantees given on behalf of bodies corporate to Financial Institutions and Banks for
loan facilities.ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 87,500 109,300

3. In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of current assets, loans
and advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

4. a) Income Tax Assessment-In respect of Assessment years 1993-94, and 1996-97 the demands aggregate to Rs. 96.90 lacs. In
view of the expected reliefs in appeals, no provision is considered necessary for the demand. However, these have been adjusted
in full by the department against TDS/Advance Tax refunds due to the Company.

Deferred Tax Deferred Tax


Liability/(Asset) Current year Liability/(Asset)
as at 01.04.2003 Charge/(Credit) as at 31.03.2004

b) DEFERRED TAX LIABILITY (NET)


1. Deferred Tax Liability
i) Difference between Book and Tax depreciationÏÏÏÏÏÏ 102,212 23,293 125,505
ii) Deferred Revenue Expenditure (Advertising and sale
promotion) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 81,661 (31,177) 50,484
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 183,873 (7,884) 175,989
2. Deferred Tax Assets
i) Provision for leave encashment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,833) (1,272) (4,105)
ii) Provision for doubtful debts and others ÏÏÏÏÏÏÏÏÏÏÏÏ (3,105) (123) (3,228)
iii) Others ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,028) 2,028 0
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (7,966) 633 (7,333)
Net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 175,907 (7,251) 168,656
Round off to nearest lacs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,759 (72) 1,687

5. a) Non fund based facilities provided by Banks are also secured by a second charge on the fixed assets of the company.

b) Provision for contingencies represents amount set apart to meet liabilities being contested in appeals.

6. a) Sundry creditors (Schedule 10) include dues to Small Scale Industrial Undertakings Ì Rs. 136.93 lacs. (Previous year
Rs. 80.42 lacs)

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b) Names of SSI parties to whom dues as on 31.03.2004, outstanding for more than 30 days: i) M/s C.C. Metal Caps, Delhi,
ii) M/s Rakesh Packaging Aids P Ltd., Bareilly, iii) M/s Krishna Packaging Industries, Bareilly, iv) M/s P.K. Enterprises,
Ghaziabad. v) M/s Cliffton Metal Closures, Noida, vi) M/s Pack Link Moradabad, vii) Ravi Enterprises, Meerut,
viii) M/s S.S. Garments, Noida, ix) Universal Laboratories Jagadhari, x) M/s Priyanka Chemicals, Muzaffar Nagar.,
xi) M/s Everest Metal Industries, Meerut, xii) M/s Modern Packers, Bareilly, xiii) M/s Plasto Chem India Ghaziabad.

c) In the matter of suppliers covered under ""Interest on delayed payments to Small Scale and Ancillary Industrial Undertakings
Act, 1993'', no claims have been received from suppliers with reference to this Act.

7. The company as a substantial shareholder (48%) of Whytehall India Ltd. has given a letter of representation and warranties dated
20.04.01 to its JV partner American Beverages (Mauritius) Ltd. (ABM) On this basis, Bacardi International Ltd. (BIL) had
acquired the shares of ABM. The warranties are undertakings by the Company to meet certain losses, claims, expenses etc. that
may arise pertaining to the period prior to the date of BIL taking over ABM.

The Company does not envisage any diminution in the value of its investments in Whytehall India Ltd. held on long term basis.

8. In June 2001, Uttar Pradesh State Industrial Development Corporation Ltd. (UPSIDC) have alloted land for a consideration of
Rs. 366.59 lacs, payable in instalments with interest. During the year a sum of Rs. 26.79 lacs has been paid as interest and
capitalised. Though the company has taken possession of the land, on a writ petition filed by the Oriental Insurance Co. Ltd., the
Hon'ble Allahabad High Court passed an order, inter alia, for the status quo to be maintained. The company has incurred expenses
amounting to Rs. 19.28 lacs for construction of boundary wall in the earlier years. The documents transferring the title of the land
to the company are yet to be executed.

9. The expenses incurred on advertisement and sales promotion during the year 1998 to 2002-03, in view of the anticipated benefits
over a longer period, were being deferred and amortised over a period of 5 years. With the Accounting Standard Ì 26 on
intangible assets coming into effect from 1.04.03, such expenses incurred during the year have been fully charged off to the Profit
and Loss A/c, while amortisation of the balance of deferred expenses as on 31st March, 2003 have been continued as before. This
change in the method of accounting has resulted in showing the profits of the year lower by Rs. 1,046.01 lacs.

10. Segment reporting:

Based on the guideline in Accounting Standard on segment reporting (AS-17) issued by ICAI, the company's primary business
segment is manufacture and trading in liquor. The liquor business incorporates the product groups, namely, rectified spirit, country
liquor and IMFL which mainly have similar risks and returns.

11. Related party disclosure as per Accounting Standard-18:

A. Related parties and their relationship:

i. Joint ventures/Associates: Whytehall India Limited

ii. Key Management personnel: Mr. Lalit Khaitan, Chairman & Managing Director
Mr. Abhishek Khaitan, Joint Managing Director
Mr. K.P. Singh, Whole Time Director

Relatives Mrs. Kiran Devi Khaitan, Mrs. Deepshikha Khaitan

iii Enterprises over which key management personnel are able to exercise significant influence:

Superior Packaging Pvt. Limited


Sapphire Intrex Ltd.
Elkay Fiscal Services Pvt. Limited
Smita Fiscal Pvt. Limited

B. Transaction with above in the ordinary course of business:


Current Year Previous Year
Rs. in '000 Rs. in '000
i. Transaction with parties referred to in (i) above
a. Purchase of goods ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 21,793 20,757
b. Services received ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,000 6,000
c. Reps & warranties ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 11,891
d. Sale of goods/services
Stores ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 82
Hire charges ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 841 841
ServicesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,945 10,786 8,327 9,250
e. Amount receivable at the year end ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 57,481 58,524

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Current Year Previous Year


Rs. in '000 Rs. in '000
ii. Transactions with parties referred to in (ii) above:
RemunerationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27,492 19,744
iii. Transaction with parties referred to in (iii) above:
a. Services received ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,000 4,350
b. Rent received ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 120 120
c Amount receivable at the year end ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 544 1,980

12. Earnings per share (EPS) as per Accounting Standard-20:


Profit after current and deferred tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 256,838 162,994
No of equity shares of Rs. 10 each as on 31.03.2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19,289,588 15,028,303
Basic & diluted EPS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13.31 10.85

13. i) Remuneration to Mr. Lalit Khaitan, Chairman & Managing Director


Salary and Allowances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,065 2,400
Contribution to Provident and other Funds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,098 648
Value of benefits, calculated as per Income Tax Rules ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,783 1,558
Commission ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,800 4,500
ii) Remuneration to Mr. Abhishek Khaitan, Jt. Managing Director
Salary and Allowances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,433 2,100
Contribution to Provident and other Funds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 657 567
Value of benefits, calculated as per Income Tax Rules ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,499 1,321
Commission ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,800 4,500
iii) Remuneration to Mr. K.P. Singh, Wholetime Director.
Salary and Allowances ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 950 870
Contribution to Provident and other Funds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 243 219
Value of benefits, calculated as per Income Tax Rules ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 496 624
26,823 19,307
14. Remuneration to Auditors
Audit Fee ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 350 300
Tax Audit Fee (Including Rs. 10000/Ì for previous year) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 70 50
Certification of StatementsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 263 41
Service tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 41 19
Expenses for Audit and other work ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 95 246

15. Computation of net profit under the Companies Act, 1956 for Managerial
Remuneration:
Profit as per profit and loss account ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 319,338 211,440
Add: Directors' RemunerationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26,823 19,307
Directors' Fees ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 175 88
Depreciation written off ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 50,930 46,256
397,266 277,091
Less: Depreciation U/S 350ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 50,930 46,256
346,336 230,835
Commission:
a) Chairman & Managing Director (subject to a maximum of 2% of net profit) 6,800 4,500
b) Joint Managing Director (subject to a maximum of 2% of net profit)ÏÏÏÏÏÏÏ 6,800 4,500

16. Extraordinary items (a) and prior period adjustments (b) include the following:
Current Year Previous Year
Rs. in '000 Rs. in '000
(a) Deferred revenue expenditure on advertisement & sales promotion ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 81,486 0
(b) Excess provision for interest written back ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 48,447
81,486 48,447

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17. Quantitative and other information

a) Particulars of Capacity and Production

Capacity per annum*


Unit Licensed Installed Production

1. Rectified spirit ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ KL 60,000 60,000 53,906


(60,000) (46,000) (43,941)
2. Bio gasÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 000 'M3 No licence required 30,975
(27,017)
3. Ordinary Portland Cement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ M.T 66,000 33,000 0
(66,000) (33,000) (0)

* As certified by the Management and not verified by the Auditors.

b) Opening Stock, Closing Stock & Turnover


Value in Rs. '000
Opening Stock Closing Stock Turnover
Unit Quantity Value Quantity Value Quantity Value
(Rs.) (Rs.) (Rs.)
1. Alcohol products
(a) Rectified spirit ÏÏÏÏÏÏÏÏÏ KL/AL 1,308 19,589 749 9,360 14,730 182,101
(2,360) (32,557) (1,308) (19,589) (12,442) (159,954)
(b) Silent spirit ÏÏÏÏÏÏÏÏÏÏÏÏ KL/AL 632 12,060 1,608 22,508 19,430 325,404
(903) (15,519) (632) (12,060) (13,195) (231,808)
(c) Cane juice spirit ÏÏÏÏÏÏÏÏ KL/AL 184 4,264
(158) (4,070)
2. Other alcohol products
(a) Denatured spirit ÏÏÏÏÏÏÏÏ KL/AL 23 342 10 123 13 314
(23) (322) (23) (342) (14) (341)
(b) Indian made foreign
liquor ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ AL 273,792 26,609 426,656 38,152 11,888,073 1,201,801
(235,935) (22,632) (273,792) (26,609) (10,845,636) (1,111,310)
(c) Country liquorÏÏÏÏÏÏÏÏÏÏ AL 46,246 6,767 153,174 47,602 7,092,042 608,241
(96,220) (19,682) (46,246) (6,767) (8,606,770) (707,270)
(d) Imported Alcoholic ÏÏÏÏÏ Bottles 94,647 14,358 111,136 26,664 106,162 10,872
products (Beer & Wine) (0) (0) (94,647) (14,358) (76,832) (8,007)
3. Others ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 31,257
(29,076)
4. Self consumption
PowerÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ KWH 9,723,150 43,754
(8,364,230) (37,639)
Bio gasÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 000 M3 30,975 110,844
(27,017) (79,887)
5. Other operating income ÏÏÏÏÏÏÏÏ 444,863
(232,997)
Total (excluding excise duty and
sales tax) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 79,725 144,409 2,963,715
(90,712) (79,725) (2,602,359)

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Unit Quantity Value


(Rs.)
c) Purchases: Ì Indian made foreign liquor ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ AL 0 0
(2,311) (483)
Ì Denatured spiritÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ AL 0 0
(5,640) (89)
Ì Cement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ MT 0 0
(15) (39)
Ì Imported Liquors (Wine &Beer) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Bottles 123,024 9,630
(171,479) (9,539)
9,630
(10,150)
d) Consumption of raw materials
(i) Molasses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ QTL. 2,501,817 510,045
(2,165,799) (480,431)
(ii) Cane juice ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ QTL. 16,863 1,835
(14,663) (2,100)
(iii) Malt/Malt Scotch/Grain/Grain Spirits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 37,318
(50,145)
(iv) Extra neutral alcohol (other than own production) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ AL 4,313
(0)
553,511
(532,676)

Rs. in '000

e) Value of imports calculated on CIF basis:


Raw materials ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,591
(3,355)
Components & spare partsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 581
(46)
Purchases (Wine & Beer) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,630
(7,564)
Capital goods ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0
(1,607)
f) Expenditure in foreign currency on account of
Foreign travel & subscriptions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,658
(5,601)
OthersÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,123
(183)

g) Value of imported and indigenous raw materials, spare parts components and stores consumed during the year

Raw Material Others


% Of Total % Of Total
Value Consumption Value Consumption

Imported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,172 1 0 0


(3,401) (1) (0) (0)
Indigenous ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 548,339 99 656,448 100
(529,275) (99) (646,342) (100)
553,511 100 656,448 100
(532,676) (100) (646,342) (100)

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Rs. in '000

h) Remittances in foreign currency on account of dividends


(i) Number of non resident shareholdersÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 42
(52)
(ii) Number of shares held by them ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,352
(12,770)
(iii) DividendÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19
(26)
i) Earnings in foreign exchange Ì Export of goods on FOB basisÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 82,125
(33,446)

18. The Company has entered into arrangements with distilleries (tie-up units) in other states for production and marketing of its own
IMFL brands. The production in the premises of tie-up units is carried out under its close supervision. The marketing is entirely
the responsibility of the Company. The Company is also required to ensure adequate finance to the tie-up units. Though, under the
agreements the production and sale are accounted for by and in the books of the tie-up units, the company promotes its brands
through this arrangement. Accordingly, it is considered appropriate to disclose the following quantitative and value information for
the year, as furnished by the tie-up units.

i) Income from tie-up operations (Schedule-12) reflects the net contribution from the sales made by these Units, and is detailed
as under:

Current Year Previous Year


Rs. '000 Rs. '000
Gross Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,999,814 1,054,498
Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,474,390 762,038
Cost of Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 893,973 528,062
Gross Profit ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 580,416 233,976
Expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 141,564 3,723
Income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 438,853 230,253

ii) Quantitative information for Tie-up operations:


Current Year Previous Year
Quantity Quantity
(Cases) Value (Cases) Value
Rs.'000 Rs.'000
Potable Alcohol
a) Production ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,349,853 Ì 1,835,922 Ì
b) Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,237,525 1,999,814 1,839,203 1,054,498
c) Closing Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 171,220 51,144 58,892 18,317

iii) The balance due from tie-up units, of Rs. 548,935 thousands (Previous year 293,342 thousands) is included under advances
recoverable. This is on account of the financing by the company of inventories, debtors and other current assets net of current
liabilities on behalf of the units.

19. In respect of items below Rs. 500, actual figures are given in brackets.

Note: Figures in brackets are those of previous year.


Annexure to our report of date

For V. Sankar Aiyar & Co. Dr. Lalit Khaitan Abhishek Khaitan
Chartered Accountants Chairman & Managing Director Joint Managing Director

Place: New Delhi V. Rethinam R.K. Mehrotra Anil Chawla Ajay K. Agarwal
Dated: May 4, 2004 Partner President (Finance) Company Secretary Asst. Vice President
M. No. 10412 (Accounts)

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CASH FLOW FOR THE YEAR ENDED 31ST MARCH, 2004


2003-04 2002-03
(Rs.'000) (Rs.'000)
A. CASH FLOW FROM OPERATING ACTIVITIES
NET PROFIT BEFORE PROVISION FOR TAX 319,338 282,840
ADD:
DEPRECIATION ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 50,930 46,256
INTEREST ON BORROWINGSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45,716 102,986
(NET OF GAIN ON SWAP TRANSACTIONS
OF RS. 41514 THOUSAND)
LOSS ON SALE OF SHARES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 89
ASSETS WRITTEN OFF ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 126
LOSS ON SALE OF ASSETS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 185 96,831 1,531 150,988
416,169 433,828
LESS:
INTEREST INCOME ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 470 335
DIVIDEND ON INVESTMENTSÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 208 199
MISC. EXPENDITURE Ì ADVERTISEMENT &
SALES PROMOTION EXPENSES (NOT
WRITTEN OFF) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 48,469
PROFIT ON SALE OF ASSETSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 368 586
PROFIT ON SALE OF INVESTMENT ÏÏÏÏÏÏÏÏ 264 (1,310) 0 (49,588)
OPERATING PROFIT BEFORE WORKING
CAPITAL CHANGESÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 414,859 384,239
ADJUSTMENT FOR WORKING CAPITAL
CHANGES:
(INCREASE)/DECREASE IN INVENTORIES (117,193) 45,413
(INCREASE)/DECREASE IN TRADE
RECEIVABLES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (47,496) (132,955)
(INCREASE)/DECREASE IN OTHER
RECEIVABLES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (9,773) (16)
(INCREASE)/DECREASE IN LOANS AND
ADVANCES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (339,993) (179,110)
(DECREASE)/INCREASE IN TRADE AND
OTHER PAYABLES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 48,480 82,355
(465,975) (184,313)
(51,116) 199,926
LESS: INTEREST PAIDÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (45,716) (102,986)
NET CASH FROM OPERATING ACTIVITIES (96,832) 96,940
B. CASH FLOW FROM INVESTING ACTIVITIES
ADDITION TO:
FIXED ASSETS (INCLUDING WORK IN
PROGRESS) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 243,035 238,908
DECREASE IN LOANS GIVEN ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 542 3,800
SALE OF FIXED ASSETSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 489 1,822
SALE OF INVESTMENTS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,754 1
INTEREST INCOME ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 470 335
DIVIDEND INCOME ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 208 199
4,463 6,157
NET CASH GENERATED (USED) IN
INVESTING ACTIVITIES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (238,572) (232,751)

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2003-04 2002-03
(Rs.'000) (Rs.'000)
C. CASH FLOW FROM FINANCING ACTIVITIES
INCREASE/(DECREASE) IN
SHARE CAPITAL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0) 52,189
SECURED LOANS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 347,578 47,813
UNSECURED LOANS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,585 73,931
DEFERRED CREDITS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,002) (5,337)
351,161 168,596
DIVIDEND ON EQUITY SHARES
(INCLUDING TAX) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (39,170) (28,453)
NET CASH GENERATED (USED) IN
FINANCING ACTIVITIESÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 311,991 140,143
NET CHANGES IN CASH AND CASH
EQUIVALENTS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (23,413) 4,332
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS
BALANCE AT THE BEGINNING OF THE
YEAR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 47,412 43,080
BALANCE AT THE END OF THE YEAR ÏÏÏÏÏ 23,999 47,412
(23,413) 4,332

For V. Sankar Aiyar & Co. Dr. Lalit Khaitan Abhishek Khaitan
Chartered Accountants Chairman & Managing Director Joint Managing Director

Place: New Delhi V. Rethinam R.K. Mehrotra Anil Chawla Ajay K. Agarwal
Dated: May 4, 2004 Partner President (Finance) Company Secretary Asst. Vice President
M. No. 10412 (Accounts)

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BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE


AS REQUIRED IN PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956.

I. Registration Details Registration No: 27278 State Code: 20


Balance Sheet Date:
31.3.2004
II. Capital raised during Public Issue: Nil Rights Issue: Nil
the year
(Amount in Rs. Bonus Issue: Nil Pvt. Placement: Nil
thousand)
III. Position of Total Liabilities: 2,783,700 Total Assets: 2,783,700
Mobilisation and
Deployment of Funds Source of Funds
(Rs. in thousand)
Paid-up Capital: 192,896 Reserves & Surplus: 678,556
Secured Loans: 1,021,255 Unsecured Loans: 334,881
Application of Funds
Net Fixed Assets: 1,008,641 Investments: 86,490
Net Current Assets: 1,160,438 Misc. expenditure: 140,720
Accumulated Losses: Nil
IV. Performance of Turnover and: 3,099,889 Total Expenditure: 2,805,388
Company Other Income
(Amount in
Rs. thousand) Profit before tax: 319,338 Profit after tax: 256,838
Earning per share (in Rs.): 13.31 Dividend Rate%: 20%
V. Generic Names of 1. Alcohol
three Principal 2. Indian Made Foreign
Products/Services of Liquor
Company 3. Country Liquor
(as per monetary
terms)

Dr. Lalit Khaitan Abhishek Khaitan


Chairman & Managing Director Joint Managing Director

Place: New Delhi R.K. Mehrotra Anil Chawla Ajay K. Agarwal


Dated: May 4, 2004 President (Finance) Company Secretary Asst. Vice President
(Accounts)

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AUDITORS' REPORT
TO THE SHAREHOLDERS OF RADICO KHAITAN LIMITED

1. We have audited the attached Balance Sheet of RADICO KHAITAN LIMITED as at 31st March,
2005 and also the annexed Profit and Loss Account and the Cash flow statement of the Company for
the year ended on that date. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our
audit.

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

3. As required by the Companies (Auditors' Report) Order, 2003 issued by the Department of
Company Affairs, Government of India in terms of Section 227(4A) of the Companies Act, 1956, we
enclose in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order
on the basis of such checks as we considered appropriate and according to the information and
explanations given to us.

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

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

(b) In our opinion, proper Books of Accounts as required by law have been kept by the Company so
far as appears from our examination of the books;

(c) The Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this Report
are in agreement with the Books of Account;

(d) In our opinion, the Balance Sheet, Profit & Loss Account and cash flow statement dealt with by
this report comply with the accounting standards referred to in subsection (3C) of section 211
of the Companies Act, 1956 to the extent applicable.

(e) On the basis of written representations received from directors, as on 31st March, 2005 and
taken on record by the Board of Directors, we report that none of the directors of the Company
is, disqualified as on 31st March, 2005 from being appointed as a director in terms of
section 274(1)(g) of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us,
the accounts, read with the notes on accounts, give the information required by the Companies
Act, 1956 in the manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March,
2005;

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ii) in the case of Profit and Loss Account, of the profit for the year ended on that date; and
iii) in the case of cash flow statement, of the cash flow for the year ended on that date.

For V. Sankar Aiyar & Co.


Chartered Accountants

Place: New Delhi V. Rethinam


Date: September 28, 2005 Partner
Membership No.: 10412

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ANNEXURE REFERRED TO IN PARA 3 OF OUR REPORT OF EVEN DATE TO THE


SHAREHOLDERS OF RADICO KHAITAN LTD.
1. (a) The Company has maintained proper records, showing full particulars including quantitative
details and situation of fixed assets.
(b) We are informed that major part of the fixed assets located at the distillery at Rampur were
physically verified once during the year. The assets physically verified are under reconciliation
with the book records and discrepancies, if any, can be ascertained only after reconciliation is
complete.
(c) Since there is no substantial disposal of fixed assets during the year, the preparation of financial
statements on a going concern basis is not affected on this account.
2. (a) On the basis of information and explanations obtained, stocks of finished goods and raw
materials of the distillery at all its locations have been under physical check by the Excise
Department in coordination with the company's supervisory staff at frequent intervals. Stocks at
other locations, stores and spares have been physically verified by the management during the
year at reasonable intervals.
(b) The procedure of physical verification of stocks followed by the management are reasonable and
adequate in relation to the size of the company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticed on
verification between the physical stock and book records were not material.
3. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other
parties covered in the register maintained u/s.301 of the Companies Act, 1956.
(b) The Company has not taken any loans, secured or unsecured from companies, firms or other
parties covered in the register maintained u/s.301 of the Act
4. In our opinion and according to the information and explanations given to us, there are adequate
internal control systems commensurate with the size of the company and the nature of its business for
the purchase of inventory and fixed assets and for the sale of goods. To the best of our knowledge, no
major weaknesses in internal control systems were either reported or noticed during the course of our
audit.
5. We are informed that there are no contracts or arrangements during the year that need to be entered
into a register in pursuance of Sec.301 of the Act.
6. The Company has not accepted deposits from public within the meaning of Sec.58A/58AA of the
Companies Act, 1956 or any other relevant provisions of the Act and the rules framed thereunder.
7. During the year, outside Consultants have carried out internal audit and submitted their reports. In
our opinion, the company has an internal audit system commensurate with its size and nature of its
business.
8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules
made by the Central Government for the maintenance of cost records under section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records
have been maintained and the required statements are in the process of compilation. However, we
have not made a detailed examination of the records with a view to determine whether they are
accurate or complete.
9. (a) According to the records of the Company, the Company has been generally regular in
depositing with appropriate authorities the statutory dues including Provident Fund, Employees'
State Insurance, Income-tax, Sales tax, Wealth-tax, Service tax, Customs duty, Excise duty,
Cess and other statutory dues. We are informed that there were no liabilities during the year
towards Investor Education and Protection Fund. According to the information and explana-

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tions given to us, there are no undisputed amounts payable in respect of the aforesaid statutory
dues, which have remained outstanding as at 31-03-2005 for a period of more than 6 months
from the date they became payable.
(b) As regards dues not deposited on account of disputes, the position as explained by the company
is as under:
S.No. Nature of dues

i Sales Tax
S.
No. Year Amount Forum where pending
Rupees in
thousands
1 1981-82 (Local) 58 Trade Tax Tribunal, Lucknow
2 1981-82 377 Trade Tax Tribunal, Lucknow
3 1985-86 117 Trade Tax Tribunal, Lucknow
4 1993-94 13,745 Appellate
Dy.Commissioner, Secunderabad
5 1994-95 18,953 Appellate
Dy.Commissioner, Secunderabad
6 1999-00 412 Trade Tax Tribunal, Moradabad
7 2000-01 85 DC (Assessment), Rampur
8 2001-02 190 Jt.Commissioner of Trade Tax (Appeal) Moradabad
9 2002-03 207 Jt.Commissioner of Trade Tax (Appeal) Moradabad
10 2002-03 14,593 Stayed by Allahabad High Court
ii. Excise Duty
S.
No. Year Amount Forum
Rs.
1 1981 17,37,287 High Court Ì Lucknow Bench
2 1985 to 1995-96 1,45,510 HC Ì Allahabad
3 1995 to Jun-02 22,00,000 Excise Commissioner, UP
10. The Company has no accumulated losses at the end of the financial year. The Company has not
incurred cash losses either in the current year or in the immediate preceding financial year.
11. On the basis of the verification of records and information and explanations given by the manage-
ment, the Company has not defaulted in repayment of dues to financial institutions and banks. The
Company has not issued any debentures during the year.
12. The Company has not granted loans and advances on the basis of security by way of pledge of shares,
debentures or other securities.
13. The provisions of any special statutes applicable to chits do not apply to the Company.
14. The Company is not dealing or trading in shares, securities, debentures or other investments.
15. In respect of guarantees given to financial institutions and banks on behalf of a body corporate for
loan facility, the terms and conditions are not prima facie prejudicial to the interest of the company.
16. According to the records of the company, term loans taken during the year have been applied for the
purpose for which they were obtained.
17. According to the information and explanations given to us, and on an overall examination of the
balance sheet of the Company, we report that funds raised on short terms basis have been used for
acquiring shares in subsidiary Companies which is in the nature of long term investment. The amount
involved is approximately Rs.19.20 crores

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18. During the year, the Company has not made any preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the Act.
19. Since no debentures have been issued during the year, question of creating securities does not arise.
20. Since there were no public issues of securities during the year by the Company, verification of the
end-use of the money does not arise.
21. Based on the audit procedures performed and the representation obtained from the management, we
report that no fraud on or by the Company has been noticed or reported during the year under audit.

For V. Sankar Aiyar & Co.


Chartered Accountants

Place: New Delhi V. Rethinam


Date: September 28, 2005 Partner
Membership No.: 10412

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BALANCE SHEET AS AT 31ST MARCH, 2005


SCHEDULE
NO. As at 31-03-2005 As at 31-03-2004
Rs. in '000 Rs. in '000
SOURCES OF FUNDS
1. SHAREHOLDERS' FUNDS
SHARE CAPITAL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1 192,896 192,896
RESERVES AND SURPLUS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2
REVALUATION RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 96,747 97,415
OTHER RESERVESÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 793,084 889,831 581,141 678,556
2. LOAN FUNDS
SECURED ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3 1,435,408 1,096,255
UNSECURED ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4 710,335 254,806
DEFERRED CREDITS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5 1,338 2,147,081 5,076 1,356,137
3. DEFERRED TAX BALANCE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 204,900 168,700
TOTAL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,434,708 2,396,289
APPLICATION OF FUNDS
1. FIXED ASSETS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6
GROSS BLOCKÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,041,751 1,442,200
LESS: DEPRECIATION TO DATE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 535,330 460,466
NET BLOCK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,506,421 981,734
CAPITAL WORK IN PROGRESS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7 173,684 1,680,105 26,907 1,008,641
2. INVESTMENTS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8 83 86,490
3. CURRENT ASSETS, LOANS & ADVANCES ÏÏÏÏÏ 9
a) ACCRUED INCOMEÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,939 10,216
b) INVENTORIES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 606,638 288,797
c) SUNDRY DEBTORS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 615,083 547,465
d) CASH & BANK BALANCES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 67,880 23,999
e) LOANS & ADVANCES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,012,238 818,092
2,303,778 1,688,569
LESS: CURRENT LIABILITIES AND PROVISIONS
LIABILITIES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10 562,634 472,430
PROVISIONS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11 64,420 55,701
627,054 528,131
NET CURRENT ASSETSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,676,724 1,160,438
4. MISCELLANEOUS EXPENDITURE (TO THE
EXTENT NOT WRITTEN OFF OR ADJUSTED)
ADVERTISEMENT & SALES PROMOTION
EXPENSES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 77,796 140,720
(SEE ACCOUNTING POLICY 10-SCH 19 A)
TOTAL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,434,708 2,396,289
SIGNIFICANT ACCOUNTING POLICIES AND
NOTES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19

ANNEXURE TO OUR REPORT OF DATE

For V. Sankar Aiyar & Co. Dr. Lalit Khaitan Abhishek Khaitan
Chartered Accountants Chairman & Managing Director Managing Director

Place: New Delhi V. Rethinam R.K. Mehrotra Ajay K. Agarwal Anil Chawla
Dated: Sept' 28, 2005 Partner President (Finance) Vice President General Manager &
M. No. 010412 (Accounts & Company Secretary
Commercial)

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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2005
SCHEDULE
NO. Current Year Previous Year
Rs. in '000 Rs. in '000
INCOME
SALES* ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12 7,675,444 5,708,316
LESS: EXCISE DUTY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,130,842 2,642,240
4,544,602 3,066,076
OTHER INCOME ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13 67,696 33,813
ACCRETION/DECRETION TO STOCKS ÏÏÏÏ 14 63,109 75,767
4,675,407 3,175,656
EXPENDITURE
PURCHASES AND MATERIALS
CONSUMEDÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15 2,313,692 1,219,590
SALARIES, ALLOWANCES AND
BENEFITSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16 240,257 196,017
OTHER EXPENSES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17 1,486,545 1,344,535
FINANCIAL EXPENSES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18 164,882 45,246
4,205,376 2,805,388
PROFIT BEFORE DEPRECIATION AND
TAXATIONÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 470,031 370,268
DEPRECIATION FOR THE YEAR ÏÏÏÏÏÏÏÏÏ 85,644 54,003
LESS: TRANSFER FROM REVALUATION
RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 668 84,976 3,073 50,930
PROFIT BEFORE TAXATION ÏÏÏÏÏÏÏÏÏÏÏÏÏ 385,055 319,338
PROVISION FOR TAXATION ÏÏÏÏÏÏÏÏÏÏÏÏÏ 25,500 62,500
PROVISION FOR DEFERRED TAX ÏÏÏÏÏÏÏÏ 1,000 26,500 0 62,500
PROFIT AFTER TAXATION ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 358,555 256,838
ADD/(LESS): PRIOR PERIOD
ADJUSTMENTS & EXTRA ORDINARY
ITEMS (SEE NOTE 16) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (62,924) (81,486)
ADD: DEFERRED TAX PROVISION
RELATING TO EARLIER PERIOD
WRITTEN BACK ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 7,200
295,631 182,552
ADD: SURPLUS BROUGHT FORWARD
FROM LAST YEAR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 137,340 126,141
PROFIT AVAILABLE FOR
APPROPRIATIONÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 432,971 308,693
LESS: OPENING BALANCE BROUGHT
FORWARD
TRANSFERS TO:
GENERAL RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 250,000 127,831
EDUCATION CESS ON DIVIDEND TAX
OF PREVIOUS YEAR ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 99 0
PROPOSED DIVIDEND ON:
EQUITY SHARES @ 22% ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 42,437 38,579
PROVISION OF TAX ON ABOVE ÏÏÏÏÏÏÏÏÏÏ 5,952 4,943
48,389 43,522
BALANCE CARRIED TO BALANCE
SHEET (SCHEDULE 2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 134,483 137,340

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SCHEDULE
NO. Current Year Previous Year
Rs. in '000 Rs. in '000
EARNINGS PER SHARE (SEE
NOTE 12) Ì BASIC & DILUTED
BEFORE PRIOR PERIOD & EXTRA
ORDINARY ITEMS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18.58 13.31
AFTER PRIOR PERIOD & EXTRA
ORDINARY ITEMS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15.32 9.09

*SALES THROUGH OTHER DISTILLERIES/BOTTLING UNITS UNDER ARRANGEMENT RS. 27,369.88 LACS NOT
INCLUDED IN THE ABOVE (REFER NOTE 18 OF SCHEDULE 19).

ANNEXURE TO OUR REPORT OF DATE

For V. Sankar Aiyar & Co. Dr. Lalit Khaitan Abhishek Khaitan
Chartered Accountants Chairman & Managing Director Managing Director

Place: New Delhi V. Rethinam R.K. Mehrotra Ajay K. Agarwal Anil Chawla
Dated: Sept' 28, 2005 Partner President (Finance) Vice President (Accounts General Manager &
M. No. 010412 & Commercial) Company Secretary

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SCHEDULES TO STATEMENT OF ACCOUNTS


As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
1. SHARE CAPITAL
AUTHORISED
340,00,000 EQUITY SHARES OF RS 10 EACHÏÏÏ 340,000 340,000
1,00,000 15% REDEEMABLE CUMULATIVE
PREFERENCE SHARES OF RS 100 EACH ÏÏÏ 10,000 350,000 10,000 350,000
ISSUED AND SUBSCRIBED
1,92,89,588 EQUITY SHARES OF RS 10 EACH
FULLY PAID UP ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 192,896 192,896
192,896 192,896

Opening As at
01-04-2004 Additions Deductions 31-03-2005

2. RESERVES AND SURPLUS


REVALUATION RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 97,415 0 668 96,747
CAPITAL RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,899 0 0 4,899
SHARE PREMIUM ACCOUNT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 36,900 0 0 36,900
GENERAL RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 400,000 250,000 35,200 614,800
PREFERENCE SHARES REDEMPTION
RESERVE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,002 0 0 2,002
541,216 250,000 35,868 755,348
SURPLUS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 137,340 134,483
Note: Deduction of Rs. 35,200 thousands being 678,556 889,831
transfer to deferred tax liability. (See note 7b)

As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
3. SECURED LOANS
1. TERM LOANS Ì FROM FINANCIAL
INSTITUTIONS/BANKS
i). STATE BANK OF MYSORE (SEE
NOTE 1 BELOW) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 110,000 75,000
ii). STATE BANK OF INDIA (SEE NOTE
1 & 2 BELOW)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22,569 44,513
iii). INFRASTRUCTURE LEASING &
FINANCIAL SERVICES LTD (SEE
NOTE 1 BELOW) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 50,000 46,154
iv). BANK OF INDIA LONDON (FOREIGN
CURRENCY LOAN) SEE NOTE 1
BELOW) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 424,734 446,254

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As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
2. OTHER THAN TERM LOANS Ì FROM
BANKS
(GUARANTEED BY CHAIRMAN AND
MANAGING DIRECTOR (CMD) &
MANAGING DIRECTOR OTHER THAN
OF UTI BANK LTD. RS. 987.80 LACS AND
STATE BANK OF MYSORE RS. 1007.94
LACS) (SECURED BY HYPOTHECATION
OF INVENTORIES AND BOOK DEBTS)
(NOTE 3 BELOW) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 828,105 484,334
1,435,408 1,096,255

NOTES:
1. SECURED BY A PARI-PASSU FIRST CHARGE ON GROSS BLOCK OF THE FIXED ASSETS OF THE COMPANY,
BOTH PRESENT AND FUTURE.
2. SECURED IN ADDITION BY SECOND CHARGE ON CURRENT ASSETS OF THE COMPANY; GUARANTEED
BY CMD AND MANAGING DIRECTOR OF THE COMPANY.
3. SECURED IN ADDITION BY SECOND CHARGE ON FIXED ASSETS OF THE COMPANY.
4. IN RESPECT OF TERM LOANS, AMOUNT DUE WITHIN ONE YEAR Ì RS.2460.02 LACS. (PREVIOUS YEAR
RS. 759.57 LACS).

As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
4. UNSECURED LOANS
(a) LONG TERM
(i) G E CAPITAL SERVICES INDIA ÏÏÏÏÏÏÏÏÏ 35,000 0
(ii) ZERO INTEREST DEBENTURES
ICICI BANK LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,836 10,836
INDUSTRIAL DEVELOPMENT BANK OF
INDIA ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,695 8,695
MADHYA PRADESH STATE
INDUSTRIAL DEVELOPMENT
CORPORATION LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,690 24,221 4,690 24,221
(REDEEMABLE IN 3 ANNUAL
INSTALMENTS, COMMENCING FROM
30TH DECEMBER, 2005)
(iii) OTHERS Ì RABO INDIA FINANCE PVT.
LTD., NEW DELHI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 177,778 100,000
(GUARANTEED BY CMD AND
MANAGING DIRECTOR)
(SECURED BY A CHARGE ON A SELF
GENERATED BRAND)

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As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
(b) OTHERS
(i) STATE BANK OF HYDERABAD ÏÏÏÏÏÏÏÏÏÏ 100,000 0
(ii) STANDARD CHARTERED BANK ÏÏÏÏÏÏÏÏÏ 110,000 0
(iii)SBI FACTORS & COMMERCIAL
SERVICES PVT. LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 88,336 80,585
(iv) UTI BANK LTD Ì FCNRB LOAN ÏÏÏÏÏÏÏÏ 87,500 0
(v) STANDARD CHARTERED BANK-FCNRB
LOAN ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 87,500 0
(vi) COMMERCIAL PAPER LOAN (FROM
BANK) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 50,000
710,335 254,806

As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
5. DEFERRED CREDITS
FOR ASSETS PURCHASED Ì UNDER HIRE
PURCHASE AGREEMENTS WITH FINANCE
COMPANIES/BANKÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,338 5,076
1,338 5,076
AMOUNT DUE WITHIN ONE YEAR ÏÏÏÏÏÏÏÏÏÏ 1,271 2,611

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6. FIXED ASSETS
COST/REVALUATION DEPRECIATION NET BLOCK

AS ON ADDITIONS AS ON UPTO FOR THE WRITTEN UPTO AS ON AS ON


DESCRIPTION OF ASSETS 01.04.2004 ON MERGER ADDITIONS DEDUCTIONS 31.03.2005 31.03.2004 YEAR BACK 31.03.2005 31.03.2005 31.03.2004

INTANGIBLE ASSETS
BRANDS & TRADE
MARKS ÏÏÏÏÏÏÏÏÏÏÏÏÏ 47,515 210,000 0 0 257,515 4,639 12,757 0 17,396 240,119 42,876
GOODWILL ÏÏÏÏÏÏÏÏÏÏÏ 0 95,500 0 0 95,500 0 4,775 0 4,775 90,725 0
TANGIBLE ASSETS
FREEHOLD LAND ÏÏÏÏ 115,951 29,501 1,601 0 147,053 0 0 0 0 147,053 115,951
LEASEHOLD LAND ÏÏÏ 169,076 (0) 53,508 45,112 177,472 123,864 0 0 123,864 53,608 45,212
BUILDINGSÏÏÏÏÏÏÏÏÏÏÏ 87,555 37,449 12,938 0 137,942 15,949 4,240 0 20,189 117,753 71,606
PLANT &
MACHINERY ÏÏÏÏÏÏÏ 936,208 77,058 112,598 9,900 1,115,964 289,563 54,435 8,313 335,685 780,279 646,645
FURNITURE &
FITTINGSÏÏÏÏÏÏÏÏÏÏÏ 20,980 816 6,504 38 28,262 7,348 1,461 38 8,771 19,491 13,632
VEHICLES ÏÏÏÏÏÏÏÏÏÏÏÏ 44,082 1,177 8,304 7,034 46,529 14,465 4,217 2,429 16,253 30,276 29,617
LEASEHOLD
IMPROVEMENTS ÏÏÏ 20,833 0 14,681 0 35,514 4,638 3,759 0 8,397 27,117 16,195
TOTAL ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,442,200 451,501 210,134 62,084 2,041,751 460,466 85,644 10,780 535,330 1,506,421 981,734
PREVIOUS YEAR ÏÏÏÏÏ 1,225,733 0 226,328 9,861 1,442,200 416,018 54,003 9,555 460,466 981,734 809,715

NOTES:
1. VALUES WRITTEN UP ON REVALUATION:
(BASED ON APPROVED VALUERS' REPORT)
As on As on
31.12.1994/31.12.1998 31.12.1985

FREEHOLD LAND ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 85,422 Ì


LEASEHOLD LAND ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 122,828 Ì
BUILDING ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 15,292
PLANT & MACHINERY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 8,709
TOTALÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 208,250 24,001

2. LAND INCLUDES RS. 4,800 THOUSANDS FOR WHICH TITLE DEED IS STILL TO BE REGISTERED.

3. ADDITIONS TO PLANT & MACHINERY INCLUDES INTEREST OF RS. 5,121 THOUSANDS CAPITALISED
DURING THE YEAR.

As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
7. CAPITAL WORK IN PROGRESS (AT COST)
(i) PLANT & MACHINERY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 128,009 26,907
(ii) ADVANCES TO VENDORSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45,675 0
173,684 26,907

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Face As at As at
Value 31-03-2005 31-03-2004
Rs. in '000 Rs. in '000 Rs. in '000
8. INVESTMENTS Ì LONG TERM (AT COST)
A. FULLY PAID UP EQUITY SHARES IN BODIES
CORPORATE.
(i) TRADE Ì UNQUOTED (IN WHOLLY OWNED
SUBSIDIARIES) Ì WHYTEHALL INDIA
LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 180,000 0 86,400
(ii) NON-TRADE Ì UNQUOTED
B. NEW URBAN COOPERATIVE BANK LTD. ÏÏÏÏÏÏÏÏ 60 60 60
C. NATIONAL SAVINGS CERTIFICATES LODGED
WITH GOVERNMENT DEPARTMENTS AS
SECURITY ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23 23 30
83 86,490

Book Value Book Value

AGGREGATE VALUE OF INVESTMENTS:


QUOTED ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 0
UNQUOTED ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 83 86,490
83 86,490

NOTE:
(1) NO INVESTMENT IS HELD IN BODIES CORPORATE UNDER THE SAME MANAGEMENT.
(2) INVESTMENT ACQUIRED AND SOLD DURING THE YEAR: UNITS IN MUTUAL FUND Ì COST RS. 850 LACS.

As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
9. CURRENT ASSETS, LOANS AND ADVANCES
a) ACCRUED INCOME
INTEREST ACCRUED ON INVESTMENT
AND FIXED DEPOSITS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 700 328
ACCRUED INCOME ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,239 9,888
1,939 10,216
b) INVENTORIES
(i) MATERIALS (AT COST)
RAW MATERIALS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 253,961 62,626
PACKING MATERIALS ÏÏÏÏÏÏÏÏÏÏÏÏÏ 41,988 33,107
STORES & SPARE PARTS ÏÏÏÏÏÏÏÏÏÏÏ 32,593 74,581 21,981 55,088
TOOLS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 657 613
(ii) STOCK IN TRANSIT ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 839 0
(iii) STOCK IN TRADE (AT LOWER OF
COST AND MARKET VALUE)
FINISHED GOODS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 236,880 144,409
STOCK IN PROCESS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 39,720 276,600 26,061 170,470
606,638 288,797

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As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
c) SUNDRY DEBTORS
(UNSECURED)
DEBTS OUTSTANDING FOR A
PERIOD EXCEEDING SIX MONTHS
CONSIDERED GOOD ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 57,389 45,889
CONSIDERED DOUBTFUL ÏÏÏÏÏÏÏÏÏÏ 5,090 8,342
LESS: ADJUSTED AGAINST
PROVISIONS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,666 2,424 3,231 5,111
OTHER DEBTS CONSIDERED GOOD 555,270 496,465
615,083 547,465
d) CASH AND BANK BALANCES
CASH IN HAND ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,652 2,108
CHEQUES IN HAND ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 4,698
BALANCE WITH SCHEDULED
BANKS:
CURRENT ACCOUNTSÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 51,685 12,101
DEPOSIT ACCOUNTS* ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,508 5,057
SAVING BANK ACCOUNTS
(EMPLOYEES' SECURITY DEPOSIT) 35 35
67,880 23,999
* DEPOSITED WITH GOVERNMENT
DEPARTMENT AND BANKS AS
SECURITY/MARGIN MONEY ÏÏÏÏÏÏÏ 4,361 3,634

e) LOANS AND ADVANCES


(UNSECURED Ì CONSIDERED
GOOD, UNLESS OTHERWISE
STATED)
LOANS:ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 326 526
ADVANCES RECOVERABLE IN
CASH OR IN KIND OR FOR VALUE
TO BE RECEIVED:
CONSIDERED GOOD ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 900,060 752,798
CONSIDERED DOUBTFUL ÏÏÏÏÏÏÏÏÏÏ 3,173 3,173
LESS: ADJUSTED AGAINST
PROVISIONS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,173 0 3,173 0
CLAIMS AND DUTIES
RECOVERABLE FROM EXCISE
DEPARTMENTÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 131 130
EXCISE AND OTHER DEPOSITS ÏÏÏÏ 87,858 54,410
INCOME TAX PAYMENTS (NET OF
PROVISIONS) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23,501 9,837
SALES TAX PAID UNDER PROTEST 362 391
1,012,238 818,092

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As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
10. CURRENT LIABILITIES
CREDITORS
TRADE ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 256,439 240,093
OTHERS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 232,172 488,611 146,510 386,603
SECURITY DEPOSITS FROM DEALERS ÏÏÏÏÏÏÏ 36,247 23,757
SECURITY DEPOSITS FROM OTHERS ÏÏÏÏÏÏÏÏ 13,412 32,941
UNCLAIMED DIVIDEND** ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,792 4,174
OTHER LIABILITIES*ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,891 24,852
INTEREST ACCRUED BUT NOT DUE ÏÏÏÏÏÏÏÏÏ 2,681 103
562,634 472,430
0 13,600

*
INCLUDES DUE TO DIRECTORS
**
THE ACTUAL AMOUNT TO BE TRANSFERRED TO INVESTOR EDUCATION AND PROTECTION FUND WILL
BE DETERMINED ON THE DUE DATES

As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
11. PROVISIONS
DIVIDEND (INCLUDING TAX THEREON) ÏÏÏÏ 48,389 43,522
PROVISION FOR LEAVE ENCASHMENTÏÏÏÏÏÏ 15,295 11,443
CONTINGENCIES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 736 736
64,420 55,701

As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
12. SALES
RECTIFIED SPIRIT AND OTHER
ALCOHOLIC PRODUCTS.
(INCLUDING EXCISE DUTY RECOVERY
OF RS. 3,130,842 THOUSANDS
PREVIOUS YEAR RS. 2,642,240
THOUSANDS) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,926,744 5,077,599
PET BOTTLESÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,203 0
INCOME FROM OPERATIONS THROUGH
OTHER DISTILLERIES/BOTTLING
UNITSÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 461,158 438,853
EXPORT INCENTIVES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,923 6,009
OTHERS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 52,056 31,257
SELF CONSUMPTION:
PET BOTTLES ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20,884 0
BIO GAS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 126,586 110,844
POWERÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 67,890 43,754
7,675,444 5,708,316

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As at As at
31-03-2005 31-03-2004
Rs. in '000 Rs. in '000
13. OTHER INCOME
DIVIDEND (TDS RS NIL) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 47 208
EXCESS PROVISIONS WRITTEN BACK ÏÏÏÏÏÏÏ 299 588
INTEREST ON INCOME TAX REFUNDS ÏÏÏÏÏÏ 0 120
MODVAT CREDIT UTILISED ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,323 21,654
INSURANCE CLAIMS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 924 2,599
MISCELLANEOUS INCOME (INCL.
TDS RS 93,810, PREV. YEAR RS. 9,350) ÏÏÏÏÏÏ 6,626 4,925
LOAN WAIVER BY AMERICAN BEVERAGES
(MAURITIUS) LTD. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43,718 0
CASH DISCOUNT FROM VENDORS ÏÏÏÏÏÏÏÏÏÏ 1,545 1,315
HIRE CHARGESÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 840
SERVICE CHARGES (INCLUDING
TDS RS. 19,322 PREVIOUS YEAR RS. 59,547) 900 932
PROFIT ON SALE OF INVESTMENTS ÏÏÏÏÏÏÏÏÏ 0 264
PROFIT ON SALE OF FIXED ASSETS ÏÏÏÏÏÏÏÏÏ 1,314 368
67,696 33,813

As at As at
31-03-2005 31-03-2004
Rs. in '000