AMBIENCE LIMITED - Cmlinks.com

SECTION II: RISK FACTORS
An investment in equity shares involves a high degree of risk. You should carefully consider all the information
in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before making an
investment in our Equity Shares. You should read this section in conjunction with the sections titled “Our
Business” and “Management‘s Discussion and Analysis of Financial Condition and Results of Operations”
on pages 92 and 254, respectively, as well as the other financial and statistical information contained in this
Draft Red Herring Prospectus. Unless otherwise stated in the risk factors set forth below, we are not in a
position to quantify the financial or other risks mentioned therein. If any one, or some combination, of the
following risks were to occur, our business, results of operations and financial condition could be seriously
harmed, the trading price of the Equity Shares could decline and you may lose all or part of your investment.
The risks described below are not the only risks that we face. Additional risks not presently known to us or that
we currently believe to be immaterial could also have a material adverse effect on our business, results of
operations and financial condition.
Internal Risk Factors and Risks Relating to our Business
1. Our Promoter, Mr. Raj Singh Gehlot and certain of our Directors are involved in criminal
proceedings.
Our promoter, Mr. Raj Singh Gehlot and our Directors, Mr. Dayanand Singh and Mr. Mohan Singh, are
involved in certain criminal proceedings. Following the filing and registration of a first information report, the
State of Delhi filed a charge report before the Metropolitan Magistrate, New Delhi against Mr. Raj Singh
Gehlot, Mr. Dayanand Singh and others alleging the commission of offences under the Indian Penal Code, 1890,
specifically, the fabrication of conveyance documents concerning property no. C-7, Haus Khas Enclave, New
Delhi. The Magistrate, through his order dated July 5, 2007, has framed charges against the accused persons.
The matter is now listed for further proceedings on December 8, 2009. For details see “Outstanding Litigation
and Material Developments” on page 287.
There are also four other criminal proceedings involving Mr. Raj Singh Gehlot. These proceedings comprise a
claim for alleged threat to peace and tranquility which has been brought by a private party in relation to a
dispute regarding the ownership of a room at 2/21, Sarvapriya Vihar, New Delhi and claims alleging the
commission of offences under the Indian Penal Code, 1890 relating to cancellation of allotment of spaces at
Ambience Mall, Gurgaon and Ambience Mall, Vasant Kunj. Further, the State of Delhi has registered two first
information reports (“FIRs”) against Mr. Mohan Singh alleging the commission of offences under the Indian
Penal Code, 1890 in relation to a dispute that arose with his neighbor and an accident involving a labourer at the
Ambience Mall, Vasant Kunj. For details see “Outstanding Litigation and Material Developments” on page
287. Any adverse order could have could have an adverse effect on our Company‟s business.
2. Our Company and certain of its Subsidiaries, Promoters and Directors were subjected to search and
seizure operations conducted by the Indian income tax authorities.
Our Company, certain Subsidiaries, our Promoters (including some individuals constituting our Promoter
Group), certain Group Entities, and certain Directors (namely Mr. Dayanand Singh and Mr. Mohan Singh) (each
a “Person”, and collectively referred to as the “Persons”) were subject to a search operation dated October 10,
2007 by the Deputy Director of Income Tax (“DDIT”) at their respective registered/corporate offices and
residential premises wherein documents, cash and jewellery owned by the Persons were seized. After
completion of the investigation, each Person has received six notices dated February 2, 2009 from the Deputy
Commissioner of Income Tax (“DCIT”), under section 153A of the IT Act, wherein they were required, within
15 days of service of the notice, to prepare true and correct in come tax returns in respect of assessment years
2002-03, 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 (including the undisclosed income). In responses
dated March 12, 2009, each Person replied to the DCIT stating that the returns were in process and requesting a
filing extension in respect thereof. The extension request was denied in a letter from the Assistant Commissioner
of Income Tax (“ACIT”) dated July 7, 2009, and the ACIT issued six additional notices to each Persons
requiring them to furnish the returns for the assessment years mentioned above on or before July 20, 2009.
Accordingly, each Person filed a reply dated July 22, 2009 furnishing the required income tax returns.
10