REI Agro Limited LEAD MANAGERS TO THE ISSUE - IDBI Capital

TABLE OF CONTENTSSECTION I - GENERAL ........................................................................................................................... iiiDEFINITIONS AND ABBREVIATIONS .................................................................................................... iiiPRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA .......................... ixFORWARD LOOKING STATEMENTS ...................................................................................................... xSECTION II – RISK FACTORS ............................................................................................................... xiSECTION III – INTRODUCTION ............................................................................................................. 1SUMMARY OF FINANCIAL AND OPERATIONAL INFORMATION .................................................... 1THE ISSUE .................................................................................................................................................... 4GENERAL INFORMATION......................................................................................................................... 6OVERSEAS SHAREHOLDERS ................................................................................................................. 15CAPITAL STRUCTURE ............................................................................................................................. 17OBJECTS OF THE ISSUE .......................................................................................................................... 30STATEMENT OF TAX BENEFITS ........................................................................................................... 37SECTION IV – ABOUT OUR COMPANY ............................................................................................. 43INDUSTRY OVERVIEW ............................................................................................................................ 43OUR BUSINESS .......................................................................................................................................... 48SECTION V – OUR MANAGEMENT .................................................................................................... 64SECTION VI – FINANCIAL INFORMATION ...................................................................................... 69FINANCIAL STATEMENTS ...................................................................................................................... 69CERTAIN OTHER FINANCIAL INFORMATION ................................................................................... 89MARKET PRICE INFORMATION ............................................................................................................ 90MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS ....................................................................................................................................... 93SECTION VII – LEGAL AND OTHER INFORMATION ...................................................................104OUTSTANDING LITIGATIONS AND OTHER DEFAULTS .................................................................104GOVERNMENT AND OTHER APPROVALS .........................................................................................107MATERIAL DEVELOPMENTS ................................................................................................................110STATUTORY AND OTHER INFORMATION .........................................................................................111SECTION VIII – OFFERING INFORMATION ...................................................................................120TERMS OF THE ISSUE .............................................................................................................................120SECTION IX –STATUTORY AND OTHER INFORMATION ..........................................................145MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ....................................................145DECLARATION .......................................................................................................................................147

SECTION I - GENERALDEFINITIONS AND ABBREVIATIONSThe following list of defined terms is intended for the convenience of the reader only and is not exhaustive.Conventional and General TermsTermDescriptionCompanies Act : The Companies Act, 1956, as amendedCopyright Act : The Copyright Act, 1955, as amendedDepository : A depository registered with SEBI under the SEBI (Depository andParticipant) Regulations, 1996, as amended from time to time.Depositories Act : The Depositories Act, 1996, as amended from time to time.Financial Year/Fiscal : The period of 12 months beginning April 1 and ending March 31 of thatparticular year, unless otherwise statedIT Act : The Income Tax Act, 1961, as amendedIndian GAAP : The generally accepted accounting principles in IndiaIndustrial Policy : The industrial policy and guidelines issued by the Ministry of Industry,GoIListing Agreement : The equity listing agreements signed between our Company and theStock ExchangesRupees and Rs. : The lawful currency of IndiaSEBI Act : The Securities and Exchange Board of India Act, 1992, as amendedSEBI Regulations : The Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations, 2009, as amendedSecurities Act : The United States Securities Act of 1933, as amendedTakeover Code : The Securities and Exchange Board of India (Substantial Acquisition ofShares and Takeovers) Regulations, 1997, as amendedTrademarks Act : The Trademarks Act, 1999Weights & Measures Act : The Standard of Weights & Measures Act , 1976 as amendedIssue Related TermsTermDescriptionAbridged Letter of Offer : The abridged letter of offer to be sent to Eligible Equity Shareholders ofour Company with respect to this Issue in accordance with theprovisions of the SEBI Regulations and the Companies Act.iii

TermDescriptionAllottee(s) : The successful applicant(s) eligible for Allotment of Rights EquityShares pursuant to the IssueAllotment/Allotted : Unless the context otherwise requires, the allotment of Rights EquityShares pursuant to the Issue to the AllotteesBankers to the Issue : The bankers to the Issue being [●]Business Day : Any day, other than Saturday or Sunday, on which commercial banksare open for business.Composite ApplicationForm/CAF: The form used by an Investor to make an application for allotment ofRights Equity Shares pursuant to IssueConsolidated Certificate : In case of holding of Rights Equity Shares in physical form, ourCompany would issue one certificate for the Rights Equity Sharesallotted to one folioDesignated StockExchange/DSE: The Bombay Stock Exchange LimitedDraft Letter of Offer : This draft letter of offer dated September 30, 2009 filed with SEBI forits commentsEligible EquityShareholder(s): A holder(s) of Equity Shares as on the Record DateFirst and Final Call : First and Final call notice as shall be sent by our Company to each of theInvestors for making a payment of Rs. [●] towards the balance amountpayable under Payment Method 1Issue : The issue of [●] Rights Equity Shares for cash at a premium of Rs. [●]per Rights Equity Share aggregating upto Rs. 11,500 million to theEligible Equity Shareholders on rights basis in the ratio of [●] RightsEquity Shares for every [●] Equity Shares held as on the Record Date,i.e. [●]Issue Closing Date : [●]Issue Opening Date : [●]Issue Price : Rs. [●] per Equity ShareIssue Proceeds : The monies received by our Company pursuant to the Rights EquityShares which are Allotted pursuant to the IssueInvestor(s) : The Equity Shareholders of our Company on the Record Date i.e. [●],Renouncees and any other persons eligible to subscribe to the IssueLead Manager(s) : SBI Capital Markets Limited, Axis Bank Limited, Fortune FinancialServices (India) Limited and IDBI Capital Market Services LimitedLetter of Offer : The letter of offer dated [●] to be filed with the Stock Exchanges afterincorporating SEBI comments on this Draft Letter of Offeriv

DescriptionCERs : Certified emission reductionsCompliance Officer and CompanySecretary: Mr. Mandan MishraCorporate Office : The corporate office of our Company located at 58A/1, SainikFarm, New Delhi 110 062, IndiaDirector(s) : Any or all director(s) of our Company, as the context may requireEquity Share(s) : The equity share(s) of our Company having a face value of Re. 1,inter alia including such equity shares of our Companyoutstanding and fully-paid up, as on the Record Date, unlessotherwise specified in the context thereofGDR(s)/Global DepositoryReceipts: Global depository receipts issued by our Company representing 1Equity Shares (originally representing 2 Equity Shares each)each aggregating to US $ 7.13 million issued in November 2005Group Entities : Our Group Entities mean companies, firms, ventures, etc.promoted by the Promoters of our Company, irrespective ofwhether such entities are covered under section 370 (1)(B) of theCompanies Act or not.mandis : Organised Government monitored market places for agriculturalproduceMemorandum/Memorandum ofAssociation: Memorandum of Association of our CompanyPromoter(s) : Any or all of the promoter(s) of our Company, as defined in theSEBI Regulations and as the context may require, namely, (a) Mr.Sandip Jhunjhunwala, (b) Mr. Sanjay Jhunjhunwala, (c) Mrs.Koushalaya Devi Jhunjhunwala, (d) Mrs. Sangita Jhunjhunwala,(e) Mrs. Suruchi Jhunjhunwala, (f) Aspective Vanijya PrivateLimited, (g) Snehapushp Barter Private Limited, (h) SubhchintakVancom Private Limited, (i) Shree Krishna Gyanodaya FlourMills Private Limited, (j) REI Steel and Timber Private Limited,and (k) Jagdhatri Tracon Private LimitedPromoter Group : The Promoter Group of our Company as defined in the SEBIRegulationspucca artiyas : Third Party procurement representatives and agents of thecompany licensed under the applicable law, operating in mandisREI Six Ten : REI Six Ten Retail LimitedRegistered Office : The registered office of our Company located at Room No. 15B,Everest House, 46C Chowringhee Road, Kolkata-700 071, WestBengal, Indiavi

AbbreviationsTermDescriptionAGM : Annual General MeetingAS : Accounting Standards, as issued by the ICAIBPLR : Benchmark Prime Lending RateBSE : The Bombay Stock Exchange LimitedCAF : Composite Application FormCAGR : Compounded Annual Growth RateCDSL : Central Depository Services (India) LimitedCER/sCertified Emission Reduction(s)CFO : Chief Financial OfficerDEPB : Duty Entitlement Pass Book SchemeDP : Depository ParticipantEBIDTA : Earnings Before Interest, Depreciation, Taxes & AmortizationECS : Electronic Clearing ServiceECGC : Export Credit Guarantee CorporationEGM : Extraordinary General MeetingEPS : Earnings per shareFDI : Foreign Direct InvestmentFEMA : Foreign Exchange Management Act, 1999, as amended and any circulars,notifications, rules and regulations issued pursuant to the provisions thereofFI : Financial InstitutionFII(s) : Foreign Institutional Investors registered with SEBI under applicable lawsFIPB : Foreign Investment Promotion BoardFY : Financial Year endedGBP or £ : Great Britain PoundGDP : Gross Domestic ProductGoI : Government of IndiaHRD : Human Resource Developmentvii

TermDescriptionHUF : Hindu Undivided FamilyICAI : Institute of Chartered Accountants of IndiaISIN : International Securities Identification NumberITAT : Income Tax Appellate TribunalKwH : Kilowatt hourMICR : Magnetic Ink Character RecognitionMn : MillionMoU : Memorandum of UnderstandingN.A. : Not ApplicableNAV : Net asset valueNEFT : National Electronic Fund TransferNR : Non ResidentNRI(s) : Non Resident Indians, as defined in the Foreign Exchange Management (Deposit)Regulations, 2000, as amendedNSDL : National Securities Depository LimitedNSE : The National Stock Exchange of India LimitedOCB(s) : Overseas Corporate Body(ies)PAN : Permanent Account NumberRBI : Reserve Bank of IndiaRoC : Registrar of Companies, West Bengal, located at KolkataRTGS : Real time gross settlementSEBI : Securities and Exchange Board of IndiaSTT : Securities Transaction TaxTPA : Tonne per annumUSD or US$ : United States DollarVAT : Value Added Taxw.e.f. : With effect fromWTG : Wind Turbine Generatorsviii

SECTION II – RISK FACTORSAn investment in equity and equity related securities involves a high degree of risk. You should carefullyconsider all of the information in this Draft Letter of Offer, including the risks and uncertainties describedbelow, before making an investment. If any of the following risks actually occur, our business, financialcondition, results of operations and prospects could suffer, the trading price of our Equity Shares and theRights Equity Shares could decline and you may lose all or part of your investment. You should also payparticular attention to the fact that we are governed in India by a legal and regulatory environment whichin some material respects may be different from that which prevails in other countries. Our Company’sactual results could differ materially from those anticipated in these forward-looking statements as a resultof certain factors, including the considerations described below and elsewhere in this Draft Letter of Offer.The financial and other implications of material impact of risks concerned, wherever quantifiable, havebeen disclosed in the risk factors mentioned below. However, there are certain risks where the impact isnot quantifiable and hence the same has not been disclosed in such risk factors.Materiality:The risk factors have been determined on the basis of their materiality. The following factors have beenconsidered for determining their materiality:1. Some events may not be material individually but may be found material collectively.2. Some events may have a material impact qualitatively instead of quantitatively.3. Some events may not be material at present but may have material impacts in the future.A. MATERIAL LITIGATIONS WHICH MAY IMPACT OUR BUSINESS AND/ORPROFITABILITY1. SEBI has issued a show cause notice dated September 11, 2009, under Sections 11, 11B and11(4) of the SEBI Act read with Regulation 11 of the SEBI (Prohibition of Fraudulent andUnfair Trade Practices relating to Securities Market) Regulations, 2003, against our Company,(“SEBI Show Cause Notice”). Any unfavourable outcome in connection with the SEBI ShowCause Notice may adversely affect our operations, financial condition and profitability.Pursuant to the SEBI Show Cause Notice, SEBI has alleged that our Company has violatedSection 77 of the Companies Act, 1956 the and Regulation 3(b), (c), (d) and 4(1) of SEBI(Prohibition of fraudulent and unfair trade practices relating to securities market) regulations 2003.SEBI has called upon our Company to show cause as to why action should not be taken againstour Company under Sections 11, 11B and 11(4) of the SEBI Act read with Regulation 11 of theSEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market)Regulations, 2003. Our Company responded to the SEBI Show Cause Notice, vide its letter datedSeptember 24, 2009 and has applied to SEBI for passing consent orders in connection with theaforesaid matter, in terms of the SEBI Show Cause Notice and in accordance with the circulardated April 20, 2007 (Circular No. EFD/ED/Cir-1/2007) issued by SEBI. Further, anyunfavourable outcome in connection with the SEBI Show Cause Notice, inter-alia including anyadverse order issued by SEBI could adversely affect our operations, financial condition andprofitability. For further details please refer to the section entitled “Outstanding Litigations andOther Defaults” beginning on page 104 of this Draft Letter of Offer.2. Criminal Proceedings under the Prevention of Food Adulteration Act, 1954, have been initiatedagainst our Company and our Directors.xi

The Government of National Capital Territory of Delhi has initiated criminal proceedings (CaseNo. 82/PFA/DA/09) under the Prevention of Food Adulteration Act, 1954, against one Mr. SushilKumar, our Company, our Directors, Mr. Sandip Jhunjhunwala, Mr. Sanjay Jhunjhunwala, Dr.ING. N.K. Gupta, Mr. Asoke Chaterjee, and Mohit Enterprises, before the Hon’ble court of theAdditional Chief Metropolitan Magistrate, New Delhi, on alleged grounds that a sample of one ofthe products purchased by our Company from Mohit Enterprises for sale at the “6Ten” stores(prior to the scheme of arrangement for de-merger of our erstwhile retail undertaking becomingeffective), was found to be adulterated and misbranded by the Public Analyst pursuant to hisreport dated August 25, 2008. Our Company has filed an application to the Hon’ble court of theAdditional Chief Metropolitan Magistrate, New Delhi, seeking that a second counter part of theimpugned sample tested by the Public Analyst be sent to the Director, Central Food Laboratories,for analysis under Section 13(2) of the Prevention of Food Adulteration Act, 1954. Anyunfavourable outcome aforementioned proceedings could subject our officers and Directors tocriminal prosecution and also have a material adverse effect on the operations and profitability ofour Company, the value of which currently can not be quantified.3. A proceeding seeking winding up of our Company is pending final determination and disposalbefore the High Court at Calcutta.SRT Innovation Services Private Limited has filed a petition before the Hon’ble High Court atCalcutta, (“High Court”), (Company Petition No. 194 of 2009, under Sections 433, 434 and 439of the Act, seeking the High Court to direct our Company to be wound up, and an officialliquidator to be appointed in connection with our assets and properties. The aforenamed petitionerhas alleged that our Company is indebted to the petitioner for an alleged sum of Rs. 37,56,924/-pursuant to alleged services rendered by the petitioner to our Company. The petitioner has furtheralleged in his petition that our Company is not in a position to honour our liabilities owed to thepetitioner and accordingly, the petitioner has sought that our Company be wound up. Since theabove claim relates to our erstwhile retail undertaking which has been transferred to REI Six TenRetail Limited pursuant to a scheme of arrangement as approved by the Hon’ble High Court ofCalcutta, our Company has opposed the above petition. As on the date of this Draft Letter ofOffer, our Company has not received any intimation of filing a counter-statement from theaforenamed petitioner. Any unfavourable outcome of the aforementioned proceedings could havea material adverse effect on the operations and profitability of our Company, the value of whichcurrently can not be quantified.B. RISKS IN RELATION TO OUR COMPANY AND ITS ON GOING BUSINESSACTIVITIESRISKS INTERNAL TO THE BUSINESS AND OPERATIONS OF OUR COMPANY4. Our Company’s non compliance with documents executed with and/or in favour of our lenders,(“Financing Agreements”), would adversely affect our operations and financial condition.The Financing Agreements executed by our Company, contain various restrictive and/or financialcovenants and reporting requirements which if breached could also lead to defaults or crossdefaultsof the terms and conditions of the Financing Agreements. Such breaches/defaults/crossdefaultscould also adversely affect our operations and financial condition.A failure to observe the covenants under the Financing Arrangements or to obtain necessaryconsents thereunder may lead to the termination of credit facilities, the acceleration of all amountsdue under the relevant facilities and enforcement proceedings against the movable and immovableassets provided by our Company as security for repayment of the credit facilities. If ourCompany’s indebtedness is accelerated, our Company may not be able to repay its debt or borrowsufficient funds in a timely manner or at all, and/or at commercially favourable terms, which inxii

turn could affect our operations, financial condition and profitability. Further under the terms ofcertain Financing Agreements, the relevant lender entitled to change the constitution of our Board,inter-alia including appointment of new directors and/or removal of any existing Director of ourCompany, in the event of any default/cross-default thereunder. The enforcement of any remedyavailable to our lenders in the event of a default/cross-default, could adversely affect ouroperations, credit rating and financial condition.Our Company has failed to comply with certain provisions of the Financing Agreements executedwith Indian Renewable Energy Development Agency Limited, Industrial Development FinanceCompany Limited and ICICI Bank Limited. For further details please refer to the section entitled“Outstanding Litigations and Other Defaults” beginning at page 104 of this Draft Letter of Offer.These failures/breaches could adversely affect the operations, profitability and/or financialcondition of our Company.5. Our Promoters have pledged their Equity Shares as additional/collateral security under variousagreements executed with various lenders in connection with the credit facilities obtained fromthem. In the event of any default/cross default under the said agreements, the lenders mayenforce aforementioned pledges, which could result in a change in control of our Company.As per the disclosures made by our Promoters under the provisions of the Takeover Code inconnection with the details of the Equity Shares held by them, as on June 30, 2009 and July 27,2009 is approximately 33,751,530 Equity Shares, and 33,751,530 Equity Shares of our Companyrepresenting 11.68% and 10.58 %, respectively, of the paid-up equity share capital of ourCompany, held by our Promoters were pledged with banks and financial institutions. In the eventof any default/cross-default under the existing agreements executed in connection with the creditfacilities, the relevant lenders are entitled to seek to enforce the pledge on the Equity Shares heldby our Promoters and could sell such Equity Shares pledged to them in the open market. Suchenforcement of the pledge on the aforementioned Equity Shares could result in our Promoterslosing control of our Company. Any such change of control could significantly influence ourCompany’s business policies, operations and profitability.6. A change in consumption patterns of and the demand for Basmati rice would affect ourCompany’s operations and profitability.A significant portion of our Company’s revenues are generated from the sale of Basmati rice. Outof our total revenues of Rs 17,385.9 million for FY 2008 and Rs 24,520.9 million for FY 2009, thesale of Basmati rice accounted for 98.74% and 98.91% of the total revenue, respectively. OurCompany’s revenues and profitability are dependent upon the demand for Basmati rice in thedomestic and international markets. Any change in consumption patterns of Basmati rice or anyreduction in demand for Basmati rice processed by us could adversely affect our Company’soperations and profitability.7. Any fall in the price of Basmati rice could adversely affect our financial condition andprofitability.There is generally a considerably long period following the processing of the Basmati paddypurchased, before which the Basmati rice can actually be sold in the market. The quality ofBasmati rice after being processed improves with age. The price of Basmati rice would depend onthe quality and maturity of the Basmati rice. Currently, our Company has no means or methods ofhedging the price risk associated with our Basmati rice products. Accordingly, our Company maynot be able to recover its investment in the Basmati paddy if there is any fall in the price ofBasmati rice, which could adversely affect our profitability and financial condition.Further, the wholesale price of Basmati rice has a significant impact on our profitability. Basmatirice is subject to price fluctuations due to weather, natural disasters, domestic and foreign tradepolicies, shifts in supply and demand and other factors beyond our Company’s control. Thexiii

Basmati rice industry in India is highly fragmented and our ability to determine and control theprice of our Basmati rice products is limited. With the global food shortage in early 2008, Basmatirice prices increased from US$1,000 per metric tonne to almost US$2,000 per metric tonne in aspan of a few months. By mid June 2008, Basmati rice prices started to decrease and have sincesettled around US$1,200 to US$1,500 per metric tonne. Any prolonged decrease in Basmati riceprices could have a material adverse impact on our operations and profitability.8. The cultivation of Basmati paddy is seasonal in nature. Accordingly, our Company’s operationsand profitability could be adversely impacted if we are unable to obtain Basmati paddy in atimely manner or at all.The cultivation of Basmati paddy being seasonal in nature, the Basmati rice industry is dependenton the harvest of Basmati paddy, which occurs generally for only six months in the year (normallybetween the months of September to March every year). Although Basmati rice is not entirelydependent upon a successful monsoon, Basmati paddy production can be adversely effected by theconsistent failure of monsoons or by an epidemic or other similar factors. Further, farmerscurrently growing Basmati paddy, may shift their resources and efforts towards the cultivation ofother crops, resulting in a decline in Basmati paddy production. The aforementioned factors couldimpact the availability and current and future cost of Basmati paddy. The future growth of ourCompany‘s business is dependent upon its ability to procure quality Basmati paddy atcommercially viable prices. Our inability to procure desired quality of Basmati paddy, in a timelymanner or at all, and at competitive prices or our inability to pass an increase in the prices ofBasmati paddy on to our customers could adversely affect our operations and profitability.9. Our operations are subject to high working capital requirements. Our inability to obtain and/ormaintain sufficient cash flow, credit facilities and other sources of funding, in a timely manner,or at all, to meet our requirement of working capital or pay our debts, could adversely affect ouroperations, financial condition and profitability.Our operations require a substantial amount of working capital. We are required to obtain and/ormaintain adequate cash flows and funding facilities, from time to time, in order to, inter-alia,finance the purchase of Basmati paddy and other raw materials, upgrade and maintain ourmanufacturing and processing facilities. Basmati rice must be aged for 18 to 24 months from thetime the Basmati paddy is harvested to ensure most premium quality of the processed product. Assuch, our Company needs to maintain a sufficient stock of Basmati paddy and Basmati rice at alltimes , which leads to higher inventory holding costs and increased working capital requirements.Our aggregate working capital requirement for the FY 2009 and the FY 2008 was Rs. 31,804.2million and Rs. 24,622.2 million, respectively.Our Company’s working capital requirements are met principally by short-term debt availed frombanks and financial institutions and the issuance of equity and or debt securities pursuant toprivate or public offerings. Our inability to obtain and/or maintain sufficient cash flow, creditfacilities and other sources of funding, in a timely manner, or at all, to meet our requirement ofworking capital or pay our debts, could adversely affect our operations, financial condition andprofitability.10. Export duties or other export restrictions imposed by the Government of India could adverselyaffect our operations and profitability.During the FY 2008, the Government of India imposed an export duty of Rs. 8,000 per metrictonne on export of Basmati rice. Our Company paid an amount to Rs. 590.0 million of export dutyin FY 2008 which had adversely impacted the profitability of our exports and consequently hadaffected our profitability. While the export duty has since been lifted, any export duty or otherexport restrictions imposed by statutory and/or regulatory authorities in the future could adverselyaffect our operations and profitability.xiv

11. A significant portion of our export sales in the last Financial Year and the current FinancialYear are derived from certain customers from United Arab Emirates for which shipment wasmade to Iran.Since December, 2008, at the request of one of our customer in the United Arab Emirates, we havealso shipped Basmati rice to Iran. All the billings, however, for both the FY 2009 and the currentFinancial Year are conducted with the customer in the United Arab Emirates. In the FY 2009,Basmati rice shipped to Iran accounted for 17 % of our Company‘s total exports and 6.94% of ourCompany‘s total income. In the current Year, on a request of our customer(s) in the United ArabEmirates, for the period from April 1, 2009 to May 31, 2009, Basmati rice shipped to Iranaccounted for 19 % of our Company’s total exports and 3.96 % of our Company’s total income.We are required to ship our products to Iran, on orders placed by our customers in the United ArabEmirates. There can be no assurance that our Company would continue to procure orders forshipment of our products to Iran. Our failure to procure such orders and in sufficient quantities ina timely manner or at all in the future could adversely affect our profitability.12. Our Company’s business faces the prospect of increased competition if there is moreconsolidation in the fragmented Basmati rice sector which may reduce our Company’s marketshare and income.Increased consolidation and a more organised Basmati market could significantly increasecompetition to our Company and thereby reduce its market share and earnings.Basmati rice has historically been predominantly grown in the Indian states of Haryana, UttarPradesh, Uttaranchal and Punjab and in a part of the Punjab region located in Pakistan on accountof favourable climatic and geographic conditions required in connection with the agriculture ofBasmati rice. India’s Basmati rice production is significantly more than that of Pakistan. Thoughpresently Pakistani Basmati Rice generally does not compete directly with Indian Basmati Rice onaccount of its lower quality, our company may face increased competition from Pakistani BasmatiRice in future.13. Our Company relies on various agents for the procurement of sufficient Basmati paddy of thedesired quality for its production requirements. Any failure on the part of such agents toprocure Basmati paddy of desired quality and in sufficient quantities in a timely manner or atall may affect our operations and profitability.Our Company is dependent on agents traditionally called ‘pucca artiyas’ who are authorised by usto make purchases of raw material in local agricultural commodities markets called ‘mandis’.Inability on the part of such agents to procure the required quantities and/or the desired quality ofBasmati paddy, in a timely manner, or at all, could adversely affect our operations andprofitability. Further, our Company typically enters into oral agreements with such agents andaccordingly, we can not assure you that our Company would be able to enforce the obligations ofsuch agents under such oral agreements or be able to maintain these arrangements on substantiallythe same terms, if at all, which could have an adverse effect on our Company’s operations andprofitability.14. Our Company does not enter into any long term supply contracts with our Basmati ricecustomers.Our Company does not, as a matter of practice, enter into long-term supply contracts with ourcustomers for the sale of our Basmati rice products. Our Company carries on business with ourcustomers on the basis of purchase orders raised from time to time, and does not have any longtermcommitments from our customers to make purchases from our Company of our Basmati riceproducts. , There is no assurance that our Company will continue to receive purchase orders forxv

our Basmati rice products either on substantially the same terms or at all, which could have anadverse effect on our Company’s operations and profitability.15. Our operations and profitability is dependent upon the availability of timely transportation ofBasmati paddy and finished products.Our Company relies on a network of third party transporters for the transportation of Basmatipaddy to our processing facilities. Our Company purchases Basmati paddy from local marketsand suppliers deliver procured Basmati paddy to our Company. Our Company’s raw materials andfinished products are transported primarily in trucks to and from our Company’s processingfacilities. Failure to obtain adequate transportation facilities and in a timely manner or at all couldadversely affect our operations and profitability. Transportation strikes by members of variousIndian truckers’ unions have had in the past, and could again have in the future, an adverse affecton supplies and deliveries to and from our customers and suppliers. In addition, raw materials andproducts maybe lost or damaged in transit for various reasons including occurrence of accidents ornatural disasters. There may also be delay in delivery of raw materials and products which mayalso affect our business and results of operation negatively. An increase in the freight costs orunavailability of freight for transportation of products to export markets may have an adverseeffect on our business and results of operations.16. Our profitability may be adversely affected in the event any investments made by our Company,other than in connection with the business of processing Basmati rice, may not yield favourableresults.Our Company has and may continue to invest in businesses other than those in connection withthe business of processing Basmati rice and matters incidental thereto. The total investments madeby our Company as at March 31, 2009 aggregated to approximately 2.86% of the total assets ofour Company. We cannot assure that such investments made by us would yield desired results.Our Company from time to time invests in the equity securities of unlisted and listed companies.Our investment in such companies are subject to a number of significant risks that arise from thenature of their businesses. Further, our Company typically holds a minority shareholding in suchcompanies and consequently does not exercise control over the affairs of such companies. OurCompany’s investment in listed equity securities of companies are subject to fluctuations of themarket price of such securities and, therefore, a significant decline in the market price of suchequity securities could adversely affect our profitability. If our Company is unable to benefit fromthe synergies or efficiencies expected from these investments, or if such investments do not yielddesired results, our profitability may be adversely affected.17. Our inability to procure and/or maintain adequate insurance cover in connection with ourprocessing facilities and other assets may adversely affect our operations and profitability.Our operations in connection with Basmati rice business are subject to inherent risks, such asburglary and house break-ins, defects, malfunctions and failures of equipment, fire and naturaldisasters. Our insurance may not be adequate to completely cover any or all our liabilities. Further,there is no assurance that the insurance premiums payable by us will be commercially justifiable.Our inability to procure and/or maintain adequate insurance cover in connection with our business/assets may adversely affect our operations and profitability.18. Any prolonged business interruption at our manufacturing facilities could have a materialadverse effect on our business.Irregular or interrupted supply of power or water, electricity shortages or government intervention,particularly in the form of power rationing are factors that could adversely affect our operations.xvi

If there is an insufficient supply of electricity or water to satisfy our requirements or a significantincrease in electricity prices, we may need to limit or delay our production, which could adverselyaffect our business, financial condition and results of operations. There is no assurance that wewill always have access to sufficient supplies of electricity in the future to accommodate ourproduction requirements and planned growth.19. Our success significantly depends on our management and operational teams and other skilledprofessionals. If we fail to retain, motivate and/or attract such personnel, our business may beunable to grow and our revenues could decline, which may decrease the value of our EquityShares.We are dependent on the senior members of our management and operational team for ourcontinued success and growth. Our ability to procure orders and to obtain new clients depends inlarge part on our ability to attract, train, motivate and retain highly skilled professionals. If wecannot hire and retain the qualified personnel, our ability to continue to expand may be impairedand our revenues could decline. Further, we may not be able to redeploy and retrain our employeesto keep pace with continuing changes, evolving standards and changing client preferences.20. An inability to manage our Company’s growth could disrupt its business, results of operationsand financial condition.Our Company has experienced significant growth in terms of production, income, and expandingits customer base. In the FY 1999, our Company’s Basmati rice production was 27,499 metrictones generating a total income of Rs. 827.6 million. By FY 2009, our Company’s Basmati riceproduction increased to 4,29,889 metric tonnes, with total income of Rs. 24,520.9 million. OurCompany also plans to penetrate new markets and increase its export sales. Our Company’scontinued growth places significant demands on our management and resources. In the event thatwe decide to implement any expansion strategies in the future, there can be no assurance that ourCompany will be able to execute such expansion strategies in a timely manner or at all. Anyfailure to do so could adversely affect our operations and profitability.21. We may be affected by labour strikes or other disruptions in connection with labor that couldadversely affect our operations, profitability and financial condition.There can be no assurance that we will not experience labour unrest in the future, which may delayor disrupt our operations. If work stoppages, work slow-downs or lockouts at our facilities occuror continue for a prolonged period of time, our results of operations and financial condition couldbe adverse affected.22. We are exposed to foreign exchange fluctuations and other exchange control risks.We have material exposure to foreign exchange related risks since a portion of our revenueearnings and expenses are in foreign currencies. Approximately, 18.40% and 41.20% of our totalsales for FY 2008 and FY 2009 were in foreign currency. Approximately 6.58% and 0.49 % ofour total assets were in foreign currencies for FY 2009 and FY 2008, respectively andapproximately 1.82% and 3.24% of our liabilities were in foreign currency, for FY 2009 and FY2008, respectively. Any appreciation or depreciation of the Indian Rupee against these currenciescan impact the profitability of the business. Translation differences arising out of conversion ofthese assets into Indian Rupees can also impact the profitability for that period. We may from timeto time be required to make provisions for foreign exchange fluctuation in accordance withaccounting standards.Devaluation or depreciation of the Rupee against other currencies may increase the cost of ourborrowings and repayment of indebtedness and reduce our net income. Further, we havexvii

• failure by our Company to fulfill our obligations under any of the Power PurchaseAgreements or obtaining and maintaining relevant permissions/approvals/certifications and/orconsents for operating our wind energy turbines and in connection with the generation ofwind energy;• inadequate wind velocity to generate power; or• failure of the corporate entity leasing the Gujarat wind power project in paying its leasecharges; or• failure on our part to operate and maintain our wind turbines in a cost effective manner26. If we are unable to obtain the necessary funds for our growth plans, our business andoperations will be adversely affected.Our funding requirements for expanding our operations are substantial, and our ability to financethese plans is subject to a number of risks, contingencies and other factors, some of which arebeyond our control, including general economic and capital markets conditions and our ability toobtain financing on acceptable terms.There can be no assurance that debt or equity financing or our internal accruals will be available orsufficient to meet the funding of our growth plans.Our ability to obtain required capital on acceptable terms is subject to a variety of uncertainties,including:• limitations on our ability to incur additional debt, including as a result of prospective lenders’evaluations of our creditworthiness and pursuant to restrictions on incurrence of debt in ourexisting and anticipated credit facilities;• investors' and lenders' perception of, and demand for, debt and equity securities of Basmatirice processing companies, wind farms, as well as the offerings of competing financing andinvestment opportunities in India by our competitors;• whether it is necessary to provide credit support or other assurances from our Promoter onterms and conditions and in amounts that are commercially acceptable to them;• limitations on our ability to raise capital in the capital markets and conditions of the Indian,U.S. and other capital markets in which we may seek to raise funds; and• our future results of operations, financial condition and cash flows.Any inability to raise sufficient capital to fund our growth plans could have a material adverseeffect on our business and results of operations. For details, please refer to the section entitled“Objects of the Issue” beginning on page 30 of this Draft Letter of Offer.27. We have contingent liabilities of Rs. 8.4 million as at March 31, 2009As on March 31, 2009, the contingent liabilities of our Company are as under:xix

35. Our Company’s ability to raise foreign capital may be constrained by Indian law.As an Indian company, our Company is subject to exchange controls that regulate borrowing inforeign currencies. Such regulatory restrictions limit our Company’s financing sources and hencecould constrain its ability to obtain financing on competitive terms and refinance existingindebtedness. In addition, our Company cannot assure you that the required approvals will begranted to it without onerous conditions, if at all. Limitations on raising foreign debt may have anadverse effect on our Company’s business growth, financial condition and results of operations.36. Shareholders will bear the risk of fluctuations in the price of our Equity Shares.The price of our Equity Shares on the Indian stock exchanges may fluctuate after this offering as aresult of several factors, including: volatility in the Indian and global securities market; operationsand performance of our Company; performance of our competitors; adverse media reports on ourCompany; changes in the estimates of our Company’s performance or recommendations byfinancial analysts; significant developments in India’s economic liberalization and deregulationpolicies; and significant developments in India’s fiscal and environmental regulations. There canbe no assurance that the prices at which our Equity Shares are initially traded will correspond tothe prices at which our Equity Shares will trade in the market subsequently.37. There are restrictions on daily movements in the price of our Equity Shares, which mayadversely affect a shareholder’s ability to sell, or the price at which it can sell Equity Shares at aparticular point in timeOur Company is subject to a daily circuit breaker imposed by all stock exchanges in India whichdoes not allow transactions beyond certain volatility in the price of our Equity Shares. This circuitbreaker operates independently of the index-based market-wide circuit breakers generally imposedby SEBI on Indian Stock Exchanges. The percentage limits on our Company’s circuit breakers areset by the BSE and the NSE. The BSE and the NSE does not inform our Company of thepercentage limit of such circuit breakers and may change it without our Company’s knowledge.This circuit breaker effectively limits the upward and downward movements in the price of ourEquity Shares. As a result of this circuit breaker, there can be no assurance regarding the ability ofour Company’s Equity Shareholders to sell our Equity Shares or the price at which shareholdersmay be able to sell their Equity Shares at a particular point in time.38. Fluctuation in the exchange rate between the Rupee and any other currency could have amaterial adverse effect on the value of our Equity Shares, independent of our Company’soperating results.Our Equity Shares are quoted in Rupees on the BSE and the NSE. Any dividends in respect of ourEquity Shares will be paid in Rupees and may subsequently be converted into other currencies forrepatriation to any non-resident Shareholder. Any adverse movement in exchange rates during thetime it takes to undertake such conversion may reduce the net dividend to investors. In addition,any adverse movement in exchange rates during a delay in repatriating outside India the proceedsfrom a sale of Equity Shares, for example, because of a delay in regulatory approvals that may berequired for the sale of Equity Shares may reduce the net proceeds received by shareholders.Further any fluctuations in the exchange rates between the Rupee and any other currency mayadversely affect the value of our Equity Shares.xxii

39. Future issuances or sales of our Equity Shares could significantly affect the trading price ofour Equity Shares, and may dilute your shareholding in our Company.The future issuances of Equity Shares by our Company or the disposal of Equity Shares by any ofthe major shareholders of our Company or the perception that such issuance or sales may occurmay significantly affect the trading price of our Equity Shares. Further, any issuance of any EquityShares pursuant to the conversion or exchange of securities of our Company, or otherwise, maydilute your shareholding in our Company.There can be no assurance that our Company will not issue further Equity Shares or that ourPromoters will not dispose of, pledge or otherwise encumber their Equity Shares.40. Foreign investors are subject to foreign investment restrictions under Indian law that limit ourCompany’s ability to attract foreign investors, which may adversely impact the market price ofour Equity Shares.Under the foreign exchange regulations currently in force in India, transfers of Equity Sharesbetween non-residents and residents are freely permitted (subject to certain restrictions) if theycomply with the pricing guidelines and reporting requirements specified by the RBI. If the transferof Equity Shares, which are sought to be transferred is not in compliance with such pricingguidelines or reporting requirements or falls under any of the exceptions referred to above, thenthe prior approval of the RBI will be required. Additionally, shareholders who seek to convert theRupee proceeds from a sale of Equity Shares in India into foreign currency and repatriate thatforeign currency from India will require a no objection/ tax clearance certificate from the incometax authority. Our Company cannot assure investors that any required approval from the RBI orany other statutory and/or regulatory authority or agency can be obtained on any particular termsor at all.C. RISKS IN CONNECTION WITH THE ISSUE AND THE OBJECTS OF THE ISSUE41. The requirement and proposed utilisation of proceeds of the Issue have not been appraised byany bank, financial institution or other independent agency.The fund requirement and utilisation of the proceeds of the Issue as specified in the sectionentitled “Objects of the Issue” beginning on page 30 of this Draft Letter of Offer are based oninternal management estimates and has not been appraised by any bank, financial institution orother independent agency. The actual operations may be different from management estimates andour Company may not be able to deploy funds as planned. Accordingly, the management will havesignificant flexibility in applying the proceeds received by us from the Issue. This may affect ourresults of operation. For details please refer to the section entitled “Objects of the Issue” beginningon page 30 of this Draft Letter of Offer.42. Our inability to obtain consents/no-objections from our lenders for an enhanced issue size, in atimely manner or at all could adversely affect the Issue, our operations and financialconditions.Our Company is required to obtain prior no-objection/consents from some of theinstitutions/banks who have lent money/sanctioned loans to our Company. Our Company hasobtained no-objection/consents from the relevant lenders in connection with the Issue. However,some of these no objection/consents are subject to a maximum issue size of Rs. 7,500 million. Wehave reapplied to the aforesaid lenders for obtaining a no-objection/consent for raising more thanRs. 7,500 million pursuant to the Issue, (“NOCs for Enhanced Limits”) in light of our estimatedrequirement of funds and the proposed objects of the Issue. We are awaiting receipt of such NOCsfor Enhanced Limits. Our inability to obtain such NOCs for Enhanced Limits in a timely manneror at all, may adversely affect our operations, financial condition and our ability to raise sufficientxxiii

funds for the purposes as stated in the section entitled “Objects of the Issue” beginning on page 30of this Draft Letter of Offer.43. There is no guarantee that the Rights Equity Shares issued pursuant to the Issue will be listedon the BSE and the NSE in a timely manner or at all.In accordance with Indian law and practice, permission for listing and trading of the Rights EquityShares issued pursuant to the Issue will not be granted until after such Rights Equity Shares havebeen issued and allotted. Such approval will require all other relevant documents authorising theissuing of Rights Equity Shares to be submitted. There could be a failure or delay in listing theRights Equity Shares on the BSE and the NSE. Any failure or delay in obtaining the approvalwould restrict your ability to dispose of your Rights Equity Shares. Further, historical tradingprices, therefore, may not be indicative of the prices at which the Rights Equity Shares will tradein the future.44. Investors choosing Payment Method 1 in the Issue are exposed to certain risks.The Issue Price of our Rights Equity Shares is Rs. [●] per Rights Equity Share. The Investors havethe option, to pay 100% of the Issue Price on application or pay [●] % of the Issue Price onapplication, and the balance [●]%of the Issue Price on the First and Final Call. The partly paid-upRights Equity Shares offered under the Issue will be traded under separate ISINs for the period asmay be applicable prior to the record date for the First and Final Call. An active market for tradingmay not develop for the partly paid-up Rights Equity Shares and, therefore, the trading price of thepartly paid-up Rights Equity Shares (for Investors who opt for Payment Method 1) may be subjectto greater volatility than our fully-paid Rights Equity Shares. Further, Investors in this Issue willbe required to pay the money due on the First and Final Call even if, at that time, the market priceof our Rights Equity Shares is less than the Issue Price. If the Investor fails to pay the balanceamount due with any interest that may have accrued thereon after notice has been delivered by ourCompany, then any of our Rights Equity Shares in respect of which such notice has been givenmay, at any time thereafter, before payment of the call money and interest and expenses due inrespect thereof, be forfeited by a resolution of our Board to that effect. Such forfeiture shallinclude all dividends declared in respect of such forfeited Rights Equity Shares and actually paidbefore such forfeiture.45. The offer, issuance and allotment of Rights Equity Shares, including any unsubscribed and/orrenounced Rights Equity Shares would be subject to our Company obtaining appropriateclarifications/approval from the RBI in connection with (a) the offer, issuance and allotment ofunsubscribed and/or renounced Rights Equity Shares to Non Residents, and (b) the issuanceand allotment of partly-paid up Rights Equity Shares to Non Residents.Pursuant to a letter dated September 29, 2009 our Company has sought a clarification/ approvalfrom the RBI in connection with (a) the offer, issuance and allotment of Rights Equity Shareswhich remain unsubscribed and/or are renounced by the Eligible Equity Shareholders, to NonResidents, and, (b) the issuance and allotment of Rights Equity Shares carrying an option toreceive payments in relation to the Rights Equity Shares, through multiple calls under PaymentMethod 1. Accordingly, the offer, issuance and allotment of Rights Equity Shares which remainunsubscribed and/or are renounced by the Eligible Equity Shareholders, to Non Residents, will besubject to our Company obtaining the aforesaid clarification/approval from the RBI in this regardprior to the date of the Final Letter of Offer. Further, Non Residents can opt for subscription ofRights Equity Shares under Payment Method 1 only if our Company has obtained theaforementioned clarification/approval from the RBI in connection with the issuance and allotmentof partly-paid up Rights Equity Shares to Non Residents prior to the date of the Letter of Offer tobe filed with the Designated Stock Exchange.xxiv

46. Persons resident outside India subscribing to the Rights Equity Shares offered pursuant to theIssue are subject to risks in connection with (i) exchange control regulations, and, (ii)fluctuations in foreign exchange rates.Various statutory and regulatory requirements and restrictions apply in connection with the EquityShares including Rights Equity Shares held by persons resident outside India, (“ExchangeControl Regulations”). Amounts payable to persons resident outside India holding the EquityShares, on dividend paid/payable in connection with such Equity Shares would accordingly besubject to prevailing Exchange Control Regulations. Any change in the Exchange ControlRegulations may adversely affect the ability of such persons resident outside India to convert suchamounts into other currencies, in a timely manner or at all. Further, fluctuations in the exchangerates between the Indian rupee and other currencies could adversely affect the amounts realized bypersons resident outside India on payment of dividend on the Equity Shares held by them.47. Our Board of Directors shall have the discretion to allot Rights Equity Shares to persons whoare not Eligible Equity Shareholders if the Issue is under-subscribed.After taking into account allotment to be made to Eligible Equity Shareholders in accordance withthe terms of this Draft Letter of Offer if there is any unsubscribed portion in the Issue, anyadditional Rights Equity Shares shall be disposed off by the Board, in such manner as they thinkmost beneficial to our Company and the decision of the Board in this regard shall be final andbinding. For further details please refer to “Basis of Allotment - Terms of the Issue” beginning onpage 133 of this Draft Letter of Offer.48. The Underwriters to the Issue may not be able to honor their underwriting commitments.Our Company is currently contemplating entering into an Underwriting Agreement with theUnderwriters for underwriting the Rights Equity Shares offered through this Issue upto anaggregate amount of Rs [●] million. Although our Company shall ensure that the Underwritersappointed shall have sufficient resources to enable them to discharge their underwritingobligations in full, there can be no assurance that the Underwriters to the Issue will be able to fulfiltheir entire underwriting obligations in connection with the Issue.Prominent Notes• Our net worth was Rs. 6,022.3 million, as per the audited financial statements of our Company asat March 31, 2009 disclosed in the section titled “Financial Statements” beginning on page 69 ofthis Draft Letter of Offer.• For details of transactions between our Company and our Group Entities in the last one yearpreceding the date of filing this Draft Letter of Offer with SEBI please refer to the section entitled“Financial Statements” beginning on page 69 of this Draft Letter of Offer.• There are no financing arrangements whereby our Promoter Group, the Directors of companiesforming a part of our Promoters, our Directors and their relatives, (“Financier”), have financedthe purchase by any other person of securities of our Company other than in the normal course ofthe business of the Financier during the period of six months immediately preceding the date offiling this Draft Letter of Offer with SEBI.• All information shall be made available by the Lead Managers and our Company to the existingshareholders of the company and no selective or additional information would be available only toa section of the investors in any manner whatsoever.• The lead manager and our Company shall update this Draft Letter of Offer and keep theshareholders and the public informed of any material changes till the listing and tradingxxv

commencement, and our Company shall continue to make all material disclosures as per the termsof the listing agreement.• Investors may contact Compliance Officer or the Lead Managers for any complaints pertaining tothe Issue.xxvi

SECTION III – INTRODUCTIONSUMMARY OF FINANCIAL AND OPERATIONAL INFORMATIONThe following table set forth below indicates a summary of the financial information derived from outstandalone financial statements as of and for FY 2009. Our Financial Statements have been prepared inaccordance with the Indian GAAP and are presented in the section titled “Financial Statements” beginningon page 69 of this Draft Letter of Offer. The summary financial information presented below should beread in conjunction with the financial statements and the notes thereto.A. ASSETS AND LIABILITIES AS AT MARCH 31, 2008 AND MARCH 31, 2009Rs. in millionsParticularsAs at March31, 2008As at March31, 2009A FIXED ASSETSGross Block 4,196.13 4,261.29Less: Depreciation 568.98 774.70Net Block 3,627.15 3,486.59Less: Revaluation Reserve - -Net Block after adjustment for Revaluation Reserve 3,627.15 3,486.59Capital Work in Progress 236.54 269.83Total Fixed Assets (A) 3,863.69 3,756.42B INVESTMENT (B) 1,037.93 1,107.93C CURRENT ASSETS, LOANS AND ADVANCESInventories 16,522.75 23,100.80Sundry Debtors 4,490.74 5,891.62Cash and Bank Balance 125.34 178.52Loans and Advances 4,205.12 4,680.39Total (C) 25,343.95 33,851.33D LIABILITIES AND PROVISIONSSecured Loans 20,361.99 24,498.37Unsecured Loans 2,798.40 5,250.00Current Liabilities 411.28 1,649.34Provisions 310.51 397.83Deferred Tax Liabilities 910.59 897.89Total (D) 24,792.77 32,693.43E NET WORTH (A+B+C-D) 5,452.80 6,022.25F REPRESENTED BYA Share Capital 689.03 689.03Share Application MoneyReserve & Surplus~ Securities Premium 1,989.58 2,002.28~ General Reserve 2,600.00 3,300.00~ Surplus 174.19 30.94Less : Revaluation Reserve - -B NET RESERVE & SURPLUS (Net of Revaluation Reserve) 4,763.77 5,333.22C Miscellaneous Expenditure - -NET WORTH (A+B-C) 5,452.80 6,022.251

B. STATEMENT OF PROFIT AND LOSS AS AT MARCH 31, 2008 AND MARCH 31, 2009Rs. in millionsParticularsYear EndedMarch 31,2008Year EndedMarch 31,2009INCOMESALESOf Product manufactured by the Company 17,350.12 21,235.18Of Product traded by the Company - 3,247.09Increase / (Decrease) in Stock 874.20 1,830.64Other Income 35.78 38.61Total 18,260.10 26,351.52EXPENDITURERaw Material Consumed 13,821.36 19,780.24Manufacturing Expenses 461.04 577.66Personnel Expenses 118.89 127.73Other Operating Expenses 652.97 1,371.53Excise Duty - -Misc. and Deferred Revenue Exp. W/off - -Total 15,054.26 21,857.16Profit before Interest, Depreciation and Tax 3,205.84 4,494.36Depreciation 199.07 212.86Profit before Interest and Tax 3,006.77 4,281.50Interest and Finance Charges 1,773.73 3,328.32Loss on Sale of Investment / Asset 0.06 -Net Profit Before tax and extra ordinary Items 1,232.98 953.18Provision for TaxationCurrent Tax~ Income Tax 200.00 336.00~ Fringe Benefit Tax 0.95 0.80Tax for Earlier Years 1.50 7.10Deferred Tax - -Net Profit After Tax and before extra ordinary items 1,030.53 609.28Proposed Dividend & Tax Thereon & Depreciation WrittenBack 103.26 52.53Prior Period ItemExtra ordinary ItemNet Profit after Tax after adjusting prior period item and Extraordinary Item 927.27 556.75Note :The Hon’ble Kolkata High Court vide its order dated 20 .06.2007 has allowed the company toutilize the Securities Premium Account towards meeting Deferred Tax Liability / Assets computedas per the Accounting Standard (AS-22) “ Accounting of Taxes on Income” prescribed by TheICAI. Accordingly the Securities Premium Account has been utilized towards adjustment ofDeferred Tax thereafter from the Financial Year 2006-2007.2

C. CASH FLOW STATEMENT ANNEXED TO THE BALANCE SHEET AS AT MARCH 31,2008 AND MARCH 31, 2009As at March 31,2008Rs. in millionsAs at March 31,2009CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax and Extraordinary Items 1,232.99 953.18Adjustments for:Depreciation 199.07 212.86Other Income (2.83) (4.58)Loss on Sale of Assets 0.06 -Interest Paid 1,773.73 3,328.32Operating Profits before Working Capital Changes 3,203.03 4,489.79Adjustments For:Inventories (7,308.07) (6,578.04)Trade & Other Receivables 2.87 (1,400.88)Loan and Advance (2,937.32) (372.40)Trade and other Payable 32.23 1,240.25Cash Generated From Operations (7,007.26) (2,621.29)Income Tax Paid (201.70) (310.92)Cash Flow Before Extraordinary Items (7,208.96) (2,932.21)Extraordinary items (Prior Year Adjustments) -Net Cash From Operating Activities (A) (7,208.96) (2,932.21)CASH FLOW FROM INVESTING ACTIVITIESCapital Work in Progress 401.16 (33.28)Sale / ( Purchase ) of Fixed Assets (915.93) (72.30)Sale / (Purchase) of Investment (1,032.10) (70.00)Other Income 2.83 4.58Deferred Revenue ExpenditureNet Cash used for Investing Activities (B) (1,544.04) (171.01)CASH FLOW FROM FINANCING ACTIVITIESNet Proceeds / Repayments of long term loans 10,640.45 6,587.97Interest Paid (1,773.73) (3,328.32)Dividend including Dividend tax (18.72) (103.26)Net Cash from Financing Activities (C) 8,848.00 3,156.39Net Increase in Cash and Cash Equivalents (A+B+C) 95.00 53.18Cash and Cash Equivalents at beginning of the Year 46.30 125.34Less : Transferred to resulting Co. on account of Demerger 15.96 -Cash and Cash Equivalents at end of the Year 125.34 178.523

THE ISSUEThe Board of Directors of our Company has pursuant to a resolution passed at their meeting held onSeptember 9, 2009, authorised this offer of Rights Equity Shares on a rights basis.The following is a summary of the Issue. This summary should be read in conjunction with, and is qualifiedin it’s entirely by, more detailed information in the chapter titled “Terms of the Issue” beginning on page121 of this Draft Letter of Offer.Rights Equity Shares beingoffered by our CompanyRights Entitlement for RightsEquity SharesRecord DateFace Value per Rights EquitySharesIssue Price per Rights EquityShareEquity Shares outstandingprior to the IssueEquity Shares outstanding afterto the IssueTerms of the Issue[●] Rights Equity Shares[●] Rights Equity Shares for every [●] Equity Shares held on theRecord Date[●]Re. 1Rs. [●] at a premium of Rs. [●] per Rights Equity Share318,975,920 Equity Shares[●] Equity SharesFor more information, please refer to the section entitled “Terms ofthe Issue” beginning on page 121 of this Draft Letter of Offer.Payment terms 1The payment terms available to the Investors are as follows:Amount payable per Rights Payment Method 1 2 Payment Method 2Equity Share (Rs.)Face Value Premium Total Face Value Premium Total (Rs.)(Re.) (Rs.)(Re.) (Rs.)On Application [●] [●] [●] 1.00 [●] [●]First and Final [●] [●] [●] - - -Call 3Total 1.00 [●] [●] 1.00 [●] [●]The investors shall be required to make the balance payment towards the First and Final Call by the duedate which shall be separately notified by our Company.1 No applicant can select both payment methods. For details on the payments methods see the sectionentitled “Terms of the Issue” beginning on page 121 of this Draft Letter of Offer.2Non Residents can opt for subscription of Rights Equity Shares under Payment Method 1 only if ourCompany has obtained a clarification/approval from the RBI in connection with the issuance and allotmentof partly-paid up Rights Equity Shares to Non Residents prior to the date of the Letter of Offer to be filedwith the Designated Stock Exchange. For further details please refer to risk factors no. 44 and 45 asdetailed in the section entitled “Risk Factors” beginning on page xi of this Draft Letter of Offer.3Since our Company will be appointing a monitoring agency in terms of Regulation 16 of the SEBIRegulations, our Company is not required to call the outstanding subscription monies within 12 months4

from the date of allotment of the Rights Equity Shares pursuant to this Issue. The call shall be structured insuch a manner that the entire call money is called and will be payable within 24 months from the date ofallotment of Rights Equity Shares in this Issue. If the Investors fail to pay the call money within 24 months,the application money already paid shall be forfeited.The Investors should indicate the manner of payment, i.e., Payment Method 1 or Payment Method 2in the CAF. No Investor can select both payment methods in a CAF. In case no payment method isselected, then the default payment method shall be Payment Method 2.Payment Method 11. Non Residents can opt for subscription of Rights Equity Shares under Payment Method 1 only ifour Company has obtained a clarification/approval from the RBI in connection with the issuanceand allotment of partly-paid up Rights Equity Shares to Non Residents prior to the date of theLetter of Offer to be filed with the Designated Stock Exchange. All other Investors/categories ofInvestors can opt for this method.2. While making an application, the Investor shall make a payment of Rs. [●] per Rights EquityShare.3. Out of the amount of Rs. [●] paid on application, Rs. [●] would be adjusted towards the face valueof the Rights Equity Shares and Rs. [●] shall be adjusted towards the share premium of the RightsEquity Shares. Out of the amount of Rs. [●] paid on the First and Final Call, Rs. [●] would beadjusted towards the face value of the Rights Equity Shares and Rs. [●] shall be adjusted towardsthe share premium of the Rights Equity Shares.4. Notices for the payment of call money for the First and Final Call shall be sent by our Company tothe Eligible Equity Shareholders of the partly paid-up Shares on the record dates fixed for therespective call. The calls shall be structured in such a manner that the entire call money is calledand will be payable within 24 months from the date of allotment of Rights Equity Shares in thisIssue. If the investors fail to pay the call money within 24 months, the application money alreadypaid shall be forfeited.5. The Rights Equity Shares in respect of which the balance amount payable remains unpaid shall beforfeited, at any time after the due date for payment of the balance amount due.6. Our Company reserves the right to adjust the amount received over and above the Applicationmoney towards the call money if such adjustment makes the total Rights Equity Shares allotted byour Company is fully paid up Rights Equity Shares.Payment Method 21. Investors under all categories can opt for this method.2. Investors shall have to make full payment of the Issue Price of Rs. [●] per Rights Equity Share atthe time of making an application.For further details, please refer to “Terms of the Issue” beginning on page 121 of this Draft Letter of Offer.5

GENERAL INFORMATIONDear Eligible Equity Shareholder(s),Pursuant to the resolution passed by the Board of Directors of our Company at its meeting held onSeptember 9, 2009 it has been decided to make the following offer to the Eligible Equity Shareholders ofour Company, with a right to renounce:ISSUE OF [●] RIGHTS EQUITY SHARES OF RE. 1 EACH FOR CASH AT A PREMIUM OF RS.[●] PER RIGHTS EQUITY SHARE AGGREGATING TO AN AMOUNT UPTO RS. 11,500MILLION TO THE ELIGIBLE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIOOF [●] RIGHTS EQUITY SHARES FOR EVERY [●] EQUITY SHARES HELD ON THERECORD DATE i.e. [●] (THE “ISSUE”). THE ISSUE PRICE OF EACH RIGHTS EQUITYSHARE IS [●] TIMES THE FACE VALUE OF EACH RIGHTS EQUITY SHARE.For details in payment methods please refer to “Terms of the Issue” beginning on page 121 of this DraftLetter of Offer.Registered Office of our CompanyREI Agro Limited46C Chowringhee Road,Room No. 15B,Everest House,Kolkata-700 0071,West Bengal, India.Telephone: +91 11 3290 6030Fax: +91 11 2955 2403Website: www.reiagro.comEmail: mandan@reiagro.comCorporate Office of our Company58A/1, Sainik Farm,New Delhi 110 062,IndiaRegistration No. : 21-104573Corporate Identity No.: L14200WB1994PLC104573Address of the RoCNizam Palace2 nd MSO Building, 2 nd Floor,234/4, A.J.C. Bose RoadKolkata - 700020The Equity Shares of our Company are listed on the Stock Exchanges, namely the BSE and the NSE. TheGDRs of our Company are listed on the London Stock Exchange.6

Board of DirectorsNameMr. Sanjay JhunjhunwalaMr. Sandip JhunjhunwalaDr. ING Narpinder Kumar GuptaMr. Asoke ChatterjeeMr. Krishna Dayal GhoshCategory/DesignationChairmanVice Chairman and Managing DirectorNon- Executive Independent DirectorNon- Executive Independent DirectorNon- Executive Independent DirectorFor further details of our Directors, please refer to the section entitled “Our Management” beginning onpage 64 of this Draft Letter of Offer.Company Secretary and Compliance OfficerMr. Mandan Mishra58A/1, Sainik Farm,New Delhi 110 062,IndiaTelephone: +91 11 3290 6030Fax: +91 11 2955 2403Website: www. reiagro.comEmail: mandan@reiagro.comLead Managers to the Issue:SBI Capital Markets Limited202, Maker Tower ‘E’,Cuffe Parade,Mumbai – 400 005Tel: +91 22 2217 8300Fax: +91 22 2218 6367Email: project.agro@sbicaps.comInvestor grievance email:investor.relations@sbicaps.comWebsite: www.sbicaps.comContact Person: Ritwik MohapatraSEBI Registration No.: INM000003531Fortune Financial Services (India) LimitedK. K. Chambers2nd Floor, Sir P. T. Marg,Fort, Mumbai 400001Tel: +91 22 2207 7931Fax: +91 22 2207 2948Email: project.agro@ffsil.comInvestor grievance email: invrelation@ffsil.comWebsite: www.ffsil.comContact Person: Mr. Vinay Rane/ Mr. Chintan HefaSEBI Registration No.: INM000000529Axis Bank LimitedCentral Office: 111Maker Tower ‘F’, Cuffe Parade, Mumbai 400 005Tel: +91 22 6707 4407;Fax: +91 22 2216 2467/6707 1264Email: project.agro@axisbank.comInvestor grievance email: axbmbd@axisbank.comWebsite: www.axisbank.comContact Person: Ms. Sonica AgarwalSEBI Registration No.: INM000006104IDBI Capital Market Services Limited5th Floor, Mafatlal CentreNariman Point,Mumbai - 400 021Tel: +91 22 4322 1212Fax: +91 22 2283 8782Email:project.agro@idbicapital.comInvestor grievance email:redressal@idbicapital.comWebsite: www.idbicapital.comContact Person: Ms. Navdeep Kaur / Mr. SubodhMallyaSEBI Registration No.: INM0000108667

Bankers of the Issue:[●]Legal Advisor to the IssueJ Sagar AssociatesVakils House,18, Sprott RoadBallard EstateMumbai- 400 001Tel: +91 22 6656 1500Fax: +91 22 6656 1515Contact Person: Mr. Avik Sen GuptaAuditors of our CompanyP.K. Lilha & Co., Chartered Accountants5 and 6, Pannalal Banerjee Lane,(Fancy Lane) 5th Floor,Kolkata — 700 001,West Bengal, IndiaTel: +91 33 22109201/22484439Fax: +91 33 22485858Email: pklilha@yahoo.co.inContact Person: Mr P.K. LilhaICAI Registration No: 11092Registrar to the IssueMaheshwari Datamatics Private Limited6, Mangoe Lane, Kolkata – 700 001, IndiaTel: + 91 33 22482248/22435029;Fax: +91 33 2248 4787;Email: mdpl@cal.vsnl.net.inContact Person: Mr. S. Rajagopalan;SEBI Registration No.: INR 000000353Note: Investors are advised to contact the Registrar to the Issue/Compliance Officer in case of any pre-Issue/post-Issue related problems such as non-receipt of the Letter of Offer/abridged letter ofoffer/CAF/allotment advice/share certificate(s)/refund orders.Inter-se Allocation of Responsibilities between the Lead ManagersThe responsibilities and co-ordination roles for various activities in this Issue have been distributedbetween SBI Capital Markets Limited, (“SBICAPS”), Axis Bank Limited, (“AXIS”), Fortune FinancialServices (India) Limited, (“FFSIL ”), and IDBI Capital Market Services Limited, (“IDBI CAPS ”), and asthe Lead Managers as under:Sr.Activities Responsibility CoordinatorNo.1. Capital structuring with the relative ALLAXIScomponents and formalities such as thecomposition of debt and equity, type ofinstruments, etc.8

Sr.Activities Responsibility CoordinatorNo.2. Liaison with Stock Exchanges and SEBI, ALLSBICAPSincluding obtaining in-principle listingapproval and completion of prescribedformalities with the Stock Exchanges and SEBI3. Due diligence of our Company’s operations / ALLSBICAPSmanagement /legal/ business plans etc.4. Drafting & design of the offer document. The ALLFFSILdesignated Lead Manager shall ensurecompliance with stipulated requirements andcompletion of prescribed formalities (includingfinalization of Letter of Offer) with StockExchanges, the Registrar of Companies andSEBI.5. Drafting and approval of all publicity material ALLIDBICAPSincluding statutory advertisement, corporateadvertisement, brochure, corporate film, etc.6. Marketing of the Issue, which will cover, inter ALLFFSILalia, formulating marketing strategies,preparation of publicitybudget, arrangements for selection of(i) ad-media,(ii) centres of holding conferences(iii) collection centres,(iv) distribution of publicity and issue materialincluding application form, Letter of Offer,Abridged Letter of Offer; and(v) brochure and deciding on quantum of issuematerial.7. Selection of various agencies connected with ALLAXISthe issue, namely Registrars to the Issue,Bankers to the Issue, printers and advertisementagencies.8. Follow-up with Bankers to the Issue to get ALLAXISestimates of Collection and advising the Issuerabout closure of the Issue, based on correctfigures.9. The post Issue activities will involve essential ALLIDBICAPSfollow up steps, which must includefinalization of basis of allotment / weeding outof multiple applications, listing of instrumentsand dispatch of certificates and refunds, withthe various agencies connected with the worksuch as Registrar to the Issue, Bankers to theIssue and the bank handling refund business.Lead Managers shall be responsible forensuring that these agencies fulfill theirfunctions and enable them to discharge thisresponsibility through suitable agreements withthe Issuer Company.9

LISTING OF SECURITIESThe Equity Shares of our Company were initially listed on the BSE w.e.f December 10, 1996 pursuant toan initial public offering by our Company. Subsequently, the Equity Shares of our Company were listed onthe NSE w.e.f October 11, 2004. The GDRs issued in November 2005 by our Company are listed on theLondon Stock Exchange. We have received in-principle approvals for listing of the Equity Shares to beissued pursuant to this Issue from the BSE and the NSE by letters dated [●] and [●], respectively. We willmake applications to the Stock Exchanges for permission to deal in and for an official quotation in respectof the Rights Equity Shares being offered in terms of this Draft Letter of Offer. If the permission to deal inand for an official quotation is not granted for the Rights Equity Shares by the Stock Exchanges, ourCompany shall forthwith repay, without interest, all monies received from the Investors pursuant to theLetter of Offer. If such money is not repaid within eight days after our Company becomes liable to repay it(i.e. 15 days after Issue Closing Date or the date of refusal by the Stock Exchanges, whichever is earlier),our Company and every Director of our Company who is an officer in default shall, on and from expiry ofeight days, be jointly and severally liable to repay the money, with interest as prescribed under Section 73of the Companies Act.ISSUE SCHEDULEThe subscription will open upon the commencement of the banking hours and will close upon the close ofbanking hours on the dates mentioned below:Issue Opening Date:Last date for receiving requests for SAFs:Issue Closing Date:[●][●][●]ImpersonationAs a matter of abundant caution, attention of the Investors is specifically drawn to the provisions ofsubsection (1) of Section 68A of the Companies Act which is reproduced below:“Any person who makes in a fictitious name an application to a company for acquiring, or subscribing for,any shares therein, or otherwise induces a company to allot, or register any transfer of shares therein tohim, or any other person in a fictitious name, shall be punishable with imprisonment for a term which mayextend to five years”.Monitoring AgencyOur Company will appoint a Monitoring Agency in connection with the Issue in accordance with therequirements of Regulation 16 of the SEBI Regulations, details of which shall be appropriately included inthe Letter of Offer to be filed with the Designated Stock Exchange pursuant to receipt of SEBI’sobservations on this Draft Letter of Offer.AppraisalThe requirement and proposed utilisation of proceeds of the Issue have not been appraised by any bank,financial institution or other independent agency.Underwriting and Underwriting AgreementOur Company is currently contemplating entering into an Underwriting Agreement with the Underwritersfor underwriting the Rights Equity Shares offered through this Issue upto an aggregate amount of Rs [•]million. The details of the Underwriting Agreement shall be included in the Letter of Offer to be filed withthe Designated Stock Exchange pursuant to receipt of SEBI’s observations on this Draft Letter of Offer.10

Our Company shall ensure that the Underwriters appointed shall have sufficient resources to enable them todischarge their underwriting obligations in full.Allotment Letters / Refund OrdersOur Company will issue and dispatch letters of allotment/share certificates/demat credit and/or letters ofregret along with refund order, as applicable, or credit the Rights Equity Shares to the respectivebeneficiary accounts, if any, within a period of 15 days from the Issue Closing Date. If refund orders arenot repaid within eight days from the date our Company becomes liable (i.e. 15 days from the Issue ClosingDate or the date of refusal by the Stock Exchange(s), whichever is earlier), our Company shall pay thatmoney with interest for the delayed period as prescribed under Section 73 of the Companies Act.Investors residing at 68 centers where clearing houses are managed by the Reserve Bank of India (‘RBI’)will get refunds through Electronic Clearing Service (“ECS”) except where Investors are otherwisedisclosed as applicable/eligible to get refunds through direct credit and real time gross settlement(‘RTGS”).In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form usingelectronic credit under the depository system, advice regarding their credit of the securities shall be givenseparately. Investors to whom refunds are made through electronic transfer of funds will be sent a letterthrough ordinary post intimating them about the mode of credit of refund within 15 days of the IssueClosing Date.In case of those Investors who have opted to receive their Rights Entitlement in physical form and ourCompany issues letter of allotment, the corresponding share certificates will be kept ready within threemonths from the date of allotment thereof or such extended time as may be approved by the Company LawBoard under Section 113 of the Companies Act or other applicable provisions, if any. Investors arerequested to preserve such letters of allotment, which would be exchanged later for the share certificates.For more information please refer to the section entitled “Terms of the Issue” beginning on page 121 of thisDraft Letter of Offer.The letter of allotment / refund order exceeding Rs. [●] would be sent by registered post/speed post to thesole/first Investors registered address. Refund orders up to the value of Rs. [●] would be sent undercertificate of posting. Such refund orders would be payable at par at all places where the applications wereoriginally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of thesole/first Investor. Adequate funds would be made available to the Registrar to the Issue for this purpose.Declaration by Board on creation of separate accountThe Board of Directors declares that funds received against this Issue will be transferred to a separate bankaccount other than the bank account referred to sub-section (3) of Section 73 of the Companies Act.Minimum SubscriptionIf our Company does not receive the minimum subscription of 90% of the Issue, including devolvement ofunderwriters, the entire subscription amount shall be refunded to the applicants within fifteen days from thedate of closure of the Issue.If there is a delay in the refund of subscription by more than eight days after the date from which ourCompany becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date or thedate of refusal by the Stock Exchanges, whichever is earlier) our Company shall pay interest for thedelayed period as prescribed under subsection (2) and (2A) of Section 73 of the Companies Act.11

Principal Terms of Loans and Assets Charged as Security:Sl.No.NameLenderof1. IndianRenewableEnergyDevelopment AgencyLimited.- I2. IndianRenewableEnergyDevelopment AgencyLimited – II3. IndianRenewableEnergyDevelopment AgencyLimited – III4. InfrastructureDevelopment FinanceCompanyLimited5. InfrastructureNature ofFacility (TermLoan/Working CapitalLoan)AmountSanctioned (inmillions)Amount (inmillions)Outstanding as onAugust 31,2009SecurityInterestTerm Loan Rs 185.0 Rs.107.9 First chargeon 5 No’sof WindTurbineGeneratorssituated atJaisalmer,Rajasthanand SundryDebtorsthereonTerm Loan Rs.249.7 Rs.168.2 First chargeon 6 No’sof WindTurbineGeneratorssituated atDhule,Maharashtra andSundryDebtorsthereon.Term Loan Rs.137.5 Rs.109.2 First chargeon 4 No’sof WindTurbineGeneratorssituated atDhule,Maharashtra andSundryDebtorsthereon.Term Loan Rs.496.0 Rs.403.0 First chargeon 6 No’sof WindTurbineGeneratorssituated atDhule,Maharashtra andSundryDebtors.Term Loan Rs.263.6 Rs.219.1 FirstCharge onDate ofMaturitySeptember, 2014December,2015December,2015March2015March,2015Rate ofInterest9.00%9.00%10.25%11.31%11.31%12

Sl.No.NameLenderofDevelopment FinanceCompanyLimited6. ICICI BankLimited7. AllahabadBank8. CorporationBank9. State Bankof MysoreNature ofFacility (TermLoan/Working CapitalLoan)AmountSanctioned (inmillions)Amount (inmillions)Outstanding as onAugust 31,2009SecurityInterest12 Nos ofWindTurbineGeneratorsatTirunelveli,Tamil Naduand SundryDebtorsthereonTerm Loan (US$ 100) Rs.331.1 First chargeon 17 No’sof WindTurbineGeneratorssituated atKutchh,Gujarat andSundryDebtorsthereon.Term Loan Rs. 41.5 Rs.12.1 First chargeon 1 WindTurbineGeneratorlocated atJaisalmer,Rajasthanand SundryDebtorsthereon.Term Loan Rs.250.0 Rs.96.0 First chargeon fixedassets ofricedivision ofthecompanyboth presentand futureTerm Loan Rs.200.0 Rs.100.0 First chargeon fixedassets ofricedivision ofthecompanyboth presentand future .Date ofMaturityMarch,2013March,2011March,2011Rate ofInterestLiborplus1.5%9.00%12.00%June, 2010 12.25%10. State Bank Term Loan Rs.200.0 Rs.50.0 First March, 12.25%13

Sl.No.NameLenderof Indoreof11. Bank ofMaharashtra12. State Bankof Bikaner &Jaipur13. United Bankof India14. Bank ofRajasthanNature ofFacility (TermLoan/Working CapitalLoan)AmountSanctioned (inmillions)Amount (inmillions)Outstanding as onAugust 31,2009SecurityInterestcharge onfixed assetsof ricedivision ofthecompanyboth presentand futureTerm Loan Rs.250.0 Rs.160.5 First chargeon fixedassets ofricedivision ofthecompanyboth presentand futureN.A.Term Loan Rs.200.0 Rs.90.0 First chargeon fixedassets ofricedivision ofthecompanyboth presentand futureN.A.Term Loan Rs.250.0 Rs.50.0 First chargeon fixedassets ofricedivision ofthecompanyboth presentand futureN.A.Term Loan Rs. 400.0 Rs.360.0 First chargeon fixedassets ofricedivision ofthecompanyboth presentand future.Date ofMaturity2010September, 2011September, 2009Rate ofInterest11.00%11.00%June, 2010 11.50%October,201112.00%.14

OVERSEAS SHAREHOLDERSThe distribution of this Draft Letter of Offer and the issue of our Rights Equity Shares on a rights basis topersons in certain jurisdictions outside India may be restricted by legal requirements prevailing in thosejurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to informthemselves about and observe such restrictions. Our Company is making this Issue of Rights EquityShares/GDR’s on a rights basis to its Rights Equity Shareholders/ Trustee(s) on behalf of holder’s of GDRsand will dispatch the Abridged Letter of Offer and Composite Application Form (“CAF”) to the overseasshareholders who have an Indian address.No action has been or will be taken to permit this Issue in any jurisdiction where action would be requiredfor that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations.Accordingly, the Rights Equity Shares/GDR’s may not be offered or sold, directly or indirectly, and thisDraft Letter of Offer may not be distributed, in any jurisdiction, except in accordance with legalrequirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offerin those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, thisDraft Letter of Offer must be treated as sent for information only and should not be copied or redistributed.Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issueof the Rights Equity Shares/GDR’s or the Rights Entitlements, distribute or send the same in or into theUnited States or any other jurisdiction where to do so would or might contravene local securities laws orregulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent ornominee, they must not seek to subscribe to the Rights Equity Shares/GDR’s or the Rights Entitlementsreferred to in this Draft Letter of Offer.Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstancescreate any implication that there has been no change in our Company‘s affairs from the date hereof or thatthe information contained herein is correct as at any time subsequent to this date.European Economic Area RestrictionsIn relation to each Member State of the European Economic Area which has implemented the ProspectusDirective at any relevant time (each, a “Relevant Member State”) it has not made and will not make anoffer of the Rights Equity Shares/GDR’s to the public in that Relevant Member State prior to thepublication of a prospectus in relation to the Rights Equity Shares/GDR’s which has been approved by thecompetent authority in that Relevant Member State or, where appropriate, approved in another RelevantMember State and notified to the competent authority in that Relevant Member State, all in accordancewith the Prospectus Directive, except that it may, with effect from and including the RelevantImplementation Date, make an offer of Rights Equity Shares/Global Depository Receipts to the public inthat Relevant Member State at any time:• to legal entities which are authorised or regulated to operate in the financial markets or, if not soauthorised or regulated, whose corporate purpose is solely to invest in securities;• to any legal entity which has two or more of (1) an average of at least 250 employees during the lastFinancial Year; (2) a total balance sheet of more than €4,30,00,000; and (3) an annual net turnover ofmore than €5,00,00,000, as shown in its last annual or consolidated accounts; orIn any other circumstances which do not require the publication by the Issuer of a prospectus pursuant toArticle 3 of the Prospectus Directive.For the purpose of this provision, the expression an “offer of Rights Equity Shares/ GDR’s to the public” inrelation to any Rights Equity Shares/GDR’s in any Relevant Member State means the communication inany form and by any means of sufficient information on the terms of the offer and the Rights EquityShares/GDR’s to be offered so as to enable an Investor to decide to purchase or subscribe for the Rights15

Equity Shares, as the same may be varied in that Member State by any measure implementing theProspectus Directive in that Member State and the expression “Prospectus Directive” means Directive2003/71/EC and includes any relevant implementing measure in each Relevant Member State. ThisEuropean Economic Area selling restriction is in addition to any other selling restriction set out below.United Kingdom RestrictionsThis document is only being distributed to and is only directed at (i) persons who are outside the UnitedKingdom, or (ii) to investment professionals falling within Article 19(5) of the Financial Services andMarkets Act 2000 (Financial Promotion) Order 2005 (the “Order”), or (iii) high net worth entities, andother persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order(all such persons together being referred to as “relevant persons”). The Rights Equity Shares/ GDR’s areonly available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire suchRights Equity Shares/GDR’s will be engaged in only with, relevant persons. Any person who is not arelevant person should not act or rely on this document or any of its contents.NO OFFER IN THE UNITED STATESThe rights and the securities of our Company have not been and will not be registered under the UnitedStates Securities Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws and maynot be offered, sold, resold or otherwise transferred within the United States of America or the territories orpossessions thereof (the “United States” or “U.S.”) or to, or for the account or benefit of, “U.S. persons”(as defined in Regulation S under the Securities Act (“Regulation S”), except in a transaction exempt fromthe registration requirements of the Securities Act. The rights referred to in this Draft Letter of Offer arebeing offered in India, but not in the United States. The offering to which this Draft Letter of Offer relatesis not, and under no circumstances is to be construed as, an offering of any Rights Equity Shares/GDR’s orrights for sale in the United States or as a solicitation therein of an offer to buy any of the said RightsEquity Shares/GDR’s or rights. Accordingly, the Letter of Offer and the enclosed CAF should not beforwarded to or transmitted in or into the United States at any time. Neither our Company nor any personacting on behalf of our Company will accept subscriptions or renunciation from any person, or the agent ofany person, who appears to be, or who our Company or any person acting on behalf of our Company hasreason to believe is, either a “U.S. person” (as defined in Regulation S) or otherwise in the United Stateswhen the buy order is made. Envelopes containing a CAF should not be postmarked in the United States orotherwise dispatched from the United States or any other jurisdiction where it would be illegal to make anoffer under this Draft Letter of Offer, and all persons subscribing for the Rights Equity Shares/GDR’s andwishing to hold such Rights Equity Shares/GDR’s in registered form must provide an address forregistration of the Rights Equity Shares/GDR’s in India. Our Company is making this issue of RightsEquity Shares/GDR’s on a rights basis to its Eligible Equity Shareholders/Trustee(s) on behalf of holder’sof GDR and the Letter of Offer and CAF will be dispatched to Eligible Equity Shareholders/ Trustee(s) onbehalf of holders of GDR who have an Indian address. Any person who acquires rights and the RightsEquity Shares/GDR’s will be deemed to have declared, represented, warranted and agreed, (i) that it is notand that at the time of subscribing for the Rights Equity Shares/GDR’s or the Rights Entitlements, it willnot be, in the United States when the buy order is made, (ii) it is not a “U.S. person” (as defined inRegulation S), and does not have a registered address (and is not otherwise located) in the United States,and (iii) is authorised to acquire the rights and the Rights Equity Shares in compliance with all applicablelaws and regulations. Our Company reserves the right to treat as invalid any CAF which: (i) does notinclude the certification set out in the CAF to the effect that the subscriber is not a “U.S. person’ (asdefined in Regulation S), and does not have a registered address (and is not otherwise located) in the UnitedStates and is authorized to acquire the rights and the Rights Equity Shares/GDR’s in compliance with allapplicable laws and regulations; (ii) appears to our Company or its agents to have been executed in ordispatched from the United States; (iii) where a registered Indian address is not provided; or (iv) where ourCompany believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal orregulatory requirements; and our Company shall not be bound to allot or issue any Rights EquityShares/GDR’s or Rights Entitlement in respect of any such CAF. Our Company is informed that there is noobjection to a United States shareholder selling its rights in India. Rights Entitlement may not betransferred or sold to any U.S. person.16

CAPITAL STRUCTUREOur share capital as on the date of filing of this Draft Letter of Offer is set forth below:Aggregate nominalvalue[Rs in Millions]Aggregate Value atIssue PriceA) AUTHORIZED SHARE CAPITAL1,600,000,000 Equity Shares of Re. 1/- each 1,600.00 [●]4,000,000 Preference Shares of Rs.100/- each 400.00 [●]B) ISSUED, SUBSCRIBED AND PAID UP SHARECAPITAL318,975,920 fully paid up Equity Shares of Re. 1/-318.98 [●]each4,000,000 fully paid up Preference Shares of Rs.100/- each400.00 [●]C) PRESENT ISSUE * IN TERMS OF THISDRAFT LETTER OF OFFER[●] Rights Equity Shares of Re. 1 each [●] [●]D) EQUITY SHARES AFTER THE ISSUE[●] Equity Shares of Re. 1 each[●]E) SHARE PREMIUM ACCOUNTBefore the Issue 3,750.46After the Issue*[●]* The amount standing in the Securities Premium Account, on a pre-Issue basis, is Rs. 3,750.46million. The increase in the Securities Premium Account as a result of this Issue will becompleted only after the Issue Price is determined.Notes to the Capital Structure1. Outstanding Instruments:(i)(ii)As on July 27, 2009, 17,827,000 Global Depository Receipts representing 1 Equity Shares(originally representing 2 Equity Shares each) each aggregating to US $ 7.1 million issued inNovember 2005, are outstanding which would entitle the holders thereof to acquire furtherentitlements to Equity Shares in the form of GDRs pursuant to the Issue.Save as provided hereinabove, as on the date hereof there are no other outstanding options, orother convertible securities of our Company.2. Our Company is, subject to market conditions and applicable statutory and/or regulatoryrequirements, contemplating to raise an amount not exceeding US$ 112.5 million, pursuant to aproposed offer, issuance and allotment of foreign currency convertible bonds, during the periodbetween the date of filing this Draft Letter of Offer with SEBI and the listing of the Rights EquityShares allotted pursuant to the Issue or the refund of application monies, as applicable,(“Proposed FCCB Issue”). The terms of the Proposed FCCB Issue inter-alia including the issueprice and the number of foreign currency convertible bonds to be issued (which shall depend onthe issue price) shall be determined by our Board, subject to applicable statutory and/or regulatory17

equirements and shall be intimated to SEBI and the Stock Exchanges once finalized by ourBoard. Relevant details of the Proposed FCCB Issue, including the consequent change in thecapital structure of our Company shall be disclosed appropriately in the Letter of Offer, if theProposed FCCB Issue is consummated prior to the filing of the Letter of Offer with theDesignated Stock Exchange. Further, if the Proposed FCCB Issue is consummated prior to theRecord Date, our Company shall make a reservation of such number of Rights Equity Sharesoffered under this Issue in favour of the holders of such foreign currency convertible bondsissued pursuant to the Proposed FCCB Issue in proportion to the portion thereof convertible intoour Equity Shares, (“Reserved Rights Shares”). The Reserved Rights Shares shall be allotted tothe holders of the foreign currency convertible bonds issued would be offered on the same termsas being offered in this Draft Letter of Offer to the existing Equity Shareholders of our Company,pursuant to the Proposed FCCB Issue at the relevant time of conversion thereof.3. History of change in authorised share capital of our CompanyDate of ChangeMarch 15, 1995September 16, 2002September 27, 2003March 9, 2005September 24, 2005January 19, 2009September 23 , 2009Change in Authorised CapitalThe authorized capital of our Company was increased from Rs. 10,00,000 to Rs.20,00,00,000The authorized capital of our Company was increased from Rs. 20,00,00,000 toRs. 60,00,00,000The authorized capital of our Company was increased from Rs. 60,00,00,000 toRs.70,00,00,000The authorized capital of our Company was increased from Rs. 70,00,00,000 toRs. 80,00,00,000The authorized capital of our Company was increased from Rs. 80,00,00,000 toRs.1,20,00,00,000The authorized capital of our Company was reorganized pursuant to the subdivisionof equity shares from Rs.10/- to Re.1/- per equity shareThe authorized capital of our Company was increased from Rs.1,20,00,00,000to Rs 2,00,00,00,0004. Details of securities held by our Promoter and Promoter GroupSl.No.The table below presents the details of the securities of our Company held by our Promoters andPromoter Group as on September 25, 2009 including details of lock-in, pledge and/orencumbrance on such securities:Name No. ofEquityShares held1. SandipJhunjhunwalaPercentage(%)No. Equity SharesPledged% of theEquitySharespledged tothe total no.ofoutstandingEquityShares ofourCompanyNo. OfEquitySharesLockedin% of theEquityShareslocked-in tothe totalno. ofoutstandingEquityShares ofourCompany25, 53, 720 0.80 - - - -18

Sl.No.Name No. ofEquityShares held2. SanjayJhunjhunwala3. KaushalyaDeviJhunjhunwala4. SangitaJhunjhunwala5. SuruchiJhunjhunwala6. AspectiveVanijyaPrivateLimited7. SnehpushpBarter PrivateLimited8. SubhchintakVancomPrivateLimited9. Shree KrishnaGyanondayaFlour MillsPrivateLimitedPercentage(%)No. Equity SharesPledged% of theEquitySharespledged tothe total no.ofoutstandingEquityShares ofourCompanyNo. OfEquitySharesLockedin% of theEquityShareslocked-in tothe totalno. ofoutstandingEquityShares ofourCompany25,50,120 0.80 - - - -3,00,300 0.09 - - - -2,67,600 0.08 - - - -1,50,000 0.05 - - - -3,59,08,929 11.26 1,67,07,330 5.24 - -2,17,78,800 6.83 - - - -1,82,58,000 5.72 1,34,08,200 4.20 - -1,78,17,500 5.59 36,36,000 1.14 - -10. REI Steel and 1,73,11,560 5.43 - - - -TimberPrivateLimited11. Jagdhatri 40,11,300 1.26 - - - -Tracon PrivateLimitedTotal 12,09,07,829 37.91 3,37,51,530 10.58 - -19

5. Details of Equity Shares acquired by our Promoters and Promoter Group in the last oneyear: The table below sets out the details of the Equity Shares acquired by our Promoters andPromoter Group in the last one year immediately prior to the date of filing of this Draft Letter ofOffer:Sr.No.123456789101112TransferorOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketTransfereeAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaDate on Whichequity SharesPurchasedNo. ofEquitySharesNovember 25,2008 56,198November 26,2008 5,606November 28,2008 5,845December 4,2008 13,381December 5,2008 5,288December 8,2008 2,000December 10,2008 4,100December 11,2008 5,500December 12,2008 4,100December 15,2008 500December 16,2008 10,718December 18,2008 7,366ParValue (InRs.)Consideration10 26,310,486.1410 2,562,366.7910 2,958,378.6310 7,933,977.0410 3,191,999.6410 1,271,420.0010 2,692,238.0010 3,640,481.0010 2,644,745.0010 322,810.0010 7,557,449.0210 5,232,435.20PurchasePrice (inRs.)468.17457.08506.14592.93603.63635.71656.64661.91645.06645.62705.12710.3520

Sr.No.131415161718192021222324TransferorOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketTransfereePrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedDate on Whichequity SharesPurchasedNo. ofEquitySharesDecember 22,2008 10,500December 23,2008 6,580December 26,2008 3,566December 29,2008 500December 30,2008 2,398December 31,2008 2,000January 2, 2009January 5, 2009January 6, 2009January 7, 2009January 9, 2009January 14, 20095,5001,70016,0502,7001,0004,257ParValue (InRs.)Consideration10 7,489,885.0010 4,553,265.5010 2,527,509.8010 339,510.0010 1,613,642.2810 1,374,900.0010 3,745,401.0010 1,214,481.0010 10,517,172.0010 1,734,974.0010 601,516.0010 2,579,334.45PurchasePrice (inRs.)713.32691.99708.78679.02672.91687.45680.98714.40655.28642.58601.52605.9021

Sr.No.25262728293031323334353637TransferorOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketTransfereeAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateDate on Whichequity SharesPurchasedJanuary 15, 2009January 19, 2009January 20, 2009January 22, 2009January 23, 2009January 27, 2009January 28, 2009January 29, 2009February 2, 2009February 3, 2009February 4, 2009No. ofEquityShares1,22120020,0122,2005507,75116,07714,1101,5002,9001,050ParValue (InRs.)February 5, 2009 8,277 1February 6, 2009 1,42,942 1Consideration10 756,578.4410 126,024.0010 11,525,029.6010 1,265,000.0010 318,584.0010 4,771,796.1310 9,654,607.5210 8,381,257.9010 850,328.0010 1,596,808.0010 588,441.00PurchasePrice (inRs.)619.64630.12575.91575.00579.24615.64600.52593.99566.89550.62560.425,19,720.43 62.7992,18,200.94 64.4922

Sr.No.TransferorTransfereeLimitedDate on Whichequity SharesPurchasedNo. ofEquitySharesParValue (InRs.)ConsiderationPurchasePrice (inRs.)383940414243444546474849OpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedFebruary 9, 2009 52,441 1February 12,2009February 13,2009February 17,2009February 18,2009February 20,2009February 24,2009February 25,2009February 27,20091,00,000 11,34,840 116,000 182,864 13,55,000 156,000 148,544 132,213 1March 2, 2009 33,794 1March 3, 2009 75,050 1March 4, 2009 94,800 132,43,475.85 61.8559,64,122.92 59.6477,22,854.89 57.278,48,821.59 53.0544,28,095.89 53.441,72,74,310.28 48.6628,69,622.06 51.2427,23,182.97 56.1017,29,682.15 53.7017,51,266.43 51.8238,45,398.80 51.2446,83,277.93 49.4023

Sr.No.50515253545556575859606162TransferorOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketOpenMarketTransfereeAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateLimitedAspectiveVanijyaPrivateDate on Whichequity SharesPurchasedNo. ofEquitySharesParValue (InRs.)March 5, 2009 47,233 1March 6, 2009 65,081 1March 9, 2009 1,50,722 1March 12, 2009 2,65,414 1ConsiderationMarch 13, 2009 66,500 1 33,55,949.74March 16, 2009 31,000 1March 17, 2009 90,000 1March 18, 2009 2,90,600 1March 19, 2009 1,02,432 1April 21, 2009 1,67,506 1April 23, 2009 1,42,000 1May 6, 2009 59,029 1May 8, 2009 19,050 1PurchasePrice (inRs.)22,23,543.11 47.0829,93,645.85 46.0067,55,767.28 44.821,21,00,520.84 45.5950.4715,57,011.04 50.2341,35,242.68 45.951,33,17,091.62 45.8346,80,246.30 45.691,05,35,527.16 62.9089,30,260.63 62.8935,27,965.09 59.7711,57,327.88 60.7524

Sr.No.TransferorTransfereeLimitedDate on Whichequity SharesPurchasedNo. ofEquitySharesParValue (InRs.)ConsiderationPurchasePrice (inRs.)6. The table below presents our Company’s shareholding as on July 27, 2009 :Sl.No.Category ofShareholderA. Promoter &Promoter GroupNo. ofShareholdersTotalnumber ofEquitySharesNo. ofEquityShares heldin the dematerialisedformPercentageof the TotalShareholding(A+B+C)(%)Equity SharesPledged or otherwiseencumberedPercentage ofEquity SharesPledged orotherwiseencumbered tothe TotalShareholding(%)A1 Indiana. Individuals/Hindu7 5,821,740 5,821,740 1.83 Nil NilUndividedFamilyb. Central/State- - - - - -Government(s)c. Bodies Corporate 8 115,086,089 115,086,089 36.08 33,751,530 10.58d. Financial- - - - - -Institutions/Bankse. Any other - - - - - -Sub Total (A1) 15 120,907,829 120,907,829 37.91 33,751,530 10.58A2 Foreigna. Individuals(NRI/ForeignIndividuals)- - - - - -b. Bodies Corporate - - - - - -c. Institutions - - - - - -d. Any other (Please - - - - - -specify)Sub Total (A2) - - - - - -Total A = (A1) +(A2)15 120,907,829 120,907,829 37.91 33,751,530 10.58B. PublicB1 Institutionsa. Mutual1 988 988 0.00 - -Funds/UTIb. Financial- - - - - -Institutions/Banksc. State/Central- - - - - -Government(s)d. Venture Capital- - - - - -Fundse. Insurance- - - - - -Companiesf. Foreign 38 43,262,504 13,317,942 13.56 - -25

Sl.No.Category ofShareholderInstitutionalInvestorsg. Foreign VentureCapital Investorsh. Any other (Pleasespecify)No. ofShareholdersTotalnumber ofEquitySharesNo. ofEquityShares heldin the dematerialisedformPercentageof the TotalShareholding(A+B+C)(%)Equity SharesPledged or otherwiseencumberedPercentage ofEquity SharesPledged orotherwiseencumbered tothe TotalShareholding(%)- - - - - -- - - - - -Sub Total (B1) 39 43,263,492 13,318,930 13.56 - -B2 Non-Institutionsa. Bodies Corporate 586 66,953,362 66,952,762 20.99 - -b. Individualsi. Nominal share8,474 5,375,381 2,328,246 1.69 - -capital upto Rs.0.1 millionii. Nominal share16 57,112,880 56,032,880 17.90 - -capital in excessof Rs. 0.1 millionc. Any Other (Non140 7,535,976 460,776 2.36 - -ResidentIndividual)Sub Total (B2) 9,216 136,977,599 125,774,664 42.94 - -Total B = (B1) +(B2)C. Equity Sharesheld byCustodians &against whichdepositoryreceipts havebeen issuedGrand Total =A+B+C9,255 180,241,091 139,092,606 56.50 - -1 17,827,000 17,827,000 5.59 - -9,271 318,975,920 277,827,435 100.00 33,751,530 10.58Note: On July 27, 2009 our Company allotted 29,945,550 Equity Shares to Qualified Institutional Buyers (asdefined in the rescinded SEBI (Disclosure and Investor Protection) Guidelines, 2000), pursuant to provisionsof Chapter XIII-A of the rescinded SEBI (Disclosure and Investor Protection) Guidelines, 2000.7. Our Company, the Directors, the Promoter, the Promoter Group Companies, their respectiveDirectors and the Lead Manager(s) have not entered into any buy-back and/or standbyarrangements for the purchase of Equity Shares from any person.8. The Present Issue being a rights issue, as per extent SEBI Regulations, the requirement ofpromoter’s contribution and lock-in are not applicable.9. The total number of Equity Shareholders as on the Record Date is [●].10. Our Promoters and Promoter Group, have confirmed, vide their letters dated September 29, 2009that they intend to subscribe to the full extent of their entitlement of Rights Equity Shares in theIssue. Our Promoters and Promoter Group reserve their right to subscribe to their entitlement26

and/or apply for additional Rights Equity Shares in the Issue, either by themselves or acombination of entities controlled by them, including subscribing for renunciation, if any, made byother Eligible Equity Shareholders. Our Promoters and Promoter Group have also, by their aboveletter confirmed that in addition to the subscription to the Rights Equity Shares as stated above,our Promoters and Promoter Group shall subscribe to, and/or make arrangements for thesubscription of, additional Rights Equity Shares in the Issue to the extent of any unsubscribedportion of the Issue as per the relevant provisions of law. As a result of subscription to theirentitlement and any unsubscribed portion and consequent allotment, our Promoters and PromoterGroup may acquire Rights Equity Shares over and above their entitlement in the Issue, which mayresult in an increase of our Promoter’s and Promoter Group’s shareholding in our Company. Suchsubscription and acquisition of such additional Rights Equity Shares by our Promoters andPromoter Group, if any, will not result in change of control of the management of our Companyand shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. Assuch, other than meeting the requirements indicated in the section on “Objects of the Issue”beginning on page 30 of this Draft Letter of Offer, there is no other intention/purpose for thisIssue, including any intention to delist our Company, even if, as a result of allotments to ourPromoters and Promoter Group, in this Issue, their shareholding in our Company exceeds theircurrent shareholding. Allotment to our Promoters and Promoter Group of any unsubscribedportion of the Rights Equity Shares, over and above their entitlement shall be done in compliancewith the listing agreements and other applicable laws prevailing at that time relating to continuouslisting requirements. Our Company hereby confirms that, in case the Issue is completed with ourPromoters and Promoter Group subscribing to Rights Equity Shares over and above theirentitlement, the public shareholding in our Company after the Issue will not fall below theminimum level of public shareholding as specified in the listing conditions or listing agreement.Presently our Company is complying with Clause 40A of the Listing Agreement and the minimumpublic shareholding required to be maintained for continuous listing is 25% of the total paid upequity capital. Our Company hereby confirms that, in case the Issue is completed with ourPromoters and Promoter Group subscribing to Rights Equity Shares over and above theirentitlement, the public shareholding in our Company after the Issue will not fall below theminimum level of public shareholding as specified in the listing conditions or listing agreement.If our Company does not receive the minimum subscription of 90% of the Issue includingdevolvement of underwriters, the entire subscription amount shall be refunded to the applicantswithin fifteen days from the date of closure of the Issue.If there is a delay in the refund of subscription by more than eight days after the date from whichour Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue ClosingDate or the date of refusal by the Stock Exchanges, whichever is earlier) our Company shall payinterest for the delayed period as prescribed under subsection (2) and (2A) of Section 73 of theCompanies Act.11. Persons and Entities owning more than 1% (one percent) of our Equity Shares:Each person or entity known to our Company to beneficially own more than 1% (one percent) ofour outstanding Equity Shares is listed below. Each shareholder listed below is both the holderon record and the beneficial owner with the sole power to vote and invest in our Equity Shareslisted next to his name below. The following table sets out the persons and entities whobeneficially own more than 1% (one percent) of our Equity Shares as at July 27,2009:Sr.No.NameNumber ofSharesPercentage (%)Promoter & Promoter Group1. Aspective Vanijya Private Limited 3,59,08,929 11.2627

Sr.No.NameNumber ofSharesPercentage (%)2. Snehapushp Barter Private Limited 2,17,78,800 6.833. Subhchintak Vancom Private Limited 1,82,58,000 5.724. Shree Krishna Gyanondaya Flour Mills Private1,78,17,500 5.59Limited5. REI Steel and Timber Private Limited 1,73,11,560 5.436. Jagdhatri Tracon Private Limited 40,11,300 1.26Others1. Citibank NA NewYork, NYADR Department 1,78,27,000 5.592. Sat Prakash Bansal 1,58,00,994 4.953. Ripple Brinechem Private Limited 1,30,95,077 4.114. Balbir Kumar Kapoor 1,29,83,858 4.075. Shalini Metals Private Limited 1,11,29,679 3.496. Silak Ram 1,04,13,313 3.267. Sophia Growth- A share class of Somerset IndiaFund 71,38,889 2.248. Pambinezhath Sulaiman Shameer 70,27,200 2.209. Raghu Nath Gupta 65,52,700 2.0510. Devender Kumar 65,20,945 2.0411. Dhavani Textile Private Limited 61,39,867 1.9212. Newton Investment Management Limited A/cMellon Investment Funds ICVC Newton OrientalFund 58,80,000 1.8213. BNY Mellon Asian Equity Fund 47,00,000 1.4714. Newton Investment Management Limited A/cMellon Investment Funds ICVC Newton OrientalFund 42,22,770 1.3215. Mahesh Kumar 37,98,200 1.1916. Merrill Lynch Capital Markets Espana SASV 37,92,180 1.1917. Sangita Securities Private Limited 3,65,20,30 1.1418. RAK- JIG Textile Private Limited 35,46,979 1.1119. Pictet Country Fund Mauritius Limited 35,24,515 1.1020. Religare Finvest Limited 33,71,393 1.0612. Our Company has not availed of “bridge loans” to be repaid from the proceeds of the Issue.13. The terms of issue to Eligible Equity Shareholders have been presented under “Terms of theIssue” beginning on page 121 of this Draft Letter of Offer.14. At any given time, there shall be only one denomination of the Equity Shares of our Company.15. We have not issued any Equity Shares out of revaluation reserves. However, we have in the past,issued bonus Equity Shares out of free reserves and share premium account.16. The Investors shall have the option to choose either Payment Method 1 or Payment Method 2.However, Non Residents can opt for Payment Method 1 only if our Company obtains aclarification/approval from the RBI to issue and allot to partly paid-up Rights Equity Shares. Fordetails please refer to “Terms of the Issue” beginning on page 121 of this Draft Letter of Offer.17. The calls shall be structured in such a manner that the entire call money is called and will bepayable within 24 months from the date of allotment of Rights Equity Shares in this Issue. If theInvestors fail to pay the call money within 24 months, the application money already paid shall be28

forfeited.18. The Equity Shares of our Company are fully paid up and there are no partly paid up Equity Sharesas on the date of this Draft Letter of Offer.19. We have not revalued our assets during the last five Financial Years.20. Issue to remain open for a minimum of 15 days and maximum of 30 days as may be determinedby the Board.21. The total number of holders of Equity Shares of our Company as on September 25, 2009 is 22,12422. Our Company is currently contemplating entering into an Underwriting Agreement with theUnderwriters for underwriting the Rights Equity Shares offered through this Issue for a maximumof upto Rs [●] million. Our Board shall ensure that the Underwriters appointed shall havesufficient resources to enable them to discharge their underwriting obligations in full.29

OBJECTS OF THE ISSUEThe Objects of this Issue are to raise funds for (i) Long Term incremental working capital marginrequirement; (ii) Repayment of short-term loans/debentures/ high cost long-term borrowings (iii) Generalcorporate purposes and (iv) To meet the rights issue expenses.The main object clauses of our Memorandum of Association enable us to undertake our existing activitiesand the activities for which funds are being raised through this Issue.Proceeds of the IssueThe gross proceeds of the Issue are Rs. [●] million. The net proceeds of the Issue, after deduction of anyIssue expenses, are estimated to be approximately Rs. [●] million (“Net Proceeds”).The details of the proceeds of the Issue are summarized in the following table:ParticularsGross proceeds of the IssueLess: Issue ExpensesNet proceeds of the Issue(Rs. in million)Amount[●][●][●]Fund Requirements and DeploymentThe details of the utilization of Net Proceeds of this Issue will be as per the table set forth below:ParticularsTotalEstimatedAmounts /CostsAmount to befunded out ofinternalaccruals /other sourcesAmountestimated to beutilized throughthe NetProceeds of thisIssueEstimated NetProceedsutilization inFY 2010(Rs. in million)EstimatedNetProceedsutilization inFY 2011IncrementalLong TermWorking9,149.4 3,282.4 5,867.0 3,798.00 2,069.00CapitalMarginPre-paymentof short-termloans/debentures/high cost 4,000.0 - 4,000.0 2,000.0 2,000.0long-termborrowingraised frombanksGeneralcorporate[●] - [●] [●] [●]purposesTotal [●] 3,282.4 [●] [●] [●]The fund requirement and deployment are based on internal management estimates and have not beenappraised by any bank or financial institution. These are based on the current status of our business and are30

subject to change in light of variations in external circumstances or costs, or in our financial condition,business or strategy, as discussed further below. Our management, in response to the competitive anddynamic nature of the industry, will have the discretion to revise its business plan from time to time andconsequently our funding requirements and deployment of funds may also change. This may also includerescheduling the proposed utilization of Net Proceeds and increasing or decreasing expenditure for aparticular object vis-à-vis the utilization of Net Proceeds.Means of FinanceThe aforesaid requirement of funds is proposed to be entirely financed by the Net Proceeds of the Issue andour Company’s internal accruals / other sources as mentioned in the above table. Thus, provisions of theSEBI Regulations in connection with firm arrangements of finance through verifiable means towards 75%of the stated means of finance, excluding the amount to be raised through the proposed Issue and internalaccruals/ other sources, does not apply to our Company as our Company do not proposes to avail anyborrowed funds for part financing the Object of the Issue.In case of a shortfall in the Net Proceeds, we may explore a range of options including utilizing our internalaccruals.Details of the Objects of the IssueThe details of the requirement of funds are as provided below:1. Incremental long term working capital margin requirementThe incremental long-term working capital margin requirement has been calculated on the basis ofadditional working capital requirement which will be required over FY 2010 and FY 2011 consideringgrowth in activities of our Company and the resultant increase in volume as our Company has acquiredrice processing mills on lease basis having an aggregate capacity of 210,240 TPA at Jallalabad and Fazilka,Punjab and Karnal, Haryana with effect from August 1, 2009. With these additional facilities, our total riceprocessing capacity has become 902,280 TPA.Raw Material (RM), Finished Goods (FG) and Auxiliary material have been taken at various levels, whichis in consonance with the industry practices and past trends.ParticularsHoldingLevel(Months)FY2009HoldingLevel(Months)FY2010(Rs. in million)FY2011Current Assets Audited EstimatedRaw Material 11.22 18,499.1 9.8 28,084.9 37,802.4Other Consumable Spares 0.4 15.1 0.4 20.0 40.0Finished Goods 2.9 4,586.6 4.0 10,071.4 14,512.9Sundry Debtors (Domestic Sales) 2.7 3,235.9 3.0 5,065.5 6,750.0Sundry Debtors (Export Sales) 3.1 2,547.8 3.0 4,500.0 6,875.0Advances to suppliers 4,328.6 4,300.1 5,069.3Other Current Assets 515.2 1,167.0 1,220.7Total Working Capital (A) 33,728.3 53,208.9 72,270.2Current Liabilities(Other than bank borrowings forworking capital)Creditors 0.8 1,357.3 0.3 720.1 969.3Total31

ParticularsAdvances from customers / othercurrent liabilitiesDeposits/Debentures/Installmentsunder Term LoansHoldingLevel(Months)FY2009HoldingLevel(Months)FY2010FY2011289.7 500.0 600.0820.0 580.0 372.1Statutory Liabilities 390.9 670.3 1,310.4Total of other current Liabilities2,857.9 2,470.4 3,251.8(B)Net Working Capital (A-B) 30,870.4 50,738.5 69,018.4TotalWorking Capital Borrowings 22,001.3 37,300.0 50,999.9Margin 8,869.1 13,438.5 18,018.5Incremental Margin 4,569.4 4,580.0 9,149.4Justification for holding period levels:InventoryReceivablesCreditorsInventory holding levels of raw materials, other consumable spares, finished goods etcare expected to be more or less in line with March 2009 levels keeping in view thenature of the industry in which our Company operates.Receivables are expected to be line with the March 2009 level keeping in view thenature of the industry in which our Company operates.Level of creditors is expected to come down in future as our Company would haveadequate working capital post this issue.Capacity Utilisation vis-a-vis business growthThe capacity utilisation of our Company for the last three FY 2007, 2008 and 2009 and estimated for FY2010 and 2011 including rice processing mills acquired on lease basis are as under:-DivisionsA) Installed CapacityBasmati RiceProcessingWind TurbineGeneratorB) ProductionBasmati RiceProcessingWind TurbineGeneratorMeasurementUnitFY 2007 FY 2008 FY 2009 FY 2010 E* FY 2011E *TPA 534,360 692,040 692,040 902,280 902,280KwH (million ) 31.45 40.38 40.38 40.38 40.38TPA 288,025 397,860 429,889 676,710 721,824KwH (million ) 4.88 4.70 4.96 6.06 6.06D) CapacityUtilisation**Basmati Rice59.80% 69.35% 62.12% 75.00% 80.00%ProcessingWind Turbine15.18% 11.63% 12.27% 15 % 15 %Generator*Based on management estimates**Calculated on average processing capacity as detailed on page 58 of the Draft Letter of Offer32

The current trend of growth in revenue of our Company had been:Financial YearRevenue Growth2006-07 13.18%2007-08 71.14%2008-09 41.04%All the above projections are based on management estimates and have not been appraised by any bank orfinancial institution.Our Company proposes to meet the incremental margin money requirement to the extent of Rs.9149.4million from the Net Proceeds of the Issue and internal accruals of our Company.Our Company has fully tied-up its entire requirement of Rs. 37,300.00 million fund based limit fromvarious banks as on the date of this Draft Letter of Offer.2. Prepayment of Short Term Loans/ Debentures / High cost long term borrowing etc from banksCurrently as on August 31, 2009, we have short-term loans/ debentures / high cost long-term borrowingaggregating Rs. 6542.70 million. Out of the aforesaid outstanding loans, our Company proposes to prepayRs. 4000.00 million out of the Net proceeds of the Issue, which will enable us to improve our debt equityratio. The details of the short term loans/ debentures / high cost long term borrowing etc from banks/FIs isdetailed in the below table:ParticularsNature ofLoanObject ofthe Loan *Nature ofInterestChargeSanctionAmount(Rs. InMillion)O/s As At31.08.2009(Rs. InMillion)Rate ofInterest onthe LoanSecurityIREDA-IITERMLOANSetting upof Windfarm atMaharashtraFloatingrateIREDA-ITERMLOANSettingup ofWindfarm atRajasthanFixedrateIREDA-IIITERMLOANSetting upof Windfarm atMaharashtraFloatingrateIDFCTERMLOANSetting upof Windfarm atMaharashtraFloatingrateIDFCTERMLOANSettingup ofWindfarm atTamilNaduFloatingrateICICIBANKECBLOANSetting upof Windfarm atGujaratFloatingrateALLAHABAD BANKTERM LOANSetting up ofWind farm atRajasthanFixed rate185.0 249.7 137.5 496.0 263.6 414.8 415.0107.9 168.2 109.2 403.0 219.1 331.1 12.19.00% 9.00% 10.25% 11.31% 11.31% Libor+1.5%1stChargeon 5WTGs1st Chargeon 6WTGslocated at1 st Chargeon 4WTGslocated at1 st Chargeon 6WTGslocated at1stChargeon 12WTGs1st Chargeon 17WTGslocated at9.00%1st Charge on1 WTGlocated atRajasthan and33

ParticularsRepayment ScheduleIREDA-IIMaharashtra andSundrydebtors ofthereonIREDA-IlocatedatRajasthan andSundrydebtorsofthereonQuarterlyIREDA-IIIMaharashtra andSundrydebtors ofthereonIDFCMaharashtra andSundrydebtors ofthereonIDFClocatedat TamiNaduandSundrydebtorsofthereonQuarterly Quarterly Quarterly QuarterlyICICIBANKGujaratandSundrydebtors ofthereonHalfYearlyALLAHABAD BANKSundrydebtors ofthereonQuarterlyParticularsNature ofLoanObject ofthe Loan *Nature ofInterestChargeRate ofInterest onthe LoanDisbursedAmount(Rs. InMillion)O/s As At31.08.2009(Rs. InMillion)SecurityRepaymentScheduleCorporation BankCorporateLoanGeneralCorporatepurposesFloating rateStateBank ofMysoreCorporate LoanGeneralCorporatepurposesFloatingrateStateBank ofIndoreCorporate LoanGeneralCorporatepurposesFloatingrateBank ofMaharashtraCorporateLoanGeneralCorporatepurposesFloating rateStatebank ofBikaner& JaipurCorporate LoanGeneralCorporatepurposesFloatingrateUnitedBank ofIndiaCorporateLoanSetting upofParboiling facilityFloatingrateBank ofRajasthanCorporateLoanGeneralCorporatepurposesFloatingrate12.00% 12.25% 12.25% 11.00% 11.00% 11.50% 12.00%250.0 200.0 200.0 250.0 200.0 250.0 400.096.0 100.0 50.0 160.5 90.0 50.0 360.0Secured by creation of first charge on hypothecation of stock of rice, paddy, book debts andstores and spares on pari passu basis and second charge on fixed assets of rice division.Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly QuarterlyParticularsNONCONVERTIBLEDEBENTURESNONCONVERTIBLEDEBENTURESNONCONVERTIBLEDEBENTURESIDBI BANK LTDNature of Loan Unsecured Loan Unsecured Loan Unsecured Loan Unsecured LoanObject of the Loan * GeneralCorporatePurposesGeneral CorporatePurposesGeneral CorporatePurposesGeneral CorporatePurposesNature of InterestChargeRate of Interest onthe LoanFloating rate Floating rate Floating rate Floating rate12.00% 11.00% 11.00% 9.50%Disbursed Amount 500.0 1500.0 1500.0 750.034

Particulars(Rs. In Million)O/s As At31.08.2009(Rs. In Million)NONCONVERTIBLEDEBENTURESNONCONVERTIBLEDEBENTURESNONCONVERTIBLEDEBENTURESIDBI BANK LTD500.0 1500.0 1500.0 750.0Security Unsecured Unsecured Unsecured UnsecuredRepaymentOnetime payment Onetime payment Onetime payment Onetime paymentSchedule3. General Corporate PurposesWe intend to use approximately Rs. [●] million from the net proceeds of the Issue towards generalcorporate purposes. Our Board of Directors will have the flexibility in sanctioning the utilization of theseproceeds for general corporate purpose including assessment of new opportunities, expansion of ouroperations domestically, and / or internationally through the organic / inorganic route and other strategicinitiatives.Our Board of Directors will review various requirements from time to time and in response to thecompetitive and dynamic nature of the industry, our management will have the discretion to revise ourCompany’s business plan from time to time.To the extent that we seek to advance on any of the above-mentioned fronts, we will utilize part of thefunds raised in this Issue towards this purpose. In the interim, if opportunities for inorganic growth or anyother strategic initiatives arise these funds will be utilized for the said initiatives.4. Issue Related ExpensesThe expenses of this Issue include, among others, lead management fees, printing and distributionexpenses, legal fees, advertisement cost, registrar fees, depository charges and listing fees. The total Issueexpenses are estimated to be approximately Rs. [●] million as per the following break-up:Issue ExpensesLead Management fees, Underwriting Commission and Selling CommissionAdvertisement and Marketing expensesPrinting & Stationery (including courier and transportation charges)Others (Legal fees, Registrar’s fees, Listing Charges etc.)TotalAmount(Rs. in million)[●][●][●][●][●]Interim Use of Net ProceedsPending utilization of the funds, the management of our Company, in accordance with policies establishedby our Board from time to time, will have flexibility in deploying the Net Proceeds. Pending utilisation forthe purposes described above, our Company intends to temporarily invest the funds in high quality interest /dividend bearing liquid instruments including money market mutual funds, deposits with banks for thenecessary duration and other investment grade interest bearing securities, as may be approved by the Boardof Directors or a committee thereof. Such transactions would be at the prevailing commercial rates at thetime of investment. Our Company confirms that pending utilization of the Issue proceeds; it shall not usethe funds for any investments in the equity markets.Monitoring of Utilisation of fundsWe have appointed [●] as the monitoring agency in relation to the Issue. Our Board/ Audit Committee and35

[●] will monitor the utilisation of the Net Proceeds of the Issue.We will disclose the details of the utilisation of the Net Proceeds of the Issue, including interim use, undera separate head in our financial statements specifying the purpose for which such proceeds have beenutilised or otherwise disclosed as per the disclosure requirements of our listing agreements with the StockExchanges. As per the requirements of Clause 49 of the Listing Agreement, we will disclose to the AuditCommittee the uses/applications of funds on a quarterly basis as part of our quarterly declaration of results.Further, on an annual basis, we shall prepare a statement of funds utilised for purposes other than thosestated in this Draft Letter of Offer and place it before the Audit Committee. The said disclosure shall bemade till such time that the full proceeds raised through the Issue have been fully spent. The statement shallbe certified by our Statutory Auditors. Further, in terms of Clause 43A of the Listing Agreement, we willfurnish to the Stock Exchanges on a quarterly basis, a statement indicating material deviations, if any, inthe use of proceeds from the Objects stated in this Draft Letter of Offer. Further, this information shall befurnished to the Stock Exchanges along with the interim or annual financial results submitted under Clause41 of the Listing Agreement and be published in the newspapers simultaneously with the interim or annualfinancial results, after placing it before the Audit Committee in terms of Clause 49.Other confirmationsOur Company confirms that no part of the proceeds from the Issue will be paid by us as consideration toour Promoters, our Directors, Promoter Group or key managerial employees, except in the normal course ofour business.36

STATEMENT OF TAX BENEFITSSTATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITSSHAREHOLDERS1. Key benefits available to the Company under the Income Tax Act, 1961 (“the Act”)(A)(i)BUSINESS INCOMEDepreciationThe Company is entitled to claim depreciation on specified tangible and intangible assets ownedby it and used for the purpose of its business under Section 32 of the Act. In case of newmachinery or plant that is acquired by the company (other than ships and aircrafts), the company isentitled to a further sum equal to twenty per cent of the actual cost of such machinery or plantsubject to conditions specified in Section 32 of the Act. Unabsorbed depreciation, if any, for anAssessment Year (AY) can be carried forward and set off against any source of income insubsequent AY’s as per Section 32 of the Act.(ii)MAT CreditAs per Section 115JAA(1A) of the Act, the company is eligible to claim credit for MinimumAlternate Tax (MAT) paid for any assessment year commencing on or after April 1, 2006 againstnormal income-tax payable in subsequent assessment years. MAT credit shall be allowed for anyassessment year to the extent of difference between the tax payable as per the normal provisions ofthe Act and the tax paid under Section 115JB for that assessment year. Such MAT credit isavailable for set-off upto 10 years succeeding the assessment year in which the MAT credit arises.(B)(i)CAPITAL GAINSDefinitionsLong term capital gains (LTCG)LTCG means capital gain arising from the transfer of a capital asset being share held in a companyor any other security listed in a recognized stock exchange in India or unit of the Unit Trust ofIndia or a unit of a mutual fund specified under clause (23D) of Section 10 or a zero coupon bondheld by an assessee for more than 12 months. In respect of any other capital asset, LTCG meanscapital gain arising from the transfer of an asset, held by an assessee for more than 36 months.Short term capital gains (STCG)STCG means capital gain arising from the transfer of capital asset being share held in a companyor any other security listed in a recognized stock exchange in India or unit of the Unit Trust ofIndia or a unit of a mutual fund specified under clause (23D) of Section 10 or a zero couponbonds, held by an assessee for 12 months or less. In respect of any other capital assets, STCGmeans capital gain arising from the transfer of an asset, held by an assessee for 36 months or less.(ii)Exemption of capital gain from income taxLTCG arising on transfer of equity shares or units of an equity oriented fund [which has been setup under a scheme of a Mutual Fund specified under Section 10 (23D) of the Act, on a recognizedstock exchange on or after October 1, 2004 are exempt from tax under Section 10(38) of the Actprovided the transaction is chargeable to securities transaction tax (STT) and subject to conditionsspecified in that Section.37

Income by way of long term capital gain exempt u/s 10(38) is to be taken into account incomputing the book profit and income tax is payable in respect of same under Section 115JB ofthe Act.(iii)Computation of capital gainAs per second proviso to Section 48 of the Act, LTCG arising on transfer of capital assets, otherthan bonds and debentures excluding capital indexed bonds issued by Government, is to becomputed by deducting the indexed cost of acquisition and indexed cost of improvement from thefull value of consideration.As per Section 112 of the Act, LTCG is taxed @ 20% plus applicable surcharge thereon,education cess and secondary & higher education cess at applicable rate on tax plus surcharge (ifany) (hereinafter referred to as applicable SC + EC + SHEC).However as per proviso to Section 112(1) of the Act, if such tax payable on transfer of listedsecurities / units / zero coupon bonds exceeds 10% of the LTCG, without availing benefit ofindexation, the excess tax will be ignored.As per Section 111A of the Act, STCG arising on sale of equity shares or units of equity orientedmutual fund [as defined under Section 10(23D) of the Act], on a recognized stock exchange aresubject to tax at the rate of 15% (plus applicable SC + EC + SHEC), provided the transaction ischargeable to STT.(iv)Set off and carry forward of capital lossAs per Section 71 read with Section 74 of the Act, short term capital loss arising during a year isallowed to be set-off against short-term as well as long-term capital gains of the said year. Balanceloss, if any, should be carried forward and set-off against short-term as well as long term capitalgains for subsequent 8 years. As per Section 71 read with Section 74 of the Act, long term capitalloss arising during a year is allowed to be set-off only against LTCG. Balance loss, if any, shouldbe carried forward and set- off against subsequent year‘s LTCG for subsequent 8 years.(v)Exemption under Section 54EC of the Act(1) Under Section 54EC of the Act and subject to the conditions and to the extent specified therein,long-term capital gains [in cases not covered under Section 10(38) of the Act] arising on thetransfer of a long term capital asset, will be exempt from capital gains tax, if the capital gains areinvested within a period of 6 months after the date of such transfer, for a period of at least 3 years,in bonds issued on or after April 1, 2006, by:(2) National Highway Authority of India constituted under Section 3 of The National HighwayAuthority of India Act, 1988, as notified; andRural Electrification Corporation Limited, the company formed and registered under theCompanies Act, 1956.If only part of the capital gains is so reinvested, the exemption shall be proportionately reduced.However, if the new bonds are transferred or converted into money within three years from thedate of their acquisition, the amount so exempted shall be taxable in the year of transfer.(C)INCOME FROM HOUSE PROPERTYBenefit of 30% of annual value is available to the Company as per the provisions of Section 24(a)of the Act.38

(D)(i)INCOME FROM OTHER SOURCESDividends exempt under Section 10(34) of the ActDividend (both interim and final) income, if any, received by the Company on its investment inshares of another Domestic Company shall be exempt from tax under Section 10(34) read withSection 115-O of the Act.(ii)Dividends from units exempt under Section 10(35) of the ActIncome received in respect of units of a Mutual Fund specified under Section 10(23D) of the Actshall be exempt from tax under Section 10(35) of the Act, subject to such income not arising fromtransfer of units in such Mutual Fund.2. Key benefits available to the members of the Company under the Act(A)(i)RESIDENT MEMBERSDividend IncomeDividend (both interim and final) income, if any, received by the resident shareholder from aDomestic Company is exempt from tax under Section 10(34) read with Section 115-O of the Act.(ii)Capital GainsThe provisions of law outlined in paragraph 1(B) above would also be applicable to residentmembers where shares are held as investments. Additionally, the following benefits are alsoavailable to resident shareholders.As per Section 54F of the Act, LTCG arising to individuals and HUF’s from transfer of shares willbe exempt from tax if net consideration from such transfer is utilized within a period of one yearbefore, or two years after the date of transfer, in purchase of a new residential house, or forconstruction of residential house within three years from the date of transfer and subject toconditions and to the extent specified therein.(iii)Shares held as stock-in-tradeGains or losses arising on shares held as stock-in-trade would be chargeable under the head―Profits and Gains of Business or Profession.In terms of Section 36(1)(xv) STT paid in respect of taxable securities transactions entered into inthe course of business during the year shall be deductible if the income arising from such taxablesecurities transactions is considered as business income.(B)(i)NON-RESIDENT MEMBERSDividend IncomeDividend (both interim and final) income, if any, received by the non-resident shareholders from adomestic company shall be exempt under Section 10(34) read with Section 115-O of the Act.(ii)Capital Gains39

Benefits outlined in paragraph 2(A)(ii) above are also available to a non-resident shareholderexcept that as per first proviso to Section 48 of the Act, the capital gains arising on transfer ofcapital assets being shares of an Indian Company need to be computed by converting the cost ofacquisition, expenditure in connection with such transfer and full value of the considerationreceived or accruing as a result of the transfer into the same foreign currency in which the shareswere originally purchased. The resultant gains thereafter need to be reconverted into Indiancurrency. The conversion needs to be at the prescribed rates prevailing on dates stipulated.Further, the benefit of indexation as provided in second proviso to Section 48 is not available tonon-resident shareholders. The aforesaid manner of computation of capital gains will be applicablein respect of capital gains accruing/ arising from every reinvestment thereafter and sale of sharesor debentures of an Indian company including those made in the Company.(iii)Shares held as stock-in-tradeBenefits outlined in paragraph 2(A) (iii) above are also applicable to the non-resident shareholder.(iv)Tax Treaty BenefitsAs per Section 90 of the Act, the shareholder can claim relief in respect of double taxation if anyas per the provision of the applicable double tax avoidance agreements.(v)Where shares have been subscribed to in convertible foreign exchange – Option of taxationunder Chapter XII-A of the ActNon-Resident Indians [as defined in Section 115C(e) of the Act], being shareholders of an IndianCompany, have the option of being governed by the provisions of Chapter XII-A of the Act,which inter alia entitles them to the following benefits in respect of income from shares of anIndian Company acquired, purchased or subscribed to in convertible foreign exchange.As per the provisions of Section 115E of the Act, income [other than dividend which is exemptunder Section 10(34)] from investments and LTCG from assets (other than specified asset) shallbe taxable @ 20% (plus applicable SC + EC + SHEC). No deductions in respect of anyexpenditure allowance from such income will be allowed and no deductions under Chapter VIAwill be allowed from such income.As per Section 115E of the Act, LTCG arising from transfer of specified foreign exchange assetsshall be taxable @ 10% (plus applicable SC + EC + SHEC). ―Specified asset has been defined bySection 115C of the Act, to mean shares in an Indian Company, debentures issued by an IndianCompany which is not a private company, deposits with an Indian company which is not a privatecompany, any security of the Central Government and such other assets as the CentralGovernment may specify in this behalf by notification in the official Gazette.As per the provisions of Section 115F of the Act and subject to the conditions specified therein,LTCG arising to a non resident Indian from the transfer of any specified asset acquired orpurchased with or subscribed to in convertible foreign exchange shall not be chargeable to tax ifthe entire net consideration received on such transfer is invested within the prescribed period ofsix months in any specified asset or savings certificates referred to in Section 10(4B) of the Act.If part of such net consideration is invested within the prescribed period of six months in anyspecified asset or savings certificates referred to in Section 10(4B) of the Act then such gainswould not be chargeable to tax on a proportionate basis. For this purpose, net consideration meansfull value of the consideration received or accruing as a result of the transfer of the capital asset asreduced by any expenditure incurred wholly and exclusively in connection with such transfer.Further, if the specified asset or savings certificates in which the investment has been made istransferred within a period of three years from the date of investment, the amount of capital gainstax exempted earlier would become chargeable to tax as LTCG in the year in which such specifiedasset or savings certificates are transferred.40

As per the provisions of Section 115G of the Act, Non-Resident Indians are not obliged to file areturn of income under Section 139(1) of the Act, if their only source of income is income frominvestments or LTCG earned on transfer of such investments or both, provided tax has beendeducted at source from such income as per the provisions of Chapter XVII-B of the Act.Under Section 115H of the Act, where the Non-Resident Indian becomes assessable as a residentin India, he may furnish a declaration in writing to the Assessing Officer, along with his return ofincome for that year under Section 139 of the Act to the effect that the provisions of the ChapterXII-A shall continue to apply to him in relation to such investment income derived from hespecified assets for the year and subsequent assessment years until such assets are converted intomoney.As per the provisions of Section 115-I of the Act, a Non-Resident Indian may elect not to begoverned by the provisions of Chapter XII-A for any assessment year by furnishing his return ofincome for that assessment year under Section 139 of the Act, declaring therein that the provisionsof Chapter XII-A shall not apply to him for that assessment year and accordingly his total incomefor that assessment year will be computed in accordance with the other provisions of the Act.(C)(i)FOREIGN INSTITUTIONAL INVESTORS (FIIs)Dividend IncomeDividend (both interim and final) income, if any, received by the shareholders from the domesticcompany shall be exempt under Section 10(34) read with Section 115-O of the Act.(ii)Capital GainsTaxability of Capital GainsUnder Section 115AD of the Act, income (other than income by way of dividends referred inSection 115-O) received in respect of securities (other than units referred to in Section 115AB)shall be taxable at the rate of 20% (plus applicable SC + EC + SHEC). No deduction shall beallowed under Section 28 to 44C or clause (i) or clause (iii) of Section 57 or under chapter VI-A ifthe gross total income of the foreign institutional investor consists of only the above income.Under Section 115AD of the Act, capital gains arising from transfer of securities (other than unitsreferred to in Section 115AB), shall be taxable as follows:As per Section 111A of the Act, STCG arising on transfer of securities where such transaction ischargeable to STT, shall be taxable at the rate of 15% (plus applicable SC + EC + SHEC). STCGarising on transfer of securities where such transaction is not chargeable to STT, shall be taxable atthe rate of 30% (plus applicable SC + EC + SHEC).LTCG arising on transfer of securities where such transaction is not chargeable to STT, shall betaxable at the rate of 10% (plus applicable SC + EC + SHEC). The benefit of indexation of cost ofacquisition, as mentioned under 1st and 2nd proviso to Section 48 of the Act would not be allowedwhile computing the capital gains.Exemption of Capital Gains from income-taxLTCG arising on transfer of securities where such transaction is chargeable to STT is exempt fromtax under Section 10(38) of the Act.Benefit of exemption under Section 54EC shall be available as outlined in paragraph 1(B) (v)above.41

(iii)Shares held as stock-in-tradeBenefits outlined in paragraph 2(A) (iii) above are also applicable to the non-resident shareholder.(iv)Tax Treaty BenefitsAs per Section 90 of the Act, FIIs can claim relief in respect of double taxation, if any, as per theprovision of the applicable double tax avoidance agreements.(D)MUTUAL FUNDSAs per the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered underthe Securities and Exchange Board of India Act, 1992 or Regulations made there under, MutualFunds set up by public sector banks or public financial institutions and Mutual Funds authorizedby the Reserve Bank of India, would be exempt from income tax, subject to the prescribedconditions as the Central Government may by notification in the Official Gazette specify in thisbehalf.3. Special tax benefits to the members of the CompanyNone4. Wealth tax Act, 1957 and Gift tax Act, 1958Shares of company held by the shareholder will not be treated as an asset within the meaning ofSection 2(ea) of Wealth Tax Act 1957. Hence shares are not liable to wealth tax.Gift made after 1st October 1998 is not liable for any gift tax, and hence, gift of shares of thecompany would not be liable for any gift tax.Notes:(i)(ii)(iii)(iv)All the above benefits are as per the current tax law and will be available only to the sole/first named holder in case the shares are held by joint holders.In respect of non-residents, the tax rates and the consequent taxation mentioned abovewill be further subject to any benefits available under the relevant DTAA, if any, betweenIndia and the country in which the non-resident has fiscal domicile.In view of the individual nature of tax consequences, each investor is advised to consulthis/her own tax advisor with respect to specific tax consequences of his/her participationin the scheme.The above statement of possible direct tax benefits set out the provisions of law in asummary manner only and is not a complete analysis or listing of all potential taxconsequences of the purchase, ownership and disposal of equity shares.42

SECTION IV – ABOUT OUR COMPANYINDUSTRY OVERVIEWThe information in this section is derived from various government publications, industry sources andother public sources. Neither the Company, the Lead Managers, nor any other persons connected withthe Issue have verified this information or makes any representation to the accuracy of thisinformation. Industry sources and publications generally state that the information contained thereinhas been obtained from sources generally believed to be reliable, but that their accuracy,completeness and underlying assumptions are not guaranteed and their reliability cannot be assuredand, accordingly, investment decisions should not be based on such information.OverviewAccording to the Food and Agriculture Organization of the United Nations, India is the second largestproducer of rice after China based on production in 2007. The rice industry in India is broadly dividedinto two segments - Basmati (drier and long grained) and non- Basmati (sticky and short grained).Basmati rice is a premium variety of rice renowned for its flavour, fine texture, distinct aroma,elongation when cooked and can be grown only in certain parts of India and Pakistan. The non-Basmati market in India is largely unbranded and dominated by unorganized/regional producers.The Company estimates that India produced approximately 3.0 million metric tonnes of Basmati riceout of the total global production of about 4.0 million metric tonnes in 2008-2009. The remainder isproduced by Pakistan. While producers in India have managed to move up the value chain byimproving quality and branding, the growth of the industry in Pakistan has been relatively muted. As aresult, India remains the world's largest Basmati rice supplier.A majority of Basmati rice produced in India is exported. According to APEDA, Indian exports ofBasmati rice increased from Rs. 27,928 million in 2006-2007 to Rs. 43,445 million in 2007-2008 andfrom 1.05 million metric tonnes in 2006-2007 to 1.18 million metric tonnes in 2007-2008. TheCompany estimates that Indian exports of Basmati rice reached approximately 1.85 million metrictones in 2008-2009. The largest export market for Indian Basmati rice has traditionally been theMiddle East with a 80.5% share of India's exports in 2007-08, representing exports of approximately0.95 million metric tonnes according to APEDA. The United Kingdom and the United Statesaccounted for approximately 9.1%, while the rest or the world accounted for the remaining 10.5% ofIndia's exports during the same period, representing approximately 0.1 million metric tonnes and 0.12million metric tonnes, respectively, according to APEDA.Basmati RiceBasmati rice is premium long-grain rice with a fine texture and is the most expensive variety ofgenerally available rice in the world. Its high value stems from its unique qualities, such as a strongaroma in both raw and cooked states. The word Basmati means the "queen of fragrance" or the"perfumed one." Its perfumed, nut-like flavour and aroma can be attributed to the ageing of the grainto decrease its moisture content. On cooking, the grain elongates, and the cooked grain has acharacteristic shape and consistency. Basmati rice is available as both white and brown rice. Thefragrance, cooking qualities and consequently, the value of Basmati rice are enhanced with maturing.For Basmati rice to be marketable, the product needs to be matured for 18-24 months.Basmati is the customary name for certain varieties of rice with these unique properties that are grownexclusively in certain parts of India and Pakistan. Basmati is cultivated in the foothills of Himalayas,the northern part of Western Punjab (on both sides of the Indian and Pakistan border), Haryana,Western Uttar Pradesh, and Uttarakhand. Basmati’s unique taste and texture is attributed to the soiland climate of this region. The following table sets forth the Basmati rice cultivating districts of India:43

Haryana andPunjabHimachalPradeshUttar PradeshUttaranchalAmritsar, Fatehgarh, Gurudaspur, Hoshiarpur, Jalandhar, Kaithal, Karnal, Kurukshetra,Panipat, Patiala, Rupnagar and SangrurKangra, Mandi, Sirmour, Solan and UnaBareilly, Bijnor, Jyotibaphule Nagar, Moradabad, Muzaffarnagar, Pilibhit, Rampur,Raebareli, Saharanpur and SitapurDehradun, Haridwar and Udham Singh NagarBasmati responds well to the climatic conditions of these areas. The amount of water, the quality ofthe soil, the amount of daylight and the gentle winds that are characteristic of this region of Asiacombine to produce good conditions for Basmati rice to thrive.According to the Company’s estimates, Basmati accounts for less than 2% of total Indian riceproduction. Production of Basmati is increasing as consumers are becoming more affluent anddiscerning, creating scope for branding Basmati rice. The Company estimates that India producedapproximately 3.0 million metric tonnes of Basmati rice out of the total global production of about 4.0million metric tones in 2008-2009. The remainder is produced by Pakistan. While producers in Indiahave managed to move up the value chain through improving quality and branding, the growth of theindustry in Pakistan has been relatively muted. As a result, India remains the world's largest Basmatirice supplier.BasmatiRiceOthervarietiesIndia(75%)Pakistan(25%)Exports(60%)Mostlyexports__________Source: Company data and estimatesFull Grain BrokenMiddle East(76%)USA/UK(9%)Rest of World(15%)The following varieties of Basmati rice have been approved by the Indian and Pakistani authoritiesand can use the description "Basmati". They all have at least one parent that is a true-line Basmativariety, and they have been approved on the basis of having the above unique properties as measuredby various objective tests such as grain dimension, amylase content, cooking elongation and aroma.Indian varietiesPakistani varietiesBasmati 370 Basmati 37044

Dehradun (Type-3)Basmati 217Kernel (Basmati Pakistan)Super basmatiBasmati 386 Basmati 385Taraori (Karnal Local, HBC-19) Basmati 198Ranbir basmati (IET 11348)Pusa basmati (IET 10364)Pusa - 1121*Punjab basmati (Bauni basmati)Haryana basmati (HKR 228/IET 10367)Kasturi (IET 8580)Mahi Suganda*Pusa – 1121 being characterised as Basmati rice in 2008-2009Climatic Factors Affecting Basmati Rice Cultivation in IndiaRainfallRainfall is the most important weather element for successful cultivation of rice. However, there aretwo factors that reduce the dependence of Basmati rice on rainfall. Firstly, Basmati rice, unlike otherrice crops, does not require large quantities of water and requires only sprinkling water and notstanding water. Secondly, Basmati rice is grown in Haryana, Punjab, Uttarakhand and Western UttarPradesh. Farmers in these areas have relatively larger holdings and most farms are well irrigated.Therefore the cultivation of Basmati rice is not as dependent on rainfall as non- Basmati rice.TemperatureTemperature is another climatic factor that influences the development, growth and yield of rice. Rice,being a tropical and sub-tropical plant, requires fairly high temperatures ranging from 20°C to 40°C.The optimum temperature of 30°C during the day and 20°C during night seems to favour thedevelopment and growth of rice crop.The Domestic MarketIndia has moved from being an importer of food grains to becoming an exporter. Currently, India isone of the largest producers of cereals and grains. The perception of Basmati rice as a premiumproduct and the fact that customers are extremely sensitive to quality have created an opportunity forbranding. Also, the structural changes in the market are partly responsible for the emergence ofbrands. Major producers in the branded segment traditionally exported Basmati under private labels(unbranded sales). However, these companies were forced to change their strategy in the mid-ninetieswhen buyers started procuring rice from smaller producers. To reduce margin erosion, moreestablished producers began serious efforts towards branding. However, so as not to alienate theirexisting clients, the branding effort first took place in the domestic market. Once the brands wereestablished in the domestic market, Indian producers gradually started introducing their brands to theexport markets.According to the Company’s estimates, Basmati rice consumption was less than 2% of overall riceconsumption in India in fiscal 2009. Low consumption is attributable to the fact that Basmati remainsa premium product in terms of pricing, and is therefore consumed only on special occasions. With agrowing consumer class and increasing disposable incomes, demand for premium products is on therise. The Company estimates that the domestic market for all types of rice is growing at 3%-4% perannum while the growth rate is over 10% for Basmati rice. Overall, the demand for branded superquality/premium rice is growing at 15% per annum. The non- Basmati market is largely unbranded45

and dominated by unorganized/regional players. The Company believes that organized players have amarket share of less than 2% of total non- Basmati rice market in India. This segment is not aslucrative in terms of profitability as compared to the Basmati segment because of the difficulty increating differentiation and brands.The Export MarketA majority of Basmati rice produced in India is exported. According to APEDA, Indian exports ofBasmati rice increased from Rs. 27,928 million in 2006-2007 to Rs. 43,445 million in 2007-2008 andfrom 1.05 million metric tonnes in 2006-2007 to 1.18 million metric tonnes in 2007-2008. TheCompany estimates that Indian exports of Basmati rice reached approximately 1.85 million metrictones in 2008-2009. The largest export market for Indian Basmati rice has traditionally been theMiddle East with a 80.5% share of India's exports in 2007-08, representing exports of approximately0.95 million metric tonnes according to APEDA. The United Kingdom and the United Statesaccounted for approximately 9.1%, while the rest or the world accounted for the remaining 10.5% ofIndia's exports during the same period, representing approximately 0.1 million metric tonnes and 0.12million metric tonnes, respectively, according to APEDA.Within the Middle East, Saudi Arabia accounts for a major part of Basmati imports from India.Pakistan is the major competitor for India in the international market for Basmati rice. Other marketsfor Indian Basmati rice exports include the United Arab Emirates, Kuwait, Austria, Belgium, Bahrain,France, Germany, Denmark, Canada, Italy, Oman, Yemen, Netherlands, Jordan and Indonesia.The below chart shows a break-up of the total quantity of Basmati rice exported from India in 2007-2008.Source: APEDA1.5% 13.5% Saudi Arabia3.0%4.2%6.0%9.6%16.3%45.9%UAEKuwaitUnited KingdomYemen RepublicUSANetherlandsOthersA large portion of Basmati exports is unbranded, which leads to lower export prices. However, withmore Indian producers opting to export under their own brands, the Company expects overall prices toincrease. Thus, the opportunity from this market is not only from volume-based growth but also fromtaking market share away from existing unorganized players through the creation of strong brands.The below chart shows the percentage of growth in the value of exports to India’s top six exportcountries from 2006 to 2008 for Basmati rice.14012010080604020064.3Source: APEDA126.030.948.3Saudi Arabia UAE Kuwait UnitedKingdom23.9USA47.1YemenRepublic46

Indian exports of Basmati rice are expected to continue to rise due to recognition of premium quality,increased branding, and better marketing along with greater access to all the markets for agriculturalproducts.Industry Development & TrendsThe Basmati rice industry in India has been traditionally dominated by small millers. However, theunique nature of the rice has attracted many large corporates. Ageing requires significant workingcapital. The large processors generally enjoy greater access to working capital.Over the last few years, the Basmati rice industry in India has witnessed a shift towards an organizedstructure for the following reasons:• Technology: Organized players have access to production technology, which smaller playerscannot afford.• Scale: Larger players have the requisite economies of scale to reduce per unit productioncosts.• Standardization: Unorganised millers use traditional methods, which cannot ensure grading(based on size) and sorting (based on colour) of the rice required for consistent productquality.• Pre-ageing ability: Small processors do not have the resources to age and mature Basmatirice.• Procurement capabilities: Basmati quality and branding require strong procurementcapabilities to procure paddy from mandis.The Company estimates that the overall Basmati rice demand is expected to grow at 15%-20% in thenext few years while the supply of Basmati rice is increasing at a lower pace as compared to demand.The international market consumption of Basmati rice is increasing owing to rise in demand frompresent countries, such as Saudi Arabia, the United Arab Emirates, Kuwait, the United Kingdom, theUnited States and the Yemen Republic, and the entry of new countries. At the same time, the domesticdemand is also on the rise due to a spurt in the mall culture and growth of hotels and restaurants. Thiswill affect the suppliers of Basmati rice directly through sales of branded products or indirectlythrough private sales. The widening gap of demand and supply is expected to create room for anincrease in the premium to be commanded. As a result of the limited supply and an increasing demandfor this product, it is likely that the companies in this section may benefit in the long run.47

OUR BUSINESSIn this section “our Company” refers to the Company, while “we”, “us” and “our” refers to our Company.OVERVIEWWe are primarily in the business of processing and marketing of branded & un-branded Basmati rice in thedomestic and overseas market. Based on the information on other Basmati rice processing companies’websites as to their actual capacity, we are the largest listed company in India engaged in the business ofprocessing Basmati rice. With over a decade experience in the Basmati rice processing industry we arepresent across the entire Basmati rice processing chain ranging from procurement of Basmati paddy to itsstorage, ageing, processing, packaging and distributing.We started our operations with a modest grading capacity located near Delhi at Bawal, Haryana andpresently have a total installed annual processing capacity of 902,280 metric tonnes, including parboilingcapacity of 621,960 metric tonnes, from our two owned processing plants in Bawal, Haryana and leasedunits in Punjab and Haryana, each strategically located in the vicinity of the Basmati paddy producingregions of northern India.In order to meet the increasing demand for Basmati rice in domestic and international markets we have,over the period increased our production output from 64,775 metric tonnes in FY 2000 to 429,889 metrictonnes in FY 2009. We have been able to achieve this through continuous capacity enhancements.We are present across all price points in the branded Basmati market and sell our processed Basmati ricedomestically and in the export market under various brand names, which include Kasauti, Mr. Miller,Hungama, Rain Drop, Hansraj, Mehrab and Nausheen, through a wide network of distributors acrossIndia. Further our parboiling capacity has enabled us to export a major portion of output to countries fromthe Gulf region namely Saudi Arabia, the United Arab Emirates and Kuwait. The Gulf region accounts forlargest exports of Basmati rice from India.In our non-primary business segment we are engaged in generation of power from our four wind farmslocated in the States of Rajasthan, Maharashtra, Tamil Nadu and Gujarat and having capacities of 7.5megawatts, 22.4 megawatts, 6.0 megawatts and 10.2 megawatts, respectively, aggregating to a totalcapacity of 46.1 megawatts. Our Company’s wind power project located at Rajasthan is registered with theUnited Nations Framework Convention on Climate Change and we are further also in the process ofregistering our other wind power projects. As on August 31, 2009 our Company has already received25,094 CERs under the Kyoto Protocol. Our Company’s wind farm business started in March, 2004.In FY 2008 the retail division of our Company, which started operations from March 27, 2007 wasdemerged into a separate company, namely, REI Six Ten Retail Limited (“REI Six Ten”). REI Six Ten is aretailing company focusing on retailing fresh vegetables & fruits, staples and all food & non food consumerproducts. It has presence in North, Western and Eastern India with currently over 380 franchisee retailstores operated under the brand name “6Ten”. We also sell our branded Basmati rice products throughretail stores managed by REI Six Ten.Our total revenue has grown at a compounded annual growth rate of 50.3% from FY 2007 to FY 2009. Forthe year ended March 31, 2009, our total revenue and profit after tax was Rs. 24482.3 million and Rs. 609.3million respectively. Further as at March 31, 2009, our Company’s total assets were Rs. 3,8715.7 millionand our Company’s net worth was Rs. 6,022.2 million.For the first quarter ended June 30, 2009, our total revenue and profit after tax was Rs. 8577.9 million andRs. 415.9 million respectively.48

COMPETITIVE STRENGTHS:We attribute our business growth primarily to variety of factors namely product mix, distribution reach,branding initiatives, better quality products, expansion in our product range domestically and in the exportmarket, and innovation.We believe the following to be our principal competitive strengths:1. Integrated Operations and Economies of Scale:Our Company is the largest listed company in India engaged in the business of processing Basmati rice.Our Company has combined installed processing capacities of 902,280 metric tonnes per annum; includingparboiling capacity of 621,960 metric tonnes per annum. By virtue of our integrated operations rangingfrom paddy procurement to distribution of processed Basmati rice our Company derives benefit ofeconomies of scales and quality control.Global buyers today are increasingly looking to consolidate their sourcing strategy. This would meansourcing from fewer vendors. We therefore believe our Company is well positioned to be one of the“preferred vendors” from India because of our size, integrated operations and modern facilities.2. Modern Equipment & Technology coupled with Process Innovations:Our Company has invested in modern and latest technology and equipments imported from recognisedsuppliers. We believe that our Company’s manufacturing technology gives us a competitive edge over mostof our competitors. Our processing units utilise Basmati rice processing technology which offer highoperational efficiency. Our technology while ensuring that labour requirement is minimal facilitates quickturnaround time to ensure production of a quality product with lower breakages, negligible losses and bettersorting and grading processes.While processing the Basmati paddy, a substantial portion of the processed rice gets normally broken. Overthe period , we have been able to minimize the proportion of broken rice to and maximize the finishedwhole grain Basmati rice from 39 % in FY 2005 to 49 % in FY 2009, this has effectively lead to increase inproportion of whole rice to the total sales volume and resultantly helped us in maximizing our salesmargins.We believe that our Company’s high level of modernization, trained work force and managerial expertiseresults in a consistently high level of productivity.3. Experienced Management Team:Our management team consists of individuals with significant experience in the Indian Basmati riceindustry and broad knowledge about Basmati rice procurement, processing and marketing activities. Ourmanagement team has expanded our business in both scale and scope through various initiatives, such asincreasing in-house processing capacity, increasing vertical integration, broadening distribution channels,expanding our product range and brand portfolio, and increasing sales in both the domestic and exportmarkets.4. Access to Working Capital:Due to our size and longstanding relationship with lenders, we have had regular access to working capitalon relatively favourable terms, which may not be available to the smaller players in the market. As on June30, 2009, we had sanctioned working capital limits of Rs. 31,800.0 million obtained from various banksand financial institutions at a floating rate of interest. As a result of this ready access to working capital, ourCompany is in a position to make advance and up-front payments for in-season purchases of Basmatipaddy, to the farmers through our licensed third-party procurement representatives and agents (“puccaartiyas”). This enables creation of long-term relationships with the farmers, as well as regular supplies of49

quality Basmati paddy at lower costs to us. Additionally, due to our access to working capital we are in aposition to store and age the Basmati paddy for relatively longer periods of time, thus improving the qualityof our product.5. Locational Advantage coupled with Strong Procurement Capabilities:We operate from our two owned processing plants in Bawal, Haryana and leased units in Punjab andHaryana, each strategically located in the vicinity of the Basmati paddy producing regions of northernIndia. This facilitates easy movement of Basmati paddy into our factory locations. Our Company’sprocurement network has developed over a period of 13 years, and includes a large team of well trainedpucca artiyas spread across approximately 180 organised government-monitored agricultural producemarkets known as “mandis” in the Basmati paddy producing areas in Haryana, Punjab, Uttarakhand andWestern Uttar Pradesh. This geographical reach allows us to procure Basmati paddy from mandis locatedin smaller villages, where Basmati paddy is generally cheaper. We make use of advance payments, upfrontpayments and consistent purchases to inspire the faith and confidence of Basmati paddy farmers, therebyobtaining the status of “preferred buyer” from farmers, thereby enabling us to procure quality Basmatipaddy at lower prices to us and have a large procurement network. These enduring relationships withBasmati paddy farmers ensure us an uninterrupted supply of quality Basmati paddy during the procurementseason.6. Strong Distribution Network:Our Company’s distribution network is extensive consisting of 490 distributors nationwide as of August 31,2009 who in turn have access to over 100,000 retailers. Basmati rice in India is mostly sold by distributorsto neighbourhood retail outlets located in densely populated residential areas. Our strong distributionnetwork has been one of the drivers for pushing our brands in these retail outlets and increasing our sales ofbranded Basmati rice as a proportion of overall domestic sales from 39.90% in FY 2008 to 43.10% in FY2009.7. Processing Expertise and Quality Control:Our Company has a well-established supply chain for the procurement, processing and marketing ofBasmati rice. When procuring Basmati paddy, we conduct pre-harvest surveys and quality checks. We ageand grade the Basmati rice and minimise the quantity of broken Basmati rice during processing, thusimproving profitability. Our Company has installed modern equipment and has a fully equipped laboratorythat checks quality at various stages of the rice production process.BUSINESS STRATEGIES:Our strategic objective is to continue to focus exclusively on Basmati rice processing and to capitalise ongrowth opportunities available in the Indian domestic and export Basmati rice industry by furtherincreasing our market share. To achieve this, we have implemented the following strategies:1. Increase Branding and Distribution Capabilities:We are focused on branding and in particular increasing our presence in the premium end of the Basmatirice market, which provides higher margins. Income from premium brands increased from 23.00% in FY2008 to 25.00% in FY 2009. We also strive to improve our distribution capabilities based on regularassessments of market developments and our relative capabilities and market position. We intend toincrease both the number and the scale of distributors we deal with. We plan to increase penetration intodomestic markets by increasing distribution of our products in areas such as West Bengal, Andhra Pradesh,Madhya Pradesh, Gujarat, Tamil Nadu, Delhi and Punjab, where we believe there is a demand for bothwhole grain and broken Basmati rice. In order to penetrate further into the Indian and export market, we arecurrently undertaking various product and brand promotion activities and marketing efforts to create a highlevel of brand awareness.50

2. Increase Exports :We plan to continue to focus on increasing export sales, which provide higher margins than domestic sales.During FY 2009, our Company generated 41.20% of its total sales of goods from exports of Basmati rice,which was up from 18.40% achieved during FY 2008. Our exports are significantly driven by sales ofparboiled Basmati rice to Saudi Arabia, the United Arab Emirates and Kuwait. Our state-of-the-artparboiling facility is expected to continue to boost export sales in total and also as a proportion of our totalsales of goods.3. Increase Maturing of Basmati Paddy to Derive Better Yields of Whole Grain Basmati Rice:We plan to continue to concentrate on maturing Basmati paddy for longer periods to derive better yields ofwhole grain Basmati rice. During the various stages of processing, some proportion of Basmati rice isbroken. The ratio of broken Basmati rice to whole grain Basmati rice depends, among other factors, on thematurity of the Basmati paddy. We sell whole grain Basmati rice at more than double the price of brokenBasmati rice in the market. Matured Basmati paddy is less likely to break during processing thanunmatured Basmati paddy. In FY 2009, our average combined holding period for finished goods and rawmaterials was 14 months, up from 13 months in FY 2008. We are targeting to achieve an 18-month averageholding period. By increasing our Basmati paddy holding period and continuing to use advanced processingtechnologies, we expect to increase profitability by deriving better yields of whole grain Basmati rice andincreasing the overall quality of our Company‘s products.4. Optimise Capital Structure, Improve Margins and Reduce Costs:We plan to increase profitability by reducing our indebtedness, thereby improving our debt to equity ratioand reducing our interest expense, and by increasing exports and sales of branded whole grain Basmati rice,as these products have the highest margins. In addition, we plan to reduce our production costs byimproving our procurement procedures by expanding our presence in smaller mandis where Basmati paddycan be purchased at lower prices than at larger mandis.5. Become a preferred supplier to Global CustomersOver the recent past, a trend that is emerging is that of large global customers looking at increasing theefficiency of their supply chain by consolidating their vendors and relying on large vendors who wouldhave the capability to service large volume orders on time and within stringent quality parameters. OurCompany, with its integrated capacities and with quality control practices, makes such sourcing costeffective and efficient for its customers. Therefore, as part of its growth strategy, our Company is makingconscious efforts to move up the value chain with its customers and become a ‘preferred supplier’ to someof the global customers. This would also have the additional advantage of being able to procure largeorders from such customers on regular basis6. Become an Employer of ChoiceWe place particular emphasis on attracting and retaining the best talent in the industry. We haveimplemented various human resource programmes at every level in the organisation, which has helped indeveloping and retaining our talent pool. We believe it is imperative that we have a well trained andexperienced pool of resources in order to execute our strategy and manage the substantial business andcapacity growth that is expected. We intend to continue attracting the appropriate level of talent through theright mix of recruitment and retention strategies.OUR BUSINESS DIVISIONS AND OPERATIONS:Post demerger our Company now has two main business divisions / verticals namely primary: Basmati RiceProcessing and Non-Primary: Wind Power Generation.51

A) BASMATI RICE PROCESSING DIVISION:Our Company is primarily engaged in the business of processing and marketing of branded & non-brandedBasmati rice in the domestic and overseas market. Our operations include procurement, storage, drying, dehusking,polishing, colour sorting, grading, inspecting, maturing (pre and post processing) packaging,branding and distribution.A schematic overview of our entire operations is given below:I. Raw MaterialsPaddy ProcurementOur Company‘s primary raw material is Basmati paddy and ungraded Basmati rice, which is a semiprocessedrice where the husk has been removed but not further processed. In India, Basmati paddy crop isharvested every year normally between September and January. During this period, we purchase most ofthe Basmati paddy to be stored for maturing and usage throughout the year. A sample is drawn and testedfrom each truckload once it arrives at the processing plant. The results of the report are analysed to ensureconsistent quality. Our Company has a paddy management team which is responsible to take care of theBasmati paddy until the time it is processed. All our stocks are insured against loss by fire and specialperils including earthquakes.In addition to purchasing Basmati paddy during the harvest seasons, we also purchase Basmati paddy in theoff-season from traders and other rice processors in order to meet our shortfall. Our Company alsopurchases ungraded Basmati rice for further processing into aged graded Basmati rice, but is currentlyconcentrating on the procurement of Basmati paddy as it offers better margins.Procurement Policy-Purchase of Basmati PaddyProcessors purchase the Basmati paddy from about 180 mandis through pucca artiyas. Our Companypurchased approximately 683,282 metric tonnes of Basmati paddy in FY 2009.Basmati paddy is sold at open auctions overseen by government officials. Our representatives participate inmost mandis throughout the Basmati paddy growing regions in Northern India, including Haryana, Punjab,Uttarakhand and Western Uttar Pradesh. This geographical reach allows our Company to procure paddyfrom mandis located in smaller villages where Basmati paddy is generally cheaper. We have arrangementswith pucca artiyas under which the quality and quantity of Basmati paddy to be procured on a daily basison our behalf is completed according to our instructions.Pucca artiyas have been trained by our Company and have a sound knowledge and understanding of thequality of Basmati paddy that is offered at the mandis, as well as of the quality and standard expected byour Company. Specific areas of purchase are surveyed by our Company during the initial purchase, andonly on our approval are sample purchases started at different mandis. Defects common to each area areidentified at this time and instructions are instituted accordingly in order to control these defects.52

Our Company has several measures in place to ensure that the Basmati paddy purchased is of the requiredquality that meets our standards. Our Company reviews each pucca artiya annually. Should a supplier notmeet our Company‘s standards, it may be issued an advisory/warning notice or removed from the approvedsupplier list. As a result of access to working capital on relatively favourable terms, our Company usesadvance payments, upfront payments and consistent purchases to inspire the faith and confidence ofBasmati paddy farmers, thereby obtaining the status of “preferred buyer” from farmers, thereby enabling usto procure quality Basmati paddy at lower prices. These enduring relationships with Basmati paddy farmershelp us ensure an uninterrupted supply of quality Basmati paddy during procurement seasonPeak and Off-peak Season ProcurementProcurement timing is one of the critical factors for effective procurement. The prices of Basmati paddy areat their lowest during the peak season (September to March every year). During the off-season, Basmatipaddy is available through stockists, who generally charge a higher price for the same. Our Company’s offseasonprocurement costs tend to be 10%-15% higher than peak season costs.In recent years, our Company has managed to increase the proportion of seasonal procurement, therebydecreasing our procurement costs. The breakdown of our Company‘s procurement between peak seasonand off-season for the last three years is illustrated below.Year ended 31March,Peak Season* Off-Season Total Peak Season Purchase as aPercentage of Total Purchase(in metric tonnes)2007 291,576 159,634 451,210 64.62%2008 415,541 158,838 574,379 72.35%2009 633,492 49,790 683,282 92.71%* Peak season is September to March each year.Drying of Basmati PaddyOnce received, Basmati paddy has to be dried. Moisture in incoming Basmati paddy ranges from 13%-16%, which has to be reduced to about 12% for proper storage and processing. The production manager incharge decides which shipment of Basmati paddy has to be used and when. When a shipment is identifiedfor use, it is first cleaned of all impurities by a machine before it is sent for drying. The dried Basmatipaddy is then bagged and stored again for final ageing.Storage & Maturing of Basmati Paddy and Basmati RiceWe have adequate storage facilities in the vicinity of our plant situated at Bawal (Haryana). We also rent ona short term basis warehouse facilities at other locations. Our Company stores the Basmati paddy in openfields, as well as in warehouses, whereas Basmati rice is stored only in warehouses.Our Company has been concentrating on increasing the maturing of Basmati paddy to derive better yieldsof whole grain Basmati rice and also to increase the overall quality of our products. The fragrance andcooking qualities of Basmati rice are enhanced with ageing. During the various stages of processing someproportion of the Basmati rice will be broken, so that the Basmati rice, after polishing, is a mixture ofbroken and whole grain basmati rice. The ratio of broken Basmati rice and whole grain Basmati ricedepends, among other factors, on the age of Basmati paddy. The longer the maturation process, the higherthe yield of whole grain basmati rice. Our Company has been able to control the percentage of brokenBasmati rice and increase whole grain Basmati rice recovery by increasing the maturity of basmati paddybefore processing. We sell whole grain Basmati rice at more than double the price of broken Basmati ricein the market. With better whole grain Basmati rice recovery due to the more efficient processing, we havenot only managed to increase realisations per tonne sold, but have also increased the volume of whole grainbasmati rice sales.53

In FY 2009, our average combined holding period for finished goods and raw materials was 14 months, upfrom 13 months in FY 2008. We are targeting to achieve an 18-month average holding period, which wouldenable wholesalers and distributors to sell Basmati rice as a fast moving consumer good since it wouldremove the need for them to make additional investment by holding stocks of Basmati rice until they arefully aged.II.ProcessingWhen the dried Basmati paddy is ready for processing, it is transferred to the processing department.Processing involves the following processes:Final Cleaning: During this stage, the basmati paddy is again cleaned of any lightand heavy impurities.Final PaddyCleaningDe-husking: Outer layer of paddy is removed by machines called “de-huskers”; theresulting rice is called “brown rice”.De-huskingWhitening: Brown rice is polished in 3-4 abrasive polishers to remove the branlayer and make it “white rice”.WhiteningFinal Polishing: The white rice is then sent to fine polishers. In this stage, with theaid of friction, water and air pressure, the loose bran layer and dust is removed toget clean white rice.Colour Sorting: The mixture of whole grain and broken basmati rice are made tofall at a high constant speed, where an electronic visual detector checks the ricecolour and in case of light and dark impurities, the defective grain is separatedusing pressurized air blows.Rice Grading: Basmati rice after polishing is a mixture of broken and whole grainbasmati rice which to be graded has based upon size. A number of long cylinders,having slots of various sizes are used for grading. Graded basmati rice is thenpacked in different bags.FinalPolishingColourSortingRiceGradingOn an average over the last five years, we have been able to process approximately 67% of Basmati riceout of total Basmati paddy processed.Parboiling:Parboiling is a hydrothermal treatment of Basmati paddy and is done by boiling the Basmati paddy beforeremoving the husk. Parboiled rice is “partially boiled” (i.e., partially cooked rice). Basmati paddy is firsthydrated, then heated to cook the Basmati rice and finally dried. Parboiling improves Basmati’s nutritionalprofile, and changes its texture. Parboiling Basmati rice drives nutrients, especially thiamine, from the braninto the grain, so that parboiled white rice is nutritionally similar to brown rice. The starches in parboiledBasmati rice become gelatinized, making it harder and glassier than other rice. Parboiled Basmati rice ispreferred to raw Basmati rice in the export market on account of customers cooking preferences. As on date54

our Company has state-of-the-art parboiling capacity of 621,960 metric tonnes per annum. Our Companyuses husk, which is a by-product of rice processing for firing boilers in our parboiling unit. Currently ourCompany processes parboiled Basmati rice largely for the export market. We, however, sell the parboiledBasmati rice in the domestic retail and wholesale markets. The process of parboiling substantially improvesthe full grain Basmati rice yield and reduces the broken Basmati rice. Further, parboiling enables ourCompany to process relatively cheaper basmati paddy thereby lowering overall production costs.Since the commencement of our Company‘s parboiling facilities in 2005, we have been able to scale up ourexport operations. In view of the growing demand and the acceptability of our Company‘s Basmati rice inthe export market, we have increased the parboiling capacity from 280,320 metric tonnes in FY 2006 to411,720 metric tonnes in FY 2009. The table below shows the parboiled rice processing capacity andparboiled rice production of the Company for the periods presented.For the year ended 31MarchMilling Capacity(in metric tonnes)Milled Paddy2005 70,080 23,1872006 280,320 81,2802007 280,320 144,6502008 345,840 177,8312009 411,720 342,352III.Sales of Basmati RiceAfter processing, Basmati rice output comprises of whole grain Basmati rice and broken Basmati rice. Wesell our Basmati rice in the domestic and export markets. Given below is a description of our sales:SALESExportDomesticOwn BrandThird Party BrandWholesaleREI 6 Ten &DistributorsOwn BrandUnbrandedOwn BrandThe following is a discussion of our Company‘s branded and unbranded whole grain and broken Basmatirice products, our domestic and export markets and our retail and wholesale distribution channels.ProductsWhole Grain and Broken Basmati RiceOur Company sells both whole grain and broken Basmati rice in branded and unbranded form. We usecertain brands exclusively for selling either whole grain or broken Basmati rice, while others are used forselling both. The following table shows a breakdown of our Company‘s whole grain and broken Basmatirice sales for the periods presented.55

(Rs. in million)Particulars FY 2007 % of total FY 2008 % of total FY 2009 % of totalWhole Grain 8,510.2 80.20% 16,141.6 94.20% 21,857.1 90.20%Broken 2,100.9 19.80% 995.3 5.80% 2,376.2 9.80%Total Basmati Rice 10,611.1 100.00% 17136.9 100.00% 24,233.3 100.00%SalesWhole grain Basmati rice is rice that is not broken during processing. Whole grain Basmati rice is soldeither in branded or unbranded form and both in the retail and wholesale markets. In branded form, wholegrain Basmati rice is mainly sold in the retail market through dealers after being matured for a period of 18months, whereas in the wholesale market it is sold in branded as well as in unbranded form after an averagematuring period of 11 months. We also sell our whole grain Basmati rice in the export market either underour own brand or in third party brands. Major brands in which our Company sells its whole grain Basmatirice include Kasuati, Mr. Miller, Hungama, Ikon, Rain Drop, Hansraj, Mehrab and Nausheen. We sell ouroutput of whole grain Basmati rice at more than double the price of broken Basmati rice. Although a lateentrant to the whole grain branded Basmati rice market, the response for our Company‘s whole grainBasmati rice has been positive, and sales of whole grain branded and unbranded Basmati rice have beenconstantly increasing, reaching Rs. 21,857.1 million in 2009 from Rs. 16,141.6 million in 2008.Broken Basmati rice is rice that gets some breakage during processing and gets separated from whole grainBasmati rice during processing. We sell our output of broken Basmati rice only in branded form under ourvarious brands. While most of our competitors are focused on branding whole grain basmati rice, ourCompany has seen an opportunity to brand broken Basmati rice and thereby create a new market segment.With our success in establishing brands in the broken Basmati segment, we have been able to develop amarket for our branded whole grain Basmati rice segment.Branded and UnbrandedOur Company has introduced brands for its whole grain and broken rice at different price points frompremium to economy segments. There are three key segments: Premium (which accounted for around 25%of our Company‘s domestic branded sales in FY 2009), Mid-range (which accounted for around 56% of ourCompany‘s domestic branded sales in FY 2009) and Economy (which accounted for around 19% of ourCompany‘s domestic branded sales in FY 2009). Our Company has also launched our brands Mr. Miller,Rain Drop, Mehrab and Nausheen in Saudi Arabia, the United Arab Emirates and Kuwait.Our Company has shown an upward trend with about 43.00%, or Rs. 10,454.5 million, of our total salescomprising of branded Basmati rice sales in FY 2009. The percentage of turnover represented by premiumbranded Basmati rice has also increased from 5% in FY 2004 to 25% in FY 2009. Our Company is activelypursuing ways to increase its sales of branded Basmati rice in the domestic as well as in the internationalmarket.We sell our unbranded processed whole grain Basmati rice to wholesalers and repackers. In FY 2007, FY2008 and FY 2009, approximately 69%, 63.8% and 63%, respectively, of our whole grain Basmati ricesales were under the unbranded segment.Distribution InfrastructureOur Company‘s Basmati rice reaches its domestic customers through two distribution channels- namelythrough distributors and 6Ten, which is mostly branded Basmati rice or to wholesalers, stockists andrepackers. In export market we sell our product directly to our customers.The following table shows a breakdown of our Company‘s sales by distribution channel for the periodspresented.56

(Rs. in million)For the year ended 31 March2007 2008 2009Rs. % total Rs. % total Rs. % totalWholesale:Branded 3,486.6 32.90% 4,018.2 23.40% 5,005.6 20.70%Unbranded 5,874.0 55.40% 10,303.6 60.10% 13,788.8 56.90%Retail (1) :To 6Ten - - 509.2 3.00% 2,135.0 8.80%To Distributors 1,250.5 11.70% 2,305.9 13.50% 3,313.9 13.60%Total Sales 10,611.1 100.00% 17,136.9 100.00% 24,233.3 100.00%(1) All sales are branded.As our Company has enhanced its production capacities, it has also continuously increased its distributionnetwork around India. Distributor numbers have continually increased over recent years to 490 as ofAugust 31, 2009. These distributors in turn have access to over 100,000 retailers. Our Company also usesits distributors to sell Basmati rice to its wholesale distribution channels. Our Company has managed tocontrol its dependence on high performing distributors. Our Company‘s top ten distributors accounted foronly approximately 20% of sales during FY 2009 compared to 22% in FY 2008.The geographic break up of the distributors of our Company is tabulated as under:Number of Distributors as of 31 March2007 2008 2009North 186 192 192West 134 143 145South 98 99 101East & Central 42 51 52Total 460 485 490Traditionally Basmati rice wholesalers and distributors have played a more substantial role than that ofmere traders. They order Basmati rice and store it in warehouses where it can further age and appreciate invalue. Upon reaching maturity, they supply the goods to retailers spread over a large geographic area.These retailers maintain stocks and can increase price by further ageing the Basmati rice. The level of profitrealised is directly related to the amount of time that the respective distributor or retailer has been able toage the Basmati rice. However, profits can also be substantially reduced by losses caused throughinfestation and other storage problems as most retailers and distributors do not have adequate facilities tostock or care for the Basmati rice.Markets – Domestic and ExportsWe sell our output of Basmati rice in the domestic as well as export market. The following table shows abreakdown of our Company‘s domestic and export sales for the periods presented:For the yearended 31 MarchDomestic SalesExport salesRs. in millions Percentage oftotal incomeRs. in millions2007 8,770.9 82.70% 1,840.2 17.30%2008 13,976.5 81.60% 3,160.4 18.40%2009 14,253.8 58.80% 9,980.0 41.20%Domestic MarketPercentage of totalincome57

In the domestic market we have promoted our key brands Kasauti, Mr. Miller, Hungama, Ikon, Rain Dropand Hansraj and sell our branded and unbranded Basmati rice domestically in the wholesale and retailmarkets.The following table shows a breakdown of our Company‘s domestic region wise sales for the periodspresented:(Rs. in millions)For the year ended March 312007 2008 2009North 4,112.2 6,225.1 6,195.8West 2,221.4 4,025.5 4,333.8South 1,633.9 2,497.8 2,515.6East 803.4 1,228.1 1,208.6Total Basmati Rice DomesticSales8,770.9 13,976.5 14,253.8We plan to increase our domestic market penetration by increasing distribution of our products in areassuch as West Bengal, Andhra Pradesh, Madhya Pradesh, Gujarat, Tamil Nadu, Delhi and Punjab, where webelieve there is a demand for both whole grain and broken Basmati rice.ExportsFor the export market, we only sell whole grain parboiled Basmati rice either through our own brand viz.Mr. Miller, Rain Drop, Mehrab and Nausheen or through a third party brand. Currently, we do not exportbroken Basmati rice. Consumers in Saudi Arabia, the United Arab Emirates and Kuwait prefer to consumeparboiled Basmati rice.As a result of our increased parboiled rice production, our Company‘s exports have grown each year since2005 both in terms of sales and percentage of its total income. Our Company derived approximately 17.3%,18.4% and 41.2% of its total sales of goods of Basmati rice from the export market for FY 2007, 2008 and2009 respectively. Saudi Arabia, the United Arab Emirates and Kuwait are the primary export markets forthe Company and accounted for 100% of the Company‘s total exports in FY 2009. This growth reflects ourincreased focus on exports. We expect that our parboiling facility will continue to boost the export income.Since December, 2008, at the request of one of our customer in the United Arab Emirates, we have alsoshipped Basmati rice to Iran. All the billings, however, for both FY 2009 and the current Year areconducted with the customer in the United Arab Emirates. In FY 2009, Basmati rice shipped to Iranaccounted for 17% of our Company‘s total exports and 6.94% of our Company‘s total income. In thecurrent Year, for the period from April 1, 2009 to May 31, 2009, Basmati rice shipped to Iran accounted for19% of our Company‘s total exports and 3.96% of the Company‘s total income..Processing CapabilitiesOur Company‘s processing facilities in Bawal, Haryana are supplied by Bühler GmbH of Germany, SatakeCorporation of Japan and Carter Day International, Inc. of the United States. We presently have a totalinstalled annual processing capacity of 902,280 metric tonnes, including parboiling capacity of 621,960metric tonnes from our two owned processing plants in Bawal, Haryana and leased units in Punjab, eachstrategically located in the vicinity of the Basmati paddy producing regions of northern India.The table below shows the production and processing capacity of our Company for the last three FinancialYears:(In metric Tonne)2007 2008 2009Production 288,025 397,860 429,889Average Processing 481,656 573,672 692,04058

2007 2008 2009CapacityUtilisation rate 59.80% 69.35% 62.12%The capacity utilisation during the above period has been relatively low on account of workingcapital constraints and as the company has regularly increased it s installed capacity.B) Wind Farm BusinessIn our non-primary business we are involved in wind power generation through our four wind farmslocated in the States of Rajasthan, Maharashtra, Tamil Nadu and Gujarat and having capacities of 7.5megawatts, 22.4 megawatts, 6.0 megawatts and 10.2 megawatts, respectively, aggregating to a totalcapacity of 46.1 megawatts. Our Company has executed power purchase agreements for the entire powergenerated at our wind farms. Sale of power/energy generated by our Company‘s wind farms represented1.1% and 0.9% of our Company‘s total income for FY 2008 and FY 2009 respectively.Our Company’s wind farm business started in March 2004. Our Company has invested in these facilities totake advantage of beneficial tax credits from the Indian government, to generate carbon credits and toprovide an additional source of income. The wind farms are operated and maintained by third partycontractors. Our Company has entered into long-term power purchase agreements with the respective stateelectricity distribution companies and electricity boards for its wind power projects at Tamil Nadu,Rajasthan and Maharashtra. Further we have leased out the Gujarat wind power project to anothercorporate entity on an operating lease basis.Our Company‘s wind power projects located at Rajasthan is registered with the United Nations FrameworkConvention on Climate Change. As on date our Company has already received 25,094 CERs under theKyoto Protocol. We are further in the process of obtaining similar registrations for our other wind powerprojects.C) Wholesale TradingIn order to fulfill our sales commitment we also procure Basmati paddy and Basmati rice from other smallprocessors and sell it to our existing wholesale customers. In FY 2009, approximately 13% of ourCompany's total income was from trading activity.D) By-ProductsTwo by-products produced as a result of rice processing are husk and rice bran. Our Company uses huskfor firing boilers in the parboiling unit. We sell rice bran to edible oil extraction units. In FY 2009,approximately 0.7% of our Company‘s total income was derived from selling the said by-products.CompetitionOur Company is the largest listed company in India engaged in the processing of Basmati rice. Our maincompetitors are Kohinoor Foods Limited, L.T. Overseas Limited, KRBL Limited, and various smallerunorganized processors.59

Intellectual propertyOur Company has the following registered trade marks in India:Sr.No.Trademark1. 6tenJ No- 13932. 6tenJ No- 13933. IKONJ No- MEGA-64. ICONJ No-MEGA-65 FIRDAUSJ No- 1328(S-V)6 MEHRABJ No-1328(S-IV)7 MR. MILLERJ No-13498 BAWALJ No-1328(S-I)9 REAL MAGICJ No-1324(S-I)RegistrationNo.Date ofCertificate ofRegistration1516784 October 25,20081516787 October 31,2008Class andGoods/ServicesClass 35- Advertising,Business Management,Business Administration,Office FunctionsServicesClass 31- Agricultural,Horticultural andForestry products andGrain not included inother classes, liveanimals, fresh fruits andvegetables, seeds,natural plants andflowers, food stuffs foranimals, malt.1162828 May 25, 2005 Class 30 in respect ofRice included in thisClass.1162404 May 20, 2005 Class 31- Agricultural,Horticultural andForestry products andGrain not included inother classes, liveanimals, fresh fruits andvegetables, seeds,natural plants andflowers, food stuffs foranimals, malt.1311374 March 16,20061311373 November 12,20051269251 March 29,20071132669 March 18,20061162403 October 21,2005Class 30 in respect ofRice included in thisClass.Class 30 in respect ofRice included in thisClass.Class 30 in respect ofRice included in thisClass.Class 30 in respect ofRice included in thisClass.Class 31- Agricultural,Horticultural andForestry products andGrain not included inother classes, liveanimals, fresh fruits andvegetables, seeds,natural plants andDate of UseClaimedDecember12, 2006December21, 2006December31, 2002December30, 2002September27, 2004September27, 2004February 27,2004September11, 2002December30, 200260

Sr.No.Trademark10 REAL MAGICJ NO-1323(S-I)11 ICONJ No-MEGA-112 ICONJ No-MEGA-I13 HUNGAMAJ No-1328(S-V)14 JANASHEENJ No-1338(S-I)15 NAUSHEENJ N0- 1338(S-I)16 VNMJ No- 1327(S-I)RegistrationNo.Date ofCertificate ofRegistrationClass andGoods/Servicesflowers, food stuffs foranimals, malt.1162407 September 01, Class 32- Beer, Mineral2005& Aerated waters &other Non alcoholicdrinks, syrups & otherpreparation for makingbeverages1161396 August 20, Class 30 in respect of2004Rice included in thisClass.1161397 June 10, 2004 Class 29 in respect ofMeat, Fish, Fruits,Vegetables, Jellies,Jams, Eggs, Milk, OtherDairy Products, EdibleOils1247906 December 16,20051311376 January 12,20071311375 January 12,20071269059 October 24,2005Class 30 in respect ofBasmati rice &categories of rice, sugar,coffee, flour made ofwheat like atta, rawa &maida & flours of rice &grains.Class 30 in respect ofBasmati rice &categories of rice, sugar,coffee, flour made ofwheat like atta, rawa &maida & flours of rice &grains.Class 30 in respect ofBasmati rice &categories of rice, sugar,coffee, flour made ofwheat like atta, rawa &maida & flours of rice &grains.Class 30 in respect ofBasmati rice &categories of rice, sugar,coffee, flour made ofwheat like atta, rawa &maida & flours of rice &grains.Date of UseClaimedDecember30, 2002December26, 2002December26, 2002November06, 2003September27, 2004September27, 2004February 26,200417 EUREKAJ No- 1327(S-IV)1132671 December 29,2005Class 30 in respect ofBasmati rice &categories of rice, sugar,coffee, flour made ofwheat like atta, rawa &maida & flours of rice &September11, 200261

Sr.No.TrademarkRegistrationNo.Date ofCertificate ofRegistrationClass andGoods/Servicesgrains.18 JJASHJ No-MEGA-51159008 March 17,2005Class 30 in respect ofBasmati rice &categories of rice, sugar,coffee, flour made ofwheat like atta, rawa &maida & flours of rice &grains.19 J No- 1360 664052 April 28, 2005 Class 30 in respect ofBasmati rice &categories of rice, sugar,coffee, flour made ofwheat like atta, rawa &maida & flours of rice &grains.20 VNMMASTIJ No- 1328(S-V)1273808 December 17,200521. 6tenJ No- 13931516782 October 24,200822. 6ten 1516786 October 29,200823. 6tenJ No- 13931516781 October 31,2008Class 30 in respect ofBasmati rice &categories of rice, sugar,coffee, flour made ofwheat like atta, rawa &maida & flours of rice &grains.Class 33- Alcoholicbeverages (except beers)Class 42- Providing ofFood and Drink, Groceryitems, Restaurants,temporaryAccommodation,Medical, Hygienic andbeauty care, veterinaryand agricultural services,legal services, scientificand industrial research,computer programming,provision of aboveservices throughhypermarkets,convenience stores,departmental stores,superstores, malls andother establishmentsincluding services thatcannot be classified inother classes.Class 32- Beer, Mineral& Aerated waters &other Non alcoholicdrinks, syrups & otherpreparation for makingbeveragesDate of UseClaimedDecember17, 2002March 19,2004December21, 2006December21, 2006December21, 200624. 6ten 1516785 October 27, Class 38- December62

Sr.No.TrademarkRegistrationNo.Date ofCertificate ofRegistrationClass andGoods/ServicesJ No- 1393 2008 Telecommunication andservicesDate of UseClaimed21, 2006Human ResourcesAs at August 31, 2009, our Company had over 335 employees on its roll and on an average 255 on contractlabour basis. We share a very good relation with all our employees as a result of which we have not facedany union problems or any actual or threatened work stoppages.Quality ControlIn order to ensure the quality of its products, our Company has a quality management system which coversall aspects of ensuring the quality of products, from raw material procurement to the packing and dispatchof finished products. We have set stringent quality specifications for both raw materials and finishedproducts. In addition, our Company has a fully equipped laboratory that checks quality at various stages ofthe rice production process. In 2005, our Company received an ISO: 9001:2000 accreditation for itsBasmati rice processing unit in Bawal, Haryana which is valid until 2011.InsuranceOur Company has insurance coverage which we consider reasonably sufficient to cover all normal risksassociated with our operations and which we believe is in accordance with industry standards.63

SECTION V – OUR MANAGEMENTBOARD OF DIRECTORSUnder the Articles of Association of our Company, we cannot have less than three Directors and more thantwelve Directors. Presently, we have five Directors on our Board.Name/ Father’sName/Age/AddressMr. SanjayJhunjhunwalaS/o Mr. K.C.JhunjhunwalaAge: 49 years10/4, Alipore ParkPlace, Kolkata -700027Designation Qualification Nationality Occupation OtherDirectorshipsNon B.Com Indian Business 1. LeonardExecutiveMerchants PrivateChairmanLimited2. Shree ShaktiSteels PrivateLimitedDIN: 00174701Date of Joining:September 14, 1994Date of Expirationof Office: Retire byrotationMr. SandipJhunjhunwalaS/o Mr. K.C.JhunjhunwalaAge: 39 yearsW-25, WesternAvenue, SainikFarm, New Delhi –110062DIN: 00174885Date of Joining:September 14, 1994Date of Expirationof Office: June 30,2013ViceChairman,ManagingDirector andChiefFinancialOfficerB.Com Indian Business 1. REI Six TenRetail Limited2. REI Foods &BeveragesLimited3. REI RetailLimited4. REI Real EstateLimited5. REI GrainsLimited64

Name/ Father’sName/Age/AddressMr. AsokeChatterjeeS/o Late Mr. AtulKumar ChatterjeeAge: 82 yearsC/D 135, Sector -I,Salt Lake, Kolkata-700064DIN: 00266151Date of Joining:January 30, 2002Date of Expirationof Office: Retire byrotationDesignation Qualification Nationality Occupation OtherDirectorshipsNon Chartered Indian Business 1. AlchemistExecutive EngineerLimitedIndependent2. Graintec IndiaDirectorLimited3. Varrsana IspatLimited4. REI RetailLimited5. REI Food &BeveragesLimited6. REI GrainsLimited7. REI Six TenRetail Limited8. S.R. BatliboiConsultant PrivateLimitedDr. ING.Narpinder KumarGuptaS/o Late Mr. MohanLal GuptaAge: 64 years8/14, SarvapriyaVihar, New Delhi –110016DIN: 00032956Date of Joining:March 27, 1995Date of Expirationof Office: Retire byrotationNonExecutiveIndependentDirectorDoctorate inEngineeringIndian Business 1. KRBL Limited2. Gharana FoodsLimited3. Graintec IndiaLimited4. REI Six TenRetail Limited5. REI Foods &BeveragesLimited6. REI RetailLimited7. MMWAgrimachinesPrivate Limited.8.Dr. INGN.K.GuptaTechnical PrivateLimited9. Indopol FoodProcessingMachinery PrivateLimited10. Khopoli RollerFlour MillsPrivate LimitedMr. Krishna DayalGhoshS/o Late ShriManindra NathGhoshNonExecutiveIndependentDirectorB.Com Indian Business REI Six TenRetail Limited65

Name/ Father’sName/Age/AddressDesignation Qualification Nationality Occupation OtherDirectorshipsAge: 72 years245A, PanchatalaRoad, Kolkata -700041DIN: 02460318Date of Joining:January 30, 2002Date of Expirationof Office: Retire byrotationBusiness Address-REI Agro Limited,58A/1, Sainik Farm,New Delhi – 110062, IndiaBRIEF BIOGRAPHY OF OUR DIRECTORSA brief profile of board members is given below:Mr. Sanjay JhunjhunwalaMr. Sanjay Jhunjhunwala, Chairman, has headed our Company since its inception in 1994. He hassignificant experience in the marketing of rice in the domestic and international markets. Besides beinginvolved in the overall strategic planning of our Company, Mr. Sanjay Jhunjhunwala is responsible for ourCompany's export business. He regularly visits various countries in the Middle East and in Africa toexplore new markets and to further strengthen our Company's presence in countries such as Saudi Arabia.Mr. Sandip JhunjhunwalaMr. Sandip Jhunjhunwala, Vice Chairman, Managing Director and Chief Financial Officer of ourCompany, the younger brother of Mr. Sanjay Jhunjhunwala, is also one of the Promoters of our Companyand has been associated with our Company since its inception in 1994. He was primarily responsible forour Company's purchase of state-of-the-art processing equipment. He was instrumental in our Company’sdecision to invest in the renewable energy sector with a capacity of more than 46.1 megawatts in the statesof Rajasthan, Maharashtra, Tamil Nadu and Gujarat. He is also responsible for developing and monitoringthe implementation of our Company’s business plan and effective strategy. He ensures that our Companymoves in line with the overall objectives and mission as set out in the business plan of our Company. Heoversees the overall operational activities and reviews the progress with the senior members of themanagement team.Dr. ING Narpinder Kumar GuptaDr. ING. Narpinder Kumar Gupta, Independent Non-Executive Director, completed his diploma course inmechanical engineering and a degree in B.Sc. (Engg.) from Technical University, Dresden, Germany. Hewas awarded the degree of Doctor Engineer (PHD) by University of Dresden. He worked as a projectengineer in Germany and acquired experience in the design, layout and construction of food processingmachinery. He has since moved to India and is the leading brain in relation to rice milling equipment in the66

industry.Dr. Gupta serves on the board of KRBL Limited, one of our Company’s main competitors. Our Companydoes not believe this presents a conflict of interest.Mr. Asoke ChatterjeeMr. Asoke Chatterjee, Independent Non-Executive Director, has significant experience in corporategovernance. He is a chartered engineer and approved valuer and possesses specialized knowledge inmetallurgical, chemical and engineering industries, mainly in relation to rice processing plants, steel plantsand heavy engineering plants.Mr. Krishna Dayal GhoshMr. Krishna Dayal Ghosh, Independent Non-Executive Director, has formerly held the position of DeputyGeneral Manager with Punjab National Bank. He also has experience in financial planning, industrialrelations, interview techniques, management development, branch development, credit management,foreign exchange banking and merchant banking. He has handled credit decisions involving projectfinancing, working capital financing, pre-sanction and post-sanction appraisals, follow ups, monitoring andcontrol of various units.NATURE OF RELATIONSHIP BETWEEN DIRECTORSMr. Sanjay Jhunjhunwala and Mr. Sandip Jhunjhunwala are brothers. No other Director has any familyrelation with the other Directors.ARRANGEMENTS WITH MAJOR SHAREHOLDERS, CUSTOMERS, SUPPLIERS OROTHERSThere is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuantto which of any Directors was appointed as a Director or member of senior management of our Company.SERVICE AGREEMENTS ENTERED INTO BETWEEN OUR COMPANY AND OURDIRECTORS:Save as provided herein below our Company has not entered into any service agreement with any Director:Sr.No.AgreementWithDate ofAgreement (andTenure)RemunerationTermination1. Mr. SandipJhunjhunwalaJune 30, 2008 Rs. 3,00,000 per month exclusive ofperquisites & allowancesJune 30, 2013INTEREST OF DIRECTORS:All our Company’s Directors, including Independent Directors, may be deemed to be interested to theextent of fees, if any, payable to them for attending meetings of the Board or a committee thereof as well asto the extent of other remuneration and reimbursement of expenses payable to them under our Company’sArticles of Association.All our Company’s Non-Executive Directors, including its Chairman, and excluding its Vice Chairmancum Managing Director, are entitled to sitting fees of Rs. 5,000 per meeting of the Board or a committeethereof. Our Company’s Vice Chairman cum Managing Director is interested to the extent of remunerationpaid to them for services rendered as an officer or employee of our Company.67

All our Company’s Directors, including the independent Directors, may also be deemed to be interested tothe extent of Shares, if any, held by them and also to the extent of any dividend payable to them and otherdistributions in respect of the said Shares. Our Company’s Directors, including the independent Directors,may also be regarded as interested in the Shares, if any, held by or that may be subscribed by and allotted tothe companies, firms and trust, in which they are interested as directors, members, partners or trustees.All our Company’s Directors may be deemed to be interested in the contracts, agreements or arrangementsentered into or to be entered into by our Company with any company in which they hold directorships orany partnership firm in which they are partners as declared in their respective declarations.Our Company has entered into a technical consultancy agreement dated February 15, 2007 with Dr. INGN.K. Gupta Technical Consultants Private Limited in relation to the setting up of our Company’s facilitiesin Bawal. Dr. ING N.K. Gupta, who is a Director of our Company, is also a Director of Dr. ING N.K.Gupta Technical Consultants Private Limited.Except as otherwise stated in this Draft Letter of Offer and statutory registers maintained by our Companyin this regard, our Company has not entered into any contract, agreements or arrangements during thepreceding two years from the date of this Draft Letter of Offer in which the Directors are interested directlyor indirectly and no payments have been made to them in respect of these contracts, agreements orarrangements which are proposed to be made with them.68

SECTION VI – FINANCIAL INFORMATIONFINANCIAL STATEMENTSAUDITORS REPORTTo:The Board of Directors,REI Agro Limited46C, Chowringhee RoadEverest House,Room No.15 BKolkata – 700 071Dear Sirs;A. We have examined the attached standalone financial information of REI Agro Limited (the“Company”), as approved by the Board of Directors of the Company prepared in terms of therequirements of :a. Paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 (“the Act”);b. The Guidance Note on Reports in Company Prospectus and Guidance Note on AuditReports/ Certificates on Financial Information in Offer Documents issued by theInstitute of Chartered Accountants of India and terms of reference received fromthe Company in connection with the proposed issue of Equity Shares of theCompany on Right basis, (“Right Issue”).B. This financial information have been extracted by the Management from the financial statementsfor the financial years ended March 31, 2009, and March 31, 2008, respectively, audited by us.C. We have also examined the financial information of the Company and done the limitedreview of for the period April 1, 2009 to June 30, 2009 prepared and approved by the Boardof Directors of the Company in its meeting held on July 9, 2009.D. In accordance with the requirements of the Securities and Exchange Board of India, (“SEBI”)(Issue of Capital and Disclosure Requirements ) Regulations, 2009 as amended, (“SEBIRegulations”), and terms of our engagement agreed with you; we further report that:1. We have examined the attached “Statement of Assets and Liabilities” of the Company asat March 31, 2009, 2008 as set out in Annexure I to this report are after makingadjustments and regrouping as in our opinion were appropriate and more fully described inSignificant Accounting Policies, Changes in Significant Accounting Policies and Selected Notes(Refer Annexure III & V).2. The “Statement of Profit and Loss” of the Company for the year ended March 31, 2009, 2008examined by us, as set out in Annexure II to this report are after making adjustments andregrouping as in our opinion were appropriate and more fully described in Significant AccountingPolicies, Changes in Significant Accounting Policies and Selected Notes (Refer Annexure III &V).3. The “ Cash Flow Statement” of the Company for the year ended March 31, 2009, 2008 examinedby us, as set out in Annexure VI to this report are after making adjustments and regrouping asin our opinion were appropriate and more fully described in Significant Accounting Policies,Changes in Significant Accounting Policies and Selected Notes (Refer Annexure III & V).69

4. We have also examined the following other financial information set out in Annexureprepared by the management and approved by Board of Directors relating to the Company for theyear ended March 31, 2009, 2008.a) Significant Accounting Policies in Annexure IIIb) Statement of Segment Reporting in Annexure IVc) Changes in Accounting policy in Annexure Vd) Statement of Dividend Paid in Annexure VIIe) Performance Ratio in Annexure VIIIf) Capitalisation Statement in Annexure IXg) Statement of Tax Shelters in Annexure Xh) Details of Other Income in Annexure XIi) Sundry Debtors in Annexure XIIj) Loans and Advances in Annexure XIIIk) Unsecured Loan in Annexure XIVl) Secured Loan in Annexure XVm) Related Party Transactions in Annexure XVIn) Investments in Annexure XVIIo) Contingent Liabilities in Annexure XVIIIp) Statement on Auditor Qualification in Annexure XIXq) Statement on Deferred Tax Adjustment in Annexure XXIn our opinion the financial information contained in Annexure I to XX of this report read alongwith the Significant Accounting Policies, Auditors Qualifications, Comments in AnnualReports and Selected Notes prepared after making adjustments and regrouping as consideredappropriate have been prepared in accordance with the SEBI Regulations.5. This report should not, in any way be construed as a re-issuance or re-dating of any of the previousaudit reports issued by the auditors for the respective period and years nor should this reports beconstrued as a new opinion on any of the financial statements referred to herein.6. Our report is intended solely for use of the management and for inclusion in the offer document inconnection with the proposed issue of equity shares on Right basis of the Company. Our reportshould not be used for any other purpose except with our consent in writingYours faithfully,For P.K.Lilha & CoChartered AccountantsP.K.LilhaPlace: KolkataPartner Date: September 29, 2009Membership No.: 1109270

ANNEXURES TO THE FINANCIAL STATEMENTSAnnexure – IStatement of Assets and LiabilitiesRs. in millionsParticularsAs at March31, 2008As at March31, 2009A FIXED ASSETSGross Block 4,196.13 4,261.29Less: Depreciation 568.98 774.70Net Block 3,627.15 3,486.59Less: Revaluation Reserve - -Net Block after adjustment for Revaluation Reserve 3,627.15 3,486.59Capital Work in Progress 236.54 269.83Total Fixed Assets (A) 3,863.69 3,756.42B INVESTMENT (B) 1,037.93 1,107.93C CURRENT ASSETS, LOANS AND ADVANCESInventories 16,522.75 23,100.80Sundry Debtors 4,490.74 5,891.62Cash and Bank Balance 125.34 178.52Loans and Advances 4,205.12 4,680.39Total (C) 25,343.95 33,851.33D LIABILITIES AND PROVISIONSSecured Loans 20,361.99 24,498.37Unsecured Loans 2,798.40 5,250.00Current Liabilities 411.28 1,649.34Provisions 310.51 397.83Deferred Tax Liabilities 910.59 897.89Total (D) 24,792.77 32,693.43E NET WORTH (A+B+C-D) 5,452.80 6,022.25F REPRESENTED BYA Share Capital 689.03 689.03Share Application MoneyReserve & Surplus~ Securities Premium 1,989.58 2,002.28~ General Reserve 2,600.00 3,300.00~ Surplus 174.19 30.94Less : Revaluation Reserve - -B NET RESERVE & SURPLUS (Net of Revaluation Reserve) 4,763.77 5,333.22C Miscellaneous Expenditure - -NET WORTH (A+B-C) 5,452.80 6,022.2571

Annexure – IIStatement of Profit & Loss AccountRs. in millionsParticularsYear EndedMarch 31,2008Year EndedMarch 31,2009INCOMESALESOf Product manufactured by the Company 17,350.12 21,235.18Of Product traded by the Company - 3,247.09Increase / (Decrease) in Stock 874.20 1,830.64Other Income 35.78 38.61Total 18,260.10 26,351.52EXPENDITURERaw Material Consumed 13,821.36 19,780.24Manufacturing Expenses 461.04 577.66Personnel Expenses 118.89 127.73Other Operating Expenses 652.97 1,371.53Excise Duty - -Misc. and Deferred Revenue Exp. W/off - -Total 15,054.26 21,857.16Profit before Interest, Depreciation and Tax 3,205.84 4,494.36Depreciation 199.07 212.86Profit before Interest and Tax 3,006.77 4,281.50Interest and Finance Charges 1,773.73 3,328.32Loss on Sale of Investment / Asset 0.06 -Net Profit Before tax and extra ordinary Items 1,232.98 953.18Provision for TaxationCurrent Tax~ Income Tax 200.00 336.00~ Fringe Benefit Tax 0.95 0.80Tax for Earlier Years 1.50 7.10Deferred Tax - -Net Profit After Tax and before extra ordinary items 1,030.53 609.28Proposed Dividend & Tax Thereon & Depreciation WrittenBack 103.26 52.53Prior Period ItemExtra ordinary ItemNet Profit after Tax after adjusting prior period item and Extraordinary Item 927.27 556.75Note :The Hon’ble Kolkata High Court vide its order dated 20 .06.2007 has allowed the company toutilize the Securities Premium Account towards meeting Deferred Tax Liability / Assets computedas per the Accounting Standard (AS-22) “ Accounting of Taxes on Income” prescribed by TheICAI. Accordingly the Securities Premium Account has been utilized towards adjustment ofDeferred Tax thereafter from the Financial Year 2006-2007.72

Annexure - IIISignificant Accounting Policies:1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:The financial statements have been prepared and presented under the historical cost conventionusing the accrual basis of accounting and comply with all mandatory accounting standards asspecified in the Companies (Accounting Standard) Rules 2006 and the relevant provisions ofCompanies Act, 1956.2. USE OF ESTIMATESThe preparation of financial statements in conformity with the generally accepted accountingprinciples requires management to make estimates and assumptions that affects the amountsreported in the financial statements and accompanying notes. Although these estimates are basedon management’s best knowledge of current events and actions the Company may undertake infuture, actual results ultimately may differ from the estimates.3. FIXED ASSETS:a) Free Hold Land/ Lease Hold Land is stated at cost of acquisition inclusive of incidentalexpenses thereto.b) Fixed Assets are recorded at cost of acquisition or construction inclusive of freight, duty,taxes and incidental expenses relating thereto less accumulated depreciation.c) Project under commissioning and other Capital Work-in-Progress are carried at costcomprising Direct Cost, Advance to Supplier and related Incidental Expenses and attributableInterest on Borrowed Fund for project if any.d) When assets are sold or discarded, their cost and accumulated depreciation are removed fromfixed asset and any gain/loss resulting there from is reflected in profit & loss account.4. DEPRECIATION:a) Cost of Lease Hold land is amortized over the period of the lease on straight-line basis.b) Depreciation on Fixed Assets has been charged in accordance with Straight Line Method(SLM) as per rates specified in Schedule XIV of the Companies Act, 1956 (as amended) on aprorata basis.5. INVESTMENTS:Long Term Investments are carried at cost after deducting provision, if any, for diminution invalue considered being other than temporary in nature.6. INVENTORIES:Inventories are valued as under:a) Raw Materials are valued at lower of cost computed on FIFO basis and net realizable valueless VAT where applicable.73

) Finished goods are valued at cost (less realizable value of by-products) or net realizable valuewhichever is lower.c) Stores & Spares, Packing Material etc. are valued at cost less VAT wherever applicable.d) By-Products are valued at estimated realizable value.7. FOREIGN CURRENCY TRANSACTIONSa) Transactions in foreign currency are recorded at the exchange rate prevailing on the dateof transaction. Foreign currency transactions are accounted at the exchange ratesprevailing on the date of the relevant transactions.b) Monetary items denominating in foreign currencies at the end are restated at year-endrates. In case of items covered by the foreign exchange rates, the difference between theyear end rates and the rate on the date of the contract is recognised as exchange differenceand the premium paid on forward contract is recognised over the life of the contract. Anyprofit or loss arising on cancellation or renewal of forward exchange contract isrecognised as income or as expense of the year.c) Profit/ loss on derivatives and financial instruments such as forward exchange contractsand interest rate swap to hedge risks associated with foreign currency fluctuations andinterest rates are considered as revenue items on maturity of the contracts.8. REVENUE RECOGNITIONa) Domestic sales are accounted when goods are supplied to customers and are recorded netof trade discounts, rebates, etc. Export sales are recognised on the date, the company shipsthe goods as evidenced by their bill of lading. Sale of energy is accounted on actual netbilling plus claims for short generation wherever applicable.b) Export entitlements in respect of Export made under Duty Entitlement PassBook (DEPB) Scheme are recognized in the profit & Loss account when the right toreceive credit as per the terms of the scheme is established.c) Sale of Certified Emission Reduction (CER) is recognized as income on the delivery ofthe CER to the customer’s account as evidenced by the receipt of confirmation ofexecution of delivery instructions.d) Other items of revenue are recognized in accordance with the Accounting Standard (AS-9). Accordingly, wherever there are uncertainties in the ascertainment/ realization ofincome, the same is accounted when it is measured with certainty.e) Interest on Fixed Deposits is booked on time proportion basis taking into account theamount invested and the rate of interest.f) Profit/Loss on sale of investments is booked on the basis of contract notes for sale ofshares.g) Dividend income on Investments is accounted for when the right to receive the payment isestablished.74

9. ACCOUNTING OF CLAIMS:a) Insurance claims receivable are accounted at the time when certainty of receivable isestablished.b) Claims raised by the Government Authorities regarding taxes & duties which are disputedby the company are accounted based on the merits of each claim.10. BORROWING COST:Borrowing costs are recognised as an expense in the year in which they are incurred except costthat are directly attributable to the acquisition, construction or installation of qualifying assetswhich are capitalized as part of the cost of the asset.11. IMPAIRMENT OF ASSETSThe company tests on annual basis the carrying amount of the asset for impairment so as todetermine -a) The provision for impairment loss if any, orb) The reversal, if any, required on account of impairment loss recognized in previousperiods.12. EMPLOYEE BENEFITS1. Short Term Employees Benefits:The undiscounted amount of short term employee benefit expected to be paid in exchangefor the services rendered by employee is recognized during the period when the employeeremain under the service. This benefit includes salary, wages, short term compensatoryabsences and bonus.2. Long Term Employee Benefits:i) Defined Contribution Scheme- This benefit includes contribution to Employee’s StateInsurance Corporation and provident fund scheme. The contribution is recognized duringthe period in which the employee rendered service.ii)Defined Benefit Scheme- For defined benefit scheme the cost of providing benefit isdetermined using the projected unit credit method with actuarial valuation being carriedout at each balance sheet date. The retirement benefit obligation recognized in the balancesheet represents value of defined benefit obligation as reduced by the fair value ofplanned assets. Actuarial gains and losses are recognized in full during the period inwhich they occur.75

13. PROPOSED DIVIDEND:Dividend proposed by the Board of Directors is provided for in the books of accounts, pendingapproval at the Annual General Meeting.14. TAXES ON INCOME:Income Tax expense comprises current tax, fringe benefit tax (i.e. amount of tax for the perioddetermined in accordance with the income – tax Act) and deferred tax charge or credit (reflectingthe tax effects of timing differences between accounting income and taxable income for the year.)and the corresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantively enacted by the balance sheet date.Deferred tax assets are recognised only to the extent that there is reasonable certainty that theassets can be realized in future; however where there is unabsorbed depreciation or carriedforward losses under taxation laws, deferred tax assets are recognised only if there is a virtualcertainty of realization of such assets. Deferred tax assets are reviewed at each Balance Sheet dateand written down or written up to reflect the amount that is reasonably/ virtually certain (as thecase may be) to be realized.15. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS:a) Provision is created when there is present obligation as a result of past events that probablyrequires an outflow of resources and a reliable estimate can be made of the amount ofobligation.b) Contingent Liability is disclosed, unless the possibility of an outflow of resources embodyingthe economic benefit is remote.c) Contingent Assets are neither recognized nor disclosed in financial statements.16. EARNING PER SHAREBasic earning per share is computed by dividing, the net profit for the year attributable to equityshareholders by the weighted average number of equity shares outstanding during the year. DilutedEarning per Share are computed after adjusting the effects of all dilutive potential equity shares, ifany.17. INCOME FROM OPERATING LEASEIt is recognised as rentals, as accrued over the period of lease.76

Annexure - IVStatement of Segment Reporting (After Demerger)Rs. in millionsParticulars As At March 31, 2008 As At March 31, 2009Rice Wind farm& OthersUnallocable Total Rice Wind farm &OthersUnallocable TotalExternal Sales 16,841.47 544.30 0.13 17,385.91 24,262.05 258.67 0.17 24,520.88Segmentresults beforeTax,2,992.37 213.30 0.13 3,205.79 4,331.50 162.70 0.17 4,494.36Depreciation& InterestLess: Interest 1,623.06 150.67 - 1,773.73 3,190.50 137.82 - 3,328.32Less:77.73 121.34 - 199.07Depreciation86.40 126.46 - 212.86Profit before1,291.57 (58.71) 0.13 1,232.99tax1,054.59 (101.58) 0.17 953.18Segment Asset 26,706.15 2,290.41 1,249.02 30,245.58 35,110.80 2,161.65 1,443.23 38,715.68Segment21,980.26 1,591.42 1,221.10 24,792.78Liability29,981.55 1,416.16 1,295.71 32,693.42CapitalEmployed(SegmentAsset -4,725.90 698.99 27.92 5,452.80 5,129.25 745.48 147.52 6,022.26SegmentLiabilities)Addition toSegment FixedAssets294.77 532.63 - 827.4172.30 - - 72.30Segment77.73 121.34 - 199.07Depreciation86.40 126.46 - 212.8677

Annexure - VChange in Accounting PoliciesThere has been no change in accounting policies for year ended March 31, 2009, 2008.Annexure – VICash Flow StatementRs. in millionsAs at March 31,2008As at March 31,2009CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax and Extraordinary Items 1,232.99 953.18Adjustments for:Depreciation 199.07 212.86Other Income (2.83) (4.58)Loss on Sale of Assets 0.06 -Interest Paid 1,773.73 3,328.32Operating Profits before Working Capital Changes 3,203.03 4,489.79Adjustments For:Inventories (7,308.07) (6,578.04)Trade & Other Receivables 2.87 (1,400.88)Loan and Advance (2,937.32) (372.40)Trade and other Payable 32.23 1,240.25Cash Generated From Operations (7,007.26) (2,621.29)Income Tax Paid (201.70) (310.92)Cash Flow Before Extraordinary Items (7,208.96) (2,932.21)Extraordinary items (Prior Year Adjustments) -Net Cash From Operating Activities (A) (7,208.96) (2,932.21)CASH FLOW FROM INVESTING ACTIVITIESCapital Work in Progress 401.16 (33.28)Sale / ( Purchase ) of Fixed Assets (915.93) (72.30)Sale / (Purchase) of Investment (1,032.10) (70.00)Other Income 2.83 4.58Deferred Revenue ExpenditureNet Cash used for Investing Activities (B) (1,544.04) (171.01)CASH FLOW FROM FINANCING ACTIVITIESNet Proceeds / Repayments of long term loans 10,640.45 6,587.97Interest Paid (1,773.73) (3,328.32)Dividend including Dividend tax (18.72) (103.26)Net Cash from Financing Activities (C) 8,848.00 3,156.39Net Increase in Cash and Cash Equivalents (A+B+C) 95.00 53.1878

Cash Flow StatementRs. in millionsAs at March 31,2008As at March 31,2009Cash and Cash Equivalents at beginning of the Year 46.30 125.34Less : Transferred to resulting Co. on account of Demerger 15.96 -Cash and Cash Equivalents at end of the Year 125.34 178.5279

Annexure – VIIStatement of Dividend PaidRs. in millionsYear EndedMarch 31, 2008Year EndedMarch 31, 2009ParticularsOn Equity Share CapitalPaid up Share Capital- Equity 289.03 289.03- Preference 400.00 400.00Face Value (Rs.) 10.00 1.00Rate of Dividend %- Equity 15 10- Preference 4 4Amount of Dividend 88.26 44.90- Equity 72.26 28.90- Preference 16.00 16.00Corporate Dividend Tax 15.00 7.63Annexure - VIIIPerformance RatioParticularsYear EndedMarch 31, 2008Rs. in millionsexcept EPS & Noof SharesYear EndedMarch 31, 2009Net Profit (A) 1,030.54 609.28Less: Preference Dividend & Dividend tax 18.72 18.72Profit Available for Equity Share Holders (B) 1,011.82 590.56Net Worth (C) 5,452.81 6,022.25Preference Share Capital 400.00 400.00Net Worth for Equity 5,052.81 5,622.25Return on Net Worth (%) (A / C) 18.90 10.12No of Share at the end of year 28,903,037 289,030,370Weighted no. of Equity Shares (Considering bonusIssue) 28,593,586 289,030,370Weighted no. of Equity Shares (Without Consideringbonus Issue) 28,593,586 289,030,370Earning Per Share (Considering Bonus issue) 35.39 2.04Earning Per Share (Without Considering Bonus issue) 35.39 2.04Net Asset Value / Book Value per Equity Share of Rs10/- each 174.82 -Net Asset Value / Book Value per Equity Share of Rs1/- each 17.48 19.4580

Annexure – IXCapitalisation StatementPre IssueAs at March 31,Particulars2009Total Debt :Short Term Debt 25,980.55Long Term Debt 3,767.82Rs. in millionsPost IssueTotal Debt : 29,748.37Shareholders Fund :Share Capital 689.03 [●]Reserve & Surplus~ Securities Premium 2,002.28 [●]~ General Reserve 3,300.00 [●]~ Surplus 30.94Less : Miscellaneous ExpenditureTotal Shareholders Fund 6,022.25 [●]Long Term Debt / Shareholders Fund 0.63 [●]81

Annexure - XStatement of Tax SheltersParticularsYear EndedMarch 31, 2008Rs. in millionsYear EndedMarch 31, 2009Profit before current and Deferred Taxes as restated (A) 1,232.99 953.18Tax Rate % 33.99 33.99Tax Impact 419.09 323.99AdjustmentsPermanent Difference~ Dividend Income 0.13 0.17Deduction u/s 80HHC of Income Tax Act Deduction u/s80IB of the Income tax Act Other Adjustments - -Total (B) 0.13 0.17Temporary Difference between book Depreciation and taxDepreciation and 35 D 644.87 (35.18)Total (C ) 644.87 (35.18)Net Adjustment (B+C) 645.00 (35.01)Taxable Income as per provisions of I.T Act 587.99 988.20Total Taxation (C) 199.86 335.89Provision made in Books 200.00 336.0082

Annexure - XIDetails of Other IncomeRs. in millionsParticularsYear Ended March31, 2008Year Ended March31, 2009Insurance Claim - 4.14Dividend on Shares 0.13 0.17Interest Received 2.69 4.41Foreign Exchange Fluctuation 23.07 -Carbon Credit Sale - 29.50Miscellaneous Income 9.89 0.40Total 35.78 38.61Annexure - XIISundry DebtorsParticularsAs at March 31,2008Rs. in millionsAs at March 31,2009Debtors Outstanding for a period exceeding Sixmonths 20.94 107.87Others 4,469.80 5,783.75Total 4,490.74 5,891.62Annexure - XIIILoans and AdvancesParticularsAs at March 31,2008Rs. in millionsAs at March 31,2009Advance recoverable in Cash or in Kind or valueto be received 3,951.76 4,307.70Deposits 15.51 15.10Income Tax Payment 203.79 332.05VAT / Excise / DEPB etc. Receivable 26.48 20.89Interest Receivable 0.29 1.40Income Tax Refundable 7.30 3.26Total 4,205.13 4,680.4083

Annexure - XIVUnsecured LoansParticularsAs at March 31,2008Rs. in millionsAs at March 31,2009i)Redeemable Non-Convertible Debentures Issuedto Financial Institutions 2,000.00 4,000.00ii) From Banks 795.00 1,250.00Interest Accrued & Due 3.40 -Total 2,798.40 5,250.00Annexure - XVSecured LoansRs. in millionsParticularsAs at March 31,2008As at March 31,2009Term Loan 2,644.96 2,506.38Working Capital Loan 17,696.69 21,957.98OthersInterest Accrued and due on above 20.35 34.01Total 20,362.00 24,498.3784

Annexure - XVIRelated Party Transaction(I) List of Related PartiesName of Related PartyKey Managerial PersonnelMr. Sanjay JhunjhunwalaMr. Sandip JhunjhunwalaRelationshipChairmanManaging DirectorCompanies in which Directors are substantially InterestedAspective Vanijya Pvt. Ltd.Jagdhatri Tracon Pvt. Ltd.REI Steel & Timber Pvt. Ltd.Snehpusph Barter Pvt. Ltd.Subhchintak Vancom Pvt. Ltd.Shree Krishna Gyanodaya Flour Mills Pvt. Ltd.Dr. ING N.K. Gupta Technical Consultants (P) Ltd.Varrsana Ispat LimitedREI Six Ten Retail LimitedRelative of Key Managerial PersonnelMr. Kailash Chandra JhunjhunwalaMs. Koushalya Devi JhunjhunwalaMs. Sangita JhunjhunwalaMs. Suruchi JhunjhunwalaMr. Akshay JhunjhunwalaMr. Ambuj JhunjhunwalaName of Related PartyNature of TransactionYear EndedMarch 31,2008Rs. in millionsYear EndedMarch 31,2009CONTROLAspective Vanijya Pvt Ltd Dividend - 7.62REI Steel & Timber Pvt Ltd Dividend - 4.33SKG flour Mills Pvt Ltd Dividend - 4.45Snehpusph Barter Pvt Ltd Dividend - 5.44Subchintak Vancom Pvt Ltd Dividend - 4.56Jagdhatri Tracon Pvt Ltd Dividend - 1.000.00 27.40Varrsana Ispat Limited Sale of DEPB Licence 16.43 -Sale of Scrap 0.65 -Investment in Shares 1,032.10 -85

Rs. in millionsName of Related PartyNature of TransactionYear EndedMarch 31,2008Year EndedMarch 31,2009ASSOCIATESREI Six Ten Retail Limited Sale of Rice 333.42 2,120.18Investment in Shares - 70.00Sundry Debtors 770.86 1,726.56KEY MANAGEMENTMr. Sanjay Jhunjhunwala Dividend - 0.64Mr. Sandip Jhunjhunwala Dividend - 0.640.00 1.28Mr. Sandip Jhunjhunwala Remuneration 6.04 5.86Mr. Sanjay Jhunjhunwala Commission 2.40 2.408.44 8.26RELATIVES OF KMPMrs. Koushalya Devi Jhunjhunwala Dividend - 0.08Mrs. Sangita Jhunjhunwala Dividend - 0.06Mrs. Suruchi Jhunjhunwala Dividend - 0.040.00 0.1886

Annexure - XVIIInvestmentsFor the Year EndedAs at March 31,2008Rs. in millionsAs at March 31,2009- Non Trade long term (Quoted)Allahabad Bank 2.87 2.87Jyoti Structure Limited 0.55 0.55Punjab National Bank 0.16 0.16Reliance Capital Limited 2.26 2.26- Non Trade -(Unquoted)Varrasana Ispat Limited 1,032.10 1,032.10REI Six Ten Retail Limited - 70.00Total 1,037.94 1,107.94- Quoted InvestmentsBOOK VALUEAllahabad Bank 2.87 2.87Jyoti Structure Limited 0.55 0.55Punjab National Bank 0.16 0.16Reliance Capital Limited 2.26 2.26MARKET VALUE5.84 5.84Allahabad Bank 2.68 1.36Jyoti Structure Limited 1.60 0.55Punjab National Bank 0.20 0.16Reliance Capital Limited 6.76 1.94Note:11.24 4.01REI Six Ten Retail Limited has been demerged from REI Agro Limited and the same was listed on NSEand BSE on 27.04.200987

Annexure – XVIIIContingent LiabilitiesFor the Year EndedAs at March 31,2008Rs. in millionsAs at March 31,2009Estimated amount of Contract remaining unexecuted onCapital AccountSales Tax Demand For which bonds has been executed bythird parties35.10 40.106.16 6.16Letters of Guarantee issued by the Bank in favour of Dy.Commissioner of Customs awaited clearance oncompletion of the Export performance under Para 5.2/5.7of Exim Policy 2002-07.2.23 2.23Annexure - XIXThere have been no qualifications in the Audit report in the preceding two yearsAnnexure - XXThe company has been regularly following (AS-22) “ Accounting of Taxes on Income” But from theFinancial Year 2006-2007 The Hon’ble High Court of Kolkata vide its order dated 20.07.2007 has allowedthe company to utilize the Securities Premium Account towards meeting Deferred Tax Liability / Assetscomputed as per the Accounting Standard (AS-22) and therefore the company changed its Accountingpolicy in regard to accounting for the deferred taxation by charging the amount to Securities PremiumAccount instead of debiting the Profit & Loss Account towards the amount of Deferred Tax Liability /AssetsHowever Deferred Tax Liability is properly presented in the Balance Sheet.Subject to the above there are no other changes in the significant accounting policies in the preceding twoyears.For P.K.Lilha & Co.Chartered AccountantsCA P.K.LILHAPartnerM. No: 1109288

CERTAIN OTHER FINANCIAL INFORMATIONWORKING RESULTS OF OUR COMPANY FOR THE PERIOD BETWEEN THE MARCH 31,2009 AND AUGUST 31, 2009.( Rs in million)Sales 16805.3Other Income 31.7Profit Before Tax excluding Depreciation 1325.3Provision for Depreciation 89.4Provision for Taxation 434.1Estimated Net Profit 801.8MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING FINANCIAL POSITIONOF OUR COMPANY.Except as disclosed in the section entitled “Material Developments” beginning on page 110 of this DraftLetter of Offer there are no Material changes and commitments, if any affecting financial position of ourCompany.WEEK-END PRICES FOR THE LAST FOUR WEEKS, CURRENT MARKET PRICE; ANDHIGHEST AND LOWEST PRICES OF EQUITY SHARES DURING THE PERIOD WITH THERELATIVE DATESFor details in connection with the week-end prices for the last four weeks, current market price, and highestand lowest prices of our Equity Shares, please refer to the section entitled “Market Price Information”beginning on page 90 of this Draft Letter of Offer.89

MARKET PRICE INFORMATIONOur Company initially listed the Equity Shares of our Company on the B.S.E w.e.f December 10, 1996pursuant to an initial public offering. Subsequently, the Equity Shares of our Company were listed on theNSE w.e.f October 11, 2004. We have received in-principle approvals for listing of the Rights EquityShares to be issued pursuant to this Issue from the BSE and the NSE by letters dated [●] and [●],respectively. We will make applications to the Stock Exchanges for permission to deal in and for an officialquotation in respect of the Rights Equity Shares being offered in terms of this Draft Letter of Offer. If thepermission to deal in and for an official quotation is not granted for the Rights Equity Shares by the StockExchanges, our Company shall forthwith repay, without interest, all monies received from the Investorspursuant to the Letter of Offer. If such money is not repaid within eight days after our Company becomesliable to repay it (i.e. 15 days after Issue Closing Date or the date of refusal by the Stock Exchanges,whichever is earlier), our Company and every Director of our Company who is an officer in default shall,on and from expiry of eight days, be jointly and severally liable to repay the money, with interest asprescribed under Section 73 of the Companies Act.The high, low and average market prices of the Equity Shares of our Company during the preceding threeyears were recorded, as stated below:BSEYear Date ofHighHigh(Rs.)Volume on dateof HighDate of Low Low(Rs.)Volume on Dateof lowAverage(Rs.)(No. of Shares)(No. of Shares)2007 October 30,2007 851.70 37,487April 27,2007 131.75 36,77,624 351.502008 May 15,2008 1,795.00 5,221November25, 2008 355.00 5,86,539 1199.902009* January 1,2009 720.00 16,541March 31,2009 38.00 5,17,277 60.99* - upto August 31, 2009 (Source: www.bseindia.com)NSEYear Date ofHighHigh(Rs.)Volume on dateof HighDate of Low Low(Rs.)Volume on Dateof lowAverage(Rs.)(No. of Shares)(No. of Shares)2007 October 30,2007 845.05 42,435April 27,2007 132.20 51,69,359 351.402008 May 15,2008 1,787.80 13,518November25, 2008 334.00 1,26,846 1197.402009* January 1,2009 715.00 2,238March 31,2009 38.00 6,73,802 60.85* - upto August 31, 2009 (Source: www.nseindia.com)Notes• High, low and average prices are of the daily closing prices.• In case of two days with the same closing price, the date with higher volume has beenconsidered.Monthly high and low prices and trading volumes on the Stock Exchanges for the six months preceding thedate of filing of this Draft Letter of Offer are as stated below:90

BSEMonth Date High(Rs.)Volume (No.of Shares)March 2,2009 55.00 2,50,174DateLow(Rs.)Volume (No.of Shares)Average(Rs.)March 31,2009 38.00 5,17,277 46.06April 15,2009 71.95 2,98,631 April 1, 2009 38.25 1,97,531 59.37April 2009May 2009 May 29, 2009 99.00 10,85,758 May 14, 2009 51.00 45,250 67.47June 2009 June 1, 2009 103.80 16,97,089 June 23, 2009 62.10 29,104 79.27July 2009 July 1, 2009 77.95 44,218 July 8, 2009 54.05 1,75,761 64.55August 2009August 3,2009 66.50 480478(Source: www.bseindia.com)NSEMonth Date High(Rs.)Volume (No.of Shares)March 2,March 20092009 53.90 75,302August 13,2009 44.25 20,16,013 50.74DateLow(Rs.)Volume (No.of Shares)Average(Rs.)March 31,2009 38.00 6,73,302 45.78April 15,2009 70.90 1,94,222 April 1, 2009 38.00 1,08,440 59.05April 2009May 2009 May 29, 2009 93.40 11,80,036 May 14, 2009 52.05 46,047 67.25June 2009 June 1, 2009 103.75 13,71,740 June 23, 2009 61.45 2,10,072 79.30July 2009 July 1, 2009 78.00 81,687 July 8, 2009 54.00 3,14,824 64.53August 2009August 3,2009 66.95 4,44,451(Source: www.nseindia.com)August 11,2009 44.10 1282562 50.69Notes• High, low and average prices are of the daily closing prices.• In case of two days with the same closing price, the date with higher volume has beenconsidered.The closing price of our Equity Shares as on September 8, 2009 (the trading day immediately following theday on which the Board resolution was passed approving the Rights Issue) was Rs. 51.35 on the BSE andRs. 51.45 on the NSE.Week end prices of Equity Shares of our Company for the last four weeks on BSE and NSE along with thehighest and lowest price are as below:BSEWeek end Date High Volume (No. Date Low Volume (No. Average(Rs.) of Shares)(Rs.) of Shares) (Rs.)September 25, SeptemberSeptember 24,200925, 2009 53.65 3606773 2009 47.00 1648486 50.42September 18, SeptemberSeptember 14,200915, 2009 51.50 888265 2009 47.40 402482 48.47September 11, September 8,September 7,20092009 54.50 2821736 2009 48.50 2516707 50.95September 4, September 1,September 4,20092009 50.50 637701 2009 46.70 298181 47.6491

NSEWeek end Date High Volume (No. Date Low Volume (No. Average(Rs.) of Shares)(Rs.) of Shares) (Rs.)September 25, SeptemberSeptember 24,200925, 2009 53.60 3678343 2009 47.25 1691486 50.36September 18, SeptemberSeptember 15,200915, 2009 51.40 1484710 2009 47.05 1484710 48.34September 11, September 8,September 7,20092009 54.45 3155747 2009 48.45 2951491 50.94September 4, September 1,September 2,20092009 50.85 716128 2009 46.55 274284 47.64The market capitalization of our Equity Shares as on September 29, 2009 was Rs. 14,913.97 million on theBSE based on a market price of Rs. 51.60 and the market capitalization of our Equity Shares on the NSEwas Rs. 14,957.32 million based on a market price of Rs. 51.75.The Issue price of Rs. [•]/- has been arrived at in consultation between our Company and the LeadManagers.92

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONSThe following discussion and analysis is based on, and should be read in conjunction with, the Company’saudited financial statements and the notes thereto prepared in accordance with Indian GAAP includedelsewhere in this Draft Letter of Offer.The discussion herein contains forward-looking statements and reflects the current views of our Companywith respect to future events and financial performance. Actual results may differ materially from thoseanticipated in these forward-looking statements as a result of certain factors such as those set forth under“Risk Factors” and elsewhere in this Draft Letter of OfferOverviewWe are primarily in the business of processing and marketing of branded & un-branded basmati rice in thedomestic and overseas market. We are the largest listed company in India engaged in the processing ofBasmati rice. With over a decade experience in the basmati rice processing industry we are present acrossthe entire basmati rice processing chain ranging from procurement of basmati paddy to its storage, ageing,processing, packaging and distributing.We are present across all price points in the branded basmati market and sell our processed basmati ricedomestically and in the export market under various brand names, which include Kasauti, Mr. Miller,Hungama, Rain Drop, Hansraj, Mehrab and Nausheen, through a wide network of distributors acrossIndia. Further our parboiling capacity has enabled us to export a major portion of output to countries fromthe Gulf region namely Saudi Arabia, the United Arab Emirates and Kuwait. The Gulf region accounts forlargest exports of basmati rice from India.In our non-primary business segment we are engaged in generation of power from our four wind farmslocated in the States of Rajasthan, Maharashtra, Tamil Nadu and Gujarat and having capacities of 7.5megawatts, 22.4 megawatts, 6.0 megawatts and 10.2 megawatts, respectively, aggregating to a totalcapacity of 46.1 megawatts. Our Company‘s wind power project located at Rajasthan is registered with theUnited Nations Framework Convention on Climate Change and we are further also in the process ofregistering our other wind power projects. As on date our Company has already received 25,094 CERsunder the Kyoto Protocol. Our Company’s wind farm business started in March 2004.In FY 2008 the retail division of our Company, which started operations from March 27, 2007 wasdemerged into a separate company, namely, REI Six Ten Retail Limited (“REI Six Ten”). REI Six Ten is aretailing company focusing on retailing fresh vegetables & fruits, staples and all food & non food consumerproducts. It has presence in North, Western and Eastern India with currently over 380 franchisee retailstores operated under the brand name “6Ten”.Our total sales has grown at a compounded annual growth rate of 50.3% from FY 2007 to FY 2009. For theyear ended March 31, 2009, our total sales and profit after tax were Rs. 24482.3 million and Rs. 609.3million respectively. Further as at March 31, 2009, our Company’s total assets were Rs. 3,8715.7 millionand our Company’s net worth was Rs. 6022.2 million.DemergerWith an Appointed Date of August 25, 2007, our Company demerged the retail undertaking, which beganoperations on March 27, 2007. As a result, unless otherwise stated, the presentation of our Company’sfinancial information below for:93

• Fiscal 2008 includes the results of the retail undertaking for the period from April 1, 2007 toAugust 24, 2007, but not for the period from August 25, 2007 to March 31, 2008; and• Fiscal 2009 does not include the results of the retail undertaking for the full Fiscal Year 2009.Our Company believes the impact of its retail undertaking on its results of operations and cash flows for theperiod from April 1, 2007 to August 24, 2007 in Fiscal 2008, was minimal and not material.Significant developments subsequent to March 31, 20091. On July 27, 2009 our Company allotted 2,99,45,550 Equity Shares to Qualified InstitutionalBuyers (as defined in the rescinded SEBI (Disclosure and Investor Protection) Guidelines, 2000),pursuant to provisions of Chapter XIII-A of the rescinded SEBI (Disclosure and InvestorProtection) Guidelines, 2000.2. SEBI has issued a show cause notice dated September 11, 2009, under Sections 11, 11B and 11(4)of the SEBI Act read with Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair TradePractices relating to Securities Market) Regulations, 2003, against our Company. Our Companyresponded to the aforesaid notice, vide its letter dated September 24, 2009 and has applied to SEBIfor passing consent orders in connection with the aforesaid matter, in terms of the SEBI ShowCause Notice and in accordance with the circular dated April 20, 2007 (Circular No. EFD/ED/Cir-1/2007) issued by SEBI. For further details please refer to the section entitled “OutstandingLitigations and Other Defaults” beginning on page 104 of this Draft Letter of Offer.Factors Affecting Our Company’s Business and Results of OperationsOur Company’s business and results of operations have been primarily affected by the following factors,some of which our Company believes will continue to affect its business and results of operations in thefuture:Demand for Basmati RiceIn Fiscal 2008 and 2009, our Company derived approximately 98.6% and 98.8%, respectively, of its totalincome from sales of basmati rice. Basmati rice is a premium variety of rice, generally consumed by themiddle and upper strata of the society. Any negative change in customer preferences for basmati rice thatwould result in reduced demand for basmati rice could adversely affect our Company’s business and resultsof operations. In addition, basmati rice is subject to price fluctuations due to weather, natural disasters,domestic and foreign trade policies, shifts in supply and demand and other factors beyond our Company’scontrol. Any prolonged decrease in basmati rice prices could adversely affect our Company’s business andresults of operations.Working Capital RequirementsOur Company’s business involves significant working capital requirements primarily due to the fact thatbasmati rice must be aged for 18 to 24 months to ensure most premium quality. As such, our Companymaintains substantial levels of indebtedness. As of March 31, 2009, our Company had approximately Rs.29,748.4 million of total indebtedness. As of March 31, 2009, all of our Company’s indebtedness was at afloating rate of interest. Any fluctuations in interest rates may directly impact the interest costs of suchloans and, in particular, any increase in interest rates could adversely affect our Company’s results ofoperations. Furthermore, our Company’s significant level of indebtedness means that a material portion ofits expected cash flow may be required to be dedicated to the payment of interest on its indebtedness,thereby reducing the funds available to it for use in its general business operations.94

Export Sales and fluctuation in forex ratesOur Company is a major exporter of basmati rice to Saudi Arabia, the United Arab Emirates and Kuwait. InFiscal 2008 and 2009, our Company derived approximately 18.4% and 41.2% respectively, of its total salesfrom exports of basmati rice. Since the building of our Company’s parboiling facility in 2005, ourCompany has been able to scale up its export operations, and expects that its parboiling facility willcontinue to boost export sales in total and also as a proportion of our Company’s total sales. Consequently,our Company’s results of operations may be significantly affected by changes in India’s trade relations withcountries to which our Company exports and changes in India’s export duties on basmati rice. For instance,as a result of high basmati rice prices during the first half of 2008, the Government of India imposed anexport duty of Rs. 8,000 per metric tonne on export of basmati rice, making it less profitable for ourCompany to export its products and resulting in an outflow of Rs. 590.0 million from our Company. Whilethe export duty has since been lifted, there can be no assurance that such export duty or other exportrestrictions will not be imposed in the future and any future imposition of export duty could have anadverse effect on our Company’s business and results of operations.Due to our Company’s significant exports, which are generally denominated in U.S. dollars, fluctuations inthe Rupee and U.S. dollar exchange rates could also affect our Company’s business and results ofoperations. During Fiscal 2009, approximately 59.3% of our Company’s total income was denominated inRupee and approximately 40.7% was denominated in U.S. dollars. During the same period, approximately99.8% of our Company’s total expenditure was denominated in Rupee and approximately 0.2% wasdenominated in U.S. dollars. Our Company enters into forward foreign exchange contracts to hedge againstsome of its foreign exchange rate risks in connection with its export sales. Nevertheless, a weakening U.S.dollar would decrease the relative value of our Company’s income denominated in or tied to the U.S. dollaragainst its Rupee denominated costs, thus decreasing our Company’s profitability.Procurement Costs and ProceduresThe major cost for our Company is raw materials, comprising 85.6% and 83.9% of our Company’s totalexpenditure in Fiscal 2008 and 2009 respectively. Our Company’s primary raw materials are basmati paddyand ungraded basmati rice, which is semi-processed basmati rice where the husk has been removed but notfurther processed. Procurement of basmati paddy is a critical function of our Company’s business. Theprocurement costs include basic cost of material, brokerage, handling and transport and local taxes/leviesbefore the material reaches the factory premises. Any increase in the price of raw materials couldsignificantly affect our Company’s business and results of operations to the extent our Company is unableto increase its selling prices to cover the increased costs.BrandingOur Company’s results of operations are significantly affected by sales of branded basmati rice. OurCompany has introduced brands for its whole grain and broken basmati rice at the different price pointsfrom premium to mass segments, and our Company’s brands are enjoying increased market recognition. Ingeneral, sales of branded basmati rice provide higher margins than unbranded basmati rice. Our Companyis focused on branding and in particular increasing its presence in the premium end of the basmati ricemarket. Branded sales of our Company have shown an upward trend with about 43.0% or Rs. 10,454.5million, of the total sales coming from branded basmati rice sales in Fiscal 2009. Our Company has beencontinuously, over the years, investing on brand building and expects sales of its branded products tocontinue to increase as a percentage of total sales.Macroeconomic ConditionsOur Company’s results of operations may be materially affected by conditions in the global capital marketsand the economy generally in India and elsewhere around the world. The basmati rice market is affected bychanges in government policies, including trade policies, economic conditions, demographic trends,employment and income levels and interest rates, among other factors. As widely reported, financialmarkets in the United States, Europe and Asia, including India, have been experiencing extreme disruption95

in past months, including, among other things, extreme volatility in security prices, severely diminishedliquidity and credit availability, rating downgrades of certain investments and declining valuations ofothers. These and other related events, such as the collapse of a number of financial institutions, have hadand continue to have a significant adverse impact on the availability of credit and the confidence of thefinancial markets, globally as well as in India. The deterioration in the financial markets is widely forecastto herald a recession in many countries, which may lead to significant declines in employment, householdwealth, consumer demand and lending and as a result may adversely affect economic growth in India andelsewhere, which may in turn affect our Company’s business and results of operations.Weak economic conditions in our Company’s target markets, or a reduction in consumer spending, couldadversely impact our Company’s business and results of operations in a number of ways, includingnegative changes in customer preferences for basmati rice, increased costs associated with developing ourCompany’s products, increased costs and decreased availability of potential sources of financing andincreased exposure to material losses from our Company’s investments. Furthermore, as a result of thecurrent tightening of credit in financial markets, our Company’s customers, distributors and suppliers mayexperience serious cash flow problems and as a result, may modify, delay or cancel plans to purchase itsproducts. All of these factors may significantly affect our Company’s business and results of operations.Summary of Major Items of Income and ExpenditureIncomeThe majority of our Company’s income is generated from the sale of basmati rice and sale ofpower/energy. The breakdown of our Company’s total income and each item as a percentage of totalincome for the last two Fiscal Years is given below:2008 2009Rs. % of total Rs. % of totalSale of Goods 17,136.9 98.6% 24,233.3 98.8%Export Incentives 29.7 0.2% 19.8 0.1%Sale of Power/Energy 183.6 1.0% 229.2 0.9%Other Income 35.7 0.2% 38.6 0.2%Total Income 17,385.9 100.0% 24,520.9 100.0%Sale of GoodsThe majority of our Company’s total income is generated from the sale of basmati rice. The segmentbreakdown of sales of basmati rice and each item as a percentage of total sales of basmati rice for the lasttwo Fiscal Years is given below:2008 2009Rs. In Million % of total Rs. In Million % of totalBasmati Rice —Domestic13,976.9 81.6% 14,253.3 58.8%Branded domestic sales 6,298.6 36.8% 8,645.4 35.7%Unbranded sales 7,678.3 44.8% 5,607.9 23.1%Basmati Rice —Export3,160.0 18.4% 9,980.0 41.2%Branded export sales 534.7 3.1% 1,809.1 7.5%Third-party label sales 2,625.3 15.3% 8,170.9 33.7%Total Sales of Goods 17,136.9 100.0% 24,233.3 100.0%The segment breakdown of basmati rice sales in volume terms and each item as a percentage of total salesof basmati rice for the last two financial years is given below:96

2008 2009metric tonnes % of total metric tonnes % of totalBasmati Rice — Domestic 407,131 83.5% 370,946 71.0%Branded domestic sales 170,033 34.9% 226,544 43.4%Unbranded sales 237,098 48.6% 144,402 27.6%Basmati Rice — Export 80,291 16.5% 151,645 29.0%Branded export sales 13,120 2.7% 31,500 6.0%Third-party label sales 67,171 13.8% 120,145 23.0%Total Sales of Goods 487,422 100.0% 522,591 100.0%Our Company sells basmati rice domestically and in the export market under its various brand names,which include Kasauti, Mr. Miller, Hungama, Rain Drop, Hansraj, Mehrab and Nausheen, to a widenetwork of distributors across India. As a result of its parboiling capacity, our Company has become amajor exporter of parboiled basmati rice to Saudi Arabia, the United Arab Emirates and Kuwait. OurCompany also sells basmati rice to 6Ten, a neighbourhood convenience store chain with a presence inNorth, West and East India. With the opening of our Company’s parboiling facilities in January 2005,export sales have increased from 7.01% of our Company’s sales in Fiscal 2005 to 41.2% of our Company’ssales in Fiscal 2009. Export sales increased in Fiscal 2009 by 216.0% from Rs. 3,160.0 million in Fiscal2008 to Rs. 9,980.0 million..Export IncentivesExport incentives are income from the sale of DEPB licenses provided by the Government of India on theexport content of certain packing materials (consisting of jute bags and low density polyethylene) used forthe export of basmati rice. Our Company received DEPB licenses during Fiscal 2008, but has not receivedDEPB licenses since May of 2008.Sale of Power/EnergyIncome from the sale of power/energy represented 1.0% and 0.9% of our Company’s total sales in, 2008and 2009, respectively. Any income derived from the sale of power/energy is treated as tax free as perSection 80IA of the Income Tax Act for any ten consecutive years out of the first 15 years from thecommencement of operations.Other IncomeOur Company’s other income comprise:• Dividend on long-term investment. Our Company’s dividend on long-term investment relates todividend income received from the various listed companies that our Company invests in on along-term basis.• Insurance claim. Insurance claim relates to claims received by our Company under the variouspolicies taken by our Company against the loss of stock of basmati paddy and/or basmati rice.• Foreign exchange fluctuation. Our Company’s gain or loss due to foreign exchange fluctuationsrelates to fluctuations in the value of the Rupee, in which our Company maintains its accounts,and the US dollar, in which a portion of our Company’s sales are denominated, and in which ourCompany has foreign currency denominated indebtedness.• Interest received. Interest received primarily relates to interest received on our Company’s fixeddeposits.• Carbon credit sale. Carbon credit sale relates to income from the sale of our Company’s carboncredits received from its Rajasthan wind power project.97

• Miscellaneous receipts. Income from miscellaneous receipts relates to income from any sourcewhich does not fall into one of the previously described categories.ExpenditureOur Company has managed to control its expenditure maintaining its operating margins at approximately18.5% for the last two Fiscal Years.Our Company’s expenditure includes:• Materials Consumed & Purchase of Goods;• (Increase)/Decrease of Inventory;• Manufacturing, Administrative and Selling Expenses;• Interest; and• Depreciation.Materials Consumed & Purchase of GoodsThe major cost for our Company is raw materials, comprising 85.6% and 83.9% of our Company’s totalexpenditure in Fiscal 2008 and 2009, respectively. Our Company’s primary raw materials are basmatipaddy and ungraded basmati rice, which is a semi-processed basmati rice where the husk has been removedbut not further processed. Our Company purchases basmati paddy from around 180 mandis locatedthroughout India. As a result of the increase in price of basmati paddy and unprocessed basmati rice, thecost of raw materials consumed has gone up on a per unit of raw material basis by 26.2% over the last year.Despite this, our Company has capitalized on its basmati paddy procurement strengths and, as a result, costof raw materials as a percentage of total income has increased only slightly from 79.5% in Fiscal 2008 to80.6% in Fiscal 2009. A table showing the proportion of basmati paddy and unprocessed basmati rice as aratio of our Company’s total input is set out below:2008 2009Basmati Paddy 61.6% 76.1%Unprocessed Basmati Rice 38.4% 23.9%Total 100.0% 100.0%As shown in the table, basmati paddy as a percentage of total quantity of raw materials was 61.6% in Fiscal2008, which has increased to 76.1% in Fiscal 2009. The increase in Fiscal 2009 of basmati paddy as apercentage of total quantity of raw materials was due to increased volume of business and less dependenceon unprocessed basmati rice.On average, basmati paddy costs per tonne are lower than the per tonne cost of unprocessed basmati rice.For example, in Fiscal 2009 the average basmati paddy costs per tonne was approximately 51.9% lowerthan the per tonne cost of unprocessed basmati rice. However, each unit of basmati paddy yields onlyaround 0.67 units of basmati rice after processing. On the other hand, each unit of unprocessed basmati riceyields almost an equal quantity of processed basmati rice. When basmati paddy is used as input, ourCompany is able to perform the whole range of value adding activities including drying, dehusking andprocessing. In addition, our Company is also able to select the quality of basmati paddy which best suits itsneeds. As a result, use of basmati paddy over unprocessed basmati rice as input enables our Company toderive better margins.(Increase)/Decrease of Inventory(Increase)/decrease of inventory consists of the change in the opening and closing stock of finished goodsin a Fiscal Year period.98

Manufacturing, Administrative and Selling ExpensesOur Company’s manufacturing, administrative and selling expenses consists of stores, spares and packingmaterial consumed, power and fuel costs, salary, wages and bonuses paid to employees, contributions toemployee provident funds and other funds, staff welfare expenses, security charges, hire charges, repair andmaintenance costs for plants and machinery, buildings and wind farms, rent, rates and taxes, key maninsurance, insurance, ECGC premium, bank charges, postage and telephone charges, auditors’remuneration, directors’ fees and remuneration, filing fees, travelling and conveyance charges, carriageoutward, freight and clearing charges, advertisement costs, brokerage and selling expenses, VAT and salestaxes, loss on sale of fixed assets and other miscellaneous expenses.InterestInterest expenditure consists of interest charged on our Company’s various term loans, debentures andworking capital loans as well as other short-term loans, which our Company generally uses to fulfil itsworking capital needs.DepreciationDepreciation relates to depreciation of fixed assets, including land, leasehold land, buildings, plants andmachinery, wind farm generators, office equipment, tubewell, computers, vehicles and furniture andfixtures.Results of OperationsThe table below shows a breakdown of our Company’s historical results of operations and each item as apercentage of total income for Fiscal 2008 and Fiscal 2009 adjusted to give effect to the Demerger as if itoccurred on August 25, 2007, and therefore includes the results of our Company’s retail business, theoperation of the 6Ten neighbourhood convenience stores, for the period from April 1, 2007 to August 24,2007 in Fiscal 2008, but not for the period from August 25, 2007 to March 31, 2008 in Fiscal 2008. See “-Overview - Demerger.”Year ended 31 March2008 2009(Rs. in millions)Income Statement: Rs. % of total Rs. % of totalTotal income 17,385.9 100.00% 24,520.9 100.00%Sales 17,350.1 99.8% 24,482.3 99.8%Other income 35.8 0.2% 38.6 0.2%Expenditure:Material consumed and 13821.4 79.5% 19,780.2 80.6%purchaseof goods(Increase)/Decrease of(874.2) (5.0)% (1,830.6) (7.5)%inventoryManufacturing,1233.0 7.1% 2,076.9 8.5%administrative and sellingexpensesInterest 1773.7 10.2% 3,328.3 13.6%Depreciation 199.0 1.1% 212.9 0.9%Total expenditure 16,152.9 92.9% 23,567.7 96.1%Profit before taxation 1,233.0 7.1% 953.2 3.9%Provision for income tax 200.0 1.2% 336.0 1.4%99

Year ended 31 March2008 2009(Rs. in millions)Provision for fringe1.0 0.0% 0.8 0.0%benefit taxIncome tax for earlier1.5 0.0% 7.1 0.0%yearProfit after taxation 1030.5 5.9% 609.3 2.5%(1) The table below presents a breakdown of the revenue and profit information of our Company’sretail undertaking for the period from April 1, 2007 to August 24, 2007 in Fiscal 2008, which isincluded in our Company’s consolidated results of operations for Fiscal 2008 in the table above.The segment information has been prepared in conformity with AS-17 issued by the Institute ofChartered Accountants of India. Our Company believes the impact of its retail undertaking on itsconsolidated results of operations for the period was minimal and not material.April 1, 2007 to August 24, 2007(Rs. in million)Net sales 326.5Profit before tax and interest 17.3Profit before tax 17.3Fiscal 2009 compared to Fiscal 2008Our Company financial information for Fiscal 2008 below gives effect to the Demerger as if it occurred onAugust 25, 2007. Our Company believes the impact of its retail undertaking on its consolidated results ofoperations for the period from April 1 to August 24, 2007 in Fiscal 2008 was minimal and not material.SalesOur Company generated sales of Rs. 24,482.3 million in Fiscal 2009, a 41.1% increase over sales of Rs.17,350.1 million in Fiscal 2008. The increase in sales was primarily due to (i) higher sales volumes (whichwere 522,591 metric tonnes in Fiscal 2009 as compared to 487,422 metric tonnes in Fiscal 2008), (ii)increased sales of branded basmati rice from Rs. 6,833.3 million in Fiscal 2008 to Rs. 10,454.5 million inFiscal 2009 and (iii) increased export sales from Rs. 3,160.90 million in Fiscal 2008 to Rs. 9,980.0 millionin Fiscal 2009. In Fiscal 2009, our Company’s average sales realisation increased to Rs. 46,371 per metrictonne from Rs. 34,880 per metric tonne in Fiscal 2008 as a result of increased sales of branded basmati riceand increased exports, which provide higher margins. In Fiscal 2009, the percentage of whole grain basmatirice yield for basmati paddy was unchanged from 49% in Fiscal 2008. Sales of power/energy increasedfrom Rs. 183.6 million in Fiscal 2008 to Rs. 229.2 million in Fiscal 2009 due to improved performance ofour Company’s wind power projects.Other IncomeOur Company generated other income of Rs. 38.6 million in Fiscal 2009, a 7.9% increase over otherincome of Rs. 35.8 million in Fiscal 2008. The increase in other income was primarily due to income of Rs.4.1 million received in Fiscal 2009 from an insurance claim relating to the loss of basmati paddy andbasmati rice stock, income of Rs. 29.5 million received from sales of carbon credits and an increase inincome earned on fixed deposits in Fiscal 2009 from Fiscal 2008.Total ExpenditureOur Company’s total expenditure increased by 45.9% to Rs. 23,567.7 million in Fiscal 2009 from Rs.16,152.9 million in Fiscal 2008, primarily due to the following reasons:100

Materials consumed and purchase of goods.Materials consumed and purchase of goods were Rs. 19,780.2 million in Fiscal 2009, a 43.1% increasefrom Rs. 13,821.3 million in Fiscal 2008. The cost of raw materials consumed as a percentage of totalincome increased only slightly from 79.5% in Fiscal 2008 to 80.6% in Fiscal 2009. The increase was due toan increase in the price of basmati paddy and increased volume of business. Basmati paddy as a percentageof total quantity of raw materials consumed by our Company increased from 61.6% in Fiscal 2008 to76.1% in Fiscal 2009 as a result of our Company’s greater reliance on basmati paddy as a raw material inFiscal 2009. The average per unit tonne cost of consumption of raw material rose from approximately Rs.23,344.0 in Fiscal 2008 to Rs. 28,714.1 in Fiscal 2009. Our Company’s average ageing period for itsbasmati paddy remained unchanged from Fiscal 2008 at 11 months in Fiscal 2009, and our Company’saverage percentage of whole grain basmati rice yield also remained unchanged from Fiscal 2008 at 49% inFiscal 2009.• (Increase)/Decrease of Inventory. Inventory of finished goods increased by Rs. 1,830.6 million inFiscal 2009 as compared to an increase of Rs. 874.2 million in Fiscal 2008. The higher increase ininventory value over the prior year was largely due to an increase in our Company’s ageing ofbasmati rice in Fiscal 2009 from the level in Fiscal 2008 and an increase in the cost of inventorydue to the higher price of raw material in Fiscal 2009 from Fiscal 2008.• Manufacturing, Administrative and Selling Expenses. Manufacturing, administrative and sellingexpenses were Rs. 2,076.9 million in Fiscal 2009, a 68.5% increase from Rs. 1,233.0 million inFiscal 2008. These expenses increased primarily as a result of expenses of Rs. 590.0 million onaccount of an export duty of Rs. 8,000 per metric tonne levied by the Government of India duringFiscal 2009, which has been subsequently withdrawn by the Government of India. Anothercontributing factor to the increase in these expenses was the increase in stores, spares and packingmaterials consumed from Rs. 337.6 million in Fiscal 2008 to Rs. 461.7 million in Fiscal 2009 as aresult of an increase in our Company’s branded basmati rice sales.• Interest. Interest was Rs. 3,328.3 million in Fiscal 2009, a 87.6% increase from Rs. 1,773.7million in Fiscal 2008. The increase was due to an increase in interest paid on our Company’sworking capital facilities as a result of increased borrowings due to increased procurement ofpaddy as well as higher procurement costs and an increase in interest rates and borrowing costs asa result of the disruption in the global financial markets in Fiscal 2009. See “- Liquidity andCapital Resources”.A breakdown of the amount of our Company’s local and foreign currency denominated loans is set outbelow:Year ended 31 March2008 2009(Rs. in millions)Rupee borrowing Rs. 22,610.9 Rs. 28,495.3Foreign currency 549.5 1,253.1Total Rs. 23,160.4 Rs. 29,748.4• Depreciation. Depreciation expense was Rs. 212.9 million in Fiscal 2009, a 6.9% increase fromRs. 199.0 million in Fiscal 2008. The increase was primarily due to an increase in our Company’sfixed assets as a result of increased purchases of plant and machinery.Profit Before TaxationOur Company’s profit before taxation decreased from Rs. 1,233.0 million in Fiscal 2008 to Rs. 953.2million in Fiscal 2009, a decrease of 22.7%.Income Tax Expense101

Income tax expense was Rs. 343.9 million in Fiscal 2009, an increase of 69.9% from Rs. 202.5 million inFiscal 2008.Profit After TaxationOur Company’s profit after taxation was Rs. 609.3 million in Fiscal 2009, a 40.9% decrease from Rs.1,030.5 million in Fiscal 2008. Despite our Company’s increased sales volumes and increased sales ofhigher margin products, our Company’s profits after taxation decreased primarily as a result of increasedborrowing costs as a result of the extreme disruption in the global financial markets in Fiscal 2008 and2009 and the levy of export duty of Rs. 8,000 per metric tonne by the Government of India imposed on theexport of basmati rice in Fiscal 2009, which was lifted later that year.Financial Condition and LiquidityThe table below shows a breakdown of our Company’s historical cash flows for Fiscal 2008 and Fiscal2009 adjusted to give effect to the Demerger as if it occurred on August 25, 2007, and therefore includesthe results of our Company’s retail business, the operation of the 6Ten neighbourhood convenience stores,for the period from April 1, 2007 to August 24, 2007 in Fiscal 2008, but not for the period from August 25,2007 to March 31, 2008 in Fiscal 2008.Year ended 31 March2008 2009(Rs. in millions)Net cash flow provided by (used in) operating activities Rs. (7,209.0) Rs. (2,932.2)Net cash flow provided by (used in) investing activities (1,544.0) (171.0)Net cash flow provided by (used in) financing activities 8,848.0 3,156.4Cash and cash equivalents (closing balance) 125.3 178.5Our Company financial information for Fiscal 2008 below gives effect to the Demerger as if it occurred onAugust 25, 2007. See “- Overview – Demerger.” Our Company believes the impact of its retail undertakingon its consolidated cash flows for the period from April 1, 2007 to August 24, 2007 in Fiscal 2008, asminimal and not material.Net Cash Flow Provided by (Used in) Operating ActivitiesNet cash used in operating activities was Rs. 7,209.0 million and Rs. 2,932.2 million in 2008 and 2009,respectively.Net cash used in operating activities decreased in Fiscal 2009 compared to Fiscal 2008 as a result of anincrease in operating profit.Net Cash Flow Provided by (Used in) Investing ActivitiesNet cash used in investing activities was Rs. 1,544.0 million and Rs. 171.0 million in 2008 and 2009,respectively. Net cash used in investing activities decreased in Fiscal 2009 as compared to Fiscal 2008primarily as a result of our Company’s lower level of purchases of plant and machinery and investment inFiscal 2009.Net Cash Flow Provided by (Used in) Financing Activities102

Net cash provided by financing activities was Rs. 8,848.0 million and Rs. 3,156.4 million in 2008 and2009, respectively.Net cash provided by financing activities decreased in Fiscal 2009 as compared to Fiscal 2008 as a result ofa repayment by our Company of Rs. 132.3 million of term loan borrowings, a decrease in short-termborrowings as a result of higher operating profit to fund working capital requirements and an increase ininterest paid on our Company’s borrowings from Rs. 1,773.7 million in Fiscal 2008 to Rs. 3,328.3 millionin Fiscal 2009 primarily due to increased interest rates as a result of the disruption in the global financialmarkets in Fiscal 2009.Liabilities and Sources of FinancingBank BorrowingsOur Company’s bank borrowings as of March 31, 2008 and 2009, respectively, were as follows:2008 2009(Rs. in Millions)Bank borrowings: Rs. Rs.Secured 20,362.0 24,498.4Unsecured 2,798.4 5,250.0Total bank borrowings* 23,160.4 29,748.4*Includes interest accrued and dueSet forth below is the maturity profile of our Company’s bank borrowings as of the dates indicated.2008 2009Rs.Rs.Due within one year 20,067.5 26,812.1Due within more than one year 3,093.2 2,936.3Total * 23,160.4 29,748.4*Includes interest accrued and due103

SECTION VII – LEGAL AND OTHER INFORMATIONOUTSTANDING LITIGATIONS AND OTHER DEFAULTSSave as detailed herein there are no:(a)(b)(i)(ii)(iii)pending legal proceedings which, if they result in an adverse outcome, would materially andadversely affect the operations or the financial position of our Company;Matters which are pending or which have arisen in the immediately preceding ten years involving:Issues of moral turpitude or criminal liability on the part of our Company;Material violations of statutory regulations by our CompanyEconomic offences where proceedings have been initiated against our Company.Neither our company nor our Promoters, members of Promoter Group, associates and Directors have beendeclared as willful defaulters by the RBI or any other Governmental authority and expect as disclosed inthis chapter in relation to the litigation, there are no violations of securities laws committed by us in thepast or pending against us.A. SEBI PROCEEDINGSSEBI has issued a show cause notice dated September 11, 2009, under Sections 11, 11B and 11(4)of the SEBI Act read with Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair TradePractices relating to Securities Market) Regulations, 2003, against our Company, (“SEBI ShowCause Notice”). Pursuant to the SEBI Show Cause Notice, SEBI has alleged that a preferentialallotment of Equity Shares of our Company made to various entities on March 22, 2005,(“Impugned Preferential Issue”), was partly indirectly funded by our Company. SEBI hasfurther alleged the Allottees of the Impugned Preferential Issue, were connected to our Companyinter-alia through common directors and common addresses, and consequently, allegedly ourCompany has violated Section 77 of the Companies Act by allegedly buying its own shares in theImpugned Preferential Issue, besides also allegedly violating the provisions of the SEBI(Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations,2003. SEBI has called upon our Company to show cause as to why action should not be takenagainst our Company under Sections 11, 11B and 11(4) of the SEBI Act read with Regulation 11of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market)Regulations, 2003. Our Company responded to the SEBI Show Cause Notice, vide its letter datedSeptember 24, 2009 and has applied to SEBI for passing consent orders in connection with theaforesaid matter, in terms of the SEBI Show Cause Notice and in accordance with the circulardated April 20, 2007 (Circular No. EFD/ED/Cir-1/2007) issued by SEBI.B. CRIMINAL PROCEEDINGS AGAINST OUR COMPANY AND OUR DIRECTORSThe Government of National Capital Territory of Delhi has initiated criminal proceedings (CaseNo. 82/PFA/DA/09) under the Prevention of Food Adulteration Act, 1954, against one Mr. SushilKumar, our Company, our Directors, Mr. Sandip Jhunjhunwala, Mr. Sanjay Jhunjhunwala, Dr.ING. N.K. Gupta, Mr. Asoke Chaterjee, and Mohit Enterprises, before the Hon’ble court of theAdditional Chief Metropolitan Magistrate, New Delhi, on alleged grounds that a sample of one ofthe products purchased by our Company from Mohit Enterprises for sale at the “6Ten” stores104

(prior to the scheme of arrangement for de-merger of our erstwhile retail undertaking becomingeffective), was found to be adulterated and misbranded by the Public Analyst pursuant to hisreport dated August 25, 2008. Our Company has filed an application to the Hon’ble court of theAdditional Chief Metropolitan Magistrate, New Delhi, seeking that a second counter part of theimpugned sample tested by the Public Analyst be sent to the Director, Central Food Laboratories,for analysis under Section 13(2) of the Prevention of Food Adulteration Act, 1954. Anyunfavourable outcome aforementioned proceedings could subject our officers and Directors tocriminal prosecution and also have a material adverse effect on the operations and profitability ofour Company, the value of which currently can not be quantified.C. COMPANY PETITIONSRT Innovation Services Private Limited has filed a petition before the Hon’ble High Court atCalcutta, (“High Court”), (Company Petition No. 194 of 2009, under Sections 433, 434 and 439of the Act, seeking the High Court to direct our Company to be wound up, and an officialliquidator to be appointed in connection with our assets and properties. The aforenamed petitionerhas alleged that our Company is indebted to the petitioner for an alleged sum of Rs. 37,56,924/-pursuant to alleged services rendered by the petitioner to our Company. The petitioner has furtheralleged in his petition that our Company is not in a position to honour our liabilities owed to thepetitioner and accordingly, the petitioner has sought that our Company be wound up. Since theabove claim relates to our erstwhile retail undertaking which has been transferred to REI Six TenRetail Limited pursuant to a scheme of arrangement as approved by the Hon’ble High Court ofCalcutta, our Company has opposed the above petition. As on the date of this Draft Letter ofOffer, our Company has not received any intimation of filing a counter-statement from theaforenamed petitioner. Any unfavourable outcome of the aforementioned proceedings could havea material adverse effect on the operations and profitability of our Company, the value of whichcurrently can not be quantified.D. DEFAULTS UNDER LOAN AGREEMENTSOur Company has failed to comply with certain provisions of the Financing Agreements executedwith Indian Renewable Energy Development Agency Limited, (“IREDA”), IndustrialDevelopment Finance Company Limited (“IDFC”) and ICICI Bank Limited, (“ICICI”), asfurther detailed hereinafter:(i)(ii)(iii)Under the terms and conditions of the Financing Agreements entered into with IREDA,the Promoters/ Directors/ Promoter Group of our Company are required to provide anundertaking to IREDA that they shall not pledge/dispose off their shareholdings in ourCompany during the currency of the credit facilities availed from IREDA, and ourCompany shall not register any transfer or lien on the said shares without priorpermission of IREDA in writing. However, certain promoters/ Promoter Group have infact pledged their shares in our Company, as per the disclosures made by our Company inits regulatory filings made with SEBI and the stock exchange(s).Further, under the terms of the Financing Agreements executed with IDFC, our Companyis required to maintain certain financial ratios including, total debt to net worth ratio ofnot more than 3.25: 1 and a secured debt to net worth ratio of not more than 1.6:1,(“Networth Covenants”). Our Company has failed to comply with the said NetworthCovenants since April 1, 2007.Any default in complying with the terms and conditions of the Financing Agreementswould be viewed as an event of default under the Financing Agreement executed withICICI.105

The aforementioned breaches would entitle the relevant lenders to various remedies availableunder their respective Financing Agreements which inter-alia include (i) pre-mature repayment ofthe amount of outstanding loans, (ii) imposition of penal interest, (iii) right of the relevant lenderto appoint a nominee Director and/or remove any existing Director of our Company and/orotherwise reconstitute the management of our Company, and/or (iv) cancellation of the existingcredit facilities extended to our Company.As of June 30, 2009, the total amounts outstanding under the financing documents with IREDA,IDFC and ICICI Bank Limited, Hong Kong Branch were Rs. 385.3 million, Rs. 636.4 million andRs. 324.2 million, respectively. In the event the aforesaid banks enforce any of the remediesavailable to them in connection with the aforementioned breaches, our operations and financialcondition would be adversely affected, the value of which currently cannot presently be exactlyquantified.106

GOVERNMENT AND OTHER APPROVALSWe have received the necessary permissions/approvals/no-objections/certifications/registrations,(collectively “Authorisations”), from GoI and various governmental agencies required for our presentbusiness and except as disclosed in this Draft Letter of Offer no further approvals are required for carryingon our present business. The objects clause of the Memorandum of Association enables our Company toundertake its existing activities.A. Approvals in relation to the Issue• The Board of Directors has, pursuant to a resolution passed at its meeting held on September 9,2009 authorized the Issue.• Our Company has obtained in-principle listing approvals dated [●] and [●] from the BSE and theNSE, respectively.B. Authorisations for our Operations:1. Authorisations obtained by our Company: The following Authorisations have been obtained byour Company and are subsisting as on the date of this Draft Letter of Offer:S. Type ofNo. Authorisation1. License toImport andstore Petroleumin InstallationDescription/Purpose Authority Issue date ExpiryImportation of 40 K.Lpetroleum of the class B inbulk and storage there of at95KM STONE, NH-8, Vill.Jaliavas Rewari, AMBALA,HaryanaJoint ChiefController ofExplosives,FaridabadSeptember21, 2007December 31,2009LicenceNo:P/NC/HN/15/1349(P90337)2. FactoryLicenceFor the factory premisessituated at 691-696, HSIDCG.C., Milestone, Bawal,REWARIChiefInspectorFactories,HaryanaofFebruary 11,2007December 31,2011Licence Registration No:RWR/R/27/118743. FactoryLicenceFor the factory premisessituated at Plot No – 180 D toJ & 181 A, Sec-3 HSIDC,Bawal Growth (Rewari)ChiefInspectorFactories,HaryanaofFebruary 25,2009December 31,2013Licence Registration No:MOH/R/334. Certificate forthe use of aBoilerFor the use of the Boiler(watertube) at the maximum pressureof 51 kg/cm square situated atBanipur Chowk; IndustrialGrowth Centre, Bawal(Rewari)ChiefinspectorBoiler,HaryanaofOctober 10,2008October9,2009107

S.No.Type ofAuthorisationDescription/Purpose Authority Issue date Expiry5. Certificate ofRegistrationunder ContractLabour(Regulation &Abolition)Act,1970Registration No: CBBT-480For the registration of theestablishment situated at PlotNo 180-D to J & 181-A,Bawal Growth Centre-Rewari, Haryana containingparticulars of contractors andcontract labour.Joint LabourCommissionerJanuary30,2007December31,20116. Certificate ofRegistrationunder ContractLabour(Regulation &Abolition)Act,1970Registration No: RG-1867/2,006/410/RWR/I-78/NI-12For the registration of theestablishment situated at PlotNo- 691, Bawal GrowthCentre Vill, Jaliawas, Rewari,Haryana containing particularsof contractors and contractlabour.DeputyLabourCommissionerandRegisteringofficerJanuary 30,2008December 31,2010Registration No: CLA/DLC II-GGn/LO-WWB No.437. No ObjectionCertificate (Fireservices)Purpose:To confirm that thesatisfactory fire safetyarrangements has been madeby the establishment situatedat Plot No 180-D to J & 181-A, Bawal Growth Centre-Rewari, Haryana, along withthe trained staff and firefighting system and theauthority certifying it has noobjections to it.Fire StationOfficer(Rewari)May 9, 2009 May 8, 20108. No ObjectionCertificate (Fireservices)Reference No: FSR/173/09To confirm that satisfactoryfire safety arrangements hasbeen made by theestablishment situated at PlotNo- 691, Bawal GrowthCentre Vill, Jaliawas, Rewari,Haryana, along with thetrained staff and fire fightingsystem and the authoritycertifying it has no objectionsto it.Fire StationOfficer(Rewari)May 9, 2009 May 8, 2010Reference No: FSR/172/099. Certificate ofRegistrationCertification that the name andaddress of our Company isDirectorLegalofApril 28,1999N/A108

S.No.Type ofAuthorisationunder Rule 35of theStandards ofWeights andMeasures(Packagedcommodities)Rules, 1977Description/Purpose Authority Issue date Expiryregistered in the Departmentof Consumer Affairs andcertification regarding themanufacturing/packing unitsof our Company situated atDelhi Jaipur Road, BawalGrowth Centre Vill, Jaliawas,Rewari, HaryanaMetrology,Department ofConsumerAffairs10. Certificate ofRegistration forQualityManagementSystemRegistrationNo-WB/1741/1999For the purpose of Companyoperating a qualitymanagement system whichcomplies with therequirements of ISO9001:2000 for the milling ofpaddy & processing of rice fordomestic & internationalmarket.ManagingDirector, BSIManagementSystemsAugust 22,2008June 15, 2011Certificate No: FM 941302. Applications made for Authorisations: Our Company has applied for the renewal of thefollowing Authorisations which have expired, and is awaiting receipt of the same from therelevant authorities, as on the date of this Draft Letter of Offer:S. Type of Applications Details of the Application Authority Date ofNo.Application1. Application for consent Application for consent under Regional May 6, 2009under Water & Pollution Water Act and Air Act for the officer,Actestablishment situated at Plot No691-696, Sector- 2, Bawal GrowthCentre, Vill- Jaliawas, DistrictRewariHaryana StatePollutionControl Board2. Application for consentunder Water & PollutionActApplication for consent underWater Act and Air Act for theestablishment situated at Plot No180-D to J & 181-A, BawalGrowth Centre- Rewari, HaryanaRegionalofficer,Haryana StatePollutionControl BoardMay 6, 2009109

MATERIAL DEVELOPMENTSSave as disclosed hereinafter, there have been no developments since March 31, 2009 which effect theoperations, or financial condition of our Company:1. On July 27, 2009 our Company allotted 2,99,45,550 Equity Shares to Qualified InstitutionalBuyers (as defined in the rescinded SEBI (Disclosure and Investor Protection) Guidelines, 2000),pursuant to provisions of Chapter XIII-A of the rescinded SEBI (Disclosure and InvestorProtection) Guidelines, 2000.2. On July 10, 2009, our Company announced its unaudited financial results for the quarter endedJune 30, 2009.3. SEBI has issued a show cause notice dated September 11, 2009, under Sections 11, 11B and 11(4)of the SEBI Act read with Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair TradePractices relating to Securities Market) Regulations, 2003, against our Company. Our Companyresponded to the aforesaid notice, vide its letter dated September 24, 2009 and has applied to SEBIfor passing consent orders in connection with the aforesaid matter, in terms of the SEBI ShowCause Notice and in accordance with the circular dated April 20, 2007 (Circular No. EFD/ED/Cir-1/2007) issued by SEBI. For further details please refer to the section entitled “OutstandingLitigations and Other Defaults” beginning on page 104 of this Draft Letter of Offer.110

STATUTORY AND OTHER INFORMATIONAuthority for the IssueThe Board of Directors of our Company has pursuant to a resolution passed at their meeting held onSeptember 9, 2009, authorised this offer of Rights Equity Shares on a rights basis.Our Company confirms that none of its Directors are associated with the securities market in any mannerand except as disclosed in this Draft Letter of Offer, SEBI has not initiated any action against our Companyor its Directors.Our Company, our Promoters, our Promoter Group, Group Entities, the relatives (as per Companies Act) ofthereof have not been named by the RBI or any other statutory/regulatory authority as willful defaulters.Our Company has complied with the requirements of Part E of Schedule VIII of the SEBI Regulations, tothe applicable extent, in terms of the disclosures made in this Draft Letter of Offer.Eligibility for the IssueOur Company has complied with the provisions of Regulation 4 of the SEBI Regulations in connectionwith the general eligibility requirements for the Issue and confirms that:1. Our Company, nor our Promoters, our Promoter Group, our Group Entities, Directors or person(s)in control of our Promoter have not been restrained, prohibited or debarred from accessing oroperating in the capital markets or restrained from buying, selling or dealing in securities underany order or direction passed by SEBI;2. None of our Promoters, Directors or persons in control of our Company was or also is a promoter,director or person in control of any other company which has been restrained, prohibited ordebarred from accessing or operating in the capital markets or restrained from buying, selling ordealing in securities under any order or direction passed by SEBI;3. Our Company, our Directors, our Promoters, our Promoter Group, our Group Entities and therelatives (as per Companies Act) of our Directors and our Promoters, have not been declared aswillful defaulters by RBI or any other governmental authority and there have been no violations ofsecurities laws committed by us in the past, and except as disclosed herein, no such proceedingsare pending against them for alleged violation of securities laws;4. Our Company is an existing company registered under the Companies Act, whose Equity Sharesare listed on the Stock Exchanges, namely BSE and NSE and we have received in-principleapprovals for listing of the Rights Equity Shares to be issued pursuant to this Issue from the BSEand the NSE by letters dated [●] and [●], respectively, and have chosen BSE to be the DesignatedStock Exchange for the purposes of this Issue. We will make applications to the Stock Exchangesfor permission to deal in and for an official quotation in respect of the Rights Equity Shares beingoffered in terms of this Draft Letter of Offer.5. All existing partly paid-up Equity Shares of our Company have either been fully paid up orforfeited and as on the date of this Draft Letter of Offer, there are no outstanding partly paid-upEquity Shares of our Company;6. The aforesaid requirement of funds is proposed to be entirely financed by the Net Proceeds of theIssue and our Company’s internal accruals / other sources as mentioned in the section entitled“Objects of the Issue” beginning on page 30 of this Draft Letter of Offer. Thus, provisions ofRegulation 4 (g) of the SEBI Regulations for firm arrangements of finance through verifiable111

means towards 75% of the stated means of finance, excluding the amount to be raised through theproposed Issue and internal accruals/ other sources, does not apply to our Company as ourCompany do not proposes to avail any borrowed funds for part financing the Object of the Issue.Disclaimer ClauseAS REQUIRED, A COPY OF THIS DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TOSEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THIS DRAFTLETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED / CONSTRUEDTHAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKEANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME ORTHE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THECORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THIS DRAFTLETTER OF OFFER. THE LEAD MANAGER(S), SBI CAPITAL MARKETS LIMITED, AXISBANK LIMITED, FORTUNE FINANCIAL SERVICES (INDIA) LIMITED, AND IDBI CAPITALMARKET SERVICES LIMITED, HAVE CERTIFIED THAT THE DISCLOSURES MADE INTHIS DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE INCONFORMITY WITH SEBI (ISSUANCE OF CAPITAL AND DISCLOSURE REQUIREMENTS)REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TOFACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKINGINVESTMENT IN THE PROPOSED ISSUE.IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY ISPRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OFALL RELEVANT INFORMATION IN THIS DRAFT LETTER OF OFFER, THE LEADMANAGER(S) ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THEISSUER COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALFAND TOWARDS THIS PURPOSE THE LEAD MANAGER(S), SBI CAPITAL MARKETSLIMITED, AXIS BANK LIMITED, FORTUNE FINANCIAL SERVICES (INDIA) LIMITED, ANDIDBI CAPITAL MARKET SERVICES LIMITED HAVE FURNISHED TO SEBI A DUEDILIGENCE CERTIFICATE DATED SEPTEMBER 30, 2009 WHICH READS AS FOLLOWS:1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TOLITIGATION LIKE COMMERCIAL DISPUTES, DISPUTES WITH COLLABORATORSETC. AND OTHER MATERIALS MORE PARTICULARLY REFERRED TO IN THEANNEXURE HERETO IN CONNECTION WITH THE FINALISATION OF THISDRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THECOMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES,INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THEOBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATIONAND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXUREAND OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:A. THIS DRAFT LETTER OF OFFER FORWARDED TO THE BOARD IS INCONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANTTO THE ISSUE;B. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSOTHE SEBI REGULATIONS, INSTRUCTIONS, ETC. ISSUED BY THE BOARD, THEGOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALFHAVE BEEN DULY COMPLIED WITH; ANDC. THE DISCLOSURES MADE IN THIS DRAFT LETTER OF OFFER ARE TRUE, FAIRAND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED112

DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE (AND SUCHDISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THECOMPANIES ACT, 1956, THE SEBI (ISSUANCE OF CAPITAL AND DISCLOSUREREQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGALREQUIREMENTS).3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED INTHIS DRAFT LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THATTILL DATE SUCH REGISTRATION IS VALID. – IN CASE OF M/S MAHESHWARIDATAMATICS PRIVATE LTD. (MDPL), WHO HAS BEEN APPOINTED AS REGISTRARTO THE ISSUE, THE CERTIFICATE OF REGISTRATION WAS VALID TILL AUGUST 31,2009. MDPL HAS MADE AN APPLICATION FOR RENEWAL FOR REGISTRATION WASMADE BY IT TO SEBI VIDE LETTER DATED MAY 15, 2009 IN TERMS OF THEREQUIREMENT OF SEBI (REGISTRARS TO AN ISSUE AND SHARE TRANSFER AGENT)REGULATIONS, 1993. CONFIRMATION REGARDING THE RENEWAL OF THEREGISTRATION IS STILL AWAITED FROM SEBI.4. WE HAVE SATISFIED OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TOFULFIL THEIR UNDERWRITING COMMITMENTS - NOTED FOR COMPLIANCE5. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THEFUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAINOBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OFASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIESWHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THEOBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.6. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURETHAT THE MONIES RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATEBANK ACCOUNT AS PER THE PROVISIONS OF SECTION 73(3) OF THE COMPANIESACT, 1956 AND THAT SUCH MONIES SHALL BE RELEASED BY THE SAID BANK ONLYAFTER THE BASIS OF ALLOTMENT HAS BEEN FINALISED IN CONSULTATION WITHTHE STOCK EXCHANGES AND IN ACCORDANCE WITH THE CONTENTS OF THISDRAFT LETTER OF OFFER AND THE LETTER OF OFFER. WE FURTHER CONFIRMTHAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUEAND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION - NOTED FORCOMPLIANCE.7. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE PROSPECTUS THATTHE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT ORPHYSICAL MODE – NOT APPLICABLE.8. WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THESECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL ANDDISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN ADDITIONTO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLETHE INVESTOR TO MAKE A WELL INFORMED DECISION.9. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THISDRAFT LETTER OF OFFER /LETTER OF OFFER:A. AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALLBE ONLY ONE DENOMINATION FOR THE SHARES OF THE COMPANY; ANDB. AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCHDISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIMETO TIME113

10. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TOADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA(ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILEMAKING THE ISSUE.11. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HASBEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESSBACKGROUND OR THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESSSTANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE ,ETC.12. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITHTHE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE BOARD OFINDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009,CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THESTATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFERWHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IFANY.The filing of this Draft Letter of Offer does not, however, absolve our Company from any liabilities underSection 63 or Section 68 of the Companies Act or from the requirement of obtaining such statutory or otherclearance as may be required for the purpose of the proposed Issue. SEBI further reserves the right to takeup, at any point of time, with the Lead Manager(s) any irregularities or lapses in this Draft Letter of Offer.Disclaimer Statement from the Company and the Lead Managers:OUR COMPANY AND THE LEAD MANAGER(S), NAMELY SBI CAPITAL MARKETSLIMITED, AXIS BANK LIMITED, FORTUNE FINANCIAL SERVICES (INDIA) LIMITED, ANDIDBI CAPITAL MARKET SERVICES LIMITED ACCEPT NO RESPONSIBILITY FORSTATEMENTS MADE OTHERWISE THAN IN THIS DRAFT LETTER OF OFFER OR IN THEADVERTISEMENT OR ANY OTHER MATERIAL ISSUED BY OR AT THE INSTANCE OFOUR COMPANY AND THAT ANYONE PLACING RELIANCE ON ANY OTHER SOURCE OFINFORMATION WOULD BE DOING SO AT HIS OWN RISK.INVESTORS WHO INVEST IN THE ISSUE WILL BE DEEMED TO HAVE BEENREPRESENTED BY OUR COMPANY AND THE LEAD MANAGER(S) AND THEIRRESPECTIVE DIRECTORS, OFFICERS, AGENTS, AFFILIATES AND REPRESENTATIVESTHAT THEY ARE ELIGIBLE UNDER ALL APPLICABLE LAWS, RULES, REGULATIONS,GUIDELINES AND APPROVALS TO ACQUIRE EQUITY SHARES OF OUR COMPANY, ANDARE RELYING ON INDEPENDENT ADVICE / EVALUATION AS TO THEIR ABILITY ANDQUANTUM OF INVESTMENT IN THIS ISSUE.Disclaimer with respect to jurisdictionThis Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rulesand regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of theappropriate court(s) in Mumbai, India only.Selling RestrictionsThe distribution of this Draft Letter of Offer and the issue of our Rights Equity Shares on a rights basis topersons in certain jurisdictions outside India may be restricted by legal requirements prevailing in thosejurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to informthemselves about and observe such restrictions. Our Company is making this Issue of Rights EquityShares/GDR’s on a rights basis to its Eligible Equity Shareholders/ Trustee(s) on behalf of holder’s ofGDR’s and will dispatch the Letter of Offer and Composite Application Form (“CAF”) to the shareholderswho have an Indian address.No action has been or will be taken to permit this Issue in any jurisdiction where action would be requiredfor that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations.Accordingly, the Rights Equity Shares/GDR’s may not be offered or sold, directly or indirectly, and this114

Draft Letter of Offer may not be distributed, in any jurisdiction, except in accordance with legalrequirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offerin those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, thisDraft Letter of Offer must be treated as sent for information only and should not be copied or redistributed.Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issueof the Rights Equity Shares/GDR’s or the Rights Entitlements, distribute or send the same in or into theUnited States or any other jurisdiction where to do so would or might contravene local securities laws orregulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent ornominee, they must not seek to subscribe to the Rights Equity Shares/GDR’s or the Rights Entitlementsreferred to in this Draft Letter of Offer.Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstancescreate any implication that there has been no change in our Company‘s affairs from the date hereof or thatthe information contained herein is correct as at any time subsequent to this date.For further details please refer to the section entitled “Overseas Shareholders” beginning on page 15 of thisDraft Letter of Offer.Designated Stock ExchangeThe Designated Stock Exchange for the purposes of this Issue will be BSE.Disclaimer Clause of the BSEAs required, a copy of this Draft Letter of Offer has been submitted to BSE. The Disclaimer Clause asintimated by BSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offerprior to filing with the Stock Exchanges.Disclaimer Clause of the NSEAs required, a copy of this Draft Letter of Offer has been submitted to NSE. The Disclaimer Clause asintimated by NSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offerprior to filing with the Stock Exchanges.Filing with SEBIThis Draft Letter of Offer has been filed with SEBI, Plot No. C 4-A, 'G' Block, Bandra Kurla Complex,Bandra (East), Mumbai 400 051, India, for its observations. After SEBI gives its observations, the Letter ofOffer will be filed with the Stock Exchanges as per the provisions of the Companies Act.ImpersonationAs a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of subsection(1) of section 68A of the Companies Act which is reproduced below:“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribingfor, any shares therein, or otherwise induces a Company to allot, or register any transfer of sharestherein to him, or any other person in a fictitious name, shall be punishable with imprisonment for aterm which may extend to five years”Expert Opinion, if anyExcept in the sections titled “Financial Statements” and “Statement of Tax Benefits” beginning on page 69and 37 of this Draft Letter of Offer, respectively, no expert opinion has been obtained by our Company inrelation to this Draft Letter of Offer.115

Expenses of the IssueThe expenses of the Issue including underwriting commission payable by our Company including fees andreimbursement to the Lead Manager(s), Auditors, Legal Advisor to the Issue, Registrar to the Issue,printing and distribution expenses, publicity, listing fees, stamp duty and other expenses are estimated at Rs[●] (around [●] of the total Issue size) and will be met out of the proceeds of the Issue.Sr. ParticularsAmount% of Issue size % of IssueNo.(Rs. In [●])expenses1. Fees payable to Lead[●] [●] [●]Manager(s)2. Fees payable to the Registrar to[●] [●] [●]the Issue3. Fees payable to the Legal[●] [●] [●]Advisors to the Issue4. Fees payable to Auditors [●] [●] [●]5. Fees payable to Bankers to the[●] [●] [●]Issue6. Fees payable to other advisors [●] [●] [●]7. Underwriting Commission/[●] [●] [●]brokerage/selling commission8. Printing and stationery,distribution, postage, etc[●] [●] [●]9. Advertisement and marketingexpenses[●] [●] [●]10. Other expenses [●] [●] [●]Total [●] [●] [●]Underwriting Commission[●]Public or rights issues by our Company in last five yearsOur Company has not undertaken any public or rights issues in the last five years.Issue of securities prior to listing of the Rights Equity SharesOur Company is, subject to market conditions and applicable statutory and/or regulatory requirements,contemplating to raise an amount not exceeding US$ 112.5 million, pursuant to a proposed offer, issuanceand allotment of foreign currency convertible bonds, during the period between the date of filing this DraftLetter of Offer with SEBI and the listing of the Rights Equity Shares allotted pursuant to the Issue or therefund of application monies, as applicable. For further details please refer to the section entitled “CapitalStructure” beginning on page 17 of this Draft Letter of Offer.Date of listing on the Stock ExchangeThe Equity Shares of our Company were listed on BSE in w.e.f December 10, 1996 and subsequently theEquity Shares of our Company were listed on the NSE w.e.f October 11, 2004.Previous issues in the last three years116

On July 27, 2009 our Company allotted 2,99,45,550 Equity Shares to Qualified Institutional Buyers (asdefined in the rescinded SEBI (Disclosure and Investor Protection) Guidelines, 2000), pursuant toprovisions of Chapter XIII-A of the rescinded SEBI (Disclosure and Investor Protection) Guidelines, 2000.Option to SubscribeOther than the present rights Issue, our Company has not given any person any option to subscribe to theEquity Shares of our Company.Important• This Issue is pursuant to the resolution passed by the Board of Directors at their meeting held onSeptember 9, 2009.• This Issue is applicable to those Eligible Equity Shareholders/GDR Holders whose names appear asBeneficial Owners as per the list to be furnished by the depositories in respect of the shares held in theelectronic form and on the Register of Members of our Company at the close of business hours on theRecord Date i.e. [●], after giving effect to the valid share transfers lodged with our Company up to theRecord Date.• Your attention is drawn to the section entitled “Risk Factors” beginning on page xi of this Draft Letterof Offer.• Please ensure that you have received the CAF with the Abridged Letter of Offer.• Please read this Draft Letter of Offer and the instructions contained therein and in the CAF carefullybefore filling in the CAF. The instructions contained in the CAF are each an integral part of this DraftLetter of Offer and must be carefully followed. An application is liable to be rejected for any noncomplianceof the provisions contained in this Draft Letter of Offer or the CAF.• All enquiries in connection with this Draft Letter of Offer or CAF should be addressed to the Registrarto the Issue, quoting the Registered Folio number/ DP and Client ID number and the CAF numbers asmentioned in the CAF.• All information shall be made available to the Investors by the Lead Manager(s) and the Issuer, and noselective or additional information would be available by them for any section of the Investors in anymanner whatsoever including at road shows, presentations, in research or sales reports, etc.• The Lead Manager(s) and our Company shall update this Draft Letter of Offer and keep the publicinformed of any material changes until the listing and trading commences.Issue ScheduleIssue Opening Date:Last date for receiving requests for SAFs:Issue Closing Date:[●][●][●]The Board may however decide to extend the Issue period as it may determine from time to time but notexceeding 30 days from the Issue Opening Date.Allotment Advices / Refund OrdersOur Company will issue and dispatch allotment advice / share certificates/ demat credit and/or letters ofregret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any,within a period of 15 days from the date of closure of the Issue. If such money is not repaid within eight117

days from the day our Company becomes liable to pay it, our Company shall pay that money with interestas stipulated under section 73 of the Companies Act.Investors residing in the 72 cities specified by SEBI pursuant to its circular dated February 1, 2008, will getrefunds through ECS only except where Investors are otherwise disclosed as applicable /eligible to getrefunds through direct credit and RTGS provided the MICR details are recorded with the Depositories orour Company.In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form usingelectronic credit under the depository system, and advice regarding their credit of the Rights Equity Sharesshall be given separately. Investors to whom refunds are made through electronic transfer of funds will besent a letter through certificate of posting intimating them about the mode of credit of refund within 15working days of closure of the Issue.In case of those Investors who have opted to receive their Rights Entitlement in physical form, ourCompany will issue the corresponding share certificates under Section 113 of the Companies Act or otherapplicable provisions.Refund orders exceeding Rs.1,500 would be sent by registered post / speed post to the sole / first Investors'registered address. Refund orders up to the value of Rs.1,500 would be sent under certificate of posting.Such refund orders would be payable at par at all places where the applications were originally accepted.The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole / first Investor.Adequate funds would be made available to the Registrar to the Issue for this purpose.Investor Grievances and Redressal SystemOur Company has adequate arrangements for redressal of Investor complaints. Well-arrangedcorrespondence system developed for letters of routine nature. Our registrar and share transfer agent ishandling the share transfer and dematerialization for our Company. Letters are filed category wise afterhaving attended to. Redressal norm for response time for all correspondence including shareholderscomplaints is within 15 days.The contact details of the Registrar to the Issue are as follows:Maheshwari Datamatics Private Limited6, Mangoe Lane,Kolkata – 700 001Status of ComplaintsNumber of shareholders complaints outstanding as of June 30, 2009: 1Total number of complaints received during the FY March 31, 2009: 7 (Seven)Total number of complaints received during current Financial Year (up to June 30, 2009):1Status of the complaints as on June 30, 2009: 1Time normally taken by it for disposal of various types of Investor grievances: 15 (Fifteen) daysInvestor Grievances arising out of this Issue118

Our Company’s Investor grievances arising out of the Issue will be handled by Mr. Mandan Mishra,Compliance Officer and Company Secretary and Maheshwari Datamatics Private Limited , who are theRegistrars to the Issue. The Registrar will have a separate team of personnel handling only post-Issuecorrespondence.The agreement between our Company and the Registrar will provide for retention of records with theRegistrar for a period of at least one year from the last date of dispatch of Allotment Advice/ sharecertificate / warrant / refund order to enable the Registrar to redress grievances of the Investors.All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such asfolio no., name and address, contact telephone / cell numbers, email id of the first Investor, number andtype of shares applied for, CAF serial number, amount paid on application and the name of the bank andthe branch where the application was deposited, along with a photocopy of the acknowledgement slip. Incase of renunciation, the same details of the Renouncee should be furnished.The average time taken by the Registrar for attending to routine grievances will be 15 days from the dateof receipt. In case of non-routine grievances where verification at other agencies is involved, it would bethe endeavour of the Registrar to attend to them as expeditiously as possible. Our Company undertakes toresolve the Investor grievances in a time bound manner.Investors may contact the Compliance Officer / Company Secretary in case of any pre-Issue/ post -Issue related problems such as non-receipt of allotment advice/share certificates/ demat credit/refundorders etc. His address is as follows:Mr. Mandan Mishra , Company SecretaryREI Agro Limited58A/1, Sainik Farm,New Delhi 110 062,IndiaTel: + 91 11 32905030/3290 6030Fax No: + 91 11 2955 2403Email: mandan@reiagro.comChanges in Auditors during the last three yearsThere has been no change in the Auditor’s of our Company during the last three years.Capitalisation of Reserves or ProfitsOur Company has not capitalized any of its reserves or profits for the last five years.Revaluation of Fixed AssetsThere has been no revaluation of our Company‘s fixed assets for the last five years.Minimum SubscriptionIf our Company does not receive the minimum subscription of 90% of the Issue including devolvement ofunderwriters on the Issue Closing Date, our Company shall forthwith refund the entire subscription amountreceived within 15 days from Issue Closing Date. If there is a delay in the refund of subscription by morethan eight days after the date from which our Company becomes liable to pay the subscription amount (i.e.15 days after the Issue Closing Date or the date of refusal by the Stock Exchanges, whichever is earlier) ourCompany shall pay interest for the delayed period as prescribed under subsection (2) and (2A) of Section73 of the Companies Act.119

Additional Subscription by the PromotersOur Promoters/Promoter Group, have confirmed, vide their letters dated September 29, 2009 that theyintend to subscribe to the full extent of their entitlement of Rights Equity Shares in the Issue. OurPromoters/Promoter Group reserve their right to subscribe to their entitlement and/or apply for additionalRights Equity Shares in the Issue, either by themselves or a combination of entities controlled by them,including subscribing for renunciation, if any, made by other Eligible Equity Shareholders. OurPromoter/Promoter Group has also, by their above letter confirmed that in addition to the subscription tothe Rights Equity Shares as stated above, our Promoter/Promoter Group shall subscribe to, and/or makearrangements for the subscription of, additional Rights Equity Shares in the Issue to the extent of anyunsubscribed portion of the Issue as per the relevant provisions of law. As a result of subscription to theirentitlement and any unsubscribed portion and consequent allotment, our Promoters/Promoter Group mayacquire Rights Equity Shares over and above their entitlement in the Issue, which may result in an increaseof our Promoter’s/Promoter Group’s shareholding in our Company. Such subscription and acquisition ofsuch additional Rights Equity Shares by our Promoters/Promoter Group, if any, will not result in change ofcontrol of the management of our Company and shall be exempt in terms of the proviso to Regulation3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section on“Objects of the Issue” beginning on page 30 of this Draft Letter of Offer, there is no other intention/purposefor this Issue, including any intention to delist our Company, even if, as a result of allotments to ourPromoters/Promoter Group, in this Issue, their shareholding in our Company exceeds their currentshareholding. Allotment to our Promoters/Promoter Group of any unsubscribed portion of the RightsEquity Shares, over and above their entitlement shall be done in compliance with the listing agreements andother applicable laws prevailing at that time relating to continuous listing requirements. Our Companyhereby confirms that, in case the Issue is completed with our Promoters/Promoter Group subscribing toRights Equity Shares over and above their entitlement, the public shareholding in our Company after theIssue will not fall below the minimum level of public shareholding as specified in the listing conditions orlisting agreement.SECTION VIII – OFFERING INFORMATIONTERMS OF THE ISSUEThe Rights Equity Shares proposed to be issued on rights basis, are subject to the terms and conditionscontained in this Draft Letter of Offer, the Abridged Letter of Offer, the enclosed CAF, the provisions ofthe Memorandum and Articles of Association of our Company, the provisions of the Companies Act,FEMA, SEBI Regulations, guidelines, notifications and regulations for issue of capital and for listing ofsecurities issued by GoI and/or other statutory authorities and bodies from time to time, terms andconditions as stipulated in the allotment advice or security certificate and rules as may be applicable andintroduced from time to time.Authority for the IssueThis Issue is being made pursuant to a resolution passed by the Board of Directors of our Company undersection 81(1) of the Companies Act at their meeting held on September 9, 2009.RankingThe Rights Equity Shares being issued shall be subject to the provisions of our Memorandum ofAssociation and Articles of Association. The dividend payable on the partly paid-up Equity Shares, untilfully paid-up, shall rank for dividend in proportion to the amount paid-up. The Rights Equity Shares shall120

ank pari passu, in all respects including dividend, with our existing Equity Shares once fully paid-up. Thevoting rights in a poll, whether present in person or by representative or by proxy shall be in proportion tothe paid-up value of the Rights Equity Shares held, and no voting rights shall be exercisable in respect ofmoneys paid in advance until the moneys have become payable. Further no person shall be entitled toexercise any voting rights either personally or by proxy at any meeting of our Company in respect of partlypaid-up Rights Equity Shares on which any calls or other sums payable by him have not been paid.Mode of Payment of DividendWe shall pay dividend to our Equity Shareholders as per the provisions of the Companies Act.Listing and trading of Rights Equity Shares proposed to be issuedOur Company’s existing Equity Shares are currently trade on the Stock Exchanges under the ISIN CodeINE385B01031. In addition to the ISIN for the existing Equity Shares, our Company would obtain separateISINs for its partly paid-up Rights Equity Shares. The partly paid-up Rights Equity Shares offered underthe Issue will be listed and traded under a separate ISIN for each period as may be applicable prior to therecord dates for the First and Final Call. On the record date for the First and Final Call, the trading of thenexisting partly paid-up Rights Equity Shares would be terminated. The process of corporate action forcrediting the partly paid-up and fully paid-up Rights Equity Shares to the Investors’ demat accounts maytake about two weeks time from the last date of payment of the account under the call money notice. Onpayment of the First and Final Call, the partly paid-up Rights Equity Shares would be converted into fullypaid-up Rights Equity Shares and merged with the existing ISIN for our Equity Shares. The Rights EquityShares in respect of which the balance amount payable remains unpaid shall be forfeited, at any time afterthe due date for payment of the balance amount due. The listing and trading of the partly paid-up and fullypaid-up Rights Equity Shares shall be based on the regulatory framework applicable thereto. Accordingly,any change in the regulatory regime would accordingly affect the schedule. The fully paid up Rights EquityShares allotted pursuant to this Issue will be listed as soon as practicable but in no case later than sevenworking days from the finalisation of basis of allotment. Our Company has made an application for “inprinciple”approval for listing of the Rights Equity Shares in accordance with clause 24(a) of the ListingAgreement to the BSE and NSE through letters dated [●], 2009 and [●], 2009, respectively, and hasreceived such approval from the BSE through letter no. [●], dated [●], 2009 and from NSE through letterno. [●], dated, [●], 2009.Rights of the Eligible Equity ShareholderThe Rights Equity Shares allotted in this Issue shall rank pari passu with the existing Equity Shares in allrespects including dividend. Subject to applicable laws, the Eligible Equity Shareholders of our Companyshall have the following rights:• Right to receive dividend, if declared. The dividend payable on partly paid-up Rights EquityShares, until fully paid-up, shall rank for dividend in proportion to the amount paid up;• Right to attend general meetings and exercise voting powers, unless prohibited by law;• Right to vote in person or by proxy. However, the voting rights in a poll shall be in proportion tothe paid-up value of the Rights Equity Shares held;• Right to receive offers for rights shares and be allotted bonus shares, if announced;• Right to receive surplus on liquidation;• Right to free transferability of Rights Equity Shares; and121

• Such other rights as may be available to a shareholder of a listed public company under theCompanies Act, the Listing Agreement and Memorandum and Articles of Association.Basis for the IssueThe Rights Equity Shares are being offered for subscription for cash to those existing Eligible EquityShareholders whose names appear as beneficial owners as per the list to be furnished by the Depositories inrespect of the Equity Shares held in the electronic form and on the Register of Members of our Company inrespect of the Equity Shares held in physical form at the close of business hours on [●] (the “RecordDate”), fixed in consultation with the Designated Stock Exchange.Rights EntitlementAs your name appears as beneficial owner in respect of the Equity Shares held in the Electronic Form orappears in the Register of Members as an Eligible Equity Shareholder, you are entitled to the number ofRights Equity Shares shown in Block I of Part A of the enclosed CAF.The Eligible Equity Shareholders are entitled to [●] Rights Equity Shares for every [●] Equity Shares heldon the Record Date.Offer to Non-Resident Equity Shareholders/ApplicantsApplications received from NRIs for allotment of Rights Equity Shares shall be, inter alia, subject to theconditions imposed from time to time by the RBI under the Foreign Exchange Management Act, 1999(FEMA) in the matter of refund of application moneys, allotment of Rights Equity Shares, issue of letter ofallotment/share certificates, payment of interest, dividends, etc. The Rights Equity Shares purchased byNRIs shall be subject to the same conditions including restrictions in regard to the reparability as areapplicable to the original shares against which Rights Equity Shares are issued.By virtue of Circular No. 14 dated September 16, 2003 issued by the RBI, overseas corporate bodies(“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued theForeign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs))Regulations, 2003. The circular stipulates that an OCB shall not be eligible to purchase equity or preferenceshares or convertible debentures offered on right basis by an Indian company, and no Indian company shalloffer equity or preference shares or convertible debentures on right basis to an OCB. Accordingly, OCBsshall not be eligible to subscribe to the Equity Shares. The RBI has however clarified in its circular, A.P.(DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are not underthe adverse notice of the RBI are permitted to undertake fresh investments as incorporated non-residententities in terms of Regulation 5(1) of RBI Notification No.20/2000-RB dated May 3, 2000 under FDIScheme with the prior approval of Government if the investment is through Government Route and withthe prior approval of RBI if the investment is through Automatic Route on case by case basis. Thus, OCBsdesiring to participate in this Issue must obtain prior approval from the RBI. On providing such approval tothe Bank at its registered office, the OCB shall receive this Draft Letter of Offer and the CAF.Applications received from the NRIs for the allotment of Rights Equity Shares shall, among other things,be subject to conditions as may be imposed, from time to time, by the RBI, in the matter of refund ofapplication moneys, allotment of Rights Equity Shares, issue of letters of allotment/ certificates/ paymentof dividends etc.In case of change of status of holders i.e. from resident to non-resident, a new demat account shall beopened for the purpose.Principal Terms of the IssueFace Value122

Each Rights Equity Share will have the face value of Re. 1.Issue PriceEach Rights Equity Share shall be offered at an Issue Price of Rs. [●] for cash at a premium of Rs. [●] perEquity Share.Entitlement RatioThe Rights Equity Shares are being offered to the existing Eligible Equity Shareholders in the ratio of [•]Rights Equity Shares for every [●] Equity Share held on the Record Date i.e. [●].Payment terms 1The payment terms available to the Investors are as follows:Amount payable per RightsEquity Share (Rs.)Payment Method 1 2 Payment Method 2Applicable to all categories ofInvestorsFace Value Premium Total Face Value Premium Total (Rs.)(Re.) (Rs.)(Re.) (Rs.)On Application [●] [●] [●] 1.00 [●] [●]First and Final [●] [●] [●] - - -Call 3Total 1.00 [●] [●] 1.00 [●] [●]The investors shall be required to make the balance payment towards the First and Final Call by the duedate which shall be separately notified by our Company.1 No applicant can select both payment methods. For details on the payments methods see the sectionentitled “Terms of the Issue” beginning on page 121 of this Draft Letter of Offer.2Non Residents can opt for subscription of Rights Equity Shares under Payment Method 1 only if ourCompany has obtained a clarification/approval from the RBI in connection with the issuance and allotmentof partly-paid up Rights Equity Shares to Non Residents prior to the date of the Letter of Offer to be filedwith the Designated Stock Exchange. For further details please refer to risk factors no. 44 and 45 asdetailed in the section entitled “Risk Factors” beginning on page xi of this Draft Letter of Offer.3Since our Company will be appointing a monitoring agency in terms of Regulation 16 of the SEBIRegulations, 2009, our Company is not required to call the outstanding subscription monies within 12months from the date of allotment of the Rights Equity Shares pursuant to this Issue. The call shall bestructured in such a manner that the entire call money is called and will be payable within 24 months fromthe date of allotment of Rights Equity Shares in this Issue. If the Investors fail to pay the call money within24 months, the application money already paid shall be forfeited.The Investors should indicate the manner of payment, i.e., Payment Method 1 or Payment Method 2in the CAF. No Investor can select both payment methods in a CAF. In case no payment method isselected, then the default payment method shall be Payment Method 2.Payment Method 1123

1. Non Residents can opt for subscription of Rights Equity Shares under Payment Method 1 only ifour Company has obtained a clarification/approval from the RBI in connection with the issuanceand allotment of partly-paid up Rights Equity Shares to Non Residents prior to the date of theLetter of Offer to be filed with the Designated Stock Exchange. All other Investors/categories ofInvestors can opt for this method.2. While making an application, the Investor shall make a payment of Rs. [●] per Rights EquityShare.3. Out of the amount of Rs. [●] paid on application, Rs. [●] would be adjusted towards the face valueof the Rights Equity Shares and Rs. [●] shall be adjusted towards the share premium of the RightsEquity Shares. Out of the amount of Rs. [●] paid on the First and Final Call, Rs. [●] would beadjusted towards the face value of the Rights Equity Shares and Rs. [●] shall be adjusted towardsthe share premium of the Rights Equity Shares.4. Notices for the payment of call money for the First and Final Call shall be sent by our Company tothe Eligible Equity Shareholders of the partly paid-up Shares on the record dates fixed for therespective call. The calls shall be structured in such a manner that the entire call money is calledand will be payable within 24 months from the date of allotment of Rights Equity Shares in thisIssue. If the investors fail to pay the call money within 24 months, the application money alreadypaid shall be forfeited.5. The Rights Equity Shares in respect of which the balance amount payable remains unpaid shall beforfeited, at any time after the due date for payment of the balance amount due.6. Our Company reserves the right to adjust the amount received over and above the Applicationmoney towards the call money if such adjustment makes the total Rights Equity Shares allotted byour Company is fully paid up Rights Equity Shares.Payment Method 21. Investors under all categories can opt for this method.2. Investors shall have to make full payment of the Issue Price of Rs. [●] per Rights Equity Share atthe time of making an application.Procedure for the First and Final CallThe listing and trading of the partly paid and fully paid up Rights Equity Shares shall be subject to thestatutory and/or regulatory requirements applicable thereto.First and Final CallOur Company would convene a meeting of the Board to pass the required resolutions for making the Firstand Final Call and suitable intimation would be given by our Company to the Stock Exchanges. Further,advertisements for the same will be published in one English national daily and one Hindi national daily,and one Regional daily newspaper , with wide circulation. The First and Final Call shall be deemed to havebeen made at the time when the resolution authorizing such First and Final Call are passed at the meeting ofthe Board. The First and Final Call may be revoked or postponed at the discretion of the Board. Pursuant toArticle 17 of the Articles of Association of our Company, the Investors would be given not less than 14days notice for the payment of the call money. The Board may, from time to time at its discretion, extendthe time fixed for the payments of the First and Final Call. Provided that the calls shall be structured in sucha manner that the entire call money is called and will be payable within 24 months from the date ofallotment of Rights Equity Shares in this Issue. If the Investors fail to pay the call money within 24 months,the application money already paid shall be forfeited.124

Record dates for First and Final Call and suspension of tradingOur Company would fix a record date giving at least 7 days prior notice to the Stock Exchanges for thepurpose of determining the list of Eligible Equity Shareholders to whom the notice for call money pursuantto the First and Final Call would be sent. Once the record dates have been fixed, trading in the partly paidRights Equity Shares for which the First and Final Call have been made would be suspended prior to suchrecord date that has been fixed for the First and Final Call.Separate ISIN on ApplicationIn addition to the present ISIN for the existing Equity Shares, our Company would obtain a separate ISINfor its partly paid-up Rights Equity Shares. The partly paid-up Rights Equity Shares offered under the Issuewill be traded under a separate ISIN for the period as may be applicable under the rules and regulationsprior to the record date for the First and Final Call. The ISIN representing partly paid-up Rights EquityShares will be terminated after the record date for the First and Final Call. On payment of the call money inrespect of the partly paid-up Rights Equity Shares, such partly paid-up Rights Equity Shares would beconverted into fully paid-up Rights Equity Shares and merged with the existing ISIN for our Equity Shares.Listing of partly paid-up Rights Equity SharesThe partly paid-up Rights Equity Shares would be listed on the Stock Exchanges. For an applicable period,under the rules and regulations, prior to the record date for the First and Final Call, the trading of theexisting partly paid-up Rights Equity Shares would be terminated. The process of corporate action forcrediting the partly paid-up and fully paid-up Rights Equity Shares to the Investors’ demat accounts maytake about two weeks’ time from the last date of payment of the account under the call money notice.Fractional EntitlementsFor Rights Equity Shares being offered under this Issue, if the shareholding of any of the Eligible EquityShareholders is less than [●] Equity Shares or not in the multiple of [●], the fractional entitlement of suchEligible Equity Shareholders shall be ignored. Shareholders whose fractional Rights Entitlements are beingignored would be given preference in allotment of one additional Rights Equity Share each if they apply foradditional Rights Equity Shares. For example, if an Eligible Equity Shareholder holds between [●] and [●]Equity Shares, he will be entitled to [●] Rights Equity Shares. He will also be given a preference forallotment of [●] additional Rights Equity Shares if he has applied for the same. Those Eligible EquityShareholders who have a holding of less than [●] Equity Shares and therefore entitled to [●] Rights EquityShares under this Issue shall be dispatched a CAF with [●] entitlement. Such Eligible Equity Shareholdersare entitled to apply for additional Rights Equity Shares. However, they cannot renounce the same infavour of third parties. CAF with [●] entitlement will be non-negotiable/non-renounceable. For example, ifan Eligible Equity Shareholder holds between one and [●] Equity Shares, he will be entitled to Nil RightsEquity Shares. He will be given a preference for allotment of [●] additional Rights Equity Shares if he hasapplied for the same.General Terms of the IssueMarket LotThe Equity Shares of our Company are tradable only in dematerialized form. The market lot for EquityShares in dematerialised mode is one (1) Equity Share. In case of holding of Equity Shares in physicalform, our Company would issue to the allottees one (1) certificate for the Rights Equity Shares allotted toeach folio (“Consolidated Certificate”). In respect of consolidated certificates, our Company will uponreceipt of a request from the respective Eligible Equity Shareholder , split such consolidated certificatesinto smaller denominations within six weeks time from the receipt of the request in respect thereof.125

Joint HoldersWhere two or more persons are registered as the holders of any Rights Equity Shares, they shall be deemedto hold the same as joint tenants with the benefit of survivorship subject to the provisions contained in theArticles.NominationIn terms of Section 109A of the Companies Act, nomination facility is available for Rights Equity Shares.The Investor can nominate any person by filling the relevant details in the CAF in the space provided forthis purpose. In case of Eligible Equity Shareholders who are individuals, a sole Eligible EquityShareholder or the first named Eligible Equity Shareholder, along with other joint Eligible EquityShareholders, if any, may nominate any person(s) who, in the event of the death of the sole holder or all thejoint-holders, as the case may be, shall become entitled to the Rights Equity Shares. A person, being anominee, becoming entitled to the Rights Equity Shares by reason of the death of the original EligibleEquity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were theregistered holder of the Rights Equity Shares. Where the nominee is a minor, the Eligible EquityShareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to becomeentitled to the Rights Equity Share(s), in the event of death of the said holder, during the minority of thenominee. A nomination shall stand rescinded upon the sale of the Eligible Equity Shares by the personnominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When theRights Equity Shares are held by two or more persons, the nominee shall become entitled to receive theamount only on the demise of all the holders. Fresh nominations can be made only in the prescribed formavailable on request at the Registered and Corporate Office of our Company or such other person at suchaddresses as may be notified by our Company. The Investor can make the nomination by filling in therelevant portion of the CAF.Only one nomination would be applicable for one folio. Hence, in case the Eligible Equity Shareholder(s)has already registered the nomination with our Company, no further nomination needs to be made forRights Equity Shares that may be allotted in this Issue under the same folio.In case the allotment of Rights Equity Shares is in dematerialised form, there is no need to make aseparate nomination for the Rights Equity Shares to be allotted in this Issue. Nominations registeredwith respective Depository Participant (“DP”) of the Investor would prevail. Any Investor desirousof changing the existing nomination is requested to inform its respective DP.NoticesAll notices to the Eligible Equity Shareholder(s) required to be given by our Company shall be published inone English national daily with wide circulation, one Hindi national daily with wide circulation and oneRegional Newspaper will be Bengali national daily with wide circulation, will be sent by ordinarypost/registered post/speed post to the registered holders of the Equity Shares from time to time.Additional Subscription by our Promoters and Promoter GroupOur Promoters and Promoter Group, have confirmed, vide their letters dated September 29, 2009 that theyintend to subscribe to the full extent of their entitlement of Rights Equity Shares in the Issue. OurPromoters and Promoter Group reserve their right to subscribe to their entitlement and/or apply foradditional Rights Equity Shares in the Issue, either by themselves or a combination of entities controlled bythem, including subscribing for renunciation, if any, made by other Eligible Equity Shareholders. OurPromoter and Promoter Group has also, by their above letter confirmed that in addition to the subscriptionto the Eligible Equity Shares as stated above, our Promoter and Promoter Group shall subscribe to, and/ormake arrangements for the subscription of, additional Eligible Equity Shares in the Issue to the extent ofany unsubscribed portion of the Issue as per the relevant provisions of law. As a result of subscription totheir entitlement and any unsubscribed portion and consequent allotment, our Promoters and PromoterGroup may acquire Eligible Equity Shares over and above their entitlement in the Issue, which may result126

in an increase of our Promoter’s and Promoter Group’s shareholding in our Company. Such subscriptionand acquisition of such additional Eligible Equity Shares by our Promoters and Promoter Group, if any,will not result in change of control of the management of our Company and shall be exempt in terms of theproviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirementsindicated in the section on “Objects of the Issue” beginning on page 30 of this Draft Letter of Offer, there isno other intention/purpose for this Issue, including any intention to delist our Company, even if, as a resultof allotments to our Promoters and Promoter Group, in this Issue, their shareholding in our Companyexceeds their current shareholding. Allotment to our Promoters and Promoter Group of any unsubscribedportion of the Eligible Equity Shares, over and above their entitlement shall be done in compliance with thelisting agreements and other applicable laws prevailing at that time relating to continuous listingrequirements. Presently our Company is complying with Clause 40A of the Listing Agreement and theminimum public shareholding required to be maintained for continuous listing is 25% of the total paid upequity capital.Our Company hereby confirms that, in case the Issue is completed with our Promoters and Promoter Groupsubscribing to Rights Equity Shares over and above their entitlement, the public shareholding in ourCompany after the Issue will not fall below the minimum level of public shareholding as specified in thelisting conditions or listing agreement.If our Company does not receive the minimum subscription of 90% of the Issue including devolvement ofUnderwriters, the entire subscription amount shall be refunded to the Investors within fifteen days from thedate of closure of the Issue. If there is delay in the refund of subscription by more than 8 days after ourCompany becomes liable to pay the subscription amount (i.e. fifteen days after closure of the issue), ourCompany will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) ofSection 73 of the Companies ActPROCEDURE FOR APPLICATIONApplication by Resident Eligible Equity ShareholdersApplication should be made on the printed CAF, provided by our Company except as mentioned under thehead application on plain paper and should be completed in all respects. For details see “Application onPlain Paper” beginning on page 132 of this Draft Letter of Offer. The enclosed CAF should be completed inall respects, as explained in the instructions indicated in the CAF. The CAF for Rights Equity Shares wouldbe printed in black ink for all Eligible Equity Shareholders. In case the original CAFs are not received bythe Investor or is misplaced by the Investor, the Investor may request the Registrar to the Issue, for issue ofa duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and theirfull name and address. In case the signature of the Eligible Equity Shareholder(s) does not agree with thespecimen registered with our Company, the application is liable to be rejected.Applications will not be accepted by the Lead Manager(s) or by the Registrar to the Issue or by the Bank atany offices except in the case of postal applications as per instructions given in this Draft Letter of Offer.The CAF consists of four parts:Part A: Form for accepting the Rights Equity Shares offered and for applying for additional Rights EquitySharesPart B: Form for renunciationPart C: Form for application for RenounceesPart D: Form for request for split application formsApplications by Non-resident Eligible Equity ShareholdersApplications received from the Non-Resident Eligible Equity Shareholders for the allotment of Rights EquityShares shall, inter alia, be subject to the conditions as may be imposed from time to time by the RBI, in thematter of refund of application moneys, allotment of Rights Equity Shares, issue of letters of allotment/127

certificates/ payment of dividends etc. The Letter of offer and CAF shall be dispatched to non-residentEligible Equity Shareholders at their Indian address only.”Application by Mutual FundsIn case of a Mutual Fund, a separate application can be made in respect of each scheme of the Mutual Fund registeredwith SEBI and such Applications in respect of more than one scheme of the Mutual Fund will not be treated asmultiple applications provided that the application clearly indicate the scheme concerned for which theapplication has been made.Applications made by asset management companies or custodians of a mutual fund shall clearly indicatethe name of the concerned scheme for which application is being made.As per the current regulations, the following restrictions are applicable for investments by mutual funds:No mutual fund scheme shall invest more than 10% of its net asset value in the Rights Equity Shares or equityrelated instruments of any company provided that the limit of 10% shall not be applicable for investments in indexfunds or sector or industry specific funds. No mutual fund under all its schemes should own more than 10% ofany company’s paid-up share capital carrying voting rights.Applications by Non Resident Indians1. CAFs have been made available for eligible NRIs at our Registered Office and with the Lead Manager(s).2. Eligible NRI applicants may please note that only such applications as are accompanied bypayment in free foreign exchange shall be considered for Allotment. The Eligible NRIs who intendto make payment through Non-Resident Ordinary (NRO) accounts shall use the form meant forResident Indians and shall not use the forms meant for reserved category.Acceptance of the IssueYou may accept the Offer and apply for the Rights Equity Shares offered, either in full or in part by fillingBlock III of Part A of the enclosed CAF and submit the same along with the application money payable to theBankers to the Issue or any of the branches as mentioned on the reverse of the CAF before the close of thebanking hours on or before the Issue Closing Date or such extended time as may be specified by the Boardthereof in this regard. Applicants at centers not covered by the branches of collecting banks can send theirCAF together with the cheque drawn on a local bank at Kolkata /demand draft payable at Kolkata to theRegistrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to theIssue are liable to be rejected.Options available to the Eligible Equity ShareholdersThe CAFs will clearly indicate the number of Rights Equity Shares that the Eligible Equity Shareholder isentitled to. If the Eligible Equity Shareholder applies for an investment in Rights Equity Shares, then hecan:• Apply for his Rights Entitlement of Rights Equity Shares in part;• Apply for his Rights Entitlement of Rights Equity Shares in part and renounce the other part of theRights Equity Shares;• Apply for his Rights Entitlement of Rights Equity Shares in full;• Apply for his Rights Entitlement in full and apply for additional Rights Equity Shares;• Renounce his Rights Entitlement of the Rights Equity Shares in full.Additional Rights Equity Shares128

You are eligible to apply for additional Rights Equity Shares over and above your Rights Entitlement,provided that you have applied for all the Rights Equity Shares offered to you without renouncing them inwhole or in part in favour of any other person(s). Applications for additional Rights Equity Shares shall beconsidered and allotment shall be made at the sole discretion of the Board, subject to sectoral caps and inconsultation if necessary with the Designated Stock Exchange and in the manner prescribed under “Basisof Allotment” on page 133 of this Draft Letter of Offer.If you desire to apply for additional Rights Equity Shares, please indicate your requirement in the placeprovided for additional Rights Equity shares in Part A of the CAF. The Renouncee applying for all theRights Equity Shares renounced in their favour may also apply for additional Rights Equity Shares, wherethe number of additional Rights Equity Shares applied for exceeds the number available for allotment, theallotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.Where the number of additional Rights Equity Shares applied for exceeds the number available forallotment, the allotment would be made on a fair and equitable basis in consultation with the DesignatedStock Exchange.RenunciationThis Issue includes a right exercisable by you to renounce the Rights Equity Shares offered to you either infull or in part in favour of any other person or persons. Your attention is drawn to the fact that ourCompany shall not allot and/or register Rights Equity Shares in favour of more than three persons(including joint holders), partnership firm(s) or their nominee(s), minors, HUF(s), any trust or society(unless the same is registered under the Societies Registration Act, 1860 or the Indian Trust Act, 1882 orany other applicable law relating to societies or trusts and is authorized under its constitution or bye-laws tohold Equity Shares, as the case may be). Any renunciation from resident Indian Shareholder(s) to NonresidentIndian(s) or from Non-resident Indian Shareholder(s) to Resident Indian(s) is subject to therenouncer(s)/Renouncee(s) obtaining the approval of the FIPB and/or necessary permission of the RBIunder the FEMA and such permissions should be attached to the CAF. Applications not accompanied bythe aforesaid approvals are liable to be rejected.By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies(“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued theForeign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)Regulations, 2003. Accordingly, the existing Eligible Equity Shareholders of our Company who do notwish to subscribe to the Rights Equity Shares being offered but wish to renounce the same in favour ofRenouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s).‘Part A’ of the CAF must not be used by any person(s) other than those in whose favour this offer has beenmade. If used, this will render the application invalid. Submission of the enclosed CAF to the Banker to theIssue at its collecting branches specified on the reverse of the CAF with the form of renunciation (‘Part B‘of the CAF) duly filled in shall be conclusive evidence for our Company of the Renouncees applying forRights Equity Shares in ‘Part C‘ of the CAF to receive allotment of such Rights Equity Shares. TheRenouncees applying for all the Rights Equity Shares renounced in their favour may also apply foradditional Rights Equity Shares. ‘Part A’ of the CAF must not be used by the Renouncee(s) as this willrender the application invalid. Renouncee(s) will have no further right to renounce any Rights EquityShares in favour of any other person.Procedure for renunciationTo renounce all the Rights Equity Shares offered to an Eligible Equity shareholder in favour of oneRenouncee129

If you wish to renounce the offer indicated in ‘Part A’, in whole, please complete ‘Part B’ of the CAF. Incase of joint holding, all joint holders must sign ‘Part B’ of the CAF. The person in whose favourrenunciation has been made should complete and sign ‘Part C’ of the CAF. In case of joint Renouncees, alljoint Renouncees must sign this part of the CAF.To renounce in part/or renounce the whole to more than one person(s)If you wish to either accept this offer in part and renounce the balance or renounce the entire offer underthis Issue in favour of two or more Renouncees, the CAF must be first split into requisite number of forms.Please indicate your requirement of Split Application Forms (“SAFs”) in the space provided for thispurpose in ‘Part D’ of the CAF and return the entire CAF to the Registrar to the Issue so as to reach themlatest by the close of business hours on the last date of receiving requests for SAFs. On receipt of therequired number of SAFs from the Registrar, the procedure as mentioned in paragraph above shall have tobe followed. In case the signature of the Eligible Equity Shareholder(s), who has renounced the RightsEquity Shares, does not agree with the specimen registered with our Company, the application is liable tobe rejected.Renouncee(s)The person(s) in whose favour the Rights Equity Shares are renounced should fill in and sign ‘Part C’ ofthe CAF and submit the entire CAF to the Bankers to the Issue on or before the Issue Closing Date alongwith the application money in full. A Renouncee cannot further renounce.Change and/or introduction of additional holdersIf you wish to apply for Rights Equity Shares jointly with any other person(s), not more than three, whois/are not already a joint holder with you, it shall amount to renunciation and the procedure as stated abovefor renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shallamount to renunciation and the procedure, as stated above, shall have to be followed. However, this right ofrenunciation is subject to the express condition that the Board of Directors of our Company shall be entitledin its absolute discretion to reject the request for allotment from the Renouncee(s) without assigning anyreason thereof.Instructions for OptionsThe summary of options available to the Rights Equity Shareholder is presented below. You may exerciseany of the following options with regard to the Rights Equity Shares offered, using the enclosed CAF:Option Available1. Accept whole or part of your RightsEntitlement without renouncing the balance.2. Accept your Rights Entitlement in full andapply for additional Rights Equity Shares3. Renounce your Rights Entitlement in full toone person (Joint Renouncees areconsidered as one).4. Accept a part of your Rights Entitlementand renounce the balance to one or moreRenouncee(s)Action RequiredFill in and sign Part A (All joint holders must sign)Fill in and sign Part A including Block III relating tothe acceptance of entitlement and Block IV relatingto additional Rights Equity Shares (All joint holdersmust sign)Fill in and sign Part B (all joint holders must sign)indicating the number of Rights Equity Sharesrenounced and hand it over to the Renouncee. TheRenouncee must fill in and sign Part C (All jointRenouncees must sign)Fill in and sign Part D (all joint holders must sign)requesting for SAFs. Send the CAF to the Registrarto the Issue so as to reach them on or before the lastdate for receiving requests for SAFs. Splitting will be130

Option AvailableORAction Requiredpermitted only once.Renounce your Rights Entitlement to all theRights Equity Shares offered to you to morethan one Renouncee5. Introduce a joint holder or change thesequence of joint holdersOn receipt of the SAF take action as indicated below.For the Rights Equity Shares you wish to accept, ifany, fill in and sign Part A. For the Rights EquityShares you wish to renounce, fill in and sign Part Bindicating the number of Rights Equity Sharesrenounced and hand it over to the Renouncee. Eachof the Renouncee should fill in and sign Part C forthe Rights Equity Shares accepted by them.This will be treated as a renunciation. Fill in and signPart B and the Renouncee must fill in and sign PartC.Investors must provide information in the CAF as to their savings bank / current account number and thename of the bank with whom such account is held, to enable the Registrar to print the said details in therefund orders after the names of the payee(s). Failure to comply with this may lead to rejection of theapplication. Bank account details furnished by the Depositories will be printed on the refund warrant incase of Rights Equity Shares held in electronic form.Please note that:• ‘Part A of the CAF must not be used by any person(s) other than the Eligible Equity Shareholdersto whom this Draft Letter of Offer has been addressed. If used, this will render the applicationinvalid.• A Request for SAF should be made for a minimum of [●] Rights Equity Shares or in multiplesthereof and one SAF for the balance Rights Equity Shares, if any.• A Request by the Investor for the SAF should reach our Company on or before [●].• Only the Eligible Equity Shareholders to whom this Draft Letter of Offer has been addressed shallbe entitled to renounce and to apply for SAFs. Forms once split cannot be split further.• SAFs will be sent to the Investor(s) by post at the Investor‘s risk.Investors must write their CAF Number at the back of the cheque/demand draftAvailability of duplicate CAFIn case the original CAF is not received, or is misplaced by the Investor, the Registrar to the Issue willissue a duplicate CAF on the request of the Investor who should furnish the registered folio number/ DPand Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that therequest for duplicate CAF should reach the Registrar to the Issue within 7 (seven) days from the IssueOpening Date. Please note that those who are making the application in the duplicate CAF should notutilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently.If the applicant violates any of these requirements, he / she shall face the risk of rejection of both theCAFs.131

Application on Plain PaperAn Eligible Equity Shareholder who has neither received the original CAF nor is in a position to obtain theduplicate CAF may make an application to subscribe to the Issue on plain paper, along with Demand Draft,net of bank and postal charges payable at Kolkata which should be drawn in favor of the “REIAgroLimited- Rights Issue” or “REI Agro Limited- Rights Issue-NR”and the Eligible Equity Shareholdersshould send the same by registered post directly to the Registrar to the Issue. The envelope should besuperscribed “REI Agro Rights Issue” and should be postmarked in India. The application on plain paper,duly signed by the Investors including joint holders, in the same order as per specimen recorded with ourCompany, must reach the office of the Registrar to the Issue before the Issue Closing Date and shouldcontain the following particulars:• Name of Issuer, being REI Agro Limited;• Name and address of the Eligible Equity Shareholder including joint holders;• Registered Folio Number/ DP and Client ID no.;• Number of Equity Shares held as on Record Date;• Number of Rights Equity Shares entitled;• Number of Rights Equity Shares applied for;• Number of additional Rights Equity Shares applied for, if any;• Total number of Rights Equity Shares applied for;• Payment method (Payment method 1 or Payment Method 2) opted for and the total amount paid atthe rate of Rs. [●] per Rights Equity Share;• Particulars of cheque/draft;• Savings/Current Account Number and name and address of the bank where the Eligible EquityShareholder will be depositing the refund order;• Except for applications on behalf of the Central or State Government and the officials appointedby the courts, PAN number of the Investor and for each Investor in case of joint names,irrespective of the total value of the Rights Equity Shares applied for pursuant to the Issue; and• Signature of Eligible Equity Shareholders to appear in the same sequence and order as they appearin the records of our Company.Please note that those who are making the application otherwise than on original CAF shall not be entitledto renounce their rights and should not utilize the original CAF for any purpose including renunciation evenif it is received subsequently. If the Investor violates any of these requirements, he/she shall face the risk ofrejection of both the applications. Our Company shall refund such application amount to the Investorwithout any interest thereon.Last date of ApplicationThe last date for submission of the duly filled in CAF is [●], 2009. The Issue will be kept open for [●] daysand our Board or any committee thereof will have the right to extend the said date for such period as it maydetermine from time to time but not exceeding 30 (thirty) days from the Issue Opening Date.If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to theIssue on or before the close of banking hours on the aforesaid last date or such date as may be extended bythe Board/ Committee of Directors, the offer contained in this Draft Letter of Offer shall be deemed to havebeen declined and the Board/ Committee of Directors shall be at liberty to dispose off the Rights EquityShares hereby offered, as provided under the section entitled “Terms of the Issue – Basis of Allotment”beginning on page 133 of this Draft Letter of Offer.INVESTORS MAY PLEASE NOTE THAT THE RIGHTS EQUITY SHARES CAN BE TRADED ONTHE STOCK EXCHANGES ONLY IN DEMATERIALISED FORM.132

Basis of AllotmentSubject to the provisions contained in this Draft Letter of Offer, the Articles of Association of ourCompany and the approval of the Designated Stock Exchange, the Board will proceed to allot the RightsEquity Shares in the following order of priority:(a)(b)Full allotment to those Eligible Equity Shareholders who have applied for their Rights Entitlementeither in full or in part and also to the Renouncee(s) who has/ have applied for Rights EquityShares renounced in their favour, in full or in part.For the Rights Equity Shares being offered under this Issue, if the shareholding of any of theEligible Equity Shareholders is less than [●] Equity Shares or is not in the multiple of [●], thefractional entitlement of such Eligible Equity Shareholders shall be ignored. Eligible EquityShareholders whose fractional entitlements are being ignored would be given preference inallotment of one additional Rights Equity Share each if they apply for additional Rights EquityShares. Allotment under this head shall be considered if there are any unsubscribed Rights EquityShares after allotment under (a) above. If the number of Rights Equity Shares required forallotment under this head are more than the number of Rights Equity Shares available afterallotment under (a) above, the allotment would be made on a fair and equitable basis inconsultation with the Designated Stock Exchange.(c)(d)(e)Allotment to the Eligible Equity Shareholders who having applied for all the Equity Sharesoffered to them as part of the Issue and have also applied for additional Rights Equity Shares. Theallotment of such additional Rights Equity Shares will be made as far as possible on an equitablebasis having due regard to the number of Equity Shares held by them on the Record Date,provided there is an under-subscribed portion after making full allotment in (a) and (b) above. Theallotment of such Rights Equity Shares will be at the sole discretion of the Board/Committee ofDirectors in consultation with the Designated Stock Exchange, as a part of the Issue and notpreferential allotment.Allotment to Renouncees who having applied for all the Rights Equity Shares renounced in theirfavour, have applied for additional Rights Equity Shares provided there is surplus available aftermaking full allotment under (a), (b) and (c) above. The allotment of such Rights Equity Shareswill be at the sole discretion of the Board/Committee of Directors in consultation with theDesignated Stock Exchange, as a part of the Issue and not preferential allotment.Allotment to any other person as the Board may in its absolute discretion deem fit provided thereis surplus available after making full allotment under (a),(b), (c ) and (d) above.After taking into account allotment to be made under (a) and (b) above, if there is any unsubscribedportion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of theTakeover Code which would be available for allocation under (c), (d), and (e) above.After considering the above Allotment, any additional Rights Equity Shares shall be disposed off by theBoard, in such manner as they think most beneficial to our Company and the decision of the Board in thisregard shall be final and binding. In the event of oversubscription, Allotment will be made within theoverall size of the Issue.Our Promoters and Promoter Group have provided an undertaking dated September 29, 2009 to ourCompany to apply for additional Rights Equity Shares in the Issue, to the extent of the unsubscribedportion of the Issue. As a result of this subscription and consequent allotment, our Promoters and PromoterGroup may acquire Rights Equity Shares over and above their Rights Entitlement in the Issue, which mayresult in an increase of the shareholding being above the current shareholding with the Rights Entitlementof Rights Equity Shares under the Issue. This subscription and acquisition of additional Rights EquityShares by the Promoters and Promoter Group, if any, will not result in change of control of the133

management of our Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of theTakeover Code. As such, other than meeting the requirements indicated in “Objects of the Issue” on page30), there is no other intention/purpose for this Issue, including any intention to delist our Company, evenif, as a result of allotments to the Promoters and Promoter Group entities, in this Issue, the Promoter’s andPromoter Group’s shareholding in our Company exceeds their current shareholding. In the event ofoversubscription, allotment will be made within the overall size of the Issue. Allotment to the Promotersand Promoter Group of any unsubscribed portion, over and above their Rights Entitlement shall be done incompliance with Clause 40A of the Listing Agreement and the other applicable laws prevailing at that time.If our Company does not receive the minimum subscription of 90% of the Issue including devolvement ofUnderwriters, the entire subscription amount shall be refunded to the Investors within fifteen days from thedate of closure of the Issue. If there is delay in the refund of subscription by more than 8 days after ourCompany becomes liable to pay the subscription amount (i.e. fifteen days after closure of the issue), ourCompany will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) ofSection 73 of the Companies Act.UnderwritingOur Company is currently contemplating entering into an Underwriting Agreement with the Underwritersfor underwriting the Rights Equity Shares offered through this Issue for a maximum of upto Rs. [●]million.Our Board shall ensure that the Underwriters appointed shall have sufficient resources to enable them todischarge their underwriting obligations in full. Details of the Underwriting Agreement shall beappropriately incorporated pursuant to receipt of SEBI’s observations on this Draft Letter of Offer.Allotment / RefundOur Company will issue and dispatch allotment advice/ share certificates/debenture certificates/dematcredit and/ or letters of regret along with refund order or credit the allotted securities to the respectivebeneficiary accounts, if any, within 15 days from the Issue Closing Date. If such money is not repaid withineight days from the day our Company becomes liable to pay the subscription amount (i.e. 15 days after theIssue Closing Date or the date of refusal by the Stock Exchange(s), whichever is earlier), our Companyshall pay that money with interest for the delayed period as stipulated under Section 73 of the CompaniesAct.Investors residing in the 68 cities specified by SEBI pursuant to its circular dated February 1, 2008, (centerswhere clearing houses are managed by the RBI) will get refund through ECS only except where theInvestors are otherwise disclosed as applicable/eligible to get refunds through direct credit and RTGSprovided the MICR details are recorded with the Depositories or our Company.In case of those Investors who have opted to receive their Right Entitlement in dematerialized form byusing electronic credit under the depository system, an advice regarding the credit of the Rights EquityShares shall be given separately. Investors to whom refunds are made through electronic transfer of fundswill be sent a letter through Certificate of posting intimating them about the mode of credit of refund within15 days of the Issue Closing Date. In case of those Investors who have opted to receive their RightsEntitlement in physical form, our Company will issue the corresponding share/debenture certificates undersection 113 of the Companies Act or other applicable provisions if any. Any refund order exceeding Rs.1,500 will be dispatched by registered post/ speed post to the sole/ first Investor‘s registered address.Refund orders up to the value of Rs. 1,500 would be sent under the certificate of posting. Such cheques orpay orders will be payable at par at all places where the applications were originally accepted and will bemarked ‗Account Payee only‘ and would be drawn in the name of the sole/ first Investor. Adequate fundswould be made available to the Registrar to the Issue for this purpose.Payment of Refund134

Mode of making refundsThe payment of refund, if any, would be done through any of the following modes:1. ECS – Payment of refund would be done through ECS for Investors having an account at any ofthe 68 centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati,Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram(managed by RBI); Baroda, Dehradun, Nashik, Panaji, Surat, Tricky, Trichur, Jodhpur, Gwalior,Jabalpur, Raipur, Calicut, Siliguri (Non-MICR), Pondicherry, Hubli, Shimla (Non-MICR),Tirupur, Burdwan (Non-MICR), Durgapur (Non-MICR), Sholapur, Ranchi, Tirupati (Non-MICR),Dhanbad (Non-MICR), Nellore (Non-MICR) and Kakinada (Non-MICR) (managed by State Bankof India); Agra, Allahabad, Jalandhar, Lucknow, Ludhiana, Varanasi, Kolhapur, Aurangabad,Mysore, Erode, Udaipur, Gorakpur and Jammu (managed by Punjab National Bank); Indore(managed by State Bank of Indore); Pune, Salem and Jamshedpur (managed by Union Bank ofIndia); Vishakhapatnam (managed by Andhra Bank); Mangalore (managed by Corporation Bank);Coimbatore and Rajkot (managed by Bank of Baroda); Kochi/Ernakulum (managed by State Bankof Travancore); Bhopal (managed by Central Bank of India); Madurai (managed by Canara Bank);Amritsar (managed by Oriental Bank of Commerce); Haldia (Non-MICR) (managed by UnitedBank of India); Vijaywada (managed by State Bank of Hyderabad); and Bhilwara (managed byState Bank of Bikaner and Jaipur). This mode of payment of refunds would be subject toavailability of complete bank account details including the MICR code as appearing on a chequeleaf, from the Depositories. The payment of refunds is mandatory for Investors having a bankaccount at any of the abovementioned 68 centres, except where the Investor, being eligible, opts toreceive refund through National Electronic Fund Transfer (“NEFT”), direct credit or RTGS.2. NEFT – Payment of refund shall be undertaken through NEFT wherever the Investors‘ bank hasbeen assigned the Indian Financial System Code (IFSC), which can be linked to a MICR, if any,available to that particular bank branch. IFSC Code will be obtained from the website of RBI ason a date immediately prior to the date of payment of refund, duly mapped with MICR numbers.Wherever the Investors have registered their nine digit MICR number and their bank accountnumber while opening and operating the demat account, the same will be duly mapped with theIFSC Code of that particular bank branch and the payment of refund will be made to the Investorsthrough this method. Our Company in consultation with the Lead Managers may decide to useNEFT as a mode of making refunds. The process flow in respect of refunds by way of NEFT is atan evolving stage and hence use of NEFT is subject to operational feasibility, cost and processefficiency. In the event that NEFT is not operationally feasible, the payment of refunds would bemade through any one of the other modes as discussed herein.3. Direct Credit – Investors having bank accounts with the existing bankers of our Company shall beeligible to receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) forthe same would be borne by our Company.4. RTGS – Investors having a bank account at any of the abovementioned 68 centres and whoserefund amount exceeds Rs. 1 million, have the option to receive refund through RTGS. Sucheligible Investors who indicate their preference to receive refund through RTGS are required toprovide the IFSC code in the CAF. In the event the same is not provided, refund shall be madethrough ECS. Charges, if any, levied by the refund bank(s) for the same would be borne by ourCompany. Charges, if any, levied by the Investor‘s bank receiving the credit would be borne bythe Investor.5. For all other Investors, including those who have not updated their bank particulars with theMICR code, the refund orders will be despatched under certificate of posting for value up to Rs.1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such135

efunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/firstInvestor and payable at par.Printing of Bank Particulars on Refund OrdersAs a matter of precaution against possible fraudulent encashment of refund orders due to loss ormisplacement, the particulars of the Investor’s bank account are mandatorily required to be given forprinting on the refund orders. Bank account particulars will be printed on the refund orders/refund warrantswhich can then be deposited only in the account specified. Our Company will in no way be responsible ifany loss occurs through these instruments falling into improper hands either through forgery or fraud.Allotment advice / Share Certificates/ Demat CreditAllotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registeredaddress of the first named Investor or respective beneficiary accounts will be credited within 15 days fromthe Issue Closing Date. In case our Company issues allotment advice, the relative share certificates will bedispatched within one month from the date of allotment. Allottees are requested to preserve such allotmentadvice (if any) to be exchanged later for share certificates.Option to receive Rights Equity Shares in Dematerialized FormInvestors to the Rights Equity Shares of our Company issued through this Issue shall be allotted the RightsEquity Shares in dematerialized (electronic) form at the option of the Investor. Our Company signed atripartite agreement dated April 25, 2000 with NSDL, which enables the Investors to hold and trade insecurities in a dematerialized form, instead of holding the securities in the form of physical certificates. OurCompany has also signed a tripartite agreement dated August 23, 2000 with CDSL, which enables theInvestors to hold and trade in securities in a dematerialized form, instead of holding the securities in theform of physical certificates.In this Issue, the allottees who have opted for Rights Equity Shares in dematerialized form will receivetheir Rights Equity Shares in the form of an electronic credit to their beneficiary account as given in theCAF with a depository participant. Investor will have to give the relevant particulars for this purpose in theappropriate place in the CAF. Allotment advice, refund order (if any) would be sent directly to theapplicant by the Registrar to the Issue but the applicant‘s depository participant will provide to him theconfirmation of the credit of such Rights Equity Shares to the applicant‘s depository account. Applications,which do not accurately contain this information, will be given the Rights Equity Shares in physical form.No separate applications for Rights Equity Shares in physical and/or dematerialized form should be made.If such applications are made, the application for physical Rights Equity Shares will be treated as multipleapplications and is liable to be rejected. In case of partial allotment, allotment will be done in demat optionfor the Rights Equity Shares sought in demat and balance, if any, will be allotted in physical form.Investors may please note that the Rights Equity Shares of the Company can be traded on the StockExchanges only in dematerialized form.Procedure for availing the facility for allotment of Rights Equity Shares in this Issue in the electronic formis as under:(i)Open a beneficiary account with any depository participant (care should be taken that thebeneficiary account should carry the name of the holder in the same manner as is exhibited in therecords of our Company. In the case of joint holding, the beneficiary account should be openedcarrying the names of the holders in the same order as with our Company). In case of Investorshaving various folios in our Company with different joint holders, the Investors will have to openseparate accounts for such holdings. Those Eligible Equity Shareholders who have already openedsuch beneficiary account (s) need not adhere to this step.136

(ii)(iii)(iv)(v)(vi)(vii)(viii)(ix)(x)(xi)For Eligible Equity Shareholders already holding Rights Equity Shares of our Company indematerialized form as on the Record Date, the beneficial account number shall be printed on theCAF. For those who open accounts later or those who change their accounts and wish to receivetheir Rights Equity Shares pursuant to this Issue by way of credit to such account, the necessarydetails of their beneficiary account should be filled in the space provided in the CAF. It may benoted that the allotment of Rights Equity Shares arising out of this Issue may be made indematerialized form even if the original Rights Equity Shares of our Company are notdematerialized. Nonetheless, it should be ensured that the depository account is in the name(s) ofthe Eligible Equity Shareholders and the names are in the same order as in the records of ourCompany.Responsibility for correctness of information (including Investor‘s age and other details) filled inthe CAF vis-à-vis such information with the Investor‘s depository participant, would rest with theInvestor. Investors should ensure that the names of the applicants and the order in which theyappear in CAF should be the same as registered with the applicant‘s depository participant.If incomplete / incorrect beneficiary account details are given in the CAF the Investor will getRights Equity Shares in physical form.Renouncees will also have to provide the necessary details about their beneficiary account forallotment of Rights Equity Shares in this Issue. In case these details are incomplete or incorrect,the application is liable to be rejected.Rights Equity Share allotted to an Applicant in the electronic account form will be crediteddirectly to the Applicant’s respective beneficiary account(s) with depository participant.Applicants should ensure that the names of the Applicants and the order in which they appear inthe CAF should be the same as registered with the Applicant’s depository participant.Non-transferable allotment advice/refund orders will be directly sent to the Applicant by theRegistrar to this Issue.The Rights Equity Shares pursuant to this Issue allotted to Investors opting for dematerializedform, would be directly credited to the beneficiary account as given in the CAF after verification.Allotment advice, refund order (if any) would be sent directly to the Investor by the Registrar tothe Issue but the Investor’s depository participant will provide to him the confirmation of thecredit of such Rights Equity Shares to the Investor’s depository account.It may be noted that Rights Equity Shares in electronic form can be traded only on the StockExchanges having electronic connectivity with NSDL or CDSL.Dividend or other benefits with respect to the Rights Equity Shares held in dematerialized formwould be paid to those Eligible Equity Shareholders whose names appear in the list of beneficialowners given by the Depository Participant to our Company as on the date of the book closure.General instructions for Investorsa) Please read the instructions printed on the enclosed CAF carefully.b) Application should be made on the printed CAF, provided by our Company except as mentionedunder the head application on plain paper and should be completed in all respects. For details see“Application on Plain Paper” beginning on page 132 of this Draft Letter of Offer. The CAF foundincomplete with regard to any of the particulars required to be given therein, and/ or which are notcompleted in conformity with the terms of this Draft Letter of Offer are liable to be rejected andthe money paid, if any, in respect thereof will be refunded without interest and after deduction of137

ank commission and other charges, if any. The CAF must be filled in English and the names ofall the Investors, details of occupation, address, father‘s / husband‘s name must be filled in blockletters.c) The CAF together with cheque/demand draft should be sent to the Bankers to the Issue/CollectingBank or to the Registrar to the Issue and not to our Company or Lead Manager(s) to the Issue.Investors residing at places other than cities where the branches of the Bankers to the Issue havebeen authorised by our Company for collecting applications, will have to make payment byDemand Draft payable at Kolkata of an amount net of bank and postal charges and send theirCAFs to the Registrar to the Issue by REGISTERED POST. If any portion of the CAF is/aredetached or separated, such application is liable to be rejected.d) Except for applications on behalf of the Central or State Government and the officials appointedby the courts, PAN number of the Investor and for each Investor in case of joint names,irrespective of the total value of the Rights Equity Shares applied for pursuant to the Issue.e) Investors are advised that it is mandatory to provide information as to their savings/currentaccount number and the name of our Company with whom such account is held in the CAF toenable the Registrar to the Issue to print the said details in the refund orders, if any, after thenames of the payees. Application not containing such details is liable to be rejected. For EligibleEquity Shareholders holding Equity Shares in dematerialized form, such bank details will bedrawn from the demographic details of the Eligible Equity Shareholder in the records of theDepository.f) All payments should be made by cheque/DD only. Cash payment is not acceptable. In casepayment is effected in contravention of this, the application may be deemed invalid and theapplication money will be refunded and no interest will be paid thereon. Signatures should beeither in English or Hindi or in any other language specified in the Eighth Schedule to theConstitution of India. Signatures other than in English or Hindi and thumb impression must beattested by a Notary Public or a Special Executive Magistrate under his/ her official seal. TheEquity Shareholders must sign the CAF as per the specimen signature recorded with ourCompany.g) In case of an application under power of attorney or by a body corporate or by a society, a certifiedtrue copy of the relevant power of attorney or relevant resolution or authority to the signatory tomake the relevant investment under this Offer and to sign the application and a copy of theMemorandum and Articles of Association and / or bye laws of such body corporate or societymust be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. Incase the above referred documents are already registered with our Company, the same need not befurnished again. In case these papers are sent to any other entity besides the Registrar to the Issueor are sent after the Issue Closing Date, then the application is liable to be rejected. In no caseshould these papers be attached to the application submitted to the Bankers to the Issue.h) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same orderand as per the specimen signature(s) recorded with our Company. Further, in case of jointInvestors who are Renouncees, the number of Investors should not exceed three. In case of jointInvestors, reference, if any, will be made in the first Investor‘s name and all communication willbe addressed to the first Investor.i) Application(s) received from Non-Resident / NRIs, or persons of Indian origin residing abroad forallotment of Rights Equity Shares shall, inter alia, be subject to conditions, as may be imposedfrom time to time by the RBI under FEMA in the matter of refund of application money, allotmentof equity shares, subsequent issue and allotment of equity shares, interest, export of sharecertificates, etc. In case a Non-Resident or NRI Eligible Equity Shareholder has specific approvalfrom the RBI, in connection with his shareholding, he should enclose a copy of such approval withthe CAF.138

j) All communication in connection with application for the Rights Equity Shares, including anychange in address of the Eligible Equity Shareholders should be addressed to the Registrar to theIssue prior to the date of allotment in this Issue quoting the name of the first/sole Investor, folionumbers and CAF number. Please note that any intimation for change of address of EligibleEquity Shareholders, after the date of allotment, should be sent to the Registrar and TransferAgents of our Company, in the case of Equity Shares held in physical form and to the respectivedepository participant, in case of Equity Shares held in dematerialized form.k) SAFs cannot be re-split.l) Only the person or persons to whom Rights Equity Shares have been offered and notRenouncee(s) shall be entitled to obtain SAFs.m) Investors must write their CAF number at the back of the cheque /demand draft.n) Only one mode of payment per application should be used. The payment must be by cheque /demand draft drawn on any of the banks, including a co-operative bank, which is situated at and isa member or a sub member of the Bankers Clearing House located at the centre indicated on thereverse of the CAF where the application is to be submitted.o) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or postdatedcheques and postal / money orders will not be accepted and applications accompanied bysuch cheques / demand drafts / money orders or postal orders will be rejected. The Registrar willnot accept payment against application if made in cash. (For payment against application in cashplease refer point (e) above).p) No receipt will be issued for application money received. The Bankers to the Issue / CollectingBank/ Registrar will acknowledge receipt of the same by stamping and returning theacknowledgment slip at the bottom of the CAF.Grounds for Technical RejectionsInvestors are advised to note that applications are liable to be rejected on technical grounds, including thefollowing:• Amount paid does not tally with the amount payable for;• Bank account details (for refund) are not given and the same are not available with the DP (in thecase of dematerialized holdings) or the Registrar (in the case of physical holdings);• Age of first Investor not given while completing Part C of the CAFs;• Except for applications on behalf of the Central or State Government and the officials appointedby the courts, PAN number not given for application of any value;• Submit the GIR number instead of the PAN;• In case of application under power of attorney or by limited companies, corporate, trust, etc.,relevant documents are not submitted;• If the signature of the existing Eligible Equity Shareholder does not match with the one given onthe CAF and for renounce(s) if the signature does not match with the records available with theirdepositories;• If the Investor desires to have Rights Equity Shares in electronic form, but the CAF does not havethe Investor‘s depository account details;139

• Application forms are not submitted by the Investors within the time prescribed as per the CAFand the Letter of Offer;• Applications not duly signed by the sole/joint Investors;• Applications by OCBs unless accompanied by specific approval from RBI permitting the OCBs toparticipate in the Issue;• Applications accompanied by Stockinvest;• In case no corresponding record is available with the Depositories that matches three parameters,namely, names of the Investors (including the order of names of joint holders), the DepositaryParticipant‘s identity (DP ID) and the beneficiary‘s identity;• Applications that do not include the certification set out in the CAF to the effect that the subscriberis not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and isnot otherwise located) in the United States and is authorized to acquire the rights and the securitiesin compliance with all applicable laws and regulations;• Applications which have evidence of being executed in/dispatched from the US;• Applications by ineligible Non-residents (including on account of restriction or prohibition underapplicable local laws) and where a registered address in India has not been provided;• Applications where our Company believes that CAF is incomplete or acceptance of such CAFmay infringe applicable legal or regulatory requirements;• Multiple Applications;• Duplicate Applications, including cases where an Investor submits CAFs along with a plain paperapplications.• Where the applicant has selected both the payment methods.• Applications by renounces who are persons not contempt to contract under the Indian ContractAct, 1872, including minors; and• Please read this Draft Letter of Offer and the instructions contained therein and in the CAFcarefully before filling in the CAF. The instructions contained in the CAF are each an integral partof this Draft Letter of Offer and must be carefully followed. An application is liable to be rejectedfor any non-compliance of the provisions contained in this Draft Letter of Offer or the CAF.Mode of payment for Resident Eligible Equity Shareholders / Investors• All cheques / demand drafts accompanying the CAFs should be crossed ‘A/c Payee only’ anddrawn in favour of ‘REI Agro Limited-Rights Issue’.• Investors residing at places other than places where the bank collection centres have been openedby our Company for collecting applications, are requested to send their applications together withDemand Draft for the full application amount, net of bank and postal charges crossed ‘A/c Payeeonly’ and drawn in favour of ‘REI Agro Limited-Rights Issue’ payable at Kolkata directly to theRegistrar to the Issue by registered post so as to reach them on or before the Issue Closing Date.Our Company or the Registrar to the Issue will not be responsible for postal delays or loss ofapplications in transit, if any.Mode of payment for Non-Resident Eligible Equity Shareholders / Investors140

As regards the application by non-resident Eligible Equity Shareholders / Investors, the followingconditions shall apply:Application with repatriation benefitsPayment by NRIs/ FIIs/ foreign investors must be made by demand draft / cheque payable at Kolkata orfunds remitted from abroad in any of the following ways:• By Indian Rupee drafts purchased from abroad and payable at Kolkata or funds remitted fromabroad (submitted along with Foreign Inward Remittance Certificate); or• By cheque / demand draft on a Non-Resident External Account (NRE) or FCNR Accountmaintained in Mumbai; or• By Rupee draft purchased by debit to NRE / FCNR Account maintained elsewhere in India andpayable in Mumbai; or• FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.• All cheques / demand drafts submitted by non-residents applying on repatriable basis should bedrawn in favour of ‘REI Agro Limited-Rights Issue - NR’ payable at Kolkata and crossed ‘A/cPayee only’ for the amount payable.A separate cheque or bank draft must accompany each application form. Investors may note that wherepayment is made by drafts purchased from NRE/FCNR accounts as the case may be, an Account DebitCertificate from the bank issuing the draft confirming that the draft has been issued by debiting theNRE/FCNR account should be enclosed with the CAF. In the absence of the above the application shall beconsidered incomplete and is liable to be rejected.In the case of non-residents who remit their application money from funds held in FCNR / NRE Accounts,refunds and other disbursements, if any shall be credited to such account details of which should befurnished in the appropriate columns in the CAF. In the case of NRIs who remit their application moneythrough Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in USDollars at the rate of exchange prevailing at such time subject to the permission of RBI. Our Company willnot be liable for any loss on account of exchange rate fluctuation for converting the Rupee amount into USDollars or for collection charges charged by the Investor’s Bankers.Application without repatriation benefitsAs far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modesspecified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Accountmaintained in Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere in India butpayable at Kolkata. In such cases, the allotment of Rights Equity Shares will be on non-repatriation basis.All cheques / demand drafts submitted by non-residents applying on non-repatriation basis should be drawnin favour of ‘REI Agro Limited-Rights Issue’ payable at Kolkata and must be crossed ‘A/c Payee only’for the amount payable. The CAF duly completed together with the amount payable on application must bedeposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hourson or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.If the payment is made by a draft purchased from an NRO account, an Account Debit Certificate from thebank issuing the draft, confirming that the draft has been issued by debiting the NRO account, should beenclosed with the CAF. In the absence of the above, the application shall be considered incomplete and isliable to be rejected.141

New demat accounts shall be opened for Eligible Equity Shareholders who have had a change in statusfrom resident Indian to NRI.Note:• In cases where repatriation benefit is available, interest, dividend, sales proceeds derived from theinvestment in Rights Equity Shares can be remitted outside India, subject to tax, as applicableaccording to Income Tax Act, 1961.• In case Rights Equity Shares are allotted on non-repatriation basis, the dividend and sale proceedsof the Equity Shares cannot be remitted outside India.• The CAF duly completed together with the amount payable on application must be deposited withthe Collecting Bank indicated on the reverse of the CAF before the close of banking hours on orbefore the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.• In case of an application received from non-residents, allotment, refunds and other distribution, ifany, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at thetime of making such allotment, remittance and subject to necessary approvals.Our Company is not responsible for any postal delay / loss in transit on this account and applicationsreceived through mail after closure of the Issue are liable to be rejected. Applications through mail shouldnot be sent in any other manner except as mentioned above. The CAF along with the application moneymust not be sent to our Company or the Lead Managers or the Registrar except stated otherwise. TheInvestors are requested to strictly adhere to these instructions.Renouncees who are NRIs / FIIs / Non Residents should submit their respective applications either by handdelivery or by registered post with acknowledgement due to the Registrar to the Issue only at the belowmentioned address along with the cheque / demand draft payable at Kolkata so that the same are receivedon or before the closure of the Issue.Investment by FIIsIn accordance with the current regulations, the following restrictions are applicable for investment by FIIs:The Issue of Rights Equity Shares under this Issue to a single FII should not exceed 10% of the post-issuepaid up capital of our Company. In respect of an FII investing in the Rights Equity Shares on behalf of itssub-accounts the investment on behalf of each sub-account shall not exceed 5% of the total paid up capitalof our Company. In accordance with foreign investment limits applicable to our Company, the total FIIinvestment cannot exceed 24% of the total paid-up capital of our Company. With the approval of the boardand the shareholders by way of a special resolution, the aggregate FII holding can go up to 100% of ourequity share capital.Investments by NRIsInvestments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of theForeign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India)Regulations, 2000. NRI Investors should note that applications by ineligible Non-residents (including onaccount of restriction or prohibition under applicable local laws) and where a registered address in Indiahas not been provided are liable to be rejected.Payment by StockinvestIn terms of the RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, theStockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted inthis Issue.142

Disposal of application and application moneyNo acknowledgment will be issued for the application monies received by our Company. However, theBankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stampingand returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualifiedand absolute right to accept or reject any application, in whole or in part, and in either case withoutassigning any reason thereto. In case an application is rejected in full, the whole of the application moneyreceived will be refunded. Wherever an application is rejected in part, the balance of application money, ifany, after adjusting any money due on Equity Shares allotted, will be refunded to the Investor within aperiod of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the dayour Company becomes liable to repay it, our Company and every Director of our Company who is anofficer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the moneywith interest as prescribed under Section 73 of the Companies Act. For further instructions, please read theCAF carefully.Utilisation of Issue ProceedsThe Board of Directors declares that:(i)(ii)(iii)All monies received out of this Issue shall be transferred to a separate bank account other than thebank account referred to sub-section (3) of Section 73 of the Companies Act;Details of all monies utilized out of the Issue shall be disclosed under an appropriate separate headin the balance sheet of our Company indicating the purpose for which such monies have beenutilized; andDetails of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriateseparate head in the balance sheet of our Company indicating the form in which such unutilizedmonies have been invested.Undertakings by our CompanyOur Company undertakes:1. That the complaints received in respect of the Issue shall be attended to by our Companyexpeditiously and satisfactorily.2. That all steps for completion of the necessary formalities for listing and commencementof trading at all Stock Exchanges where the securities are to be listed will be taken withinseven working days of finalization of basis of allotment.3. That the funds required for dispatch of refund orders/allotment letters/certificates byregistered post shall be made available to the Registrar to the Issue;4. That where refunds are made through electronic transfer of funds, a suitablecommunication shall be sent to the applicant within 15 days of closure of the issue, as thecase may be, giving details of the bank where refunds shall be credited along withamount and expected date of electronic credit of refund.5. That the certificates of the securities/ refund orders shall be dispatched within thespecified time.6. Certificates of securities/refund orders of the Non-Resident/Non Resident Indians shall bedispatched within the specified time subject to receipt of approval from RBI/FIPB, ifrequired;143

7. Our Company accepts full responsibility for the accuracy of information given in thisDraft Letter of Offer and confirms that to best of its knowledge and belief, there are noother facts or the omission of which makes any statement made in this Draft Letter ofOffer misleading and further confirms that it has made all reasonable inquiries toascertain such facts;8. That no further issue of securities affecting equity capital of our Company shall be madetill the securities issued/offered through this Draft Letter of Offer Issue are listed or tillthe application money are refunded on account of non-listing, under-subscription etc.9. All information shall be made available by the Lead Manager(s) and the Issuer to theInvestors at large and no selective or additional information would be available for asection of the Investors in any manner whatsoever including at road shows, presentations,in research or sales reports etc.ImportantPlease read this Draft Letter of Offer carefully before taking any action. The instructions contained in theaccompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefullyfollowed; otherwise the application is liable to be rejected.All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for SAFsmust be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number andthe name of the first Equity Shareholder as mentioned on the CAF and superscribed “REI Agro RightsIssue” on the envelope and postmarked in India) to the Registrar to the Issue at the following address:Maheshwari Datamatics Private Limited6, Mangoe Lane,Kolkata – 700 001It is to be specifically noted that this Issue of Equity Shares is subject to the risks as detailed in the sectionentitled “Risk Factors” beginning on page xi of this Draft Letter of offer.Issue to remain open for a minimum of 15 days and maximum of 30 days as may be determined by theBoard.144

SECTION IX –STATUTORY AND OTHER INFORMATIONMATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTIONThe following contracts (not being contracts entered into in the ordinary course of business carried on byour Company or entered into more than two years before the date of this Draft Letter of Offer) which are ormay be deemed material have been entered or are to be entered into by our Company. These contracts andalso the documents for inspection referred to hereunder, may be inspected at the Registered and CorporateOffice of our Company situated at REI Agro Limited, Room No. 15B, Everest House, 46C ChowringheeRoad, Kolkata-700 0071, West Bengal, India, from 10.00 a.m. to 5.00 p.m., from the date of this DraftLetter of Offer until the Issue Closing Date, on working days. Please note that the corporate office of ourCompany is in Delhi.(A)Material Contracts1. Engagement letter dated September 10, 2009 appointing SBI Capital Markets Limited, Axis BankLimited, Fortune Financial Services (India) Limited, and IDBI Capital Market Services Limited toact as Lead Manager(s) to the Issue.2. Agreement dated September 30, 2009 between our Company and the Lead Manager(s) to theIssue.3. Memorandum of Understanding dated September 29, 2009 between our Company and theRegistrar to the Issue.4. Underwriting Agreement dated [●], 2009 between our Company and [●];5. Agreement with Monitoring Agency dated [●](B)Documents1. Certified true copy of the certificate of incorporation of our Company dated September 14, 1994.2. Memorandum of Association and Articles of Association of our Company.3. Shareholders’ resolution passed at the AGM held on September 23, 2009 appointing M/s. P.K.Lilha & Co., Chartered Accountants as statutory auditors of our Company.4. Copy of the Board resolution dated September 9, 2009 authorising this Issue.5. Copy of the Board resolution dated June 30, 2008 appointing Mr. Sandip Jhunjhunwala as theVice Chairman and Managing Director of our Company.6. Consents of the Directors, Company Secretary, Auditor, Lead Manager(s) to the Issue, Registrar tothe Issue and the Legal Advisor to the Issue to our Company to include their names in this DraftLetter of Offer to act in their respective capacities.7. Appointment of Company Secretary as Compliance Officer and consent thereto.8. Letter dated September 29, 2009 from the Auditor of our Company confirming the Statement ofTax Benefits as disclosed in this Draft Letter of Offer.9. The Report of the Auditors dated September 29, 2009 as set out herein in relation to the auditedfinancials of our Company for the FY 2009.145

10. Annual Reports of our Company for the last FY 2009.11. Applications made for in-principle listing approval dated [●] and [●] to the BSE and NSE,respectively.12. In-principle listing approval dated [●], 2009 and [●], 2009 from the BSE and NSE, respectively.13. SEBI Observation Letter No. [●] dated [●] issued by SEBI for the Issue.14. Due Diligence Certificate dated September 30, 2009 from the Lead Manager(s).15. Tripartite agreement with CDSL dated August 23, 2000 and with NSDL dated April 25, 2000.16. Prospectus dated July 24, 1996 for the public issue of 72,50,000 equity shares of face value Rs.10/- each of our Company.146

DECLARATIONNo statement made in this Draft Letter of Offer contravenes any of the provisions of the Companies Act,1956 and the rules made thereunder. All the legal requirements connected with the said Issue as also theguidelines, instructions, etc. issued by SEBI, Government and any other competent authority in this behalfhave been duly complied with.We hereby certify that all disclosures made in this Draft Letter of Offer are true and correct.Signed by all the Directors of the Company______________________________MR. SANJAY JHUNJHUNWALANon-Executive Chairman______________________________MR. SANDIP JHUNJHUNWALAVice Chairman, Managing Director and Chief Financial Officer____________________________________DR. ING NARPINDER KUMAR GUPTANon-Executive Independent Director_______________________________MR. ASOKE CHATERJEENon-Executive Independent Director_______________________________MR. KRISHNA DAYAL GHOSHNon-Executive Independent Director_____________________________MR. MANDAN MISHRACompany SecretaryDate: September 30, 2009Place: Kolkata147