Draft ProspectusDated: November 09, 2010ISSUE OPENS ON [] ISSUE CLOSES ON []BID/ISSUE PROGRAMMELEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUEHEM SECURITIES LIMITED14/15 Khatau Building,40, Bank Street, Fort,Mumbai- 400 001.Tel: 022-2267 1543/44Fax: 022-2262 5991Web: www.hemonline.comEmail Id: rakeshb@hemonline.comContact Person: Mr. Rakesh BhallaSEBI Regn. No. INM000010981KARVY COMPUTERSHARE PRIVATE LIMITEDPlot No. 17-24, Vittal Rao Nagar,Madhapur,Hyderabad- 500 081Tel: +91-40-23420815-28Fax: +91-40-23431551Web: http://www.karvy.comEmail Id: gemini.ipo@karvy.comContact Person: Mr. Murali KrishnaSEBI Regn. No. INR000000221THE ISSUEPUBLIC ISSUE OF 90,00,000 EQUITY SHARES OF RS.10/- EACH ISSUED FOR CASH AT A PREMIUM OF RS. 55/- PER EQUITY SHARE I.E. AT APRICE OF RS.65/- PER EQUITY SHARE AGGREGATING TO RS. 5850.00 LACS ("THE ISSUE" OR "THE NET ISSUE") BY GEMINI ENGI-FABLIMITED ('THE COMPANY' OR 'THE ISSUER'). THE FACE VALUE OF THE SHARE IS RS.10/- EACH AND THE ISSUE PRICE IS (SIX AND HALF)6.5 TIMES OF THE FACE VALUE. THE ISSUE TO THE PUBLIC WILL CONSTITUTE 41.46% OF THE FULLY DILUTED POST-ISSUE EQUITYSHARE CAPITAL OF THE COMPANY. THE ISSUE IS BEING MADE IN TERMS OF REGULATION 26 (1) OF SEBI (ICDR) REGULATIONS, 2009.RISK IN RELATION TO THE FIRST ISSUEThis being the first issue of the equity shares of Gemini Engi-Fab Limited ("Our Company"), there has been no formal market for the Equity Shares of our Company. Theface value of the equity shares of the Company is Rs. 10/- per share and the Issue Price is (six and half) 6.5 times of the face value of the Equity Shares of the Company.The Issue Price (as determined by the Company in consultation with the Lead Manager as stated herein 'Basis of Issue Price') should not be taken to be indicative of themarket price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and / or sustained trading in the Equity Shares of ourCompany or regarding the price at which the Equity Shares will be traded after listing.GENERAL RISKSInvestments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the riskof losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision,investors must rely on their own examination of our Company and the Issue including the risks involved. The Equity Shares offered in the Issue have not been recommendedor approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this Draft Prospectus. Specific attention of theinvestors is invited to the section titled 'Risk Factors' beginning on Page No.08 of this Draft Prospectus.ISSUER'S ABSOLUTE RESPONSIBILITYThe Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Prospectus contains all information with regard to the Issuer andthe Issue, which is material in the context of the Issue, that the information contained in this Draft Prospectus is true and correct in all material aspects and is not misleadingin any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this DraftProspectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.LISTINGThe Equity Shares offered through this Draft Prospectus are proposed to be listed on Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of IndiaLimited (NSE). The In-principle Approvals of BSE and NSE for listing of Equity Shares of our Company have been received pursuant to letters dated [] and []respectively. BSE shall be the Designated Stock Exchange for the purpose of this Issue.GRADINGThis Issue has been graded by CARE. CARE has assigned "IPO GRADE []" to the Initial Public Offering of our Company. For more information on IPO Grading, pleaserefer to Page No. 45 of this Draft Prospectus. (Company Registration No. 11-112909; CIN-U28920MH1998PLC112909)Our Company was originally incorporated as 'Gemini Engi-Fab Private Limited' on January 12, 1998 under the Companies Act, 1956, which was later on convertedinto a Public Limited Company on January 09, 2007 and consequently the name of the Company was changed to 'Gemini Engi-Fab Limited' and a Fresh Certificate ofIncorporation dated January 09, 2007 was issued by the Registrar of Companies, Maharashtra, Mumbai. For details of Change in the Name and Registered Office, pleaserefer to 'History and Certain Corporate Matters, beginning on Page No. 127 of this Draft Prospectus.Registered Office: 501, Palm Spring, Next D'Mart, Link Road, Malad (West), Mumbai- 400 064Tel No. +91-022-2880 8822; Fax No. +91-022-2880 8998; E-mail: investor@geminief.com; Website: www.geminief.comContact Person: Ms. Pooja Karia (Company Secretary and Compliance Officer)Promoters of the Company: Mr. Dalpatram Jethalal Panchal, Mrs. Sunita Dalpatram Panchal, Mr. Rakesh Dalpatram Panchal, Mr. Ashish DalpatramPanchal and Mr. Hitesh Dalpatram Panchal, for detail of promoters please refer to Page No. 146 of this Draft Prospectus 2 RSECTIUN I - CENERAL . Dfinitions and Abbrviations Dfinitions 1erm Descr|pt|on Cemlnl Lnallab LlmlLed" or Cemlnl" or Lhe Companv" or Cur Companv" Cemlnl Lnallab LlmlLed a publlc llmlLed companv lncorporaLed under Lhe Companles AcL 19S6 wlLh lLs realsLered offlce aL S01 alm Sprlna Llnk 8oad nexL Lo 'u'MarL Mumbal 400 064 lndla We" or us" or our" unless Lhe conLexL oLherwlse requlre refers Lo Cemlnl Lnallab LlmlLed . Convntional]Cnral Trms 1erms Descr|pt|on ArLlcles/ArLlcles of AssoclaLlon ArLlcles of AssoclaLlon of Cemlnl Lnal lab LlmlLed AudlLors uass Maullk Mahendra k Aarawala Co CharLered AccounLanLs 81/ 17 A vvapar 8hawan u' Mello 8oad Carnac 8under Mumbal 400009 (lease refer Lo aae no 218 of Lhls urafL rospecLus for furLher deLalls) 8oard of ulrecLors / 8oard 1he 8oard of ulrecLors of Cemlnl Lnallab LlmlLed lncludlna all dulv auLhorlzed CommlLLees Lhereof Companles AcL 1he Companles AcL 19S6 as amended from Llme Lo Llme ueposlLorles AcL 1he ueposlLorles AcL 1996 as amended from Llme Lo LlmeulrecLor(s) ulrecLor(s) of Cemlnl Lnallab LlmlLed unless oLherwlse speclfledLqulLv Shares LqulLv Shares of our Companv of lace value of 8s 10 each unless oLherwlse speclfled ln Lhe conLexL Lhereof LSCS/LSC/LSS Lmplovee SLock CpLlon Scheme / Lmplovee SLock CpLlon lan / Lmplovee SLock urchase Scheme lacLorles AcL lacLorles AcL 1948 as amended from Llme Lo LlmeCl8 number Ceneral lndex 8ealsLrv numberPul Plndu undlvlded lamllvlndlan CAA Cenerallv AccepLed AccounLlna rlnclples ln lndla MCA / Memorandum / Memorandum of AssoclaLlon Memorandum of AssoclaLlon of Cemlnl Lnallab LlmlLed non 8esldenLs A person resldenL ouLslde lndla as deflned under lLMA n8ls/non8esldenL lndlans A person resldenL ouLslde lndla as deflned under lLMA and who ls a clLlzen of lndla or a erson of lndlan Crlaln under lLMA (1ransfer or lssue of SecurlLv bv a erson 8esldenL CuLslde lndla) 8eaulaLlons 2000 neaoLlable lnsLrumenLs AcL neaoLlable lnsLrumenLs AcL 1881 as amended from Llme Lo Llme 3 R1erms Descr|pt|on Cverseas CorporaLe 8odv / CC8 A companv parLnershlp socleLv or oLher corporaLe bodv owned dlrecLlv or lndlrecLlv Lo Lhe exLenL of aLleasL 60 of beneflclal lnLeresL ls lrrevocablv held bv n8ls dlrecLlv or lndlrecLlv as deflned under lorelan Lxchanae ManaaemenL (1ransfer or lssue of SecurlLv bv a erson 8esldenL CuLslde lndla) 8eaulaLlons 2000 erson or ersons Anv lndlvldual sole proprleLorshlp unlncorporaLed assoclaLlon unlncorporaLed oraanlzaLlon bodv corporaLe corporaLlon companv parLnershlp llmlLed llablllLv companv [olnL venLure or LrusL or anv oLher enLlLv or oraanlzaLlon valldlv consLlLuLed and/or lncorporaLed ln Lhe [urlsdlcLlon ln whlch lL exlsLs and operaLes as Lhe conLexL requlres Core romoLers Mr ualpaLram ! anchal Mrs SunlLa u anchal Mr 8akesh u anchal Mr Ashlsh u anchal and Mr PlLesh u anchal romoLer Croup ( LnLlLles) M/S Cemlnl Lnalneers labrlcaLors M/S LxperL Lnalneers and M/S Cem Lnalneerlna Servlces (arLnershlp llrms) (no LqulLv Poldlna) romoLer Croup (lndlvlduals) Mrs Aruna 8 anchal Mrs Peena A anchal and Mrs ueena P anchal 88l 8eserve 8ank of lndla consLlLuLed under Lhe 88l AcL 88l AcL 1he 8eserve 8ank of lndla AcL 1934 as amended from Llme Lo Llme8ealsLered and CorporaLe Cfflce S01 alm Sprlna Llnk 8oad nexL Lo 'u' MarL Malad (WesL) Mumbal400 064 lndla 8oC 8ealsLrar of Companles LveresL 100Marlne urlve Mumbal400 002 MaharashLra lndla SL8l SecurlLles and Lxchanae 8oard of lndla consLlLuLed under Lhe SL8l AcL 1992SL8l AcL SecurlLles and Lxchanae 8oard of lndla AcL 1992 as amended from Llme Lo Llme SL8l 8eaulaLlons SL8l (lssue of CaplLal and ulsclosure 8equlremenLs) 8eaulaLlons 2009 lssued bv SL8l on AuausL 26 2009 as amended lncludlna clrculars lnsLrucLlons and clarlflcaLlons lssued bv SL8l from Llme Lo Llme SL8l 1akeover 8eaulaLlons SecurlLles and Lxchanae 8oard of lndla (SubsLanLlal AcqulslLlon of Shares and 1akeover) 8eaulaLlons 1997 as amended from Llme Lo Llme SlCA Slck lndusLrlal Companles (Speclal rovlslons) AcL 198SSLock Lxchanaes 8ombav SLock Lxchanae LlmlLed and 1he naLlonal SLock Lxchanae of lndla LlmlLed . Issu Rlatd Trms 1erms Descr|pt|on AlloLmenL/AllocaLlon lssue of Lhe LqulLv Shares pursuanL Lo Lhe lssue Lo Lhe successful appllcanLs AlloLLee 1he successful appllcanL Lo whom Lhe LqulLv Shares are belna / have been lssued AppllcanL Anv prospecLlve lnvesLor who makes an appllcaLlon for LqulLv Shares ln Lerms of Lhls urafL rospecLus AppllcaLlon lorm 1he lorm ln Lerms of whlch Lhe appllcanL shall applv for Lhe LqulLv Shares of Lhe Companv 8anker Lo Lhe Companv 1he 8haraL CooperaLlve 8ank LLd (Andherl (LasL) Mumbal) 4 R8ankers Lo Lhe lssue 8SL 8ombav SLock Lxchanae LlmlLed ueposlLorv A deposlLorv realsLered wlLh SL8l under Lhe SL8l (ueposlLorles and arLlclpanL) 8eaulaLlons 1996 ueposlLorv arLlclpanL A ueposlLorv arLlclpanL as deflned under Lhe ueposlLorles AcL 1996Lmplovees ermanenL Lmplovees of Cemlnl Lnallab LlmlLed as on CcLober 1 2010 lncludlna boLh sLaff and workmen emplovees Lscrow AccounL AccounL opened wlLh Lhe Lscrow CollecLlon 8ank(s) and ln whose favour Lhe AppllcanL (excludlna Lhe AS8A AppllcanL) wlll lssue cheques or drafLs ln respecL of Lhe AppllcaLlon AmounL when submlLLlna an AppllcaLlon Lscrow AareemenL AareemenL enLered lnLo amonasL Lhe Companv Lhe Lscrow CollecLlon 8ank(s) and Lhe LM for collecLlon of Lhe AppllcaLlon AmounLs and for remlLLlna refunds (lf anv) of Lhe amounLs collecLed Lo Lhe AppllcanLs (excludlna Lhe AS8A AppllcanLs) on Lhe Lerms and condlLlon Lhereof Lscrow CollecLlon 8ank(s) 1he banks whlch are clearlna members and realsLered wlLh SL8l as 8ankers Lo Lhe lssue aL whlch bank(s) Lhe Lscrow AccounL of Lhe Companv wlll be opened lC lnlLlal ubllc Cfferlna lssue / lssue Slze 1he publlc lssue of an aaareaaLe of 9000000 LqulLv Shares lssue rlce 1he llnal rlce aL whlch Lhe LqulLv Shares are belna lssued bv our Companv under Lhls urafL rospecLus ln Lhls case belna 8s6S/ per LqulLv Share LM/Lead Manaaer Lead Manaaer Lo Lhe lssue ln Lhls case belna Pem SecurlLles LlmlLed rospecLus 1he rospecLus flled wlLh Lhe 8CC conLalnlna lnLer alla Lhe lssue prlce Lhe slze of Lhe lssue and oLher lnformaLlon nSL naLlonal SLock Lxchanae of lndla LlmlLed ubllc lssue / lssue / lnlLlal ubllc Cfferlna / lC ubllc lssue of 9000000 equlLv shares of 8s10/ each for cash aL a premlum of 8s SS/ per equlLv share (rlce of 8s 6S/ per equlLv share) aaareaaLlna Lo 8s S8S000 Lakhs (Lhe lssue) bv Cemlnl Lnallab LlmlLed ('Cur Companv or lssuer) 1he face value of Lhe share ls 8s10/ each and Lhe lssue prlce ls 6S/ (6S Llmes of Lhe face value) Cuallfled lnsLlLuLlonal 8uvers / Cl8s ubllc llnanclal lnsLlLuLlons as speclfled ln SecLlon 4A of Lhe Companles AcL Scheduled Commerclal 8anks MuLual lunds lorelan lnsLlLuLlonal lnvesLors realsLered wlLh SL8l MulLllaLeral and 8llaLeral uevelopmenL llnanclal lnsLlLuLlons venLure CaplLal funds realsLered wlLh SL8l SLaLe lndusLrlal uevelopmenL CorporaLlons lnsurance Companles realsLered wlLh Lhe lnsurance 8eaulaLorv and uevelopmenL AuLhorlLv (l8uA) rovldenL lunds wlLh a mlnlmum corpus of 8s 2S crores and enslon lunds wlLh a mlnlmum corpus of 8s 2S crores 8efund AccounL AccounL opened wlLh an Lscrow CollecLlon 8ank from whlch Lhe refunds of Lhe whole or parL of Lhe AppllcaLlon AmounL (excludlna Lo Lhe AS8A AppllcanLs) lf anv shall be made 8efund 8ank - 8efunds Lhrouah elecLronlc 8efunds Lhrouah elecLronlc Lransfer of funds means refunds Lhrouah LCS ulrecL S R . Tcbnical and Industry Rlatd Trms 1erms Descr|pt|on ASML Amerlcan SocleLv of Mechanlcal Lnalneers 8ll8 8oard for lndusLrlal and llnanclal 8econsLrucLlon 8S 8rlLlsh SLandardCS Carbon SLeel CnC CompuLerlzed numerlcal ConLroluC ulesel CeneraLorLxoLlc MaLerlals 1lLanlum Copper nlckel lnconel MonelC1AW Cas 1unasLen Arc Weldlna P1 Plah 1enslon lS lndlan SLandardL1 Low 1enslon MlC MeLal lnerL Cas MlS ManaaemenL lnformaLlon SvsLemMm MllllmeLer Crder 8ook value of (l) pro[ecLs awarded Lo us for whlch we have enLered lnLo slaned aareemenLs or recelved leLLers of award or leLLers of lnLenL or work orders buL have noL commenced work and (ll) Lhe uncompleLed parL of Lhe pro[ecLs for whlch we have commenced work C8 rocedure CuallflcaLlon 8ecordCA CuallLv Assurance lan 8CC 8elnforcemenL CemenL ConcreLe 8mL 8unnlna MeLerSq fL Square leeL Sq mLrs Square MeLers SSl Small Scale lndusLrv SS SLalnless SLeel 1lC 1unasLen lnerL Cas Lransfer of funds CredlL or 81CS or nLl1 or Lhe AS8A process as appllcable8ealsLrar/ 8ealsLrar Lo Lhelssue 8ealsLrar Lo Lhe lssue belna karvv CompuLershare rlvaLe LlmlLed 8eaulaLlons SL8l (lssue of CaplLal and ulsclosure 8equlremenL) 8eaulaLlons 2009 8eLall lndlvldual lnvesLors lndlvldual lnvesLors (lncludlna Puls ln Lhe name of karLa and Lllalble n8ls) who applv for Lhe LqulLv Shares of a value of noL more Lhan 8s100000 SCS8 Self CerLlfled SvndlcaLe 8ank Cemlnl or our companv orCemlnl Lnallab LlmlLed" or CLlL" Cemlnl Lnallab LlmlLed a publlc llmlLed Companv lncorporaLed under Lhe Companles AcL 19S6 havlna lLs realsLered offlce aL S01 alm Sprlna Llnk 8oad nexL Lo 'u' MarL Mumbal 400 064 lndla We or us or Cur Companv 8efers Lo Cemlnl Lnallab LlmlLed 6 R1erms Descr|pt|on WS Weldlna rocess SpeclflcaLlonsWC Weldlna rocess SpeclflcaLlons . Abbrviations Abbrev|at|on Iu|| IormA/c AccounL AoA ArLlcles of AssoclaLlon ACM Annual Ceneral MeeLlnaAS AccounLlna SLandards as lssued bv Lhe lnsLlLuLe of CharLered AccounLanLs of lndlaAS8A AppllcaLlons SupporLed bv 8locked AmounLA? AssessmenL ?ear 8SL 8ombav SLock Lxchanae LlmlLedCAC8 Compounded Annual CrowLh 8aLe CA8L CredlL Analvsls and 8esearch LlmlLed CuSL CenLral ueposlLorv Servlces (lndla) LlmlLedCLC Chlef LxecuLlve CfflcerCLS Cash Larnlnas er ShareCln Companv ldenLlflcaLlon numberCl1 Commlssloner of lncome 1axCrore 10 mllllon (or) 100 lakhsuln ulrecLor ldenLlflcaLlon numberul ueparLmenL of lndusLrlal ollcv and romoLlon MlnlsLrv of Commerce CovernmenL of lndla u urafL rospecLusLCS LlecLronlc Clearlna SvsLemLS Larnlnas er Share LCM LxLraordlnarv Ceneral MeeLlnaLxlM/ LxlM ollcv LxporL lmporL ollcv MlnlsLrv of Commerce CovernmenL of lndla 8eaulaLed bv lorelan 1rade uevelopmenL and 8eaulaLlon AcL 1992 lCn8 AccounL lorelan Currencv non 8esldenL AccounLll8 lorelan lnvesLmenL romoLlon 8oard ueparLmenL of Lconomlc Affalrs MlnlsLrv of llnance CovernmenL of lndla l? / llscal/llnanclal ?ear erlod of Lwelve monLhs ended March 31 of LhaL parLlcular vear unless oLherwlse sLaLed lLMA lorelan Lxchanae ManaaemenL AcL 1999 as amended from Llme Lo Llme and Lhe reaulaLlons framed Lhere under llls lorelan lnsLlLuLlonal lnvesLors (as deflned under lLMA (1ransfer or Cffer of SecurlLv bv a erson 8esldenL ouLslde lndla) 8eaulaLlons 2000) realsLered wlLh SL8l under appllcable laws ln lndla Col/CovernmenL CovernmenL of lndlaCu Cross uomesLlc roducLCluC / CluC Cu[araL lndusLrlal uevelopmenL CorporaLlonPul Plndu undlvlded lamllv 7 RAbbrev|at|on Iu|| Iorml1 AcL lncome 1ax AcL 1961 as amended from Llme Lo Llme l1 8ules 1he lncome 1ax 8ules 1962 as amended from Llme Lo Llme MAln MarkeL arLlclpanLs and lnvesLors' lnLearaLed uaLabaseMluC MaharashLra lndusLrlal uevelopmenL CorporaLlon Mol MlnlsLrv of llnance CovernmenL of lndla MCu Memorandum of undersLandlna MerchanL 8anker MerchanL 8anker as deflned under Lhe SecurlLles and Lxchanae 8oard of lndla (MerchanL 8ankers) 8eaulaLlons 1992 nA / nA noL AppllcablenAv neL AsseL value nv neL resenL value n8ls non 8esldenL lndlans n8L AccounL non 8esldenL LxLernal AccounL n8C AccounL non 8esldenL Crdlnarv AccounLnSuL naLlonal SecurlLles ueposlLorv LlmlLed nSL 1he naLlonal SLock Lxchanae of lndla LlmlLedC8C CrlenLal 8ank of Commerce CC8 Cverseas CorporaLe 8odlespa er Annum AC ersons AcLlna ln ConcerL An ermanenL AccounL number A1 roflL AfLer 1ax/L 8aLlo rlce/Larnlnas 8aLlo8 ubllc 8elaLlons88l 1he 8eserve 8ank of lndla 8CL 8eLurn on LqulLv 8CnW 8eLurn on neL WorLh 81CS 8eal 1lme Cross SeLLlemenL 8s 8upees Lhe offlclal currencv of Lhe 8epubllc of lndla S8l SLaLe 8ank of lndla SC88 SecurlLles ConLracLs (8eaulaLlon) 8ules 19S7 as amended from Llme Lo Llme SC8A SecurlLles ConLracL (8eaulaLlon) AcL 19S6 as amended from Llme Lo Llme S11 SecurlLles 1ransacLlon 1ax Sec SecLlon uS/unlLed SLaLes unlLed SLaLes of Amerlca uSu/ uS$/ $ unlLed SLaLes uollar Lhe offlclal currencv of Lhe unlLes SLaLes of Amerlca u/s under SecLlon vCl / venLure CaplLal lund lorelan venLure CaplLal lunds (as deflned under Lhe SecurlLles and Lxchanae 8oard of lndla (venLure CaplLal lunds) 8eaulaLlons 1996) realsLered wlLh SL8l under appllcable laws ln lndla wef WlLh effecL fromvA1 value Added 1ax 8 RSECTIUN II: RISK FACTURS . CERTAIN CUNVENTIUNS: USE UF MARKET DATA unless sLaLed oLherwlse Lhe flnanclal daLa ln Lhe urafL rospecLus ls derlved from our flnanclal sLaLemenLs prepared and resLaLed ln accordance wlLh lndlan CAA Lhe Companles AcL and SL8l (lCu8) 8eaulaLlons 2009 lncluded on aae no 1S3 of Lhls urafL rospecLus We have no subsldlarles Accordlnalv flnanclal lnformaLlon relaLlna Lo us ls presenLed on a nonconsolldaLed basls Cur flscal vear commences on Aprll 1 of everv vear and ends on March 31sL of everv nexL vear ln Lhls urafL rospecLus anv dlscrepancles ln anv Lable beLween Lhe LoLal and Lhe sum of Lhe amounLs llsLed are due Lo roundlnaoff ln Lhls urafL rospecLus unless Lhe conLexL oLherwlse requlres all references Lo one aender also refers Lo anoLher aender and Lhe word Lakhs means one hundred Lhousand and Lhe word Mllllon means 1en Lakhs and Lhe word Crore means 1en Mllllon 1hrouahouL Lhls urafL rospecLus all flaures have been expressed ln Lakhs unless oLherwlse sLaLed all references Lo lndla conLalned ln Lhls urafL rospecLus are Lo Lhe 8epubllc of lndla unless sLaLed oLherwlse lndusLrv daLa used LhrouahouL Lhls urafL rospecLus has been obLalned from lndusLrv publlcaLlons lnLernal companv reporLs newspaper and maaazlne arLlcles eLc Such publlcaLlons aenerallv sLaLe LhaL conLenL Lhereln has been obLalned from sources belleved Lo be rellable buL Lhelr accuracv and compleLeness are noL auaranLeed and Lhelr rellablllLv cannoL be assured AlLhouah we belleve LhaL Lhe lndusLrv daLa used ln Lhls urafL rospecLus ls rellable lL has noL been verlfled bv anv lndependenL source lor addlLlonal deflnlLlons please refer Lo ueflnlLlons and AbbrevlaLlons on aae no 02 of Lhls urafL rospecLus ln Lhe SecLlon LlLled Maln rovlslons of Lhe ArLlcles of AssoclaLlon on aae no 2S8 of Lhls urafL rospecLus deflned Lerms have Lhe meanlna alven Lo such Lerms ln Lhe ArLlcles of AssoclaLlon of our Companv 9 R . FURWARD-LUUKINC STATEMENTS SLaLemenLs lncluded ln Lhls urafL rospecLus whlch conLaln words or phrases such as wlll alm wlll llkelv resulL belleve expecL wlll conLlnue anLlclpaLe esLlmaLe lnLend plan conLemplaLe seek Lo fuLure ob[ecLlve aoal pro[ecL should wlll pursue and slmllar expresslon or varlaLlons of such expresslons LhaL are forwardlooklna sLaLemenLs All forward looklna sLaLemenLs are sub[ecL Lo rlsks uncerLalnLles and assumpLlons LhaL could cause acLual resulLs Lo dlffer maLerlallv from Lhose conLemplaLed bv Lhe relevanL forward looklna sLaLemenL lmporLanL facLors LhaL could cause acLual resulLs Lo dlffer maLerlallv from our expecLaLlons lnclude amona oLhers Ceneral economlc and buslness condlLlons ln lndla and oLher counLrles 8eaulaLorv chanaes relaLlna Lo Lhe fabrlcaLlon lndusLrv ln lndla and our ablllLv Lo respond Lo Lhem Cur ablllLv Lo successfullv lmplemenL our sLraLeav our arowLh and expanslon Lechnoloalcal chanaes our exposure Lo markeL rlsks LhaL have an lmpacL on our buslness acLlvlLles or lnvesLmenLs 1he moneLarv and flscal pollcles of lndla lnflaLlon deflaLlon unanLlclpaLed Lurbulence ln lnLeresL raLes forelan exchanae raLes equlLv prlces or oLher raLes or prlces Lhe performance of Lhe flnanclal markeLs ln lndla and aloballv chanaes ln domesLlc and forelan laws reaulaLlons and Laxes and chanaes ln compeLlLlon ln our lndusLrv Chanaes ln Lhe value of Lhe 8upee and oLher currencles 1he occurrence of naLural dlsasLers or calamlLles Chanae ln pollLlcal condlLlon ln lndla lor furLher dlscusslon of facLors LhaL could cause our acLual resulLs Lo dlffer see Lhe SecLlon LlLled 8lsk lacLors bealnnlna on aae no 10 of Lhls urafL rospecLus 8v Lhelr naLure cerLaln markeL rlsk dlsclosures are onlv esLlmaLes and could be maLerlallv dlfferenL from whaL acLuallv occurs ln Lhe fuLure As a resulL acLual fuLure aalns or losses could maLerlallv dlffer from Lhose LhaL have been esLlmaLed nelLher our Companv nor anv of Lhelr respecLlve afflllaLes have anv obllaaLlon Lo updaLe or oLherwlse revlse anv sLaLemenLs reflecLlna clrcumsLances arlslna afLer Lhe daLe hereof or Lo reflecL Lhe occurrence of underlvlna evenLs even lf Lhe underlvlna assumpLlons do noL come Lo frulLlon ln accordance wlLh SL8l requlremenLs our Companv and Lhe Lead Manaaer wlll ensure LhaL lnvesLors ln lndla are lnformed of maLerlal developmenLs unLll such Llme as Lhe aranL of llsLlna and Lradlna ermlsslon bv Lhe SLock Lxchanaes for Lhe LqulLv Shares alloLLed pursuanL Lo Lhls lssue 10 R. RISK FACTURS An lnvesLmenL ln equlLv lnvolves a hlah dearee of rlsk lnvesLors should carefullv conslder all Lhe lnformaLlon ln Lhls urafL rospecLus lncludlna Lhe rlsks and uncerLalnLles descrlbed below before maklna an lnvesLmenL ln our equlLv shares Anv of Lhe followlna rlsks as well as oLher rlsks and uncerLalnLles dlscussed ln Lhls urafL rospecLus could have a maLerlal adverse effecL on our buslness flnanclal condlLlon and resulLs of operaLlons and could cause Lhe Lradlna prlce of our LqulLv Shares Lo decllne whlch could resulL ln Lhe loss of all or parL of vour lnvesLmenL ln addlLlon Lhe rlsks seL ouL ln Lhls urafL rospecLus mav noL be exhausLlve and addlLlonal rlsks and uncerLalnLles noL presenLlv known Lo us or whlch we currenLlv deem lmmaLerlal mav arlse or become maLerlal ln Lhe fuLure unless oLherwlse sLaLed ln Lhe relevanL rlsk facLors seL forLh below we are noL ln a poslLlon Lo speclfv or quanLlfv Lhe flnanclal or oLher rlsks menLloned hereln Mater|a||ty 1he 8lsk facLors have been deLermlned on Lhe basls of Lhelr maLerlallLv 1he followlna facLors have been consldered for deLermlnlna Lhe maLerlallLv 1 Some evenLs mav noL be maLerlal lndlvlduallv buL mav be found maLerlal collecLlvelv 2 Some evenLs mav have maLerlal lmpacL quallLaLlvelv lnsLead of quanLlLaLlvelv 3 Some evenLs mav noL be maLerlal aL presenL buL mav be havlna maLerlal lmpacL ln fuLure Note 1he rlsk facLors as envlsaaed bv Lhe manaaemenL alona wlLh Lhe proposals Lo address Lhe rlsk lf anv unless speclfled or quanLlfled ln Lhe relevanL rlsk facLors below we are noL ln a poslLlon Lo quanLlfv Lhe flnanclal lmpllcaLlon of anv of Lhe rlsks descrlbed ln Lhls secLlon ln Lhls urafL rospecLus anv dlscrepancles ln anv Lable beLween LoLal and Lhe sums of Lhe amounL llsLed are due Lo roundlna off Anv percenLaae amounLs as seL forLh ln 8lsk lacLors ManaaemenL ulscusslon and Analvsls of llnanclal CondlLlons and CperaLlons as menLloned on aae no 181 ln Lhls urafL rospecLus unless oLherwlse lndlcaLed has been calculaLed on Lhe basls of Lhe amounL dlsclosed ln Lhe llnanclal SLaLemenLs prepared ln accordance wlLh Lhe lndlan AccounLlna SLandards IN1LkNAL kI5k IAC1Ck5 1 Our compony hos undisputed omounts poyob/e in respects of lncome tox which hove remoin outstondino os ot 5eptember l0 2010 for the period of more thon six {) months from the dote they become poyob/e As on SepLember 30 2010 Lhere are undlspuLed sLaLuLorv dues aaareaaLlna Lo 8s 1636S lakhs on accounL of lncome 1ax whlch are veL Lo be pald bv Lhe Companv Cur cash flows would be adverselv affecLed Lo Lhe exLenL amounL of such pavmenL made bv our Companv lurLher Cur Companv mav be llable Lo pav such penalLles and lnLeresL as Lhe auLhorlLles mav decldes under Lhe provlslons of Lhe lncome 1ax AcL 1961 11 R2 Our compony is yet to p/oce orders for the P/ont Mochinery worth ks 281894 Lokhs constitutino 100 of the toto/ p/ont ond mochinery Our compony hos o/so not orronoed for ony hedoino foci/ity to cover the risk orisino out of foreion exchonoe f/uctuotions for the p/ont ond mochinery proposed to be to be imported for ks 578l /okhs which constitutes 2014 of the toto/ p/ont ond mochinery Cur Companv ls veL Lo place orders for Lhe enLlre planL and machlnerv and oLher equlpmenLs and accessorles 1he LoLal cosL of all Lhese comes Lo 281894 Lakhs whlch ls 4SS0 of Lhe LoLal cosL of Lhe ro[ecL of whlch 8sS6783 Lakhs worLh of machlnerv ls Lo be lmporLed consLlLuLlna 916 of LoLal pro[ecL cosL We are sub[ecL Lo Lhe rlsks on accounL of lnflaLlon ln Lhe prlce of machlnerv and oLher equlpmenL LhaL we requlre for Lhe pro[ecL lurLher ln respecL of Lhe machlnerv / equlpmenL / oLher pro[ecL relaLed servlces LhaL we propose Lo lmporL / procure from overseas we mav be sub[ecL Lo Lhe rlsks arlslna ouL of currencv raLe flucLuaLlons Slnce no orders have been placed as on daLe our Companv has noL arranaed for anv hedalna faclllLv Lo cover Lhe rlsk arlslna ouL of forelan exchanae flucLuaLlons ln relaLlon Lo Lhe aforesald lmporLs 1hese facLors mav lncrease Lhe overall cosL of our pro[ecL and have an adverse effecL on our buslness and resulLs of operaLlons l uurino the linoncio/ Yeor 200910 our compony hos oiven /oon to two of its uirectors in controvention of the provisions of section 295 of the componies 4ct 195 uurlna Lhe vear 200910 Lhe Companv has alven loan Lo Lwo of lLs ulrecLors ln conLravenLlon of Lhe provlslons of secLlon 29S of Lhe Companles AcL 19S6 1he aaareaaLe amounL of loan alven was 8s 2708 lakhs of whlch 8s 1S lakhs loan was alven Lo Mr 8akesh u anchal Manaalna ulrecLor and 8s 1208 lakhs was alven Lo Mr PlLesh u anchal Whole 1lme ulrecLor As on Lhe daLe of flllna Lhls drafL prospecLus boLh Lhe loans are ouLsLandlna Accordlnalv our Companv and boLh of sald ulrecLors mav be llable for vlolaLlna Lhe provlslons of Lhe sald secLlon of Lhe Companles AcL 19S6 Moreover lf elLher or boLh Lhe ulrecLors fall Lo repav Lhe loans Lhen Lo LhaL exLenL lL could adverselv affecL cash flows of our Companv and also our operaLlons dlrecLlv or lndlrecLlv 4 Our compony hos been mointoinino inventory records os per excise ru/es ond the monooement physico//y verified mojor items of inventories durino finoncio/ yeor ended Morch l1 2010 ond discreponcies noticed on verificotion were oppropriote/y deo/t with uurino the months period ended 5eptember l0 2010 the monooement physico//y verified o// mojor items of inventories ond no moterio/ discreponcies were noticed nowever there ore no supportino records to substontiote these inventory records to vouch the occurocy ond vo/ue of c/osino stocks ln Lhe absence of supporLlna documenLs our Companv ls unable Lo subsLanLlaLe accounLlna records of lnvenLorles malnLalned bv Lhe manaaemenL lurLher Lhere ls no svsLem for quanLlLaLlve reconclllaLlon of such lnvenLorles and Lherefore Cur Companv ls unable Lo auLhenLlcaLe Lhe accuracv of Lhe quanLlLv and value of closlna sLock for Lhe flnanclal vear ended March 31 2010 and 6 monLhs perlod ended SepLember 30 2010 Slnce Lhe consequenLlal lmpacL whereof ls noL presenLlv ascerLalnable anv ma[or varlaLlon found laLer on due Lo non reconclllaLlon mav hamper operaLlons and revenues of Lhe companv 12 R5 we hove not undertoken copito/ expenditure of simi/or site ond noture os entoi/ed in objects of issue ond our inobi/ity to monooe copito/ expenditure moy odverse/y offect our operotions We are embarklna upon a ma[or expanslon Lo meeL Lhe arowlna demand of domesLlc buvers ln Lhe enalneerlna fabrlcaLlon secLor We are lncurrlna caplLal expendlLure of 8s 619S67 lakhs as deLalled ln Lhe SecLlon LlLled 'Cb[ecLs of Lhe lssue' sLarLlna on aae no S9 of Lhls urafL rospecLus for enhancemenL and uparadaLlon of exlsLlna capaclLles ln pasL we have noL underLaken caplLal expendlLure of such slze and our lnablllLv Lo manaae caplLal expendlLure mav adverselv affecL our operaLlons We cannoL assure LhaL we wlll be able Lo aeL Lhe beneflLs of Lhe aenerallv arowlna demand and accordlnalv Lhe beneflLs accrulna Lo us from Lhe planned capaclLv expanslon pro[ecL mav be less Lhan whaL ls anLlclpaLed Our compony hos foi/ed to serve the interest ond principo/ omount in respect of term /oons ond interest of cosh credit for the months of 4uoust l1 2010 ond 5eptember l0 2010 Cur Companv has Laken varlous faclllLles from our banker for Lhe purpose of our buslness AlLhouah we are aenerallv reaular ln pavlna Lhe lnLeresL and prlnclpal amounL ln respecL of Lhe loans Laken from Lhe banks Powever we have falled Lo pav Lhe lnLeresL and prlnclpal amounL ln respecL of Lhe Lerm loan and lnLeresL of cash credlL for Lhe monLhs AuausL 31 2010 and SepLember 30 2010 1he Companv mav be llable for addlLlonal lnLeresL for delaved pavmenL and healLh code alven Lo Lhe Companv bv our bankers mav be revlewed 7 Our componys time/y ond cost effective execution of orders is dependent on the odeouote ond time/y supp/y of row moterio/s we hove not entered into ony /ono term supp/y controcts ond we connot ossure you thot we wou/d be ob/e to procure odeouote supp/ies of row moterio/s os ond when we need them on commercio//y occepted terms AdequaLe supplles of raw maLerlals on compeLlLlve and commerclallv vlable Lerms aL rlahL Llme are kev Lo our Llmelv and cosL execuLlon of orders Slnce our companv has noL enLered anv lona Lerm raw maLerlal supplv conLracLs we cannoL assure vou LhaL we would be able Lo procure adequaLe supplles of kev maLerlals ln Lhe fuLure as and when we need Lhem on compeLlLlve Lerms lurLher LransporLaLlon sLrlkes bv manv LransporLers and reaulaLorv resLrlcLlons placed on LransporLaLlon provlders whlch Lhev had ln Lhe pasL and could have ln Lhe fuLure an adverse effecL on recelpL of raw maLerlal supplles lf we are unable Lo procure Lhe requlslLe quanLlLles of maLerlals as requlred our buslness resulLs of operaLlons and revenues mav be adverselv affecLed 8 Our compony is yet obtoin certoin opprovo/s for our proposed project ond moy be unob/e to obtoined or renew reouired opprovo/s in o time/y monner ond existino opprovo/ moy be revoked lor successful execuLlon of our exlsLlna and our proposed pro[ecLs we are requlred Lo obLaln sLaLuLorv and reaulaLorv approvals llcenses realsLraLlons and appllcaLlons need Lo be made aL approprlaLe sLaaes of Lhe proposed pro[ecLs 1hese mav lnclude approvals of bulldlna plans lavouL plans envlronmenLal consenLs and flre safeLv clearance durlna varlous sLaaes of Lhe pro[ecL We mav have Lo obLaln cerLlflcaLe of chanae of land use ln respecL of our aarlculLural and lndusLrlal land lf we fall Lo obLaln or renew or experlence maLerlal delavs ln obLalnlna or renewlna Lhe requlslLe Lhe aovernmenLal approvals or lf anv approvals are suspended or revoked our buslness prospecLs flnanclal condlLlons and resulLs of operaLlon mav be adverselv affecLed 13 R9 Our compony durino the finoncio/ yeor ended 200910 hod occepted pub/ic deposits in controvention of the provisions of the componies 4ct 195 os omended ond the controvention continues uurlna Lhe flnanclal vear 200910 Lhe companv accepLed publlc deposlLs Lo Lhe Lune of 8s 100 lakhs ln conLravenLlon of SecLlon S8A and S8AA of Lhe Companles AcL 19S6 as amended and Companles (AccepLance of ueposlL) 8ules 197S and Lhe conLravenLlon conLlnues Cur Companv and all Cfflcers ln uefaulL mav be llable for Lhe pecunlarv and oLher punlshmenLs for such vlolaLlons under Lhe provlslons of sald secLlons and reaulaLlons whlch mav adverselv affecL operaLlons of Lhe companv dlrecLlv or lndlrecLlv 10 uurino linoncio/ Yeor 200809 our compony hod incurred of ks 911l Lokhs towords lPO expenses which wos she/ved were not choroed in the books of occounts os per 45 2 of the lc4l Cur Companv had lncurred lC expenses of 8s 91 13 Lakhs durlna llnanclal ?ear 200809 whlch was shelved buL Lhe same were noL charaed ln Lhe books of accounLs of Lhe flnanclal vear ended March 31 2009 as per AS 26 1hls has resulLed lnLo oversLaLemenL of Lhe balance of 8eserves and Surplus and Mlscellaneous LxpendlLure bv 8s 9113 Lakhs each for Lhe sald flnanclal vear 11 Our compony is in the process of fi/ino/revisino its vorious stotutory returns such os v41 returns 1u5 returns etc for the finoncio/ yeor ended Morch l1 2010 ond the months period ended 5eptember l0 2010 lurther the compony hos to deposit on omount of ks 2240 Lokhs on occount of excise duty in respect of removo/ of ooods durino months of 4uoust ond 5eptember 2010 Cur Companv ls ln Lhe process of flllna/revlslna lLs varlous sLaLuLorv reLurns such as vA1 reLurns 1uS reLurns eLc for Lhe vear for Lhe llnanclal ?ear ended March 31 2010 and 6 monLhs perlod ended SepLember 30 2010 endlna Lhe flnallzaLlon of Lhese reLurns Lhe necessarv lmpacL on Lhe accounLs for Lhe vear/perlod menLloned above ls noL presenLlv ascerLalnable Slnce Lhe lmpacL lf anv wlll be alven ln Lhe subsequenL vears lL mav hamper flnanclal condlLlons of Lhe sald respecLlve vears lurLher our Companv has Lo deposlL 8s 2240 Lakhs on accounL of exclse duLv aaalnsL Lhe aoods removed durlna monLhs of AuausL and SepLember 2010 whlch would adverselv affecL cash flows/ operaLlons of Lhe Companv 12 Our compony does not hove on lnterno/ 4udit 5ystem in p/oce commensurote with the site of the compony ond noture of its business 1here ls no lnLernal AudlL SvsLem ln place ln our Companv whlch ls necessarv keeplna ln vlew of Lhe maanlLude and naLure of buslness of Lhe companv ln Lhe absence of such lnLernal audlL svsLems lL ls noL posslble Lo crlLlcallv revlew Lhe companv's flnanclal and oLher operaLlonal reporLlna process and proper dlsclosure of Lhe relaLed lnformaLlon ln Lhls reaard under such scenarlo lL mav noL be posslble Lo ensure LhaL Lhe flnanclal and oLher operaLlna sLaLemenLs are correcL sufflclenL and credlble Accordlnalv Lo LhaL exLenL Lhere mav be loss of revenue on accounL of lack of checks reconclllaLlons and conLrol svsLems 1l Our compony in the post hos entered into ke/oted Porty 1ronsoctions ond it moy continue to do so ln future o/so Cur Companv has enLered lnLo cerLaln LransacLlons wlLh our romoLers ulrecLors and romoLers Croup llrms ln Lhe pasL lor deLalled lnformaLlon on our relaLed parLv LransacLlons please refer Lo Annexure xlv on 8elaLed arLv 1ransacLlons of Lhe AudlLor's 8eporL under SecLlon LlLled llnanclal lnformaLlon of Lhe Companv" bealnnlna on aae no 1S3 of Lhls urafL rospecLus 14 RWhlle we belleve LhaL all our relaLed parLv LransacLlons have been conducLed on and have commerclal Lerms conslsLenL wlLh an arm's lenaLh basls Lhere can be no assurance LhaL we could noL have achleved more favorable Lerms and had such LransacLlons been enLered lnLo wlLh unrelaLed parLles lurLhermore lL ls llkelv LhaL we mav enLer lnLo relaLed parLv LransacLlons ln fuLure Loo 1here can be no assurance LhaL such LransacLlons lndlvlduallv or ln Lhe aaareaaLe would noL have an adverse effecL on our buslness flnanclal condlLlon and resulLs of operaLlons 14 Our compony os ot Morchl1 2010 hos fo//owino continoent /iobi/ities which hove not been provided for in the books of occounts Cur Companv has followlna conLlnaenL llablllLles as aL March 31 2010 have noL been provlded for ln Lhe books of accounLs {ks ln Lokhs) 5r No Cont|ngent L|ab|||t|es As at March 31 2010 1 8ank CuaranLees Lo CusLomers 333302 ulspuLed SLaLuLorv uues 91933 SeL off of Sales 1ax 21S4 lncome 1ax Sales 1ax LlablllLles noL AscerLalnable 1C1AL 42738ln case lf anv or all of above sLaLed conLlnaenL llablllLles aeL crvsLalllzed and are requlred Lo be seLLled lL could adverselv affecL flnanclals and operaLlons of our companv 15 Our compony durino the finoncio/ yeor ended Morchl1 2010 ond for months period ended 5eptember l0 2010 hos bo/onces of /oons creditors debtors ond odvonces which ore subject to confirmotion 1hus if ony or o// of such bo/onces cou/d not be confirmed or wou/d be confirmed for /esser omounts then to thot extent moy odverse/y offect finoncio/s of the compony Cur Companv's balances of loans credlLors debLors and advances for Lhe flnanclal vear ended March 31 2010 and for 6 monLhs perlod ended SepLember 30 2010 are sub[ecL Lo conflrmaLlon 1hus lf anv or all of such balances could noL be conflrmed or are conflrmed for lesser amounLs Lhen Lo LhaL exLenL mav adverselv affecL flnanclals of Lhe companv 1 4// the ossets hove not been physico//y verified by the monooement durino the yeor thouoh there is reou/or proorom of verificotion lixed ossets inc/ude o Motor cor which wos purchosed by the compony durino the finoncio/ yeor 200910 thouoh it is reoistered in the nome of its Monooino uirector Mr kokesh u Poncho/ All Lhe asseLs have noL been phvslcallv verlfled bv Lhe manaaemenL durlna Lhe vear Lhouah Lhere ls reaular proaram of verlflcaLlon llxed asseLs lnclude a MoLor Car whlch was purchased bv Lhe Companv durlna Lhe flnanclal vear 200910 amounLlna Lo 8s3798 Lacs Lhouah lL ls realsLered ln Lhe name of lLs Manaalna ulrecLor Mr 8akesh u anchal Cur Companv mav noL aeL Lhe beneflLs of depreclaLlon for Lhe sald moLor car aL Lhe Llme of lncome Lax assessmenL as lL ls noL realsLered ln Lhe name of companv and Lo LhaL exLenL mav affecL proflLablllLv and cash flows of Lhe companv 1S R17 Our compony hos not fo//owed 4ccountino 5tondord 15 reoordino mp/oyee 8enefits prescribed by 1he lnstitute of chortered 4ccountonts of lndio {lc4l) As per Lhe AudlLed llnanclal SLaLemenLs for Lhe vear ended March 31 2010 under noLes Lo AccounLs we accounL for llablllLles ln respecL of araLulLv and leave encashmenL on avmenL basls whlch ls noL ln conformlLv wlLh AS 1S reaardlna Lmplovee 8eneflLs prescrlbed bv Lhe lCAl 1hls AccounLlna SLandard sLlpulaLes LhaL Lhese llablllLles should be accounLed for ln Lhe books of accounLs on accrual basls 18 Our compony hos not disc/osed re/evont informotion in the linoncio/ 5totements for the finoncio/ yeor ended Morch l1 2010 ond for months period ended 5eptember l0 2010 os reouired under provisions of Micro 5mo// Medium nterprise ueve/opment 4ct 2002 Cur Companv ln Lhe absence of relevanL lnformaLlon perLalnlna Lo Mlcro Small and Medlum LnLerprlses falled Lo dlsclosed lnformaLlon ln Lhe llnanclal SLaLemenLs for Lhe flnanclal vear ended March 312010 and 6 monLhs perlod ended SepLember 30 2010 as requlred under provlslons of Mlcro Small Medlum LnLerprlses uevelopmenL AcL 2002 Cur Companv and everv offlcer ln defaulL mav be held llable for noL complvlna wlLh Lhe provlslons of Lhe sald AcL 19 Our compony wos not hovino o fu// time compony 5ecretory Cur Companv was noL havlna a full Llme Companv SecreLarv durlna Lhe alven perlod of Aprll 1 2009 Lo AuausL 12 2010 1he same ls ln vlolaLlon of SecLlon 383 A 20 Our compony hos not creoted orotuity fund os reouired under 5ec 44 of the Poyment of 6rotuity 4ct 1972 Cur companv has noL complled wlLh Lhe compulsorv requlremenL of creaLlon of fund/obLalnlna of lnsurance as requlred under SecLlon 4A of Lhe avmenL of CraLulLv AcL 1972 Powever Lhe companv ls conslderlna Lhe opLlon of complvlna wlLh Lhe same ln Lhe near fuLure 21 Our compony hos not been reou/or in mokino of 5lc poyments to its emp/oyees Cur companv has noL made anv LSlC pavmenLs for Lhe vear 2006 2007 Lven as on daLe Lhe companv ls exLendlna Lhe LSlC beneflL Lo 10 emplovees ouL of a LoLal sLrenaLh of 27 22 Our compony hos uti/ited funds credited to shore premium occount in excess of the omount mentioned in reso/ution possed by the boord of directors Cur companv ln Lhe vear 2007 declded Lo ao for a bonus lssue ln Lhe raLlo of 32 for whlch lL had passed a resoluLlon auLhorlzlna Lhe board Lo uLlllze a sum of 8s 42607S0/ Lowards Lhe sald cause from Lhe share premlum accounL alLhouah Lhe companv has uLlllzed all Lhe amounL avallable ln Lhe share premlum accounL wlLhouL passlna a proper resoluLlon and has Llll daLe noL recLlfled Lhe same 16 R2l Our compony in the yeor 2007 foi/ed to comp/y with the reouirement of 5ection 205 of the componies 4ct 195 Cur Companv had pald dlvldend ln Lhe vear 2007 1he dlvldend monles were dlrecLlv pald Lo Lhe shareholders/members ouL of Lhe companv accounLs and no separaLe bank accounL was opened for Lhe same 1he same ls ln noncompllance of SecLlon 20S of Lhe Companles' AcL 19S6 24 Our compony is invo/ved in certoin /eoo/ proceedinos We are lnvolved ln leaal proceedlnas and clalms ln lndla 1hese leaal proceedlnas are pendlna aL dlfferenL levels of ad[udlcaLlon before varlous courLs and Lrlbunals Should anv new developmenLs arlse such as a chanae ln lndlan law or rullnas aaalnsL us bv appellaLe courLs or Lrlbunals we mav need Lo make provlslons ln our flnanclal sLaLemenLs whlch could lncrease our expenses and our llablllLles We cannoL assure vou LhaL Lhese leaal proceedlnas wlll be declded ln our favour Anv adverse declslon mav have a slanlflcanL adverse effecL on our buslness and resulLs of operaLlons Cur ouLsLandlna leaal proceedlna and Lhe amounLs clalmed ln Lhese proceedlnas have been dlsclosed Lo Lhe exLenL ascerLalnable below {ks ln mi//ion un/ess stoted otherwise) Nature of roceed|ng Number of Cases Amount (ks)Clvll Cases 1 noL ascerLalnable Lxclse Cases 2 2301S97**AmounL does noL lnclude anv penalLv and lnLeresL whlch ls noL ascerLalnable and mav be lmposed upon our Companv Also we have from Llme Lo Llme lnlLlaLed leaal proceedlnas relaLlna Lo our buslness and operaLlons for furLher deLalls of ouLsLandlna llLlaaLlon aaalnsL us please see CuLsLandlna LlLlaaLlon and MaLerlal uevelopmenLs" on aae no 196 of Lhls urafL rospecLus 25 we ore subject to restrictive /oon covenonts of 8onks in respect of term /oons / workino copito/ foci/ities ovoi/ed from them Cur Companv has enLered lnLo aareemenLs for Lerm loans and flnanclal faclllLles wlLh our banker and Lhe covenanLs ln such aareemenLs requlre us Lo obLaln bank's permlsslon ln wrlLlna ln respecL of effecLlna anv chanae ln Lhe Companv's CaplLal SLrucLure chanae ln unsecured loan chanae ln Lradlna cvcle lmplemenLaLlon of anv scheme of expanslon/ modlflcaLlon/ dlverslflcaLlon/ renovaLlon enLerlna lnLo anv borrowlna arranaemenL wlLh oLher banks underLake auaranLee underLake obllaaLlons on behalf of anv oLher Companv declare dlvldends excepL for Lhe anv vear approved bv Lhe bank pav auaranLee commlsslon Lo Lhe auaranLors whose auaranLees have been sLlpulaLed creaLe an furLher charae/ llen/ encumbrance over asseLs properLles charaed Lo Lhe bank and sell/ asslan or oLherwlse dlspose off Lhe flxed asseLs charaed Lo Lhe bank 1hese covenanLs mav have an adverse effecL on Lhe funcLlonlna of our Companv lurLhermore our Companv has creaLed a charae ln favor of our lender aaalnsL Lhe flxed asseLs of our Companv ln case of defaulL bv our Companv ln repavmenL of Lhe loans our 8anker mav exerclse Lhelr rlahLs over Lhe securlLv whlch mav be deLrlmenLal Lo Lhe lnLeresL of our Companv lor deLalls of resLrlcLlve covenanLs please refer Lo paraaraph Annexure xv of Lhe AudlLor's reporL appearlna on aae no 177 of Lhls urafL rospecLus under SecLlon LlLled llnanclal lnformaLlon of Lhe Companv" 17 R 2 Our compony moy foce ony unexpected increose in price of inputs /ike price of /obour row moterio/s fue/ or other inputs which we ore unob/e to poss on our c/ients moy hove on odverse effect on our resu/ts of operotions ond finoncio/ condition Anv lncrease ln lnpuLs cosL vlz raw maLerlal labour fuel and oLher maLerlal consLlLuLes a slanlflcanL parL of our operaLlna expenses cosL whlch ls approxlmaLelv 819S of our LoLal expendlLure Cur ablllLv Lo pass on unanLlclpaLed lncrease ln Lhe prlces of Lhese lnpuLs Lo our cllenLs mav be llmlLed whlch mav Lo LhaL exLenL adverselv affecL our operaLlons and revenues 27 Our Promoters wi// continue to retoin mojority contro/ in the compony ofter the issue which wou/d enob/e them to inf/uence the outcome of motters submitted to shoreho/ders for opprovo/ Cur romoLers would beneflclallv own S831 of our companv's posL equlLv share caplLal ConsequenLlv Lhe romoLers wlll have Lhe ablllLv Lo conLrol our buslness lncludlna maLLers relaLlna Lo anv sale of all or subsLanLlallv all our companv's asseLs caplLallzaLlon of reserves dlsLrlbuLlon of dlvldend appolnLmenL of dlrecLors and kev manaaerlal personnel and manv oLher lmporLanL declslons 1hls conLrol could delav defer or prevenL a chanae ln conLrol of Lhe companv lmpede a meraer consolldaLlon Lakeover or dlscouraalna a poLenLlal acqulrer aLLempLlna Lo obLaln conLrol of Lhe companv desplLe of Lhe facL LhaL Lhe aLLempL would have been ln Lhe besL lnLeresLs of Lhe companv lurLher Llll Lhe promoLers are ln Lhe poslLlon Lo exerclse slanlflcanL conLrol over Lhe companv Lhev mav lnfluence ma[or pollcles of Lhe companv ln such a wav LhaL lL could confllcL wlLh Lhe lnLeresLs of oLher mlnorlLv shareholders 28 uep/oyment of funds out of net proceeds of the issue is entire/y ot our discretion ond is not subject to ony monitorino by on independent ooency We lnLend Lo use Lhe neL proceeds of Lhe lssue for Lhe ob[ecLs as descrlbed ln Lhe secLlon enLlLled Cb[ecLs of Lhe lssue" on aae noS9 of Lhls urafL rospecLus 1he purposes for whlch Lhe neL proceeds of Lhe lssue are Lo be uLlllzed have noL been appralsed bv anv lndependenL enLlLv and are based on our esLlmaLes and on Lhlrd parLv quoLaLlons ln addlLlon our caplLal expendlLure plans and worklna caplLal esLlmaLes are sub[ecL Lo a number of varlables lncludlna posslble cosL overruns and chanaes ln manaaemenL's vlews of Lhe deslrablllLv of currenL plans and manv oLher facLors endlna uLlllzaLlon of proceeds ouL of lssue for Lhe purposes descrlbed ln Lhe urafL rospecLus we lnLend Lo Lemporarllv lnvesL Lhe funds ln hlah quallLv lnLeresL bearlna llquld lnsLrumenLs lncludlna deposlLs wlLh banks lnvesLmenL ln muLual funds eLc as Lhe 8oard of ulrecLors mav deem flL and proper lurLher as Lhe lssue slze ls less Lhan 8s S00 Crores Lhere ls no requlremenL for appolnLmenL of a monlLorlna aaencv An AudlL CommlLLee of Lhe 8oard shall monlLor Lhe uLlllzaLlon of Lhe neL proceeds of Lhe lssue whlch shall noL be sub[ecL Lo anv monlLorlna bv anv lndependenL aaencv 29 Our compony is unob/e to determine whether there ore dues poyob/e to ony smo// sector undertokino keeplna ln vlew of Lhe larae number of credlLors of Lhe companv Lhe lnformaLlon wheLher Lhe credlLors are Small Scale and Anclllarv lndusLrlal underLaklna as deflned bv Lhe 1he lnLeresL on uelaved avmenLs Lo Small Scale and Anclllarv lndusLrlal underLaklnas AcL 1992 ls noL ascerLalnable bv Lhe Companv 18 Rl0 Our compony is yet to opp/y for odditiono/ workino copito/ finoncino for our proposed exponsion p/on from 8onk{s) We would requlre addlLlonal amounL of worklna caplLal for our proposed expanslon plans and our companv ls veL Lo applv for addlLlonal llmlLs Lo Lhe exlsLlna bankers / new bankers ueLalls of Lhe worklna caplLal faclllLles presenLlv avalled bv us please see deLalls on aae no 177 of Lhls urafL rospecLus lurLher due Lo varlous facLors such as chanaes ln lnLeresL raLe or borrowlna / lendlna resLrlcLlons we mav noL be able Lo flnance our worklna caplLal needs when needed on accepLable commerclal Lerms or aL all Anv such scenarlo would adverselv affecL our buslness revenues and flnanclal condlLlon l1 Our componys inobi/ity to ottroct recruit ond retoin ski//ed ond efficient personne/ cou/d odverse/y offect our business ond resu/ts of operotions 1he successful lmplemenLaLlon of our arowLh plans and our ablllLv Lo meeL fuLure buslness challenaes depend on our capablllLles Lo aLLracL recrulL Lraln and reLaln LalenLed and skllled manpower Cur companv ls slanlflcanLlv dependenL on our kev manaaerlal personnel members of senlor manaaemenL and skllled pro[ecL manaaerlal Leam members Cur companv faces sLlff compeLlLlon Lo recrulL and reLaln skllled and professlonallv quallfled sLaff 8ecause of llmlLed pool of avallable skllled personnel compeLlLlon for skllled enalneers and senlor manaaemenL ls verv lnLense We could face dlfflculLles ln aLLracLlna recrulLlna and reLalnlna requlred number of manaaers and enalneers for our buslness needs Cur fuLure arowLh and performance would depend upon Lhelr conLlnued servlces Lo our companv Loss of anv of Lhe members of above Leams and our lnablllLv Lo check and conLrol aLLrlLlon levels of all caLeaorles as sLaLed above mav maLerlallv and adverselv affecL our buslness operaLlons and revenues l2 Our compony moy foce strono competition from new entronts in the industry ond if we foi/ to keep poce with technico/ ond techno/ooico/ deve/opments ond compete effective/y it moy hove odverse effect on our business operotions ond profitobi/ity We so far have been compeLlna wlLh a few of compeLlLors LhaL Loo noL exacLlv ln Lhe slmllar llnes of acLlvlLles underLaken bv our companv Powever wlLh larae poLenLlal and furLher scope of new plavers enLerlna lnLo Lhe lndusLrv we mav have Lo face sLrona compeLlLlon lf we fall Lo keep pace wlLh Lechnlcal and Lechnoloalcal developmenLs ln our lndusLrv we mav noL face compeLlLlon 1o meeL our cllenLs' needs we musL reaularlv updaLe exlsLlna Lechnoloav 8apld and frequenLlv Lechnoloav and markeL demand chanaes ofLen render exlsLlna Lechnoloales and equlpmenLs obsoleLe 1here can be no assurance LhaL we would conLlnue Lo effecLlvelv compeLe wlLh our exlsLlna compeLlLors / new compeLlLors ln fuLure Cur fallure Lo compeLe effecLlvelv mav have an adverse effecL on our buslness operaLlons and revenues ll Our business is concentroted in stote of 6ujorot Cur buslness ls concenLraLed ln Lhe sLaLe of Cu[araL Should Lhere be anv realonal slowdown or pollLlcal lnsLablllLv Lhen our buslness operaLlon and revenues mav be adverselv affecLed 19 R l4 Our Promoters ond promoter oroup concerns ore enoooed in business octivities simi/or to ours Cur promoLers and promoLer aroup concerns are enaaaed ln buslness acLlvlLles slmllar Lo Lhose underLaken bv us and Lhls could be a poLenLlal source of confllcL of lnLeresL 1here are no non compeLe aareemenLs ln place beLween us and our promoLers and promoLer aroup concerns We cannoL assure vou LhaL no such confllcL wlll arlse ln fuLure LhaL mav affecL our buslness prospecLs and flnanclals lurLher we cannoL assure vou LhaL lf anv acLual confllcL of lnLeresL does arlse we wlll be able Lo resolve Lhe confllcL of lnLeresL ln our favour l5 One of Our Promoters does not hove odeouote experience in vorious business octivities undertoken by the compony Cne of our promoLers Mrs SunlLa u anchal does noL have adequaLe experlence ln Lhe varlous buslness acLlvlLles underLaken bv us Cur companv cannoL assure vou LhaL Lhe lack of adequaLe experlence ln our buslness wlll noL have anv adverse lmpacL on Lhe manaaemenL and /or operaLlons of Lhe companv Alreadv dlscussed she ls noL Lhe core promoLer no need Lo puL Lhls l 4ny de/oy in imp/ementotion schedu/e which moy odverse/y offect our exponsion p/on 1he expanslon of our proposed pro[ecL ls Lo be funded from Lhe proceeds of Lhls lC and lnLernal accruals We have noL ldenLlfled anv alLernaLe source of fundlna and hence anv fallure or delav on our parL Lo moblllze Lhe requlred resources or anv shorLfall ln Lhe lssue proceeds mav delav Lhe lmplemenLaLlon schedule We Lherefore cannoL assure LhaL we would be able Lo execuLe Lhe expanslon pro[ecL wlLhln Lhe alven Llme frame or wlLhln Lhe cosLs as orlalnallv esLlmaLed bv us Anv Llme overrun or cosL overrun mav adverselv affecL our arowLh plans and proflLablllLv l7 1here moy be o de/oy reduction in scope conce//otions execution difficu/ty poyment postponement or poyment defou/ts or disputes with c/ients with reoord to existino or proposed orders Cur Companv's buslness operaLlons and revenues mav be adverselv affecLed lncase of anv delav reducLlon ln scope of order cancellaLlons execuLlon dlfflculLles pavmenL posLponemenL pavmenL defaulLs or dlspuLes wlLh cllenLs wlLh reaard Lo our order book or anv oLher order under execuLlon l8 1here is no existino morket for the Our componys ouity 5hores which moy or moy not deve/op or be sustoined ofter the comp/etion of Offer Our stock price moy be hioh/y vo/oti/e ofter the lssue ond os o resu/t you cou/d /ose o sionificont portion or o// of your investment rlor Lo Lhe lssue Lhere has noL been a publlc markeL for Lhe LqulLv Shares We cannoL predlcL Lhe exLenL Lo whlch lnvesLor lnLeresL wlll lead Lo Lhe developmenL of an acLlve Lradlna markeL on Lhe SLock Lxchanaes or how llquld LhaL markeL wlll become lf an acLlve markeL does noL develop vou mav experlence dlfflculLv ln selllna Lhe LqulLv Shares LhaL vou purchased 1he lC prlce ls noL lndlcaLlve of prlces LhaL wlll prevall ln Lhe open markeL followlna Lhe lssue ConsequenLlv vou mav noL be able Lo sell vour LqulLv Shares aL prlces equal Lo or areaLer Lhan Lhe prlce vou pald ln Lhe lssue 20 Rl9 You wi// not be ob/e to se// immediote/y ony of the ouity 5hores you purchose in this lssue on on lndion stock exchonoe 1he LqulLv Shares are proposed Lo be llsLed on 8SL and nSL ursuanL Lo lndlan reaulaLlons cerLaln acLlons musL be compleLed before Lhe LqulLv shares can be llsLed and Lradlna mav commence lnvesLors book enLrv or demaL accounLs wlLh deposlLorv parLlclpanLs ln lndla are expecLed Lo be credlLed wlLhln Lwo worklna davs of Lhe daLe on whlch Lhe basls of alloLmenL ls approved bv Lhe ueslanaLed SLock Lxchanae 1hereafLer upon recelpL of flnal approval of Lhe sLock exchanaes Lradlna ln Lhe equlLv shares ls expecLed Lo commence wlLhln seven worklna davs of Lhe daLe on whlch Lhe basls of alloLmenL ls approved bv Lhe ueslanaLed SLock Lxchanae 1here can be no assurance LhaL Lhe LqulLv Shares allocaLed earller Lo lnvesLors wlll be credlLed Lo Lhelr demaL accounLs or LhaL Lradlna wlll commence wlLhln Lhe Llme perlods speclfled above 40 1he Lond pertoinino to our unit no1504 situoted ot 6luc umberooon 6ujorot is not in the nome of the compony 1he Land perLalnlna Lo our unlL no1S04 slLuaLed aL CluC umberaaon Cu[araL ls noL ln Lhe name of Lhe Companv lor Lhe use of Lhe premlses durlna Lhe flnanclal vear 200708 we had enLered lnLo a leave and llcense aareemenL wlLh one of our romoLers aroup flrm M/s LxperL Lnalneers Lhe explrv of whlch ls ln vear 2013 for unlL 1S04 CluC umberaaon Powever lf Lhe Lessor decldes Lo or lf cerLaln clrcumsLances bevond elLher parLv's conLrol leads Lo cancellaLlon revocaLlon or premaLure LermlnaLlon of such aareemenL Lhen lL could hamper buslness operaLlons and flnanclal condlLlons 41 uurino finoncio/ yeors 200809 ond 200910 ond months period ended 5eptember l0 2010 more thon 20 of our toto/ 5o/es wos from trodino operotions some of which moy be nonrecurrino ond /oss of revenue from these products in subseouent yeors moy odverse/y impoct our finoncio/ operotions {ks ln Lokhs) art|cu|ars 6 months ended 5eptember 30 2010 ear ended March 31 2010 ear ended March 31 2009 Amount Amount Amount ManufacLurlna 68683 4S43 1831S9 6936 172S24 76S4 1radlna 82489 S4S7 80896 3064 S3386 2346 1ota| 151172 10000 264055 10000 233262 10000 1hese Lradlna acLlvlLles were execuLed Lo faclllLaLe dlfferenL conLracLors / dealers for provldlna all producLs from one polnL lurLher for Lradlna ln Lhese producLs we are dependenL on ouLslde suppllers and Lhelr producL quallLv whlch lf found lnferlor would adverselv affecL our buslness and flnanclal operaLlons Powever Lhese lncome levels are nonrecurrlna and we do noL lnLend Lo focus on Lradlna of Lhese lLems 42 Our top three customers occounted for more thon 75 of our revenues in the /ost finoncio/ yeor ond /oss of ony one or more of c/ients cou/d odverse/y offect our business ond finoncio/ operotions to thot extent 1he percenLaae of revenues derlved from our Companv's Lop Len cusLomers ls more Lhan 7S lease refer Lo aae no 183 for furLher deLalls of Lhls urafL rospecLus We cannoL assure vou LhaL we shall aeneraLe Lhe same quanLum of buslness or anv buslness aL all from Lhese cusLomers and loss of buslness from one or more of Lhem mav adverselv affecL our operaLlons and proflLablllLv lurLher our buslness and resulLs of operaLlons wlll be adverselv affecLed lf we are unable Lo develop and malnLaln relaLlonshlps wlLh our cusLomers 21 R 4l Our compony hod neootive cosh f/ows durino certoin periods 4ny neootive cosh f/ow in future cou/d offect our operotions ond finoncio/ conditions We had neaaLlve cash flow from varlous acLlvlLles deLalls of whlch are as under {ks ln /okhs) art|cu|ars 5eptember 302010 200910 200809 200708 neL cash flow from operaLlna acLlvlLles 17SS9 (3210) (47011) (31439) neL cash flow from lnvesLlna acLlvlLles 134 (3672) 032 (3801S) neL cash flow from flnanclna acLlvlLles (1SSS7) 13139 37441 649921ota| net cash f|ow 2136 6258 (425) (4462) 1he neL cash flow of a companv ls a kev lndlcaLor Lo show Lhe exLenL of cash aeneraLed from operaLlons of Lhe companv Lo meeL caplLal expendlLure pav dlvldends repav loans and make new lnvesLmenLs wlLhouL ralslna flnance from exLernal resources lf we are noL able Lo aeneraLe sufflclenL cash flows lL mav adverselv affecL our buslness and flnanclal operaLlons 44 One of our Promoters 6roup lirms hos reported /osses for the fo//owino finoncio/ yeors {ks ln Lokhs) art|cu|ars 200708 200607 M/s Cemlnl Lnalneers labrlcaLors (021) (007) 45 1he morket price of the ouity 5hores moy be odverse/y offected by ony odditiono/ issuonces of eouity or so/es of o /oroe number of the ouity 5hores by our Promoters 1here ls a rlsk LhaL we mav be requlred Lo flnance our arowLh or sLrenaLhen our balance sheeL Lhrouah addlLlonal equlLv offerlnas Anv fuLure lssuance of LqulLv Shares wheLher Lhrouah Lhe exerclse of opLlons or oLherwlse wlll dlluLe Lhe poslLlon of exlsLlna shareholders and could adverselv affecL Lhe markeL prlce of Lhe LqulLv Shares 4 Our insuronce cover moy be inodeouote to fu//y cover us from probob/e /osses thereby /eodino to moterio/ ond odverse impoct on business operotions ond finoncio/ condition We have varlous lnsurance pollcles coverlna sLocks bulldlnas and planL machlnerv for LoLal lnsured amounL of 8s 17487 lakhs deLalls of whlch are dlsclosed on aae no 117 of Lhe urafL rospecLus Powever our lnsurance pollcles mav noL provlde adequaLe coveraae ln cerLaln clrcumsLances and are sub[ecL Lo cerLaln deducLlbles excluslons and llmlLs on coveraae We cannoL assure vou LhaL Lhe Lerms of our lnsurance pollcles wlll be adequaLe ln fuLure Lo cover anv damaae or deLrlmenL suffered bv us or LhaL such coveraae wlll conLlnue Lo be avallable on reasonable Lerms or wlll be avallable ln sufflclenL amounLs Lo cover one or more larae clalms or LhaL Lhe lnsurer wlll noL dlsclalm coveraae as Lo anv fuLure clalm lurLher we are noL covered bv buslness lnLerrupLlon pollcv whlch mav have a maLerlal and adverse lmpacL on our buslness operaLlons and proflLablllLv 22 R47 1here moy be de/oy or defou/ts in co//ection of receivob/es from our c/ients 1here mav be delavs assoclaLed wlLh Lhe collecLlon of recelvables from our cllenLs Cur operaLlons lnvolve slanlflcanL worklna caplLal requlremenLs and delaved collecLlon of recelvables could adverselv affecL our llquldlLv and resulLs of operaLlons lurLher lf cusLomers defaulL ln Lhelr pavmenLs on an order Lo whlch we have devoLed slanlflcanL resources or cancels Lhe order wlLhouL pavlna Lhe amounL spenL on raw maLerlals Llll recelpL of cancellaLlon order or lf a pro[ecL ln whlch we have lnvesLed slanlflcanL resources ld delaved cancelled or does noL proceed Lo compleLlon lL could have a maLerlal adverse effecL on our buslness flnanclal condlLlon and resulLs of operaLlons and could cause Lhe prlce of our LqulLv Shares Lo decllne Moreover our producLs are made as per Lhe speclflcaLlons provlded bv our cusLomers Pence anv lasL mlnuLe cancellaLlons would resulL ln a losL sales opporLunlLv and we also run Lhe rlsk of noL belna able Lo sell Lhose producLs Lo anoLher cusLomer 1hese evenLs could have maLerlallv adverse affecL on our buslness resulLs of operaLlons and flnanclal condlLlon 48 ln our controct terms ond conditions we ore subject to /ote de/ivery choroes under the controcts oworded by our customers for ony de/oy in comp/etion ond hondover of the project 1he lndusLrv ln whlch we operaLe ls Llme bound Cur conLracLs aenerallv carrv a clause for levv of laLe dellverv charaes ln case of fallure ln meeLlna Lhe compleLlon of Lhe pro[ecL wlLhln Lhe speclfled Llme on accounL of lapse on Lhe parL of our Companv Powever aL Llmes due Lo clrcumsLances bevond our conLrol Lhere mav be some delavs ln compleLlna Lhe pro[ecLs whlch mav lead Lo pavmenL of laLe dellverv charaes Also anv lnablllLv Lo compleLe Lhe pro[ecL on Llme can lead Lo Lhe cllenL elLher delavlna or refuslna Lo make full or parLlal pavmenL L us ln respecL of Lhe amounL due Lowards Lhe pro[ecL ln addlLlon lL could cause damaae Lo or repuLaLlon whlch could adverselv affecL our ablllLv Lo prequallfv for pro[ecLs whlch ln Lurn could adverselv affecL our buslness resulLs of operaLlons and flnanclal condlLlon 49 Our operotiono/ performonce is subject to our obi/ity to oet time/y de/ivery of lob work Cur Companv depends on ouLslde aaencles le [obworkers for performance of some of Lhe processes ln Lhe whole fabrlcaLlon process whlch lncludes preclslon drllllna mouldlna heaL LreaLmenL of equlpmenLs rolllna of plaLes wlLh Lhlckness of more Lhan 2Smm and machlnlna of equlpmenLs wlLh dlameLer of more Lhan 12S0mm unanLlclpaLed delav ln performance of Lhese [obworks mav delav Lhe whole process of fabrlcaLlon whlch ln Lurn could alve rlse Lo penalLv or damaaes or loss of repuLaLlon 1hese facLors could adverselv lmpacL our buslness operaLlons and flnanclal condlLlon 50 Our compony foces stiff competition in this /ine of business octivity 4ny inobi/ity to compete with them con odverse/y impoct business operotions ond finoncio/ conditions Cur Companv operaLes under compeLlLlve envlronmenL We compeLe wlLh mulLlnaLlonal enalneerlna and consLrucLlon companles or Lhelr realonal operaLlna enLlLles as well as oLher lndlan companles where number of unoraanlzed plavers exlsLs MosL equlpmenL fabrlcaLlon conLracLs and pro[ecLs are awarded Lhrouah compeLlLlve blddlna processes and saLlsfacLlon of oLher prescrlbed prequallflcaLlon crlLerlon Whlle servlce quallLv Lechnoloalcal capaclLv and performance healLh and safeLv records and personnel as well as repuLaLlon and experlence are lmporLanL conslderaLlons ln cllenL declslons prlce ls a ma[or facLor ln mosL Lender awards Cnce prospecLlve bldders clear Lhe Lechnlcal requlremenLs of Lhe Lender Lhe conLracL ls 23 Rusuallv awarded Lo Lhe mosL compeLlLlve flnanclal bldder Cur lndusLrv has been frequenLlv sub[ecL Lo lnLense prlce compeLlLlon 1hls compeLlLlve blddlna process mav have an adverse effecL on Lhe proflL maralns LhaL we are able Lo aLLaln 1here can be no assurance LhaL we can conLlnue Lo effecLlvelv compeLe wlLh our compeLlLors ln fuLure and Lhe fallure Lo compeLe effecLlvelv mav have an adverse effecL on our buslness operaLlons and revenues 51 we foce risks of ossumino performonce ouorontees ond product worronty costs due to unforeseen defects in our products ond /iouidoted domooes for de/oys in de/ivery ot times due to circumstonces beyond our contro/ 1here are cerLaln clauses ln our conLracLs aL Llmes expose us Lo warranLv clalms CerLaln of our supplv conLracLs provlde for warranLv perlods varvlna from 1824 monLhs ln Lhe form of performance bank auaranLee AlLhouah Lhlrd parLv supplled lLems are covered under warranLles provlded bv some of our vendors we mav noL alwavs be able Lo sLrlcLlv enforce Lhe same ln defendlna such clalm we could lncur cerLaln cosLs and manaaemenL resources be dlverLed Lo aparL from recelvlna adverse publlclLv Cur conLracLs are aenerallv Llmebound and mav provlde for llquldaLlon damaaes Lo be pald ln Lhe evenL Lhere ls delav ln dellverv bevond sLlpulaLed Llmes llnes ln Lhe conLracL As a resulL anv delav and consequenLlal pavmenL of llquldaLed damaaes bv us could have an adverse effecL on our buslness operaLlons and revenues 52 Our business /oroe/y depends on our monufocturino foci/ities ond the /oss of or shutdown of operotions of the monufocturino foci/ity on ony orounds cou/d odverse/y offect our business or resu/ts of operotions Cur manufacLurlna faclllLles are sub[ecL Lo operaLlna rlsks such as breakdown or fallure of equlpmenL lnLerrupLlon ln power supplv or processes shorLaae of raw maLerlals performance below expecLed levels of ouLpuL or efflclencv naLural dlsasLers obsolescence labour dlspuLes sLrlkes lockouLs severe weaLher lndusLrlal accldenLs our lnablllLv Lo respond Lo Lechnoloalcal advances and emeralna lndusLrv sLandards and pracLlces ln Lhe lndusLrv and Lhe need Lo complv wlLh Lhe dlrecLlves of relevanL aovernmenL auLhorlLles 1he occurrence of anv of Lhese rlsks could slanlflcanLlv affecL our operaLlna resulLs and Lhe loss or shuLdown of operaLlons aL our manufacLurlna faclllLv wlll have a maLerlal adverse affecL on our buslness flnanclal condlLlon and resulLs of operaLlons 5l 1he compony does not hove necessory Power sonction for unit no 1505 from re/evont outhorities Cur Companv does noL have necessarv power sancLlon for unlL no1S0S from relevanL auLhorlLv and presenL needs are meL from our ad[acenL unlL no1S06 We cannoL assure vou LhaL we wlll conLlnue Lo recelve power supplles ln fuLure ln case of anv dlsrupLlon ln power supplles could adverselv affecL our buslness operaLlons and revenues 54 we ore susceptib/e to foreion exchonoe f/uctuotions 1hus ony /oss on occount of odverse foreion exchonoe movements cou/d homper finoncio/ conditions ond profitobi/ity uurlna flnanclal 200910 we lmporLed raw maLerlal worLh 8s 78064 lakhs whlch accounLed for S886 of LoLal raw maLerlal requlremenL for Lhe above menLloned vear osL expanslon Lhe quanLum of raw maLerlal lmporLed mav varv Slnce we currenLlv sell our enLlre producLs ln Lhe domesLlc markeL we do noL en[ov anv naLural hedae aaalnsL Lhe sald forelan currencv exposure lurLher we are noL enaaaed ln exchanae raLe hedalna acLlvlLles As a resulL we are vulnerable Lo anv adverse movemenL ln forelan currencv raLe 24 R 55 Our compony is dependent on third porty tronsportotion providers for supp/y of row moterio/s ond de/ivery of finished ooods We use LhlrdparLv LransporLaLlon provlders for Lhe supplv of mosL of our raw maLerlals and also for dellverv of our flnlshed producLs Lo our cusLomers Such Lhlrd parLv LransporLers are chosen on a spoL basls 1ransporLaLlon sLrlkes bv members of varlous lndlan LransporL unlons have had ln Lhe pasL and could ln Lhe fuLure have an adverse effecL on our recelpL of supplles and our ablllLv Lo dellver our producLs Lo our cusLomers ln addlLlon conLlnulna lncrease ln LransporLaLlon cosLs and requlremenL Lo pav an addlLlonal premlum for uraenL dellverles mav have an adverse effecL on our buslness and resulLs of operaLlons Powever we do noL foresee anv dlfflculLv as we have been deallna wlLh Lhese parLles and also as we malnLaln buffer raw maLerlal whlch can be used ln unforeseen clrcumsLances 5 4ny future eouity offerinos or issue of options under ony emp/oyee stock option scheme moy /eod to di/ution of your shoreho/dino in our compony Subscrlbers of LqulLv shares ln Lhls lssue mav experlence dlluLlon of Lhelr shareholdlna Lo Lhe exLenL of anv fuLure equlLv offerlnas and Lo Lhe exLenL addlLlonal opLlons LhaL mav be lssued under our emplovee sLock opLlon scheme 57 Our obi/ity to poy dividends in the future wi// depends upon future eorninos finoncio/ conditions cosh f/ows workino copito/ reouirements of our compony ond restrictive covenonts in our finoncio/ orronoements Cur luLure ablllLv Lo pav dlvldends wlll depend on Lhe earnlnas flnanclal condlLlon and caplLal requlremenLs of our Companv ulvldends dlsLrlbuLed bv us wlll aLLracL dlvldend dlsLrlbuLlon Lax aL raLes appllcable from Llmes Lo Llme We cannoL assure vou LhaL we wlll aeneraLe sufflclenL lncome Lo cover our operaLlve expenses and pav dlvldend Lo our shareholders We mav be unable Lo pav dlvldends ln Lhe near or medlums Lerm and our fuLure dlvldend pollcv wlll depend upon on our caplLal requlremenLs and flnanclna arranaemenLs flnanclal condlLlons and resulLs of operaLlons 58 1here ore restrictions on doi/y movements in the price of the eouity shores which moy odverse/y offect o shoreho/ders obi/ity to se// or the price ot which it con se// the eouity shore ot o porticu/ors point in time As per presenL reaulaLlons Lhe prlce of our equlLv shares wlll be sub[ecL Lo a dallv clrculL breaker lmpose bv all sLock exchanaes ln lndla whlch does noL allow LransacLlon bevond a cerLaln level of volaLlllLv ln Lhe prlce of Lhe equlLv shares 1hls clrculL breaker effecLlvelv llmlLs upwards and downwards movemenLs ln Lhe prlce of Lhe equlLv shares As a resulL shareholders ablllLv Lo sell Lhe equlLv shares or Lhe prlce aL whlch Lhev can sell Lhe equlLv shares mav be adverselv effecLed aL a parLlculars polnL ln Llme 59 we moy not uti/ite the proposed enhonced copocity to its moximum which cou/d hove on impoct on the production performonce ond profitobi/ity of our compony We are currenLlv able Lo uLlllze our capaclLv Lo Lhe fullesL buL due Lo Lhe subsLanLlal lncrease ln capaclLv we mav noL be able Lo uLlllze Lhe proposed capaclLv Lo opLlmum level for varlous reasons lncludlna sLablllzaLlon of producLlon processes on accounL of Lechnlcal and operaLlonal problems or markeL flucLuaLlons ln lndlan and Clobal markeLs or due Lo chanaes ln markeL condlLlons due Lo lnflaLlon or recesslon or economlc condlLlons whlch are bevond Lhe conLrol of manaaemenL 2S R 0 Our operotions moy be odverse/y offected in cose of industrio/ occidents ot our monufocturino unit lndusLrlal accldenLs mav occur on accounL of human fallure mechanlcal breakdowns power splkes eLc 1he occurrence of such evenLs wlll noL onlv damaae our labor force maLerlals and machlnerv buL wlll also cause dlsrupLlons ln our producLlon schedules and affecL Lhe Llmelv dellverv of flnlshed aoods whlch ln Lurn mav adverselv affecL our buslness operaLlons 1 Out of toto/ lndioenous P/ont Mochinery of ks225111 our compony proposes to monufocture p/ont mochinery inhouse oooreootino to ks12040 Locs for the proposed exponsion project Cur Companv proposes Lo manufacLure lanL Machlnerv lnhouse aaareaaLlna Lo 8s12040 Lacs ouL of LoLal lndlaenous lanL Machlnerv of 8s22S111 for proposed expanslon pro[ecL ln case Lhe Companv falls Lo manufacLure Lhe sald lanL Machlnerv due Lo anv reason whaLsoever lL mav adverselv affecL our buslness operaLlons and revenue 26 RLx1LkNAL kI5k IAC1Ck5 1 4ny s/owdown in economic orowth in lndio cou/d couse our business to suffer Cur performance and arowLh are essenLlallv dependenL on Lhe healLh of Lhe overall lndlan economv A slowdown ln Lhe lndlan economv could adverselv affecL our buslness lndla's economv could be adverselv affecLed bv a aeneral rlse ln lnLeresL raLes weaLher condlLlons adverselv affecLlna aarlculLure commodlLv and enerav prlces or varlous oLher facLors ln addlLlon Lhe lndlan economv ls ln a sLaLe of LranslLlon 1he share of Lhe servlce secLor of Lhe economv ls rlslna whlle LhaL of Lhe lndusLrlal manufacLurlna and aarlculLural secLors ls decllnlna lL ls dlfflculL Lo aauae Lhe lmpacL of Lhese fundamenLal economlc chanaes on our buslness Anv slowdown ln Lhe lndlan economv or fuLure volaLlllLv ln alobal commodlLv prlces could adverselv affecL our buslness 2 xchonoe kote l/uctuotions moy hove impoct on the performonce of Our compony Cur Companv ls exposed Lo exchanae raLe flucLuaLlons uncerLalnLles ln Lhe alobal flnanclal markeL mav have an adverse lmpacL on Lhe exchanae raLe beLween 8upee vlsvls oLher currencles 1he exchanae raLe beLween Lhe 8upee and oLher currencles ls varlable and mav conLlnue Lo flucLuaLe ln Lhe fuLure Such flucLuaLlons can have a serlous lmpacL on Lhe revenues We lnLend Lo lmporL equlpmenL / machlnerles for Lhe expanslon of our lnLearaLed planL llucLuaLlons ln forelan exchanae raLes mav adverselv affecL Lhe cosL of pro[ecL We have noL enLered lnLo anv hedalna aareemenL for mlnlmlzlna Lhe exchanae raLe rlsk and ln Lhe evenL of raLes chanalna adverselv Lhe pro[ecL cosL mav rlse l Our keou/otory chonoes with reoord to uirect/lndirect toxes moy odverse/y offect our performonce or finoncio/ conditions 8eaulaLorv chanaes relaLlna Lo buslness seamenLs ln whlch we operaLe ln lndla can have a bearlna on our buslness Lach sLaLe ln lndla has dlfferenL local Laxes and levles whlch mav lnclude value added Lax sales Lax and ocLrol charaes ln Lhese local Laxes and levles mav lmpacL our proflLs and proflLablllLv Anv neaaLlve chanaes ln Lhe reaulaLorv condlLlons ln lndla or our oLher aeoaraphlc markeLs could adverselv affecL our buslness operaLlons or flnanclal condlLlons 4 Our business cou/d be odverse/y offected by ony economic po/itico/ socio/ deve/opments ond oovernment po/icies in lndio ond porticu/or/y in the reoiono/ morkets where we operote Cur performance and arowLh could be adverselv affecLed bv varlous facLors such as pollLlcal and reaulaLorv acLlon lncludlna adverse chanaes ln llberallzaLlon pollcles anv adverse developmenL ln Lhe World economv lnLroducLlon of new laws pollcles or reaulaLlons or chanaes ln Lhe lnLerpreLaLlon or appllcaLlon of exlsLlna laws pollcles and reaulaLlons 1here can be no assurance LhaL we wlll succeed Lo operaLe ln or succeed ln obLalnlna all requlslLe reaulaLorv approvals ln Lhe fuLure for our operaLlons whlch could have an adverse lmpacL on our buslness flnanclal condlLlon and resulLs of operaLlons 27 R 5 lnstobi/ity of economic po/icies ond the po/itico/ situotion in lndio or e/sewhere cou/d odverse/y offect the fortunes of the lndustry 1here ls no assurance LhaL Lhe llberallzaLlon pollcles of Lhe aovernmenL wlll conLlnue ln Lhe fuLure roLesLs aaalnsL prlvaLlzaLlon could slow down Lhe pace of llberallzaLlon and dereaulaLlon 1he CovernmenL of lndla plavs an lmporLanL role bv reaulaLlna Lhe pollcles and reaulaLlons aovernlna Lhe prlvaLe secLor over Lhe pasL several vears unsLable lnLernal and lnLernaLlonal pollLlcal envlronmenL could lmpacL Lhe economlc performance ln boLh Lhe shorL Lerm and Lhe lona Lerm 1he CovernmenL has LradlLlonallv exerclsed and conLlnues Lo exerclse a slanlflcanL lnfluence over manv aspecLs of Lhe lndlan economv Cur Companv's buslness and Lhe markeL prlce and llquldlLv of Lhe LqulLv Shares mav be affecLed bv chanaes ln lnLeresL raLes chanaes ln CovernmenL pollcv LaxaLlon soclal and clvll unresL and oLher pollLlcal economlc or oLher developmenLs ln or affecLlna lndla lorce mojeure events terrorist ottocks or noturo/ disoster or ony other octs of vio/ence or wor invo/vino lndio or other countries cou/d odverse/y offect the finoncio/ morkets moy resu/t in /oss of customer confidence ond odverse/y offect our componys business resu/ts of operotions finoncio/ conditions ond cosh f/ows CerLaln force ma[eure evenLs belna bevond our Companv's conLrol lncludlna naLural dlsasLers LerrorlsL aLLacks and oLher acLs of vlolence or war whlch mav lnvolve lndla or oLher counLrles mav adverselv affecL lndlan or worldwlde flnanclal markeLs and could lead Lo economlc recesslon 1hese acLs mav also resulL ln a loss of buslness confldence and have oLher consequences LhaL could adverselv affecL buslness resulLs of operaLlons and flnanclal condlLlon of our Companv More aenerallv anv of Lhese evenLs could lower confldence ln lndla Anv such evenL could adverselv affecL Lhe flnanclal performance or Lhe markeL prlce of Lhe LqulLv Shares of our Companv 7 You wi// not be ob/e to se// immediote/y ony of the ouity 5hores you purchose in this lssue on lndion 5tock xchonoes 1he LqulLv Shares are proposed Lo be llsLed on 8SL and nSL ursuanL Lo lndlan reaulaLlons cerLaln acLlons musL be compleLed before Lhe LqulLv shares can be llsLed and Lradlna mav commence lnvesLors book enLrv or demaL accounLs wlLh deposlLorv parLlclpanLs ln lndla are expecLed Lo be credlLed wlLhln Lwo worklna davs of Lhe daLe on whlch Lhe basls of alloLmenL ls approved bv Lhe ueslanaLed SLock Lxchanae 1hereafLer upon recelpL of flnal approval of Lhe sLock exchanaes Lradlna ln Lhe equlLv shares ls expecLed Lo commence wlLhln seven worklna davs of Lhe daLe on whlch Lhe basls of alloLmenL ls approved bv Lhe ueslanaLed SLock Lxchanae 1here can be no assurance LhaL Lhe LqulLv Shares allocaLed earller Lo lnvesLors wlll be credlLed Lo Lhelr demaL accounLs or LhaL Lradlna wlll commence wlLhln Lhe Llme perlods speclfled above 28 R8 4fter this lssue the price of our ouity 5hores moy be vo/oti/e or on octive trodino morket for our ouity 5hores moy not sustoin 1he prlces of our LqulLv Shares mav flucLuaLe afLer Lhls lssue due Lo a wlde varleLv of facLors lncludlna volaLlllLv ln Lhe lndlan and alobal securlLles markeLs our operaLlonal performance flnanclal resulLs and capaclLv expanslon developmenLs ln lndla's economlc llberallzaLlon and dereaulaLlon pollcles parLlcularlv ln Lhe LelecommunlcaLlon and aarlculLural secLor and chanaes ln lndla's laws and reaulaLlons lmpacLlna our buslness We cannoL assure vou LhaL an acLlve Lradlna markeL for our equlLv shares wlll be susLalned afLer Lhls lssue or LhaL Lhe prlce aL whlch our equlLv