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RANA SUGARS LIMITED (Incorporated in the Republic of India a s a public company with limited liability) Offering of 2.455,662 million Global Depositary Receipts representing 24.556,620 million underlying Equity Shares of Rs.10 each. Offer Price of US$7.33 per Global Depositary Receipt (The total amount is not to exceed U.S.$18.million) Rana Sugars Limited (“Rana Sugars” or “the Company”) is offering million of its ordinary equ ity 2.455,662 shares of Rs.10 each in the capital of the Company (the “Shares”) in the form of Global Depositary Receipts (“GDRs”). Each GDR represents 10 equity Shares in the capital of the Company. The GDRs will be issued pursuant to a Deposit Agreement to be dated on or about 15 May, 2006 between the Depo sitary and the Company. The GDRs will be issu ed in global form and evidenced by a Master GDR (the “Master GDR”), registered in the name of DIFX Guardian Limited, as nominee for the Dubai International Financial Exchange (“ DIFX ”), and held for the account of GDR holders as bo ok-entry interests in DIFX. Except as described herein, individual global depositary receipts representing the GDRs will not be issued in definitive form in exchange for beneficial interests in the Master GDR. Interests in the Master GDR will be subject to certain restrictions on transfer. See “Description of the Global Depositary Receipts” and “Restrictions on Foreign Ownership of Indian Securities – Transfer Restrictions.” The Shares evidenced by the GDRs may be with drawn by Holders but only after the listing of the Shares on the Indian Stock Exchanges, where the shares of the Company are currently listed (see page 2 below). There can be no assurances that such listings will be granted. Upon listing of the Shares on the Ind ian Stock Exchanges, a GDR holder may request the Depositary to withdraw, from the GDR facility, the Shares represented thereby and transfer such Shares directly to the Holder. The Issuer states that no Securities will be distributed under the Offering Circular later than 12 months after the date of Offering Circular. The courts of India shall be the courts of competent jurisdiction under which the Certificates and the underlying Securities have been created and shall be the courts of competent jurisdiction in the event of litigation including details of the con sequences in e t of default occurring in respect of the underlying ven Securities. Lead Manager Chartered Capital and Investment Limited The date of this Offering Circular is 2 May 2006. 1

Transcript of rana sugar

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RANA SUGARS LIMITED

(Incorporated in the Republic of India a s a public company with limited liability)

Offering of 2.455,662 million Global Depositary Receipts representing 24.556,620 million underlying EquityShares of Rs.10 each. Offer Price of US$7.33 per Global Depositary Receipt

(The total amount is not to exceed U.S.$18.million)

Rana Sugars Limited (“Rana Sugars” or “the Company”) is offering million of its ordinary equ ity2.455,662shares of Rs.10 each in the capital of the Company (the “Shares”) in the form of Global DepositaryReceipts (“GDRs”). Each GDR represents 10 equity Shares in the capital of the Company.

The GDRs will be issued pursuant to a Deposit Agreement to be dated on or about 15 May, 2006 betweenthe Depo sitary and the Company. The GDRs will be issu ed in global form and evidenced by a Master GDR(the “Master GDR”), registered in the name of DIFX Guardian Limited, as nominee for the DubaiInternational Financial Exchange (“ DIFX”), and held for the account of GDR holders as bo ok-entryinterests in DIFX. Except as described herein, individual global depositary receipts representing the GDRswill not be issued in definitive form in exchange for beneficial interests in the Master GDR. Interests in theMaster GDR will be subject to certain restrictions on transfer. See “Description of the Global DepositaryReceipts” and “Restrictions on Foreign Ownership of Indian Securities – Transfer Restrictions.”

The Shares evidenced by the GDRs may be with drawn by Holders but only after the listing of the Shares onthe Indian Stock Exchanges, where the shares of the Company are currently listed (see page 2 below).There can be no assurances that such listings will be granted. Upon listing of the Shares on the Ind ian StockExchanges, a GDR holder may request the Depositary to withdraw, from the GDR facility, the Sharesrepresented thereby and transfer such Shares directly to the Holder. The Issuer states that no Securities willbe distributed under the Offering Circular later than 12 months after the date of Offering Circular.

The courts of India shall be the courts of competent jurisdiction under which the Certificates and theunderlying Securities have been created and shall be the courts of competent jurisdiction in the event oflitigation including details of the con sequences in e t of default occurring in respect of the underlyingvenSecurities.

Lead ManagerChartered Capital and Investment Limited

The date of this Offering Circular is 2 May 2006.

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An application will be made to the DIFX for the admission to listing of million G DRs.2.455,662

The Offering is not intended for, and the GDRs are not being offered, distributed, sold, transferredor delivered, directly or indirectly, to, or for the account or benefit of, any person in the DIFC. ThisOffering Circular is not intended for distribution to any person in the DIFC and any such personthat receives a copy of this Offering Circular should not act or rely on this Offering Circular andshould ignore the same.

The DIFX takes no responsibility for the contents of this document, makes no representations as toits accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoeverarising from or in reliance upon any pa rt of the contents of this document.

GDR holders are given an option to cancel GDRs with the Depositary upon listing of the Shares on the IndianStock Exchanges and hold such Shares directly and recover the proceeds by selling the Shares and investors arealso given the option to convert the Shares so released into GDRs for purchase, subject in both cases to applicableIndian laws and regulations, (see “Transfer Restrictions” on page 89). In India, two-way fungibility is permittedand therefore, GDRs are convertible to the extent of the original issue size. The reissuance of GDRs is permittedwhere such GDRs have been redeemed into Shares, subject to such original issue size.

Rana Sugars’s equity shares are traded in India on The Stock Exchange, Mumbai and National StockExchange of India Limited, which are referred to herein as the “Indian Stock Exchanges”. Copies of thisOffering Circular will be filed, for record purposes, with Indian regulatory authorities including theRegistrar of Companies, Pu njab, Himachal Pradesh and Chandigarh in India, the Securities and ExchangeBoard of India, the Reserve Bank of India and with the Indian Stock Exchanges.

The distribution of this Offering Circular and the offering of the GDRs and the Shares may be restricted bylaw in certain jurisdictions. This Offering Circular does not constitute an offer of, or an inv itation by or onbeh alf of the Company to subscribe for or purchase any of the GDRs in any jurisdiction where it isunlawful for it to make such an offer or invitation. This Offering Circular may not be used for or inconnection with any offer to sell, or solicitation of an offer to subscribe for or buy, by anyone in anyjurisdiction in which it is unlawful to make such an offer or solicitation. Persons into whose possession thisdocument may come are required by the Company to inform themselves about and to observe suchrestrictio ns. No action is being taken in any jurisdiction to permit an o ffering to the general public of GDRsand the Shares or the distribution of this document in any jurisdiction where action would be required forsuch purposes.

The GDRs are being offered by the Company as specified herein, subject to receipt and acceptance by it of,and subject to its rights to reject, any offer to purchase in whole or in part and subject to certain othercond itions.

Rana Sugars and its Directors accept responsibility for the information contained in this Offering Circular.To the best of the knowledge and belief of the Company and the Directors (which has taken all reasonablecare to ensure that such is the case), the information contained herein is in accordance with the facts anddoes not omit anything likely to affect the import of such information. No responsibility is accepted byChartered Capital and Investment Limited or the Depositary or their respective affiliates for the accuracy ofthe information contained in the Offering Circular.

Any investor should rely only on the information contained in this Offering Circular. The Company has notauthorised any person to provide information different from that contained in this Offering Circular. TheCompany is offering to sell, and seeking offers to buy GDRs only in jurisdictions wh ere offers and sales arepermitted. The information contained in this Offering Circular is accu rate only as o f the date of thisOffering Circular, regardless of the time of delivery of this Offering Circular or of any sale of theCompany’s GDRs. Information contained on the Company’s website does not form part of this OfferingCircular.

This Offering Circular relies on or refers to information and data regarding the sugar industry, drawn fromvarious publication s available in the public domain. Although, the Company believes that this informationis reliable, it has not independently verified the same.

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The GDRs are being offered in Middle East Countries and high networth individuals are desirous ofsubscribing to the GDRs of the Company. The GDRs may not be offered or sold directly or indirectly in theRepublic of India or to, or for the account or benefit of, any resident of India. The GDRs offered hereby arenot transferable except in accordance with the restrictions described under “Transfer Restrictions”.

Certain defined terms, conventions and currency of presentation

In this Offering Circular, all references to “Indian Rupees”, “Rupees” and “Rs.” are to the legal currency ofIndia and all references to “U.S. Dollars”, “USD”, “Dollars” and “$” are to the legal currency of the UnitedStates. For the convenience of the reader, this Offering Circular contains translations of some Indian Rupeeamounts into U.S. Dollars. This should not be construed as a representation that those Indian Rupee or U.S.Dollar amounts could have been, or could be, converted into U.S. Dollars or Indian Rupees, as the casemay be, at any particular rate, the rate stated below, or at 43.74. Except as otherwise stated in this OfferingCircular, all translations from Indian Rupees to U.S. Dollars contained in this Offering Circular have beenbased on the noon buying rate in the city of New York on 20 November 2005 for cable transfers in IndianRupees as certified for custom purposes by the Fed eral Reserve Bank of New York, which was Rs. 45.61per $1.00. In this Offering Circular, any discrepancies in any table between totals and the sums of theamounts listed are due to rounding off.

In this Offering Circular, unless otherwise specified or the context otherwise requires, “U.S.” and “UnitedStates” means the United States of America, its territories and its possessions, “U.K.” means the UnitedKingdom and “Financial Year” means the financial year ended 31 March in any particular year, unlessotherwise specified. Unless the context otherwise requires, references to the “Government” are to theCentral Government of India. A glossary of certain technical terms and abbreviations used in this OfferingCircular is provided at page 15.

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TABLE OF CONTENTS

PageFORWARD LOOKING STATEMENTS 5

SUMMARY 6

SUMMARY OF THE OFFERING 11

DEFINITIONS 13

GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONS 15

RISK FACTORS 17

ENFORCEMENT OF JUDGMENTS OBTAINED IN OTHER JURISDICTIONS 23

USE OF PROCEEDS 24

INDUSTRY OVERVIEW 25

COMPANY INFORMATION 29

BUSINESS OF THE COMPANY 42

PERFORMANCE OF THE COMPANY 45

INFORMATION ON THE SHARES 48

DESCRIPTION OF THE SHARES AND COMPANY PROCEDURE 51

GOVERNMENT AND OTHER STATUTORY APPROVALS 59

TERMS AND CONDITIONS OF THE GLOBAL DEPOSITARY RECEIPTS 61

SUMMARY OF PROVISIONS RELATING TO THE GDRS WHILE IN MASTER FORM 76

INFORMATION RELATING TO THE DEPOSITARY 78

NATURE OF THE INDIAN SECURITIES TRADING MARKET 79

RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES 85

TAXATION 90

GENERAL INFORMATION 94

THREE YEAR FINANCIALS OF RANA SUGARS ALONGWITH ANNEXURES 95

INFORMATION ABOUT THE COMPANY AS REQUIRED FOR DIFX 116

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FORWARD LOOKING STATEMENTS

Investors should not rely on forward-looking statements

This Offering Circular contains forward-looking statements that involve risks and uncertainties. Thesestatemen ts relate to future events or the Compan y’s future financial performance and include, but are notlimited to, statements concerning:

• its ability to attract and retain clients;

• the anticipated benefits and risk s associated with its business strategy, including those relating to itscurrent and future service offerings;

• its future operating results and the future value of the GDRs;

• the anticipated benefits and risks of its key business relationships;

• the anticipated size or trends of the market segments in which it competes and the anticipatedcompetition in those markets;

• Government regulation; and

• its future capital requirements and ability to satisfy the capital needs.

In some cases, the investor can identify forward -looking statements by terminology such as “may”, “will”,“could”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “project”,“po tential” or “continue”, the negative of such terms or other comparable terminology. These statementsare only predictions. Actual events or results may differ materially. In evaluating these statements, theinvestor should specifically consider various factors, including the risks outlined in the Risk Factors sectionabove. These factors may cause the Company’s actual results to differ materially from those contained inany forward-looking statemen t. Altho ugh, in the opinion of the Board, the expectations reflected in theforward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity,performance or achievement. Except as required by law, the Company has no obligation to update publiclyany forward-looking statements for any reason after the date of this Offering Circular, and the Companydoes not undertake to confirm these statements to actual results or to changes in expectations.

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SUMMARY

The following is only a summary which should be read together with more detailed informationregarding the Company and the GDRs being sold pursuant to this Offering Circular and theCompany’s historical financial statements and notes included elsewhere in this Offering Circular.

INFORMATION ABOUT THE COMPANY

Rana Sugars is a sugar company with a capacity to crush 5000 TCD of sugarcane and generation of 20 MWof power per day. The Sugar Mill and Co-generation Power projects are situated at Village Buttar Seviyan ,Tehsil Baba Bakala, District Amritsar, Punjab.

The project was set up with a capacity of 2500 TCD, alongwith facilities for generation of 5 MW of powerper day. The cost of project was Rs.395.5 million and the same was funded by equity share capital ofRs.213 million (Rs.36.5 million from Rana Gurjeet Singh & Associates, Rs.61 million from Punjab AgroIndustries Corporation Limited and Rs.115.5 million from public issue), term loans of Rs.177.5 million(Rs.70 million from IFCI, Rs.70 million from IDBI, Rs.30 million from ICICI, Rs.5 million from SBI andRs.2.5 million from SBOP) and State Subsidy of Rs.5 million. It is incentive for setting up an Industry. Theproject started the commercial production in December 1993.

The crushing capacity of Rana Sugars was enhanced to 5000 TCD and co-generation capacity to 20 MWfrom November 1998 with a capital outlay of Rs.280 million. The expansion of project was funded by termloans by IFCI of Rs.140 million, Sugar Development Fund of Rs.101 million and equity contribu tion ofRs.39 million by Rana Gurjeet Singh & Associates. Out of total co-generation capacity of 20 MW, 10.2MW co-generation project was funded by Soft Loan of Rs.75.57 million, Term Loan of Rs.4.9 million fromIREDA, Capital Subsidy of Rs.75.57 million from Government of India, Rs.17.00 million by US Aid andEquity contribution of Rs.25.5 million by Punjab Energy Development Agency and Rs.71.15 million by thePromoters of the Company, Rana Gurjeet Singh & Associates including cash accruals from the Company.

Financial and Operational Performance

Rana Sugar’s turnover has increased from Rs.835.15 million in 2000-2001 to Rs.1410.39 million in 2004-2005 and its n et profit has increased from Rs.28.3 million in 2000-2001 to Rs.178.3 million in 20 04-2005.

During the year 2004-2005, the income o f the Company has recorded an impressive growth of 6%. The netprofit of the Company has increased to Rs.178.312 million from Rs.70.968 million registering an increaseof 151%.

(For further information and detailed analysis please see the heading “Performance of the Company” atpag e no. 45)

Adequacy of Internal Controls

The Company ensures existence of adequate internal control through documented policy and procedure tobe followed by the executives of the Company at various levels in the organisation commen surate with thesize of the Company and the nature of its business for purchase of stores, raw-materials includingcomponents plant and machinery, equipments and other assets, and for the sale of goods.

Outlook

The Company has crushing capacity of 5000 TCD of sugarcane. The Company is making all possibleefforts to encourage and motivate the cane growers of the area (state of Punjab in India) to producemaximum sugarcane by providing necessary guarantee for the crop loans from Banks like State Bank ofPatiala, State Bank of India and UCO Bank and also providing seeds and pesticides on the subsidised rates.

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Future Strategy

Rana Sugar is setting up a distillery unit of 60 KL with a total project cost of Rs.350 million. The Letter ofIntent for distillery awarded in August 2002 and approval of site granted by the Department of Labour andEmployment. Rana Sugar has obtained the NOC from the Punjab Pollution Control Board after a successfulpublic hearing and has already obtained the environmental clearance from the Ministry of Environment andForests and has purchased approximately 30 acres of Land at Village Louhka, Tehsil Patti at the total costapproximately Rs.16 million.

The expansion of power generation capacity from existing 20 MW to 30 MW per day is in process and thesame is likely to be completed during the last quarter of 2006.

Competitive strengths of the Company

1. Enough Sugar cane available

There is enough sugar cane available in the cane growing area of the Company. Further, theCompany has taken various steps for its progress and growth in the years to come. Sufficientarrangements h as been made to make available th e required q uantity and quality of sugarcane duringthe coming seasons. As an incentive to the cane growers, the Company has arranged the crop loansfrom various Banks for supply of cane seeds, insecticides and other agricultural inputs to thegrowers. As a result of which the Company expects to have sufficient sugarcane for the comingseasons in its catchment area.

2. A good managed Company

Rana Sugars Limited is a well managed Company. The Company is headed by its Board of Directorshaving competent and experienced Directors. The production department is looked after by GeneralManager of the Company. The cane crop area is looked after by a team of officers headed by ChiefCane Development Officer assisted by staff members including Deputy Chief Cane DevelopmentOfficer. The financial, secretarial and legal activities are supervised by the highly qualified,experienced and competent professionals.

3. Earning profit from very beginning

Rana Sugars started commercial production during the month of December 1993. The Company hasshown imp ressive results since incorporation. The Company is earning profits from the very firstyear of its op eration. The year wise net profit of the Company is as below:

Year Net Profit(Rs. in million )

1993-94 2.1381994-95 23.1001995-96 13.9341996-97 17.5501997-98 27.9081998-99 13.8761999-00 14.8942000-01 28.3362001-02 16.0722002-03 34.4732003-04 70.9682004-05 178.312

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4. Good quality of product

The main product of Rana Sugars is sugar. The Company is manufacturing sugar of good quality.The chief chemist of the Company ensures that the quality of the product is maintained. There hasnev er been any complaint about the quality of Company’s product.

5. Co-generation Power Project

Rana Sugars is the first Company in the state of Punjab, India, which has set up a co-generationpower project. The project was set up during the year 2000. The power is produced mainly frombagasse, which is a by-product. The surplus power produced by the Company is sold to PunjabState Electricity Board for which the Company has executed a Power Purchase Agreement.

6. Dividend paying Company

Rana Sugars is a dividend paying Company. After stabilization, it has starting paying dividend toits shareholders. The Company paid dividend @ 10% to the shareholders for the financial year2003-04 and 2004-05. Considering the progress, growth and future plans, the Company expects topay higher rate of dividend in the coming years.

7. Good future plans for the growth of the Company

Rana Sugars is a progressive Company, which was set up in the year 1993 with a crushingcapacity of 2500 TCD, which has been increased to 5000 TCD subsequently. The Company hasset up Co-generation power project with a capacity of 20 MW per day of power.

The Company is in the process of setting up a Distillery Unit of 60 KL per day capacity with aCost of Rs.350 million, which is likely to be completed by December 2005. The Company is alsoexp anding its power generation cap acity from 20 MW to 30 MW, which is likely to be completedduring the last quarter of 2006. The Company has very good future plans of growth. The Companyis planning to set up 2 sugar mills of 5000 TCD capacity alongwith power generating facilities of20 MW each in the State of Uttar Pradesh, India during the next year with a total project cost ofRs.4180.00 million.

The audited and re-stated Financial Summary of Rana Sugars for the financial years ended 31March 2003, 2004 and 2005, as per IFRS regulations have been extracted from the auditors reportsprepared by M/s. S.N.Nanda & Co., Chartered Accountants. The complete financial statementscan be found in the Offering Circular on page 95 of this document.

There has been no material adverse change in th e financial position or trading prospects of Ran aSugars since the last audited accounts or later interim statement ending on 31 March 2006.

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Financial Summary - For The Last Three Years

INCOME STATEMENT

Amount in Amount in Millions Amount in Millions Amount in Millions

Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

Income

Revenue (As per note 497.17 11.30 1341.79 30.67

15) 850.85 19.61 934.11 19.67

Other Inco mes 1.81 0.04 10.30 0.24 31.30 0.72 11.58 0.24

Changes in Inventory (380.34) (8.65) (228.60) (5.23) 184.30 4.25 52.18 1.10

Expenses

Raw material & 6.24 0.14 583.97 13.36

consumables used 660.99 15.23 652.77 13.73

Staff Costs (As per note 17.26 0.40 43.09 0.98

16) 41.36 0.95 43.67 0.92

Depreciation 31.26 0.71 62.52 1.43 61.00 1.41 57.75 1.22

Manufacturing Expenses (As per note 21.70 0.50 83.26 1.90

17) 89.30 2.06 79.12 1.67

Other Operating (As per note 11.59 0.26 28.16 0.64

Expenses 18) 13.88 0.33 15.51 0.33

Profit from operations 30.59 0.68 322.49 7.37 199.92 4.60 149.05 3.14

Finance Costs (As per note 27.84 0.62 70.60 1.61

19) 90.38 2.09 90.44 1.90

Selling Expenses 1.26 0.02 4.23 0.10 2.89 0.06 3.45 0.08

Cane Develop ment 0.88 0.02 4.28 0.10

Expenses 2.20 0.05 3.97 0.08

Provision for doubtful (0.61) (0.01) (0.08) (0.00)

debts 0.58 0.01 1.04 0.02

Profit before tax 1.22 0.03 243.46 5.57 103.87 2.39 50.15 1.06

Income Tax - Current 0.55 0.01 19.30 0.44

Tax 7.38 0.17 4.19 0.09

Deferred Tax 0.01 0.01 46.71 1.07 27.03 0.62 16.76 0.35

Income Tax of Previous 0.00 0.00 0.00 0.00 0.44 0.01

years 0.77 0.03

Provision Written Back 0.00 0.00 0.00 0.00 0.00 0.00 2.19 0.05

Net Profit after tax 0.66 0.01 177.46 4.06

(loss) 69.02 1.59 30.62 0.64

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The audited Financial Summary of the Company for the financial years ended 31 March 2003, 31 March2004, 31 March 2005 and for the half-yearly ending 30 September 2005, have been extracted from the re-stated financial statements, as per IFRS Regulations prepared by S.N.Nanda & Co., Chartered Accountants.The complete financial statements can be found on page 95 of this Offering Circular.

BALANCE SHEET

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

Assets

Non-Current Assets

Property, Plant & Equipment (note no 1) 1357.93 30.87 1047.46 23.94 967.97 22.31 952.48 20.05

Investments (note no 2) 0.39 0.01 0.39 0.01 0.39 0.01 0.00 0.00

Trade receivables (note no 4) 0.32 0.01 0.49 0.01 0.80 0.02 1.27 0.03

Security deposit 2.68 0.06 2.14 0.05 2.32 0.05 1.92 0.04

Current Assets

Inventories (note no 3) 374.86 8.53 736.43 16.83 962.28 22.18 771.00 16.23

Current portion of trade (note no 4) 65.03 1.48 196.74 4.50 96.37 2.22 56.27 1.18

Receivables

Cash and Cash equivalent (note no 5) 86.29 1.96 121.98 2.79 15.78 0.37 11.43 0.23

Prepayments 5.98 0.10 5.64 0.13 6.33 0.14 5.20 0.11

Interest Receivable 0.22 0.01 0.27 0.01 0.03 0.00 0.03 0.00

Other Receivables (note no 6) 66.43 1.51 117.19 2.68 11.23 0.26 30.90 0.65

Tax Deducted at Source by 0.30 0.01 5.28 0.12 2.74 0.06 0.73 0.02

Clients & Advance Tax

Other Loans & Advances 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

MODVAT 19.29 0.44 7.30 0.17 3.35 0.07 1.82 0.04

Service Tax 1.26 0.03 0.86 0.02 0.00 0.00 0.00 0.00

Total Assets 1980.98 45.02 2242.17 51.26 2069.59 47.69 1833.05 38.58

Equity and Liabilities

Shareholders Equity

Issued Capital (note no 7) 498.32 11.32 498.32 11.39 348.29 8.02 348.29 7.33

Reserves (note no 8) 459.02 10.44 457.20 10.46 210.66 4.85 184.19 3.88

Retained Earnings (note no 9) 146.24 3.32 145.57 3.33 58.15 1.35 48.42 1.02

Non -Current Liabilities

Interest bearing borrowings (note no 10) 274.36 6.24 178.85 4.09 228.35 5.27 264.62 5.57

Non Interest bearing (note no 11) 120.82 2.75 93.99 2.15 156.39 3.60 152.43 3.21

borrowings

Deferred Tax Liab ility 112.70 2.56 112.70 2.57 65.99 1.52 38.96 0.81

Retirement Benefit 4.64 0.11 3.40 0.08 3.60 0.08 3.65 0.08

Obligations

Current Liabilities

Trade and Other Payables (note no 12) 88.90 2.02 123.08 2.81 279.48 6.44 293.53 6.17

Short Term Borrowings (note no 13) 228.07 5.17 569.72 13.02 672.01 15.49 494.76 10.42

Provisions (note no 14) 47.91 1.09 59.34 1.36 46.67 1.07 4.19 0.09

Total Equity and Liability 1980.98 45.02 2242.17 51.26 2069.59 47.69 1833.05 38.58

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SUMMARY OF THE OFFERING

The following is only a summary of the Offering:

The Offering Offering of million GDRs representing million equity shares of2.455,662 24.556,620nominal value of Rs.10 each pursuant to this Offering Circular. The equity sharesrepresented b y the GDRs will represent approximately 33.40% of the Company’soutstanding share capital.

Offering Price The Offering Price is US$7.33 per GDR.

The GDRs GDRs will be delivered by the Depositary pursuant to the Deposit Agreement andwill be represented by Shares, which are deposited with the ICICI Bank Limited (the“Custodian”) in India. The Shares will have sub stantially the same rights as theissued shares (see “Description of Shares” and “Description of Global DepositaryReceipt”).

The GDRs will be evidenced by a Master GDR. The GDRs and the Shares aresubject to certain restrictions on transfer. (see “Transfer Restrictions” on page 89).

Shares issued by the Company There are 49,861,000 equity shares of Rs.10 each issued by the Company as on 31August 2005.

Shares authorised and issued An AGM of the Company held on 3 November 2005 at which enabling resolutionsunder this Offering Circular for the following further issue of shares have been passed:

“to issue Global Depository Receipts for an amount not exceeding 50,000,000equity shares @ Rs.33 per share aggregating to Rs.1650 million (about US$ 36.66million)”

Use of Proceeds The aggregate net proceeds received from this Offer, anticipated to be USD$17.60million, which shall be used for setting up a Sugar Mill of 5000 TCD with co-generation of power at a capacity of 20 MW, also see “Use of Proceeds” on page24.

Sale and Withdrawal of Shares Upon listing of the Shares on the Indian Stock Exchanges, a GDR holder maywithdraw and hold the Shares directly represented by such GDRs upon productionof such GDRs, together with a duly executed order and payment of all necessaryfees, expenses, taxes or government charges. In accordance with the DepositAgreement, the Company shall use its best endeavours to maintain a listing ofShares on the Indian Exchanges, the rules of which require the Shares to bedematerialized prior to listing.

Listing of the Shares and An application has been made to the DIFX for the million GDRs under2.455,662GDRs this Offering to be admitted to their official list. An application is proposed to be

made to list the Shares to be represented by the GDRs on the Indian StockExchanges.

Dividends For the financial year ending 31 March 2 005, Rana Sugars has declared dividend of10% per Equity Share of Rs.10 each. Although the Company has no currentintentio n to discontinue dividend payments, the Company cannot assure that anyfuture dividends will be declared or paid o r that the amount thereof will not bedecreased. Holders of GDRs on the applicab le d ividend reco rd date will be entitledto receive dividends, if declared, payable on equity shares represented by suchGDRs. Cash dividends on equity Shares represented by GDRs will be paid to theDepositary in Rupees and, except as otherwise described under “Description ofGlobal Depositary Receipts,” will be converted by the Depositary into U.S. dollarsand distributed, net of fees, taxes, duties, charges, costs and expenses, to theHolders of such GDRs.

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Voting Rights Holders of th e GDRs will have no voting rights with resp ect to the Shares. TheDepositary will not exercise any voting rights in respect of the Shares u nless it isrequired to do so by law. If so required , the Depositary will, at the direction of theBoard of Directors of the Company (the “Board”) (subject to the advice of legalcounsel), either vote as directed by the Board or give a proxy or power of attorneyto vote the Deposited Shares in favour of a Director of the Company or otherperson or vote in same manner as those shareholders designated by the Board.

Registered holders of Shares withdrawn from the deposit facility will be entitled tovote and exercise other direct shareholders rights (subject to transfer restrictions, asto which see “Terms and Conditions of the Global Depositary Receipts” and“Transfer Restrictions”). However, GDR holders may not receive sufficientadvance notice of shareholder meetings to enable them to withdraw the Shares andvote at such meetings.

Taxation Dividends payable on the offered Shares are not subject to withholding tax in Indiaunder Section 115 AC of the Indian Income Tax Act, 1961. There is an exemptionfrom Indian Capital Gains Tax on the sale in Foreign Currency of GDRs outsideIndia from one non-resident Indian to another non-resident Indian. See “Taxation –Indian Taxation” at page 90 .

Settlement The Master GDR will be registered in the name of DIFX Guardian Limited, asnominee for DIFX, and delivered to Deutsche Bank AG, as the CommonDepositary for DIFX. DIFX has accepted the GDRs for settlement in their systemon a book entry basis. The Common Code for the GDRs is 025137515. The ISINfor the GDRs is US75188Q108 5.

Transfer restrictions Global depositary receipts issued by Indian companies to non-residents have freeconvertibility outsid e Ind ia. As regards to the transfer of Shares (on conversion ofGDRs into Shares) in favour of residents, the non-resident can instruct theDepositary to request that the Custodian release the Shares in favour of the non-resident or to transfer the Shares in the books of Rana Sugars in the name of thenon-resident to a resident. The RBI has granted general permission permittingtransfer of shares from non-residents to residents provided (a) such shares arereleased by the Custodian against surrender of GDRs by the non-residentconcerned and (b) the sale is made on a stock exchange or the shares offered forsale in terms of an offer made under the SEBI (Substantial Acquisition of Sharesand Takeover) Regulations, 1997 (As amended).

Lock in Perio d A lock in period does no t apply to the GDRs issued under “the Issue of FCCB andOrdinary Shares (through Depositary Receipt Mechanism) Scheme, 1993(Notification GSR No. 700(E) dated 12 Nov ember 1993)”.

Risk Factors Investing in the offered GDRs and the Shares represented thereby involves risks,which are described in “Risk Factors” on page 17.

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DEFINITIONS

“Articles of Association” The Articles of Association of the Company

“Board” The Board of Directors of the Company

“Companies Act” or “CA56” The Indian Companies Act, 1956, as amended from timeto time.

“Custodian” ICICI Bank Limited

“Depositary” Deutsche Bank Trust Company Americas

“Depositories Act” The Indian Depositories Act, 1996, as amended

“Directors” The Directors of the Company

“Dubai International Financial Exchange” Dubai Stock Exchange

“Euro” Legal currency of European Union

“Finance Act” The Indian Finance Act, 2005

“GDR holders” or “Holder” Holders of GDRs

“Government” Government of India

“IAS” Indian Administrative Service, which is the highest cadre ofthe civil services in India. Under supervision of the Ministryof Home Affairs, Government of India, IAS officers holdkey positions in the government both at the Centre and Statelevels in India.

“Income Tax Act” The Indian Income Tax Act, 1961, as amended

“Indian GAAP” Generally Accepted Accounting Principles in India

Indian Stock Exchanges The Stock Exchange, Mumbai (BSE) and National StockExchange of India Limited

“Issue of Foreign Currency Convertible Bonds and The Indian Issue of Foreign Currency Convertible BondsOrdinary Shares Scheme” and Ordinary Shares (through Depositary Receipt

Mechanism) Scheme, 1993, as amended

“Lead Manager” Chartered Capital and Investment Limited

“Offering” USD 7.33 per GDR

“Offering Circular” This document

“Rana Sugars” or “the Company” or “we” or “us” Rana Sugars Limited

“Securities Act” United States Securities Act of 1933

“Securities Contracts Act” Th e Indian Securities Con tracts (Regulation) Act, 1956 ,as amended

“Securities Contracts Rules” Th e Indian Securities Contracts (Regulation) Rules,1957, as amended

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“Common Depositary” Deutsche Bank AG, London Branch

“Shareholders” Holders of Shares of the Company

“Shares” The equity shares of par value of Rs.10 each of theCompany

“Takeover Code” SEBI (Substantial Acquisition of Shares and Takeovers)Regulations, 1997, as amended

“UK GAAP” Generally Accepted Accounting Principles in UnitedKingdom

“U.S. or U.S.A.” The United States of Americaor “US dollar” or “USD” or “$”

The legal currency of the United States of America

“US GAAP” Generally Accepted Accounting Principles in US

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GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONS

The following definitions and terms apply throughout these Listing Particulars unless the con text otherwiserequires:

“AGM” Annual General Meeting

“approx.” Approximately

“Articles” Articles of Association of the Company

“AS” Accoun ting Standards

“BOLT” BSE’s online trading facility

“BSE” The Stock Exchange, Mumbai

“CA56” The Companies Act, 1956

“CLB” Company Law Board

“DIFX” Dubai International Financial Exchange

“EGM” Extraordinary General Meeting

“EPF” Employees Provident Fund

“EPF Act” Employees Provident Fund and MiscellaneousProvisions Act, 1952

“FCCB” Foreign Currency Convertible Bond

“FDI” Foreign Direct Investment

“FIIA” Foreign Investment Implementation Authority

“ft.” Feet

“FEMA” The Indian Foreign Exchange Management Act, 1999,as amended

“FIIs” Foreign Institutional Investors

“FIPB” Foreign Investment Promotion Board

“GAAP” Generally Accepted Accounting Policies

“GDRs” Global Depositary Receipts issued by the Depositary,each representing 10 equity shares

“ICICI” ICICI Bank Limited

“IDBI” Industrial Development Bank of Ind ia

“IFCI” The IFCI Limited

“IFRS” International Financial Reporting Standards

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“IPRs” Intellectual Property Rights

“KL” Kilo Litre

“mn” Million

“MW” Mega Watt

“No.” Number

“NOC” No Objection Certificate

“NSE” The National Stock Exchange of India Limited

“PAT” Profit After Tax

“qtl.” Quintal (i.e. 100 kilo g rams)

“RBI” Reserve Bank of India

“R&D” Research and Development

“RoC” Registrar of Companies

“Rs.” Or “INR” or “Rupees” or “Indian Rupees” Indian National Rupee, the legal currency of India

“SEBI” Securities and Exchange Board of India

“SEBI Act” Securities and Exchange Board of India Act, 1 992, asamended

“Sl. No.” Serial Number

“sq.” Square

“TCD” Tonnes Crushing per Day

“U.K.” United Kingdom

“w.e.f.” with effect from

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RISK FACTORS

Investors should carefully consider the risks described below and the other information in this documentbefore investing in the GDRs. The Company’s business could be seriously harmed by any of these risks. Inparticular, any potential investor in, or purchaser of, GDRs should pay particular attention to the fact thatthe Company is governed in India by a legal and regulatory environment, which, in some respects, maydiffer from that which prevails in other countries. The trading price of the GDRs could decline due to anyof these risks, and investors may lose all or part of their investment.

Some of the information in this Offering Circular may contain forward-looking statements. Such statementscan be identified by the use of forward looking terminology, such as “may”, “will”, “expect”, “anticipate”,“estimate”, “continue” or other similar words. These statements discuss future expectation, containprojections of result of op erations or of financial condition or state other “forward looking information”.Wh en considering such forward statements, the investor should keep in mind the risk factors and othercautionary statements in this Offering Circular. The risk factors noted in this section and other factors notedthroughout this Offering Circular, including certain risks and uncertainties, could cause actual results todiffer materially from those projected in any forward looking statement.

RISKS RELATED TO INVESTMENTS IN INDIAN COMPANIES

Political instability could adversely a ffect the business and economic conditions in India g enerally, andthe Company’s business in particular .

The Company is incorporated in India and majority of its assets are located in India. Consequently, itsfinancial performance and the market price of Shares and GDRs will be affected by changes in exchangerates and controls, interest rates, Government policies, including tax ation policies, as well as political,social and economic developments affecting India.

Any potential investor in, and purch aser of, the GDRs should pay particular attention to the fact that theCompany is governed in India by a legal and regulatory environment which in some material respects maybe different from that which prevails in the United States and the United Kingdom and other countries.Prior to making an investment decision, prospective investors and purchasers should carefully consider allof the information contained in the Offering Circular (including the consolidated and, where relevant, non-consolidated financial statements included in this Offering Circular).

Since 1991, the Government has pursued policies of economic liberalisation and financial sector reforms.Nevertheless, the role of the Indian central and state governments in the Indian economy has remainedsignifican t. In the elections in May 2004, a new coalition Government, the United Progressive Alliance, ledby the Indian National Congress party was formed. The new Government has announced its generalintention to contin ue India’s current economic and financial sector liberalisation and deregulation p olicies.However, there can be no assurance that these policies may continue in the future. The rate of economicliberalisation could change, and specific laws and policies affecting foreign investment, currency exchangerates and other matters affecting investment in securities could also change. A sign ificant change in India’seconomic liberalisation and deregulation policies could adversely affect business and economic conditionsin India generally, and the Company’s business in particular.

There may be less company information available in the Indian securities markets than securitiesmarkets in developed countries.

There may be differences between the level of regulatio n and monitoring of the Indian securities marketsand the activities of investors, brokers and other participants and that of markets in the United States andother developed countries. SEBI is responsible for approving and improving disclosure and otherregulatory standards for the Indian securities markets. SEBI has issued regulations and guidelines ondisclosure requirements, insider trading and other matters.

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As the Company operates all its business in India, ex change rate fluctuations may affect the marketvalue of Shares and GDRs independent of its operating results.

The price of the GDRs will be quoted in U.S. dollars. The Shares are quoted in Rupees on the Indian StockExchanges. Dividends in respect of the Shares will be paid in Rupees and subsequently converted into U.S.dollars for distribution to GDR holders. GDR holders, who seek to sell in India any Shares withdrawn uponsurrender of any GDR, and to convert the Rupee proceeds of such sale into foreign currency from India,will require the approval of the RBI for each such transaction. The value of the Rupee, measured in U.S.dollars, has been declining over the past few years. However, over the last year, the value of Rupee hasappreciated against the USD.

Fluctuations in the exchange rate between the Rupee and the US dollar will affect the US dollar conversionby the Depositary of any cash dividends paid in Rupees on the Shares represented by the GDRs. Inadd ition, fluctuations in the exchange rate between the Rupee and the US dollar will affect the US dollarequivalent of the Rupee price of the Company’s Shares on the Indian Stock Exchanges and, as a result, arelikely to affect the prices of the Co mpany’s GDRs. Such fluctuations will also affect the US dollar value ofthe proceeds, a Holder would receive upon the sale in India of any Shares withdrawn from the Depositaryunder th e Deposit agreement. There can be no assurance that Holders of GDRs will be able to convertRupee proceeds into US dollars or any other currency or the rate at which any such conversion could occur.

Surcharges under the Income Tax Act will increase the Company’s tax liability and d ecrease any profitsthe Company might have in the future.

The statutory corporate income tax rate in India is currently 30%. This tax rate is presently subject to 10%surcharge and 2% education cess resulting in an effective tax rate of 33.66%. Though, th e surcharge wasincreased from 2 .5% to 10% for the assessment year 2005-06, the Company cannot assure that the 10%surcharge will be repealed or remain at its current rate or that additional surch arges will not beimplemented by the Government of India.

Dividends declared, distributed or paid by Indian companies are subject to a dividend distribution tax of12.5%, including the presently applicable surcharge of 10% plus education cess of 2%, of the total amountof the dividend declared, distributed or paid. The said dividend tax is payable by the company and not theshareholders.

Although, the Government has recently issued regulations on relevant tax matters, certain aspects of theIndian tax treatment ap plicable to the Shares remain unclear.

Capital gains (whether short term or long-term) arising on the sale of the Shares in India are subject toIncome Tax Act. There is an exemption for the purpose of computing the amount of capital gains subject tosuch tax, the Government’s Depositary Receipt Scheme specifies that the cost of acquisition of the Sharesshall be deemed to be the Share price prevailing on the Indian Stock Exchanges on the date, the Depositarygives notice to the Custodian requesting release of such Shares. However, there is no correspondingprovision in the Income Tax Act, as to the cost of acquisition of the Shares being the price prevailing on thedate of notice/conversion as mentioned above. The period of holding of such Shares, for determiningwhether the gain is long-term or short-term, commences on the date of the giving of such notice by theDepositary to th e Custodian.

Investors are advised to consult their own tax advisors and to consider carefully the potential taxconsequences/liabilities of an investment in the GDRs. See “Taxation ”.

There is a difference between the level of regulation and monitoring of the Indian securities markets andthe activities of investors, brokers and other participants and that of markets in United Arab Emirates(“UAE”), the United States and other developed economies. SEBI is responsible for approving disclosureand other regulatory standards for the Indian secu rities markets. SEBI has issued regulations and guidelineson disclosure requirements, insider trading and other matters. There may, however, be less publiclyavailable information about Indian companies than is regularly made availab le by public companies indeveloped economies.

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Conditions in the Indian securities market may affect the price or liquidity of the Shares and the GDRs.

The Indian securities markets are smaller and more volatile than securities markets in more developed economies.The Indian Stock Exchanges has in the past experienced substantial fluctuations in the prices of listed securitiesand the price of the Company’s stock has been especially volatile. For example, the Company’s stock price onthe BSE ranged from a high of Rs.25 (approximately USD0.58) in the last month of calendar year 2004 to alow of Rs.24 (approximately USD0.56) in the second quarter of calendar year 2005. As on 31 August 2005,the closing price of the Company’s shares on the BSE was Rs.32.55 (approximately USD0.76).(Conversion rate USD1=Rs.43).

The Indian Stock Exchanges have also experienced problems that affected the market price and liquidity ofthe securities of Indian companies. These problems have included temporary exchange closures, brokerdefaults, settlement delays and strikes by brokers. The BSE was closed for three (3) d ays in March 1995following default by a b rokerage house. In addition, the governing bodies of the Indian Stock Exchangeshav e from time to time imposed restrictions on trading in certain securities, limitations on price movementsand margin requirements. Further, from time to time, disputes have occurred between listed companies andstock exchanges and other regulatory bodies, which in some cases may have had a negative effect onmarket sentiment. Similar problems could happen in the future and, if they do, they could affect the marketprice and liquidity of the Company’s Shares and GDRs.

THE MATERIAL RISKS ASSOCIATED WITH INVESTING IN THE COMPANY, AND WHEREAPPLICABLE, ANY RISKS ASSOCIATED WITH ASSETS TO BE ACQUIRED USING THEPROCEEDS OF THE DISTRIBUTION

The Company operates in a highly regulated market. Changes in Government policy regarding fixation ofstatutory cane price, sugar distribution (i.e. the ratio of levy and non-levy sugar) and pricing of sugar mayaffect the reven ues and profitability of the Company. The cane price is paid by sugar Companies as fixedby State Government. The price is fixed by State Government after considering various factors. The presentcane price is Rs.115 per qtl. which has been increased from Rs.100 per qtl. by the State Government afterfew years. The levy sugar is only 10% and the non-levy sugar which consists 90% is sold by the Companyon prevailing market rate. Ho wever, the sugar is sold in accordance with quota released by Government ofIndia on month basis.

Also, as the Company is going to set up new Sugar Mills from the proceeds of the GDRs the aforesaidfactors may affect the performance of the new Sugar Mills.

The Company’s business is dependent on agricultural production.

Sugar industry is an agro-based industry and its main raw material is sugarcane. In India, agriculture isprimarily dependent on climatic conditions. Therefore, in any year, if there is a shortfall of sugarcaneproduction on account of adverse climatic conditions, the same may affect the Company’s financialperformance adversely.

The Company may face competition from other established Companies and future entrants into theindustry.

Since, the sugar industry is growing, additional capacities are b eing added by existing sugar companies andalso by new entrants in this field . The additional supply of sugar in the market will impact the sugar price ifit is not supported by proportionate increase in demand. The Company’s profit margin may get reduce,incase of fall in future sugar price and the same will have a direct impact on the Company’s financialperformance. The sugar is an essential commodity and presently, being sold without branding except fewplaces in North India like states of Punjab, Haryana and Uttar Pradesh in India. Thus, competition is likelyto affect the Company’s financial performance.

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Changes in the Government of India policies could impact the liberalisation of the Indian economy andadversely affect economic conditions in India generally and the Company’s business in particular.

A significant change in India’s economic liberalisation and deregulation policies could affect business andeconomic conditions in India generally and the Company’s business in particular. A significant change inthe Indian government’s or the state government’s economic liberalisation and deregulation policies couldadv ersely affect the bu siness and economic conditions in India generally and the Company’s business andfinancial condition and prospects in particular.

Certain factors beyond the control of the Company could adversely affect the business of the Company.

Certain factors beyond the control of the Company like terrorist attacks, droughts, floods, earthquakes etc.,or any other acts of violence involving India and other countries could adversely affect the Company’sfinancial performance.

Litiga tion.

The Company is involved in three litigation cases involving civil suits, amounting to Rs.6,147,535 .

Therefore, if the judgment is given against the Company in any/all of the aforementioned matters, theCompany will become liable to the same, which may have an adverse effect on the business, finan ce resultsand operations of the Company.

Intellectual Property Rights.

The Company h as not filed for registration of any intellectual property rights. Therefore, the Company’sefforts to protect its intellectual property may not be adequate to prevent misappropriation of proprietaryinformation or to ensure that it will be able to detect un authorised use and take appropriate steps to enforceits unregistered intellectual property rights. The Company’s competitors may independently developsimilar technology or duplicate its products. Unauthorised parties may infringe upon or misappropriate itsproducts or proprietary information. The misappropriation or duplication of Company’s intellectualproperty could disrupt its ongoing business, distract its management and employees, reduce its revenuesand increase its expenses. In the future, litigation may be necessary to enforce Company’s intellectualproperty righ ts or to determine the validity and scope of the proprietary rights of others.

STEPS PROPOSED BY THE COMPANY TO MITIGATE OR MANAGE THE RISKS

The Company has taken various effective steps in ord er to make available the sufficient quantity andquality of sugarcan e in the years to come such as arranging crop loans from Banks for cane seeds,insecticides, agricultural inputs for the growers. 90% of the sugar is non-lev y, which is sold by th eCompany in the open market at competitive rates. Further, the Company makes efforts to obtain maximumquota for sale of sugar from Government of India on various grounds.

RISKS RELATED TO THE GDRs AND THE TRADING MARKET

Holders of GDRs will not have any voting rights

Holders of GDRs will have no voting rights with respect to the Deposited Shares. The Depo sitary will notexercise any voting rights in respect of the Deposited Shares unless it is required to do so by law. If sorequired, the Depositary will, at the d irection of the Board (su bject to the advice of legal counsel taken bythe Depositary and the Company at the expense of the Company), either vote as directed by the Board orgive a proxy or power of attorney to vote the Depo sited Shares in favour of a Director of the Company orother person or vote in same manner as those shareholders designated by the Board. See “Terms andConditions of Global Depositary Receipts – Voting Rights” on page 68.

Restrictions on foreign investment may affect the price of the GDRs

Foreign investment in Indian securities is regulated by FEMA. In certain emerging markets, includingIndia, GDRs may trade at a discount or premium, as the case may be, to the Shares, in part because of

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restrictions on foreign ownership of the Shares. The RBI has granted a general exemption permitting thetransfer of Shares, after such Shares have been converted into GDRs, from non-residents to residents,provided that the Shares are released by the Indian custodian in respect of a GDR issue against thesurrender of the GDRs by the non-resident, and further provided that the sale was made on a stockexchange, or the Shares were offered for sale by way of an offer made under the provisions of the SEBI(Substantial Acquisition of Shares and Takeovers) Regulation s, 1997 (as amended) (“the Regulations”). Incase of transfer of shares on conversion into shares in favour of residents, no prior approval of the RBI willbe required for the transfer of Shares from non-residents to residents.

Holders who seek to convert the Rupee proceeds from a sale in India into foreign currency and repatriatesuch foreign currency from India will not be required to obtain prior RBI approval for each suchtransaction. In addition, Shares, which are withdrawn from the Depositary, may not be sold on the domesticstock exchanges until the Shares have been listed on those exchanges, a p rocess which can take forty fiv e(45) days from issuance of the relevant GDRs.

Issues of GDRs may not result in the market for GDRs being more active or liquid, particularly in light ofIndian legal restriction s on equity share conversion and other restriction s.

The Company cannot predict the extent to which issues of GDRs will chan ge the public trading market forthe GDRs. Active, liq uid trading mark ets generally result in lower price volatility and more efficientexecution of bu y and sell orders for investors. Liquidity of a securities mark et is often a function of thevolume of the Shares that are publicly held by unrelated parties. Alth ou gh, GDR Holders are entitled towithdraw the underlying Shares from the Depositary at any time after such Shares are listed on the IndianStock Exchanges, there is no public market for the Shares anywhere outside India.

Future issue of GDRs or sales of the Shares may significantly affect the trading price of the Shares or theGDRs.

The future issuance of Shares by the Company or the disposal of Shares by any of the major shareholdersof the Company or the perception that such issuance or sales may occur may significantly affect the tradingprice of the Shares and the GDRs.

Holders of the GDRs may face uncertainties in their ability to withdraw Shares from the GDR depositaryfacility and any such withdrawal may be subject to delays

India’s restrictions on foreign ownership of Indian companies limits the number of shares that may beowned by foreign investors and generally require Government approval for foreign ownership. Although,the Company is not required to obtain Government approval for the offering, investors who withdrawShares from the GDR depositary facility for the purpose of selling such Shares will be subject to Indianregulatory restrictions on foreign ownership upon withdrawal. It is possible that this withdrawal processmay be subject to delays.

The ability of Holders of the GDRs to sell to a resident of India, any equity Shares withdrawn from theGDR depositary facility, ma y be subject to delays if specific Government approval is required

Due to restrictions set out in the Deposit Agreement and the Terms and Conditions of the GlobalDepositary Receipts, the supply of GDRs will be limited. See “Terms and Con ditions of the GlobalDepositary Receipts” page no. 61.

Holder of GDRs ma y be restricted in their ability to exercise pre-emptive rights under Indian law andthereby may suffer future dilution of their ownership position

Under the Companies Act, a public company incorporated in India must offer its holders of equity shares,pre-emptive rights to subscribe and pay for a proportionate number of shares to maintain their existingownership percentages, prior to the issuance of any new equity shares, unless the pre-emptive rights havebeen waived by a special resolution requiring the affirmative vo te three times of negative vote polled onthat resolution. Overseas holders of GDRs may be unable to exercise pre-emptive rights for the Sharesunless a registration statement under the Securities Act, 1933 (“Securities Act”), as amended, is effective

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with respect to the rights or an exemption from the registration requirements of the Securities Act isavailable. The Company’s decision to file a registration statement will depend on the costs and potentialliabilities associated with any given registration statement as well as the perceived benefits of enabling theHolders of its GDRs to exercise their pre-emptive rights and any other factors that the Company deemsappropriate to consider at the time the decision must be made. The Company may elect not to file aregistration statement, related to the Shares issuable upon exercise of the pre-emptive rights otherwiseavailable by law to the Company’s shareholders. In the case of such future issuance, the new securities maybe issued to its Depositary, which may sell the securities for the benefit of the holders of the GDRs. Thevalue, if any, the Depositary would receive upon the sale of such securities cannot be predicted. To theextent that holders of GDRs are unable to exercise pre-emptive rights granted in respect of the Sharesrepresented by their GDRs, their proportional interests in the Company would be different to othershareholders.

There is no guarantee that the Shares will be listed on the Indian Stock Exchanges

The Shares of the Company are listed on the Indian Stock Exchanges. The Company will apply to obtainpermission of Indian Stock Exchanges to list the Shares represented by the GDRs upon the GDRs offeredhereunder having been issued, but there is no guarantee that such permission for listing of Shares on theIndian Stock Exchanges will be granted. Application for listing of the Shares underlying the GDRs will not,in accordance with Indian law and practice, be made until those Shares and the GDRs representing themhav e been allotted and issued. GDR holders will be unable to withdraw the Shares underlying their GDRsuntil such time as such Shares are listed on the Indian Stock Exchanges.

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ENFORCEMENT OF JUDGMENTS OBTAINED IN OTHER JURISDICTIONS

The Company is a public limited liability co mpany incorporated and operating under the laws of theRepublic of India. Consequently, it may be difficult for investors to effect service of process in respect ofproceedings issued outside India upon Directors and executive officers of the Company or the Indianexperts named in this Offering Circular. It may also be difficult to enforce judgments obtained in otherjurisdictions against the Company.

However, it has been advised by K. R. Chawla and Co., Advocates that the statutory basis for recognitionof foreign judgments is found in Section 13 of the Indian Code of Civil Procedure, 1908, which providesthat an Indian court may recognise a foreign civil judgment, subject to certain time limitations, ascon clusive evid ence of any matter directly decided upon, if it finds that:

• the judgment has been pronounced by a court of competent jurisdiction;

• the judgment has been given on the merits of the case;

• the judgment does not appear on the face of the proceedings to be founded on an incorrectinterpretation of international law or a refusal to recognise the law of India in cases where such law isapp licable;

• the proceedings in which the judgment was obtained were not opposed to natural justice;

• the judgment has not been obtained by fraud; and

• the judgment does not sustain a claim founded on a breach of any law in force in India.

Section 44A of the Indian Code of Civil Procedure, 1908, provides that where a foreign judgment has beenmade by a court in any country or territory ou tside India, which the Government of India has bynotification declared to be a reciprocating territory, such judgment may be enforced in India, as if thejudgment had been rendered by the relevant court in India. The United States and certain countries inEurope have not been declared by the Government to be a reciprocating territory for the purposes ofSection 44A. Accordingly, a judgment of a court in the United States or certain European countries may beenforced in India only by “suit upon the judgment”, and not by proceedings in execution. The suit must bebrought in India within three (3) years from the date of the judgment in the same man ner as any other suitfiled to enforce a civil liability in In dia. It is unlikely that a court in India would award damages on thesame basis as a foreign court. Furthermore, it is unlikely that an Indian court would enforce foreignjudgments if it viewed the amount of damages awarded as excessive or inconsistent with Indian practice. Aparty seeking to enforce a foreign judgment in India, whether by suit upon the judgment or by proceedingsin execution, is required to obtain the approval of the RBI under the FEMA, if such enforcement involvesany matter requiring approval under FEMA, including the repatriation of any amount recovered. K. R.Chawla and Co., Advocates have advised the Company, that a party may file a suit in India against RanaSugars, its Directors, and its executive officers as an original action.

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USE OF PROCEEDS

The total proceeds of the Offer will be USD 18 millio n and the net proceeds after deduction ofunderwriting fees, discounts, commissions and expenses associated with this Offering, anticipated tobe USD 17.60 million, received by the Company in respect of the Offering.

The Company intends to use the proceeds of the issue for setting up a Sugar Mill of 5000 TCD withco-generation of power at a capacity of 20 MW.

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INDUSTRY OVERVIEW

SUGAR INDUSTRY

Indian Sugar Industry

India is the largest consumer and second largest producer of sugar in the world (Source: United StatesDepartment of Agriculture (USDA) Foreign Agricultural Service) . The Indian sugar industry is the secondlargest agro-industry located in the rural India. The Indian sugar industry has a turnover of approximatelyRs.500 billion per annum and it contributes almo st Rs.22.5 billion to the central and state exchequer as tax,cess, and excise duty every year [Source: Ministry of Food, Government of India] . It is the second largestagro-processing industry in the country after cotton textiles. With 453 sugar mills operating in differentparts of the country, Indian sugar industry has been a major contributing factor in the socio-economicdevelopment of the rural areas. About 50 million sugarcane farmers and a large number of agriculturallabourers are involved in sugarcane cultivation and ancillary activities, co nstituting 7.5% of the total ruralpopulation. This industry also provides employment to about 2 million skilled / semi- skilled workers whoare mostly from rural areas. [Source: Indian Sugar Mills Association, www.indiansugar.com]

SUGAR MARKETING & DEMAND-SUPPLY

India has been known as the original home of sugar and sugarcane. Indian mythology supports the abovefact as it contains legends showing the origin of sugarcane. India is the second largest producer ofsugarcane next to Brazil. Presently, about 4 million hectares of land is under sugarcane with an averageyield of 70 tonnes per hectare. India is the largest single producer of sugar including traditional cane sugarsweeteners, khandsari and Gur equivalent to 26 MMTs raw value followed by Brazil in the second place at18.5 MMTs. Even in respect of white crystal sugar, India has ranked at No.1 position in 7 out o f the last 10years.

India is the largest consumer of sugar in the world and Indian sugar industry is the 2 largest agro-industryn d

located in the rural India. With 507 operating sugar mills in different parts of the country, Indian sugarindustry has been a focal point for socio-economic development in the rural areas. About 50 millionsugarcane farmers and a large number of agricultural labourers are involved in sugarcan e cultivation andancillary activities, constituting 7.5% of the rural population. Besides the industry provides employment toabou t 2 million skilled/semi skilled workers and o thers mostly from the rural areas.

The sugar industry not on ly generates power for its own requirement but surplus power for export to thegrid based on byproduct bagasse. It also produces ethanol, an eco-friendly and renewable energy forblending with petrol. Following table gives the details of impressive contribution of the Indian sugarindustry to the national economy.

The sugar industry uses only sugarcane as input, hence, sugar companies have been established in largesugarcane growing states like Uttar Pradesh, Maharashtra, Karnataka, Gujarat, Tamil Nadu, and AndhraPradesh. In the year 2003-2004, these six states contributed more than 85% of the to tal sugar production ofIndia; Uttar Pradesh, Maharashtra, and Karnataka together contributed more than 65% of the totalproduction.

Sugar Production by State in India (in million metric tons)

State 2002-2003 Total Percentage 2003-2004 Total Percentage

Uttar Pradesh 5.65 28.06% 4.55 33.60%

Maharashtra 6.22 30.86% 3.18 23.44%

Karnataka 1.87 9.28% 1.12 8.24%

Gujarat 1.25 6.22% 1.07 7.87%

Tamil Nadu 1.64 8.16% 0.92 6.80%

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Andhra Pradesh 1.21 6.01% 0.89 6.54%

Haryana 0.64 3.16% 0.58 4.30%

Punjab 0.59 2.91% 0.39 2.88%

Uttaranchal 0.50 2.47% 0.39 2.86%

Bihar 0.41 2.03% 0.27 2.02%

Others 0.17 0.85% 0.20 1.46%

TOTAL 20.14 100.00% 13.55 100.00%

[Source: Indian Sugar Magazine December 2004, published by Indian Sugar Mills Association]

The Gov ernment of India de-licensed the sugar sector in August 1998, thereby remov ing the restrictions onexpansion of existing capacity as well as on the establishmen t of new units, with the only stipulation that aminimum distance of 15 kilometers would be maintained between an existing sugar mill and a new mill.

There are 566 installed sugar mills in the country with a production capacity of 18 million metric tons ofsugar, of which only 453 are presently operatio nal. These mills are spread over 18 different states of thecountry. Around 315 of the total installed mills are in the cooperative sector, 189 in the private sector and62 in the public sector [Source: Directorate of Sugar]

Sugarcane Availability

Sugarcane occupies about 2.7% of the total cultivated area and it is on e of the most important cash crops ofthe country. The area under sugarcane has gradually increased from 2.7 million hectares in 1980-1981 to4.3 million hectares in 2002-2003, mainly because of much larger diversion of land from other crops tosugarcane by the farmers for economic reasons. The sugarcane area, however, declined in the year 2003-2004 from 3.9 million hectares and to 3.7 million hectares in 2004-2005, mainly due to drought and pestattacks.

From a level of 154 million metric tons in 1980-1981, the sugarcane production increased to 241 millionmetric tons in 1990-1991 and further to 296 million metric tons in 2000-2001. Since then, it has beenapproximately around 300 million metric tons until 2002-2003. In the season 2003-2004, however,sugarcane production declined to 236 million metric tons mainly due to drought and pest attacks. [Source:Indian Sugar Mills Association, www.indiansugar.com]

Not only sugarcane production has been increasing, even the utilisation of sugarcane by the sugar industryhas also been steadily in creasing over the past years. In India, sugarcane is utilised by sugar mills as well asby producers of traditional sweeteners like gur and khandsari. However, the diversion of sugarcane to gurand khandsari is lower in states of Maharashtra and Karnataka, as compared to Northern States like UttarPradesh.

Sugarcane Utilisation

% Sugarcane utilisation for

Year White sugar Gur and khandsari Seed, feed and chewing

1980-1981 33.4 54.8 11.8

1990-1991 50.7 37.4 11.8

2000-2001 59.7 28.8 11.5

2001-2002 57.4 31.5 11.1

2002-2003 68.9 20.1 11.1

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2003-2004 56.1 32.5 11.4

(Source: Indian Sugar Mills Association, www.indiansugar.com)

International Sugar Industry

Brazil and India are the largest sugar producing countries followed by China, USA, Thailand, Australia,Mexico, Pakistan, France and Germany. Global sugar production increased from approximately 125.88million metric tons in 1995-1996 to 149.4 million metric tons in 2002-2003 and then declined to 143.7million metric tons in 2003-2004, whereas consumption increased steadily from 118.1 million metric tonsin 1995-1996 to 142.8 million metric tons in 2003-2004 as shown in the table given below [Source: FOLicht World Sugar Balance] . The world consumption is projected to grow to 160.7 million metric tons by2010 and 176.1 million metric tons by 2015 [Source: FO Licht, 2005] .

The world’s largest consumers of sugar are India, China, Brazil, USA, Russia, Mexico, Pakistan, Indonesia,Germany and Egypt. According to USDA Foreign Agriculture Service, the consumption of sugar in Asiancountries has increased at a faster rate, as a direct result of increasing population, increasing per capitaincome and increased availability.

Production and Consumption for Major Countries(Data shown for the year 2004-2005)

(‘000 metric tons)

World Sugar Balance

(Data shown for the years: September - August)

(‘000 metric tons)

2003-2004 2002-2003 2001-2002 2000-2001 1999-2000

Opening Stocks 69,327.3 62,040.0 62,063.3 62,223.6 57,611.7

Production 143,701.9 149,405.2 137,982.6 132,200.0 134,753.9

Impo rts 48,190.3 48,593.2 45,261.1 43,573.9 41,226.3

Exports 52,062.7 51,339.9 47,759.7 44,212.9 42,720.6

Consumption 142,766.9 139,371.1 135,507.3 13,1721.2 128,647.7

Ending Stocks 66,389.9 69,327.3 62,040.0 62,063.3 62,223.6

Ending stocks as % of 46.50% 49.74% 45.78% 47.12% 48.37%

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consumption[Source: FO Licht World Sugar Balance]

World Sugar Trade

World trade in raw sugar is typically around 22 million metric tons and white sugar around 16 millionmetric tons. The tab le given below shows the total exports of sugar for top exporting nations. Brazil is thelargest exporter, followed by EU, Thailand, Australia and Cuba. The largest importers are Russia,Indonesia, UK, South Korea, Japan, Malaysia, the Middle East, and North Africa.

Major Exporting Nations For 2003-2004(All units in ‘000 metric tons)

[Source: F orld Sugar Balance]O Licht W

SUGARCANE AREA AND PRODUCTIONFROM 19 80 -81 TO 2003-04

Year Area under cane (Million Cane Production (Millionhectares) Metric Tonnes)

1980-81 2.67 154

1990-91 3.69 241

2000-01 4.32 296

2001-02 4.41 297

2002-03 4.36 282

2003-04 3.99 236

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COMPANY INFORMATION

Rana Sugars is a sugar company with a capacity to crush 5000 tonnes of sugarcane per day and operates acaptive power unit for co-generation of 20 MW of power. The project is situated at village Buttar Seviyan,Tehsil Baba Bakala, District Amritsar, Punjab.

Background

The Company was set up jointly by Rana Gurjeet Singh & Associates with Punjab Agro IndustriesCorporation Limited, in the year 1991. The project was set up with a capacity of 2500 TCD alongwithfacilities for generating of 5 MW of power. The cost of project was Rs.395.5 million which was funded, asper details given below:

Sl. No. Name of the Party Amount (Rs. in Millions)A. Equity1. Rana Gurjeet Singh & Associates 36.52. Punjab Agro Industries 61

Corporation Ltd.3. Public Issue 115.5

SUB TOTAL 213B. Loans1. IFCI Ltd. 702. IDBI 703. ICICI 304. SBI 55. SBOP 2.5

SUB TOTAL 177.5C. State Subsidy 5

SUB TOTAL 5GRAND TOTAL 395.5

The project started commercial production in December 1993. The Company came out with its first publicissue during September 1993, of Rs.115.5 million, which was subscribed by more than four times.

Thereafter, the sugarcane crushing capacity of the Company was subsequently enhanced to 5000 TCD andits co-generation capacity to 10 MW of power from November 1998, with a cap ital outlay of Rs.280million. The expansion of the project was funded by term loans of Rs.140 million by IFCI, SugarDevelopment Fund of Rs.101 million and Equity contribution of Rs.39 million by Rana Gurjeet Singh &Associates.

Rana Sugars is the first company in the State of Punjab, which has set up a co-generation power project atthe cost of Rs.330 million and which is running successfully. The co-generation power project is generating14 MW surplus power after meeting its captive demand from its in -built system and the surplus power isbeing sold to Punjab State Electricity Board, pursuant to the Power Purchase Agreement dated 4 May 2005,executed between Rana Sugars Limited and Punjab State Electricity Board. . Out of total co-generationcapacity of 20 MW, 10.2 MW co-generation project was funded by Soft Loan of Rs.75.57 million, TermLoan of Rs.4.9 million from IREDA, Capital Subsid y of Rs.75.57 millio n from Government of India,Rs.17.00 million by US Aid and Equity contribution of Rs.25.5 million b y Punjab Energ y DevelopmentAgency and Rs.71.15 million by the Promoters of the Company, Rana Gurjeet Singh & Associatesincluding cash accruals from the Company.

Incorporation

Rana Sugars Limited was incorporated as a public limited company on 30 July 1991, under CompaniesAct, 1956 and was issued a Certificate of Incorporation bearing number 53-11537 of 1991 by the ROC,Punjab, Himachal Pradesh and Chandigarh. Further, Rana Sugars was issued a Certificate ofCommencement of Business on 9 August 1991 by the ROC, Punjab, Himachal Pradesh and Chandigarh.

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The Company falls under the jurisdiction of the district courts of Chandigarh and the High Court of Punjaband Haryana, India.

Registered Office

Rana Sugars is having its reg istered office at SOC 49-50, Sector 8-C, Madhya Marg, Chandigarh - 1 6000 9.

Rana Group

Rana Sugars is a member of Rana Group of companies and has six (6) other group companies namely RanaPolycot Limited, Rana Leathers Limited, Rana Informatics Limited, R.G.S. Traders Pvt. Ltd., SriHargobindpur Sugars Private Limited and Rana Infrastructures Private Limited. No equity of Rana SugarsLimited is held by any other Group Company nor any Group Company hold any shares in Rana SugarsLimited.

Subsidiaries of the Company

The Company has no subsidiary company.

Main Objects of the Company

The main objects as set out in Article III (A) of the Memorandum of Association of the Company are:

1. To carry on all or any of the business of manufacturers, importers, exporters and dealers in alltypes and grades of Sugar and it’s allied products.

2. To generate, distribute, supply and employ electricity, all kinds of power and energy out of thesteam generated in the process of manufacturing of sugar and its by-products.

3. To carry on all or any business of manufacturers, importers, exporters, distributors and otherwisedealers in sugar and its by-products such as molasses, baggage, alcohol and other chemicalsextracted from sugar, molasses and baggage, manures, breweries, distilleries, and manufacturers ofall kinds of preserved food, sauces, jams, alcoholic and non-alcoholic drinks and pharmaceuticalsfor domestic and hotel use.

4. To carry on all or any of the business of cultivators, planters, growers, processors, buyers, millersand dealers of all types of sugar cane, sugar beet and other agriculture products of the soil as maybe required for the purpose of the Company.

5. To carry on all or any of the business of manufacturers, importers and exporters, distributors,processors and oth erwise dealers in all types of raw materials like Sulph ur, Lime, Ch emicalspacking material, gunny bags, plastic and synthetic bags, metallic and non-metalic bag &containers and things required for the production of sugar, its by-products and electricity.

6. To manufacture, export, import, distribute or sell in retail and wholesale pulp, simplex, duplex andtriplex boards, hard boards, soft boards, coated paper, writing paper and printing paper, specialtypaper, all variety of boards and paper and board products, art paper, newsprint, drawing paper,filter paper, grease p aper, insulation paper, kraft paper, cheque paper, absorbent paper, decorativelaminate paper.

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The present Board of Directors of the Company is as under:

Sl. No. Name Address Date of Appointment EducationalQualification

1. Mr. Rana Ranjit H. No. 53, Sector – 4, 30 July 1991 Diploma in HotelSingh Chandigarh Management

2. Mr. S. A. S. Bajwa Village Naya Gaon, 30 November 1992 M.A., LLB(Near Chandigarh)Distt. Ropar (Pb.)

3. Mr. A. S. Sodhi H. No. 2282, Sector 30 November 1992 Retd. IAS21-C, Chandigarh

4. Mr. S. S. Sekhon H. No. 659/2, Sector- 27 August 2001 B. Tech38-A, Chandigarh

5. Dr. Y. P. Abbi H. No. A-1/85, 30 July 2001 Ph.D. inSafdarjung Enclave, EngineeringNew Delhi

6. Mr. Rana Inder H. No. 53, Sector – 4, 31 October 2002 MBAPratap Singh Chandigarh

7. Mr. Rana Veer H. No. 53, Sector – 4, 31 October 2002 BBAPratap Singh Chandigarh

8. Mr. Baljit Singh H. No. 264, Shivalik 30 July 2004 ChemicalEnclave, NAC EngineerManimajra,Chandigarh

9. Mr. M. P. Singh H. No. 1740, Sector 1 December, 2005 Mechanical34-D, Chandigarh Engineer,

M B A10. Mr. S. K. Duggal H. No.1013, Sector 29 December, 2005 B. Tech,

43-B, Chandigarh LLB

Brief profile of the Board

1. Mr. Rana Ranjit Singh

Mr. Singh has done 3 years course in Hotel Management from Delhi Institute of ManagementStudies in the year 1976 after 12 standard. He is one of the promoters of the Company. He is alsoth

Managing Director of Rana Polycot Limited w.e.f. 27 March 2002 and Director in 4 otherCompanies, namely:

Sr.No. Name of the Company Date of appointment1 Rana Leathers Limited 12 July, 19942 Rana Informatics Limited 17 August, 19993 R.G.S. Traders Pvt. Limited 15 October, 20034 Sri Hargobindpur Sugars Pvt. Limited 5 April, 2000

He has about 15 years of experience in different fields of industry. He was Director of RanaSugars Limited w.e.f. 30 July 1991 and Director of Rana Polycot Limited w.e.f. 5 July 1993.Besides he was involved in his family business of Certified Seeds since 1977. He was ManagingDirector of the Compan y from 31 January 2002 to 31 January 2006. He is the Chairman of theCompany w.e.f. 31 January 2006.

2. Mr. S. A. S. Bajwa

Mr. Bajwa is holding a degree of LL.B and he has completed his LL.B from Punjab University in1973. He is practising as an advocate in Punjab & Haryan a High Court since 1993. He has worked

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as a Managing Director with Morinda Co-operative Sug ar Mill Ltd. from 1975 to 1977 and PunjabState Co-operative Bank from 1988 to 1992. He has also worked as an Ad ditional Managingdirector with MARKFED from 1978 to 1983 and administrator with Co-operative Sugar Mills,Punjab. He has about 30 years of experience. He is holding a directorship in the Company since 30November 1992.

3. Mr. A. S. Sodhi

Mr. Sodhi is a retired IAS since January, 1988. He has worked on various administrative posts inPunjab Government and its Corporations. He has about 35 years of experience. He is holding adirectorship in the Company since 30 Nov ember 1992.

4. Mr. S. S. Sekhon

Mr. Sekhon is holding a degree of B. Tech and has completed his B. Tech from PunjabAgriculture University, Ludhiana in 1977. He is a nominee Director of Punjab EnergyDevelopment Agency (PEDA) since 27 August 2001. He has about 28 years of experience. He hasworked in various Punjab Government Departments including Agriculture, Soil Conversation,Education etc. from 1977 to 1984. He worked as Senior Manager in Punjab Agro IndustriesCorporation Limited from 1984 to 1991. He has also worked in PEDA as Senior Manager from1991 to 1992, as Joint Director from 1992 to 1998. Presently he is working as Director in PEDA.He is holding a directorship in the Company since 27 August 2001.

5. Dr. Y. P. Abbi

Mr. Abbi is holding a degree of Ph.D. in Engineering and has completed his Ph.D in Engineeringfrom University of Wales, Swansea, U.K in 1973. He is a nominee Director of Indian RenewableEnergy Development Agency (IREDA) since 30 July 2001. He is also working as Senior Fellowin Energy Environment Technology Application s, Tata Energy Research Institute, New Delhisince April 2001. He has about 30 years experience. He has worked as Executive Director inBharat Heavy Electricals Limited from 1975 to 2001. He is holding a directorship in the Companysince 30 July 2001.

6. Mr. Rana Inder Pratap Singh

Mr. Singh is holding a degree of MBA and has completed his MBA from University of Kent, U.K. in the year 2003. He is one of the private promoters. He is also holding a directorship in fiveother Companies, namely:

Sl. No. Name of the Company Date of appointment1 Rana Leathers Limited 29 April, 20042 Rana Informatics Limited 3 September, 20033 R.G.S. Traders Pvt. Limited 29 April, 2 0044 Sri Hargobindpur Sugars Pvt. Limited 2 9 April, 20045 Rana Infrastructures Pvt. Limited 3 October, 2005

He has about 4 years of experience in the industry. He is the Managing Director of the Companyw.e.f. 31 January 2006.

7. Mr. Rana Veer Pratap Singh

Mr. Singh is holding a degree of BBA and has completed his BBA from Ehapn University LosAngles, U.S.A. in the year 2004. He is a representative of private promoters. He has about 4 yearsexperience in the industry. He is also director of Rana Infrastructures Pvt. Limited since 3 October2005. He is holding a directorship in the Compan y since 31 October 2002.

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8. Mr. Baljit Singh

Mr. Singh is a chemical engineer and has completed his engineering from Jadavpur University,Kolkata in the year 1979. He has worked with Steel Authority of India (SAIL) as AssistantManager from the 1970 to 1982 and with IFCI as Loan Officer (Tech), Dy. Manager, AssistantGeneral Manager, Deputy General Manager from 1982 to 2001. He has worked as ManagingDirector of NITCON from March 2001 to September 2002. He has about 32 years of experience.He is holding a directorship in the Company since 30 July 2004.

9. Mr. M. P. Singh

Mr. Singh is a Mechanical Engineer from Punjab University, Chandigarh that he has done inFebruary 1987. He has also done MBA from Punjab University, Chandigarh in November 1993.He is a nominee Director of Punjab Energy Development Agency (PEDA). He has worked asManager from May 1998 to July 200 3 and is working as Senior Manager from July 2003 to tilldate with PEDA. He is Director of the Company w.e.f. 1 December 2005.

10. Mr. S. K. Duggal

Mr. Duggal had done B. Tech from Delhi Polytechnic in 1959. He has also done LLB from PunjabUniversity, Chandigarh in 1996. He has worked as Executive Director of Punjab State IndustrialDevelopment Corporation Limited and Managing Director of NITCON Ltd. He has totalexperience of about 45 years in the industry.

Shareholding of the Directors of the Company

Sl. No. Name(s) No. of Shares held Percentage ofShareholding

1. Rana Ranjit Singh 2196561 4.412. Rana Inder Pratap Singh 3804100 7.633. Rana Veer Pratap Singh 3804100 7.63

Term of the Office of Directors

There are total ten directors on the Board of the Company. Out of which three are permanent directors who are noteligible for retirement. The remaining seven directors are liable to retire by rotation out of which 1/3 directorsretire by rotation every year.

Key Management Personnel

Sl. No. Name Age Qualification Experience1. Mr. Rana Ranjit 48 years Diploma in Hotel He is also the Managing

Singh Management Director of Rana PolycotLimited and holding aDirectorship in four otherassociates companies, namelyRana Leathers Limited, RanaInformatics Limited, R.G.S.Traders Pvt. Limited and SriHargobindpur Sugars Pvt.Limited. He has experience ofabout 15 years in differentfields of sugars and textilesindustry, besides he wasinvolved in his familybusiness of Certified Seeds.

2. Mr. Rana Inder 25 years M.B.A He is holding Directorship inPratap Singh five other associates

companies namely Rana

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Leathers Limited, RanaInformatics Limited, R.G.S.Traders Pvt. Limited, SriHargobindpur Sugars Pvt.Limited and RanaInfrastructures Pvt. Limited.He has experience of about 4years in the sugar industry,besides he was involved in hisfamily business of CertifiedSeeds.

3. Mr. Rana Veer Pratap 22 years B.B.A He has experience of about 4Singh years in the sugar industry

besides he was involved in hisfamily business of certifiedseeds. He is also director ofRana Infrastructures Pvt.Limited.

Corporate Governance

The Company’s Philosophy on Corporate Governance relates to transparency, accountability leading tomanagement reliability and equity in all its spheres and dealing with stakeholders. The Company continuesto follow the p rocedures and practices in conformity with the code of Corporate Governance. TheCorporate Governance at the Company recognise all stakeholders and the decision-making process reflectsthis concern of the Company.

Board Committees

There are various committees of Directors responsible for different aspects of the Company’s organisation.The Company gives importance to the corporate governance and operates in a transparent manner. In orderto facilitate the functioning of the Board and to provide effective supervision, the Company has constituteddifferent committees: the Audit Committee, Share Transfer Committee, Shareholders / Investors GrievanceCommittee and Remuneration Committee.

Audit Committee

The Audit Committee comprises of 3 non-executive directors and the Company Secretary is the Secretaryof the Audit Committee. The Committee met 4 times during the year 2004-2005 and the attendance ofmembers at the meetings is as follows:

Name of the Member Status No. of Meetings AttendedMr. A. S. Sodhi Chairman 4Mr. S. A. S. Bajwa Member 4Mr. Rajnish Tuli* Member 4Mr. Baljit Singh Member 2Mr. S.K Duggal** Member -

* Ceased to be member of Audit Committee w.e.f. 3 October 2005.** Appointed as member of Audit Committee w.e.f. 18 January 2006.

Terms of reference:

The Board has d efined the sco pe of Audit Committee to cover all areas provided for under section 292A ofthe Companies Act, 1956 and Clause 49 of the Listing Agreement of Stock Exchanges.

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Share Transfer Committee

The Committee comprises of three Non-Execu tive Director, Managing Director and Company Secretary asits members. The Committee met twenty five times during the year 2004-2005 and the attendance ofmembers at the meetings is as follows:

Name of the Member Status No. of Meetings AttendedMr. Rana Ranjit Singh ** Chairman 25Mr. Rajnish Tuli * Member 25Mr. Manmohan K. Raina** Member 25Mr. A. S. Sodhi *** Member -Rana Veer Pratap Singh **** Member -Sh. S.K. Duggal *** Member -

* Ceased to be member of Share Transfer Committee w.e.f. 3 October 2005.** Ceased to be member of Share Transfer Committee w.e.f. 18 January 2006.*** Appointed as member of Share Transfer Committee w.e.f. 18 January 2006.**** Appointed as member of Share Transfer Committee w.e.f. 31 January 2006.

Term of reference:

The Co mmittee has been formed to approve the matters relating to transfer, transmission and issue ofduplicate certificates etc.

Shareholders / Investors Grievance Committee

The present composition of the Shareholders / Investors Grievance Committee is as under:

Name of the Member StatusMr. A. S. Sodhi ChairmanMr. S. A. S. Bajwa MemberMr. Rajnish Tuli* MemberMr. S.K. Duggal** Member

* Ceased to be member of Shareholders / Investors Grievance Committee w.e.f. 3 October 2005.** Appointed as member of Shareholders / Investors Grievance Committee w.e.f. 18 January 2006

In accordance with Clause 49 (VI) (D) of the Listing Agreement with Stock Exchanges the Board hasauthorised Mr. Manmohan K. Raina, Company Secretary, as Compliance Officer of the Company.

Investors’ Complaints received and resolved during the year 2004-2005:

The Company has about 45,805 investors. The Company received 229 letters/complaints from the investorsand all the letters/complaints received were duly attended/resolved.

Term of reference:

The Committee has been formed to review and redressal of inv estors’ grievance regarding allotment ofsecurities, issue of duplicate certificates, dematerialisation of shares etc. and other allied matters.

Remuneration Committee

The present composition of the Remuneration Committee is as under:

Name of the Member StatusMr. A. S. Sodhi ChairmanMr. S. A. S. Bajwa MemberMr. Rajnish Tuli * Member

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Mr. S.K Duggal ** Member

* Ceased to be member of Remuneration Committee w.e.f. 3 October 2005 .** Appointed as member of Remuneration Committee w.e.f. 18 January 2006

Term of reference:

The Remuneration Committee, inter alia, recommends to the Board the remuneration package of theManaging Director.

Employees

As at 31 August 2005, the Company employed a total of 545 employees. The average number of employeesover the last 3 fiscal years are as follows:

Fiscal year ended 31 Fiscal year ended 31 Fiscal year ended 31March 2004 March 2005 March 2006

Average700Number of 302 545

Employees

The list of employees of Rana Sugars is as follows:

Sl. Category No. of No. of No. of TotalNo. Employees Employees Employees

(Head Office) (Sugar (DistilleryDivision) Division)

1. Vice President - 1 - 12. Company Secretary 1 - - 13. General Manager - 1 1 24. Dy. / Asstt. General 2 - 2 4

Manager5. Chief Chemist - 1 - 16. Chief Engineer - 1 - 17. Chief Cane Development - 1 - 1

Officer8. Chief Accounts Officer - 1 1 29. Managers 1 8 2 1110. Officers - 20 5 2511. Staff 14 181 101 29612. Workers - 295 60 355

TOTAL 18 510 172 700

The Company has not had any strikes or labour disputes since its incorporation. The Company’s employeesdo not belong to any labour union or other employee union.

There is no provision and/or scheme of the Company to offer any stock option for involving any employeeor staff in the capital of the Company.

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Employees’ Post-Retirement Benefits

Employees' post-retirement benefits include a Gratuity, Provident Fund, and Employees’ State Insurance,as follows:

The Payment of Gratuity Act, 1972

The Company’s liability to pay gratuity arises on superannuation/ retirement/ resignation/death/disablement of an employee who has rendered five year’s of continuous service. As per theprovisions of the Gratuity Act, every employee other than an apprentice, irrespective of his wages, isentitled to receive gratuity after he has rendered continuous service for five years or more. Gratuity ispayable at the rate of fifteen day’s wages for every completed year of service, not exceeding Rs.350,000.The gratuity can be withheld, to the extent of the damage caused, if the act for which the services of anemployee were terminated had resulted in loss to the employer.

Employees Provident Fund and Miscellaneous Provisions Act, 1952

The provisions of the EPF Act are intended for the better future of covered workers on their retirement andalso for their dependents in the event of a worker’s death in the course of employment.

As per section 6 of the EPF Act, the employer shall pay a total contribution, which shall be equal to 12.5%of basic wages (as defined under the EPF Act) to the Employees’ Provident Fund.

The Company is regular in depositing EPF and for the month of July 2005, Rana Sugars has deposited anamount of Rs.52,625.

The Employees State Insurance Act, 1948

The purpose of the ESI Act is to provide for certain benefits to employees in case of sickness, maternityand employment injury.

The ESI Act is applicable to any employee earning a wage of Rs.7,500 and below. The Employer shall payboth the employer’s contribution and the employee’s contribution. The Employer shall be entitled torecover from the employee, the employee’s contribution by deduction from the employee’s wages at therate of 1.75% of the monthly wages paid to the employee. The Employer shall make his contribution of4.75% of the monthly wages payable to the employee.

The Sugar Industry is a seasonal industry as such E.S.I. is not applicable to the Company.

Loans and Advances

The Company has obtained term loan s and working capital loans from various institutions such as StateBank of India, State Bank of Patiala, Bank of Baroda, UCO Bank and the total outstanding loans, as at 31 August2005 is of Rs.450.622million.

Financial Position

The Company has sufficient funds to meet its working capital requirements. The Company, vide BoardResolution dated 29 September 1995, has authorised its Directors as per the provisions of section 293(1)(d)of the CA56 to raise additional capital from time to time upto an amount of Rs. 1,000,000,000.

Investments

The Company has invested Rs.390,000 in the equity shares of UCO Bank. The market price of these sharesas on 31 March 2005 was Rs.973,375. The Company has also invested Rs.63,000,000 as on 30 September2005 in Rana Infrastructures Pvt. Limited under section 372A of the Companies Act, 1956.

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Litigation

The following litigation cases are pending, in which Rana Sugars is involved, or has been involved ,whether as a claimant, defendant or third party:

Sl. No. Name of the Nature of the Case Amount Involved StatusCase (Rs.)

1. India Glycols Civil Suit for specific 4,000,000 The Case isLtd. vs. Rana performance presently atSugars evidence stageLimited M/s. India Glycols and the next date

Limited had agreed to of hearing haspurchase an old boiler been fixed for 4from the Company and May 2006.paid Rs.4 million asadvance for the same.But the party did not liftthe boiler in specifiedtime resulting into delayin start of Sugar Mill an dCompany suffered hugelosses due to that. TheCompany cancelled thedeed and opposite partyfiled suit for specificperformance in the Courtof Mr. R. K. Singla,Civil Judge, JuniorDivision, Chandigarh.

2. Rana Sugars Civil Suit 2,147,535 The decree hasLimited vs. been granted inAmritsar Pulp The Company had favour of Rana& Board Pvt. supplied bagasse to M/s. Sugars Ltd. TheLtd. Amritsar Pulp & Board request for stay

Pvt. Ltd. but the party of the oppositedid not pay the price of party has beenthe bagasse to Rana dismissed bySugars Limited. The Punjab &Company filed a Civil Haryana HighSuit in the Court of Civil Court, and caseJudge, Junior Division, has beenBaba Bakala and decree admitted. Nextfor Rs.2,147,535 was date of hearinggranted by the Court in has not beenfavour of Rana Sugars fixed yet.Limited.

3. Batala Co- Writ Petition Batala Co- The Notice ofoperative operative Sugar Mills motion has beenSugar Mills have filed a writ petition issued. Next datevs. State of in Punjab & Haryana of hearing hasPunjab & High Court regarding not been fixedothers transfer of villages of yet.

cane area, which belongto Rana Sugars Ltd.presently.

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4. Rana Sugars The Company filed a The case wasLimited Vs. writ petition for Stay heard on 31State of Order of imposing January 2006.Punjab & Purchase Tax on The Hon’bleOthers. Sugarcane as well as High Court

VAT @4%. ordered that theState Govt. shallnot resort tocoercive step forrecovery of Tax.Next date ofhearing has notbeen fixed yet.

5. Sarya Case regarding fixation Case remandedIndustries of Sugarcane price by to High Court byLtd. & Others State Govt. in excess of Supreme Court.Vs. State of what has been fixed by The Case hasPunjab etc. the Central Govt. been admitted

(Rana Sugars is one of after hearingthe parties) High Court.

Next date ofhearing yet to befixed.

6. Punjab State Rana Sugars Limited, in The case wasElectricity the year 1999, executed heard onBoard Vs. an agreement with 25.04.2006. TheRana Sugars Punjab State Electricity petition filed byLtd. Board, wherein the PSEB has been

power generated by dismissed.Rana Sugars is suppliedat a pre-determined rateto Punjab StateElectricity Board subjectto an escalation of 5% inthe purchase price for aperiod of 10 years fromthe date of execution ofthe agreement. However,due to change ingovernment policy,Punjab State ElectricityBoard has filed a petitio nbefore Punjab StateElectricity RegulatoryCommission,Chandigarh seeking areview of the saidagreement, as it is notdesirous of escalating thepurchase pricesubsequent to the year2006, payable to RanaSugars. In this regard,the petition h as beenfiled for review ofescalation in rate of

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purchase of power.TOTAL 6,147,535

The total exposure of the Company in the aforesaid litigation cases is Rs.6,147,535.

Significant Properties

Rana Sugars has taken and given certain properties on lease and it also owns certain properties in its ownname and the details of the same are as follows:

The details of the properties owned by the Company are as follows:

Sl. Title Address PurposeNo.1. Owned Village Bu ttar Seviyan, Works 1 (Sugar and Power Division)

Tehsil Baba Bakala, District Amritsar,Punjab

2. Owned Village Louhka, Near Patti, District Works 2 (Distillery Division)Tarn-Taran, Punjab [under imp lementation]

3. Owned B-103, Phase – VIII, Industrial Area, Branch OfficeS.A.S. Nagar, Mohali, Punjab

The details of the properties taken on lease by the Company are given below:

Sl. Title Address Commence Tenure Area Consideration PurposeNo. ment Date (approx

.)1. Leased SOC 49-50, 1 December 4 years 2 800 sq. Rs.33,000 per Registered

Sector 8-C, 1 998 ft. month for the first OfficeMadhya Marg, two years andChandigarh – Rs.37,950 for next1 60009. two years.

2. Leased Plot No. 14, 1 April 2005 11 months 2 9//1/2 Rs.25,000 per GuestDefence marlas month. House/Colony, BranchJalandhar, OfficePunjab.

The details of the property given on lease by the Company is given below:

Sl. Name of Area Commencement Tenure ConsiderationNo. the Lessee Date1. Rana Half Portion of Building 5 May 2003 5 years Rs.25,000 per

Polycot situated at B-103, Phase month with anLimited – VIII, Industrial Area, increase at the rate

S.A.S. Nagar, Mohali, of 7.5% every year.Punjab.

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Intellectual Property

Rana Sugars has not registered for any trademark in its name, its logo and its products in India and overseascountries or any service marks. Further, Rana Sugars does not have/own/possess any Intellectual PropertyRights such as copyrights, rights in designs, rights in inventions, know - how or trade secrets.

Delisting of the Company’s shares

The Company’s shares have been delisted from the Delhi Stock Exchange Association Limited, MadrasStock Exchange Limited and the Jaipur Stock Exchange Limited, due to non-trading of the shares at theseStock Exchanges.

The Board of Directors, in its meeting held on 6 September 2005 has approved the de-listing of shares ofthe Company from the Ludhiana Stock Exchange Association Limited, due to non-trading of the shares atthis Stock Exchange.

As the shares o f the Company were not being traded at the Delhi Stock Exchange Association Limited,Madras Stock Exchange Limited and the Jaipur Stock Exchange Limited since long, the Company gotvoluntary de-listed the shares from these stock exchanges.

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BUSINESS OF THE COMPANY

Rana Sugars is manufacturing white crystal sugar with a capacity to 5000 TCD. Rana Sugars is the firstCompany in the State of Punjab, which has set up a Co-generation Power Project, which is generating 14MW surplus power after meeting its captive demand. The surplus power is being sold to Punjab StateElectricity Board.

The distillery unit of the Company is under implementation and is likely to be completed by December2005.

BUSINESS OVERVIEW

The Company’s turnover has increased from Rs.835.15 million in 2000-2001 to Rs.1410.39 million in2004-2005 and its net profit has increased from Rs.28.3 million in 2000-2001 to Rs.178.3 million in 2004-2005.

Rana Sugars has 3 divisions:

1. Sugar Division2. Power Division3. Distillery Division

1. Sugar Division

The Sugar Division of the Company is located at Village Buttar Seviyan, Tehsil Baba Bakala,District Amritsar, Punjab, India. The Sugar Division was set up in the year of 1993. It has crushingcapacity of 5000 TCD. The basic raw material for the sugar unit is sugarcane, which is producedby the sugarcane growers in the area allocated by the Punjab Government, to the Company. Thesugar is sold through dealers in the State of Punjab and other states in India. Sugar being acon trolled commodity, its sale is made in accordance with the release orders issued by the CentralGovernment. The total manpower of Sugar Division is 487.

2. Power Division

The Power Division of the Company is located at Village Buttar Seviyan, Tehsil Baba Bakala,District Amritsar, Punjab, India. The Power Division of the Company was set up during the year2000. The Power Division has generating capacity of 20 MW power per day. After captive use ofthe power used for running sugar mill, the surplus power of about 13-14 MW is sold to the PunjabState Electricity Board for which the Company has executed a Power Purchase Agreement withPunjab State Electricity Board. There are about 22 employees engaged in the Power Division.

3. Distillery Division

The Distillery Division of the Company is being set up at Village Lauhka, near Patti, DistrictTarn-Taran, Punjab, India. This Unit will have capacity of 60 KL per day with a total cost ofproject Rs.350 million. The project is at an advan ced stage of completion and is likely to b ecompleted by the end of December 2005.

COMPETITIVE STRENGTHS OF THE COMPANY

1. Enough Sugar cane available

There is enough sugar cane available in the cane growing area of the Company. Further, theCompany has taken various steps for its progress and growth in the years to come. The Companyhas made sufficient arrangements to make available the required quantity and quality of sugarcaneduring the coming seasons. As an incentive to the cane growers, the Company has arranged thecrop loans from various banks for supply of cane seeds, insecticides and other agricultural inputsto the growers. The Company expects to have sufficient sugarcane for the coming seasons in itscatchment area.

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2. A well managed Company

Rana Sugars is a well managed Company. The Company is headed by its Board of Directorshaving competent and experienced Directors. The production department is looked after by theGeneral Manager. The cane crop area is looked after by a team of officers headed by Chief CaneDevelopment Officer. The financial, secretarial and legal activities are supervised by the highlyqualified, experienced and competent professionals.

3. Earning profit from very beginning

Rana Sugars started commercial production during the month of December 1993. The Companyhas shown excellent results from the very first year of its operation. The year wise net profit of th eCompany is as below:

Year Net Profit(Rs. in million)

1993-94 2.1381994-95 23.1001995-96 13.9341996-97 17.5501997-98 27.9081998-99 13.8761999-00 14.8942000-01 28.3362001-02 16.0722002-03 34.4732003-05 70.9682004-06 178.312

4. Good quality product

The main product of Rana Sugars is Sugar. It is manufacturing sugar of good quality. The ChiefChemist of the Company ensures that the quality of the product is maintained. There has neverbeen any complaint about quality of product of the Company.

5. Co-generation Power Project

Rana Sugars is the first Company in the state of Punjab, which has set up a co-generation powerproject. The project was set up during the year 2000. The power is produced mainly from bagasse,which is a by-product of sugarcane. The surplus power produced by the Company is sold toPunjab State Electricity Board for which the Company has executed a Power Purchase Agreement.

6. Dividend paying Company

Rana Sugars is a dividend paying Company. After stabilization, it has starting paying dividend toits shareholders. The Company paid dividend @ 10% to the shareholders for the financial year2003-04 and 2004-05. Considering the progress, growth and future plans, the Company expects topay higher rate of dividend in the coming years.

7. Good future plans for the growth of the Company

Rana Sugars is a progressive Company, which was set up in the year 1993 with a crushingcapacity of 2500 TCD, which has been increased to 5000 TCD subsequently. The Company hasset up co-generation power project with a capacity of 20 MW per day of power. The Company issetting up a Distillery Unit of 60 KL p er day capacity with a Cost of Rs.350 million, which islikely to be completed by December 2005. The Company is also expanding its power generationcapacity from 20MW to 30 MW, which is likely to be completed during the last quarter of 20 06.

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The Company is setting up 2 sugar mills of 5000 TCD capacity alongwith power generatingfacilities of 20 MW each in the State of Uttar Pradesh during the next year with a total cost ofProject of Rs.4180.00 million.

FUTURE STRATEGY

The Company proposes to set up a distillery unit of 60 KL with a total project cost of Rs.350 million.

The Company is in the process of expanding its power generation capacity from 20 MW to 30 MW, whichis likely to be completed in the next 6 months.

MAIN CUSTOMERS OF THE COMPANY

SUGAR:

1. M/s. Amar Nath Satpal & Co., Jammu2. M/s. Brijmohan & Sons, Chojawa (Punjab)3. M/s. Deep Raj & Co., Jammu4. M/s. Deepak Traders, Baba Bakala (Punjab)5. M/s. Gandamal Mangal Dass, Jammu6. M/s. H. P. State Civil Supply Company, Shimla7. M/s. Karan Sugar Store, Baba Bakala (Punjab)8. M/s. Nandlal Rakesh Kumar, Amritsar (Punjab)9. M/s. Nobal Karyana Store, Cheretha (Punjab)10. M/s. Pawan Kumar & Co., Mehta Chowk (Punjab)11. Radha Soami Satsang, Beas (Punjab)

POWER:

Punjab State Electricity Board (PSEB)

MOLASSES:

1. M/s. Chandigarh Distilleries Limited, Chandigarh2. M/s. Patiala Distilleries & Bottlers Limited, Patiala3. M/s. Santokh Ram Narinder Nath, Phagwara (Punjab)

MAIN SUPPLIERS OF THE COMPANY

The main raw material o f the Company is sugarcane, which is supplied by the farmers of the catchmentarea of the Company.

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PERFORMANCE OF THE COMPANY

Financial and Operational Performance

The Company’s turnover has increased from Rs.835.15 million in 2000-2001 to Rs.1410.39 million in2004-2005 and its net profit has increased from Rs.28.3 million in 2000-2001 to Rs.178.3 million in 2004-2005.

During the year 2004-2005, the income o f the Company has recorded an impressive growth of 6%. The netprofit of the Company has increased to Rs.178.312 million from Rs.70.968 million registering an increaseof 151.256%.

Adequacy of Internal Controls

The Company ensures existence of adequate internal control through documented policy and procedure tobe followed by the executives at v arious levels in the Company commensurate with the size of theCompany and the nature of its business for purchase of stores, raw-materials including components plantand machinery, equipments and other assets, and for the sale of goods.

Year to Year Profitability

Company's performance including net profits, earning per share for the last five (5) years:(Rs. In Millions)

Year 2004-2005 2003-2004 2002-2003 2001-2002 2000-01

Turnover (Gross) 1410.39 904.35 994.12 822.11 835.15PBIT 314.59 195.29 145.27 119.48 123.37Depreciation 62.52 61.00 57.76 40.29 37.49Interest 70.27 89.91 89.84 92.59 92.41Taxation 66.01 34.41 20.96 10.82 2.62PAT 178.31 70.97 34.47 16.07 28.34No. of Shares 49861000 3486 100 0 3 486 100 0 3 486 1000 28575800EPS (in Rs) 5.03 2.04 0.99 0.46 0.99

Financial Projections of the Company for the next 12 months

Projected Balance Sheets

LIABILITIES As on 31 March 2006 As on 31 March 2007Share Capital 8,005.05 10,505.05Share Premium 5,750.00 11,500.00Reserves & Surplus 9,603.75 17,120.84Term Loans 16,343.98 26,929.43Working Capital Limits 7,927.85 18,977.84Other Term Liabilities 939.86 939.86Current Liabilities 1,175.84 1,275 .84

TOTAL 49,746.33 87,248.87ASSETSFixed Assets 34,553.98 53,053.61Current Assets 13,855.64 30,023.58Non-Current Assets 3.90 3.90Cash & Bank Balance 1,320.37 4,167.77Miscellaneous Expenditure (to be 12.43 -Written Off)

Total 49746.22 87248.86

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Profitability Projections (Unit I at Amritsar)

Capacity Utilisation 87% 87%Particulars 2005-06 2006-07

Raw Materials 7862.63 7862.63Packing Material 202.275 202.275Consumable, Stores & Chemicals 163.13 163.13Power & Fuel Expense 150.00 150.00Wages & Salaries 466.15 489.45Factory Overheads 373.58 392.26Administrative Expenses 260.00 260.00Selling Expenses 55.46 55.46Total cost of Production 9533.21 9375.20Sales Realisation 13874.47 13874.47Misc. Income 100.00 100.00Gross Profit 4441.26 4399.27Interest on R.T.L 165.45 163.95Interest on Bank Borrowings 600.00 600.00Depreciation 680.00 690.00Misc. Expenses Written Off 25.00 12.43Operating Profit / Loss 2970.81 2932.89Profit before Tax 2970.81 2932.89Taxation 250.14 246.36Net Profit 2720.66 2686.54Dividend & Dividend Tax 646.46 646.46Net Profit after Dividend 2074.20 2040.08Gross Cash Accruals 3425.66 3388.97Net Cash Accruals 2779.20 2742.51

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Profitability Projections (Unit II a t Amritsar)

For the year ended 2005-06 2006-07

Cost of the production 2723.66 6214.90Administrative Expenses 20.00 40.00Selling expensesAdvertisement and publicity 16.66 3 8.08Selling and distribution 16.66 38.08Total selling ex penses 33.32 76.16Total cost of production 2776.98 6331.06Sales realization 3331.95 7615.88Gross profit before interest 554.97 1284.82

16.66 16.87Financial ExpensesInterest on term loan 100.00 200.00Interest on working capital 30.61 69.90Bank charges & commission 5.00 15.00Total Financial Expenses 135.61 284.90

Depreciation 85.04 170.09Operating profit 334.32 829.83Operating profit Margin % 10.03 10.90

Profit before taxation 334.32 829.83Provision for taxation 26.21 65.06Profit after tax 308.11 764.77Profit after tax % 9.25 10.04

Retained Profits 308.11 764.77

Total Cash accruals 393.16 934.86

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INFORMATION ON THE SHARES

Share Capital

As at 31 August 2005, the Company’s authorised share capital is Rs.500,000,000 divided into 50,000,000equity shares of Rs.10 each.

As at 31 August 2005, the issued, subscribed and paid up share capital of the Company is Rs.498,610 ,000divided into 49,861,000 equity shares of Rs.10 each and allotment money @ Rs.5/- per share aggregating toRs.294,500 is in arrears on 58,900 shares.

Capital History

The paid up capital of the Company consists of equity shares on ly.

Capital History of the Company is as follows:

Date of Face Total CumulativeIssueallotment/ Amount (Rs. number ofNo. of Valu Price

Fully Shares e Million) Consideration Remarks Equity(Rs.)paid-up (Rs.) Shares

Cash Subscribers to70 the

30.07.1991 7 10 10 Memorandum 7Firm allotmentto the

9,74,99,930 Cash promoters atthe time of

10.11.1993 97,49,993 10 10 Public Issue 97,50,0001,15,50,0 11,55,00,00 Cash Public issue

10.11.1993 00 10 10 0 2,13,00,000To the

7,27,58,000 Cash Promoters onPreferential

29.10.1999 72,75,800 10 10 Basis 2,85,75,800To the

6,28,52,000 Cash Promoters onPreferential

31.10.2001 62,85,200 10 10 Basis 3 ,48,6 1,000To the

34,50,00,00 Cash Promoters on1,50,00,0 0 Preferential

18.03.2005 00 10 23 Basis 4,98,61,000

Capital Structure

Capital Structure of the Company as at 31 August 2005:

Share Capital Amount(in Rupees Million)

A Authorised Capital 1000 *Divided into 100 million Equity Shares of Rs.10 each

B Issu ed, Subscribed and Paid up Capital 498.61Divided into fully paid 49.861 million Equity Shares of Rs.10 each

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C Present Offer24.55 million Equity Shares of Rs.10 each 245.56

D Equ ity Capital after the Present Offer 744.1774.41 million Equity Shares of Rs.10 each

* Authorised Capital increased from Rs.500 million to Rs.1000 million w.e.f. 03.11.2005

Shareholders Holding More Than 5% Voting Rights in the Company

S. Name(s) No. of Shares Percentage ofNo. Held Shareholding

INDIAN PROMOTERS

1. Rana Inder Pratap Singh 3,804,100 7.632. Rana Veer Pratap Singh 3,804,100 7.633. Rana Karan Pratap Singh 3,804,100 7.634. Rana Preet Inder Singh 3,804,100 7.635. Punjab Energy Development Agency 2,550,000 5.11

Dividends

Rana Sugars has declared dividend o f 10% fo r the Financial Year 2004-2005.

Although, the Company has no intention to discontinue dividend payments in future, however, the Companycannot assure that any future dividends will be declared or paid or that the amount thereof will not be decreased.Holders of GDRs on the applicable dividend record date will be entitled to receive dividends, if declared,payable on equity shares represented by such GDRs. Cash dividends on equity shares represented by GDRswill be paid to the depositary in Rup ees and, except as otherwise described under “Description of GlobalDepositary Receipts,” will be conv erted by the d epositary into U.S. dollars and distributed, net of fees,taxes, duties, charges, costs and expenses, if any, to the holders of such GDRs.

Price Range of Equity Shares

The Company’s equity shares are listed and traded on the Indian Stock Exchanges. The prices for equityshares as quoted in the official list of the Indian Stock Exchanges are expressed in Indian Rupees. For thelast 3 years, the following figures are provided in respect of NSE:

• The reported high and low sales prices quoted in Rupees for the equity shares; and

• The total and average trading volume for the equity shares.

The prices and volumes quoted on other stock exchanges may be different.

Financial Year Quarter Share Price (Rs.) Volume

High Low No. of AverageShares

2002-03 1 Quarter 5.00 1.55 394985 6583s t

2 Quarter 6.55 3.25 578386 9037n d

3 Quarter 4.15 2.40 238414 4041rd

4 Quarter 4.70 2.65 282964 4564t h

2003-04 1 Quarter 6.09 3.40 442760 7141s t

2 Quarter 11.18 5.55 3416896 52568n d

3 Quarter 14.90 6.50 9551848 146952rd

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4 Quarter 14.40 8.55 5385148 86857t h

2004-05 1 Quarter 17.30 7.80 10056345 159624s t

2 Quarter 18.95 8.50 20176610 305706n d

3 Quarter 25.50 14.55 58656604 931057rd

4 Quarter 32.95 20.25 93294321 1529415t h

2005-06 1 Quarter 32.00 24.05 32099774 493843s t

2 Quarter 36.80 24.90 33046225 524543n d

As on 30 September 2005, the closing price of a Share on the BSE was Rs.31.70.

Shareholding Pattern

The distribution schedule of shareholding of Rana Sugars, as at 31 March 2006, is as follows:

CATEGORY NO. OF SHARES %AGE OFHELD SHAREHOLDING

A. PROMOTERS HOLDING1. Promoters- Indian Promoters 23,362,103 4 6.854- Foreign Promoters(NRI) Nil Nil2. Persons acting in concert Nil Nil**Sub Total** 23,362,103 46.854B. NON-PROMOTERS HOLDING3. Institutiona l Investorsa. Mutual Funds & UTI 36,400 0.073b. Banks, FIs, Insurance Companies, 14,250 0 .029(Central/State Govt. Institutions, Non-Govt. Institutions)c. Foreign Institutional Investors Nil Nil**Sub Total** 50,650 0.1024. Othersa. Private Corporate Bodies 6,398,725 12.833b. Indian Public 18,601,735 37.307c. NRIs/OCBs 1,447,787 2.904d. Any other --- ---**Sub Total** 26,448,247 53.044**GRAND TOTAL** 49,861,000 100.000** TOTAL FOREIGN HOLDING** 1,447,787 2.904

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DESCRIPTION OF THE SHARES AND COMPANY PROCEDURES

General

The present offer of GDRs is being made pursuant to the resolution passed at the Annual General Meetingof the Company held on 3 November, 2005 and the Board Resolution in this regard passed on 5 October,2005, for the purposes of this Offering Circular, “sh areholder” means a shareholder who is registered as amember in the Register of Members of the Company.

Dividend

Under the Companies Act, unless the Board recommends the payment of a dividend, the Company may notdeclare a dividend. Similarly, under its Articles of Association (“Articles”), the shareholders may, at th eAGM, approve a dividend of an amount less than that recommended by the Board. The shareholders cannotincrease the amount of dividend. The dividend recommended by the Board, if any, and subject to thelimitations described above, is distributed and paid to shareholders in proportion to the paid up value oftheir shares within thirty (30) days from the date of the declaration by the company after the approval bythe shareh olders at the AGM. Pursuant to its Articles, the Board has discretion to declare and pay interimdividends without shareholders’ approval. However, the final dividend is required to be approved in theAGM of the company. The company’s shares are compulsorily traded in dematerialised form andaccordingly all shares including converted shares are entitled to a full dividend in any particular year.Under the Companies Act, dividends can only be paid to the registered shareholder at a record date fixed onor prior to the AGM in cash or to his order or his banker’s order.

The Companies Act provides that any dividends that remain unpaid or un claimed after the thirty (30) daysperiod are to be transferred to a special bank account (the Unpaid Dividend Account) within seven (7) daysof the expiry of the th irty (30) days period. The company is required to transfer any dividends that remainunclaimed for seven (7) years from the date of the transfer to the Unpaid Dividend Account to an InvestorEducation and Protection Fund created by the Government. After the transfer to this fund, no claim shall lieagainst the fund or against the company in respect of unclaimed and unpaid dividends.

Under the Companies Act, dividends may be paid out of the profits of the company in th e year in which thedividend is declared or out of the undistributed profits of the previous fiscal years. Before declaring adividend, the comp any is required under the Companies Act to transfer to its reserves a min imumpercentage of its profits for that year, depending upon the dividend percentage to be declared in such year.The Companies Act further provides that, in the ev ent of an in adequacy or absence of profits in any year, adividend may be declared for such year out of the company’s accumulated profits, subject to the followingconditions:

• The rate of dividend to be declared shall not exceed 10% of its paid up capital or the average of the rateat which dividends were declared by the company in the previous 5 years, whichever is less;

• The total amount to be drawn from the accumulated profits earned in the previous years and transferredto the reserves shall not exceed an amount equivalent to 10% of its paid up capital and free reserves,and the amount so drawn is to be used first to set off the losses incurred in the fiscal year before anydividends in respect of preference or equity are declared; and

• The balance of reserves after such withdrawals shall not fall below 15% o f its paid up capital.

Any income by way of dividends distributed, declared or paid (whether interim or otherwise) by any Indiancompany is subject to dividend distribution tax, as per Finance Act, 2005, at a rate of 12.5% including 10%surcharge plus 2% education cess on the dividend.

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Bonus Shares

In addition to permitting dividends to be paid out of current or retained earnings as described above, theCompanies Act permits the Board of the company to distribute an amount transferred from the generalreserve or capital redemption reserve to shareholders in the form of fully paid-up bonus shares, wh ich aresimilar to a stock dividend, subject to an approval from the shareholders of the company in the generalmeeting. The company is not permitted to issue bonus shares out of reserves created by revaluation ofassets. The Companies Act also permits the issuance of bonus shares from a share premium account. Thosebonus shares are distributed to the shareholders in the proportion of the number of shares owned by them.The shareholders on record on a fixed record date are entitled to receive such bonus shares.

Pre-emptive Rights and Issue of Additional Shares

The Companies Act gives shareholders the right to subscribe for new shares in proportion to theirrespective existing shareholdings, unless the shareholders decide otherwise by a special resolution. Aspecial resolution is a resolution passed by shareholders where the number of votes cast in favor of theresolution is not less than three (3) times nu mber of votes cast against the resolution . If the specialresolution is no t approv ed, the new shares must first be offered to the existing shareholders as of a fixedrecord date. The offer must include: (i) the right, exercisable by the shareholders of record, to renounce theshares offered in favor of any other person; and (ii) the number of shares offered and the period of the offer,which may not be less than fifteen (15) days from the date of offer. If the offer is not accepted it is deemedto have been declined. The Board of Directors is authorised under the Companies Act to distribute any newshares not purchased by the pre-emptive rights holders in the manner that it deems most beneficial to thecompany.

If the resolution is passed as an ordinary resolution, the Company may, with th e approval of the CentralGovernment, issue such shares to persons other than the existing shareholders.

General Meetings of Shareholders

There are two types of general meetings of shareholders: annual general meetings and extraordinarygeneral meetings. The company is required to convene an annual general meeting within six months of theend of each fiscal year and may convene an extraordinary general meeting of shareholders when necessary,or at the request of a shareholder or shareholders holding on the date of the request at least 10% of the paidup cap ital of the company. Not more than fifteen months is permitted to elapse between the date of oneannual general meeting and that of the next. A general meeting of the shareholders is generally convenedby the Chairman of the company in accordance with a resolution of the Board. Written notices setting outthe agenda of the meeting must be given, at least twenty one days (excluding the days of mailing andreceipt) prior to the date of the general meeting to the shareholders on record).

The annual general meeting of shareholders is either held at the registered office of the company or at someother place within the city in which the registered office is situated.

Alteration of Share Capital

As per Article 72 of the AOA of the Company:

“The Company may in General Meeting after the conditions of its Memo randum as follows:

(a) Consolidate and divide all or any of its share capital into shares of larger amount than its existingshares;

(b) Sub-divide its shares or any of them into shares of smaller amount than is fixed by theMemorandum, so, however, that in the sub-division the proportion between the amount paid andthe amounts, if any, unpaid on each reduced share shall be the same as it was in the case of theshare from which the reduced shares is derived.

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(c) Cancel shares which, at the date of such General meeting have not been taken or agreed to betaken by any person and diminish the amount of its share capital by the amount of the shares socancelled.”

Modification of Rights

As per the Companies Act, where the company’s share capital is divided into different classes, all or any ofthe rights and privileges attached to any class (unless otherwise provided by the terms of issue of the sharesof that class) may be varied, abrogated or dealt with the consent in writing of th e holders of three-fourths ofthe issued shares of that class, or with the sanction of a special resolution passed at a separate meeting ofthe holders of shares of that class.

Voting Rights

At any general meeting, voting is by show of hands unless a poll is demanded by a shareholder orshareholders present in person or by proxy, holding at least 10% of the total shares entitled to vote on theresolution. Upon a show of hands, each shareholder has one vote and, on a poll, every shareholder entitledto vote and present in person or by proxy has voting rights in proportion to the paid up capital held by suchshareholder.

Ordinary resolutions are adopted at general meetings of shareholders by a majority of the shareholdershaving voting rights present in person or by proxy. However, certain resolutions, such as amendments tothe Memorandum or Articles of Association, commencement of a new line of business, issue of furthershares to persons other than existing shareholders and reduction of share capital, require a specialresolution i.e., the votes cast in favor of the resolution (whether on a show of hands or on a poll) are notless than three times the number of votes cast against the resolution.

A shareholder may exercise his voting rights by proxy to be given in the form provided in the relevantschedule to the Companies Act. The instrument appointing a proxy must be delivered to the company atleast forty eight hou rs prior to th e meeting. A corporate shareholder is also entitled to nominate arepresentative to attend and vote (both upon a show of hands and upon poll) on its behalf at generalmeetings.

A holder of GDRs has no voting rights or other direct rights of a shareholder with respect to the Shares.

The Depositary will not exercise any voting rights in respect of the Shares unless it is required to do so bylaw. If so required, the Depositary will, at the direction of the Board of Directors of the Company (subjectto the advice of legal counsel taken b y the Depositary and the Company at the expense of the Company),either vote as directed by the Board of Directors of the Company or give a proxy or power of attorney tovote the Shares in favour of a Director of the Company or other person or vote in same manner as thoseshareholders designated by the Board of Directors of the Company. A valid corporate decision of theCompany will bind the Depositary and the Holders notwithstanding these restrictions on voting rights.

Shares, which have been withdrawn from the depositary facility and transferred on the Comp any’s registerof members to a person other than the Depositary or its nominee may be voted by the holders thereof.However, Holders or owners of GDRs may not receive sufficient advance notice of shareholder meetings toenable them to withdraw the Shares and vote at such meetings

Recently, the government has framed rules for listed companies for voting by postal ballot in case ofresolutions like alteration of the object clause in the Memorandum of Association, buy back of shares, issueof shares with differential voting rights, sale of whole or substantially whole of undertaking of a company,giving loans or extending guarantees in excess of limits and compromises or arrangements with creditorsand members.

Audit and Annual Report

At least twenty-one (21) clear days before the annual general meeting of shareholders (excluding the dateof mailing and the date of the meeting), the company must dispatch to the shareholders a detailed version ofthe audited balance sheet and profit and loss account and the related reports of the Board and the auditors,

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together with notice convening the annual general meeting. Such documents are presented at the annualgen eral meeting for adoption.

Under the Companies Act, the Co mpany must file the balance sheet and profit and loss account presentedto the shareholders within thirty days of the conclusion of the annual general meeting with the Registrar ofCompanies in Punjab, Himachal Pradesh and Chandigarh, India. The Company must also file an annualreturn, which includes a list of the shareholders, directors as on the date of annual general meeting, withinsixty days of the conclusion of the annual general meeting. In case the annual general meeting has not beenheld within the time specified in the Companies Act, the annual return should be filed within sixty daysfrom the last date on which the annual general meeting ought to have been held as per the provisions of theCompanies Act. Copies of the annual reports are also required to be sent to the stock exchange where theCompany’s shares are listed.

Under the listing agreement, the Company must fu rnish to th e Indian Stock Exchang es where its shares arelisted, unaudited financial results on a quarterly basis within one month from the end of the relevant quarterduly approved by the Board of Directors. However, in respect of the half yearly results, if the Companyintimates in advance to the Indian Stock Exchanges that it will publish audited half yearly financial resultswithin two months of the close of the half year, then in such a case unaudited results and limited reviewneed not be published/given to the Indian Stock Exchanges. The Company must also publish its financialresults in at least one English language daily newspaper circulating in the whole or substantially the wholeof India and also in a regional newspaper.

Register of Members, Record Dates and Transfer of Shares

The Company maintains a Register of Members at its registered office. Fo r th e purpose of determining theshares entitled to annual dividends, the register is closed for a specified period prior to the AGM. The dateon which this period begins is the record date.

To determine which shareholders are entitled to specify shareholder rights, the company may close theregister of shareholders. The Companies Act requires a Company to give at least seven days' prior notice tothe public by way of a newspaper advertisement before such closure. The Company may not close th eregister o f shareholders for more than thirty co nsecutive days, and in no event for more than forty-five daysin a year. Trading of the equity shares, however, may continue while the register of shareholders is closed.

Following the enactment of the Depositories Act and the repeal of section 22A of the Securities ContractsAct, which enabled companies to refuse to register tran sfers of shares in some circumstances, the shares ofpublic companies are freely transferable, sub ject only to the provisions of section 111A of the CompaniesAct. In accordance with the provisions of section 111A (2) of the Companies Act, the Company’s Directorsmay exercise this discretion if they have sufficient cause to do so. If the Company’s Directors refuse toregister a transfer of shares, the shareholder wishing to transfer his, her or its shares may file an appeal withthe Company Law Board (“CLB”). Pursuant to Section 111A (3), if a transfer of shares contravenes any ofthe provision s of the SEBI Act or the regulations issued thereunder or the Sick Industrial Companies(Special Provisions) Act, 1985 or any other Indian laws, the CLB may, on an application made by th eCompany, a Depositary incorporated in India, a participant, an investor, or the Securities and ExchangeBoard of India, direct the rectification of the register of members. The CLB may, in its discretion, issue aninterim order suspending the voting rights attach ed to the relevant shares before making or comp leting itsinvestigation into the alleged contravention. During the p endency of the application with the CLB, therights of a shareholder to transfer the shares are not suspended unless there is an order of the CLB to thateffect.

Acquisition by the Company of its own Shares

Under the Companies Act, approval of the Company’s shareholders by passing special resolution voting onthe matter and confirmation of the High Court of the State in which the registered office of the Company issituated (in the Company’s case, this is Punjab, Himachal Pradesh and Chandigarh) is required to reducethe Company’s share capital. The Company may, under some circumstances, acquire its own equity shareswithout seeking the confirmation of the High Court. However, the Company wou ld have to extinguish theshares it has so acquired within the prescribed time period. Generally, the Company is not permitted toacquire its own shares for treasury operations. An acquisition by a listed Company of its own shares

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(without having to obtain the confirmation of the High Court) must comply with prescribed rules,regulatio ns and conditions as laid down in the Companies Act and the SEBI (Buy-back of Securities)Regulations, 1998.

Disclosure of Ownership Interest

Section 187C of the Companies Act requires beneficial owners of shares of Indian companies, who are notHolders on record, to declare to the Company details of the Holder on record and requires the Holder onrecord to declare details of the beneficial owner. Any lien, promissory note or other collateral agreementcreated, executed or entered in to with respect to any equity share by its registered owner, or anyhypothecation by the registered owner of any equity share, shall not be enforceable by the beneficial owneror any person claiming th rough the beneficial owner if such declaration is not made. Failure to comply withSection 187C of the Companies Act will not affect the Company’s obligation to register a transfer of sharesor to pay any dividends to the registered holder of any shares pursuant to which the declaration has notbeen made. While it is unclear under Indian law whether Section 187C of the Companies Act applies toholders of GDRs, in the absence of any specific exemption from the Department of Company Affairs, thereporting requirements under Section 187C of the Companies Act could be enforced against holders ofGDRs. It is clear, however, that investors who exchange GDRs for the equity Shares will be subject to th erequirements of Section 187C. Any investor who fails to comply with these requirements may be liable fora fine of up to Rs.1,000 for each day such failure continu es. Additionally, if the Company fails to complywith the provisions of Section 187C, then Company, and every one of its officers, may be liable for a fineof up to Rs.100 for each day the default continues. Additionally, holders of GDRs may be required tocomply with the notification and disclosure obligations pursuant to the provisions of the DepositAgreement to be entered into by the Company and the Depositary.

Liquidation Rights

Subject to the rights of creditors, employees and th e holders of any shares entitled by their terms topreferential repayment over the shares, if any, in the event of Company’s winding-up, the holders of theshares are entitled to be repaid the amounts of paid up capital or credited as paid up on those shares. Allsurplus assets remaining after payments are made to holders of any preference shares belong to holders ofthe shares in proportion to the amount paid up or credited as paid up on such shares, respectively, at thecommencement of the winding up.

Takeover Code

Disclosure and mandatory bid obligations under Indian law are g overned by the Securities and ExchangeBoard of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Code”),which prescribes certain thresholds, or trigger points that give rise to these obligations. The Takeover Codeis under constant review by SEBI and was recently amended.

The most important features of the Takeover Code, as amended, are as follows:

• Any acquirer (meaning a person who, directly or indirectly, acquires or agrees to acquire shares orvoting rights in a comp any, either by himself or with any person acting in concert) who acquiresshares or voting rights that would entitle him to more than 5% or 10% or 14% or 74% of theshares or voting rights in a company is required to disclose the aggregate of his shareholding orvoting rights in that company to the company (which in turn is required to disclose the same toeach of the stock exchanges on which the Company's shares are listed) and to the stockexchange(s) on which the Company’s shares are listed within two days of (a) the receipt ofintimation of allotment of shares; or (b) the acquisitions of shares or voting rights, as the case maybe.

• A person who holds more than 15% of the shares or voting rights in any company shall, withintwenty one days from the financial year ending 31 March, as well as the record date of thecompany for the purposes of declaration of dividend, disclose the number and percentage of sharesor voting rights held by him and by persons acting in concert with him, in that company to the

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company (which in turn is required to disclose the same to each of the stock exchanges on whichthe Company's shares are listed).

• Promoters or persons having control of a company are also required to make the said disclosure oftheir holdings in the same manner.

• An acquirer cannot acquire shares or voting rights which (taken tog ether with existing shares orvoting rights, if any, held by him or by persons acting in concert with h im) would entitle su chacquirer to exercise 15% or more of the voting rights in a company, unless such acquirer makes apublic announcement offering to acquire an aggregate minimum of 20% of the shares of theCompany in accordance with the Takeover Code.

• An acquirer who, together with persons acting in concert with him, holds between 15% and 75%of the shares, cannot acquire additional shares or voting rights that would entitle him to exercisemore than 5% of the voting rights in a period of twelve months ending on 31 March unless suchacquirer makes a public announcement offering to acquire an aggregate minimum of 20% of theshares of the Company, in accordance with the Takeover Code.

• Any further acquisition of shares or voting rights by an acquirer who holds 75% of the shares orvoting rights in a company triggers the same public announcement requirements.

• In add ition, regardless of whether there has been any acquisition of shares or voting rights in acompany, an acquirer acting in concert cannot directly or indirectly acquire control over acompany (for example, by way of acquiring the right to appoint a majority of the directors or tocontrol the management or the policy decisions of the Company) unless such acquirer makes apublic announcement offering to acquire an aggregate minimum of 20% of the shares of thecompany to acquire shares and acquires such shares in accordance with the Takeover Code.

The Takeover Code sets out the contents of the required public announcements as well as the minimumoffer price.

The Takeover Code permits conditional offers as well as the acquisition and subseq uent delisting of allshares of a company in case of non-compliance; and provides specific guidelines for the gradual acquisitionof shares or voting rights. Specific obligations of the acquirer and the board of directors of the targetcompany in the offer process have also been set out. Acquirers making a public offer are also required todeposit in an escrow account a percentage of the total consideration, which amount will be forfeited in theevent the acquirer does not fulfill his obligations. In add ition, the Takeover Code defines acqu isitio n toinclude indirect acquisition by virtue of acquisition of holding comp anies, wh ether listed or unlisted,whether in India or abroad.

There are separate requirements for bail-out takeovers relating to substantial acquisition of shares of afinancially weak company but not a “sick industrial company” pursuant to a rehabilitation schemeapproved by a public financial institution or a scheduled bank. A “financially weak company” is acompany, which has at the end of the previous fiscal year accumulated losses, which have resulted inerosion of more than 50% but less than 100% of net worth at the end of the previous fiscal year. A “sickindustrial company” is an industrial company registered for more than 5 years, which has at the end of anyfiscal year accumulated losses equal to or exceeding its entire net worth.

The Takeover Code does not apply to certain specified acquisitions including the acquisition of shares:

• by allotment in pursuance of an application made to a public / rights issue;• allotment to the underwriters pursuant to any underwriting agreemen t;• inter se transfer amongst group, relatives, promoters and foreign collaborators who are shareholders,

etc.;• the acquirer and the perso n acting in concert with him where such transfer of shares takes place

amongst those persons (inter se transfer) three years after the date of closure of the public offer madeby them under the said regulations;

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• acquisition of shares in the ordinary course of business by a registered stock -broker of a stockexchange on behalf of clients; a registered market maker of a stock exchange in respect of shares forwhich he is the market maker, during the course of market making; by Public Financial Institutions ontheir own account; by b anks and public financial institutions as pledges;

• acquisition of shares by a person in exchange of shares received under a public offer under the saidregulations;

• acquisition of shares by way of transmission on succession or inheritance;• acquisition of shares by government companies within the meaning of Section 617 of the Comp anies

Act, 1956 (1 of 1956) and statutory corporations;• transfer of shares from state level financial institutions, pursuant to an agreement between such

financial institution and such co-pro moter(s);• transfer of shares from venture capital funds or foreign venture capital investors registered with the

Board to promoters of a venture capital undertaking or venture capital undertaking pursuant to anagreement between such venture capital fund or foreign venture capital investors with such promotersor venture capital undertaking;

• pursuant to a scheme – framed under Section 18 of the Sick Industrial Companies (Special Provisions)Act, 1985; of arrangement or reconstruction including amalgamation or merger or demerger under anylaw or regulation, Indian or fo reign;

• Change in control by takeover of management of the borrower target company by the secured creditorsor by restoration of the management to the said target company by the said secured creditor in terms ofthe securitisation and reconstruction of financial assets and enforcement of Security Interest Act, 2002;

• acquisition of shares in companies whose shares are not listed on any stock exchang e.

Disclosures under the Insider Trading Regulations

The Insider Trading Regulations have been issued by SEBI vide SEBI (Prohibition of Insider Trading)Regulations, 1992, to prevent insider trading in India by prohibiting and penalising insider trading in India.The Insider Trading Regulations prohibit an “insider” from dealing, either on his/her own behalf or on behalfof any other person, in the securities of a company listed on any stock exchange when in possession ofunpublished price sensitive information. The terms, “insider”, “unpublished” and “price sensitiveinformation” are defined in the Insider Trading Regulations. The insider is also prohibited fromcommunicating, counselling or procuring, directly or indirectly, any unpublished price sensitive informationto any other person whilst in possession of such unpublished price sensitive information, shall not deal in anysecurities to which that information relates. The prohibition under the Insider Trading Regulations alsoextends to a company dealing in the securities of other company listed on any stock exchange whilst in thepossession of unpublished price sensitive information. It is to be noted that recently SEBI has amended theInsider Trading Regulations to provide certain defences to the prohibition on companies in possession ofunpublished price sensitive information dealing in securities.

The Insider Trading Regulations make it compulsory for listed companies and certain other entities associatedwith the securities market to establish an internal code of conduct to prevent insider trading and also toregulate disclosure of unpublished price sensitive information within such entities so as to minimise misuse ofsuch information. To this end, the Insider Trading Regulations provide a model code of conduct. Further, theInsider Trading Regulations specify a model Code of Corporate Disclosure Practices to prevent insidertrading, which must be implemented by all listed companies.

Pursuant to the Insider Trading Regulations, any person holding more than 5% of the ordinary shares orrelated voting rights in any listed company must disclose to the company in the specified form, the number ofshares or voting rights held by such person on becoming such a holder, within four working days of (a) thereceipt of intimation of allotment of shares or (b) the acquisition of shares or voting rights, as the case may be.Additionally, any change in such shareholding or voting rights in excess of 2% from the time of the lastdisclosure (even if such change results in the shareholding or voting rights falling below 5%) is required to bedisclosed to the company within four working days of (a) the receipt of intimation or allotment of shares or (b)the acquisition or sale of shares or voting rights, as the case may be. The company is also required to disclosesuch information, in the specified format, received from its shareholders within five days of the receipt of suchinformation, to the stock exchanges on which the company’s shares are listed.

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Any person who is a director or officer of a listed company is required to disclose to the company, in thespecified form, the number of shares or voting rights held by him within 4 days of becoming such director orofficer of the company. Further, such director or shareholder must disclose any change from the lastdisclosure in his shareholding and voting rights in excess of Rs.500,000 or 25,000 shares or 1% of totalshareholding or voting rights, whichever is lower. The disclosure shall be made within four working days of(a) the receipt of intimation or allotment of shares or (b) the acquisition or sale of shares or voting rights, asthe case may be.

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GOVERNMENT AND OTHER STATUTORY APPROVALS

The Company has obtained all the n ecessary consents/ licenses/ permissions/ approvals from theGovernment and various Government agencies required for its present business and no further approvalsare required for carrying on the present as well as the proposed business, except as stated elsewhere in thisOffering Circular. The Company will take all the necessary steps in compliance with applicable laws toobtain any other governmental licenses or permissions required to undertake for any of its proposedactivities.

The Company h as obtained the following Govern ment approvals/licenses/permissions:

Incorporation and other statutory compliances

1. Certificate of Incorporation bearing no. 53-11537 of 1991 dated 30 July 1991 in the name of Ran aSugars Limited issued by the ROC, Punjab, Himachal Pradesh and Chandigarh.

2. Certificate of Commencemen t of business dated 9 August 1991 in the name of Rana SugarsLimited issued by the ROC, Punjab, Himachal Pradesh and Chandigarh.

3. Industrial Licence bearing no. CIL No. 114 (94) dated 24 November 1994, und er Ru le 7 of theRegistration and Licencing of Industrial Undertaking Rules, 1952 for the manufacturing of Sugar.

4. Letter of Intent No.1/110 /2002-ET2(8)/4959 dated 01.08.2002 valid for two years and the v alid ityof the same was extended upto 31.07.20 06 vide letter No.10350 dated 05.08.2005.

Income Tax

Permanent Account Number - AABCR6744C, issued by the Director of Income Tax (Systems), IncomeTax Department.

Government Approvals not yet applied for/Pending Government Approvals:

Approval / Consent Agency Status

Letter of Intent Ministry of Food, Govt. of India, Letter of Intent for setting up newNew Delhi two Sug ars Mills of 5000 TCD is

expected shortly from Govt. ofIndia

Convertion of land from Revenu e Authorities, Permission is to be granted byAgriculture use to Industrial Uttar Pradesh Revenue Authorities in due courseusePower Purchase Agreement U. P. State Electricity Board The Power Purchase Agreement is

to be executed for surplus powergenerated in due course

Statutory Approval

The Company has obtained all the necessary consents, licenses, permissions and approvals form theGovernment/RBI and various government agencies required for its present business and no furtherapprovals are required for carrying on the present as well as the proposed business of the Company exceptthe pending approvals as mentioned above It must, however, be distinctly understood that in granting theabov e consents/licenses/permissions/approvals, the Government does not take any responsibility for thefinancial soundness of the Company or for the correctness of any of the statements or any commitmentsmade or opinions expressed.

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The Company can undertake all the present and proposed activities in view of the present approvals and nofurther approvals from any statutory body are required by the Company to undertake the present andproposed activities.

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TERMS AND CONDITIONS OF THE GLOBAL DEPOSITARY RECEIPTS

The Global Depositary Receipts (“ GDRs”) represented by this certificate are each issued in respect of ten(10) equity shares of par value Rs. 10 each (the “ Shares”) in Rana Sugars Limited (the “ Company”)pursuant to and subject to an agreement dated 15 May 2006, and made between the Company and DeutscheBank Trust Company Americas as depositary (the “ Depositary ”) (such agreement, as amended from timeto time, being hereinafter referred to as the “ Deposit Agreement ”). Pursuant to the provisions of theDeposit Agreement, the Depositary has appointed ICICI Bank Limited, Mumbai as Custodian (as definedbelow) to receive and hold on its behalf the Share certificates in respect of certain Shares (the “ DepositedShares”) and all rights, securities, property and cash deposited with the Custodian which are attributable tothe Deposited Shares (together with the Deposited Shares, the “ Deposited Property ”). Th e Depositaryshall hold Deposited Shares for the ben efit of the Holders (as defined below) in proportion to the number ofShares in respect of which the GDRs held by them are issued. In these terms and conditions (the“Conditions ”), references to the “ Depositary” are to Deutsche Bank Trust Company Americas and/or anyother Depositary which may from time to time be appointed under the Deposit Agreement, references to the“Custodian” are to ICICI Bank Limited, Mumbai or any other Custodian from time to time appointedunder the Deposit Agreement and references to the “ Office” mean , in relation to the Custodian, its office atICICI Ban k Limited, Securities Processing Division, North Tower 2nd Floor, ICICI Towers, Bandra KurlaComplex, Mumbai 400 051, India (or such other office as from time to time may be designated by theCustodian with the ap proval of the Depositary).

GDRs may take the form of GDRs evidenced by one or more Master GDRs (each a “ Master GDR ”)registered in the name of a nominee for, and held by the Common Depositary for, DIFX Central SecuritiesDepository (“ CSD”), and held for the account of accountholders in the CSD, exchangeable, at the option ofthe Holder (as defined below) of such Master GDR and at the expense of any person shown in the recordsof the CSD as the owner of a GDR (as defined below) and upon delivery to the Depositary of a certificatesubstantially in the form of Schedule 3, Part A of the Deposit Agreement, for a certificate in definitiveregistered form in respect of GDRs evidenced all or part of the interest of such person in such Master GDR.

If at any time when Deposited Shares are represented by the Master GDR, either (i) the Holder of theMaster GDR is unwilling or un able to continue as Common Depositary or depositary (or as nomineethereof), as the case may be, and a successor Common Depositary or successor depositary (or successornominee therefor), as the case may be, is not appointed within 90 calendar days; or (ii) the CSD is closedfor business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) orannoun ces an intention permanently to cease business or does, in fact, do so and no alternative clearingsystem satisfactory to the Depositary is available within 45 days; or (iii) the Depositary has determin edthat, on the occasion of the next payment in respect of the GDRs, the Company, the Depositary or its Agentwould be required to make any deduction or withholding from any payment in respect of the GDRs whichwould not be required were the GDRs in definitive form; or (iv) the Holder of the relevan t Master GDRgives notice to the Depositary of its desire to exchange a part or the whole of the Master GDR forcertificates evidencing GDRs in defin itive registered form, the Company will, on intimation from theDepositary of the occurrence of one or more events set forth in (i) to (iv) instruct the Depositary to mak eCertificates in definitive registered form available.

Under the terms of the GDRs, each purchaser of GDRs is deemed to have represented and agreed, amongother things, that (a) the GDRs have no t been and will not be registered u nder the Securities Act and maybe offered, sold, pledged or otherwise transferred only in a transaction exempt from the registrationrequirements of the Securities Act and (b) the GDRs may not be offered, sold, pledged or otherwisetransferred to any person located in India, residents of India, or to, or for the account or benefit of, suchpersons. Each GDR will contain a legend to the foregoing effect.

References in these Conditio ns to the “Holder” of an y GDR shall mean the person registered as Ho lder onthe books of the Depositary maintained for su ch purpose. These Conditions include summaries of, and aresubject to, the detailed provisions of the Deposit Agreement, which includes the forms of the certificate inrespect of the GDRs. Copies of the Deposit Agreement, are available for inspection at the specified officeof the Depositary and each Agent (as defined in Condition 17) and at the Office of the Custodian. Holdersare deemed to have notice of and be bound by all of the provisions of the Deposit Agreement. Terms usedin these Conditions and not defined herein but which are defined in the Deposit Agreement have themeanings ascribed to them in th e Deposit Agreement.

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1. Deposit of Shares and Other Securities

(A) After the initial deposit of Shares by the Company in respect of each GDR, unlessotherwise agreed by the Depositary and the Company and permitted by applicable law,only the following may be deposited under the Deposit Agreement in respect of suchGDR:

(i) Shares issued as a dividend or free distribution on Deposited Shares pursuant toCondition 5;

(ii) Shares subscribed or acquired by Holders from the Company through theexercise of rights distributed by the Company to such persons in respect ofDeposited Shares pursuant to Condition 7;

(iii) Securities issued by the Company to the Holders in respect of Deposited Sharesas a result of any change in the par value, sub-division, consolidation or otherreclassificatio n of Deposited Shares or otherwise pursuant to Condition 10.References in these Conditions to “Deposited Shares” or “Shares” shall includean y such securities, where the context permits; and

(iv) (to the extent permitted by applicable law and regulation) any other Shares inissue.

(B) The Depositary will issu e GDRs in respect of Shares accepted for deposit und er thisCondition. Under the Deposit Agreement, the Co mpany must inform the Depositary ifany Shares issued by it which may be deposited under this Condition do no t, by reason ofthe date of issue or otherwise, rank pari passu in all respects with the other DepositedShares. Subject to the provisions of Conditions 5, 7 and 10, if the Depositary accepts suchShares for deposit it will arrange for the issue of temporary GDRs in respect of suchShares which will form a different class of GDRs from the other GDRs until such time asthe Shares which they represent become fully fungible with the other Deposited Shares.

Shares may not be deposited by persons located in India, residents of India or for, or onthe account of, such persons (except by the Company and the Custodian) and such otherpersons who are authorised to do so in accordance with Indian regulations.

Subject to the terms and condition s of the Deposit Agreement and applicable law, uponphysical delivery to the Custodian of Shares, delivery to the Depositary of a certificatesubstantially in the form of Schedule 3, Part C of the Deposit Agreement and availablefrom the Depositary or the Custodian and payment of necessary taxes, governmentalcharges (including transfer taxes) and other charges as set forth in the DepositAgreement, the Depositary will adjust its records for the number of GDRs issued inrespect of the Shares so deposited and will notify th e Common Depositary, as the casemay be, as to the increase in the number of GDRs evidenced by a Master GDR. Eachperson receiving a GDR or interest therein will be deemed to make the representations,covenants and acknowledgements set forth under “Transfer Restrictions”.

(C) The Depositary will refuse to accept Shares for deposit whenever it is notified in writingthat the Company has restricted the transfer of such Shares to comply with ownershiprestrictions under applicable Indian law or that such deposit would result in any violationof any applicable Indian laws or governmental or stock exchange regulations. TheDepositary may also refuse to accept Shares for deposit in certain other circumstances asset out in the Deposit Agreement.

(D) Subject to the limitations set forth in th e Deposit Agreement, the Depositary may (bu t isnot required to) issue GDRs prior to the delivery to it of Shares in respect of which su chGDRs are to be issued.

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2. Withdrawal of Deposited Property

(A) Deposited Property may not be withdrawn un til the Depositary has received a writtenconfirmation from the Company that the Shares are listed on The Stock Exchange,Mumbai (“ BSE”), and the National Stock Exchange of India Limited (“ NSE”). TheDepositary shall notify the Holders of su ch listings in accordance with Condition 23 assoon as is practically possible after receiving such written confirmation. Subject as set outabove, any Holder may requ est withdrawal o f, and the Depositary shall thereuponrelinquish, the Deposited Property attribu table to any GDR upon production of suchevidence that such person is the Holder of, and entitled to, the relative GDR as theDepositary may reasonably require at the specified office of the Depositary or any Agentaccompanied by:

(i) duly executed order (in a form approved by the Depositary) requesting theDepositary to cause th e Deposited Property being withdrawn to be delivered atthe Office of the Custodian, or (at the request, risk and expense of the Holder) atthe specified office from time to time of the Depositary or any Agent (located inIndia or such other place as permitted under applicable law from time to time)to, or to the order in writing of, the person or persons designated in such orderand a certificate substantially in the form of Schedule 3, Part B o f the DepositAgreement and available from the Depositary or the Custodian;

(ii) the payment of such fees, duties, charges and expenses as may be required underthese Conditions o r the Deposit Agreement; and

(iii) the surrender (if appropriate) of GDR certificates in defin itive registered form towhich the Deposited Property being withdrawn is attributable.

(B) Certificates for withdrawn Deposited Shares will contain such legends and withdrawalsof Deposited Shares may be subject to such transfer restrictions or certifications, as theCompany or the Depositary may from time to time determine to be necessary forcompliance with applicable laws.

The Board of Directors of the Company may in certain circumstances refuse to registerthe transfer of Deposited Shares from the name of the Depositary or its nominee.

A stamp duty of 0.25 per cent of the market value of Shares is currently charged inrespect of any transfer of Shares in physical form. This duty is payable b y the relevantHolder. Currently, in accordance with Indian regulations, the delivery of underlyingShares of GDRs shall only be in the dematerialised form and stock exchanges may notaccept delivery of underlying Shares of GDRs in physical form. In addition, it may benecessary to obtain the approval of (i) the Reserve Bank of India for Shares, such aswithdrawn Deposited Shares, to be registered in the name of a person who is a resident ofIndia and (ii) the Foreign Investment Promotion Board for Shares, such as withdrawnDeposited Shares, to be registered in the name of certain categories of persons who arenot residents of India. Holders are advised to seek independent legal advice in relation totransfer and requirement of approval issues.

(C) Upon production of such documentation and the making of such payment as aforesaid inaccordance with paragraph (A) of this Condition, the Depositary will direct theCustodian, within a reasonable time after receiving such direction from such Holder, todeliver at its Office to, or to the order in writing of, the person or persons designated inthe accompanying order:

(i) a certificate for, or other appropriate instrument of title to, the relevantDeposited Shares, registered in the name of the Depositary or its nominee andaccompanied by such instruments of transfer in blank or to the person or personsspecified in the order for withdrawal and such other documents, if any, as arerequired by law for the transfer thereof; and

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(ii) all other property forming part of the Deposited Property attributable to suchGDR, accompanied, if required by law, by one or more duly executedendorsements or instruments of transfer in respect thereof as aforesaid;

provided that the Depositary (at the request, risk and expense of any Holder sosurrendering a GDR):

(a) will direct the Custodian to deliver the certificates for, or other instruments oftitle to, the relevant Deposited Shares and any do cument relative thereto and anyother documents referred to in sub-paragraph (C) (i) of this Con dition (togetherwith any other property forming part of the Deposited Property which may beheld by the Custodian or its Agent and is attributable to such Deposited Shares);and/or

(b) will deliver any other property forming part of the Deposited Property whichmay be held by the Depositary and is attributable to such GDR (accompanied bysuch instruments of transfer in blank or to the person or persons specified insuch order and such other documents, if any, as are required by law for thetransfer thereto),

in each case to the specified office from time to time of the Depositary or, if any, anyAgent (located in India or such other place as is permitted under applicable law from timeto time) as designated by the surrendering Holder in such accompanying order asaforesaid.

(D) Delivery by the Depositary, any Agent and th e Custodian of all certificates, instruments,dividends or other property forming part of the Deposited Property as specified in thisCondition will be made subject to any laws or regulations applicable thereto.

(E) The Depositary may suspend the withdrawal of all or an y category of Deposited Prop ertyduring any period when the register of shareholders or other relevant holders of othersecurities of the Company is closed, generally or in one or more localities, or in order tocomply with any applicable Indian law or governmental or stock exchange regulations.The Depo sitary shall restrict the withdrawal of Deposited Shares whenever it is notifiedin writing that such withdrawal would result in a breach of ownership restrictions underapplicable Indian law.

3. Transfer and Ownership

GDRs are in registered form each issued in respect of ten (10) Shares. Title to the GDRs passes byregistration in the records of the Depositary. The Depositary will refuse to accept for transfer anyGDRs if it reasonably believes that such transfer would result in a violation of applicable laws.The Holder of any GDR will (except as otherwise required by law) be treated as its absolute ownerfor all purposes (whether or not any payment or other distribution in respect of such GDR isoverdue and regardless of any notice of ownership, trust or any interest in it or any writing on, orthe theft or loss of, any certificate issued in respect of it) and no person will be liable for sotreating the Holder.

The Deposit Agreement defines the “owner of GDRs” as, in respect of any GDR represented by aMaster GDR, such person whose name appears in the records of the CSD and, in respect of anyother GDR, the Holder thereof and “beneficial owner of GDRs” as a person ho lding beneficial titleto such GDRs or interests therein.

4. Cash Distributions

Whenever the Depositary shall receive from the Company any cash dividend or other cashdistribution on or in respect of the Deposited Shares (including any amounts received in theliquidation of the Company) or otherwise in connection with the Deposited Property, th eDepositary, its Agent or Custodian shall as soon as practicable convert the same into United Statesdollars in accordance with Condition 8. The Depositary shall, if practicable in the opinion of theDepositary, give notice to the Holders of its receipt of such payment in accordance with Condition

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23, specifying the amount per Deposited Share payable in respect of such dividend or distributionand the date, determined by the Depositary, for such payment and shall as soon as practicabledistribute any such amounts to the Holders in proportion to the number of Deposited Sharesrepresented by the GDRs so held by them respectively, subject to and in accordance with theprovisions of Conditions 8, 9 and 11 ; provided that:

(a) in the event that any Deposited Shares shall not be entitled, by reason of the date of issue ortransfer or otherwise, to such full proportionate amount, the amount so distributed to therelative Holders shall be adjusted accordingly; and

(b) the Depositary will distribute only such amounts of cash dividends and other distributions asmay be distributed withou t attributing to any GDR a fraction of the lowest integral unit ofcurrency in which the distribution is made by the Depositary and any balance remaining shallbe retained by the Depositary beneficially as an additional fee under Condition 16(A)(iv).

5. Distributions of Shares

Whenever the Depositary shall receive from the Company any distribution in respect of DepositedShares which consists of a d ividend in, or free distribution or bonus issue of, Shares, th eDepositary shall cause to be distributed to the Holders entitled thereto, in proportion to the numberof Deposited Shares represented by th e GDRs held by them respectively, additional GDRsrepresenting an aggregate number of Shares received pursuant to such dividend or distribution byan increase in the number of GDRs evidenced by the Master GDR or an issue of certificates indefinitive registered form in respect of GDRs, according to the manner in which the Holders holdtheir GDRs; provided that, if and in so far as the Depositary deems any su ch distribution to all orany Holders not to be reasonably practicable (including, without limitation, owing to the fractionswhich would otherwise result or to any requirement that the Company, the Custodian or theDepositary withhold an amount on account of taxes or other governmental charges) or to beunlawful, the Depositary shall sell such Shares so received (either by public or private sale andotherwise at its discretion, subject to Indian laws and regulations) and distribute the net proceedsof such sale as a cash distribution pursuant to Condition 4 to the Holders entitled thereto.

6. Distributions Other than in Cash or Shares

Whenever the Depositary shall receive from the Company any dividend or distribution insecurities (other than Shares) or in oth er property (o ther than cash) on or in respect of th eDeposited Property, th e Depositary shall distribute or cau se to be distribu ted such securities orother property to the Holders entitled thereto, in proportion to the number of Deposited Sharesrepresented by the GDRs held by them respectively, in any manner that the Depositary may deemequitable and practicable for effecting such distribution; provided that, if and in so far as theDepositary deems any such distribution to all or any Holders not to be reasonably practicable(including, without limitation, due to th e fractions which would otherwise resu lt o r to anyrequirement that the Company, the Custodian or the Depositary withhold an amount on account oftaxes or other governmental charges) or to be unlawful, the Depositary shall sell the securities orproperty so received, or any part thereof, (either by public or private sale and otherwise at itsdiscretion, subject to Indian laws and regulations) and distribute the net proceeds of such sale as acash distribution pursuant to Condition 4 to the Holders entitled thereto.

7. Rights Issues

If and whenever the Co mpany announces its intention to make any o ffer or invitation to theHolders o f Shares to subscribe for or to acquire Shares, securities or other assets by way o f rights,the Depositary shall as soon as practicable give notice to the Holders in accordance with Condition23 of such offer or invitation specifying, if applicable, the earliest date established for acceptancethereof, the last date established for acceptance thereof and the manner by which and time duringwhich Holders may request the Depositary to ex ercise su ch rights as provided below or, if such b ethe case, give details of how the Depositary proposes to distribute the rights or the proceeds of sale.The Depositary will deal with such rights in the manner described below:

(i) if at its discretion, the Depositary shall be satisfied that it is lawful and reasonablypracticable and, to the extent that it is so satisfied, the Depositary shall make

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arrangements whereby the Holders may, upon payment of the subscription price inRupees or other currency (where appropriate) together with such fees, taxes, duties,charges, costs and expenses as may be required under the Deposit Agreement andcompletion of such undertakings, declarations, certifications and other documents as theDepositary may reasonably require, request the Depositary to exercise such rights on theirbehalf with respect to the Deposited Shares and in the case of Shares so subscribed oracquired to distribute them to the Holders entitled thereto by an increase in the numbers ofGDRs evidenced by the Master GDR or an issu e of certificates in definitiv e form inrespect of GDRs, according to the manner in which the Holders hold their GDRs; or

(ii) if, at its discretion, the Depositary shall be satisfied that it is lawful and reasonablypracticable and to the extent that it is so satisfied, the Depositary shall distribu te suchsecurities or other assets by way of rights or the rights themselves to the Holders entitledthereto in proportion to the number of Deposited Shares represented by the GDRs held bythem respectively in such manner as the Depositary may at its discretion determine; or

(iii) if and in so far as the Depositary is not satisfied that any such arrangement anddistribution to all or any Holders is lawful and reasonably practicable (including, withoutlimitation, owing to the fractions which would otherwise result or to any requirement thatthe Company, the Custodian or the Depositary withhold an amount on account of taxes orother governmental charges) or is so satisfied that it is unlawful, the Depositary will,provided that Holders have not taken up rights through the Depositary as provided in (i)abov e, sell such rights (either by public or private sale and otherwise at its discretionsubject to Indian laws and regulations) and distribute the net proceeds of such sale as acash distribution pursuant to Condition 4 to the Holders entitled thereto except to theextent prohibited by applicable law.

If at the time of the offering of any rights, at its discretion, the Depositary shall be satisfied that itis not lawful or practicable (for reasons outside its control) to dispose of the rights in any mannerprovided in (i), (ii) or (iii) above the Depo sitary shall permit the rights to lapse. In the absence ofits own wilful default, negligence or bad faith the Depositary will not be responsible for any failureto determine that it may be lawful or practicable to make rights available to Holders in general orto any Ho lder in particular.

The Company has agreed in the Deposit Agreement that it will, un less prohibited by applicablelaw, give its con sent to, and, if requested, use all reasonable endeavours (subject to the nextparagraph) to facilitate any such distribution, sale or subscription by the Depositary or the Holders,as the case may be, pursuant to Condition 4, 5, 6, 7 or 10.

If the Company notifies the Depositary th at registration is required in any jurisdiction under anyapp licable law of the rights, securities or other property to b e distributed under Condition 4, 5, 6, 7or 10 or the securities to which such rights relate, in order for the Depositary to offer such righ ts ordistribute such securities or other property to the Holders or owners of GDRs and to sell thesecurities represented by such rights, the Depositary will not offer such rights or distribute suchsecurities or other property to Holders of GDRs unless and until the Company procures at theCompany’s expense, the receipt by the Depositary of an opinion from counsel satisfactory to theDepositary that the necessary registration has been effected or that the offer and sale of suchrights, securities or property to Holders of GDRs are exempt of registration. Neither the Comp anynor the Depositary shall be liable to register such rights, securities or other property or thesecurities to which such rights relate and they shall not be liable for any losses, damages orexpenses resulting from any failure to do so.

8. Conversion of Foreign Currency

Whenever the Depositary shall receive any currency other than United States dollars by way ofdividend or oth er distribution or as the net proceeds from the sale of securities, other property orrights, and if at the time of the receipt thereof the currency so received can in the judgement of theDepositary be converted on a reasonable basis into United States dollars and distributed to theHolders entitled thereto, the Depositary shall as soon as practicable itself convert or cause to beconverted by another bank, by sale or in any other manner that it may determine, the currency soreceived into United States dollars. If such conversion or distribution can be effected only with the

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approval or licence of any government or agency thereof, the Depositary, with th e assistance of theCompany, shall make reasonable efforts to apply, or procure that an application be made, for suchapproval or licence, if any, as it may consider necessary. If at any time the Depositary shalldetermin e th at in its judgement any currency other th an United States dollars is not convertible ona reasonable basis into United States dollars and distribu table to the Holders entitled thereto, or ifany approval or licence of any government or agency thereof which is required for suchconversion is denied or, in the opinion of the Depositary, is not obtainable, or if any such approvalor licence is not obtained within a reasonable period as determined by the Depositary, theDepositary may distribute such other currency received by it (or an appropriate documentevidencing the right to receive such other currency) to the Holders entitled thereto to the extentpermitted under applicable law, or the Depositary may in its discretion hold such other cu rrencyfor the benefit of the Holders entitled thereto. If any conversion of any such currency can b eeffected in whole or in part for distribution to some (but not all) Holders entitled thereto, theDepositary may in its discretion make such conversion and distribution in United States dollars tothe extent possible to the Holders entitled thereto and may distribute the balance of such othercurrency received by the Depositary to, or hold such balance on non-interest bearing accounts forthe account of, th e Holders entitled thereto and notify th e Hold ers accordingly.

9. Distribution of any Payments

(A) Any distribution of cash under Condition 4, 5, 6, 7 or 10 will be made by the Depositaryto those Holders who are Holders of record on the record date established by theDepositary (wh ich shall be the same date as the corresponding record date set by theCompany or, if different from the record date set by the Company, shall be set afterconsultation with the Company and shall be as near as practicable to any record date setby the Company) for that purpo se and, if practicable in the opinion of the Depositary,notice shall be given promptly to Holders in accordance with Condition 23, in each casesubject to any laws or regulations applicable thereto and (subject to the provisions ofCondition 8) distributions will be made in United States dollars by cheque drawn upon abank in New York City or, in the case of the Master GDR, according to usual practicebetween the Depositary and the CSD, as the case may be. The Depositary or the Agent, asthe case may be, may deduct and retain from all moneys due in respect of such GDR inaccordance with the Deposit Agreement all fees, taxes, duties, charges, costs andexpenses which may become or have become payable under the Deposit Agreement orunder applicable law in respect of such GDR or the relative Deposited Property.

(B) Delivery of any securities or other property or rights other than cash shall be made assoon as practicable to the entitled Holder, subject to any laws or regulations app licablethereto. If any distribution made by the Company with respect to the Deposited Prop ertyand received by the Depositary shall remain unclaimed at the end of 12 years from thefirst date upon which such distribution is made available to Ho lders in accordance withthe Deposit Agreement, all rights of the Holders to such distribution or the proceeds of thesale thereof shall be ex tinguished and the Depositary shall (except for any distributionupon the liquidation of the Company, which remains unclaimed for such period asaforesaid, when the Depositary shall retain the same) return the same to the Company forits own use and benefit.

10. Capital Reorganisation

Upon any change in the par value, sub-division, consolidation or other reclassification ofDeposited Shares or any other part of the Deposited Property or upon any reduction of capital orupon any reorganisation, merger or consolidation of the Company or to which it is a party (exceptwhere the Company is the continuing corporation), the Depositary shall as soon as practicable givenotice of such event to the Holders in accordance with Condition 23 and, at its discretion, may treatsuch event as a distribution and comply with the relevant provisions of Conditions 4, 5, 6 and 9with respect thereto or may execute and deliver additional GDRs in respect of Shares or mayrequire the exch ange of existing GDRs for new GDRs which reflect the effect of such change.

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11. Taxation and Applicable Laws

(A) Payments to Holders of dividends or other distributions made to Holders on or in respectof the Deposited Shares will be subject to deduction of Indian and other withholding taxes,if any, at the applicable rates.

(B) If any governmental or administrative authorisation, consent, registration or permit or anyreport to any governmental or administrative authority is required under any applicablelaw in India in order for the Depositary to receive from the Company Shares to bedeposited under the Conditions or in order for Sh ares, other securities or other property tobe distribu ted under Condition 4, 5, 6 or 10 to b e subscribed under Condition 7, theDepositary shall request that the Co mpany apply for such authorisation, consent,registration or permit or file such report on behalf of the Holders within the time requiredunder such law. In this connection, the Company has undertaken in the DepositAgreement, to the extent reasonably practicable and that it does not involve unreasonableexpense on behalf of the Company, to take such action as may be required in obtaining orfiling the same. The Depositary shall not distribute GDRs, Shares, other securities or otherproperty with respect to which such authorisation, consent or permit or such report has notbeen obtained or filed, as the case may be, and shall have no duties to obtain any suchauthorisation, consent or permit or to file any such report except in circumstances wherethe same may only be obtained or filed by the Depositary without, in the opinion of theDepositary, unreasonable burden or expense.

12. Voting Rights

Holders of GDRs will h ave no vo ting rights with respect to the Deposited Shares. The Depositarywill n ot exercise any voting rights in respect of the Deposited Shares unless it is required to do soby law. If so requ ired, the Depositary will, at the direction of the Board of Directors of theCompany (subject to the advice of legal counsel taken by the Depositary and the Company at theexpense of the Company), either vote as directed by the Board of Directors of the Company or givea proxy or power of attorney to vote the Deposited Shares in favour of a Director of the Companyor other person or vote in same manner as those shareholders designated by the Board of Directorsof the Comp any. A v alid corporate decision of the Company will bind the Depositary and theHolders notwithstanding these restrictions on vo ting rights.

Shares, which have been withdrawn from the depositary facility and transferred on the Company’sregister of members to a person other than the Depositary or its nominee, may be voted by theholders thereof. However, Holders or owners of GDRs may not receive sufficient advance noticeof shareholder meetings to enable them to withdraw the Shares and vote at such meetings.

13. Documents to be Furnished, Recovery of Taxes, Duties and Other Charges

The Depositary shall no t be liable for any taxes, duties, charges, costs or expenses which maybecome payable in respect of the Deposited Shares or other Deposited Property o r the GDRs,whether under any present or future fiscal or other laws or regulations, and such part th ereof as isproportionate or referable to a GDR shall be payable by the Holder thereof to the Depositary at anytime on request or may be deducted from any amount due or becoming due on such GDR inrespect of any dividend or other distribution. In default thereof, the Depositary may, for theaccount of the Holder, discharge the same out of the proceeds of sale and subject to Indian law andregulations, of an appropriate number of Deposited Shares (being an integral multiple of thenumber of Shares in respect of which a single GDR is issued) or other Deposited Property andsubsequently pay any surplus to the Holder. Any such request shall be made by giving noticepursuant to Condition 23.

14. Liability

(A) In acting hereunder the Depositary shall have only those duties, obligations andresponsibilities expressly specified in the Depo sit Agreement and these Conditions and,other than holding the Deposited Property for the benefit of Holders as bare trustee, doesnot assume any relationship of trust for or with the Holders or the owners of GDRs except

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that any funds received by the Depositary for the payment of any amount due, inaccordance with these Conditions, on the GDRs shall, subject to Condition 9(B) be heldby it in trust for the relevant Holder until duly paid thereto.

(B) None of the Depositary, the Custodian, the Company, nor any of their agents, officers,directors or employees nor any Agent shall incu r any liability to any other o f them or toany Holder or owner of a GDR if, by reason of any provision of any present or future lawor regulation of India or any other country or of any relevant governmental authority or byreason of the interpretation or application of any such present or fu ture law or regulationor any change therein or by reason of any other circumstan ces beyond their control or, inthe case of the Depositary, the Custodian, any of their agents, officers, directors oremployees or an y Agent, by reason of any provision, present or futu re, of the constitutivedocuments of the Company, any of them shall be prevented, delayed or forbidden fromdoing or performing any act or thing which the terms of the Deposit Agreement or theseConditions provide shall or may be done or performed; nor (save in the case of wilfuldefault, neg ligen ce or bad faith) shall any of them incur any liability to any Holder, ownerof a GDR or person with an interest in any GDR by reason of an y non-performance ordelay, caused as aforesaid, in performance of any act or thing which the terms of theDeposit Agreement or these Conditions provide shall or may be done or performed, or byreason of any exercise of, or failure to exercise, caused as aforesaid, any voting rightsattached to the Deposited Shares or any of them or any other discretion or power providedfor in the Deposit Agreement. Any such party may rely on, and shall be protected in actingupon, any written n otice, request, direction or other documen t believed by it to be genuineand to have been duly signed or presented (including a translation which is made by atranslator believed by it to be competent or which appears to be authentic).

(C) Neither the Depositary, the Custodian nor an y Agent shall be liable (except by reason of itsown wilful default, negligence or bad faith or that of its agent, officers, directors oremployees) to the Company or any Holder or owner of a GDR, by reason of havingaccepted as valid or not having rejected any certificate for Shares or GDRs purporting tobe such and subsequently found to be forged or not authentic.

(D) Neither the Company nor the Depositary nor any of their respective agents shall be liableto Holders of GDRs for any indirect, special, punitiv e or consequential damag es.

(E) The Depositary and each of its Agents (and any holding, subsidiary or associated companyof the Depositary) may engage or be interested in any financial or other businesstransactions with the Company or any of its subsidiaries or affiliates or in relation to theDeposited Property (including, without prejudice to the generality of the foregoing, theconversion of any part of the Deposited Property from one currency to another), may atany time hold GDRs for its own account, and shall be entitled to charge and b e paid allusual fees, commission and other charges for business transacted and acts done by it as abank or in any other capacity, and not in the capacity o f Depositary, in relation to mattersarising under the Deposit Agreement (including, without prejudice to the generality of theforegoing, charges on the conversion of any part of the Deposited Property from o necurrency to another and any sales of property) without accounting to Hold ers or any otherperson for any profit arising therefrom.

(F) The Depositary shall endeavour to effect any such sale as is referred to or contemplated inCondition 5, 6, 7, 10, 13 or 21 or any such conversion as is referred to in Condition 8 inaccordance with the Depositary’s normal practices and procedures, but shall have noliability (in the absence of its own wilful default, negligence or bad faith or that of itsagents, officers, directors or employees) with respect to the terms of such sale orconversion or if such sale or conversion shall not be possible. In the absence of its ownwilful default, neg ligence or bad faith the Depo sitary will no t be responsible fo r anyfailure to determine that it may b e lawful or practicable to make rights available to Holdersin general or to any Holder in particular pursuant to Condition 7.

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15. Issue and Delivery of Replacement GDRs and Exchange of GDRs

Subject to the payment of the relevant fees, taxes, duties, charges, costs and expenses and suchterms as to evidence and indemnity as the Depositary may require, replacement GDRs will beissued by the Depositary and will be delivered in exchange for or in replacement of outstandinglost, stolen, mutilated, defaced or destroyed GDRs upon surrend er thereof (ex cept in the case ofdestruction, loss or theft) at the specified office of the Depositary or (at the request, risk andexpense of the holder) at the specified office of any Agent.

16. Depositary’s Fees, Costs and Expenses

(A) The Depositary shall be entitled to charge the following remuneration and receive thefollowing remuneration and reimbursement (such remuneration and reimbursement beingpayable on demand) from the Holders in respect of its services under the DepositAgreement:

(i) for the issue of GDRs (other than upon the issue of GDRs on the date hereof) orthe cancellation of GDRs upon the withdrawal of Deposited Property: U.S.$0.05or less per GDR issued or cancelled;

(ii) for issuing GDR certificates in definitive registered form in replacement formutilated, defaced, lost, stolen or destroyed GDR certificates: a sum per GDRcertificate which is determined by the Depositary to be a reasonable charge toreflect the work, costs and expenses involved;

(iii) for issuing GDR certificates in definitive registered form (other than pursuant to(ii) above): a sum per GDR certificate which is determined by the Depositary tobe a reasonable charge to reflect the work, costs (inclu ding, but not limited to,printing costs) and expenses involved;

(iv) for receiving and paying any cash dividend or other cash distribution on or inrespect of the Depo sited Shares: a fee of U.S.$0.02 or less per GDR for each suchdividend or distribution;

(v) in respect of any issue of rights or distribution of Shares (whether or notevidenced by GDRs) or other securities or other property (other than cash) uponexercise of any rights, any free distribution, stock dividend or other distribution(except where converted to cash): U.S.$0.05 or less per outstanding GDR foreach such issue of rights, dividend or distribution;

(vi) for the operation and maintenance in administering the GDRs an annual fee ofU.S.$0.02 or less per GDR; and

(vii) in connection with inspections of the relevant share register maintained by th elocal registrar, if applicable undertaken by the Depositary, the Custodian or theirrespective agents: an annual fee of U.S.$0.01 or less per GDR (such fee to beassessed against Holders of record as of the date or dates set by the Depositary asit sees fit and collected at the sole discretion of the Depositary by billing suchHolders for such fee or by deducting such fee from one or more cash dividendsor other cash distributions;

together with all expenses, transfer and registration fees, taxes, duties and charges payableby the Depositary, an y Agent or the Custodian in connection with any of the aboveincluding, but not limited to charges imposed by a central depositary and such customaryexpenses as are incurred by the Depositary in the conversion of currencies other than U.S.dollars into U.S. dollars and fees imposed by any relevant regulatory authority.

(B) The Depositary is entitled to receive from the Company such fees, taxes, duties, charges,costs, expenses and other payments as agreed between them in any agreement concerningsuch fees, taxes, duties, charges, costs, expenses and other payments.

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17. Agents

(A) The Depositary shall be entitled to appoint one or more agents (the “ Agents”) for thepurpose, inter alia , making distributions to the Holders.

(B) Notice of appointment or removal of any Agent or of any change in the specified office ofthe Depositary or any Agent will be duly given by the Depositary to the Holders.

18. Listing

The Company has undertaken in the Dep osit Agreement to use its best endeavours to obtain andthereafter maintain, so long as any GDR is outstanding, a listing for GDRs on the DIFX and alisting of the Shares on the BSE and the NSE. For that purpose the Company will pay all fees andsign and deliver all undertakings required by the DIFX in connection therewith. In the event thatsuch listings are not maintained, the Company has undertaken in the Deposit Agreement to use itsbest endeavours to obtain and maintain a listing of the GDRs on another international recognisedinvestment exchange designated as a “recognised investment exchange” for the purposes of s.841(1) (b) of the United Kingdom Income and Corporation Taxes Act (ICTA) 1988 and a listing of theShares on one or more stock exchanges in India.

19 The Custodian

The Depositary has, pursuant to the Deposit Agreement, agreed with the Custodian that th eCustodian will receive and hold (or appoint agents approved by the Depositary to receive and hold)all Deposited Property for the account and to the order of the Depositary in accordance with theapp licable terms of the Deposit Agreement, which include a requirement to segregate theDeposited Property from the other property of, or h eld by, the Custodian. The Custodian shall beresponsible solely to the Depositary; provided that, if at any time the Depositary and the Custodianare the same legal entity, references to them separately in these Conditions and the DepositAgreement are for convenience only and that legal en tity shall be responsible for discharging bothfunctions directly to the Holders and the Company. Upon receiving notice of the resignation of theCustodian, the Depositary shall promptly appoint a successor custodian, which shall, uponacceptance of such appointment, become the Custodian under the Deposit Agreement. Wheneverthe Depositary in its discretion determin es that it is in the best interest of the Holders to do so, itmay terminate the appointment of the Custodian and, in the event of the termination of theappo intment of the Custodian, the Depositary shall promptly appoint a successor Custodian whichshall, upon acceptance of such appointment, become the Custodian under the Deposit Agreementon the effective d ate of such termination. The Depositary shall notify Holders of such change assoon as is practically possible following such change taking effect in accordance with Condition23. Notwithstanding the forego ing, the Depositary may temporarily deposit the Deposited Propertyin a manner or a place other than as herein specified; provided that, in the case of such temporarydeposit in another place, the Company shall have consented to such deposit and such consent of theCompany shall have been delivered to the Custodian. In case of transportation of the DepositedProperty under this Condition, the Depo sitary shall obtain appropriate insurance at the expense ofthe Company if, and to the extent that, the obtaining of such insurance is reasonably practicableand the premiums payable are, in the opinion of the Depositary, of a reasonable amount.

20. Resignation and Termination of Appointment of the Depositary

(A) Unless otherwise agreed to in writing between the Company and Depositary from time totime, the Company may terminate the appointment of the Depo sitary under the DepositAgreement b y giving at least 90 days’ notice in writing to the Depositary and theCustodian, and the Depositary may resign as Depositary by giving 90 days’ notice inwriting to the Company and the Custodian. Within 30 days after the giving of suchnotice, notice thereof shall be duly given by the Depositary to the Holders in accordancewith Condition 23. Such resignation by the Depositary shall be subject to the terms andconditions of an y other agreement executed between the Depositary and the Company.

The termination of the appointment or the resignation of the Depositary shall take effecton the date specified in the relevant notice provided that no such termination ofappo intment or resignation shall take effect un til the appointment by the Company of a

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successor depositary, the grant of such approvals as may be necessary to comply withapp licable laws and with the constitutive docu ments of the Company for the transfer ofthe Deposited Property to such successor depositary, the acceptance of such appointmentto act in accordance with the terms thereof by the successor depositary and the paymentto the Depositary of all fees, taxes, duties, charges, costs, expenses and other payments asagreed by the Depositary and the Co mpany in any agreement concerning such fees, taxes,duties, charges, costs, expenses and other payments. The Company has undertaken in theDeposit Agreement to use its best endeavours to procure the appointment of a successordepositary with effect from the date of termination specified in such notice as soon asreasonab ly possible following notice of such termination or resignation. Upon any suchappointment and acceptance, notice thereof shall be duly given by the successordepo sitary to the Holders in accordance with Condition 23.

(B) Upon the termination of appointment or resignation of the Depositary, the Depositaryshall deliver to its successor depositary sufficient information an d records to enable su chsuccessor efficiently to perform its obligations under the Deposit Agreement and shalldeliver and pay to such successor depositary all Deposited Property held by it under theDeposit Agreement. Upon the date when such termination of appointment or resignationtakes effect, the Deposit Agreement provides th at the Custodian shall be deemed to be theCustodian thereunder for such successor depositary and shall hold the Deposited Propertyfor such successor depositary and the Depositary shall thereafter have no obligationthereunder.

21. Termination of Deposit Agreement

(A) Subject as set out below, either the Company or the Depo sitary but, in the case o f th eDepositary, only if the Company has failed to appo int a replacement Depositary with in 90days of the date on which the Depositary has given notice pursuant to Condition 20 that itwishes to resign, may terminate the Deposit Agreement by giving 90 days’ notice to theother and to the Custodian. Within 30 days after the giving of such notice, notice of suchtermination shall be duly given by the Depositary to Holders of all GDRs thenoutstanding in accordance with Condition 23.

If the Company terminates the Deposit Agreement, it will (unless the termination is due tothe wilful default, negligence or fraud of the Depositary) be obligated, prior to suchtermination, to reimburse to the Depositary all amounts owed to the Depositary as set outin the Deposit Agreement and in any agreement between the Depositary and the Company.

(B) During the period beginning on the date of the giving of such notice by the Depositary tothe Holders and ending on the date on which such termination takes effect, each Holdershall be entitled to obtain delivery of the Deposited Property relative to each GDR heldby it, subject to the provisions of paragraph (D) of Condition 2 and upon compliance withCondition 2, and further upon payment by the Holder of any sums payable by theDepositary to the Custodian in connection therewith for such delivery and surrender butotherwise in accordance with the Deposit Agreement.

(C) If any GDRs remain outstanding after the date of termination, the Depositary shall assoon as reasonably practicable sell the Deposited Property then held by it under theDeposit Agreement and shall not register transfers, shall not pass on dividends ordistributions or take any o ther action except that it will deliver the net p roceeds of anysuch sale, together with any other cash then held by it under the Deposit Agreement, prorata to Holders of GDRs which have not previously been so surrendered by reference tothat proportion of the Deposited Pro perty which is represented by the GDRs of whichthey are Holders. After making such sale, the Depositary shall be discharged from allobligations under the Deposit Agreement and these Conditions, except its obligations toaccount to Holders for such net proceeds of sale and other cash comprising the DepositedProperty without interest.

(D) The Company has agreed not to appoint any other depositary for the issue of depositaryreceipts so long as Deutsche Bank Trust Company Americas is acting as Depositaryunder the Deposit Agreement.

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22. Amendment of Deposit Agreement and Conditions

All an d any of the provisions of the Deposit Agreement and these Conditions (other than thisCondition 22 and Clause 12 of the Deposit Agreement) may at any time and fro m time to time beamended by written agreement between the Company and the Depositary and if required, theSecurities and Exchange Board of India (or its successor organisation) in any respect which theymay deem necessary or desirable. Notice of any amendmen t of these Conditions (except to correcta manifest error) shall be duly given to the Holders by the Depositary and any amendment (exceptas aforesaid) which shall increase or impose fees or charges payable by Holders or which shallotherwise, in the opinion of the Depositary, b e materially prejudicial to the interests of the Holders(as a class) shall not become effective so as to impose any obligation on the Holders of theoutstanding GDRs until the expiry of three months after such notice shall have been given. Duringsuch period of three months, each Holder shall be entitled to obtain, subject to and uponcompliance with Condition 2, delivery of the Deposited Property relative to each GDR held by itupon surrender thereof, free of the charge specified in paragraph (A)(i) of Condition 16 for suchdelivery and surrender but otherwise in accordance with the Deposit Agreement. Each Holder atthe time when any such amendment so becomes effective shall be deemed, by continuing to hold aGDR, to approve such amendment and to be bound by the terms thereof in so far as they affect therights of the Holders. In no event shall any amendment impair the right of any Holder to receive,subject to and upon compliance with Condition 2, the Deposited Property attributable to therelevant GDR.

23. Notices

All notices to Holders shall be validly given if mailed to th em at their respective addresses in theregister o f Holders main tain ed by the Depo sitary or furnished to them by electronic transmission asagreed between the Company and the Depositary and, so long as the GDRs are listed on the DIFX,published on the trading system and website of the DIFX (www.difx.ae) or any other method ofpublication as the DIFX Listing Rules may provide.

All notices required to be given by the Company to the Holders pursuant to any applicable laws,regulations or other agreements shall be given by the Company to the Depositary and upon receiptof any such notices, the Depositary shall forward such notices to the Holders. The Depositary shallnot be liable for any notices required to be given by the Company which the Depositary has notreceived from the Company, nor shall the Depositary be liable to monitor the obligations of theCompany to provide such notices to the Holders.

24. Reports and Information on the Company

(A) The Company has undertaken in the Deposit Agreement (so long as any GDR isoutstanding) to furnish the Depositary with six copies in English by mail, facsimile orelectronic transmission as agreed between the Company and the Depositary (and to makeavailable to the Depositary, the Custodian and each Agent as many further copies as theymay reasonably require to satisfy requests from Holders) of:

(i) in resp ect of the financial year ending on 31 March 2005 and in respect of eachfinancial year thereafter, the non-consolidated (or, if published for holders ofShares, consolidated) balance sheets as at the end of such financial year and thenon-consolidated (or, if published for holders of Shares, consolidated)statements of income for such financial year in respect of the Company,prepared in conformity with either generally accepted accounting principles inIndia or, at the option of the Company, in accordance with InternationalFinancial Reporting Standards and reported upon by independent publicaccountants selected by the Company, as soon as practicable (and in any eventwithin nine months) after the end of such year; and

(ii) semi-annual non-consolidated (or, if published for holders of Shares,consolidated) financial statements as soon as practicable (and in any event, notlater than four months after the date to which they relate) after the same arepublished.

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(B) The Depositary shall, upon receipt thereof, give due notice to the Holders that suchcopies are available upon request at its specified office and the specified office of anyAgent.

25. Copies of Company Notices

On or before the day when the Company first gives notice, by mail, publication or otherwise, toholders of any Shares or other Deposited Property, whether in relation to the taking of any actionin respect thereof or in respect of any dividend or other distribution thereon or of any meeting oradjourned meeting of such holders or otherwise, the Company has undertaken in the DepositAgreement to transmit to the Custodian and the Depositary such number of copies of such noticeand any other material (which in the opinion of the Company contains information having amaterial bearing on the interests of the Holders) furnished to such holders by the Company inconn ection therewith as the Depositary may reasonably request. If such notice is no t furnished tothe Depositary in English , either by th e Company or the Cu stodian, the Depositary shall, at th eCompany’s expense, arrange for an English translation thereof (which may be in su ch summarisedform as the Depositary may deem adequate to provide sufficient information) to be prepared. TheDepositary shall, as soon as practicable after receiving notice of such transmission or (whereappropriate) upon completion of translation thereof, give due notice to the Holders which noticemay be given togeth er with a notice pursu ant to paragraph (A) of Condition 9, and shall make thesame available to Holders in such manner as it may determine.

26. Moneys Held by the Depositary

The Depositary shall be entitled to d eal with moneys paid to it by the Company for the purposes ofthe Deposit Agreement in the same manner as other moneys paid to it as a banker by its customersand shall not be liable to account to the Company or any holder or an y other person for any interestthereon, except as otherwise agreed.

27. Disclosure of Beneficial Ownership and Other Information

The Depositary may from time to time request Holders or former Holders o r any clearing system inwhich the GDRs are from time to time cleared to provide information as to the capacity in whichthey hold or held GDRs and regarding the identity of any other persons then or previouslyinterested in such GDRs and the nature of such interest and various other matters. Each suchHolder agrees to provide any such information reasonably requested by the Depositary pursuant tothe Deposit Agreement whether or not still a Holder at the time of such request.

28. Severability

If any one or more of the provisions contained in the Deposit Agreement or in these Conditionsshall be or become invalid, illegal or unenforceable in any resp ect, the validity, legality andenforceability of the remaining provisions contained therein or herein sh all in no way be affected ,prejudiced or otherwise disturbed thereby.

29. Governing Law

(A) The Deposit Agreement and the GDRs are governed by, and shall be construed inaccordance with, English law. The rights and obligations attaching to the DepositedProperty will be governed by Indian Law. The Co mpany has submitted in respect of theDeposit Agreement and these Conditions to the jurisdiction of the English co urts.

(B) The courts of England are to have jurisdiction to settle any disputes wh ich may arise out ofor in connection with the GDRs and accordingly any legal action or proceedings arisingout of or in connection with the GDRs (“ Proceedings ”) may be brought in such courts.This submission is made for the benefit of each of the Holders and shall not limit the rightof any of them to take Proceedings in any other court of competent jurisdiction nor shallthe taking of Proceedings in one or more jurisdictions preclude the taking of Proceedingsin any other jurisdiction (whether concurrently or not).

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(C) The Depositary irrevocably appoints the Managing Director for the time being ofDeutsche Trustee Company Limited, currently situated at Winchester House, 1 GreatWinchester Street, London EC2N 2DB as its authorised agen t for service of process inEngland. If for any reason the Depositary does not have such an agent in England, it willpromptly appoint a substitute process agent and notify the Company of such appointment.Nothing herein shall affect the right to serve process in any other manner permitted bylaw.

30. Contracts (Rights of Third Parties) Act, 1999

No person shall have any right to enforce th ese terms and conditions under the Contracts (Rightsof Third Parties) Act, 1999 except and to the extent (if any) that these terms and conditionsexpressly provide for such Act to apply.

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SUMMARY OF PROVISIONS RELATING TO THE GDRS WHILE IN MASTER FORM

A Master GDR in registered form represents the GDRs. The Master GDR is registered in the name of acommon nominee (the “Common Nominee”), and held by Deutsche Bank Trust Company Americas in itscapacity as common depositary (the “Common Depositary”). The Master GDR contains certain provisionsthat apply to the GDRs while they are in master form. The terms and conditions described below includesummaries of, and are subject to, the detailed provisions of the Deposit Agreement, which includes theforms of the relevant certificates. Copies of the Deposit Agreement are available for in spection at thespecified office of the Depositary and each Agent and at the Office of the Custodian. Holders are deemed tohav e notice of and be bound by all of the provisions of the Deposit Agreement. Terms used in the terms andcond itions below and not defined herein but which are defined in the Deposit Agreement have themeanings ascribed to them in th e Deposit Agreement.

The Master GDR will only be exchanged for certificates in definitive registered form evid encing GDRs inthe circumstances described in (i), (ii), (iii) or (iv) below in whole but not, ex cept in the case o f (iii) or (iv)below, in part. Subject to the terms and conditions hereof, the Depositary hereby irrevocably undertakes todeliver certificates evid encing GDRs in definitive registered form in exchang e for the Master GDR topersons entitled to interests in the Master GDR within 60 days in the event that:

(i) the holder of the Master GDR is unwilling or unable to continue as settlement agent (or asnominee thereof) and a successor settlement agent (or successor depositary) (or successor nomineethereof), is not appo inted within 90 calendar days; or

(ii) CSD is closed for business for a continuous period of 14 days (other than by reason of holiday,statutory or otherwise) or announces an intention permanently to cease business or does, in fact,do so and no alternative clearing system satisfactory to the Depositary is av ailable within 45 days;or

(iii) the Depositary has determined that, on the occasion of the next payment in respect of the GDRs,the Company, th e Depositary or its Agent would be required to make any deductio n orwithholding from any payment in respect of the GDRs which would not be required were theGDRs in definitive form; or

(iv) the Holder gives notice to the Depositary of its desire to exchange a part or the whole of th eMaster GDR for certificates evidencing GDRs in definitive registered form.

In relation to (iii) and (iv) above any person appearing in the records maintained by the CSD as entitled toany interest in the Master GDR shall be en titled to require the Holder to procure the exchange of anappropriate part of the Master GDR for a definitive GDR for an interest held by such person in the MasterGDR in the above circumstances upon notice to the Holder. Any such exchange shall be at the expense(including printing costs) of the Holder in the case of such appropriate part or at the expense of the Holdersin case of exchange of the whole of the Master GDR for the definitive GDRs.

See “Terms and Conditions of the Global Depositary Receipts" on page 61. "Depositary’s Fees, Costs andExpenses" on page 70 for details o f certain of the costs for issuing GDRs in defin itive form.

Upon any exchange of a part of the Master GDR for a certificate eviden cing a GDR or GDRs in definitiveform or any distribution of GDRs pursuant to Conditions 3, 5, 6, 7 or 10, or any reduction in the number ofGDRs evidenced hereby following any withdrawal of any Deposited Property pursuant to Condition 2, orany increase in the number of GDRs following the deposit of Shares pursuant to Condition 1, the relevantdetails shall be entered on the Register of the Depositary, whereupon the number of GDRs represented bythe Master GDR shall be reduced or increased. As the case may be, for all purposes by the amount soexchanged and entered on the Register, provided always that if the number of GDRs evidenced by theMaster GDR is reduced to zero the Master GDR sh all continue in existen ce until the obligations of theCompany under the Deposit Agreement and the obligations of the Depositary pursu ant to the DepositAgreement and the Conditions have terminated.

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Payments and Distributions

Payments of cash dividends and other amounts (including cash distributions) in respect of the GDRsevidenced by the Master GDR will be made by the Depositary through the CSD on behalf of personsentitled thereto upon receipt of funds therefore from the Company. A free distribution or rights issue ofShares to the Depositary on behalf of Holders may result in the Master GDR being marked up to reflect theenlarged number of GDRs it thereby eviden ces.

Surrender of GDRs

Any requirement in the Conditions relating to the surrender of a GDR to the Depositary shall be satisfiedby the production by the Common Depositary on behalf of a Holder of such evidence of entitlement of suchHolder as the Depositary may reasonably require, which is expected to be a certificate or other documentsissued by the CSD or, if relevant, an alternative clearing system. The delivery or production of any suchevidence shall be sufficient evidence, in favour of the Depositary, any Agent and the Custodian of the titleof such person to receive (or to issue instructions for the receipt of) all moneys or other property payable ordistributable, in respect of the Deposited Property represented by such GDRs.

Notices

For so long as the Master GDR is registered in the name of a Common Depositary on behalf of the CSD,notices may be given by the Depositary by delivery of the relevant notice to the Common Depositary forcommunication to persons entitled thereto in substitution for pub lication required by Condition 23.

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INFORMATION RELATING TO THE DEPOSITARY

The Depositary is Deutsche Bank Trust Company Americas. Deutsche Bank Trust Company Americaswas in corporated in 1 903 as a bank with limited liability in the State of New York and is an indirectwholly-owned subsidiary of Deutsche Bank AG. The Depositary is subject to regulation and supervisionby the New York State Banking Department, the Federal Reserve Board and the Federal Deposit InsuranceCorporation. The registered office of the Depositary is located at 60 Wall Street, New York, NY 10005and the registered number is BR1026. A copy of the Depositary’s by-laws, as amended, together withcopies of the most recent financial statements and annual report of the Depositary will be available forinspection at the princip al admin istrative establishment of the Depositary located at 60 Wall Street, DRDepartment, 27th Floor, New York, NY 10005 and at the office of the Depositary located at WinchesterHouse, 1 Great Winchester Street, London EC2N 2DB.

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NATURE OF THE INDIAN SECURITIES TRADING MARKET

The information in this section has been extracted from publicly available documents, including o fficiallyprepared materials from the SEBI, the BSE and has not been prepared or independently verified by theCompany. Rana Sugars accepts responsibility for the information contained in these listing particulars. Tothe best of the knowledge and belief of the Company and its Directors (who have taken all reasonable careto ensure that such is the case), the information contained herein is in accordance with the facts and doesnot omit anything likely to affect the import of such information.

The Indian Securities Market

India has a long histo ry of organised securities trading. In 1875, the first stock exchange was established inMumbai. As of today there are twenty four Stock Exchanges in India.

Stock Exchange Regulation

India's stock exchanges are regulated primarily by the SEBI, as well as by the Government acting throughthe Ministry of Finance, Stock Exch ange Division, un der the Securities Contracts Act and the SecuritiesContracts Rules. The Securities Contract Rules regulate the recognition of stock exchanges, thequalifications for membership and th e manner in which contracts are entered into and enforced betweenmembers.

The main objective of SEBI, which was established by the Government in February 1992, is to promote thedev elopment of and regulate the Indian securities markets and protect the interests of investors. SEBI maymake or amend an exchange's by-laws and rules, overrule an exchange's governing body and withdrawrecognition of an exchange. In the past, SEBI's regulation of market practices was limited. The SEBI Actgranted SEBI powers to regulate the business of Indian securities markets, including stock exchanges andother financial intermediaries, promote and monitor self-regulatory organisations, prohibit fraudulent andunfair trade practices and insider trading, and regulate substantial acquisitions of shares and takeovers ofcompanies. SEBI has also issued guidelines concerning minimum disclosure requirements by publiccompanies, rules and regulations concerning investor protection, insider trading, substantial acquisitions ofshares and takeovers of companies, buyb acks o f securities, employee stock option schemes, stockbrokers,merchant bankers, mutual funds, credit rating agencies and other capital market participants.

Recently, the Securities Contracts Act has been amended to include derivatives of securities andinstruments of collective investment in the defin ition o f “securities”. This has been done with a view todevelop and regulate the markets for derivatives. SEBI has also set up a committee for the review of Indiansecurities laws, which has proposed a draft Securities Bill. The draft Securities Bill, if accepted, will resultin a substantial revision in the laws relating to securities in India. Recently, the Companies Act wasamended to introduce significant changes such as allowing the buyback of securities, issuance of sweatequity shares, making accounting standards issued by the Institute of Chartered Accountants of Indiamandatory and relaxing restrictions on inter-corporate investment and loans.

Public Issuance of Securities

Under the Companies Act, a public offering of securities in India must generally be made by means of aprospectus, which must contain information specified in the Companies Act and under applicable SEBIguidelines and be filed with the Registrar of Companies having jurisdiction over the place where theCompany's registered office is situated. The Company's Directors and Promoters may be subject to civiland criminal liability for misstatements in a prospectus. The Comp anies Act also sets forth procedures forthe acceptance of subscriptions and the allotment of securities among subscribers and establishes maximumcommission rates for the sale of securities.

SEBI has issued detailed guidelines concerning disclosures by public companies and investor protection.Prior to the repeal of certain rules in mid-1992, the Controller o f Capital Issues of the Governmentregulated the prices at which companies could issue securities. SEBI guidelines now p ermit existing listedcompanies to price freely their public or rights issue of securities, though the pricing of initial publicofferings is subject to certain restrictions. All new issues governed by SEBI guidelines are conditional upon

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a minimum subscription requirement of 90% of the securities being issued. However, such minimumsubscription clause is not applicable to Development Financial Institutions. In July 1996, SEBI relaxed theforegoing minimum subscription requirement in the case of “offer for sale” of securities (i.e., a sale byexisting shareholders), but introduced regulations which require that there be a minimum of tenshareholders for every Rs.100,000 of the nominal value of shares offered to the public. In the case of publicissues, the requirement is for a minimum of five shareholders for every Rs.100,000 of the nominal value ofshares offered to the public. Promoters of companies are required to retain a certain min imum certifiedholding of equity share capital, which is subject to a lock-in for three years. No issuance of bonus shares ispermitted within twelve months of any public issue or rights issue.

Public limited compan ies are required under the Companies Act to prepare, file with the Registrar ofCompanies and circulate to their shareholders audited annual accounts, which comply with the CompaniesAct's disclosure requirements and regulations governin g th eir manner of presentation. In addition, a listedcompany is subject to continuing disclosure requirements pursuant to the terms of its listing agreement withthe relevant stock exchange. SEBI has recently notified amendments to the listing agreement tightening thecontinual disclosure standards by corporations. Accordingly, companies are now required to publishunaudited financial statements on a quarterly basis and are required to inform stock exchanges immediatelyregarding any price sensitive information.

Listing

The listing of secu rities on a recognised Indian stock exchange is regulated by the Securities ContractsRules.

Under the standard terms of stock exchange Listing Agreements, the governing body of each stockexchange is empowered to suspend trading of or dealing in a listed security for breach of a company'sobligations under such agreement, subject to the company receiving prior notice of the intent of theexchange. A listed company can also be delisted after a notice period of six months, if the number of publicshareholders falls below five for every Rs.100,000 nominal value of shares offered to the public or thelisted company fails to pay annual listing fees to the relevant stock exchange. SEBI has recently issuedguidelines for standardising Listing Agreements and by-laws of stock exchanges in India. SEBI proposes toissue additional guidelines, which set out basic listing standards for all stock exchanges in India. In theevent th at a suspension of a company's securities continues for a period in excess of three months, thecompany may appeal to SEBI to set aside the suspension. SEBI has the power to veto stock exchangedecisions in this regard.

Indian Stock Exchanges

There are twenty four (24) stock exchanges in India. As of 31 March 2005, over nine thousand (9000)brokers dispersed across India served these stock exchanges. Most of the stock exchanges have theirgoverning board for self-regulation.

The BSE and the NSE account for a majo rity of trading volumes of securities in India. The BSE and NSEtogether hold a dominant position among the stock exchanges in terms of number of listed companies,market capitalisation and trading activity.

SEBI had prescribed certain guidelines for the pricing and reporting of negotiated deals. A negotiated dealrefers to a transaction executed at a price not determined through stock exchange pricing and involving avalue of not less than Rs.2.5 million or a volume of not less than 10,000 shares. Earlier, a negotiated dealhad to be reported to th e stock exchange within fifteen minutes from the time the trade was negotiated, or ifsuch transaction occurs after trading hours, on the next day when the market opens.

However, for greater transparency, SEBI has decided that negotiated deals will not be permitted in theexisting manner, and they have to be executed on the screens of the exchanges just like any other normaltrade.

There are generally no restrictions on price movements of any security on any given day. However, torestrict abnormal price volatility, SEBI has instructed stock exchanges to apply daily circuit breakers thatdo not allow transactions at prices different by more than 8% of the previous closing price for shares

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quoted at Rs.20 or more. SEBI has recently instructed stock exchanges to relax the circuit breakers by afurther 4% after half an hour from the time prices reach the limit of 8% It has allowed stock exchanges tofix circuit breakers for shares quoted at prices up to Rs.20. Further, margin requirements are also imposedby stock exchanges that are required to be paid at rates fixed by the stock exchanges. The stock exchangescan also exercise the power to suspend trading during periods of market volatility.

A settlement cycle is an account period for the securities traded on a stock exchange. At the end of theperiod, obligations are settled, i.e., buyers of securities pay for and receive securities while sellers givesecurities and receive payment for them. The obligations are settled on a net basis, i.e., if some security isboth purchased and sold in the same settlement cycle then only the net quantity of securities is delivered orreceived and the net amount of funds paid or received. Typically, the length of the settlement period is fivebusiness days. SEBI has specified ten shares that were to be settled by rolling settlement from 10 January2000. Under rolling settlement, the length of the settlement period is on e day.

In December 1993, SEBI announced a ban on forward trading on the Ahmedabad, Calcutta and Delhi stockexchanges and the BSE in order to contain excessive speculation, protect the interests of investors andregulate the stock market. All transactions thereafter were required to be for payment and delivery.

In October 1995, SEBI announced the introduction of a modified forward trading system to enable buyersand sellers to defer the settlement of their obligations to the following settlement cycle. This system beganon BSE in January 1996 for select shares. The new system segregates trades into different categories,namely, carry-forward, delivery and jobbing, with different identification numbers of the various trades.SEBI has appointed a committee to recommend modalities for a carry forward mechanism under the rollingsettlement. Once the revised carry forward mechanism is approv ed, rolling settlement will be applicablealso for shares in the carry forward list.

In 1992, SEBI promulgated rules and regulations that prescribe conditions for reg istration of stockbrokers.A stockbroker may not buy, sell or deal in securities except pursuant to a certificate granted by SEBI. Th eregulations also prescribe a broker code of conduct and rules for the fair treatment of investors by brokers,the procedures for registration, the payment of registration fees, maintenance of appropriate books andrecords and the right of inspection of the books of the stockbrokers by SEBI. Broker liability in cases ofdefault extends to suspension or cancellation of the broker's registration. SEBI has issued registrationcertificates to over 9,000 stockbrokers who are members of various stock exchanges in India. Before theseregulations, stockbrokers were required to be registered only with the stock ex changes of which they weremembers. SEBI regulations introduced the concept of dual registration of stockbrokers with SEBI and thestock exchanges, and brought the brokers under regulation for the first time.

SEBI has enforcement powers over secondary market participants for violation of any provisions of SEBIAct, 1992, or breach of the rules and regulations of SEBI. SEBI may also take enforcement action forviolations of the Securities Contracts Act or rules made thereunder and rule regulations and by-laws of thestock exchanges.

BSE

The BSE, the oldest stock exchange in India, was established in 1875. It has evolved over the years into itspresent status as the premier stock exchange of India. The BSE switched over to online trading ( “BOLT”)from May 1995. As of 31 January 2005, the BSE had 781 members, comprising 201 individual members, 561Indian companies and 19 foreign institutional investors. Only a member of the BSE has the right to trade inthe stocks listed on the BSE.

As of 30 June 2005, there were 4,738 listed companies trading on the BSE and the estimated marketcapitalisation of stocks trading on the BSE was Rs.18,503.8 billion (U.S.S424.5 billion). The average dailyturnover on the BSE was Rs.25.4 billion (U.S.$0.6 billion) in June 2005. The BSE had over 11,000 traderwork stations spread over 400 cities as of 30 June 2005.

Derivatives trading commenced on the BSE in 2000. The BSE has also wholesale and retail debt tradingsegments. Retail trading in government securities commenced in January 2003.

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Trading Hours

Trading on the BOLT system of the BSE is conducted from Monday through Friday between 9:55 a.m. to3:30 p.m. The BSE is closed on public holidays.

Trading Procedure

Until 1995, brokers and members of the BSE received individual orders from which any cross-orders werematched and taken off. The balance of the orders was transmitted to the trading floor for execution in anopen outcry system. The BSE has now introduced its BOLT online trading system on the exchange. Theenhanced transparency in dealings due to implementation of BOLT has assisted considerably insmoothening settlement cycles and improving efficiency in back office work. The BOLT wascommissioned on 14 March 1995.

Transaction tax

The Finance Act 2004 has inserted a levy of securities transaction taxes on taxable securities transactions.According to this act, the rate of levy of the securities transaction tax is as follows:

Sl. No. Taxable Securities Transaction Rate Payable by1. Purchase of an equity share in a company or a unit of an equity 0.1% Purchaser

oriented fund, where (a) such purchase is transacted on arecognised stock exchange; and (b) the contract for thepurchase of such share or unit is settled by the actual deliveryor transfer of such share or unit

2. Sale of an equity share in a company or a unit of an equity 0.1% Selleroriented fund, where (a) such sale is transacted on a recognisedstock exchange; and (b) the contract for the sale of such shareor unit is settled by the actual delivery or transfer of such shareor unit

3. Sale of an equity share in a company or a unit of an equity 0.02% Selleroriented fund, where (a) such sale is transacted on a recognisedstock exchange; and (b) the contract for the sale of such shareor unit is settled otherwise than by the actual delivery ortransfer of such share or unit

4. Sale of a derivative where the transaction of such sale is entered 0.0133% Sellerinto on a recognised stock exchange

5. Sale of a unit of equity and equity oriented fund to a mutual 0.2% Sellerfund

Derivatives (futures and options)

Trading in derivatives is governed by the Securities Contracts (Regulation) Act, 1956 and the Securities andExchange Board of India Act, 1992. The Securities Contracts (Regulation) Act, 1956 was amended inFebruary 2000 and derivative contracts were included within the term “securities”, as defined by theSecurities Contracts Act. Trading in derivatives in India takes place either on separate and independentderivatives exchanges or on a separate segment of an existing stock exchange. Derivatives products have beenintroduced in a phased manner in India, starting with futures contracts in June 2000 and index options, stockoptions and stock futures in June 2000, July 2001 and November 2001, respectively.

Settlement

The trades done by the members during the weekly trading period from Monday to Friday are settled bypayment of monies and delivery of securities in the following week. All deliveries of securities are requiredto be routed through the clearinghouse. The securities, as per delivery orders issued by the BSE, are to be

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delivered in the clearing house on the day designated for securities pay-in, i.e., on Wednesday without anytime slot up to 4:00 p.m. and as per time slot between 4:00 p.m. and 6:00 p.m. and on Thursday as perprescribed time slots up to 2:00 p.m. The members can, however, submit deliveries between 2:30 p.m. and4:00 p.m. on Thursday on payment of late delivery charges. The BSE clearing house then deliverssecurities to the brokers on Friday and makes payments to the brokers on Saturday. The clearinghousecompulsorily auctions all shortages in delivery. The auction system is fully computerised and has beenfollowing a closed-bid system. For payments, the bank accounts of the brokers are maintained with thedesignated clearing banks, which are debited or credited on the specified days.

Commissions

The maximum commission charged by brokers for trading equities is 2.5 % of the transaction value but, inpractice, commissions are normally in the range of 0.5% to 2% The 1994 budget imposed a 5% service taxon brokerage commissions, which was subsequently increased to 8% by 2003 budget.

Stock Market Indices

The following two indices are generally used in tracking the aggregate price movements on the BSE.

The BSE Sensitive Index (Sensex) consists o f listed shares of 30 large market capitalisation companies.The companies were selected on the basis of market cap italisation, liquidity and the need for industryrepresentation. The BSE Sensitive Index was first compiled in 1986 with the fiscal year ended 31 March1979 as its base year. This is the most commonly used index in India.

The BSE 100 Index (formerly the BSE National Index) contains listed shares of 100 companies includingthe 30 in the BSE Sensitive Index, and fiscal year 1983-84 was chosen as the base year. Th e BSE 100Index was introduced in January 1989.

Internet-Based Securities Trading and Services

SEBI allows Internet-based securities trading under th e existing legal framework. The regulations seek toallow the Internet to be used as an order routing system through stock brokers registered with SEBI onbehalf of clients for executing trades on a recognised stock exchange in India. Stock brokers interested inproviding this service are required to apply for permission to the respective stock exchange and also have tocomply with certain min imum conditions stipulated by SEBI. Given the limited life of these newregulations to date, it is possible that these regulations will continue to evolve in the future.

Depositaries

In August 1996, the Indian Parliament enacted the Depositories Act, which provides a legal framework forthe establishment of depositaries to record ownership details and effectuate transfers in book-entry fo rm.SEBI enacted. SEBI (Depositories and Participants) Regulations, 1996, which provides for the formation ofsuch depositaries, the registration of participants as well as the rights and obligations of the depositaries,participants and the issuers. Every depositary has to register with SEBI. Pursuant to the Depositories Act,the National Securities Depositary Limited was established by the Unit Trust of India, the IndustrialDevelopment Bank of India and the NSE in 1 996, to prov ide electronic depositary facilities for trading inequity and debt securities. The National Securities Depositary Limited, which commenced operations inNovember 1996, was the first depositary in India. Another depositary, the Central Depositary Serv ices(India) Limited, established by the BSE has commenced operations since 15 July 1999. The depositarysystem has significantly improved the operations of the Indian securities markets.

Trading of securities in book-entry form commenced in December 1996 an d was available for securities of1,473 companies as of 9 November 2000. In order to en courage “dematerialisation” of securities, SEBI hasset up a working group on dematerialisation of securities comprising FIIs, custodians, stock exchanges,mutu al funds and the National Securities Depositary Limited to review the progress of securities andtrading in dematerialised form and to recommend scripts for compulsory dematerialised trading in a phasedmanner. Accordingly, commencing January 1998, SEBI has notified Scripps of various companies forcompulsory dematerialised trading b y certain categories of investors such as FIIs and other institutionalinvestors and has also notified compulsory dematerialised trading in specified Scripps for all retail

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investors. SEBI proposes to increase the number of Scripps in which dematerialised trading is compulsoryfor all investors significantly in the near future. SEBI has also provided that the issue and allotment ofshares in public, rights or offer for sale after a specified date to be notified by SEBI shall only be indematerialised form and an investor shall be compulsorily required to open a depositary account with aparticipant.

However, even in case of scripts notified for compulsory dematerialised trading, investors, other thaninstitutional investors, are permitted to trade in physical shares on transactions outside the stock exchangewhere there are no requirements of reporting such transactions to the stock exchange and on transactions onthe stock exchange invo lving lots less than 500 securities.

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RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

General

Prior to 1 June 2000, fo reign investment in Indian securities, including the acquisition, sale and transfer ofsecurities of Indian companies, was regulated by the Foreign Exchange (Regulation) Act, 1973 of India (the“FERA”) and the notifications issued by the RBI thereunder.

With effect from 1 June 2000, foreign investment in Indian securities is regulated by the Foreign ExchangeManagement Act, 1999 (as amended from time to time) (“FEMA”) and the rules, regulations andnotifications by the RBI made under FEMA. A person resident outside India can acquire or transfer anysecurity of an Indian company or any other security to an Indian resident only under the terms andconditions specified in FEMA and th e rules and regulations made thereunder.

The RBI issued the Foreign Exchange Management (Transfer or Issue of Security by a Person ResidentOutside India) Regulations 2000 (the “Regulations”) to regulate the issue of Indian securities includingglobal depositary receipts to persons resident outside India and the transfer of Indian securities by or topersons resident outside India. The RBI has also issued the Foreign Exchange Management (Transfer orIssue of any Foreign Security) Regulations 2000 (the “ODI Regulations”).

The Regulations prov ide that an Indian entity may issue securities to a p erson resident ou tside India orrecord in its books any transfer of security from or to such person only in the manner set forth in FEMAand the rules and regulations made thereunder or as permitted by the RBI.

Foreign Direct Investment

The Government of India, pursuant to its liberalisation policy, set up the Foreign Investment PromotionBoard, Ministry of Finance, Government of India (the “FIPB”) to regulate all investments by way ofsubscription and/or pu rchase of securities of an Indian company by a non-resident investor (“Foreign DirectInvestment” or “FDI”) into India. FIPB approval is required for investment in sectors such as housing,petroleum (other than refining), defence and strategic industries and for investment in certain othercircumstances. Also, the following investments would require the prior permission of the FIPB:

• Foreign investment in industries that require an industrial licence under the provisions of theIndustries (Development and Regulation) Act, 1951;

• Foreign investment of more than 24% in the equity capital of manufacturing items reserved forsmall scale industries;

• All proposals in which the foreign collaborator has a prev ious or existing joint venture in India inthe relevant sector;

• All proposals for investment in certain industries specified by the Government (for example,atomic energy, defence and strategic industries; and

• All proposals for investment in certain specified industries where the proposed investment is inexcess of a maximum specified limit (for example, investment in excess of 74% in banking).

Currently, subject to certain exceptions, FDI and investment by Non-Resident Indians in Indian companiesdoes not require the prior approval of the FIPB or the RBI. The Government of India has indicated that inall cases where Foreign Direct Investment is allowed on an automatic basis without FIPB approval, the RBIwould continue to be the primary agency for the purposes of monitoring and regulating foreign investment.In cases where FDI is on an automatic basis, no prior approval of the RBI is requ ired, although adeclaration in the prescribed form, detailing the foreign investment, must be filed with the RBI within aspecified period of the foreign investment being made in the Indian company. The foregoing descriptionapp lies only to an issuance of shares by, and not to a transfer of shares of, Indian companies.

The Government of India has set up the Foreign Investment Implementation Authority (the “FIIA”) in theMinistry of Commerce & Industry. The FIIA has been mandated to (i) translate foreign direct investmentapprovals into implementation, (ii) provide a pro-active one stop after care service to foreign investors byhelping them obtain necessary approvals, (iii) deal with operational problems, and (iv) meet with variousGovernment of India agencies to find solutions to foreign investment problems, and maximiseopportunities through a partnership approach.

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Pricing

The price of shares of a listed Indian company issued to non-residents under the FDI scheme on anautomatic basis cannot be less than the price calculated in accordance with the guidelines issued by theSEBI. Where th e Indian company is not listed on any recognised stock exchange in India, the minimumissue price of the shares would be based on a fair valuation of shares produced by a chartered accountant asper the guidelines issued by the former Controller of Capital Issues.

Every Indian company issuing shares or convertible debentures in accordance with the Regulations isrequired to submit a report to the RBI within thirty days of receipt of the consideration and another reportwithin thirty days from the date of issue of the shares to the non-resident purchaser.

The above description applies only to a fresh issue of shares or convertible debentures by an Indiancompany.

Portfolio Investment by Foreign Institutional Investors

In September 1992, the Govern ment of India issued guidelines which enable Foreign Institutio nal Investors(“FIIs”), includ ing institutions such as pension funds, investment trusts, asset management companies,nominee companies and incorporated/institutional portfolio managers, to make portfolio investments in allsecurities of listed and unlisted comp anies in India. Investments by registered FIIs or Non-Resident Indiansmade through a stock exchange are known as portfolio investments (“Portfolio Investments”). Foreigninvestors wishing to invest and trade in Indian securities in India under the portfolio investment route arerequired to register with the SEBI under the Securities and Exchang e Board of India (Foreign InstitutionalInvestors) Regulations 1995 (the “Foreign Institutional Investor Regulations”) and obtain a generalpermission from the RBI under the Foreign Exchange Management Act, 1999. Investors can also register assub accounts of FIIs. However, since the SEBI provides a single window clearance, a single applicationmust be made to the SEBI. Foreign investors are not necessarily required to register with the SEBI as FIIsand may invest in securities of Indian companies pursu ant to the Foreign Direct Investment route discussedabove.

FIIs who are registered with the SEBI are required to comply with the provisions of the Securities andExchange Board of India (Foreign Institutional Investors) Regulations 1995 (the “Foreign InstitutionalInvestor Regulations”). A registered FII may buy, subject to the ownership restrictions discussed below, andsell freely listed securities issued by any Indian compan y, realise capital gains on in vestments madethrough the initial amount invested in India, subscribe to or renounce rights offerings for shares, appoint adomestic custodian for custody of investments made and repatriate the capital, capital gains, dividends,income received by way of interest and any compensation received towards sale or renunciation of rightsofferings of shares. A FII or a sub account of an FII may not hold mo re than 10% of the total issued capitalof a company in its own name, a corporate/individual sub-account of the FII may not hold more than 5% ofthe total issued capital of a company, and a broad-based sub-account may not hold more than 10% of thetotal issued capital of a company. The maximum holding of 24% for all non-residents portfolio investmentsincluding those of the registered FIIs, will also include NRI corporate and non-corporate investments, butwill not include: (a) foreign investment under financial collaborations (direct foreign investment) which arepermitted upto 51% in all priority areas; (b) investments by FIIs thro ugh the alternative routes, such asoffshore single/regional funds, global depository receipts and euro convertibles.

In terms of the recent amendments made to the Regulations, FIIs are permitted to purchaseshares/convertible debentures, subject to the FII limits, of an Indian company either through:

• a public offer, where the price of the shares to be issued is not less than the price at which theshares are issued to the residents, or

• by way of a private placement, where the price is not less than the price according to the terms ofthe relevant guidelines or the guidelines issued by the former Controller of Capital Issues.

There is uncertainty under Indian law about the tax regime applicable to FIIs, which hold and trade GDRs.FIIs are urged to consult with their Indian legal and tax advisers about the relationship between the FIIguidelines and the GDRs and any equity shares withdrawn upon surrender of the GDRs.

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Registered FIIs are generally subject to tax under Section 115AD of the Income Tax Act, 1961 of India (asamended) (the “Income Tax Act”). The Bonds and Shares (including Shares represented by GDRs) aresubject to tax under the Income Tax Act. There is uncertainty under Indian law as to the tax regimeapplicable to FIIs that hold and trade in GDRs and Shares. “See Taxation — Indian Tax”.

Portfolio Investment by Non-Resident Indians

A variety of methods for investing in shares of Indian companies are available to Non-Resident Indians.These methods allow Non-Resident Indians to make Portfolio Investments in shares and other securities ofIndian companies on a basis not generally available to other foreign investors. Under the PortfolioInvestment Scheme, a Non-Resident Indian can purchase upto 5% of the paid up value of the shares issuedby a company, subject to the condition that the aggregate paid up value of shares purchased by all Non-Resident Indians does not exceed 10% of the paid up capital of the company. In addition to PortfolioInvestments in Indian companies, Non-Resident Indians may also make foreign direct investments inIndian companies pursuant to the Foreign Direct Investment route discussed above.

Transfer of shares and convertible debentures of an Indian company by a person resident outside India

Subject to what is stated below, a person resident outside India may transfer the shares or debentures heldby him in Indian companies in accordance with the Regulations. A non-resident or a Non-Resident Indianmay transfer by way of sale the shares or convertible debentures held by him to any other non- resident or aNon-Resident Indian, respectively, without the prior approval of the RBI. Approval from the FIPB may,however, be required by the transferee. If the transferee has an existing or previous venture or tie up inIndia through investment in shares or debentures, or a technical collaboration, trade mark agreement orinvestment by whatever name called in the same field or allied field other than in the informationtechnology field to that in which the Indian company whose shares are being transferred is engaged,approval from the FIPB would be required. Further, a non-resident may transfer any security held by him toa person resident in India by way of gift.

Under FEMA, no approval of the RBI is required for the sale of Shares by a non-resident person (includinga non-resident Indian) to a resident of India. Intimation to the RBI is made in Form FC-TRS, in respect ofsuch transfer of shares, in which information as to the transferor, the transferee, the shareholding structureof the Indian company whose shares are to be sold, the sale price per share, and other information isprovided.

In the event that the acquisition o f shares as above mentioned exceeds the limits prescribed, the TakeoverCode may apply. (See “Indian Securities Market”).

Transfer of shares of an Indian company would be subject to capital gains in the hands of the transferor(See “Taxation - Indian Tax”).

A non-resident person holding shares or convertible debentures of an Indian company is now, pursuant torecent changes to the Regulations, permitted to sell the same on a recognised Indian stock exchangethrough a registered broker. Any non-resident person seeking to sell shares received upon surrender ofGDRs or otherwise transfer such shares within India, whether or not through the BSE, or any other stockexchange, should seek advice from their Indian legal advisers as to the applicable requirements.

Issue of GDRs

The Ministry of Finance, through the Issue of Foreign Currency Convertible Bonds and Ordinary Shares(Through Depository Receipt Mechanism) Scheme, 1993 (the “Depository Receipt Scheme”) allows Indiancompanies to issue GDRs. This notification has been amended from time to time by the Ministry ofFinance, and certain relaxations in the guidelines have been notified by the RBI. The Regulations providethat an Indian company may issue GDRs to a person resident outside India through a depository under theautomatic route, subject to the approval of the Ministry of Finance, which is required only in certain cases.An Indian company issuing such GDRs is required to comply with certain reporting requiremen ts.

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Transfer of GDRs and Surrender of GDRs

A person resident outside India may transfer the GDRs held by him in Indian companies to another personresident outside India without any permission. A person resident in India is not permitted to hold GDRs ofan Indian company.

A GDR holder is permitted to surrender the GDRs held by him in an Indian company and to receive theunderlying equity shares in terms of the Deposit Agreement. Under Indian regulations the re-deposit ofthese equity shares with the depositary to obtain GDRs may not be permitted.

Fungibility of GDRs

The Ministry of Finance, Government of India, has granted general permission for the transfer of GDRsoutside India and has permitted non-resident holders of GDRs to surrender their GDRs in exchange for thedepo sited shares.

In March 2001, the RBI amended the Regulations and established two (2) alternative methods to allowequity shares to be converted into and sold as GDRs.

Purchase on the Stock Exchange

Pursuant to this amendment, a registered broker in India can purchase shares of an Indian company that hasissued depositary shares, on behalf of a person resident outside India, for the purpose of converting theshares into depositary shares. However, such conversion of equity shares into depositary shares is possibleonly if the follo win g cond itions are satisfied:

• the shares are purchased on a recognised stock exchange;• the shares are purchased with the permission of the Custodian for the depositary shares offering of

the Indian company and are deposited with the Custodian;• the shares purchased for conversion into depositary shares do not exceed the number of shares that

were released by the Custodian pursuant to conversions of depositary shares into shares under theDeposit Agreement; and

• the non-resident investor, the broker, the Custodian an d the Depositary comply with the provisionsof the Depositary Receipt Scheme and the related guidelines issued by the Government from timeto time.

Sponsored GDR facilities

By notification dated 23 November 2002, the RBI has permitted existing shareholders of Indian companiesto sell their shares through the issuance of GDRs against the block of existing shares of the Indiancompany, subject to the following conditions:

• The facility to sell the shares would be available pari passu to all categories of shareholders.• The sponsoring company whose shareholders propose to divest existing shares in the overseas

market through the issue of GDRs will give an option to all its shareholders in dicating the numberof shares to be divested and the mechanism of determining the price under the GDR norms. If theshares offered for divestment are more than the pre-specified number to be divested, shares wouldbe accepted from the existing shareholders in proportion to their existing shareholdings.

• The proposal for divestment of the shares would have to be approved by a special resolution of theIndian company.

• The proceeds of the GDR issue raised abroad shall b e repatriated into India with in a period of onemonth from the closing of the issue. However, the proceeds of the GDR issue can also be retainedabroad to meet the future foreign exchange requirements of the company and, by a recentnotification, this facility has been extended indefinitely until further notice.

• The issue-related expenses in relation to the pub lic issue of GDRs under this scheme would besubject to a ceiling of 4% of the issue size, in the case of public issues, and 2% of the issue size, inthe case of private placements. The issue related expenses would include underwritingcommissions, lead managers’ charges, legal expenses and reimbursable expenses. The issue

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expenses shall be passed on to the shareholders participating in the sponsored issue on a pro-ratabasis.

Obligations of the Custodian

The RBI has prescribed that the domestic custodian s are the entities required to ensure compliance with theRBI guidelines and to file reports with the RBI from time to time. The domestic custodians are alsorequired to perform certain functions, including the following:

• provide a certificate to the RBI and the SEBI stating that the sectoral ceilings for foreigninvestment in the relevant company have not been breached;

• monitor the total number of GDRs that have been converted into underlying shares by non-resident investors;

• liaise with the Company to ensure that the foreign investment restrictions, if any, are not beingbreached; and

• file a monthly report with the RBI and the SEBI concerning the GDR transactions under the two-way fun gibility arrang ement.

Transfer Restrictions

The GDRs may not be offered or sold directly or indirectly in India, to residents of India, or to, or for theaccount or benefit of, such persons in connection with the Issue or at any time thereafter. Each personacquiring a beneficial interest in any GDR will be deemed to have represented and agreed as follows:

(1) It is not located in In dia, is not a resident of India and is not purchasing for, or for the account orbenefit of, such a person.

(2) It acknowledges that the GDRs may not be offered, sold, pledged or otherwise transferred to anyperson located in India, to residents of India, or to, or from the account or benefit of, such persons.

(3) It understand s that the GDRs will bear a legend substantially to the followin g effect:

THE MASTER GDR, THE GLOBAL DEPOSITARY RECEIPTS EVIDENCED HEREBY ANDTHE EQUITY SHARES REPRESENTED THEREBY HAVE NOT BEEN AND WILL NOT BEREGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED(“SECURITIES ACT ”) AND SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGEDOR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH REGULATION SUNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THE HOLDER HEREOF, BY PURCHASING THE GLOBAL DEPOSITARY RECEIPTSREPRESENTED BY THIS MASTER GDR, AGREES, FOR THE BENEFIT OF RANASUGARS LIMITED AND THE DEPOSITARY NAMED BELOW THAT THE GLOBALDEPOSITARY RECEIPTS REPRESENTED BY THIS CERTIFICATE MAY NOT AT ANYTIME BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED TO ANYPERSON LOCATED IN INDIA, RESIDENTS OF INDIA, OR TO, OR FOR THE ACCOUNTOR BENEFIT OF, SUCH PERSONS.

(4) Any resale or other transfer, or attempted resale or other transfer, made other than in compliancewith the above-stated restriction may not be recognised by the Company or the Depositary inrespect of the GDRs.

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TAXATION

The following summary is based on current Indian tax laws. The summary does not purport to deal with allaspects of taxation that may be relevant to particular investors in light of their investment o r taxcircumstances. Prospective investors shou ld consult th eir own advisers concerning the tax consequences ofan investment in Bonds, GDRs and the Shares. The summary is based on the taxation law in force at thetime of these Listing Particulars and is subject to change.

Indian Taxation

The following is a summary of the Indian tax consequences of an investment in Bonds, GDRs and Sharesby investors who are not resident in India. This summary is not a complete guide on the tax consequencesunder Indian law with respect to the acquisition, ownership or sale of Bonds, GDRs or of other transactionsinvolving Bo nds, GDRs or of the con version of the Bonds into GDRs or Shares or redemption of GDRsinto Shares or sale of the Shares by non-resident investors. Prior to making a decision to invest, potentialinvestors should, therefore, consult their own tax advisers on the tax consequences of such transactionsunder Indian law, the law of the jurisdiction of their residence and any tax treaty between India and theircountry of residence.

The Income Tax Act, 1961 (144 of 1961) (“Indian Income Tax Act”) is the law relating to taxes on incomein India. The Indian Income Tax Act provides for the taxation of persons resident in India on global incomeand persons not resident in India on income received, accruing or arising in India or deemed to have beenreceived, accrued or arisen in India. Sections 4, 5, 6 and 9 of the Indian Income Tax Act set forth thecircumstances under which persons not resident in India are subject to income tax in India.

Residence for the Purpose of the Indian Income Tax Act

For the purpose of the Indian Inco me Tax Act, an individual is said to be resident in India if, in any yearend ed 31 March, the individual: (i) is in India for one hundred eighty two days or more; or (ii) having beenin India for three hundred sixty five days or more, during the four years preceding that year ended 31March and is in India for sixty days or more in that year ended 31 March. However, in the case of an Indiancitizen or a person of Indian origin who is not resident in India and visits India during the fiscal year or, anIndian citizen who leaves India as a member of a crew of an Indian ship or for the purpose of employmentoutside India during the year ended 31 March, the sixty days period in (ii) above is extended to onehundred eighty two days.

A company is resident in India in any year ended 31 March, if it is an Indian company or if during that yearcon trol and management of its affairs is situated wholly in India.

An Indian company means a company formed and registered under the Indian Companies Act, 1956 andincludes a company formed and registered under any law relating to companies formerly in force in Indiaor, a corporation established by or under a Central, State or Provincial Act of India or, an institution,association or a body declared by the Central Board of Direct Taxes of India to be a company for thepurpose of the Indian Income tax Act; provided that the registered office or, as the case may be, theprincipal office of the company, corporation, institution, association or body is in India.

A firm or other association of persons, and every other person is regarded as resident in India except where,during the year ended 31 March, the control and the management of its affairs is situated wholly outsideIndia.

Taxation of Income from Bonds a nd GDRs

Section 115AC of the Indian Income Tax Act (read with other applicable provisions of the Indian IncomeTax Act) is a special tax regime for taxes on income from Bonds or GDRs (issued under the Issue ofForeign Currency Convertible Bonds and Ordinary Shares (through the Depositary Receipt Mechanism)Scheme, 1993) (the “Scheme”) purchased in foreign currency through an approved intermediary and capitalgains arising from their transfer. The concessional tax treatment provided under section 115AC of theIndian Income Tax Act is ap plicable only to Bonds and GDRs falling within th e purview of the said section

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and not in relation to the Sh ares issued upon conversion of the Bonds or GDRs. A summary of theconcessions available under this section is set forth below.

Taxation of Interest

Section 115AC of the Indian Income Tax Act provides that payment of interest on the Bonds paid to non-resident holders of the Bonds will be subject to tax at the rate of 10 % plus surcharge of 2.5% plus educationcess of 2% on the income tax or will be subject to withholding tax at a favourable rate available under taxtreaties entered into by India with the country of residence of the relevant Depositary. The Indian IncomeTax Act requires such tax to be withheld at source. Where the tax is required to be deducted or withheld, theCompany will gross up th e taxable amount to the exten t set forth under “Terms and Conditions - Tax ation ”and will be required to account separately to the Indian tax authorities for any withholding taxes applicableon such amounts.

Taxation on Dividend Distributions

Under the current Indian tax laws, dividends are not taxable in the hands of the recipient and hence uponconversion of the Bonds into GDRs and delivery to the Depositary and/or each holder or such holdersdesignee of the shares in respect thereof, or after withdrawal of shares from the depositary facility under theDepositary Agreement or wh en the Bonds are converted directly into Shares, dividends to su ch non-resident holder will not be liable to tax. However, the Company will be liable to pay a “dividenddistribution tax” currently at the rate of 12.5% including 10% surcharge on the total amount distributed asdividend. Additionally, the Finance Act, 2005 levies an education cess at the rate of 2% of such tax.

Taxation on Transfer of Bonds and GDRs

The transfer of Bonds and GDRs falling within the purview of section 115AC of the In dian Income Tax Actbetween non-resident investors outsid e India are to be free from any liability to income tax in India oncapital gains therefrom. It is unclear whether capital gains derived from the sale of rights by a non-residentinvestor to another non-resident investor will be subject to tax liability in India. This would depend on theview taken by Indian tax authorities on th e po sition with respect to the status of the rights being offeredunder the Bonds or GDRs.

Taxation on acquisition of Shares upon conversion of Bonds or GDRs into Shares

The conversion of the Bonds or GDRs into Shares by a non-resident investor does not give rise to a taxableevent for Indian income tax purposes.

Taxation on Sale of Shares

Capital gains arising to the non-resident investor on the transfer of the Shares (whether in India or outsideIndia to non-resident investor) will be liable to income tax under the provision s of the Indian In come TaxAct.

If the Shares (including shares issuable on the conversion of the Bonds and GDRs) are held by the non-resident investor for a period of more than twelve months from the date of advice of their redemption bythe depositary, the capital gains arising on the sale thereof is to be treated as long term capital gains andwill be subject to income tax at the rate of 10.25% (including surcharge). As per the existing Finance Act,2005 lon g term capital gains tax on listed securities is nil. The Shares are held for a period of less th antwelve months from the date of redemption advice, the capital g ains arising on the sale thereof is to betreated as short term capital gains and will be subject to tax at the rate of 10% plus surcharge.

The provisions of the Agreement for Avoidance of Double Taxation entered into by the Government ofIndia with the country of residence of the non-resident investor will be applicable to the extent they aremore beneficial to the non-resident investor.

Neither section 115AC of the Indian Income Tax Act nor the Scheme deals with capital losses arising on atransfer of Shares in India. However under the Indian Income Tax Act, losses arising from a transfer of acapital asset in India can only be set off against capital gains. A long term capital loss can be set off only

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against a long term capital gain. A short-term capital loss can b e set off again st capital gain. To the extentthat the losses are not absorbed in the year of transfer, they may be carried forward for a period of eightassessment years immediately succeeding the assessment year for which the loss was first computed andmay be set off against the capital gains assessable for such subsequent assessment years. In order to set offcapital losses as above, the non-resident investor would be required to file appropriate and timely taxreturns in India and undergo the usual assessment procedures.

Taxation on Buyback of Equity Shares

If the Shares held by the non-resident investor are purchased by the issuing company from the non-residentinvestor, the non-resident investor will be liable to income tax in respect of the capital gains arising on suchbuyback as per the provisions of the Indian Income tax Act and capital gains tax arising therefrom shall bewithheld at source before repatriation of sale proceeds from India. The provisions of the Agreement forAvoidance of Double Taxation entered into by the Government of India with the country of residence of thenon-resident investor will be applicable to the extent they are more beneficial to the non-resident investor.(See “Taxation on Sale of Shares”).

Taxation of Payment on Liquidation or Reduction of Capital

If any distribution is made by the Company to its shareholders or GDR holders on its liquidation or on thereduction of its capital, to the extent to which the distribution is attributable to the accumulated profits ofthe issuin g company, the same will be treated as deemed div idend income in the hands of the shareholdersor GDR holders and will be subject to income tax in India. However, tax on such deemed dividend will bepaid by the company. Any gains accruing to the shareholder or GDR holders on liquidation or reduction ofcapital of the issuing company, in excess of such accumulated profits will be liable to income tax as capitalgains in the hands of the shareholder or GDR holder as per the provisions of Indian Income Tax Act. Theprovisions of the Agreement for Avoidance of Double Taxation entered into by the Government of Indiawith the country of residence of the non-resident investor will be applicab le to the extent they are morebeneficial to the non-resident investor. (See “Taxation on Sale of Shares”).

Taxation of Bonus Shares and Right Shares

The issue of right shares or bonus shares to the shareholders or GDR holders will not give rise to a taxableevent for Indian inco me tax pu rposes. The shareholders or the GDR holders will be subject to capital gainstax liability as per the provisions of the Indian Income Tax Act on the transfer of right shares or bonusshares. The provisions of the Agreement for Avoidance of Double Taxation entered into by the Governmentof India with the country of residence of th e non-resident investor will be app licable to the extent they aremore beneficial to the non-resident investor. (See “Taxation on sale of Shares”).

Withholding Tax

Capital gains arising to non-resident investors on the transfer of the Shares in India will be subject to awithholding tax at applicable rates (see “Taxation on sale of Shares”). However, as per the provisions ofsection 196D (2) of the Indian Income Tax Act, no withholding tax is required to be deducted from anyincome by way of capital gains arising to Foreign Institu tional Investors as defined in sectio n 115AD of theIndian In come Tax Act on the transfer of securities defined in section 115AD of the Indian Income Tax Act.The provisions of the Agreement for Avoidance of Double Taxation entered into by the Government ofIndia with the country of residence of the non-resident investor will be applicable to the extent they aremore beneficial to the non-resident investor.

Tax Tre ati es

Currently, dividend income is not subject to tax in India in the hands of the holder of the shares. If anyshares are held by a non-resident investor following withdrawal thereof from the Depositary Facility underthe Depositary Agreements, any double taxation treaty if any, entered in to by India with the country ofresidence of such non-resident investor, will be applicable to taxation of interest, tax credit with respect toany taxes paid by the Company and any tax on capital gain arisin g from transfer of such Shares or Bonds.

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Stam p Duty

The sale of an equity share in physical form would be subject to Indian stamp duty at the rate of 0.25% ofthe value of the equity shares on the trade date, and such stamp duty customarily is borne by the transferee,that is, the purchaser. However, since the Company’s equity shares are not in physical form, there would beno stamp duty payable in India on transfer of these equity shares. There is no stamp duty liability on sale ortransfer of GDRs.

Other Taxes

At present, there are no wealth, gift or inheritance taxes, which may apply to the GDRs and the redeemedequity shares.

Service Tax

Brokerage or commissions paid to stockbrokers in connection with the sale or purchase of shares listed on arecognised stock exchange in India are subject to a service tax of 12.24% (including education cess). Thestockbrok er is responsible for co llecting the service tax and paying it to the relevant authority.

PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITHRESPECT TO THE INDIAN AND THEIR LOCAL TAX CONSEQUENCES OF ACQUIRING,OWNING OR DISPOSING OF EQUITY SHARES OR GDRs

Shares Eligible for Future Sale

Sales of a substan tial number of equity shares into the public market following this offering, whether on theIndian Stock Exchanges or into the United Kingdom or Europe markets by conversion of outstandingequity shares into GDRs could adversely affect the market price of the GDRs.

Upon completion of this offering, 24.55 million equity shares will be issued.

Pricing of the Offering

The offering price will be determined by nego tiations between the Company, the Investment Bankers andthe representatives of the Purchasers. Amo ng the factors considered in determining the offering price willbe the future prospects of Rana Sugars and its industry in general, sales, earnings and certain other financialoperating information of Rana Sugars in recent periods, and the price-earnings ratios, price sales ratios,market prices of securities in the Indian Stock Exchanges an d the DIFX and certain financial and operatinginformation of companies engaged in activities similar to those of Rana Sugars.

Experts

The India GAAP based financial statements of Rana Sugars as of 31 March 2003, 2004 and 2005 have beenincluded herein in reliance upon the report of Kansal Singla & Associates, independent accountantsapp earing elsewhere herein, and upon the authority of said firm as experts in aud iting and accountin g.Kansal Singla & Associates have given and not withdrawn their consents to the inclusion of their respectivenames and reports in the form and context in which they appear herein.

Placement of the GDRs

2.455,662 million GDRs have been offered to and placed with institutional investors by the Company withthe assistance of the Lead Manager (Chartered Capital And Investment Limited). The Company has placedand procured payment for the Shares represented by the GDRs at the issue price of USD7.33 per GDR.

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GENERAL INFORMATION

1. The issue of Shares represented by the GDRs and of this Offering Circular have been authorisedand approved by The Annual General Meeting of the shareholders of the Company held on 3November 2005.

2. The Company will issue the Shares to the Depositary pursuant to the Placing Agreement on th eClosing Date (as defined in the Placing Agreement). On the Closing Date the Company willdeliver a share certificate in the Depositary’s name to the Custodian. The Depositary will issu eGDRs in respect of the Shares.

3. Application has been made to list the GDRs on the DIFX. In connection with the listingapp lication, the Memorandum and Articles of Association of the Company and the by-laws of theDepositary, as each is amended to the date hereof, the Deposit Agreement and a legal noticerelating to the issue of the GDRs will be deposited prior to listing with the DIFX, where copiesthereof may be obtained upon request. Immediately following the Closing Date, application willbe mad e to list the Shares on the Indian Stock Exchanges. There is no assurance that such listingswill be granted or maintained.

4. Copies of the Memorandum and Articles of Association of the Company and of the Depositary,and the Deposit Agreement will be available for inspection at Deutsche Bank Trust CompanyAmericas at Winchester House, 1 Great Winchester Street, London EC2N 2DB and, for so long as theGDRs are listed on the DIFX, copies of the audited, non-consolidated (with effect from theCompany’s financial year end ing 31 March 2003) annual reports to shareholders of the Companyand copies of the unaudited non-consolidated semi-annual financial statements of the Companyand copies of the unaudited non-consolidated quarterly financial statements of the Company, ineach case, in English may be obtained in that office. The Company has a subsidiary, which isunder inco rporation, therefore, the Company does not produce or publish consolidated annualaccounts/ consolidated interim accounts.

5. There has been no material adverse change in the financial position of the Company since 31March 2005, the date to which the audited financial information in this document has beenprepared.

7. The Placing Agreement and the Deposit Agreement are governed by the laws of Dubai.

8. The Exchang e Co ntrol Department of the RBI will be furnished with full particulars of thePlacing, including the percentage of foreign shareholding in the Company, within thirty days afterthe issue of the GDRs. A copy of this document will be delivered to the Registrar of Companies,Punjab, Himachal Pradesh and Chandigarh and to SEBI for the purpose of record.

9. The GDRs from time to time evidenced by one or more Master GDRs have been accepted forclearance and settlement in DIFX. The Common Code for th e GDRs is 025137515. The ISIN forthe GDRs is US75188Q1085. Th e CUSIP for the GDRs is 75188Q 10 8.

10. The auditors of the Company are Kansal Singla & Associates, Chartered Accountants, having its officeat SCO 1114-15, Sector 22-B Chandigarh – 160 022 w ho audited the accounts for the period ended31 March 2005, 2 004 and 2003. Kansal Singla & Associates, Chartered Accountants have consentedto the inclusion of their report in this document. The reconsolidation and compilation of accountsas per IFRS guidelines has been done by S.N.Nanda & Co., C-43 Pamposh Enclave, New Delhi -110048

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Index to Financial Statements

Description Page• Three year Financials of the Company for the year ended 31 March 2003, 2004 95-107

and 2005, re-stated as p er IFRS including the Financials of the Company for thehalf-yearly ending 30 September 2005.

108-114• Significant A ccounting Policies and Notes on Accounts forming part of accounts ofRana Sugars for the year ended 31 March 2005

• Independent Auditors Report of Rana Sugars for the year ended 31 March 2005 115

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BALANCE SHEET OF RANA SUGARS LIMITED

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

Particulars 30 September 2005 31 March 2005 31 March 2004 31 March 2003

Rs. USD Rs. USD Rs. USD Rs. USDAssets

Non-Current Assets

Property, Plant & (note no 1) 1357.93 30.87 1047.46 23.94 967.97 22.31 952.48 20.05EquipmentInvestments (note no 2) 0.39 0.01 0.39 0.01 0.39 0.01 0.00 0.00

Trade receivables (note no 4) 0.32 0.01 0.49 0.01 0.80 0.02 1.27 0.03

Security deposit 2.68 0.06 2.14 0.05 2.32 0.05 1.92 0.04

Current Assets

Inventories (note no 3) 374.86 8.53 736.43 16.83 962.28 22.18 771.00 16.23

Current portion of trade (note no 4) 65.03 1.48 196.74 4.50 96.37 2.22 56.27 1.18ReceivablesCash and Cash equivalent (note no 5) 86.29 1.96 121.98 2.79 15.78 0.37 11.43 0.23

Prepayments 5.98 0.10 5.64 0.13 6.33 0.14 5.20 0.11

Interest Receivable 0.22 0.01 0.27 0.01 0.03 0.00 0.03 0.00

Other Receivables (note no 6) 66.43 1.51 117.19 2.68 11.23 0.26 30.90 0.65

Tax Deducted at Source by 0.30 0.01 5.28 0.12 2.74 0.06 0.73 0.02Clients & Advance TaxOther Loans & Advances 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

MODVAT 19.29 0.44 7.30 0.17 3.35 0.07 1.82 0.04

Service Tax 1.26 0.03 0.86 0.02 0.00 0.00 0.00 0.00

Total Assets 1980.98 45.02 2242.17 51.26 2069.59 47.69 1833.05 38.58

Equity and Liabilities

Shareholders Equity

Issued Capital (note no 7) 498.32 11.32 498.32 11.39 348.29 8.02 348.29 7.33

Reserves (note no 8) 459.02 10.44 457.20 10.46 210.66 4.85 184.19 3.88

Retained Earnings (note no 9) 146.24 3.32 145.57 3.33 58.15 1.35 48.42 1.02

Non -Current Liabilities

Interest bearing (note no 10) 274.36 6.24 178.85 4.09 228.35 5.27 264.62 5.57borrowings

Non Interest bearing (note no 11) 120.82 2.75 93.99 2.15 156.39 3.60 152.43 3.21borrowingsDeferred Tax Liability 112.70 2.56 112.70 2.57 65.99 1.52 38.96 0.81

Retirement Benefit 4.64 0.11 3.40 0.08 3.60 0.08 3.65 0.08ObligationsCurrent Liabilities

Trade and Other Payables (note no 12) 88.90 2.02 123.08 2.81 279.48 6.44 293.53 6.17

Short Term Borrowings (note no 13) 228.07 5.17 569.72 13.02 672.01 15.49 494.76 10.42

Provisions (note no 14) 47.91 1.09 59.34 1.36 46.67 1.07 4.19 0.09

Total Equity and 1980.98 45.02 2242.17 51.26 2069.59 47.69 1833.05 38.58LiabilityThe notes referred to above and other notes on financial statements form an integral part of the Balance Sheet.

As per our report of even date

For S. N. Nanda & Co., For and on behalf of the Board

Chartered Accountants Rana Ranjit Singh

Bhavna Nanda Managing Director

Partner

Date:

Place:

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RANA SUGARS LIMITEDIncome Statement for the period ending

Amount in Amount in Millions Amount in Millions Amount in MillionsMillions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

Inc ome

Revenue (As per 497.17 11.30 1341.79 30.67note 15) 850.85 19.61 934.11 19.67

Other Incomes 1.81 0.04 10.30 0.24 31.30 0.72 11.58 0.24

Changes in Inventory (380.34) (8.65) (228.60) (5.23) 184.30 4.25 52.18 1.10

Expenses

Raw material & 6.24 0.14 583.97 13.36consumables used 660.99 15.23 652.77 13.73

Staff Costs (As per 17.26 0.40 43.09 0.98note 16) 41.36 0.95 43.67 0.92

Depreciation 31.26 0.71 62.52 1.43 61.00 1.41 57.75 1.22

Manufacturing (As per 21.70 0.50 83.26 1.90Expenses note 17) 89.30 2.06 79.12 1.67

Other Operating (As per 11.59 0.26 28.16 0.64Expenses note 18) 13.88 0.33 15.51 0.33

Profit from operations 30.59 0.68 322.49 7.37 199.92 4.60 149.05 3.14

Financ e Costs (As per 27.84 0.62 70.60 1.61note 19) 90.38 2.09 90.44 1.90

Selling Expenses 1.26 0.02 4.23 0.10 2.89 0.06 3.45 0.08

Cane Development 0.88 0.02 4.28 0.10Expenses 2.20 0.05 3.97 0.08Provision for doubtful (0.61) (0.01) (0.08) (0.00)debts 0.58 0.01 1.04 0.02Profit before tax 1.22 0.03 243.46 5.57 103.87 2.39 50.15 1.06

Income Tax - Current 0.55 0.01 19.30 0.44Tax 7.38 0.17 4.19 0.09

Deferred Tax 0.01 0.01 46.71 1.07 27.03 0.62 16.76 0.35

Income Tax of 0.00 0.00 0.00 0.00 0.44 0.01Previous years 0.77 0.03Provision Written 0.00 0.00 0.00 0.00 0.00 0.00Back 2.19 0.05

Net Profit after tax 0.66 0.01 177.46 4.06(loss) 69.02 1.59 30.62 0.64

The notes referred to above and other notes on financial statements form an integral part of the Income Statement.

As per our report of even date.

For and on behalf of the Board

For S. N. Nanda & Co.,

Chartered Accountants Rana Ranjit Singh

Bhavna Nanda Managing Director

Partner

Rana Inder Pratap Singh

Director

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CASH FLOW STATEMENT

Amount in Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

CASH FLOW FROM OPERATING

A. ACTIVITIES

Net Profit before Tax and extra ordinary

items 122.04 2.77 243.46 5.57 103.87 2.39 52.35 1.10

Adjustment for:

Depreciation & Non Cash Expences 32.15 0.73 66.71 1.52 63.79 1.47 62.78 1.32

Profit on Sale of Fixed assets - - - - - - - -

Interest (Net) 27.66 0.63 69.33 1.58 89.11 2.06 89.05 1.87

OPERATING PROFIT BEFORE

WORKING CAPITAL CHANGES

181.86 4.13 379.52 8.67 256.77 5.92 204.18 4.29

Adjustment for:

Trade and Other Receivables 174.85 3.97 (213.09) (4.87) (25.50) (0.59) (35.17) (0.74)

Inventories 359.78 8.18 225.84 5.17 (191.27) (4.41) (60.91) (1.28)

Trade Paybles (76.43) (1.74) (143.50) (3.28) 27.82 0.64 112.32 2.36

CASH GENERATED FROM

OPERATING ACTIVITIES 640.06 14.55 248.77 5.69 67.82 1.56 220.42 4.63

Interest paid (27.66) (0.63) (70.27) (1.61) (89.91) (2.07) (89.83) (1.88)

Direct Tax paid (0.57) (0.01) (19.30) (0.44) (7.38) (0.17) (4.19) (0.09)

Cash Flow before Extraordinary

Activities 611.83 13.91 159.20 3.64 (29.47) (0.68) 126.40 2.66

NET CASH FROM OPERATING

ACTIVITIES 611.83 13.91 159.20 3.64 (29.47) (0.68) 126.40 2.66

CASH FLOW FROM INVESTING

B. ACTIVITIES

Purchase of Fixed Assets (339.52) (7.72) (144.77) (3.30) (76.65) (1.77) (54.73) (1.15)

Sale of Fixed Assets (Net) - - 2.76 0.06 0.16 0.00 2.76 0.06

Purchase of Investments - - - - (0.39) (0.01) - -

Interest received - - 0.94 0.02 0.81 0.02 0.78 0.02

Misc. Expenses (0.89) (0.02) (4.28) (0.10) (2.21) (0.05) (0.77) (0.02)

NET CASH USED IN INVESTING

ACTIVITIES (340.41) (7.74) ###### (3.32) (78.28) (1.80) (51.96) (1.09)

CASH FLOW FROM FINANCING

C. ACTIVITIES

Proceeds from Issue of Capital - - 345.03 7.89 - - - -

Subsidy 1.83 0.04 1.54 0.04 6.47 0.15 3.40 0.07

Proceeds from Long Term Borrowings 9.96 0.23 - - 13.74 0.32 27.43 0.58

Repayment of Long Term Borrowings (4.06) (0.09) (49.50) (1.13) (50.02) (1.15) (37.44) (0.79)

Adjustment of Unsecured Loans 26.83 0.61 (62.41) (1.43) 3.96 0.09 11.50 0.24

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Working Capital Borrowing (341.67) (7.77) (102.28) (2.34) 177.24 4.08 (82.36) (1.73)

Dividend and Dividend Tax Paid - - (40.03) (0.92) (39.29) (0.91) - -

Decrease in Deferred Tax Liability - - - - - - - -

NET CASH FROM FINANCING

ACTIVITIES (307.11) (6.98) 92.35 2.11 112.10 2.58 (77.47) (1.63)

NET CHANGE IN CASH AND CASH

EQUIVALENT (A+B+C) (35.69) (0.81) 106.20 2.43 4.35 0.10 (3.03) (0.06)

CASH AND CASH EQUIVALENT AT

THE BEGINING 121.98 2.77 15.78 0.36 11.43 0.26 14.46 0.30

CASH AND CASH EQUIVALENT AT

THE END 86.28 1.96 121.98 2.79 15.78 0.36 11.43 0.24

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Note No. 1

NOTES TO FINANCIAL STATEMENTS

I. Property, Plant, Equipments & Other Assets: Sugar Division

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

30 Sep 2005 31 March 31 March 2004 31 March 2003

Particulars 2005

Rs. USD Rs. USD Rs. USD Rs. USD

Land includes site development 62.08 1.41 62.08 1.42 27.00 0.62 26.99 0.57

Building & Civil Works 96.11 2.19 97.65 2.23 91.70 2.11 89.18 1.88

Plant & Machinery 405.49 9.22 423.55 9.68 418.78 9.65 444.80 9.36

Electric Installation 3.96 0.09 4.30 0.10 4.71 0.11 5.27 0.11

Furniture & Fittings 1.67 0.04 1.79 0.04 2.95 0.07 3.07 0.06

Office Equipments 1.01 0.02 1.07 0.02 1.19 0.03 1.26 0.03

Vehicles 14.57 0.33 15.74 0.36 7.15 0.16 7.89 0.16

Computers 0.54 0.01 0.83 0.02 1.02 0.02 1.33 0.03

Miscellaneous Fixed Assets 5.18 0.12 7.55 0.17 7.43 0.17 7.74 0.16

Total590.61 13.49 614.57 14.05 561.94 12.94 587.52 12.37

Capital Work in Progress 461.22 10.48 116.29 2.66 83.36 1.92 31.41 0.66

II. Property, Plant, Equipments & Other Assets: Power Division

Land includes Site

Development 0.80 0.02 0.80 0.02 0.02 0.80 0.02 0.80

Building & Civil

Works 9.82 0.23 9.98 0.23 10.32 0.24 10.41 0.22

Plant & Machinery 290.98 6.61 300.08 6.86 306.32 7.06 322.22 6.78

Furniture An d

Fittings 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total 301.60 6.86 310.87 7.11 317.44 7.32 333.43 7.02

Capital Work in

Progress 0.29 0.04 5.73 0.13 5.22 0.12 0.12 0.00

Grand Total 1357.93 30.87 1047.46 23.94 967.97 22.31 952.48 20.05

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Note No. 2

Investments

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

30 Sep 31 March 31 March 2004 31 March 2003

Particulars 2005 2005

Rs. USD Rs. USD Rs. USD Rs. USD

Current Investment 0.39 0.01 0.39 0.01 0.39 0.01 0.00 0.00

(quoted investment

32500 equity

shares of Rs.10

each fully paid-up

at UCO Bank)

(Valued at lower of

cost or Market

Price)

Total 0.39 0.01 0.39 0.01 0.39 0.01 0.00 0.00

Note No. 3

Inventories

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

30 Sep 31 March 2005 31 March 2004 31 March 2003

Particulars 2005

Rs. USD Rs. USD Rs. USD Rs. USD

Sugar 309.61 7.04 631.40 14.43 904.17 20.84 711.95 14.99

Molasses 3.81 0.09 59.41 1.36 15.24 0.35 15.87 0.33

Stores & 59.62 1.36 43.80

Chemicals 1.00 41.03 0.95 34.10 0.72

1.82 0.04 1.82 1.84 0.04 1.78Packing Material 0.04 0.04

Bagasse 0.00 0.00 0.00 0.00 0.00 0.00 7.29 0.15

Sugar Cane in hand 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00

736.43 16.89 16.23Total 374.86 8.53 962.28 22.18 771.00

Note No. 4

Trade

Receivables:

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

30 Sep 31 March 2005 31 March 2004 31 March 2003

Particulars 2005

Rs. USD Rs. USD Rs. USD USD Rs.

Sundry Debtors

Current 65.03 4.50 2.22 1.181.48 196.74 96.37 56.27

1.25 0.03 2.03 0.05 2.43 0.06 2.31 0.05Non current

Less: Provision for (0.93) (0.02) (1.54)

doubtful debts (0.04) (1.63) (0.04) (1.04) (0.02)

Total 65.35 97.17 1.49 197.23 4.51 2.24 57.54 1.21

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Note No. 5

Cash and Cash

Equivalent:

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

31 March 2005 31 March 2004 31 March 2003Particulars 30 Sep 2005

USD USDRs. Rs. USD Rs. Rs. USD

0.81 24.11 0.55 0.03 1.11Cash in Hand 35.73 1.20 0.02

Draft / Cheques in 0.00 0.00 39.18

hand 0.90 1.67 0.04 1.18 0.02

Balance with

Scheduled Bank

- In Current 46.21 1.05 49.70

Account 1.14 4.74 0.11 1.51 0.03

- Fixed Deposit 4.35 0.10 8.98 0.20 8.17 0.19 7.63 0.16

Total 86.29 1.96 121.98 2.79 15.78 0.37 11.43 0.23

Note No. 6

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Particulars

Rs. USD Rs. USD Rs. USD Rs. USD

Other receivables

Loan to Cane 15.32 0.35 68.96

growers 1.58 0.30 0.01 2.12 0.04

Buffer stock claim 4.88 0.11 4.88

receivable 0.11 2.49 0.00 0.00 0.06

43.35 Other advances 46.23 1.05 0.99 8.43 0.19 28.78 0.61

Total 66.43 1.51 117.19 2.68 11.22 0.26 30.90 0.65

Note No. 7

Shareholders

Equity

Amount in Millions Amount in MillionsAmount in Millions Amount in Millions

30 Sep 2005 31 March 2004Particulars 31 March 2005 31 March 2003

USD USD USD Rs. USDRs. Rs. Rs.

Authorised:

50000000 Equity 500.00 11.37 500.00 11.43

Shares of Rs 10/-

each 350.00 8.07 350.00 7.37

Issued & paid up:

Equity Shares of 498.32 11.32 498.32 11.39

Rs 10/ each 348.29 8.02 348.29 7.33

498.32 11.32 498.32 11.39 348.29 348.29 7.33Total 8.02

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Note No. 8

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

USD USD Rs. USD Rs. USDRs. Rs.

Reserves

Capital Reserve

State subsidy 7.50 0.17 7.50 0.17 7.50 0.17 7.50 0.16

MNES Subsidy 43.00 0.98 43.00 0.98 0.99 36.53 0.77 43.00

16.96 0.39 15.14 0.36 13.60 13.60 0.29US Aid 0.31

Share Premium 195.00 4.43 195.00 4.46 0.00 0.00 0.00 0.00

196.56 4.47 196.56 4.49 146.56 3.38 126.56 2.66General Reserve

Total 459.02 10.44 457.20 10.46 210.66 4.85 184.19 3.88

Note No. 9

Retained earning

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

March 2003Particulars 30 Sep 2005 31March 2005 31 March 2004 31

Rs. USD Rs. USD Rs. USD Rs. USD

Opening balance 145.58 3.31 58.15 1.33 48.42 1.12 37.80 0.80

Net profit for the 0.66 177.46

year 0.01 4.06 69.02 1.59 30.62 0.64

Transfer to reserve 0.00 0.00 (50.00) (1.14) (20.00) (0.46) (20.00) (0.42)

Dividend 0.00 0.00 (35.41) (0.81) (34.83) (0.80) 0.00 0.00

Corporate dividend 0.00 (4.63)

tax 0.00 (0.11) (4.46) (0.10) 0.00 0.00

Total 146.24 3.32 145.57 3.33 58.15 1.35 48.42 1.02

Note No. 10

Interest Bearing

Borrowings

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

31 March 2005 31 March 2004 31 March 2003Particulars 30 Sep 2005

USD USDRs. USD Rs. Rs. USD Rs.

From others -

secured against

hypothecation

of inventory and 267.97 6.09 170.24 3.89

equipments 213.34 4.92 244.96 5.16

From Others - 6.39 0.15 8.61 0.20

Secured against

Bank guarantee 15.01 0.35 19.66 0.41

Total 274.36 6.24 178.85 4.09 228.35 5.27 264.62 5.57

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Note No. 11

Non-Interest

Bearing

Borrowing :

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

31 March 2005 31 March 2004 31March 2003Particulars 30 Sep 2005

Rs. USD Rs. USD Rs. USD Rs. USD

Interest Free 120.82 2.75 93.99 2.15 156.39 3.60 152.43 3.21

unsecured loan

from Directors and

relatives

Total 120.82 2.75 93.99 2.15 156.39 3.60 152.43 3.21

Note No. 12

Trade and Other

Payables

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

31 March 2005 31 March 2004 31March 2003Particulars 30 Sep 2005

Rs. USD Rs. USD Rs. USD Rs. USD

1.27Sundry Creditors 42.94 0.98 55.63 59.48 1.37 55.27 1.16

0.08Cane price payable 0.00 0.00 3.45 165.32 3.81 202.54 4.26

0.11Security Received 7.24 0.16 4.64 4.55 0.10 4.88 0.10

1.17Other Payable 20.86 0.47 51.17 38.22 0.88 28.24 0.59

Income tax of 0.00 0.00 0.00 0.00

Previous Years 1.21 0.03 0.77 0.02

Advance received 17.86 0.41 8.19 0.19

from clients 10.70 0.25 1.83 0.04

Total 88.90 2.02 123.08 2.82 279.48 6.44 293.53 6.17

Note No. 13

Short Term

Borrowing

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

31 March 2005 31 March 2004 31 March 2003Particulars 30 Sep 2005

Rs. USD Rs. USD Rs. USD Rs. USD

Working Capital

Loan

- State Bank of 120.68 230.16

India 2.74 5.26 272.07 6.27 221.12 4.66

- State Bank of 47.26 155.88

Patiala 1.07 3.56 181.17 4.18 149.06 3.14

- Bank of Baroda 42.75 0.97 139.64 3.19 151.40 3.49 124.58 2.62

- Uco Bank 17.38 0.39 41.91 0.96 67.37 1.55 0.00 0.00

- Intt. Acc. And 0.00 2.13 0.00 0.00 0.00 0.00

due 0.00 0.05

Total 228.07 5.17 569.72 13.02 672.01 15.49 494.76 10.42

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Note No. 14

Provisions

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

31March 2005 31March 2004 31 March 2003Particulars 30 Sep 2005

Rs. USD Rs. USD Rs. USD Rs. USD

Provision for Tax 7.87 0.18 19.30 0.44 7.38 0.17 4.19 0.09

Proposed Dividend 35.41 0.80 35.41 0.81 34.83 0.80 0.00 0.00

Corporate 4.63 0.11 4.63 0.11

Dividend Tax 4.46 0.10 0.00 0.00

Total 47.91 1.09 59.34 1.36 46.67 1.07 4.19 0.09

Note No. 15

Revenue

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

30 Sep 2005 31 March 2005 31 March 2004 31March 2003

Particulars

Rs. USD Rs. USD Rs. USD Rs. USD

Sale of -

Sugar. 448.78 10.20 1193.93 27.29 689.88 15.90 781.28 16.45

Molasses. 66.77 1.52 75.69 1.73 57.47 1.32 73.05 1.54

Electricity. 14.10 0.32 140.77 3.22 138.78 3.20 117.73 2.48

Sale of Agro

inputs. 0.00 0.00 0.00 0.00 18.23 0.42 0.00 0.00

Bagasse. 0.00 0.00 0.00 0.00 0.00 0.00 22.06 0.46

Less Excise duty

paid (32.48) (0.74) (68.60) (1.57) (53.51) (1.23) (60.01) (1.26)

Total Revenue 497.17 11.30 1341.79 30.67 850.85 19.61 934.11 19.67

Note No. 16

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Particulars

Rs. USD Rs. USD Rs. USD USD Rs.

Staff Cost

Salary, Wages and 15.67 37.65

other benefits

including Bonus 0.36 0.86 37.28 0.86 38.75 0.82

Contribution to 1.16 2.37

Provident Fund 0.03 0.05 2.22 0.05 2.09 0.04

Gratuity 0.33 0.01 0.60 0.01 0.43 0.01 0.47 0.01

Staff Welfare 0.10 0.00 2.47 0.06 1.43 0.03 2.36 0.05

Total 17.26 0.40 43.09 0.98 41.36 0.95 43.67 0.92

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Note No. 17

Manufacturing

Expenses

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

Packing Material 0.00 17.69

Consumed 0.00 0.40 22.17 0.51 20.52 0.43

Power & Fuel 3.32 0.08 15.14 0.35 5.51 0.13 6.34 0.13

Chemical 0.00 8.85

Consumed 0.00 0.20 12.34 0.28 14.09 0.30

Process Stores & 2.22 2.97

Spares 0.05 0.07 2.85 0.07 2.50 0.05

Repair &

Maintenance

Plant & Machinery 14.53 30.47

& Building 0.33 0.70 35.90 0.83 28.50 0.60

Handling Expenses 0.23 0.01 3.06 0.07 3.77 0.09 3.37 0.07

Hire Charges 0.10 0.00 1.01 0.02 1.84 0.04 0.13 0.00

Oil & Lubricants 0.00 0.00 1.44 0.03 1.79 0.04 1.86 0.04

Insurance on Plant 1.30 2.63

& Machinery 0.03 0.06 3.13 0.07 1.81 0.04

Total 21.70 0.50 83.26 1.90 89.30 2.06 79.12 1.66

Note 18

Other Operating

Expenses

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

Particulars 30 Sep 2005 31 March 2005 31 March 2004 31 March 2003

Rs. USD Rs. USD Rs. USD Rs. USD

Rent 0.80 0.01 2.50 0.06 1.89 0.04 2.29 0.05

Rates, Taxes & Fee 0.34 0.01 1.32 0.03 0.24 0.01 0.89 0.02

Traveling & 3.84 5.58

Conveyance 0.08 0.12 2.69 0.06 2.66 0.06

Postage, Telephone 0.90 3.09

& Telegraph 0.02 0.07 1.78 0.04 1.59 0.03

Business 1.61 4.78

Promotion &

Entertainment 0.04 0.11 0.68 0.02 0.76 0.02

Printing & 0.25 1.56

Stationery 0.01 0.04 1.26 0.03 0.94 0.02

Vehicle running/ 1.21 2.20

Car hire ch arges 0.02 0.05 1.71 0.04 1.76 0.04

Repair & 1.10 2.08

Maintenance 0.03 0.05 0.87 0.02 1.11 0.02

Consultancy and 0.40 1.27

Technical Fees 0.01 0.03 0.36 0.01 0.50 0.01

Insurance 0.70 0.02 2.76 0.06 1.66 0.04 1.49 0.03

Listing Fees 0.24 0.01 0.32 0.01 0.23 0.01 0.21 0.00

Electricity & Water 0.13 0.41

Charges 0.00 0.01 0.30 0.01 0.26 0.01

Auditors 0.00 0.10

Remuneration 0.00 0.00 0.08 0.00 0.08 0.00

Loss on sale of 0.00 0.00

Assets 0.00 0.00 0.03 0.00 0.89 0.02

Misc. Expenses 0.07 0.00 0.19 0.00 0.10 0.00 0.08 0.00

Total 11.59 0.26 28.16 0.64 13.88 0.33 15.51 0.33

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Note No. 19

Finance Cost

Amount in Millions Amount in Millions Amount in Millions Amount in Millions

31 March 2004 31 March 2003

Particulars 30 Sep 2005 31 March 2005

Rs. USD Rs. USD Rs. USD Rs. USD

Interest on 27.33 65.76

Overdraft and Loan 0.61 1.50 86.57 2.00 85.00 1.79

Bank charges and 0.34 4.52

other finance

charges 0.01 0.10 3.35 0.08 4.85 0.10

Amortization 0.17 0.00 0.32 0.01 0.46 0.01 0.59 0.01

Total 27.84 0.62 70.60 1.61 90.38 2.09 90.44 1.90

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SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS FORMING PART OFACCOUNTS AS AT 31 MARCH 2005

A. ORGANIZATION AND NATURE OF OPERATIONS

Rana Sugars Limited was incorporated as a public limited company on 30 July 1991, under the IndianCompanies Act, 1956 in India and was issued a Certificate of Incorporation bearing number 53-11537 of1991 by the ROC, Punjab, Himachal Pradesh and Chandigarh.

Rana Sugars is a sugar company with a capacity to crush 5000 tonnes of sugarcane per day and operates acaptive power un it for co-generation of 20 MW of power. The project is situated at village Buttar Seviyan,Tehsil Baba Bakala, District Amritsar, Punjab.

Rana Sugars is the first company in the State of Punjab, which has set up a co-generation power project atthe cost of Rs.330 million and which is running successfully. The co-generation power project is generating14 MW surplus power after meeting its captive d emand from its in-built system and the surplus power isbeing sold to Punjab State Electricity Board, pursuant to the Power Purchase Agreement dated 4 May 2005,executed between Rana Sugars Limited and Punjab State Electricity Board.

The co-generation power project has been set up with equity participation of Rs.25.50 million by PunjabEnergy Development Agency.

B. SIGNIFICANT ACCOUNTING POLICIES

1. Accounting Convention

The financial statements are prepared in accordance with the historical cost convention inaccordance with generally accepted accounting principles and the provisions of theCompanies Act, 1956. Accounting policies not specifically referred to are consistent withgenerally accepted accounting policies.

Cost is based on the fair value of consideration given in exchange for assets. The carryingamount of non-current assets has been determined by reference to expected net cash flow,which has not been discounted, except where stated.

The financial statements of the company are presented as per International AccountingStandards (IAS) & IFRS applicable during the period.

The income statement has been prepared on the basis of classification of expenses byfunction.

The financial statements have been reported in Indian rupees, the national currency of India,which is also the functional currency of the company. Solely, for the convenience of thereaders, the financial statements have been translated into United States dollars at the noonbuying rate in New York city on 31 March 2005 for cable transfers in Indian Rupees.

2. Revenue Recognition

Sales revenue is recognized on the basis of dispatch of goods to the customers and isaccounted for inclusive of Excise Duty. Sale of Power to Punjab State Electricity Board(PSEB) is accounted for based on the meter reading as per metering equipments of PSEBinstalled at the Power Grid.

3. Fixed Assets

The fixed assets are stated at cost net of Excise Duty. All costs directly related to theacquisition and installation of fixed assets are capitalized and added to the respective assets.

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4. Depreciation

Depreciation is provided on all the fixed assets on straight-line method in accordance withand in the manner specified in Schedule XIV to the Companies Act, 1956.

5. Inventories

Inventories except molasses and bagasse, being by-products, are valued at lower of cost andnet realizable value. The by-products are valued at net realizable value. Cost of stores, spares& consumables is determined on Weighted Average Cost method. In respect of finishedgoods, appropriate overheads are considered.

6. Investments

Current Investments are valued at lower of cost or market value.

7. Current assets, loans &advances

a) Accounts receivable are valued at their estimated realizable value, by recording anappropriate provision for doubtful accounts.

b) In the opinion of the Board of Directors all the Current Assets, Loans and Advances,if realised in the ordinary course of business, have a value at least equal to theamount at which these are stated in the Balance Sheet.

8. Guarantees, Commitments and Contingent liabilities

Contingent liabilities are not recognized but a disclosure is made.

9. Current liabilities

Accounts payable are stated at their nominal value.

10. Retirement Benefits

Defined Contribution Plan

Contribution to provident fund is made on a monthly basis as per the enactment in India. Thecontributions are made to a provident fund scheme (a government of India body) at the rate of12% of the basic salary of the employee restricted to Rs. 6,500 and charged to revenue.

Defined Benefit Plan

Defined benefit plan is based on service and remuneration of employees at retirement. Paymento f present liability of future obligation is mad e to gratuity fund, which fu lly covers the sameunder group gratuity scheme of Life Insurance Corporation of India. Some actuarialassumptions adopted are discount rate is 7.5%, salary escalation is 7% and withdrawals are 5%.

Provision for Leave encashment liability is made on accrual basis.

11. Borrowing cost

Borrowing co sts that are attrib utable to the acquisition or construction of qualifying assets arecapitalised as a part of the cost of such assets. A qualifying asset is one that necessarily takessubstantial period of time to get ready for intended use. All other borrowing costs are chargedto revenue.

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12. Taxes on Income

Provision for current tax is made for the amount of tax payable in respect of taxable incomefor the year under the Income Tax Act, 1961.

Deferred tax is recognized subject to the consideration of prudence, on timing difference,being the differences between Book profit and tax profit that originate in one period and arecapable of reversal in one or more subsequent periods. Deferred tax assets are recognized onlyif there is reasonable certainty that sufficient future taxable income will be available againstwhich such deferred tax assets can be realized.

13. Accounting Estimates, Assumption and Judgement

The preparation of accounts is in accordance with International accounting standard whichrequire management to make certain estimates and assumption concerning future, that effectthe reported amounts of revenues and expenses during the reporting period. Actual resultscould differ from those estimates.

Estimation and judgements are continuously evaluated and are based on historical experienceand other factors, including expectation of future events that are believed to be reasonableunder the circumstances.

14. Financial Instruments

The company’s financial instruments consist of trade and other receivables, interest bearingborrowings, security deposits, trade and other payables, and accrued liabilities. Unless stated,it is the managements opinion that the company is n ot subjected to sig nificant interest,currency and credit risk arising from its financial instruments the fair value amortised cost offinancial instruments as applicable approximates their carrying value, unless otherwise stated.

NOTES

20. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not providedfor Rs.1.55 million (Previous year Rs.1.88 million)

21. Contingent liabilities

Contingent Liabilities Not Provided For:

Liability in respect of Income Tax and Sales Tax has been accounted for on the basis ofrespective returns filed with the relevant authorities. Additional demand, if any, arising at thetime of assessment is accounted for in the year in which the assessment is completed.a) Income Tax assessments have been completed up to the assessment year 2002-03.b) Sales Tax assessments have been completed upto the assessment year 2002-03 and there

is no outstanding demand in this respect.However, there is no demand pending in respect of completed assessment.c) The company has deposited a sum of Rs0.21million under protest with excise authorities

and has preferred an appeal with the Appellate Authorities against the order of thisamount.

d) Bank Guarantees given to Ministry of Food, Govt. of India Rs. 37.9 million (previousyear Rs. 37.9 million). Guarantees are secured by pledge of FDRs of Rs. 8.98 million(previous year Rs. 8.17 million) and counter guarantee given by the Company.

e) The Company has given guarantees against crop loans availed by farmers of Rs. 145.51million to banks.

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22. The Company has not made provision for Excise Duty on stock of finished goodslying at the year end and accordingly the amount is not included in the valuation ofinventories. However, this does not have any impact on the profit for the year.

23. Equity Shares

The Company has only one class of capital stock referred to herein as equity shares. Par valueof each share outstanding as on 31March 2005 is Rs.10.

Voting

Each ho lder of equity shares is entitled to one vote per share.

Dividends

Final dividends proposed by the Board of Directors are payable when formally declared bythe shareholders, who have the right to decrease but not increase the amount of dividendrecommended by the Board of Directors. The Board of Directors declares interim dividendwithout the need of shareholders approval. Dividend payable to equity shareholders are basedon the net income available for distribution as reported in the company’s financial statementsprepared in accordance with US GAAP. As such, dividends are declared and paid in Indianrupees. The net income in accordance with IFRS may, in certain years, either not be fullyavailable or will be additionally available for distribution to equity shareholders.

Under Indian GAAP, the accumulated retained earnings available for distribution to equityshareholders as on 31 March, 2005 is Rs.177.46 million, dividend proposed by the companyfor the year ending 31 March 2005 is Rs. 35.40 million.

Under the Indian Companies Act, dividends may be paid out of profits of a company in theyear in which the dividend is declared or out of the undistributed profits of previous fiscalyears. Before declaring a dividend greater than 10.0% of the par value of its equity shares, acompany is required to transfer to its reserves a minimum percentag e of its profits for thatyear, ranging from 2.5% to 10.0% or higher, depending on the dividend percentage to bedeclared in such year.

24. Earning Per Share: 2004-05 2003-04

a) Weighted average number of shares at thebeginning and end of the year. 3,54,36,342 3,48,61,000

b) Net Profit after tax available forEquity Share Holders (Rs. In million) 1,77.46 70.50

c) Basic & Diluted Earning per share (Rs.) 5.01 1.98

25. Segment Reporting

Primary Segment

Based on the guiding principle given in IAS-14 "Segment Reporting" issued by theInstitute of Chartered Accountants of India, the Company's segments are WhiteCrystallized Sugar and Power Generation. Revenue and expenses have been accountedon the basis of their relationship to the operating activities of the respective segment.

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(Rs. In millions)Description White Crystal Power Generation Elimination Total

SSegment Revenue Cur. Prv. Yr. Cur. Yr. Prev. Yr. Cur. Yr. Prv. Cur. Yr. Prv.Yr. Yr. Yr.

31.03.0 31.03.04 31.03.05 31.03.04 31.03.05 31.03. 31.03.05 31.03.5 04 04

a) External Sales 1269.62 765.57 140.78 138.78 - - 1410.39 904.35

b) Inter Segment 101.48 103.42 129.87 138.26 231.35 (241.68 - -Sales )

Total 1371.10 868.99 270.64 277.04 231.35 (241.68 1410.39 904.35)

Segment Result 22775.4 79.97 88.03 114.27 - - 314.07 194.24

Interest 70.59 90.37

Profit before Tax 243.48 103.87

Provision for current 19.30 7.38tax

Provision for Deferred 46.71 27.03Tax

Income tax of previous - 0.43years

Profit after tax 177.47 69.03

Segment Assets (Cross) 1839.35 1730.72 683.49 692.02 - - 2522.84 2422.74

Segment Liability 759.97 1040.90 120.79 148.67 - - 880.76 1189.57

Capital Expenditure 105.48 58.98 25.72 17.42 - - 131.20 76.40(Net)

Depreciation 34.92 33.72 27.60 27.28 - - 62.52 61.00

Non cash expenses 2.45 1.73 - - - - 2.45 1.73

26. Related Party Disclosures:

Disclosures as required by IAS-24 “Related Party Disclosures” are given below:

A. Relationship

a) Associate Companies1. Rana Polycot Limited2. Sri Hargobindpur Sugars (P) Ltd.3. Rana Informatics Ltd.4. Rana Leathers Ltd.5. R.G.S. Traders Pvt. Ltd.

b) Key Management Personnel:1. Rana Ranjit Singh — Managing Director2. Rana Inder Pratap Singh — Director3. Rana Veer Pratap Singh — Director

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c) Relative of Key ManagementPersonnel:1. Rana Gurjeet Singh.

B. Transactions with(Rs. In million)related Parties

Nature of Transactions Associate Companies Key ManagementPersonnel

2004-2005 2003-2004

1. Purchase of raw 0.06 0.59 -material

&t 0.30 0.28 -2. Rent Received

0.00 0.03 -3. Mobile expenses

C. Outstanding 01.04.2004 31.03.2005Balances (Rs. inMillion)

20.4120.89- Interest Free unsecuredloans from Directors

- Interest Free Loan 50.60 2.64from relatives ofDirectors

27. Deferred Tax Liability

The Deferred Tax Liability for the current year amounting to Rs. 46.71 million (Previous year Rs.27.03 million) has been charged to Profit & Loss account. Deferred tax assets and liabilities arebeing offset as they relate to taxes on income levied by the same governing taxation laws. Majorcomponents of Deferred Tax Assets and Deferred Tax Liabilities:-

(Rs. in million)31 March, During the 31 March,

2005 Year 2004

Net Timing Difference Net Deferred Tax 112.70 46.71 46.71 65.99Liability - 27.03

28. Impairment of assets

The company has carried out the assessment of impairment of assets as per IAS 36. There has beenno impairment loss during the year 2004-05.

29. Financial Instruments

The financial instruments of the company are classified as Trade and other receivables, interestbearing borrowings and security deposits and financial liabilities as per classification specificationof IAS 32/39, the carrying amount of this do not vary significantly from their amortized cost,except in case of the following:

a) Trade receivables - Sundry debtors include Rs. 1.85 million for the recovery of which suitis pending in court and as per the legal opinion received by the management, these areexpected to be realized before the year 2007. These have been amortized at thecommercial rate of borrowing which is currently 10% per annum.

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b) Security deposits are interest free long term deposits and in the opinion of themanagement, these are providing adequate economic benefits to the company, and havenot been amortized.

30. Retirement benefits

Contribution to provident fund during the year is Rs.2.37 million. Gratuity liability has beenfully funded as per the group g ratuity scheme of Life Insurance Corporation of India.

(Rs in million)Total contribution to the fund : 2.04Interest earned : 0.12Claims settled : 0.29

The leave encashment liability has been estimated by the management at Rs.2.72 million atthe end of the year.

Leave encashment

Balance sheet and related analysis(Rs in million)

March 2005 March 2004Present value of the obligation at end 2.72 2.56Present value of plan assets -- --Unfunded liability provision in 2.72 2.56Balance sheetUnrecognised actural gains/ (losses) -- --Unrecognized transiting liability -- --

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AUDITOR’S REPORT OF RANA SUGARS LIMITED FOR THE YEAR ENDED 31 MARCH 2005

DirectorsRana Sugars Ltd.SCO 49-50 Sector 8 CMadhya MargChandigarh

As agreed with you, we have examined the restated the Balance Sheet as on 31 March 2005 Profit & LossAccount and Cash Flow Statement for the year ending 31 March 2005 audited by M/s Kansal Singla &Associates Chartered Accountants. Our engagement was undertaken in accordance with the guidance Noteon Engagements to perform Agreed upon procedures regarding Financial information issued by theInstitute of Chartered Accountants of India. The preparation and presentation of these financial statementsare the responsibility o f the company management. Our responsibility is to express our opinion on thesefinancial statement duly audited by Kansal Singla & Associates.

We have performed such tests and procedures, which in our opinion were necessary for the examination.The procedure include comparison of the attached restated financial statements with the Company’s auditedFinancial Statements on the basis of the information and explanation, given to us and on consideration ofthe audit report of M/s Kansal Singla & Associates dated 6 September, 2005. In our opinion the restatedfinancial statements give a true & fair view in conformity with the International Financial ReportingStandards

a) In case of restated Balance Sheet of the company as at 31 March 2005.b) In case of Profit & Loss accounts result of operation of the company for the year ended 31 March

2005.c) In case of cash flow statement of the cash flows for the year ended on that date.

This report is solely for your information and for submission to Dubai International Finan cial Exch ange inconn ection with application for listing of your securities.

Place : New Delhi For S. N. Nanda & Co.Dated : CHARTERED ACCONTANTS

BHAVNA NANDAPartner

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RANA SUGARS LIMITEDSCO 49-50, SECTOR 8-C

MADHYA MARGCHANDIGARH - 160 009

INDIA

DEPOSITARY LEAD MANAGER

DEUTSCHE BANK TRUST COMPANY CHARTERED CAPITAL AND INVESTMENTAMERICAS LIMITED

60 WALL STREET 711, MAHAKANT, OPP. V S HOSPITAL,NEW YORK, ELLISBRIDGE

NEW YORK 10005 AHMEDABAD, GUJARAT (INDIA) - 380 006U.S.A.

AUDITORS CHARTRED ACCOUNTANTS

KANSAL SINGLA & ASSOCIATES S.N.NANDA & Co.CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS

SCO 1114-15, SECTOR 22-B CHANDIGARH – C-43, PAMPOSH ENCLAVE160 022 NEW DELHI - 110048

OVERESEAS COUNSEL TO THE LEAD LEGAL ADVISORS TO THE COMPANYMANAGER

K.R. CHAWLA & CO.DAVÉ & CO.ADVOCATESSOLICITORS

AND LEGAL CONSULTANTS49 THE PADDOCKS707, KAILASH BUILDINGRAYLEIGH

26, KASTURBA GANDHI MARGESSEXNEW DELHI 110 001SS6 8NE,

INDIAUNITED KINGDOM

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